NEXTDC : Half Year Report and Accounts

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ASX Appendix 4D

Results for Announcement to the Market

For the half-year ended 31 December 2021 ("1H22")

Previous corresponding period: to 31 December 2020 ("1H21")

Summary of financial information

Note

1H22	1H21	Change	Change
$'000	$'000	$'000	%

For personal use

Revenue from ordinary activities		144,510	121,622	22,888	19%
Profit/(loss) from ordinary activities after income tax for	1, 2	10,256	(17,823)	28,079	nmf
the period attributable to members
Profit/(loss) after income tax attributable to members	1, 2	10,256	(17,823)	28,079	nmf

Explanation of Revenue and Profit from Ordinary Activities

Note 1: During the half-year to 31 December 2021 the Group completed a refinance of its existing Senior Debt Facilities, including an upsize of $650 million to a new aggregate limit of $2.5 billion, together with material pricing, flexibility enhancements and extended tenors. As a result of the refinance, $23.3 million of costs associated with the extinguishment of the original facilities were expensed during the half year to 31 December 2021 offset by a modification gain of $26.5 million that arose from the improved pricing achieved as a result of the refinance. Further details can be found in note 4(a) to the financial statements.

Note 2: Comparative information has been restated to reflect the change in accounting policy and prior period restatements detailed in note 2 to the financial statements

NTA Backing

1H22 1H21

Net tangible asset backing per ordinary share	$3.61	$3.60

Dividends

No dividend has been proposed or declared for the period ended 31 December 2021.

NEXTDC Limited ABN 35 143 582 521

For personal use only

NEXTDC Limited

ABN 35 143 582 521

Interim financial report

for the half-year ended 31 December 2021

For personal use only

Contents

	Page
Directors' Report	1
Auditor's independence declaration	5
Interim financial statements
Consolidated Statement of Comprehensive Income	6
Consolidated Balance Sheet	7
Consolidated Statement of Changes in Equity	8
Consolidated Statement of Cash Flows	9
Notes to the Consolidated Financial Statements	10
Directors' Declaration	18
Independent Auditor's Review Report to the Members	19

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2021 and any public announcements made by NEXTDC Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

These interim financial statements are the consolidated interim financial statements of the consolidated entity consisting of NEXTDC Limited and its subsidiaries. The interim financial statements are presented in the Australian currency.

NEXTDC Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office is:

NEXTDC Limited

20 Wharf Street

Brisbane Qld 4000

For personal use only

NEXTDC Limited

Directors' Report

31 December 2021

The Directors of NEXTDC Limited present their report on the consolidated entity (referred to hereafter as "the Group") consisting of NEXTDC Limited ("NEXTDC" or "the Company") and the entities it controlled at the end of, or during, the half-year ended 31 December 2021 ("1H22").

Directors

The following persons held office as Directors of NEXTDC Limited during the financial period and up to the date of this report:

Douglas Flynn

Craig Scroggie

Stuart Davis

Dr Gregory J Clark AC

Stephen Smith

Jennifer Lambert

Dr Eileen Doyle

Principal activities

During the half-year, the principal continuing activities of the Group consisted of the development and operation of independent data centres in Australia.

Operating and financial review

NEXTDC is pleased to announce its interim results for the half-year ended 31 December 2021 that saw continued substantial growth in data centre revenue, as well as a significant increase in underlying EBITDA.

As at 31 December 2021:

• Contracted utilisation grew 10.0MW (14%) to 81.0MW1 (31 December 2020: 71.0MW)
• The number of interconnections rose by 1,968 (14%) to 15,879 (31 December 2020: 13,911), representing 7.3% of recurring revenue

Key financial highlights include:

• Data centre services revenue grew $22.9 million (19%) to $144.5 million (1H21: $121.6 million)
• Underlying EBITDA rose $19.3 million (29%) to $85.0 million (1H21: $65.7 million)
• Operating cash flow increased $5.9 million (9%) to $69.5 million (1H21: $63.62 million)
• Liquidity (cash and undrawn senior debt facilities) of $2.1 billion at 31 December 2021

Reconciliation of statutory profit/(loss) to EBITDA and underlying EBITDA is as follows:

	1H22	1H212
	$'000	$'000
Net profit/(loss) after tax	$10,256	($17,823)
Add: finance costs	$21,574	$40,316
Less: interest income	($577)	($2,841)
Add: depreciation and amortisation	$51,102	$45,087
EBITDA	$82,355	$64,739
Add: expensed SaaS costs previously capitalised	$1,364	$495
Add: Asian market review expenses	$222	$510
Add: cost expensed in relation to acquisition opportunities	$819	-
Add: share of loss on investment in associate	$273	-
Underlying EBITDA	$85,033	$65,744

• Represents pro-forma 1H22 contracted utilisation as disclosed in NEXTDC's market announcement on 31 January 2022

• Comparative information has been restated to reflect the change in accounting policy and prior period restatements detailed in note 2

1

For personal use only

NEXTDC Limited

Directors' Report

31 December 2021

(continued)

Operating and financial review (continued)

NEXTDC has a clear strategy to differentiate its services through in-house engineering innovation and the adoption of new technologies in power and cooling systems. In addition, NEXTDC is committed to delivering a world-class customer experience with continued investments in internal systems and processes, with the ongoing implementation of online platforms to automate and integrate the management of the entire customer journey through the life cycle of their data centre services with NEXTDC.

These investments position NEXTDC to deliver significant customer benefits, reinforce its market differentiation over the longer term and deliver scalable growth, generating operating cost efficiencies and increasing revenue.

A summary of consolidated revenues and segment EBITDA for the period is set out below:
	Segment revenues	Segment EBITDA
	1H22	1H21	1H22	1H21
Consolidated entity	$'000	$'000	$'000	$'000
Victoria	51,077	39,527	40,507	29,080
New South Wales/ACT	67,882	59,049	49,406	41,514
Queensland	13,020	11,821	10,043	8,581
Western Australia	11,274	9,996	8,006	6,836
Other	1,257	1,229	267	244
Total segment revenue/EBITDA	144,510	121,622	108,229	86,255

Segment EBITDA reconciles to Group EBITDA as follows:
	1H22	1H21
	$'000	$'000
Segment EBITDA	$108,229	$86,255
Less: employee benefits expense (non-facility staff)	($14,881)	($13,955)
Less: overheads and other expenses	($10,993)	($7,561)
EBITDA	$82,355	$64,739

Operational developments and performance

NEXTDC invested $260.7 million during the half-year to progress capital development projects. M2 Melbourne added 3MW of capacity to support contracted customer requirements. Construction works continue at pace at NEXTDC's third generation S3 Sydney and M3 Melbourne facilities, with S3 Sydney practical completion of Stage 1 on target for 2H22 with 12MW of initial capacity. M3 Melbourne is on target for practical completion in 1H23 with 13.5MW of initial capacity and a further 4.5MW being added to support early customer contracted requirements. NEXTDC's first edge location SC1 Sunshine Coast was also acquired as an operational site with 0.2MW of built capacity and target capacity of 1MW+.

Investment continued into our AXON customer connectivity platform, with NEXTDC being named one of the select group of AWS (Amazon Web Services) Direct Connect High Capacity Service Delivery Partners globally. Additionally, NEXTDC has further expanded its footprint of direct hosted public cloud on ramps subsequent to period end, with the addition of a new Microsoft Azure ExpressRoute hosting location at S2 - NEXTDC's fourth ExpressRoute location nationwide. NEXTDC has built one of the most cloud connected and enabled data centre footprints in the country providing customers with greater choice and support when building hybrid architectures that are built to scale.

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