Macquarie Telecom's profit drops 42 per cent

Company blames capital expenditure program, flat revenue in managed hosting business

Macquarie Telecom (ASX: MAQ) has reported a net profit after tax of $11.3 million for 2013, down 42 per cent on last year’s profit of $19.6 million.

According to a statement released to the ASX, the company's profit was impacted by a flat revenue performance in its managed hosting business and a capital expenditure program which included the building of a $14 million Canberra security data centre called Intellicentre 4 to help protect government Internet gateways.

This resulted in increased depreciation and amortisation charges and a fall in interest revenue.

In an address to shareholders, Macquarie Telecom CEO David Tudehope said the company also experienced delays in receiving revenue from some federal government and corporate customers which had a short term impact on earnings in 2013.

“Our servicing of the federal government’s lead agency gateway and Intellicentre 2 [data centre] are on track to deliver long term profitable growth,” he said.

Capital expenditure for the fiscal year 2013 was $51.5 million, of which $29 million was spent on the expansion of hosting capacity in Sydney and Canberra. The remaining 22.5 million was business as usual capital expenditure.

Earnings before interest, tax, depreciation and amortisation (EBITDA) profit for the first half of 2014 is forecast to reach $14 million.

Macquarie Telecom plans to fit out a second data hall and install a third megawatt of IT load at its Intellicentre 2 data centre in the first half of 2015. This will cost approximately $11 million, of which $6 million will be spent in the second half of 2014.

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