Slide 1: Gamma 2019 Results
Gamma 2019 Results Andrew Taylor, CEO Andrew Belshaw, CFO Working smarter, together.
Slide 2: Results 2019 Agenda
Gamma 2019 results Results 2019 01. Performance highlights and business update Andrew Taylor 2019 Financial Review 02. Andrew Belshaw Gamma 2023 Strategic plan update Agenda 03. Andrew Taylor Business outlook 04. Andrew Taylor Q&A 05. Andrew Taylor & Andrew Belshaw
Slide 3: Performance highlights and business update
Gamma 2019 results Performance highlights and business update
Slide 4: 2019 - Highlights
Gamma 2019 results 2019 - Highlights Strong financial performance Revenue £328.9m (+15% against 2018; organic growth (UK) was +11%) Adj EBITDA £63.5m (+31%) Adjusted EPS 40.8p (+35%) • Strong growth across all key products, with a continued focus on upselling and cross selling across all sales chann
Slide 5: Product Performance
Product Performance
Slide 6: 2019 Product Summary – Applications
Gamma 2019 results 2019 Product Summary – Applications Product Unit growth in 2019 Comments SIP Trunking 856k to 1,016k (+19%) • 9.39% market growth over the period* • Margins consistent with previous periods • Further consolidated No.1 position in the market – now at 31% market share • Gamma delive
Slide 7: 2019 Product Summary - Connectivity
Gamma 2019 results 2019 Product Summary - Connectivity Product Unit growth in 2019 Comments Business 94k to 111k (+18%) • Good growth in a mature market – small but growing market share of 4.0% Broadband • 1.1% market growth (Business Broadband Market) during the period* • Cost base reductions throu
Slide 8: 2019 Business Unit Performance
2019 Business Unit Performance
Slide 9: 2019 Indirect Channel Summary £230.1m
Gamma 2019 results Indirect Channel revenue 2019 Indirect Channel Summary £230.1m • 70% of Group revenues – £230.1m (2018: £210.6m) and 9.3% organic growth • Maintaining our core product Margins (Cloud PBX and SIP) despite price pressure in a competitive market • Revenues continue to be diversified,
Slide 10: 2019 Direct Channel Summary £83.6m
Gamma 2019 results Direct Channel revenue 2019 Direct Channel Summary £83.6m • 25% of Group Revenue – £83.6m (2018: £70.9m) and 17.9% organic growth • All market segments performing well and growing, with strong cross selling and upselling a key feature during 2019 - Mid Market (+10%) Public Sector
Slide 11: 2019 Overseas Summary £15.2m
Gamma 2019 results Overseas revenue 2019 Overseas Summary £15.2m • 5% of Group revenue – £15.2m • Dean One (Channel) business has performed well, however, legacy ISDN business reduced more quickly than expected in H1; H2 performance has been positive with net growth in Cloud seats and Mobile Connect
Slide 12: 2019 Financial Review
2019 Financial Review
Slide 13: 2019 Financial Highlights
Gamma 2019 results 2019 Financial Highlights • Strong growth – Revenue up 15% to £328.9m (organic growth of 11%) • Adjusted EBITDA up 31% to £63.5m • Adjusted EPS up 35% to 40.8p • Cash generated by operations up 33% to £54.0m • Dividend up 13% to 10.5p • Cash balance £53.9m as at 31 December
Slide 14: Income Statement
Gamma 2019 results Growth Income Statement Years ended 31 December (£m) Revenue 2017 242.0 2018 284.9 2019 328.9 18 vs 19 15.4% Cost of sales -133.3 -152.7 -162.4 • Organic revenue (UK) growth of 11% Gross profit 108.7 132.2 166.5 25.9% • Recurring revenue remains at 90%+ Gross profit margin 44.9% 4
Slide 15: Indirect Business
Gamma 2019 results Revenue (£m) 250 Indirect Business 200 • Growth business increasing at revenue and gross 150 profit led by SIP and Cloud PBX which continue to 100 grow strongly 50 • Traditional business static at gross profit but low margin legacy “calls and lines” replaced by higher 0 2017 2018
Slide 16: Direct Business
Gamma 2020 results Revenue by Sector (£m) 90 80 Direct Business 70 60 50 • Direct business continues to grow in all market 40 30 segments but driven by Enterprise Solutions 20 • Customers are buying more Gamma solutions as 10 upsell becomes an important sales channel 0 2017 2018 2019 The Loop Mid Ma
