Manx Telecom Preliminary results Year ended 31 December March 2018

Transcription

1 Manx Telecom Preliminary results Year ended 31 December March 2018

2 Results Summary Solid financial performance with strong underlying cash flows: Stable core domestic business and continued strong performances in Broadband and Global Solutions offset expected drop in Data Centre Reshaping of the business for future growth ongoing: Transformation Programme progressing well with the implementation of IT systems and improvements in internal processes and organisation structure Rollout of FTTP commenced Successful integration of Partitionware by business incubator Vannin Ventures and acquisition of majority stake in Goshawk On Communications. track to deliver Board expectations for the full year Progressive dividend policy re-iterated. Full year dividend of 11.4p, up from 10.9p 2

3 Financial Performance Revenues of 78.5m (2016: 80.8m) Fixed Line, Broadband and Data revenues stable (down 0.5%) Increased availability, and good uptake, of high-speed broadband Mobile revenues down 1.4% Reduction due to the introduction of lower roaming charges Revenue up 3.1% excluding retail roaming revenues Global Solutions up 6.2% Growth across the majority of the product portfolio Data Centre revenues down due to previously reported customer consolidation Underlying revenue growth of 6.6% Revenues up 4.9% in H2 compared with H1 Underlying EBITDA at 27.1m (2016: 27.7m) Underlying profit before tax 15.1m (2016: 16.3m) Underlying free cash flow 20.0m (2016: 16.4m) Net debt at period end 56.9m (2016: 52.4m) 3

4 Profit and Loss k Revenue 78,491 80,823 growth % (2.9%) +1.5% Underlying EBITDA 27,051 27,669 margin % +34.5% +34.2% Depreciation and amortisation (9,695) (9,142) Underlying operating profit (EBIT) 17,356 18,527 margin % +22.1% +22.9% Net finance costs and other income (2,262) (2,234) Underlying profit for the period 15,094 16,293 Net profit/(loss) on interest rate swaps 777 (1,238) Impairment of equipment (102) (464) Transformation programme (3,863) (4,335) Acquisition costs (30) (161) Loss on property revaluation - (1,274) Taxation - - Profit for the year attributable to: 11,876 8,821 Owners of the Group 11,938 8,821 Non-controlling interest (62) - Revenue and underlying EBITDA decline primarily due to data centre customer consolidation and change in scheduling of the directory distribution Depreciation up slightly Reported figures impacted by Transformation Programme 4

5 Cash Flow k Reported cash flows from operating activities 20,023 21,963 Transformation programme & acquisition costs 6, Underlying cash flows from operating activities 26,472 22,568 Capex (9,052) (6,425) Acquisition of subsidiary (2,007) (1,668) Other Cash flows from investing activities (10,949) (7,843) Reported free cash flow 9,074 14,120 Transformation programme & acquisition costs 8, Acquisition of subsidiary 2,007 1,668 Underlying free cash flow 20,010 16,393 Cash flows from financing activities (13,407) (14,047) Net (decrease)/increase in cash and cash equivalents (4,333) 73 Cash and cash equivalents brought forward 16,674 16,601 Cash and cash equivalents at end of period 12,341 16,674 Strong underlying operating cashflow Reduction in pension contributions from 1.2m p.a. to 0.6m Adjustments for specific items related to Transformation Programme and payments relating to acquisition costs. 5

6 Net Debt Net debt at 31 December m (2016: 52.4m) Bank debt 70m Loan term to 30 June 2020 Interest rate swap covering 50m of banking debt, matches loan term Net debt to underlying EBITDA ratio of 2.1x (2016: 1.9x) 6

7 Fixed Line, Broadband and Data Revenues stable at 31.5m (2016: 31.6m) Fixed line market share of 93% (2016: 95%) Broadband revenues +2.2% Increased availability of high speed broadband services Good take-up of Ultima and Ultima+, with 93% of premises and 52% of customers taking the service (2016: 40%) Fixed Line and Broadband tariff changes introduced in May 2017 Increasing fixed line rental charges Discounts for existing customers who subscribe to multiple services Commenced rollout of Fibre To The Premise (FTTP) programme Services currently available in the main business district and selected residential premises Plans to make services available to 4,600 by the end of

