Facility costs drive NextDC net loss to AU$22.9m

Infrastructure development and facility costs have driven NextDC's net loss after tax for the financial year ending June 2014 to AU$22.9 million.
Written by Leon Spencer, Contributor

Expanded facility costs associated with its new datacentres in Sydney and Perth have driven NextDC's statutory net loss after tax to AU$22.9 million for the financial year ending 2014, but the company hopes to see positive earnings by next year.

The Australian-listed datacentre-as-a-service company released its annual financial report (PDF) today, reporting a loss in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA), adjusted for non-recurring items, of AU$16.1 million in FY14 — an improvement from its loss of AU$20 million in FY13.

The company said this was due to increased facility costs from its expanded network. Over the past three years, NextDC has invested heavily in new infrastructure, opening up five datacentres around Australia, two of which were completed in the past 12 months.

Now, with infrastructure established in Sydney, Perth, Melbourne, Canberra, and Brisbane, the company hopes to leverage its expanded footprint and work towards positive earnings by the end of FY15.

NextDC CEO Craig Scroggie
Image: NextDC

"The 2014 financial year was a pivotal year in NextDC's short story, with the company achieving significant growth across all key operational and financial metrics, and moving closer to generating positive cash flows," said NextDC’s CEO Craig Scroggie in a statement to shareholders.

"NextDC is at the heart of the digital economy and well positioned to take advantage of the fast growth in datacentre colocation powered by the move of enterprise and governments to colocation and the adoption of cloud and mobile computing technologies."

Next DC launched its fifth datacentre, P1 in Perth, during FY14, along with its S1 Sydney datacentre. Now, the company says that with no new datacentres currently under construction, it is no longer carrying any base building construction risk.

"With all of NextDC's Australian datacentres now built and operational, the benefits of the inherent leverage of the company's scalable infrastructure will now start to drive increasing returns," said Scroggie.

"While carefully managing the cost base, it is important that the company continues to invest in sales to maximise contracted utilisation at appropriate prices per MW to generate the highest possible return on capital invested."

NextDC reported AU$30.4 million in revenue from its datacentre services for the financial year ending June 2014, up from AU$9 million for the 2013 financial year. The company also reported revenue from ordinary activities of AU$48.3 million, up from AU$36.2 million for the financial year ending 2013.

Meanwhile, its B1 Brisbane datacentre continued to contribute positive facility EBITDA, with M1 Melbourne and C1 Canberra breaking even in the first quarter and the fourth quarter of FY14, respectively.

"With the completion of S1 Sydney and P1 Perth in 2014, M1 Melbourne and C1 Canberra in 2013, and B1 Brisbane in 2012, NextDC has delivered a world-class portfolio of market-leading carrier and vendor-neutral datacentres in all key capital cities," said Scroggie.

"The company now transitions into its operational phase that will help achieve its vision of becoming the most recognised, connected, and trusted datacentre brand in the Asia-Pacific region."

NextDC revealed that it achieved a number of its key milestones during FY14, including seeing annualised contracted recurring revenue rise by 36 percent to AU$41.7 million for the year, and investing AU$91 million in datacentre plant and equipment infrastructure.

In July last year, the company sold its remaining shareholding in APDC, raising AU$28.1 million in cash and generating a profit on the sale of the securities of AU$1.7 million.

NextDC raised over AU$160 million in cash and debt over FY14, including AU$50 million raised in a placement in August last year, and AU$60 million in June this year from a five-year senior unsecured note offer.

While NextDC hopes to draw upon its FY14 infrastructure investment in FY15, it expects to spend a further AU$30-AU$35 million in capital investment on plant and equipment, with new products to be released in FY15.

"In FY15, our innovation will see the introduction of the company's new subscription-based ONESC software-as-a-service datacentre infrastructure management platform for datacentre intelligence," said Scroggie.

In July last year, NextDC founder Bevan Slattery announced that he would leave the company in order to focus on his other businesses, including Megaport and SubPartners, and in July this year, SubPartners announced that it had inked a deal with NextDC to use its P1 Perth datacentre for the landing station of its APX-West and APX-Central submarine cables.

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