Ann: Investor Presentation FY 2011 Results , page-4

http://www.psl.com.au/research/your-market-daily#VOC

Vocus Communications Limited (VOC) - BUY

Future proofing with Fibre

Vocus Communications (VOC) delivered an impressive headline FY11 result. EBITDA grew by 62.1% to $13.2m while NPAT grew by 112.4% to $8.1m. However, we caution that the result included $3.7m of FX gains and an effective tax rate of 20.6%. Nonetheless, the result was strong with underlying EBITDA growth of 48.4%. We continue to rate VOC's scalable business model which is driven by continued growth in internet traffic, data consumption and data storage. We retain our BUY recommendation with a target price of $2.55 (from $2.80).

* FY11 result key points:
o Revenue of $30.7m (up 75.6%);
o EBITDA of $13.2m (up 62.1%), underlying EBITDA of $10.2m;
o NPAT of $8.1m (up 112.4%), normalised NPAT of $7.2m (only normalising for tax);
o Normalised EPS of 11.4c up from 7.0c; and
o Operating cash flow of $11.4m up from $5.8m.
* Forecasts downgraded by circa 10.0%. Our FY11 forecasts factored in a lower FX gain of circa $2.2m (vs $3.8m actual). Despite strong FY11 EBITDA growth, VOC missed our expectations. Our new forecasts imply underlying EBITDA growth of 60.7% and NPAT growth of 14.7% (impacted by higher D&A, interest and tax).
* Lots to keep VOC busy in FY12. Away from continuing growth in the underlying business, which we are confident will eventuate, we believe VOC will work to fill the existing Data Centre space while building out additional Fibre in CBD locations. Alone, these offerings should all command organic growth, however coupled with cross selling the opportunity is even greater (only 26% of current customers buy more than one product).
* 'Fibre is the future'. VOC noted its intention to spend up to $5.0m in FY12 expanding its current Fibre network. With an expanding sales, operational and management team and strong demand for Dark Fibre, we believe Fibre will become a key product offering for VOC. Albeit, earnings are likely to flow in FY13 rather than FY12.