8 Mobile Slight reduction in Mobile, as expected, due to introduction of SmartRoam tariffs Revenue up 3.1% excluding retail roaming revenues Inclusive roaming tariffs launched in August 2017 Positive take-up by our post-pay customer base, and price reductions supported by improved cost control Excluding retail roaming, revenue up 3.1% supported by continued improvement in on-island network infrastructure 4G network performing well and providing 99% population coverage at speeds 10x faster than 3G services 8

9 Data Centre Data Centre revenues of 4.7m (2016: 5.9m) Revenue excluding consolidation impact up by 6.6% Revenue impacted by customer consolidation in 2016 Revenues up 4.9% in H2 compared with H1 Primarily due to good uptake of our intelligent cloud services; resulting in increase in recurring revenue Growth in non-recurring equipment sales Combined occupancy rates of 76% (2016: 71%) New suite of managed service products launching in 2018 Annual impact of customer consolidation has now been realised 9

10 Global Solutions Strong growth in Global Solutions with revenues up 6.2% Growth across majority of the product portfolio Significant growth in M2M and the international traveller market China Unicom UK mobile and roaming product now fully operational ahead of the 2018 travel season Initial revenues generated in H

11 Other Services Revenues down 23% to 5.9m (2016: 7.6m) Revenue decline as expected from previously flagged impacts Other Services includes: Paper and online directory advertising Equipment sales, IT managed services, interconnect revenues Vannin Ventures and its subsidiaries, including Partitionware Revenue decline was as expected, driven by: Rescheduling of directory distribution Fewer low margin kit sales 11

12 100% owned subsidiary of Manx Telecom launched in August 2016 Growth vehicle new innovative technologies, products & services Agile, lean, creative culture, dedicated team Successful integration following 2016 acquisition Isle of Man software developer specialising in telecommunication platforms Acquisition of a majority stake Provider of telecom solutions for those with hearing loss Patented technology, significant addressable global market 12

13 Update Technology simulated in network successfully IOM technology and commercial launch Q2 UK launch Q Addressable market 9.2m people (moderate to severe 2.5m) 13

14 Transformation Programme Launched Q4 2016, programme completion this year Programme progressing well with the introduction of new IT systems supporting improvements in processes and organisational structure in 2017 Focus on implementation of IT systems in 2018 m Planned Spend To Date spend remaining Operating expenditure Capital expenditure Capex transfer from BAU Total expenditure 11.4 Cash Flow Accrual/Creditors/Provisions

15 Regulatory back-drop Communications Commission is the regulator, a separate entity from Ofcom Ofcom still controls number allocation and spectrum on the Island Good working relationship with ongoing discussions re Isle of Man Digital Strategy Communications Commission Director recently retired, currently recruiting new Director Good visibility on regulatory outlook: No Cable TV or Local Loop Unbundling No third mobile licence applicant in spectrum allocation process Sure provided with code powers in November 2016; allows them to dig up roads and install cables Wholesale line rental (WLR) introduced September 2015 (3.3k non MT retail lines) Fixed Number Portability (FNP)- the ability to migrate numbers between IoM licence holders introduced August

16 Strategy Solid and stable core supporting growth opportunities Maintain our core market position by providing the highest levels of customer service enhanced by our Transformation Programme Grow by exploiting new market opportunities on- and off-island by leveraging our mobile infrastructure and delivering innovative products and services Supported by investment in our people and processes 16

17 Outlook Expect overall stable revenues in our core business, driven by a solid performance in Broadband and Mobile Future growth of the Global Solutions business Data Centre to return to growth in 2018, supported by new product development Provision of ultrafast FTTP broadband with Services rolled out in the main business district and selected residential premises Continued execution of the transformation programme Launch of Goshawk hard of hearing proposition Progressive dividend policy 17

18 18 Appendix

19 An overview of Manx Telecom 128 year heritage on the Isle of Man Leading communication solutions provider in all on-island sectors Approx. 300 staff; top 5 employer on Island 2 main office locations, 3 data centre premises, 1 retail store Strong reputation for customer service and network quality Over 70 engineers trained in IP technologies and more than 30 Cisco qualified specialists Good mix of business lines within Global Solutions Multiple Data Centre accreditations Good relationship with unions Strong relationship with Isle of Man Government 19

