October 2016 - Enterprise Cloud & Network Infrastructure · PDF fileInvestor presentation ....

Investor presentation October 2016

Transaction summary

1

• Interoute is a leading information communication technology and cloud company with the largest Pan-European integrated fibre network

• Interoute acquired Easynet, a leading European provider of IT infrastructure products and services, in October 2015

− The integration is on track and the transaction is expected to generate run rate synergies of €31.9m, above the originally expected run-rate synergies of €24.4m

• The combined entity had €747m pro forma revenue (+4.2% y-o-y) and €175m pro forma synergy adjusted EBITDA (+5.9% y-o-y) as of LTM June ‘16

• On the back of this strong momentum, Interoute plans to issue a new €250m Term Loan B with proceeds used for the repayment of the existing €240m Floating Rate Notes (“FRNs”) that are callable, for transaction fees and general corporate purposes

• Transaction is approximately leverage neutral with pre and post net leverage of 3.7x

1. Business overview

2. Credit highlights

3. Historical financials

3.1. Interoute

3.2. Easynet

3.3. Pro forma

Table of contents

2

Interoute at a glance

3

Key figures – Interoute What we do

c.€2.0bn Network

€747m Revenues(1)

(1) Pro Forma LTM June ‘16 combined financials for Interoute and Easynet. (2) Financials for Stand-alone Interoute (excluding Easynet) only. (3) Interoute’s available route kilometres amount to approx. 70,000. (4) Based on current FX rate of GBP/EUR of 1.17. Certain factors for achieving our synergies are outside of our control and may result in increased costs, decreased revenues and the diversion of management’s time and energy. Even if the operations of

Interoute and Easynet are integrated successfully, we may not realize the full benefits of the acquisition or the expected synergies, cost savings or sales or growth opportunities. These benefits may not be achieved within the anticipated time frame, or at all. Any failure to realize such results could have a material adverse effect on our business, results of operations and financial condition.

€175m PF Synergy

Adj. EBITDA(1)

>10 yrs Management

• Largest pan-European fibre network; approx. 70,000 route km of fibre

• 33 colocation centres, 15 data centres

• 92% recurring revenues; less than 1% churn(2) • €1.3bn of revenue under contract (2) • c.10% revenue CAGR ‘08-’15(2)

• c.61% gross profit margin(1)

• c.23% PF Synergy adj. EBITDA margin – significant operating leverage(1)

• 24% adjusted EBITDA CAGR ‘08-’15(2)

• Disciplined on opex/capex, delivering growth • Long term, supportive shareholders

Interoute owns and operates the largest pan-European fibre network(3)

€32m run-rate synergies

• Easynet integration on track • Increase of full run-rate synergies from €24m

to €32m(4)

Provide network and enterprise services

across Europe…

…to multinational and national enterprises,

telcos, mobile operators and OTT providers…

…leveraging the largest pan-European fibre

network(3) and extensive cloud infrastructure…

…with a fully integrated offering to

differentiate from the competition and to

increase asset utilisation

Transport

Infrastructure

Computing

VPN & Security

Communications

Interoute - product portfolio, selected customers and competitors En

terp

rise

Serv

ices

N

etw

ork

Serv

ices

OTT providers

Highly competitive and integrated service offering addressing a diversified customer base

€130m

€103m

€149m

€61m

€39m

PF LTM June ‘16 revenue

contribution

67%

80%

50%

78%

74%

PF LTM June ‘16 gross profit

margin

• Carrier Ethernet

• Wavelength, SDH, Ethernet

• Internet Service

• Managed Cloud • Virtual Data Centre / IaaS

• Data Centre / Co-location • Application Management • VPN • Security • Corporate and Government

Network services

• Duct

• Dark Fibre

• Voice & Video Conferencing • Virtual Voice Networking • Business VoIP

Products examples Customer examples Competitor examples

€265m 52% • European Managed IT Services provider

35%

8%

17%

20%

14%

5%

Inte

rout

e

4 Notes: Our customers are well represented across a range of industries. Professional Services customers represent c.22%, Service and Entertainment c.33%, Retailers c.7% and Industrials and Technology c.38% of our

Enterprise Services business revenues as of LTM June ’16. Network Services business includes Internet Content Providers representing c.20%, mobile operators representing c.18% and traditional telecommunications representing c.62% as of LTM June ’16.

