Annual Report for the YEAR 1 JULY 2013 to 30 JUNE 2014
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1 JULY 2013 TO 30 JUNE 2014 NEXTDC Limited ABN 35 143 582 521 Annual Report FOR THE YEAR 1 JULY 2013 TO 30 JUNE 2014 2 4 6 16 24 57 58 72 122 124 126 129 FY14 1 JULY 2013 TO 30 JUNE 2014 NEXTDC Limited ABN 35 143 582 521 1 NEXTDC LIMITED ANNUAL REPORT 30 JUNE 2014 Letter from the Chairman Operational performance and cost management are a key focus to ensure the Company is strongly positioned for growth and to deliver the financial performance and shareholder value that investors require. Douglas Flynn, Chairman On behalf of the Board of Directors and NEXTDC Limited, it The completion of our capital recycling program with the I was honoured to take over as Chairman of the Board We believe the Company’s new Board has the strength, is my pleasure to present NEXTDC Limited’s fourth Annual Asia Pacific Data Centre Group raised approximately $140 from Mr Ted Pretty in April 2014. Ted has remained on the independence and breadth of experience required to Report. million across the 2013 and 2014 financial years. The investor Board as a Non-executive Director and I’d like to take this build long term shareholder value. Your Directors and response to NEXTDC’s five-year senior unsecured notes opportunity to thank him for guiding the Company during management team look forward to a period of stability as The past financial year has been transformational with offering in June 2014, which raised $60 million of debt what was a key period of change. Ted continues to make NEXTDC progresses from a developing start-up company to NEXTDC experiencing significant growth across all financial funding, further demonstrated market confidence in the an important contribution to the NEXTDC board given his a more mature and profitable company. and operating performance metrics. The Company achieved Company’s growth strategy. This notes offering provides extensive experience and depth of understanding of the growth in number of customers, installed capacity, contracted While many key strategic objectives have been met during NEXTDC with improved funding flexibility to support the Australian IT&T and investment banking sectors. customer utilisation and contracted recurring revenue, the 2014 year, we are cognisant of the importance of ongoing growth demands of the business. revenue pipeline as well as revenue received from data centre As part of this Board evolution, Mr Roger Clarke and Mr creating value for our shareholders and continue to adopt services. In July 2014, NEXTDC was admitted to the Australian Gregory Baynton retired as non-executive directors in April a disciplined approach to capital allocation. Operational Government Data Centre Facilities Supplies Panel, an 2014. Both were directors of the Company from its listing in performance and cost management are a key focus to In cementing NEXTDC’s position as Australia’s leading Data- achievement that enables the Company to contract with December 2010, and on behalf of the Board I wish to thank ensure the Company is strongly positioned for growth and Centre-as-a-Service (DCaaS) provider, we saw the completion Federal Government departments and agencies and provide Roger and Greg for their commitment and tireless efforts to deliver the financial performance and shareholder value of the S1 Sydney and P1 Perth data centres during the Government with a new level of scalability and flexibility in during their tenure. that investors require. year, fulfilling the Company’s vision for an initial network of data centre services nationally. five operating data centres situated across Australia. From In October 2013, the Company’s founder and initial CEO, I take this opportunity to acknowledge the hard work and February 2014, NEXTDC began booking revenue from each of Innovation is the key foundation of our growing business. Mr Bevan Slattery retired from the Board. On behalf dedication of our staff and management team lead by our its facilities. Delivering a network of world-class data centres It is how we have developed our position and reputation in of the Board I acknowledge Bevan’s strategic vision in energetic CEO, Craig Scroggie. Over the past year their is complex and capital-intensive, and to be able to achieve the market, and are increasingly differentiating ourselves revolutionising data centre services in Australia, and his dedication, commitment and focus has been instrumental that outcome in a relatively short timeframe is a testament to from our competitors. One example of this is our ONEDC® leadership within the nation’s ICT industry. Bevan created in helping the Company achieve a strong financial position the drive and focus of the entire NEXTDC team. solution developed by our internal technical team as an open, a culture of