The Macquarie Telecom Group has delivered $6.2 million in net profits for the first half of the 2017 fiscal year on increased revenue of $106.8 million.
The group’s revenue was up by 7% on the first half of the previous year when it had revenues of $100.1 million, while net profits increased by 214% on the corresponding six months for FY16.
Chairman Peter James said the results — at the upper end of guidance — affirmed Macquarie’s strategic and operational plan and “growth activities to build on continued customer demand”.
And, chief executive David Tudehope said Macquarie’s confidence that hosting revenue would continue to grow strongly had been realised during the half and the “continued improvement in data centre asset utilisation has driven further growth in profitability”.
{loadposition peter}Key points of Macquarie’s results for 1H FY17 include:
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $19.0 million, an increase of 22% on 1H FY16 ($16.7 million).
• Net profit after tax of $6.2 million, an increase of 214% on 1H FY16 ($2.0 million).
• Telecom contributed revenue of $71.2 million, an increase of $1.2 million (2%), and EBITDA of $9.3 million, in line with 1H FY16.
• Hosting contributed revenue of $37.8 million, an increase of $5.3 million (16%), and EBITDA of $9.7 million, an increase of $3.4 million (55%), compared to 1H FY16.
• Healthy balance sheet with cash and cash equivalents of $24.7 million, no debt and cash flows from operating activities of $13.9 million.
• Business as usual capex increased to $12.5 million from $7.5 million in 1H FY16, driven by strong customer demand.
• Growth capex was $11.0 million to expand capacity at Intellicentres 2 and 4 ($7.3 million) and data networking technology and network operations centre insourcing ($3.7 million).
• Fully franked interim dividend of 25 cps declared, continuing our commitment to ongoing shareholder returns.
Outlook for FY17
• Underpinned by strong sales growth, EBITDA is expected to be approximately $37 to $39 million for the full year.
• The company is confident that Hosting revenue will continue to grow in 2H FY17. However profitability will be impacted by additional staff costs in the sales team and increased electricity prices.
• Hosting’s Fortune 100 customer will commence initial billing in Q3 FY 17.
• Telecom’s investment in new data networking technology and network operations centre insourcing will result in additional staff costs being incurred in 2H FY17. These investments will materially reduce costs and further improve service delivery in FY18.
• Affirm the full year guidance announced at the AGM for capital expenditure and depreciation:
o Driven by strong demand, business as usual capex isexpected to be $21 to $23 million;
o Growth capex for the expansion of Intellicentres 2 and 4, data networking technology and network operations centre insourcing will continue in 2H FY17 and is expected to be $13 to $15 million for Hosting and $6 to $7 million for Telecom; and
o Depreciation is expected to be $21 to $23 million.