Infrastructure 8%

Transport 17%

VPN & Security 20% Computing

14%

Communications 5%

Easynet 35%

27

80 93 94

175

2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A June '16PF LTM

Growth and diversification over time Revenue growth with high visibility

Continued adjusted EBITDA growth

417 425 473

747

2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A June '16PF LTM

(€ in millions)

(€ in millions)

19.3%

21.8%

Adjusted EBITDA Adjusted EBITDA Margin

Note: As of LTM June ‘16, amongst VPN customers spending > €60k pa, c.84% purchased more than one product (c.18% purchased more than 5 products). (1) CAGR excluding Easynet. (2) Pro Forma LTM June ‘16. Pro Forma LTM June ‘16 EBITDA includes €4.9m of synergies realised. (3) Easynet revenues included in Enterprises Services. (4) Includes €31.9m full run-rate synergies, of which €4.9m realised synergies in period ending LTM June ‘16. Synergy figures based on current FX rate of GBP/EUR of 1.17.

Enterprise Services €556m

Network Services €191m

239 255 338

556 178 170

192

191

417 425

530

2013A 2014A 2015A PF LTM June '16

Enterprise Services Network Services

26%

74%

(€ in millions)

Diversified revenue streams

19.8% 23.4%

64%

36%

60%

40%

57%

43%

747

Diversified revenue stream via a disciplined and successful approach to organic and inorganic growth

(2)

(2)

(2,3)

5

Increased exposure to Enterprise Segment

Balanced product portfolio

Diversified European presence

PF synergy adjusted EBITDA

(4)

(LTM June ’16)

(LTM June ’16)

Benelux & Nordics 19%

UK 36% Italy & Spain

10%

France & Switzerland

11%

Germany & Austria

6%

Rest of World 13%

CEE 4%

Update on acquisition of Easynet

6 (1) Synergy estimate using FX rate of GBP/EUR 1.40. (2) Based on current FX rate of GBP/EUR of 1.17. Certain factors of achieving our synergies are outside of our control and may result in increased costs, decreased revenues and the diversion of management’s time and

energy. Even if the operations of Interoute and Easynet are integrated successfully, we may not realize the full benefits of the acquisition or the expected synergies, cost savings or sales or growth opportunities. These benefits may not be achieved within the anticipated time frame, or at all. Any failure to realize such results could have a material adverse effect on our business, results of operations and financial condition.

(3) As at 30 June ‘16, Interoute achieved €4.9m of previously targeted €24.4m total run-rate synergies and incurred €8.7m in integration costs.

Increased

exposure to Enterprise Segment

Geographical

Focus

Synergies well

on track

Network Services €191.2m

26%

Enterprise Services €556.0m

74%

Network Services €192.2m

41%

Enterprise Services €281.2m

59%

€473m

2015 Interoute Stand-alone Pro forma LTM June ’16

€747m

Benelux & Nordics

19%

UK 36% Italy & Spain

10%


11%

Germany & Austria

6%

Rest of World 13%

CEE 4%

31.9

4.3

13.8

Revisedrun-rate

Annualised6M 2016

(achieved)

P&L Annualised

24.4

Previous Estimatesrun-rate

(2) (1)

Attractive investment case remains intact and synergies are ahead of original plan

Benelux & Nordics

21%

UK 22%

Italy & Spain 12%


11%

Germany & Austria

8%

Rest of World 18%

CEE 6%

(3)

