Slide 1: Gamma Communications Plc FY14 Results
GAMMA COMMUNICATIONS PLC FY14 RESULTS March 2015
Slide 2: Disclaimer
Disclaimer This presentation is issued on behalf of Gamma Communications plc (the “Company”). This presentation does not constitute an admission document or prospectus, nor does it constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or su
Slide 3: Highlights of the year
Highlights of the year £m Strong growth across the business Dec 2013 Dec 2014 Growth % Channel Partners 627 725 +16% SIP Trunks 161,000 234,000 +45% Cloud PBX users 43,000 80,000 +86% £m Good growth in other services and traditional services held steady 72% of Gross profit came from partners selling
Slide 4: Gamma overview
Gamma overview Gamma is a technology based provider of advanced communications services to the UK business market with c80% of its sales via the channel What we do Fixed Connection Portal Gamma Core Network National Network Services, applications, Local Provider interconnects Mobile Connection What
Slide 5: Our position in the market
Our position in the market Traditional telco markets Being Gamma’s “new-generation” markets replaced ISDN by SIP Trunking (Business grade VoIP) Traditional fixed line voice Calls are carried over data lines instead of traditional voice lines communications Growing at c. 45%, market share 16% Declini
Slide 6: Financials
FINANCIALS
Slide 7: Income statement
Income statement Continued organic growth driven by Years ended 31 December (£m) 2012 2013 2014 Growth strategic services (SIP, Cloud PBX and Revenue 137.2 148.7 173.2 +16.4% Inbound) Cost of sales (92.3) (94.8) (105.6) Gross profit 44.9 53.9 67.6 +25.4% Repeating revenues remains high Gross profit
Slide 8: Indirect business
Indirect business £m Positive shift in mix of Traditional and New (Strategic and Enabling) services at both revenue and gross margin Traditional (Indirect) Strong increase in Strategic services– especially SIP Trunking and Cloud PBX Direct £m Traditional calls and lines holding up and beating the ma
Slide 9: Direct business
Direct business Direct business growing due to £m Strategic services Margin increased from 38% (2013) to 42% - due to mix Direct £m Adj. EBITDA margin increased from 12.1% to 15.7% (2013 was New service suppressed due to significant commission payments made to mobile dealers (written off as incurred
Slide 10: Balance sheet and cash flow
Balance sheet and cash flow Significant cash reserves, and remain Balance Sheet as at 31 December (£m) 2012 2013 2014 debt free Non-current assets (incl. PPE) 23.3 24.6 32.0 Receivables and inventories 22.6 26.9 33.6 Capex in year high: Cash 7.2 14.6 13.4 – £10.2m on capital items Current assets 29.
Slide 11: Operating Review
OPERATING REVIEW oO 2: Gamma
Slide 12: Indirect business
Indirect business Revenue up 15% to £136.9m (FY13: £119.0m) Gross margin up 23% to £52.4m (FY13: £42.6m) Channel partners Growth from 627 to 725 channel partners billing in excess of £500/mth Estimated indirect sales force of c10,000 Top 10 are 26% of group revenue – major channel partners include A
Slide 13: Direct business
Direct business Revenue up 22% to £36.3m (FY13: £29.7m) Gross margin up 35% to £15.2m (FY13: £11.3m) Enterprise and Public Sector Services in this sector may be tailored and non-standard services selectively introduced Major enterprise wins include BDO, London Stock Exchange, Hearst Magazines & Moor
Slide 14: Direct business (cont'd)
Direct business (cont’d) SME and Mid-Market [NB – focussed on standard products to the mid-market] Solid growth with many new wins e.g. West Bromwich BS, Haymarket Media, Home Energy, Concur Technologies New customers double the size of leaving customers Many contract renewals and expansions e.g. Am
Slide 15: Growth strategy
Growth strategy External influences Consolidation amongst larger operators (e.g. BT & EE) focussed on bundled residential offerings Ofcom announcement of wide ranging Strategic Review of the market Businesses increasingly planning to buy communications services from a single supplier Our plan To foc
Slide 16: Converged fixed and mobile products
Converged fixed and mobile products Currently have a ‘light’ mobile virtual network – longer term strategic objective is to provide integrated fixed and mobile service In December 2014 we opportunistically acquired the ‘core’ of a mobile network – materially reduces the timescales and costs to deliv
Slide 17: The Future
The Future Short term Exploit market leading position on SIP Trunks and Cloud PBX (Horizon) Launch bundled services for SMEs to encourage cross-selling by partners Launch of multi-site private data networks in June Continue to invest in tools and processes to improve operational gearing Medium term
Slide 18: Thank you
THANK YOU www.gamma.co.uk Clear. Creative. Communications.