2016 full year results - over the wire · full year results for revenue, ebitda and npat all...
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2016 Full Year ResultsSeptember 2016
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IMPORTANT NOTICE AND DISCLAIMER
The information in this presentation does not constitute personal investment advice. The presentation is not intended to be comprehensive or provide all
information required by investors to make an informed decision on any investment in Over the Wire Holdings Limited ACN 151 872 730 (Company). In
preparing this presentation, the Company did not take into account the investment objectives, financial situation and particular needs of any particular
investor.
Further advice should be obtained from a professional investment adviser before taking any action on any information dealt with in the presentation. Those
acting upon any information without advice do so entirely at their own risk.
Whilst this presentation is based on information from sources which are considered reliable, no representation or warranty, express or implied, is made or
given by or on behalf of the Company, any of its directors, or any other person about the accuracy, completeness or fairness of the information or opinions
contained in this presentation. No responsibility or liability is accepted by any of them for that information or those opinions or for any errors, omissions,
misstatements (negligent or otherwise) or for any communication written or otherwise, contained or referred to in this presentation.
Neither the Company nor any of its directors, officers, employees, advisers, associated persons or subsidiaries are liable for any direct, indirect or
consequential loss or damage suffered by any person as a result of relying upon any statement in this presentation or any document supplied with this
presentation, or by any future communications in connection with those documents and all of those losses and damages are expressly disclaimed.
Any opinions expressed reflect the Company’s position at the date of this presentation and are subject to change.
References to Over the Wire in this presentation are to the Over the Wire group including all subsidiaries.
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AGENDA
1. Introduction 4
2. Our Brands and Divisions 5
3. Customer Service 6
4. Growth Strategy 7
5. Full Year Results 9
6. Outlook 14
Page number
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1. INTRODUCTION – OVER THE WIRE OVERVIEW
Objective To be the telecommunications, cloud and IT services provider of choice to businesses in Australia
Business divisions
Data Networks (45% of FY2016 revenue)
Voice (33% of FY2016 revenue)
Cloud / Managed Services (11% of FY2016 revenue)
Data Centre Co-Location (11% of FY2016 revenue)
Value to customers
Delivering tailored, efficient and cost effective telecommunications, cloud and IT services;
Providing an integrated, customer focussed solution; and
Ensuring that customers receive a high quality service at all times.
Growth drivers Organic growth through both geographic expansion and cross selling more products and services to existing customers
Growth through complimentary acquisitions which add shareholder value
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2. OUR BRANDS AND DIVISIONS
Broad and integrated offering of products and services provides Over the Wire customers with a complete
solution from one supplier dedicated to customer service
Over the Wire
divisionsData Networks Voice Cloud / Managed Services Data Centre Co-Location
Over the Wire
brands
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Over the Wire has developed a culture which consistently
delivers high levels of customer service and retention.
Over the Wire has achieved this by:
o Tailoring a solution for a customer’s requirements;
o Being highly responsive and pro-active; and
o Ensuring that the product or service performs.
This high level of customer service allows Over the Wire to win
customers from its competitors and expand the services
provided to customers.
3. CUSTOMER SERVICE IS A COMPETITIVE ADVANTAGE
Notes:
(1) Over the Wire only (excluding Faktortel, Sanity & SpiderBox).
(2) A customers revenue is classified as retained in a given year if Over the Wire
had revenue from the customer in the current year and in the previous year.
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Over the Wire will continue to target > 20% Year on Year
organic growth.
Targeted organic growth will be achieved through continuing
the following strategies:
o Increased penetration in existing established markets
through expanding Over the Wire’s Sales function;
o Leveraging Over the Wire’s platform to sell more
products and services to existing customers; and
o Continued geographic expansion into NSW and Victoria.
4.1 GROWTH STRATEGY – ORGANIC GROWTH
Plans are being executed to continue to deliver strong organic growth
(A$m)
RevenueFY16
GrowthFY15 to FY16
QLD 17.0 31%
NSW 3.6 34%
VIC 2.0 39%
Other 1.0 19%
FY16 Revenue by Geography
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4.2 SELECTIVE ACQUISITIONS TO ACCELERATE GROWTH
Future acquisitions
• Over the Wire is well positioned to pursue acquisitions of approximately
$15m consideration without raising new equity.
• Positive pipeline of potential acquisition opportunities.
• Clear criteria for acquisitions including:
• EBITDA / EPS accretive;
• Assist with geographic expansion;
• Complement current offering; and
• Synergies resulting from cost savings and ability to cross-sell
other Over the Wire products.
Over the Wire will consider acquisitions with a compelling strategic fit, readily achievable synergies and which
add shareholder value
Completed acquisitions
• Consideration paid < 5 x EV/EBITDA.
• Successfully acquired and well progressed in the integration of:
• Faktortel (acquired in July 2015 for approximately $4.9m, with
both cash and Over the Wire shares as consideration).
• Sanity Technology (acquired in November 2015 for
approximately $3.5m including earn out, with both cash and
Over the Wire shares as consideration).
• Spiderbox (acquired the business assets in April 2016 for
$0.7m, cash consideration).