Interoute’s shareholders

Committed shareholders Investment rationale

Sandoz – founding shareholder

TMT is a core investment sector for shareholders

Compelling growth prospects in fibre demand,

bandwidth consumption, data centre needs,

integrated services and cloud deployment

Significant asset base with approximately €2.0bn

invested in infrastructure

Significant operating leverage

Successful and experienced management team

70% 30%

7




3.1. Interoute

3.2. Easynet

3.3. Pro forma

Table of contents

8

Credit highlights – Interoute

9

Large and structurally attractive market

Differentiated high capacity European fibre infrastructure platform

Highly innovative and competitive service offering verified by 3rd parties

Sustainable top-line growth with high revenue visibility

Growing EBITDA from operating leverage

1

2

3

4

5

€1.2bn

2014

7%

93%

16%

84%

Large and structurally attractive market

10

Addressable market – Enterprise Services(1) Addressable market – Network Services (Transport)(2)

Evolution of Interoute’s Enterprise Services revenues Evolution of Interoute’s Network Services revenues

1

(€ in millions) (€ in millions)

(1) Source: Frost & Sullivan and Gartner. Includes VPN (European VPN) and Cloud & Communications (Cloud System Infrastructure Services). Converted from USD to EUR using EUR/USD rate of 1.1. Market share defined as Interoute’s pro forma Easynet revenues for LTM June ‘16 for VPN & Security, Computing and Communications divided by total market size of €7.8bn.

(2) Source: Ovum. Includes Pan-European non-voice, non-incumbent, cross border data market. Market share defined as Interoute’s transport revenues for LTM June ‘16 divided by 2014 total market size of €1.2bn.

33%

67%

€7.8bn

2014VPN Cloud & Communications

€178m

€191m

2013 PF LTM June '16

€239m

€556m

2013 PF LTM June '16

Growth engine Stable and predictable cash flows

Differentiated high capacity European fibre infrastructure platform

11

Wide-spread network infrastructure spanning the European continent

Highlights

Largest pan-European fibre network(1)

Ownership over the majority of core network infrastructure

Low cost base infrastructure

2

Ownership of extensive and modern network allows low cost of delivery

Approx. 70,000 route km of fibre

29 countries

126 major cities

24 metro networks

33 co-location centres

15 data centres

17 virtual data centres

Connects 195 third party data centres

(1) Interoute’s available route kilometers amount to approx. 70,000.

Key network statistics

No legacy elements Significant available capacity

Highly innovative and competitive service offering verified by 3rd party sources

12

3

(1) Source: Gartner, June ‘16.

Leader in cloud enabled managed hosting - Europe(1) Best pan-European operator

Quality of offering recognised by external parties

Received best pan- European

operator in 2006, 2007, 2008, 2009,

2012, 2014 and 2015

“Unlike most other European providers, it caters both to pure-play digital service providers and to traditional enterprises”

Gartner

Niche players Visionaries Completeness of vision

Challengers Leaders

Abili

ty to

exe

cute

Sungard Availability Services

KPN

Attenda

Vodafone Fujitsu

NTT Communication

IBM Verizon

Century Link

Claranet Rackspace

BT

151 168 155 162

Q3-15 Q4-15 Q1-16 Q2-16

9% <47%

Sustainable top-line growth with high revenue visibility

13

Diversified customer base(1) Multi-years contracts(4)

Enterprise ICT

Transport

Infrastructure

3-5yrs

4-5 yrs

10-15 yrs

(1) Total customer base of approximately 9,000 as of June ‘16, of which 2,952 excluding Easynet. (2) Increase in revenue under contract as at the end of each period from either net new contracts signed or old contracts renewed during the relevant period. (3) Within Enterprise Services top 10 customers represent c.13% and within Network Services c.16% (LTM June ‘16). (4) In 5 years prior to Dec 2015, we experienced only 92 hard disconnects (excl. Easynet).