Slide 17: Netherlands – Dean One, Schiphol Connect, Nimsys
Gamma 2019 results Netherlands – Dean One, Schiphol Connect, Nimsys • Overseas business contributed £15.2m to revenue in 2019 and £2.6m of (trading) EBITDA • In addition £2.3m of costs spent evaluating other European opportunities (overall “overseas EBITDA” was £0.3m for the first half) • Dean tradi
Slide 18: Overheads
Gamma 2019 results Overheads 2019 2019 2018 2018 Growth • “Cash overheads” increased by £m £m £m £m Expenses included within cash generated from operations 23% to £103.0m - UK Indirect Business 64.9 60.6 7.1% - UK Direct Business 20.1 16.4 22.6% • Strong cost control in Indirect - Overseas Business
Slide 19: Balance Sheet and Cashflow
Gamma 2019 results Balance Sheet as at 31 December (£m) 2017 2018 2019 Balance Sheet and Cashflow Non-current assets (incl. PPE) Receivables and 57.3 64.8 90.3 69.0 98.9 85.6 inventories Cash 31.6 35.5 53.9 • Remains debt free with strong cash reserves Current assets 96.4 104.5 139.5 Total assets 15
Slide 20: Gamma 2023 Strategic Plan update
Gamma 2019 results Gamma 2023 Strategic Plan update
Slide 21: Gamma 2023 Key Strategic Priorities
Strategic Plan Update Gamma 2023 Key Strategic Priorities Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our proposition from pure OTT’s Expand to Europe to gain continued growth and scale Continue to build on our digi
Slide 22: Evolve our strong cloud telephony position into the UCaaS market
Strategic Plan Update • Launched our first complete and fully integrated UCaaS product “Collaborate” in March 2019 Evolve our strong • Fully assessed options to evolve our UCaaS proposition for cloud telephony different market sectors – now very much in execution position into the • Acquisition of T
Slide 23: Build on our Fixed and Mobile Strength to differentiate our proposition
Strategic Plan Update Strong network and Data Access capabilities: • Clear strategic direction as an aggregator – enables us to offer Build on our Fixed best in class service and be more price competitive and Mobile Strength • Delivered a broader and stronger data product portfolio in 2019 - launche
Slide 24: Expand to Europe to gain continued growth and scale
Strategic Plan Update • The European cloud market continues to be attractive and presents significant future growth opportunities, in what is an active M&A Expand to Europe environment • We are executing well against our strategic plan: to gain continued - A clear understanding of our target markets
Slide 25: Continue to build on our digital capabilities
Strategic Plan Update • In our Direct business we are implementing a Digital Transformation that is creating a system foundation to support Continue to build continued and long-term business growth with a high level of customer driven automation on our digital • To deliver this programme, we have bu
Slide 26: New Brand and Values launched across Gamma
New Brand and Values launched across Gamma
Slide 27: New websites launched
New websites launched GammaCommunicationsPlc.com Gamma.co.uk
Slide 28: Business Outlook
Gamma 2020 results Business Outlook
Slide 29: Business outlook
Gamma 2019 results Business outlook • Positive long-term market outlook and significant opportunities across Gamma’s core growth products and key areas of strategic focus • However, this is tempered by short term uncertainty due to the potential but yet unknown impact of Coronavirus • Gamma has a st
Slide 30: Q&A
Gamma 2019 results Q&A
Slide 31: Statement on Coronavirus
Statement on Coronavirus • We have discussed the potential impact of Covid-19 on the business. This remains a matter of close attention for the Board. In particular we will take measures to ensure the safety of our employees and other stakeholders. We are taking regular advice and following guidance
Slide 32: Thank you.
Thank you. Working smarter, together.