Slide 1: Gamma Results 2016
Gamma Results 2016
Slide 2: Summary of Gamma
Summary Gamma is a rapidly growing technology based provider of of Gamma advanced communication services to the UK business market. Who we are We are a UK based What we do business employing 753* staff across We supply a broad range of five main sites simplified communications and software services
Slide 3: 2016 Business Highlights
2016 Business Highlights • Strong financial performance: • Revenue £213.5m (+11.3%) Adj EBITDA £34.2m (+20.8%) Adj PBT £24.5m (+ 16.7%): • Growth accelerating in direct sales, particularly in the enterprise market. Gross profit £20.6m (+13.2%) • Significant direct new business wins included; OCS, Re
Slide 4: 2016 Product Summary
2016 Product Summary Good solid year - increasing volumes and holding margins Strategic – SIP Enabling – Data & Cloud PBX & Mobile Traditional YoY Growth: YoY Growth: Structural decline continues – SIP Trunks - 360k to 511k B’band - 40k to 54k (35%) (42%) Eth’net - 2.4k to 3.5k (46%) Displaced by SI
Slide 5: Growing Market Share in Strategic Services
Growing Market Share in Strategic Services Gamma Market and share Position in growth growth UK market Update 2016 2016 SIP Trunking Installed trunks of 511,000 “Business grade 42% 22% 22% No. 1* VOIP” replacing Market growth slowing slightly Gamma ISDN share increasing 37% of market still to convert
Slide 6: 2016 Channels Summary
2016 Channels Summary Growth in all markets and some major wins in Enterprise space Indirect Channel Direct Channel • 79% of revenue £169m (2015: £152m) • 21% of revenue £44.5m (2015: £39.8m) • Active Channel Partners grew from 834 to 970 • £33m of new contract value • Many entrants new to channel •
Slide 7: The Financials
The Financials Tuesday 21st March
Slide 8: 2016 Financial Highlights
2016 Financial Highlights • Strong organic grown – Revenue up 11.3% to £213.5m • Adj EBITDA up 20.8% to £34.2m • Adj EPS up 17.9% to 21.1p • Pre-tax operating cashflow up 23.7% to £31.3m – 92% conversion of adj EBITDA • Dividend for the year up 13.6% to 7.5p (includes interim already paid) Tuesday 2
Slide 9: Income statement
Income statement Revenue and Gross Profit • Growth continues to be driven by SIP, Cloud PBX and data – segmental analysis follows • Repeating revenues remain 90%+ • Accounting standard changes to come (IFRS 15 and IFRS 16) Other items • Overheads increased due to spend on mobile platform support: £4
Slide 10: Indirect business
Indirect business • Positive shift in mix of Traditional and • Margin increased from 42% (2015) to Growth services at both revenue and 46% due to product mix and gross margin improvement in Inbound product set • Strong increase in Strategic services – • Adj. EBITDA margin increased to 14.7% especial
Slide 11: Direct business
Direct business • Direct business growing due to Cloud • Average contract length continues PBX and SIP products to increase • Margin held steady at 46% year on year • Significant contract wins in 2016 • Adj. EBITDA margin increased from yet to contribute 19.3% to 21.1% Revenue (£m) Gross margin (£m)
Slide 12: Balance sheet and cash flow
Balance sheet and cash flow • Remain debt free with significant cash reserves • Cash conversion at 91.5% • Capex increases driven by success and investment for the future – • Maintenance Capex at £6.7m (2015:£5.7m) • CPE of £8.3m (2015:£4.4m) • Investments of £2.8m in our mobile platform (2015: £1.0
Slide 13: Strategic Developments
Strategic Developments Tuesday 21st March
Slide 14: Market trends
Market trends The rise and Network We have identified 5 rise of cloud flexibility key trends in our services markets showing how Superfast the face of business connectivity communications is changing and how Gamma is addressing these trends. Mobility and increasing data demands from business users T
Slide 15: Mobile
Mobile • Full MVNO brought into service • Have now transferred those prepared to swap from Thin MVNO to Full MVNO via sim swap • Launched to new customers in October • Early successes in Direct business – Indirect will take longer • Post-launch service constraints have largely been addressed and pro
Slide 16: Converged Fixed/mobile – coming soon
Converged Fixed/mobile – coming soon True convergence only possible with converged fixed and mobile core network – few have this capability Works on any mobile phone with a Gamma SIM – no App required! Combines key fixed and mobile features using Gamma’s Cloud PBX • One number for fixed & mobile • C
Slide 17: Cloud Compute
Cloud Compute DIY DIY Benefits of Cloud Compute A managed service • Fully-managed service • Server, storage, firewall Tech and network changes business Enterprise all included • Simple, rapid, risk-free deployments Gamma • Opex model Partners • Scalable platform SME Tuesday 21st March
Slide 18: Outlook
Outlook • Direct business expected to continue to grow strongly in both enterprise and public sector where traction has now been established • The focus on helping the channel to expand and grow will continue to produce dividends • SIP and Cloud PBX are expected to continue to grow significantly wit
Slide 19: Appendix
Appendix Tuesday 21st March
Slide 20: “Back in the day”
“BACK IN THE DAY” arte) oleae iz ites) OL ull COMPANY XYZ Se gue aed Branch Sites Laptops Phones Branch Sites INTERNET (Public and Private) ) Dedicated Data SS0N Connection Servers phone sytem tine
Slide 21: Driven by Voice over IP - two options emerged
“DRIVEN BY VOICE OVER IP - TWO OPTIONS EMERGED" Option 1: SIP Use data connection for both voice and data Increase flexibility Option 2: Hosted PBX yee _Sua nae manage gout] (fam vemones 4 Hi Bratch Sites COMPANY XYZ Laptops Phones INTERNET AND DATA NETWORK Use cloud phone system Lower connectivity
Slide 22: Service portfolio
Service portfolio Tuesday 21st March
Slide 23: How do we compete against
How do we compete againstR 3US/Euro market entrants Trends emerging this HY: • Major telcos don’t appear to be making “Agile, “Scalable, inroads with SIP innovative, strong channel and good and complete • Cloud PBX 3Smaller UK software service” service” becoming established in IT channel • Tradition