Stable signed contracted value (“SCV”) (2) Breakdown revenue under contract for Interoute stand-alone

Revenue under contract (order backlog) : €1.3bn as of June ‘16

Top 1Top 1–10

Top 1–25

9%

<3%<11%

<19%

c.65%

<36% Top 1–100


Predictable revenue stream driven by sustainable multi-year contracts and high order backlog

(3)

• Over 6.2 years relationship with top 5 customers

429

271

162 96 61

239

2016 2017 2018 2019 2020 >2020

€636m SCV for LTM June ‘16

4

Geneva Prague

Sofia

London

Shepton

2005 - London operations moved to Prague

2011 - Geneva Hosting operations centre (acquired as part of PSI.NET) moved to Prague

2012 - Move of primary operational support from Prague to Sofia

2016 - Move of Easynet’s Shepton Mallet operations to Sofia

Growing EBITDA from operating leverage

14

5

Common operating and business support system

Migration of staff and operations to lower cost geographies

Process automation enabling headcount rationalisation

Tight cost control on 3rd party local access providers

Sustained operating leverage

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Revenue Network costs Operating costs Capex

1

2

3

Operating leverage based on increasing asset utilisation and tight cost control

Continued cost optimisation through moving operations(2)

1

2 3

4

4

(1)

Notes: Interoute has regional field operations staff in 23 cities across Europe that are responsible for their training and oversight, as well as 67 spare centres with key operations and maintenance contractors in addition to on-site spares.

(1) 2015A Interoute financials are combined for Easynet’s financial results post acquisition on 15th October 2015. (2) We estimate that our cost of operations in the Czech Republic and Bulgaria are €51,000 and €17,000 per employee, respectively, compared to €92,000 in the United Kingdom (excluding Easynet).




3.1. Interoute

3.2. Easynet

3.3. Pro forma

Table of contents

15

Interoute stand-alone revenue by segment and by type

Comments

• Our Key KPI is new net monthly recurring revenue (MRR), calculated net of churn

• Enterprise Services net MRR has been stable over the years – impacted by one-off cease from Nokia in Q4 ‘15

• Network Services increased due to growth in Transport segment – (FY ‘15 included a large one-off deal of c.€19k)

• Q2 ‘16 was the highest delivered on new MRR for the last 12 months; H1 ’16 average net MRR was €191k

• Stable churn over past years at low levels

• Total revenue CAGR of 6.6% for 2013-2015 − Organic revenue CAGR (excl. Vtesse) of 3.5% from 2013-

2015 • High and stable recurring revenue base: increased from

89.2% in 2013 to 91.7% in 2015 • Revenue growth predominantly driven by Enterprise

Services • Growth in Network Services in 2015 primarily driven by

acquisition of Vtesse (September 2014)

Revenue by segment

16

High recurring revenue and strong revenue growth

(1) Average new net monthly recurring revenue is calculated net of any churn. Based on delivered MRR. (2) LTM June ‘16 total net MRR of €191k with Enterprise Services of €155k (pre-one off Nokia cease of €17k) and Network Services of €35k. Churn of 0.7%.

239 255 281 291

178 170 192 192

417 425 473 482

2013A 2014A 2015A LTM June '16Enterprise Services Network Services

CAGR (‘13 – ‘15)

6.6% 89.2% 92.1% 90.2% 91.7%

4.0%

8.5%

(€ in millions)

(% of recurring revenue)

175 173 151

264 1 2 42

15

(17)

0.7% 0.7% 0.7% 0.6%

2013A 2014A 2015A Q2 '16

Enterprise Services Network Services One-off Nokia Cease Churn (%)

Average new net monthly recurring revenue (MRR)(1)

(€ in thousands)

176 175 193

279

(2)

(€ in millions) 2013A 2014A 2015ALTM

June '16CAGR

(13-15)

Total revenue 417 425 473 482 6.6%

Sales related costs (130) (130) (151) (161) 7.9%

Gross margin 287 295 322 321 6.0%

Gross margin % 68.9% 69.4% 68.1% 66.5% (0.5%)

Network costs (77) (82) (89) (90) 7.5%

Operating costs (119) (123) (139) (139) 8.0%

Integration costs – – (1) (4)

