Redcentric Plc · LSE:RCN
Redcentric — H1 FY18 Earnings Presentation
24 slides from Redcentric's earnings presentation, Nov 29, 2017
Slide 1: Interim Results: Six Months Ended 30 September 2017
INTERIM RESULTS SIX MONTHS ENDED 30 SEPTEMBER 2017 29 November 2017 Slide 1 | © Redcentric 2017
Slide 2: Disclaimer
DISCLAIMER IMPORTANT NOTICE This document contains statements that are, or may be deemed to be, “forward-looking statements” which are prospective in nature. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking state
Slide 3: Highlights
HIGHLIGHTS SOLID FIRST HALF WITH STRONG OPERATING CASH FLOWS AND A REDUCTION IN NET DEBT • First half results are in line with expectations • Operating cash conversion of 125% • Material reduction in net debt of £6.2m • Operating cost base has been trimmed, with full effects to be realised in H2 • A
Slide 4: Financial Performance
FINANCIAL PERFORMANCE Peter Brotherton Chief Financial Officer Slide 4 | © Redcentric 2017
Slide 5: H1 FY18 Financial Highlights
H1 FY18 FINANCIAL HIGHLIGHTS BUSINESS RETURNS TO NORMAL FINANCIAL FOOTING Revenue Gross profit Operating costs Adjusted EBITDA £51.4m (-1%) £30.5m (+2%) £21.4m (+2%) £9.1m (+1%) Recurring revenue Gross margin of 59.4% £0.4m increase. Cost Adj. EBITDA margin of (RMR) of £44.6m (H1 FY17: 57.8%). reduc
Slide 6: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT H1 H2 H1 Earnings H1 H2 H1 FY18 FY17 FY17 per share FY18 FY17 FY17 Revenue 51,374 52,774 51,849 Adjusted basic 2.47p 2.50p 2.53p Cost of sales (20,867) (22,257) (21,902) Adjusted diluted 2.38p 2.40p 2.41p Gross profit 30,507 30,517 29,947 Adjusted operating expenditure
Slide 7: Revenue / Gross Profit
REVENUE / GROSS PROFIT H1 H2 H1 FY18 FY17 FY17 RMR 44,644 45,537 44,682 Product 4,121 3,184 3,094 Services 2,609 4,053 4,073 51,374 52,774 51,849 Gross profit 30,507 30,517 29,947 Gross margin 59.4% 57.8% 57.8% % RMR 87% 86% 86% • Recurring monthly revenue (RMR) broadly flat over the last three repo
Slide 8: Operating Costs
OPERATING COSTS £’000 H1 H2 H1 FY18 FY17 FY17 Staff costs 11,940 12,709 11,946 Office & DC costs 3,589 3,718 3,716 Network & IT costs 3,286 2,992 2,812 Other costs 1,575 1,915 1,738 Offshore costs 999 872 773 21,389 22,206 20,985 UK staff numbers 366 378 387 India staff numbers 140 144 139 Total sta
Slide 9: Operating Costs – H1 FY18 vs H2 FY17
OPERATING COSTS – H1 FY18 VS H2 FY17 Staff Costs Office and DC Costs Network and IT Costs £11.9m (-6%) £3.6m (-3%) £3.3m (+10%) Staff costs reduced Closure of 4 premises Increased licence and through headcount has led to reduction in maintenance costs to reduction. Full effect to costs (London, supp
Slide 10: Other Consolidated Income Items
OTHER CONSOLIDATED INCOME ITEMS H1 H2 H1 Non recurring items H1 H2 H1 FY18 FY17 FY17 FY18 FY17 FY17 EBITDA 9,118 8,311 8,962 Trade debtor impairment - - (2,933) Depreciation (3,679) (3,901) (3,606) Professional fees re forensic review and FCA Amortisation (3,272) (2,947) (3,261) investigation (509)
Slide 11: Net Debt
NET DEBT Movement in net debt H1 FY18 H2 FY17 H1 FY17 Adjusted EBITDA 9,118 8,311 8,962 Working capital movements 2,278 (5,723) (2,109) Cash generated from operations 11,396 2,588 6,853 Purchase of tangible fixed assets - Cash (2,276) (3,940) (2,804) - Finance Leases (1,464) (1,414) (1,056) (3,740)
Slide 12: Working Capital Movements
