Slide 1: Gamma H1 2019 Results
tgs. we #e3:: Gamma Clear. Creative. Communications. Gamma H1 2019 Results Andrew Taylor, CEO Andrew Belshaw, CFO
Slide 2: Agenda
H1 2019 Performance Highlights & Business Update Andrew Taylor H1 2019 Financial Review Andrew Belshaw Gamma 2023 Strategic Plan – Update Andrew Taylor Business Outlook and Priorities Andrew Taylor Q&A 2 © Copyright Gamma 2019
Slide 3: Performance Highlights & Business Update
Performance Highlights & Business Update
Slide 4: Strong financial performance
Strong financial performance: Revenue £158.2m (+15% against HY 2018; organic growth was +9%) EBITDA £30.4m (+39%) Adjusted EPS 19.2p (+43%) • Strong growth across all key products, with a continued focus on upselling and cross selling across all sales channels • Indirect business grew strongly – str
Slide 5: Product Performance
Product Performance
Slide 6: Product Unit Growth in H1 2019
Unit Growth Comments Product In H1 2019 SIP Trunking 856k to 938k • 5.5% market growth over the period* (+10%) • Margins consistent with previous periods • Further consolidated No. 1 position in the market – growth in market share, now at 30% market share • Increasing sale of SIP Trunk Call Manager,
Slide 7: Product Unit Growth in H1 2019
Product Unit Growth Comments in H1 2019 • Good growth in a mature market – small but growing market share of 3.7% Business 94k to 103k • 1.1% market growth (Business Broadband Market) during the period* Broadband • Cost base reductions throughout 2018 enabling keener pricing to improve (+10%) compet
Slide 8: Business Unit Performance
Business Unit Performance
Slide 9: Channel: 70% of Group revenue – £110.9m
70% of Group revenue – £110.9m (H1 2018: £103.1m) Focus continues on enabling partners to take a larger share of the business market with targeted cross sell and upsell programmes Revenues continue to be unconcentrated, with our Top 10 Partners contributing 16% of channel revenue, and our largest pa
Slide 10: Direct: 25% of Group Revenue – £40.0m
25% of Group Revenue – £40.0m (2018: £34.5m) Several new contract wins including HMRC, Hogg Robinson, Inchcape plc, Bourne Leisure, NHS Lanarkshire and HM Land Registry Significant increase in contracted revenue and margin backlog In the Public Sector, Gamma was successful in achieving accreditation
Slide 11: Overseas: 5% of Group revenue – £7.3m
5% of Group revenue – £7.3m Nimsys acquired in February and performing ahead of expectations. Customer wins include - Avanade, Whitepages, Scott Brownrigg, ING and Rosewood Hotel Schiphol Connect successful in migrating customers from legacy products to next generation platform Dean (Channel) busine
Slide 12: Financial Review H1 2019
H1.2019 Financial Review
Slide 13: Strong growth – Revenue up 15% to £158.2m
Strong growth – Revenue up 15% to £158.2m (organic growth of 9%) Adjusted EBITDA up 39% to £30.4m Adjusted EPS up 43% to 19.2p Cash generated by operations up 49% to £27.4m Interim Dividend up 13% to 3.5p Cash balance £44.8m as at 30 June © Copyright Gamma 2019 13 © Copyright Gamma 2019
Slide 14: Organic revenue growth of 9%
Six months ended Year ended Organic revenue growth of 9% - NL 30 June 30 June 31 December revenue of £7.3m in H1 2019 2018 2018 Growth Revenue 158.2 137.6 284.9 15.0% Cost of sales (80.1) (75.3) (152.7) Gross profit 78.1 62.3 132.2 25.4% Recurring revenue remains at 90%+ Gross profit margin 49.4% 45
Slide 15: Growth business increasing at Revenue and GP
Revenue (£m) 120.0 100.0 80.0 60.0 Growth 40.0 Traditional Growth business increasing at Revenue and GP led by SIP 20.0 0.0 and Cloud PBX continue to grow strongly H1 2018 H2 2018 H1 2019 Traditional business static at gross profit but low margin Gross Profit (£m) legacy “calls and lines” replaced b
Slide 16: Direct business continues to grow fast
Revenue (£m) 50.0 40.0 30.0 20.0 10.0 0.0 H1 2018 H2 2018 H1 2019 Direct business continues to grow fast, driven by Enterprise Mid-markets Enterprise Public Sector The Loop and Public Sector Gross Profit (£m) Slight reduction in margins (2018: 45.5%; 2019: 44.8%) due 20.0 to lower margins being earn
Slide 17: Overseas business contributed £7.3m to revenue
Overseas business contributed £7.3m to revenue in H1 2019 and £1.2m of EBITDA In addition £0.9m of costs spent evaluating other European opportunities (overall “overseas EBITDA” was £0.3m for the first half) Dean trading is driven by Cloud PBX and also by mobile since deal signed with T-Mobile in la
Slide 18: Remain debt free with strong cash reserves
Balance Sheet as at 30 June 30 June 31 Dec (£m) 2019 2018 2018 Non-current assets (incl. PPE) 90.3 63.1 90.3 Receivables and 85.8 75.1 69.0 inventories Cash 44.8 36.9 35.5 Remain debt free with strong cash reserves Current assets 130.6 112.0 104.5 Total assets 220.9 175.1 194.8 Cash conversion incre
Slide 19: Gamma 2023 Strategic Plan - update
Gamma 2023 Strategic Plan - update
Slide 20: Gamma 2023 strategic priorities
Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our proposition from pure OTT’s Expand to Europe to gain continued growth and scale Continue to build on our digital capabilities to assure agility and sustain competitive
Slide 21: Good progress in building detailed execution plans
Good progress in building detailed execution plans against each of our strategic priorities: Launched our first complete UCaaS product “Collaborate” and fully assessed options to evolve our UCaaS proposition for different market sectors In support of our objective to move to a ‘lighter’ MVNO model,
Slide 22: Business Outlook and Priorities
Business Outlook and Priorities
Slide 23: Outlook continues to be positive
Despite political and economic uncertainties, the outlook continues to be positive, driven by growth across our key products and markets Momentum in SIP Trunking is expected to continue in the short term, driven by BT’s plan to switch off ISDN in 2025 The UK Cloud Telephony and UCaaS market continue
Slide 24: Key Product development activities in H2
Key Product development activities in H2 include: • Enhanced Collaboration features, including a fully integrated in-room video solution • Enhanced MiFiD compliant call recording solution • SIP enhancements, to support the Microsoft Team market • 4G Fast-start and back-up for our high speed Ethernet
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Slide 26: © Copyright Gamma 2018
26 © Copyright Gamma 2018 2019