EBITDA 91 90 95 88 1.9%

EBITDA margin 21.9% 21.2% 20.0% 18.2% (4.4%)

One-off adjustments(1) (11) 3 (1) 3 NA

Adjusted EBITDA 80 93 94 91 8.0%

Adjusted EBITDA margin 19.3% 21.8% 19.8% 18.8% 1.3%

Comments

• Sales related costs as % of revenues relatively stable from 2013 to 2015

− Increase in LTM June ‘16 period from higher local tail costs to support VPN revenue growth

• Network and operating costs largely stable due to continued cost optimization (relocation of operations to lower-cost locations such as Prague and Sofia)

− Increased in 2015, primarily driven by acquisition of Vtesse (Sept-14)

− Also driven by additional headcount for delivery of increased revenue and to capture future growth

Interoute stand-alone gross profit and adjusted EBITDA

Overview

17 Notes: No supplier accounted for more than 5% of our OLO spend for the LTM June ‘16. (1) One-off EBITDA adjustments include primarily exceptional releases of deferred revenue, movement in the valuation of dark fibre stock, restructuring costs, dilapidation and onerous lease provision releases and other non-recurring items.

Strong track record of profitable growth




3.1. Interoute

3.2. Easynet

3.3. Pro forma

Table of contents

18

268 276

265

FY '14 FY '15 LTM June '16

Easynet stand-alone summary financials – revenues

Comments

• Negative average new net MRR broadly in line with expectations

• Ceases from the SME and channel business and certain dissatisfied enterprise clients carried over from previous ownership

• Improving net MRR in Q2 ’16 vs. Q1 ‘16, which was negative €188k

• Relatively stable revenues

• c.98% of Easynet’s revenues recurring in nature

• H1 ’16 revenue exposed to declines in SME, channel business and Enterprise ceases

Notes: Easynet summary financials based on Lux GAAP and converted from £ to € based on average of £1 = €1.38 for 2015 and average £1 = €1.24 for 2014. FY’14 refers to Dec’13 – Nov’14.

19

Positive net MRR and stable revenues in EUR terms

Average new net monthly recurring revenue (MRR)

Revenue

(€ in millions)

(118) (109)

1.1% 1.3%

FY '15 Q2 '16

(€ in thousands) Churn (%)

45

55 57

16.7%

19.8% 21.7%


Easynet stand-alone summary financials – profit and cash flows

Comments

• Adjusted EBITDA growth driven by cost improvements

• Continuous margin increase to 21.7% in LTM June ‘16

• Sustained high and stable cash flows

− Strong cash conversion of c. 82% in H1 ’16 and LTM June ‘16 driven by higher adjusted EBITDA and lower capex

− Adjusted EBITDA less capital expenditure increased historically

Notes: Easynet summary financials based on Lux GAAP and converted from £ to € based on average of £1 = €1.38 for 2015 and average £1 = €1.24 for 2014. FY’14 refers to Dec’13 – Nov’14. (1) Defined as (Adj. EBITDA – Capex) / Adj. EBITDA.

20

Adjusted EBITDA

28

42 47

63.2%

77.2% 81.9%


(€ in millions) Cash conversion(1) (%)

Adjusted EBITDA – Capex

(€ in millions) Margin (%)

Improvement in adjusted EBITDA and sustained high cash flow conversion




3.1. Interoute

3.2. Easynet

3.3. Pro forma

Table of contents

21

Operational update on combined business

22

132

(65) (84)

169

Q3 '15 Q4 '15 Q1 '16 Q2 '16

Delivered average positive new net MRR(1)

(1) Average monthly amount calculated as quarterly amount divided by 3. Incremental additional revenue from new sales delivered during a month and that will recur on a monthly basis, excluding any usage-based revenue and net of any churn.

(2) Q3 ‘15 results shown are excluding new MRR for a one-off deal. Q3-15 win of €229k has been removed from Q3-15 data. Including the win would result in an average net MRR of €208k for Q3-15.