WORKING CAPITAL MOVEMENTS • Working capital movements total £2.3m, of which £2.5m relates to customer working capital movements (trade debtors plus other debtors plus accrued income less deferred income) • The balancing outflow of £0.2m relates to supplier and VAT working capital movements • New app
Slide 13: Business Update
BUSINESS UPDATE Chris Jagusz Chief Executive Officer Slide 13 | © Redcentric 2017
Slide 14: Business Update: First Impressions
BUSINESS UPDATE FIRST IMPRESSIONS • Joined 16th October 2017 • Fundamentally sound business • Robust operator of mid-market & public sector customers’ mission-critical infrastructure • Highly accredited in public & private sector • Broad vertical market reach (multi-site “retail”) - particular stren
Slide 15: Business Update: Focus Areas
BUSINESS UPDATE FOCUS AREAS • Build on our strengths: assets, know-how, people, customer relationships, reputation • Retain today’s customers by providing trusted cloud, connectivity & collaboration services which support their mission • Grow the business through: • Focus on UK-centred mid-market an
Slide 16: Sales – Case Study Virgin Care (VCL)
SALES – CASE STUDY VIRGIN CARE (VCL) GROWING WITH CUSTOMERS’ INFRASTRUCTURE TRANSITIONS • Virgin Care are a private healthcare provider who aim to improve the lives of patients through improved workforce management, streamlined appointment scheduling and faster diagnosis • Grown their business with
Slide 17: Outlook and Summary
OUTLOOK AND SUMMARY Slide 17 | © Redcentric 2017
Slide 18: Summary and Outlook
SUMMARY AND OUTLOOK • Good progress made during H1 FY18 in improving operating cash flows and reducing the cost base • Business is now a stable platform • H2 outlook – continuation of H1 trend • Restoring top line growth is our priority • Familiar markets • Opportunity in customers’ technology trans
Slide 19: Appendices
APPENDICES Slide 19 | © Redcentric 2017
Slide 20: Redcentric at a Glance
REDCENTRIC AT A GLANCE • AIM listed (RCN) • Leading UK IT Managed Services provider • Market capitalisation c. £130m, 149m shares in issue • c.£100m revenue, 87% recurring • Over 500 staff across 6 locations in UK and India. • Over 1,500 UK customers Slide 20 | © Redcentric 2017
Slide 21: The Heart of Redcentric's Service
THE HEART OF REDCENTRIC’S SERVICE Slide 21 | © Redcentric 2017
Slide 22: Redcentric's Data Centre & Network Investment
REDCENTRIC’S DATA CENTRE & NETWORK INVESTMENT Data Centre • Harrogate – DC, NOC & Head Office • Reading – DC and Support • London & Cambridge – DC and Support • Theale – application centre Network • 10 Gb MPLS Backbone Network with 2.4 Gb National Fibre Ring • Leased fibre in London Critical accredi
Slide 23: India Operations and Back Office Functions
• Key differentiator • Wholly owned subsidiary delivering highly skilled technical services • Single team structure between UK & India • Huge skilled resource pool (9m) • 2nd and 3rd line technical resource • Development opportunity • Back office functions – finance, HR, sales support • Natural attr
Slide 24: Redcentric's Accreditations and Certifications
REDCENTRIC’S ACCREDITATIONS AND CERTIFICATIONS 1SO27001 Information Security Management Certified (British Standards Institution) 1SO9001 Quality Management Certified (British Standards Institution) 1S022301 Business Continuity Management Certified (British Standards Institution) 1SO20000 IT Service