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The seven-year growth: Macquarie Group delivers on EBITDA again

Macquarie Park Intellicentre IC3 NEW.jpg

In its full year financial results, Macquarie Telecom Group reported its seventh consecutive year of EBITDA growth.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) reached A$73.8 million in the year ending 30 June, an increase of 13% on the prior year. Further, conversion of EBITDA to operating cash flows generated total operating cash flows of $45.3 million during the year.

Full year revenue increased 7% to reach of $285.1 million, compared to $266.2 million for FY20.

Chairman Peter James said: "The 2021 full year results delivered the seventh consecutive year of EBITDA growth underpinned by our strategy of investing in data centres, cloud & cyber security, including the recent announcement of our new IC3 Super West development, which will provide significant customer growth opportunities in the future.”

However, telecom revenue and EBITDA was affected by Australia's Covid lockdowns, which Macquarie said reduced the office based higher margin voice usage and access lines. This is partially offset by demand for new technologies including SD-WAN, but telecom depreciation is expected to remain broadly flat at $17 to $18 million in FY22, while hosting will increase from $31.2 million in FY21 to $53 to $56 million in FY22 (of which $34 to $36 million is data centres).

Full year FY21 capex stood at $139.1 million, compared to $64.1 million the previous year and this was driven by growth capex of $103.6 million primarily relating to investment in IC3 East in Macquarie Park (pictured) and IC5 South Bunker in Canberra. Customer related Capex was $21.8 million, while maintenance Capex was $13.7 million.

Macquarie Telecom has now completed work on IC3, drawing down $84 million of the debt facility this financial year. As of 30 June 2021, there was a closing cash balance of $19.8 million and undrawn debt facilities of $58 million.

Flowing from these increased levels of capital expenditure, net profit after tax was $12.5 million, a decrease of 7.4% on FY20 and reflective of the increase in depreciation and amortisation.

Group chief executive, David Tudehope said: “We have decided to increase our investments in Cyber Security, people and technology, to benefit from the increasing demand for business and government to uplift their security defences.

“Our outstanding customer experience as measured by a Net Promotor Score of over 75 has been even more important to our customers as they rely to a greater extent on telecom and cloud services as their staff are predominantly working from home as a result of Covid-19.”

On the outlook, EBITDA is expected to continue on its current trajectory in FY22, due to investments in data centres, cloud and public sector contracts. Development will focus on public cloud capability to enhance the current hybrid cloud offering and, on demand, the expectation is for "strong demand for cyber security in our government and cloud services businesses". There will be "significant investments in FY22" to support this.

 

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