Slide 1: Gamma Communications plc
Gamma Communications plc Bob Falconer CEO Andrew Belshaw CFO Richard Bligh COO
Slide 2: Summary of Gamma
Summary of Gamma Leading provider of integrated voice, data, and mobile telecoms services and applications to businesses UK market leader in SIP and Cloud PBX – differentiated by software and systems Product development and innovation is a core strength High volume indirect channel model with broad
Slide 3: Strategy: Service portfolio
Strategy: Service portfolio Bundle into strategic services to maximise order value 2016HY: Good data growth, Mobile decline prior to new service Strategic Enabling Services Cloud Services PBX SIP GROWTH Ethernet Inbound Traditional Mobile Services Strategy: Maximise product leadership and increase f
Slide 4: Routes to Market
Routes to Market Indirect Channel: Increasingly selling the Gamma brand (79% of revenue) Direct Channel (21% of revenue) System Hardware Mobile Resellers Carriers / SME Enterprise Public Sector Integrator Vendors Operators Cloud IT Resellers Voice of (36 of top UK 100 Cisco with Gamma*) Mobile Mitel
Slide 5: 2016 H1 Business Highlights – strategy on track
2016 H1 Business Highlights – strategy on track Strong SIP performance Positive Cloud PBX performance and market share increased New Mobile service soft launched end Q2, full launch in Q4 Number of new Partners increased by 72 to 906 in total Key brand wins include Strutt & Parker, lastminute.com, A
Slide 6: The Financials
The Financials ©O0® #3: Gamma 6
Slide 7: 2016 H1 Financial Highlights
2016 H1 Financial Highlights Revenue up 13.3% to £104.7m Adj EBITDA up 25.4% to £16.3m Adj EPS up 23.2% to 10.1p Pre-tax operating cashflow up 26.6% to £13.8m Interim Dividend up 13.6% to 2.5p 7
Slide 8: Income statement
Income statement 6 months ended 30 June Year ended 31 Dec Half on Half 2016 2015 2015 Growth Revenue and Gross Profit Revenue 104.7 92.4 191.8 13.3% Cost of sales (57.0) (53.2) (109.5) Continued organic growth continues to be driven by SIP and Cloud PBX Gross profit 47.7 39.2 82.3 21.7% Gross profit
Slide 9: Indirect business
Revenue Indirect business Positive shift in mix of Traditional and Growth services at both revenue and gross margin Strong increase in Strategic services – Gross profit especially SIP Trunking and Cloud PBX First signs of decline in Gamma’s traditional business Margin increased from 42% (H1 2015) to
Slide 10: Direct business
Revenue Direct business Direct business growing due to Strategic products Margin increased from 46% (H1 2015) to 47% - Gross profit due to mix Adj. EBITDA margin increased from 18.6% to 20.7% Adj EBITDA Average contract length continues to increase 11
Slide 11: Balance sheet and cash flow
30‐Jun 31‐Dec Balance sheet and cash flow Balance Sheet (£m) 2016 2015 2015 Non-current assets (incl. PPE) 39.0 31.6 35.8 Receivables and inventories 42.4 35 37.5 Debt free with significant cash reserves Current assets Cash 27.8 70.2 16.1 51.1 24.8 62.3 Total assets 109.2 82.7 98.1 Cash conversion a
Slide 12: Market Overview
Market Overview ©O0® #3: Gamma 12
Slide 13: Key market trends
Key market trends of all broadband connections are now superfast sve they don't vices that could benefit their organisation fixed broadband speeds have increased at an average annual rate 36" er year. from 3.6Mbit/s in 2008. to 22.8Mbit/s in 2014 Sources: lume Consulting Ofcom MA, Comms Business, Co
Slide 14: How do we compete against ……..?
How do we compete against ……..? “Scalable, strong channel and complete service” “Financially “Agile, strong, innovative, US/Euro market strong and good entrants channel and service” complete service” Trends emerging this HY: • Major telcos don’t appear to be making inroads with SIP The major telcos
Slide 15: Growing Strategic Services
Growing Strategic Services Gamma Market Position in UK Market growth growth UK market size by 2018 Update H1 15 – H1 16 2016# and share • Market share increasing SIP Trunking • Installed base over 413,000 “Business grade 46% 14% 19%, No. 1* £819m • Still 50% of ISDN 30 market to convert VOIP” replac
Slide 16: Operational Review
Operational Review ©O0®@ Gamma 16
Slide 17: New key wins
New key wins Large Financial Institution 17
Slide 18: Our new Mobile Service
Our new Mobile Service Reminder - What is it ? What we become The future Gamma’s core network 4th Mobile operator in UK business Convergence Primary radio access from Three market M2M IOT ? Full roaming Access The only channel focused operator Enabling consumer MVNO’s ? Business grade services Progr
Slide 19: Summary
Summary ©O0® #3: Gamma 19
Slide 20: Outlook
Outlook A good first half for Gamma Channel and Direct outperforming – strong and growing reputation in Enterprise and Mid Market SIP continues to offer short-medium term growth; Cloud PBX offers medium-long term growth Gamma Mobile offers real opportunity for future service growth and differentiati
Slide 21: Thank You
Thank You ©O0®@ Gamma 21
Slide 22: oo oH
oo oH | | a A dei Branch Sites INTERNET (Public and Private) } iy Data Connection “BACK IN THE DAY” COMPANY XYZ Laptops Servers Phones LL Dedicated phone sytem ISDN Line Branch Sites | VOICE | NETWORK )
Slide 23: Driven by Voice over IP - two options emerged
“DRIVEN BY VOICE OVER IP - TWO OPTIONS EMERGED” Option 2: Hosted PBX Option 1: SIP Use data connection for both voice and data Branch Sites VOICE NETWORK INTERNET AND DATA NETWORK Data +S|P Increase flexibility Easier to manage Use cloud phone system Lower connectivity costs Always upgraded Branch S