Slide 1: Gamma Results H1 2018
Clear. Creative. Communications. Gamma Results Hi 2018 Andrew Taylor, CEO Andrew Belshaw, CFO
Slide 2: H1 2018 agenda
H1 2018 Performance highlights and business update Andrew Taylor Initial priorities and observations Andrew Taylor H1 2018 Financial Review Andrew Belshaw Outlook and priorities moving forward Andrew Taylor Q&A 2 © Copyright Gamma 2018
Slide 3: H1 Performance Highlights and Business Update
H1 Performance Highlights and Business Update \
Slide 4: Strong financial performance
Strong financial performance: Revenue £137.6m (+18.3% against H1 2017) EBITDA £21.8m (+30.5%) Adjusted EPS 13.4p (+28.8%) • Strong growth across all key products, with increased upselling and cross selling across all sales channels • Continued focus on market development and investment to strengthen
Slide 5: Product Performance
* Product b ¢ Performance oN
Slide 6: Product Unit Growth in H1 2018
Unit Growth Product in H1 2018 Comments SIP Trunking 680k to 766k • 6% Market Growth over the period* (+13%) • Margins consistent with previous periods • Consolidated No 1 position in the market – growth in market share • Increasing sale of SIP Trunk Call Manager, representing 17% of SIP Sales; prot
Slide 7: Product Unit Growth in H1 2018
Unit Growth Product in H1 2018 Comments • Good growth in a saturated market – small market share (3%) Business 76k to 85k • 2.5% market growth (Business Broadband Market) during the period Broadband • Cost base reductions in Q2 enabling better pricing to improve growth and maintain (+12%) margins •
Slide 8: Business Unit Performance
Business Unit Performance a
Slide 9: Indirect channel: 75% of Group revenue
75% of Group revenue – £103.1m (2017: £89.8m) Active Channel Partners grew from 1,089 to 1,146 – Channel continues to attract new partners, with an increased number of IT focused Partners Focus on enabling partners to take a larger share of the business market with cross-sell and upsell programmes W
Slide 10: Direct business: 25% of Group revenue
25% of Group Revenue – £34.5m (2017: £26.5m) Primary focus on Enterprise and Public Sector with several new contract wins and re-signs during the period Significant increase in contracted revenue backlog, providing positive growth through 2018 and beyond Achieved Stage-1 compliance on HSCN accredita
Slide 11: Priorities and initial observations
Priorities and initial observations
Slide 12: Smooth transition and successful CEO handover
Smooth transition and successful CEO handover (internally / externally with our partners and customers) Ensuring Business Continuity, and continued delivery of our business and financial commitments Understanding of our business, people and culture, including our priorities both today and in the fut
Slide 13: Marketplace, culture, team, products, business model
Marketplace Gamma Culture and Core Values Gamma Team Products Customers and Channel Partners Business Model Vision and Strategy 13 © Copyright Gamma 2018
Slide 14: © Copyright Gamma 2018
14 © Copyright Gamma 2018
Slide 15: Strong organic growth
Strong organic growth – Revenue up 18% to £137.6m EBITDA up 31% to £21.8m Adjusted EPS up 29% to 13.4p Cash generated by operations up 66% to £18.4m Interim dividend up 11% to 3.1p Cash balance £36.9m as at 30th June Note that all figures are stated under new accounting policies and classifications
Slide 16: Changes in accounting standards and presentation
Six months ended Year ended 30 June 30 June 31 December 2018 2017 2017 Changes in accounting standards and (Restated) (Restated) Growth Revenue 137.6 116.3 242.0 18.3% presentation – little effect on EPS Cost of sales (75.3) (64.7) (133.3) Gross profit 62.3 51.6 108.7 20.7% Gross profit margin 45.3%
Slide 17: Indirect business: traditional held steady in H1
Revenue (£m) 120.0 100.0 80.0 60.0 Growth 40.0 Traditional Traditional business held steady in H1 – carrier business 20.0 offset “calls and lines” decline 0.0 H1 2017 H2 2017 H1 2018 SIP and Cloud PBX continue to grow strongly Gross Profit (£m) Data performing well in price-competitive market 60.0 4
Slide 18: Direct business continues to grow fast
Revenue (£m) 40.0 30.0 20.0 Growth Traditional 10.0 0.0 Direct business continues to grow fast, driven by Enterprise and H1 2017 H2 2017 H1 2018 Public Sector Gross profit (£m) 20.0 Margins settling around 45% (H1 2017 – 45.7%; H1 2018 – 15.0 45.5%) as mix settles 10.0 Growth Traditional 5.0 Changes
Slide 19: Remain debt free with strong cash reserves
Balance Sheet as at 30 June 30 June 31 Dec (£m) 2018 2017 2017 Non-current assets (incl. PPE) 63.1 50.5 57.3 Receivables and 75.1 64.4 64.8 inventories Remain debt free with strong cash reserves Cash 36.9 28.7 31.6 Current assets 112.0 93.1 96.4 Total assets 175.1 143.6 153.7 Cash conversion at 84.4
Slide 20: Adopted IFRS 15 and IFRS 16
Adopted IFRS 15 and IFRS 16 – Adjusted EBITDA Adjusted EPS (FD) the latter early and only H1 2018 H1 2017 H1 2018 H1 2017 affects 2018 £m £m Growth p p Growth Consistent with 2017 presentation and accounting 25.2 19.7 28% 14.4 11.6 24% policy Share Based Payments (“SBP”) no longer shown as “adjustme
Slide 21: Changes also affect cashflow classifications
Changes also affect cashflow Cash generated by operations Conversion of EBITDA classifications H1 2018 H1 2017 H1 2018 H1 2017 £m £m Growth CPE no longer capital spend – Consistent with 2017 presentation and accounting policy 22.5 15.3 47% 89% 78% effectively shown as deferred payment (working capit
Slide 22: Outlook and Priorities moving forward
S Outlook and Priorities moving forward oS ‘ N ‘
Slide 23: Mid-long term market outlook continues to be positive
Mid-long term market outlook continues to be positive, driven by strong growth drivers in our Key Product Development activities include: key Products • WIFI Calling Application launch scheduled for Q4 2018 Momentum in SIP Trunking is expected to • 4G back-up service launch date scheduled Q4 2018 co
Slide 24: Priorities moving forward
Continue to execute against our commitments and strengthen our capabilities across Gamma’s core products, channels and markets Continued focus on quality and operational excellence across our business Continue to focus effort on strengthening our capabilities to support the indirect channel to be su
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Slide 26: © Copyright Gamma 2018
© Copyright Gamma 2018
Slide 27: © Copyright Gamma 2018
27 © Copyright Gamma 2018