Gamma Communications Plc · LSE:GAMA
Gamma Communications — H1 2017 Earnings Presentation
23 slides from Gamma Communications's earnings presentation, Sep 5, 2017
Slide 1: Interim Results – 5 September 2017
Interim Results – 5 September 2017 Bob Falconer CEO Andrew Belshaw CFO
Slide 2: Gamma Summary
Gamma Summary Who we are Gamma is a rapidly growing technology based provider of advanced communication services to the UK business market A UK based business employing 821 staff across six sites What we do We supply a broad range of simplified communications and software services to small, medium a
Slide 3: 2017 H1 Business Highlights
2017 H1 Business Highlights Strong financial performance continues Revenue £115.0m (+9.8% against H1 2016); adjusted EBITDA £19.7m (+20.9%); adjusted EPS 11.6p (+14.9%) Growth drivers continue to be SIP and Cloud PBX (Indirect market) and Enterprise and Public Sector (Direct market) Number of active
Slide 4: 2017 H1 Product Summary
2017 H1 Product Summary Strategic Product Unit Growth Comments (H2 16 – H1 17) SIP Trunking 511k to 605k • 10% Market Growth over period* (+18%) • Margins remain similar • Consolidate No 1 position in market – growth in market share to 24% • SIP Trunk Call Manager successfully preserving margins/red
Slide 5: 2017 H1 Product Summary
2017 H1 Product Summary Enabling Product Unit Growth Comments (H2 16 – H1 17) Mobile 20Tbytes to • Data volumes on Full MVNO – still modest following late 2016 launch 35 Tbytes • Market share <1% • Thin MVNO with Vodafone ceased (+75% from early • Direct pipeline strongest, channel growth slower to
Slide 6: 2017 Channel Summary: Indirect
2017 Channel Summary: Indirect 77% of Group revenue – £88.1m SME focus remains but also larger partner wins (H1 2016: £83.0m) Partner Partner’s Customer Service Active Channel Partners grew from Unify Addison Lee c500 Horizon seats 970 to 1,023 – Channel is still Sabio Homebase Resilient Inbound cal
Slide 7: 2017 Channel Summary: Direct
2017 Channel Summary: Direct 23% of Group Revenue – £26.9m Notable wins (H1 2016: £21.7m) Company Sector Service ‘Large financial institution’ now live itsu Food retailer 70 site data network with Horizon Significant and growing pipeline in delivery Savills Plc Property High speed managed data netwo
Slide 8: The Financials
The Financials 05/09/2017 8
Slide 9: 2017 Financial Highlights
2017 Financial Highlights Strong organic growth – Revenue up 9.8% to £115.0m Adjusted EBITDA up 20.9% to £19.7m Adjusted EPS up 14.9% to 11.6p Pre-tax operating cashflow up 10.9% to £15.3m Interim dividend up 12% to 2.8p 05/09/2017 9
Slide 10: Income Statement
Six months Year Income Statement ended 30 ended 31 June December 2017 2016 2016 Growth Revenue 115.0 104.7 213.5 9.8% Repeating revenues remain at over 90% – segmental analysis follows Cost of sales -60.9 -57.0 -114.7 Gross profit 54.1 47.7 98.8 13.4% Overheads increased by £3.0m – increases Gross p
Slide 11: Indirect Business
Indirect Business The anticipated reductions in traditional business was more than offset by increasing sales of growth products Strong increases in SIP Trunking and Cloud PBX – underlying growth and gross profit consistent with prior period Data performing well in price-competitive market Mobile pr
Slide 12: Direct Business
Direct Business Direct business growing faster driven by Enterprise and Public Sector Strong order book mentioned at year end now installed and billing Margin reduced from 46.5% to 46.1% due to Public Sector equipment sale at negligible margin – underlying margins improving Pipeline remains strong R
Slide 13: Balance sheet and cash flow
30-Jun 31-Dec Balance sheet and cash flow Balance Sheet as at (£m) 2017 2016 2016 Non-current assets (incl. PPE) 49.3 39.0 45.3 Receivables and 55.1 42.4 42.9 inventories Remain debt free with significant cash Cash 28.7 27.8 28.2 reserves Current assets 83.8 70.2 71.1 Total assets 133.1 109.2 116.4
Slide 14: Accounting Standard Changes
Accounting Standard Changes Changes are IFRS15 “Revenue from Contracts with Customers” and IFRS16 “Leases” In summary (assuming similar leads and mix of trading) – – We do not expect EPS to be materially affected – We expect significant changes to EBITDA as items which were shown as depreciation are
Slide 15: Strategic Developments
Strategic Developments 05/09/2017 15
Slide 16: Upcoming Developments
Upcoming Developments Initial launch of a converged fixed/mobile service-branded “Connect” (H2 2017) MiFID II Compliant call recording available for fixed and mobile voice services (H2 2017) PCI Compliance service added to Horizon and SIP Trunking products (H2 2017) Adding further specific vertical
Slide 17: Outlook
Outlook The momentum in SIP and Horizon is expected to continue in the short term; additional features for Horizon anticipated to attract both new partners and end users Data products continue to grow – with upsell to both indirect and direct markets “Connect” – combination of Mobile and Cloud PBX –
Slide 18: Appendix
Appendix 05/09/2017 18
Slide 19: “BACK IN THE DAY”
“BACK IN THE DAY” COMPANY XYZ Laptops Phones Branch Sites Branch Sites. INTERNET (Public and Private) Dedicated phone sytem Data , Servers Connection 0006 = Gamma
Slide 20: “DRIVEN BY VOICE OVER IP - TWO OPTIONS EMERGED”
“DRIVEN BY VOICE OVER IP - TWO OPTIONS EMERGED” Option 1:SIP Option 2: Hosted PBX Use data connection for both voice and data Increase flexibility Easier to manage Save money i a a Branch Sites COMPANY XYZ Use cloud phone system Lower connectivity costs Always upgraded Pay as you use COMPANY XYZ INT
Slide 21: Service portfolio
Service portfolio 05/09/2017 21
Slide 22: Who do we compete against …
Who do we compete against … Major telcos don’t appear to be making inroads with SIP Traditional phone system manufacturers “Agile, “Scalable, more active in cloud e.g. Mitel innovative, strong channel and good and complete service” service” “Financially strong, strong channel and complete service” 0
Slide 23: Thank you
Thank you T: 0333 014 0000 W: www.gamma.co.uk