innovation, hard work and entrepreneurial spirit and develop a high quality range of products a that further vendor independent, holistic on premise software appliance which continues within NEXTDC. We thank him for his strengthen our unique business model. As Australia’s only truly independent data centre provider with combined with a web based Software-as-a-Service (SaaS) significant contribution in establishing the platform that has a strategic footprint in all major growth markets, NEXTDC Lastly, I would like to thank you, our shareholders for your platform for customers to efficiently manage their data centre allowed the Company to remain at the forefront of industry offers its customers the ability to interact and connect with continued support and invite you to attend our upcoming IT infrastructure anywhere in the world. Our engineering innovation. We wish all our previous Directors well in their new communities within the Company’s growing ecosystem Annual General Meeting. team continues to drive innovation in data centre design and future endeavours. of carriers, internet service providers (ISPs) and other relevant power and cooling efficiency such as the integration of M1 service providers. Through a single provider with the flexibility The Company received its first strike against the 2013 Melbourne’s solar array. and scalability of NEXTDC’s data centres, our customers Remuneration Report with shareholders expressing provide a myriad of transformative applications to help There were a number of board changes throughout the year, concerns about NEXTDC’s corporate governance and businesses take advantage of the cloud computing revolution. with Stuart Davis and myself joining in September 2013 as remuneration structures. Significant efforts have been independent non-executive directors, and Dr Gregory Clark made to engage with stakeholders and consult experts During the year we signed a number of significant customer joining as an additional independent non-executive director in prior to implementing revised policies and remuneration Douglas Flynn contracts, including well-known national and international April 2014. structures that the Board believes better meet stakeholder Chairman enterprises such as Amcom, Telstra, NEC and Tata requirements. For example, the Board has significantly Communications. Colocation and managed hosting services Dr Clark is a world-renowned technologist, businessman enhanced disclosure in the 2014 Remuneration Report in in Australia are expected to grow strongly over the next few and scientist with extensive governance, corporate and response to the feedback received. I encourage you to read years driven by the adoption of cloud computing and NEXTDC commercial expertise globally. His previous board experience the report, included in the enclosed Directors Report from is very well placed to capitalise on this growth. includes nine years on the Board of ANZ Banking Group page 24. where he chaired the Board Technology Committee and was a member of the Risk and Human Resources Committees. He has been appointed to chair NEXTDC’s Remuneration and Nomination Committee. 2 3 NEXTDC LIMITED ANNUAL REPORT 30 JUNE 2014 Letter from the CEO Our innovation differentiates our offering in the market, attracts customers and further enhances NEXTDC’s position as the leading national provider of carrier and vendor-neutral data centre services in Australia. Craig Scroggie, CEO The 2014 financial year was a pivotal year in NEXTDC’s short With all facilities now operational and generating revenue Sustainability is not just a buzz word inside NEXTDC. NEXTDC has come a long way in a short space of time. history, with the Company achieving significant growth for the coming full year, we are confident that the Company We were recently recognised by the City of Melbourne This would not have been possible without our people across all key operational and financial metrics and moving will generate positive operating cash flows in FY15. for our leadership in renewable energy production from and we recognise our NEXTHEROES and staff as valued closer to generating positive cash flows. Achieving positive cash flows will be a key milestone in the fully operational rooftop M1 solar array. We are contributors. We look forward to continuing NEXTDC’s NEXTDC’s short history and will provide further funding empowering our customers by delivering game-changing, employee engagement, development and recognition As a critical infrastructure provider, NEXTDC hosts a number flexibility to underpin future growth. real-time analytical information on their energy usage initiatives. We also value and prioritise employee health and of the leading international and domestic public and private from our DCIM platform. The team at NEXTDC is proud safety in our workplace, and have a pleasingly