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5. HIGHLIGHTS OF 2016 FULL YEAR RESULTS
Statutory Trading Revenue up 46% to $23.6m
Organic Growth in Trading Revenue up 25%
EBITDA up 54% to $5.4m (Underlying EBITDA up 63% to $5.8m, if IPO costs are excluded)
NPAT up 45% to $2.8m (Underlying NPAT up 62% to $3.2m, if IPO costs are excluded)
EPS up 19% to 7.4¢ per share (Underlying EPS up 33% to 8.2¢ per share, if IPO costs are excluded)
Net Cash of $6.0m (includes deferred consideration payable on acquisitions as debt)
Successful acquisition of three businesses during the year – Faktortel, Sanity Technology and SpiderBox.
Full year results for Revenue, EBITDA and NPAT all exceeded Prospectus forecasts.
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Strong revenue growth:
o Data Networks – Ongoing strong organic growth of 28%
o Voice – 88% growth, including strong organic growth of 24%
o Cloud / Services – 47% growth, and best performing product with
31% organic growth
o Data Centre Co-Location – 35% growth, primarily driven by the
acquisition of Sanity
Significant increase in profitability is due to:
o Effective management of operating expenses;
o Strong revenue growth; and
o Strong Gross Profit Margin expansion, predominantly delivered
by Voice product lines.
5.1 PROFIT AND LOSS
(A$m) Statutory Organic
2015 2016 Change (%) Change (%)
Data Networks 8.2 10.5 28% 28%
Voice 4.2 7.9 88% 24%
Cloud / Services 1.8 2.7 47% 31%
Data centre co-location 1.9 2.6 35% 9%
Revenue 16.1 23.6 46% 25%
Gross profit 8.6 13.7 59%
Gross profit % 53% 58%
Other Income 0.0 0.3
Overhead Expenses 5.1 8.2
EBITDA (Underlying) 3.5 5.8 65%
EBITDA % 22% 25%
Interest 0.1 0.1
Depreciation 0.6 0.9
Amortisation 0.1 0.4
Tax 0.8 1.2
NPAT (Underlying) 2.0 3.2 65%
IPO Costs 0.0 0.4
NPAT 2.0 2.8 45%
EPS (cents) (Reported) 6.2 7.4 19%
EPS (cents) (Underlying) 6.2 8.2 33%
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5.2 STRONG ONGOING REVENUE GROWTH
A$m A$m
A$m A$m
A$m
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Continued strong conversion of EBITDA to cash.
Increase in cash and cash equivalents of $4.9m for the year.
IPO proceeds used for:
- Acquisitions Faktortel $3.7m
Sanity $2.3m
SpiderBox $0.7m
- Repayment of Debt
- Cost of the IPO
5.3 STRONG CASH CONVERSION
(A$m)
Receipts from Customers 17.7 25.9
Payments to Suppliers & Employees -14.5 -20.1
3.2 5.8
Interest Received 0.0 0.0
Interest Paid & Other Finance Costs Paid -0.1 -0.1
Income Taxes paid -0.2 -0.8
Net Cash From Operating Activities 2.9 5.0
Payments for Purchases of Businesses 0.0 -6.7
Payments for Property, Plant & Equipment -0.7 -1.7
Net Cash Used in Investing Activities -0.7 -8.4
Proceeds from Issue of Shares 0.0 9.6
Proceeds / (Repayment) of Borrowings 0.9 -1.2
Dividends Paid -1.5 0.0
Net Cash From / (Used in) Financing Activities -0.6 8.3
Net Increase in Cash & Cash Equivalents 1.6 4.9
Cash & Cash Equivalents at Beginning of the Year 0.6 2.2
Cash & Cash Equivalents at the End of the Year 2.2 7.0
2015 2016
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Net Cash of $6.0m
Debtors Days remain in line with last year at 18 days
Intangibles balance largely reflects the acquisitions of Faktortel and
Sanity Technology.
Settlement liabilities ($0.7m in total) reflects the fair value of potential
deferred consideration for the acquisition of Sanity Technology
Borrowings reflect equipment finance leases ($0.3m)
Strong balance sheet, remaining well positioned to consider further
acquisition opportunities that add shareholder value
5.4 BALANCE SHEET
(A$m)
Cash and Cash Equivalents 2.2 7.0
Trade and other Receivables 1.0 1.8
All Other 0.2 0.3
Total Current Assets 3.3 9.1
Property, Plant & Equipment 2.1 3.5
Intangibles 0.2 10.2
All Other 0.2 0.0
Total Non Current Assets 2.5 13.7
Total Assets 5.7 22.8
Trade & Other Payables 1.2 2.4
Borrowings 0.2 0.1
Settlement Liability 0.0 0.2
Current Tax Liability 0.6 1.4
All Other 0.3 0.4
Total Current Liabilities 2.3 4.6
Borrowings 1.3 0.3
Settlement Liability 0.0 0.5
Deferred Tax 0.0 1.3
All Other 0.0 0.1
Total Non-Current Liabilities 1.4 2.1
Total Liabilities 3.7 6.7
Net Assets 2.0 16.2
Issued Capital 0.0 11.3
Retained Profits 2.0 4.9
Total Equity 2.0 16.2
2015 2016
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Full year contributions from FY16 acquisitions:
o Faktortel ( 11 months contribution in FY16 )
o Sanity Technology ( 7 months contribution in FY16 )
o SpiderBox ( 3 months contribution in FY16 )
Continued strong organic revenue growth driven by:
o Further geographic expansion into NSW and Victoria
o Cross selling to existing customers
Margin expansion driven by:
o Leveraging FY16 investment in new sales and marketing staff
o Synergy benefits from FY16 acquisitions
o Scale Benefits
Selective acquisitions
6. OUTLOOK
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Thank you for your time
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