Slide 1: Interim results for the six months ended 30 June 2015
GAMMA COMMUNICATIONS PLC Interim results for the six months ended 30 June 2015 September 2015 1
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: Gamma summary
Gamma summary Gamma is a rapidly growing, technology-based, provider of communications services to the UK business market Provides integrated voice, data, and mobile telecoms services and applications to businesses Strong organic growth since 2006 driven by repeating revenues Efficient indirect chan
Slide 4: Highlights of H1 2015
Revenue Highlights of H1 2015 100.0 80.0 £m 60.0 Strong organic growth across the business 40.0 20.0 0.0 Good growth in Strategic Services whilst Traditional Services declined H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 slightly Adj EBITDA Number of active channel partners increased from 725 to 782 (+8%
Slide 5: Service portfolio
Service portfolio Strategic Services SIP Enabling Services Cloud PBX Inbound GROWTH Ethernet Mobile Broadband Calls & Lines MARGIN Traditional Services 5 5
Slide 6: Strategic services – increasing market share
Strategic services – increasing market share Gamma Market Position in UK UK Market Update growth CAGR market & share size by 2018* H1 14 - H1 2014 15 SIP Trunking 44% 20%* 16% (#1) £819m • Market share increasing “Business grade • Installed base 280,000+ VOIP” replacing ISDN • TalkTalk entered marke
Slide 7: H1 operational review – indirect and direct
H1 operational review – indirect and direct Consistent growth across both channels Indirect Direct Gross Profit increased from £25.5m to Gross Profit increased from £6.5m to £8.9m £30.3m (19%) (37%) 57 active new partners Strong position on new public sector Named subcontractor for multiple partners
Slide 8: Financials
GAMMA COMMUNICATIONS PLC FINANCIALS 8 8
Slide 9: Income statement
Income statement 6 months ended Year ended 30 June 31 Dec Continued organic growth driven by strategic 2015 2014 2014 Growth Revenue 92.4 83.6 173.2 10.5% services (SIP, Cloud PBX and Inbound) Cost of sales -53.2 -51.6 -105.6 Gross profit 39.2 32.0 67.6 22.5% Repeating revenues remains high Gross pr
Slide 10: Indirect business
Revenue Indirect business 80.0 60.0 £m 40.0 New Traditional 20.0 Strong revenue growth of 10% against first half 2014 0.0 Positive shift in mix of traditional and new (strategic and H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 enabling) services at both revenue and gross margin Gross Profit Traditional S
Slide 11: Direct business
Revenue Direct business 25.0 20.0 15.0 £m New Direct business growing due to strategic 10.0 Traditional 5.0 services, revenue up 12% against the first half 0.0 of 2014 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 Gross Profit Traditional Margin increased from 38% (H1 2014) to 46% - 10 (Indirect) due to m
Slide 12: Balance sheet and cash flow
Balance sheet and cash flow Balance Sheet 30-Jun 31-Dec (£m) 2015 2014 2014 Significant cash reserves, and remain debt free Non-current assets (incl. PPE) Receivables and inventories 31.6 35.0 25.7 29.3 32.0 33.6 Consistent cash generation – 84% conversion rate Cash Current assets 16.1 51.1 17.5 46.
Slide 13: Gamma Communications plc
GAMMA COMMUNICATIONS PLC 13 13
Slide 14: Market new wins
Market new wins Indirect Channel: Increasingly selling the Gamma brand (79% of revenue) Direct Channel (21% of revenue) System Hardware Mobile Resellers Carriers Special SME Enterprise Public Sector Integrator Vendors Operators Business IT Services Resellers Voice of (36 of top UK 100 Cisco with Gam
Slide 15: The Gamma Mobile network
The Gamma Mobile network “Masters of our own destiny” Gamma’s Mobile Network Own core infrastructure, with comparable functionality to a mobile operator, using 3rd party radio access Separate roaming agreement under negotiation Includes 4G high speed data services £4.5m out of £5.5m initial investme
Slide 16: Competitive Positioning
Competitive Positioning Businesses increasingly planning to buy communications services from a single supplier Larger operators and current consolidation focussed on bundled residential offerings (e.g. BT/EE) New entrants to UK SIP market (e.g. TalkTalk for Business) and hosted PBX market (more from
Slide 17: H1 in summary
H1 in summary SIP and Hosted continue to drive growth Indirect business growing ahead of plan Direct business winning bigger customers Mobile development on track for release in H1 16 Public sector now offers significant opportunity – direct and indirect The Board are confident of meeting full year
Slide 18: Looking Forward
Looking Forward Medium term New converged offerings being developed – Market research concluded – Concept designs identified Longer term Gamma becomes one of a very small number of players with in depth technical infrastructure and know-how in Voice, Data, Mobile and related Applications 18 15
Slide 19: Thank you
THANK YOU www.gamma.co.uk 19
Slide 20: Appendix
Appendix 0@ ‘3: Gamma Clear. Creative. Communications. 20 ee
Slide 21: Management and ownership
GAMMA COMMUNICATIONS PLC MANAGEMENT AND OWNERSHIP 21 21
Slide 22: Board & Senior Management
Board & Senior Management Senior Management David Macfarlane Malcolm Goddard Andy Morris Solutions Commercial Operations Telecoms – 20+ yrs Telecoms – 10+ yrs Telecoms – 20+ yrs Gamma – 2012 Gamma – 2005 Gamma – 2006 Bob Falconer Andrew Belshaw Richard Bligh CEO CFO Marketing Telecoms – 35+ yrs Tele
Slide 23: Ownership
Ownership Name Percentage holding Type Hoxton Assets Ltd 23% Founder – Kuok Family Stone Family 11% Founder – Stone Family Liontrust Investment Partners LLP 11% Institution Standard Life 6% Institution Octopus Investments Nominees Limited 6% Institution River and Mercantile Asset Management LLP 5% I
Slide 24: The business
GAMMA COMMUNICATIONS PLC THE BUSINESS 24 24
Slide 25: Phases of growth
Phases of growth Establishment: Network transformation: Broadening portfolio FUTURE GROWTH rapid growth of voice scale and differentiation (2010 – 2014) (2015 – onwards) (2001 – 2006) (2006 – 2010) 91 Partners 350 Partners 750 Partners Opportunistic acquisitions of; £10m investment to introduce Laun
Slide 26: What we do for customers
What we do for customers This image cannot currently be display ed. This image cannot currently be display ed. Gamma Core Network Fixed Connection Portal Services, applications, interconnects National Network Local Provider This image cannot currently be display ed. Customer’s site(s) Mobile Connect
Slide 27: Case studies
Case studies The problem Gamma’s solution Customer satisfaction Demand for real time audio, video and imaging at Replaced 600 legacy PSTN lines & ADSL links Created a “rock solid” architecture with ability to users’ desks with Ethernet increase network capacity 40x, delivered big Improvements to com
Slide 28: Competition
Competition When selling Strategic services, competing against: Example software and hardware competitors Mitel Look to differentiate on basis of completeness of service, scale, channel size and depth When selling Traditional services, competing against: Example Infrastructure competitors Look to di
Slide 29: 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 communications Calls are carried over data lines instead of traditional voice lines Declining 6% per annum Growing at c. 44%, m
Slide 30: 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 31: Commercial model
Commercial model Indirect Contractual model Framework agreements with channel partners Partners engaging in multi-service term agreements 1 – 3 years Partner owns end-user relationship and is billed by Gamma Customer concentration Largest Channel Partner contributed <4% revenue; and Top 10 Channel P