Redcentric Plc · LSE:RCN
Redcentric — H1 FY2020 Earnings Presentation
20 slides from Redcentric's earnings presentation, November 2019
Slide 1: Half year results
Half year results Six months ended 30 September 2019
Slide 2: Introduction
Introduction “ Good visibility of future revenues, strong and improving margins and continued excellent cash conversion. ” HY20 financial review HY20 operational review Summary & outlook Appendices 2
Slide 3: HY20 financial review
HY20 financial review Dean Barber Chief Financial Officer
Slide 4: HY20 financial highlights
HY20 financial highlights Results in line with Board’s expectations REVENUE GROSS MARGIN ADJUSTED EBITDA* NET DEBT ADJUSTED EPS* £43.2m (-9%) 64.5% (+4.7%pts) £8.8m (+8%) £16.5m (-27%) 2.48p (+31%) Recurring revenue of £38.8m, Gross profit £27.8m Adjusted EBITDA margin of Reduction of £1.1m in the P
Slide 5: Group income statement (pre-IFRS 16)
Group income statement (pre-IFRS 16) Good revenue visibility, improved margins and profit growth H1-19 H2-19 H1-20 H1-20 vs £m £m £m H1-19 % • Total revenue declined by 9% to £43.2m. Recurring revenue mix improved to Revenue 47.5 45.8 43.2 -9% 90% of total revenue (H1-19: 87%) Cost of Sales (19.1) (
Slide 6: Cash flow (pre-IFRS 16)
Cash flow (pre-IFRS 16) Positive cash flow performance again delivered H1-19 H2-19 H1-20 • Adjusted cash generated from operations (before exceptionals) 6% lower at £m £m £m £8.7m with operating cash conversion of 99% Adjusted EBITDA 8.1 8.6 8.8 Working capital movements 1.1 3.5 (0.1) • Small workin
Slide 7: Balance sheet (pre-IFRS 16)
Balance sheet (pre-IFRS 16) Solid balance sheet maintained Net debt analysis H1-19 H2-19 H1-20 H1-20 £m £m £m £m Goodwill and other intangibles 79.4 75.8 72.3 Cash 2.2 Property, plant and equipment 19.2 18.1 19.4 RCF (12.5) Current assets 22.9 22.5 19.9 Term loan / fees (0.2) Deferred income (7.8) (
Slide 8: HY20 operational review
HY20 operational review Peter Brotherton Chief Executive Officer
Slide 9: Products, platforms and networks
Products, platforms and networks Modern, resilient, optimised and scalable Products Platforms and networks Optimisation • Product management and development teams • Core network upgraded to enable 10Gb • Network ring decommissioned in the period has have been restructured connections and work in pro
Slide 10: Revenue & Margin
Revenue & Margin Recurring revenue stabilised, margins continue to improve Revenue Margin • H1-20 recurring revenue down marginally on H2-19 (-1%) with Q1 flat • Full effect of the cost measures undertaken in November 2018 have fed on Q4 and Q2 up on Q1 through into the first half numbers with a res
Slide 11: Quarterly Revenue trend
Quarterly Revenue trend • FY17 Crown Hosting revenues were £8.2m • Further cancellations confirmed reduce Crown Hosting revenues to £0.5m in Q3-20 and £0.2m in Q4-20 (FY20 total of £2.5m) 11
Slide 12: Sales & Marketing
Sales & Marketing YoY growth in sales order intake and pipeline, revised value proposition, long-term contracts Public Sector Private Sector Marketing • Strong progress made on YHPSN in period: • Strong performance on retaining and extending • New value proposition and messaging focused on existing
Slide 13: Summary & outlook
Summary & outlook redcentric AGILE * AVAILABLE * ASSURED
Slide 14: Summary and outlook
Summary and outlook Recurring revenues growing, margins improving, continued excellent cash conversion Summary Outlook • Recurring revenue now stabilised • Modest growth in revenue forecast for H2 • Sales order intake significantly improved YoY • Roll out of HSCN and YHPSN contracts substantially co
Slide 15: Financial guidance and trends
Financial guidance and trends Factors affecting future financial performance Data centre & network review Capital expenditure Tax rate Operating expenditure savings of £2.8m anticipated to be Lower spend in H2, following accelerated spend of £4.8m Expected to be close to UK statutory rate realised f
Slide 16: Appendices
Appendices redcentric AGILE * AVAILABLE * ASSURED
Slide 17: Investment case
Investment case Good visibility of future revenues, strong and improving margins, proven cash conversion, low and reducing levels of net debt • Recurring revenue now stabilised • High visibility of future revenue: 90% recurring revenue secured on long-term contracts (average contact length of 33 mon
Slide 18: HY-20 impact of IFRS 16
HY-20 impact of IFRS 16 Income statement Balance sheet Pre-IFRS 16 IFRS 16 adj. Post-IFRS 16 Pre-IFRS 16 IFRS 16 adj. Post-IFRS 16 £m £m £m £m £m £m Revenue 43.2 - 43.2 Goodwill and other intangibles 72.3 - 72.3 Cost of Sales (15.4) - (15.3) Property, plant and equipment 19.4 - 19.4 Gross Profit 27.
Slide 19: FY-20 & FY-21 impact of IFRS 16
FY-20 & FY-21 impact of IFRS 16 P&L impact, £'000’s Closing balance sheet, £'000’s H1-20 H2-20 FY20 H1-21 H2-21 FY21 H1-20 FY-20 H1-21 FY-21 EBITDA 1,571 1,571 3,142 1,568 1,534 3,102 ROU asset 21,079 19,976 18,873 17,776 Lease liabilities (23,505) (22,505) (21,484) (20,479) Depreciation (1,103) (1,
Slide 20: Redcentric
redcentric AGILE ¢ AVAILABLE e ASSURED redcentric