Comments

• Net MRR returned to historic levels in Q2 ’16, in line with management expectations

• Q4 ‘15 and Q1 ‘16 showed elevated churn – explained by Easynet integration and one-offs at Interoute

• Churn levels of Interoute below industry standards

Churn rate

0.5%

1.2%

0.7%

0.6%

1.3%

1.4%

1.8%

1.3%

0.0%

0.5%

1.0%

1.5%

2.0%

Q3 '15 Q4 '15 Q1 '16 Q2 '16

Interoute Easynet

(€’000)

Negative net MRR in Q4-15 and Q1-16 driven by Easynet integration. Net MRR has been turned around and is showing positive growth

(2)

62

85

LTMJune '15

LTMJune '16

141 148

24 27

165 175

LTMJune '15

LTMJune '16

PF Adjusted EBITDA Synergies


Pro forma revenue Pro forma synergy adjusted EBITDA

Strong financial profile pro forma for Easynet acquisition

23

23.0%

PF synergy adj. EBITDA margin

Pro forma synergy adj. EBITDA – capex

(€ in millions)

37.4%

Cash conversion

Notes: Pro forma combined financials include the contribution of Easynet for 12 months. Acquisition integration capex has been excluded. (1) Originally anticipated full run-rate synergies of €24.4m. Synergy figures based on FX as of July 2015 (FX rate of GBP/EUR 1.40). (2) Includes €31.9m full run-rate synergies, of which €4.9m realized synergies in period ending LTM June ‘16. Synergy figures based on current FX rate of GBP/EUR of 1.17.

(2)

23.4%

(1)

48.5%

717 747

LTMJune '15

LTMJune '16

Combined business demonstrated strong growth and successful execution of synergies

• Structurally negative working capital primarily as a result of deferred revenue from long-term contracts

• In FY ‘15 negative working capital increased as a result of one-off proactive management action, partially offset in H1 ‘16

− Elevated trade creditors and deferred revenues balances and slightly lower trade receivables (comparing Dec to normalized level in Oct ‘15)

• In H1 ‘16 working capital was impacted by working capital seasonality and unwinding of pro-active management action

− Deferred revenue balance was lower in H1 ‘16 due one-off impacts

Consolidated pro forma capex & working capital

• Maintenance capex to maintain physical infrastructure • Base capex to keep recurring revenues flat

− Base capex growth driven by investment in 500Gb platform to enable the sale of 100Gb channels

− 90% of network has been upgraded • Strategic growth capex to support current and future growth • Estimated payback period of 24 months for Network Services and 13

months for Enterprise Services(3) for LTM June ’16 • Easynet capex expected to be relatively stable • Year end capex (excluding integration capex) expected to be in the range

of €87-92m for combined entity

(€ in millions)

Net working capital Capital expenditure by type (1)

24

Comments Comments

(€ in millions) Oct '15 Dec '15 June '16

Stock 2 1 0

Provisions (22) (23) (27)

Trade & other debtors 130 129 138

Prepayments and accrued income 67 61 64

Trade and other creditors (181) (195) (169)

Deferred revenue (208) (216) (196)

Net working capital (213) (242) (190)

15 13 13

28 26 29

38 49 36

12 16

10

94 103

89

FY '15 LTM June '15 LTM June '16Maintenance capex Base capex Strategic growth capex Easynet

(1) Excluding purchased buildings of €1.1m in H1 ‘16. Acquisition integration capex of €2.6m in 2015A , €1.6m LTM June ’15 and €4.1m LTM June ’16, respectively, has been excluded. (2) Combined estimated WC position. (3) We estimate our payback period by dividing our base and strategic growth capex by gross profit generated from revenues added over the last 12 months to compensate for annual churn (monthly avg. churn x 12 applied against LTM June ’16 revenues).

