Redcentric Plc · LSE:RCN
Redcentric — FY2017 Earnings Presentation
17 slides from Redcentric's earnings presentation, June 2017
Slide 1: FY 2017 Year End Roadshow
FY 2017 YEAR END ROADSHOW Fraser Fisher - CEO Peter Brotherton - CFO Slide 1 | © Redcentric 2017
Slide 2: Overview
OVERVIEW • Its been a very difficult & challenging year for Redcentric but the past is nearly behind us and we are focussed on looking forward • FY17’s results are in line with the Board’s revised expectations • Our existing customers have stayed with us and we can develop those relationships • We a
Slide 3: FY17 Financial Highlights
FY17 FINANCIAL HIGHLIGHTS • £104.6m revenue • Recurring revenue of £90.2m (86.2% of total revenue) • Adjusted EBITDA* of £17.3M, representing a margin of 16.5% • Gross profit margin 58.6% • Adjusted EPS** 4.45p. Statutory EPS loss of (1.60)p • Adjusted profit after tax £6.6m • Net debt £39.5m at Mar
Slide 4: Accounting Misstatements
ACCOUNTING MISSTATEMENTS • During the last seven months the March 2016 Balance sheet has been reviewed by: • Deloitte during the forensic review • PWC during the re-audit of the subsidiary accounts • KPMG during the 2017 audit • Net asset prior year adjustments totalling £15.8m have been made to the
Slide 5: Income Statement
INCOME STATEMENT Unaudited Unaudited 2017 Restated Operating costs comprise: £’000 2016 Note £000 £000 • UK staff costs 24,646 • Office and data centre costs 8,532 Revenue 104,623 102,363 Cost of sales (43,304) (44,553) • Network and equipment costs 5,804 Gross profit 61,319 57,810 • Offshore costs
Slide 6: Cash Flows
CASH FLOWS Unaudited 2017 £000 • The cash flow statement reflects a £9.7m catch Operating cash flow before non-recurring costs and movements in working capital 17,273 up of supplier payments: Movements in inventories and trade and other receivables 1,785 • Prior to the forensic review, suppliers Mov
Slide 7: Strengthening the Business
STRENGTHENING THE BUSINESS • Finance team strengthened with new credit manager, financial controller and management accountants • Improvements made to internal systems and controls with a robust process and control framework • Legacy systems being replaced with standard integrated Microsoft product
Slide 8: Existing Customers Are Staying
EXISTING CUSTOMERS ARE STAYING WHAT IT MEANS TO WHAT WE WON – Retention of the DWP Data Warehouse platform as a service solution and oracle THE CUSTOMER database as a service managed service provision Consistent, proven, modern, HOW MUCH IT’S WORTH – £3.8m reliable and secure hosting platform for cr
Slide 9: We Can Grow Existing Relationships
WE CAN GROW EXISTING RELATIONSHIPS WHAT IT MEANS TO WHAT WE WON – Virtual Desktop Infrastructure (VDI) THE CUSTOMER HOW MUCH IT’S WORTH – £2.9m Able to provide their teams CONTRACT TERM – 5 years from Jan 17 with clinical, social care and back WHY WE WON – Ability to offer a fully managed option wit
Slide 10: We Are Winning New Business
WE ARE WINNING NEW BUSINESS WHAT IT MEANS TO WHAT WE WON – Wide Area Network, Hosted Telephony, Wi-Fi and Mobile Services THE CUSTOMER HOW MUCH IT’S WORTH – £4.6m Operational effectiveness, reliability CONTRACT TERM – 5 years from Sept 16 and wireless driven customer WHY WE WON – Technical capabilit
Slide 11: Sales Momentum and Key Metrics
Redcentric lines of business size and market growth SALES MOMENTUM 100% Infrastructure & Cloud 90% KEY METRICS AND TARGETS 80% Security • 45 new name clients in H2, 88 new names in FY17 70% Applications Relative gross margins (£23.9m TCV) 60% • We continue to leverage client relationships & strength
Slide 12: Operational Progression
OPERATIONAL PROGRESSION OFFSHORING, AUTOMATION & COST REDUCTION Hyderabad transition activities completed: Automation: • Provisioning of all MPLS networks • Customer monitoring • Provisioning of all Microsoft Updates • Router and Firewall patching • Provisioning of all VOIP (voice over internet) pro
Slide 13: Summary and Outlook
SUMMARY AND OUTLOOK POSITIVE OUTLOOK • Its been a difficult time for all of us • Core business remains strong with high level of recurring revenues • Redcentric has moved quickly and continues to strengthen its internal controls and processes through 2017 • Our existing customers have stayed with us
Slide 14: Appendices
APPENDICES Fraser Fisher - CEO Peter Brotherton – CFO June 2017 Slide 14 | © Redcentric 2017
Slide 15: Hybrid Cloud Strategy
HYBRID CLOUD STRATEGY Hybrid Cloud is the primary Cloud usage model for foreseeable future. Achievements (Gartner Datacentre survey). • Microsoft business unit established. Microsoft Cloud Solution Provider (CSP) Silver Cloud competency achieved, working to Gold • Cloud Connectivity established to M
Slide 16: Security Market Opportunities
SECURITY MARKET OPPORTUNITIES Principles Connectivity • Security, assurance and governance underpins everything we do. • Assured Secure Cloud Connectivity (Amazon; Microsoft; PSN; Our first priority is to protect our customers and earn their trust. HSCN) • Hybrid cloud creates new security challenge
Slide 17: High Quality Service Standards
HIGH QUALITY SERVICE STANDARDS DEMONSTRATING A HIGH QUALITY SERVICE ISO9001:2008 Quality Management Dec 2011 ISO20000:2011 Service Management March 2017 Consistency in delivery of services. Ensuring products and services consistently meet customers’ requirements. A culture of continuous improvement