Redcentric Plc · LSE:RCN
Redcentric — H1 FY2017 Earnings Presentation
21 slides from Redcentric's earnings presentation, January 2017
Slide 1: Interim Results FY17
SONY = REDCEA ee INTERIM RESULTS — FY17 JANUARY 2017 FRASER FISHER — CEO PETER BROTHERTON- CFO redcentric business technology. managed.
Slide 2: Redcentric Forensic Review
REDCENTRIC FORENSIC REVIEW Timeline:- 7%» November 8 November 15th November 23'4 November 13th December 23'4 December Key Findings:- redcentric business technology. managed. Announcement of accounting mis-statements to market. Appointment of interim CFO. Appointment of Deloitte & Nabarro to conduct
Slide 3: Forensic Review - Key Adjustments
FORENSIC REVIEW - KEY ADJUSTMENTS * Net assets impairment: The cumulative overstatement of net assets and profits after tax up to 30 September 2016 is approximately £20.8 million. ¢ £5.9 million of this misstatement (£4.7 million at the EBITDA level) arose in the six months ended 30 September 2016.
Slide 4: Redcentric's Current Position
REDCENTRIC’S CURRENT POSITION 1. We have acted as quickly as possible to address the questions over our finances by appointing both new people internally, as well as externals in the form of Deloitte and Nabarro, to support our findings. The announcements have no bearing on our ability to support ou
Slide 5: Interim Financial Highlights
INTERIM FINANCIAL HIGHLIGHTS Revenue growth of 2% to £53m(H1 FY16 restated: £51.9m) — Recurring revenue up 5.9% (1.9% organic) to £44.7m — Recurring revenue now represents 84.3% of total * Improved profitability: ¢ Adjusted EBITDA* up 16.6% to £9.1m (H1 FY16 restated: £7.8m) * Adjusted EBITDA* margi
Slide 6: Half Year Operational Highlights
HALF YEAR OPERATIONAL HIGHLIGHTS * Strong sales momentum; 38 new H1 clients & key wins including: * £6.0m Retail sector contract Pepartment ~~ nobia 2. ea virgincare” HAYS suze" Pensions * £1.0m Property sector contract — * £1.1m Property sector contract we = : 4,cegedim nile © Leonard g * Delivered
Slide 7: Services Taken / Business Benefits
SERVICES TAKEN SERVICES TAKEN • • • • • • • • • • BUSINESS BENEFITS BUSINESS BENEFITS
Slide 8: What Our Offering Means to Clients
WHAT OUR OFFERING MEANS TO CLIENTS HOWDENS JOINERY CO. WAKING SPACE MORE VALUABLE SERVICES TAKEN + Data Centre Hosting Private hosting suite at Redcentric’s Harrogate data centre * Managed Hosting Service Data Centre Edition Backup, monitoring and managing of data held * | Managed Network Services F
Slide 9: Taking Redcentric Forward
TAKING REDCENTRIC FORWARD The remedial plan will continue through 2017. Redcentric is integrated, stable, financially strong, operating in the technology marketplace with a full portfolio of services that clients want to buy. Redcentric's assets, offshore operation and high level of accreditations p
Slide 10: Performance
PERFORMANCE Revenue & EBITDA £60m 4 £50m 4 458 £40m 4 422 £30m 4 £20m 4 £10m £0m Revenue redcentric business technology. managed. H1 FY14 mH1 FY15 mH1 FY16 mH1 FY17 EBITDA £50m £45m £40m £35m £30m £25m £20m £15m £10m £5m £0m £10m £9m £8m £7m £6m £5m £4m £3m £2m £1m £0m Revenue 44.7 4 FY14 pro- 418 f
Slide 11: Income Statement
INCOME STATEMENT H1 FY17 H1 FY16 £m £m Revenue 53.0 +2% 51.9 EBITDA 9.1 +17% 7.8 EBITDA margin 17.2% 15.0% Depreciation (4.0) +41% (2.8) Amortisation (3.4) +23% (2.8) Transaction & integration (0.8) (3.6) Share option charge 0.0 (0.7) * Higher depreciation as a result Operating profit/(loss) 0.9 142
Slide 12: Cash-Flow
CASH-FLOW Operating activities EBITDA 9.1 Working capital (2.1) Net debt affected by: Transaction & integration (0.5) * Capital expenditure in support of Interest (0.5) contract wins Tax 0.1 * One off proceeds from fibre network . oo. 6.1 disposal Investing activities aye oo. Capital dit 3.4 * Billi
Slide 13: Redcentric Summary and Outlook
REDCENTRIC SUMMARY AND OUTLOOK POSITIVE OUTLOOK Its been a difficult time for all of us. Redcentric has moved quickly to strengthen its internal controls and processes. Rounded portfolio of skills and services to meet client demands Flexible, agile and unencumbered by legacy technologies Solid, loya
Slide 14: Appendix
APPENDIX redcentric business technology. managed.
Slide 15: Redcentric — Business Technology. Managed.
REDCENTRIC — BUSINESS TECHNOLOGY. MANAGED. LEADING BUSINESS TECHNOLOGY OFFERING Leading AIM-listed managed technology services provider , oe OsTA penammnee CENTRE ‘couasoraron ' SECURITY INFRASTRUCTURE Ras weeeeet Hn ACCESS | TRANSITION J MANAGE | 24/7 DUAL SITE NOC KEY FACTS Y Over 2000 UK mid-mark
Slide 16: Relative gross margins
100% Infrastructure & Cloud 90% 80% Security 70% Applications Relative gross margins 60% Network 50% 40% Collaboration Mobile 30% ICT Projects 20% 10% Hardware/Software 0% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% Market growth rate
Slide 17: Redcentric's Indian Investment
REDCENTRIC’S INDIAN INVESTMENT HYDERABAD OFFICE * Key differentiator + Wholly owned subsidiary delivering highly skilled technical services + — Single team structure between UK & India - Huge skilled resource pool - 2nd and 3rd line technical resource * Development opportunity - Back office function
Slide 18: Restated income statement H1 FY16
As reported Restatements As £000 £000 restated £000 Continuing operations Revenue 53,997 (2,069) 51,928 Cost of sales (23,121) (963) (24,084) Gross profit 30,876 (3,032) 27,844 Selling and distribution (5,32 2,056 (3,269) costs 5) Administrative (23,760) (2,964) (26,724) expenses Adjusted EBITDA * 1
Slide 19: Restated income statement FY16
As reported Restatements As £000 £000 restated £000 Continuing operations Revenue 109,526 (6,211) 103,315 Cost of sales (45,050) (3,427) (48,477) Gross profit 64,476 (9,638) 54,838 Selling and distribution (8,688) 2,206 (6,482) costs Administrative expenses (47,349) (5,384) (52,733) Adjusted EBITDA
Slide 20: Restated balance sheet
As reported Restatements As restated £000 £000 £000 Assets Non-current assets Property plant and equipment 23,982 - 23,982 Intangible assets 92,461 - 92,461 116,443 - 116,443 Current assets Cash and short term deposits 9,984 (9,984) - Trade and other receivables 20,272 8,648 28,920 30,256 (1,336) 28
Slide 21: Restated balance sheet
As reported Restatements As restated £000 £000 £000 Assets Non-current assets Property plant and equipment 28,669 (499) 28,170 Intangible assets 92,285 - 92,285 120,954 (499) 120,455 Current assets Inventories - 497 497 Cash and short term deposits 8,492 (8,492) - Trade and other receivables 35,762