Related financials (in €m) for Enterprise Business – Implied Revenue Churn: (€19.1m) using 7.3% annual churn rate, Vtesse revenue increase of €2.3m, implying Added Revenue of €44.6m, Gross Profit of 28.5 based on 63.8% margin, base and strategic capex of €30.7m. Network Services - Implied Revenue Churn: (€20.5m) using 11.1% annual churn rate, Vtesse revenue increase of €2.1m, implying Added Revenue of €24.8m, Gross Profit of €17.5m based on 70.6% margin, capex of €34.5m. Based on Interoute stand-alone figures.

(2)

On a combined basis, we view an outflow relating to change in NWC in the range of €10-15m p.a. as a normal level in the absence of one-off impacts

Current trading update

25

Interoute

• Stand-alone total revenue and adjusted EBITDA to increase y-o-y for Q3 ’16 versus Q3 ‘15

Easynet

• Stand-alone revenues and adjusted EBITDA expected to decline slightly (on a constant currency basis) y-o-y for Q3 ’16 versus Q3 ‘15

• Decrease driven by anticipated decline in SME, channel business and Enterprise ceases

• Integration of Easynet is on track and delivered synergies are ahead of original plan

Notes: The above information is based on our management’s review of our preliminary results and estimates, which have not been audited or reviewed by any audit firm, and is not intended to be a comprehensive statement of our financial or operational results for the months ended 31 July 2016, 31 August 2016 and 30 September 2016. Our preliminary results are based on a number of assumptions and judgements, and as a result, reflect a certain level of uncertainty and remain subject to change. Our preliminary results for the months ended 31 July 2016, 31 August 2016 and 30 September 2016 may not be indicative of our results for any other period.

This presentation and the information contained herein (unless otherwise indicated) have been provided by Interoute Communications Holdings Limited (together with its subsidiaries, referred to as “Interoute”) solely for informational purposes.

This presentation is intended to present background information on Interoute, Easynet and their subsidiaries, their respective businesses and the industry in which they operate.

This presentation does not constitute investment, legal, accounting, regulatory, taxation or other advice, and neither this presentation nor the information contained herein takes into account your investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs.

This presentation contains forward-looking statements and projections. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause Interoute’s actual results, performance or achievements to be materially different from those expressed in, or implied by, such forward-looking statements. All forward-looking statements apply only as of the date hereof and we undertake no obligation to update this information. These forward-looking statements are only predictions and are subject to known and unknown risks, uncertainties, assumptions and other factors beyond Interoute’s control that are difficult to predict because they relate to events and depend on circumstances that will occur in the future some of which are not in the control of Interoute. Therefore, Interoute’s actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Interoute therefore cautions against relying on any of these forward-looking statements.

Certain data contained in this Presentation, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum of the numbers in a column or a row in tables may not conform exactly to the total figure given for that column, or row or the sum of certain numbers presented as a percentage may not conform to the total percentage given. This presentation presents combinations of Interoute and Easynet's financial and operating information, which has been prepared for illustrative purposes only and does not purport to represent what Interoute’s actual results of operations or financial position would have been if the acquisition and transactions had actually occurred, nor does it purport to project Interoute’s consolidated results of operations or financial position at any future date. The financial information of Interoute is presented in accordance with Luxembourg GAAP, and the financial information of Easynet is presented in accordance with IFRS. Additionally, certain pro forma figures for Easynet are presented in accordance with Luxembourg GAAP in order to be comparable with certain Interoute financial information. Because of these differences in reporting standards, the financial information of Interoute and Easynet are not directly comparable, and results may differ materially from these amounts.

The information contained in this presentation is provided as of the date of this presentation and may change materially in the future. Interoute is under no obligation to update or keep current the information contained in this document. The information contained in this presentation has not been independently verified. In particular, any estimates, projections, forecasts, targets, prospects or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption are based upon the best judgment of Interoute, subject to change without notice, and each recipient should satisfy itself in relation to such matters. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of Interoute, the Global Coordinator, the Bookrunners or any of their respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

Certain financial data included in this presentation consists of “non-IFRS financial measures.” These non-IFRS financial measures, as defined by Interoute, may not be comparable to similarly-titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or other indicators of the performance based on IFRS.

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