Redcentric Plc · LSE:RCN

Redcentric — H1 FY2017 Earnings Presentation

21 slides from Redcentric's earnings presentation, January 2017

  1. Slide 1: Interim Results FY17

    SONY = REDCEA ee INTERIM RESULTS — FY17 JANUARY 2017 FRASER FISHER — CEO PETER BROTHERTON- CFO redcentric business technology. managed.

  2. 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

  3. 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.

  4. 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

  5. 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

  6. 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

  7. Slide 7: Services Taken / Business Benefits

    SERVICES TAKEN SERVICES TAKEN • • • • • • • • • • BUSINESS BENEFITS BUSINESS BENEFITS

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. Slide 14: Appendix

    APPENDIX redcentric business technology. managed.

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

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