20 Revenue Breakdown k 2017 % of revenue 2016 % of revenue YoY growth Fixed Line, Broadband & Data 31, % 31, % (0.5%) Mobile 19, % 20, % (1.4%) Global Solutions 16, % 15, % +6.2% Data Centre 4, % 5, % (19.0%) Other 5, % 7, % (23.0%) Total Revenue 78,491 80,823 (2.9%) 20

21 Balance Sheet k Non-current assets 147, ,120 Current assets 41,745 40,809 Current liabilities (30,944) (30,624) Non-current liabilities (73,928) (76,348) Net assets 84,820 82,957 21

22 Global Solutions Product Overview Wholesale Voice Wholesale SMS MVNE International M2M/SSM Chameleon Wholesale carrier termination of voice minutes as a standalone offering and to support MVNE services. Revenue share to partners for voice termination to MT number ranges in relation to MVNE offering or for call forwarding services like conferencing or Unified Communications. Two way SMS messaging to allow wholesale customers to send and receive SMS via MT s extensive roaming and interconnect agreements. Use the commercial advantage of MT number ranges to generate a revenue share model to support value added services such as Personal Tracking, Competition Entry and Dating. High level MVNE integration exposing our Global roaming and interconnect agreements to International mobile service providers. Allows control of mobile service at a more granular level to enable partners to adapt services for specific end users markets. Enterprise Services. Smart SIM solutions that intelligently seek out the best signal and most commercially attractive network (e.g. can roam/connect to all UK Networks). Provide flexible Service Management Platform to enable distributors real time control of tariffs, provisioning, usage control etc. Attractive to customers where Mobile connectivity is critical for the delivery of the end service Lone Working, Alarm monitoring, Telehealth etc. 22

23 Global Solutions Customer Overview Voice Wholesale (WorldSIM) SMS Wholesale (TynTec) MVNE International (Matrix) M2M/SSM Chameleon (PeopleSafe) WorldSIM are predominantly a MVNE partner but also use MT for wholesale carrier voice termination. WorldSIM also provide a variation of call forwarding services that allow customers to provide friends and relatives with MT numbers that when called are forwarded either to mobile numbers or fixed numbers in any country required. Wholesale SMS Aggregator using multiple Network Partners to provide a wide spectrum of SMS services from Push Marketing through to more advanced Search Engine and Social Media services to the Internet Giants. Initially needed access to MT s large Global base of bi-lateral SMS agreements. MT was the initial founder Network Partner and as such offers an extremely high level of Integration and a strategic working relationship that can not be matched by our competition. Large ($100m) Indian distributor of mobile solutions to international travellers out of India. Previously had arrangements with many countries to provide local SIM solutions and now consolidating services onto a single SIM provided by MT that provides access to all countries and reduces reliance on multiple solutions for Matrix. Use MT as the most capable Technology Partner to glue together their International Network Agreements. Provide Panic Alarms to over 70,000 users that are part of the 6.8m Lone Workers in the UK. Dedicated device with a SIM inside that permanently tracks the individual and provides a button that once pressed alerts a monitoring centre, starts to send location information and records what is going on for assistance or evidential services. Whole service hinges on having access to the Mobile Network which is why the MT roaming solution is key. 23

24 Board of directors Kevin Walsh Gary Lamb Jeffrey Hume Chris Hall Non-executive Chairman Chief Executive Officer Senior Independent Non-executive Director Independent Non-executive Director Previously CEO of KCOM Group plc, retired July 2014 Ran KC Hull incumbent operator Senior roles with Electrolux group Joined MT in October 2011 as Finance Director Appointed CEO in July 2015 Chairman of Strix plc (previously CFO for 11 years) Former FD of Alfred McAlpine plc, AWG plc and TDG plc Holds numerous NED roles including at the LSE and Dover Harbour Over 30 years telecoms industry experience Previous experience at BT and Manx Telecom Ltd 24