NetComm Wireless Limited 1H17 results presentation Ken Sheridan - PowerPoint PPT Presentation

NetComm Wireless Limited 1H17 results presentation Ken Sheridan – Chief Executive Officer and Executive Director Chris Last – Chief Financial Officer 24 February 2017 Listen. Innovate. Solve.

1H17: doing exactly what we said we would do 1H17: doing exactly what we said we would do Executing to plan Executing to plan   Jul: Frame Purchase Agreement signed with Nokia for NTC’s fixed wireless devices for Nokia’s global FastMile initiative Jul: Frame Purchase Agreement signed with Nokia for NTC’s fixed wireless devices for Nokia’s global FastMile initiative   Aug: R&D facility established in US Aug: R&D facility established in US   Aug: Key technical milestone for US fixed wireless contract passed – moved into small scale rollout and eco-system testing Aug: Key technical milestone for US fixed wireless contract passed – moved into small scale rollout and eco-system testing   Sep & Nov: Strengthened senior management team to support long term global growth Sep & Nov: Strengthened senior management team to support long term global growth   Nov: Master Equipment and Services Supply Agreement signed with nbn for supply of Distribution Point Units (DPUs) for nbn’s Nov: Master Equipment and Services Supply Agreement signed with nbn for supply of Distribution Point Units (DPUs) for nbn’s Fibre-to-the-Curb (FTTC) project Fibre-to-the-Curb (FTTC) project   Jul - Dec: Continued growth in units delivered under Ericsson / nbn fixed wireless contract Jul - Dec: Continued growth in units delivered under Ericsson / nbn fixed wireless contract   Feb 17: Received initial nbn FTTC order commitment of $28m for delivery between June to August 2017 Feb 17: Received initial nbn FTTC order commitment of $28m for delivery between June to August 2017 2

Key messages Key messages  Mix changing to Growth Businesses  Debt free and well funded to support growth objectives  Large opportunities in markets with Tier 1 customers; allows us to leverage into other projects  Experienced Board and Executive Team to leverage existing contracts for global expansion; Ken Sheridan appointed CEO & Executive Director following an independent Board-managed recruitment process  Investing in people to execute on substantial growth opportunities  Won 3 out of 3 major contracts tendered for so far with great customers  Ericsson/nbn Fixed Wireless: producing revenue now  nbn FTTC: ramp up expected during H1 FY18  US Fixed Wireless: ramp up expected during FY18 3

1H17: strong increase in Growth Business revenues and operating cash flow 1H17: strong increase in Growth Business revenues and operating cash flow Reinvesting to drive growth in FY18 and beyond Reinvesting to drive growth in FY18 and beyond   Delivered record 1H operating revenue of $47.0m Delivered record 1H operating revenue of $47.0m – – Revenues from Growth Businesses (M2M, Fixed Wireless) up 16.4% to $36.3m (1H16: $31.2m) Revenues from Growth Businesses (M2M, Fixed Wireless) up 16.4% to $36.3m (1H16: $31.2m)   Revenue mix continues to evolve towards our Growth Business Revenue mix continues to evolve towards our Growth Business – – 77% of revenue (1H16: 67%) 77% of revenue (1H16: 67%)   Reinvesting to enable strategic long term growth Reinvesting to enable strategic long term growth – – Reported EBITDA of $0.7m (1H16: $5.1m) Reported EBITDA of $0.7m (1H16: $5.1m) EBITDA adjusted for cumulative growth investments 1 up 41% to $12.5m (1H16: $8.9m) EBITDA adjusted for cumulative growth investments 1 up 41% to $12.5m (1H16: $8.9m) – –   Strong improvement in operating cash flow Strong improvement in operating cash flow – – Tighter management of working capital Tighter management of working capital – – Operating cash inflow of $6.1m (1H16: operating cash outflow of $(4.3)m) Operating cash inflow of $6.1m (1H16: operating cash outflow of $(4.3)m) (1) Excludes investment within operating expenditure relating to additional staff and infrastructure to support long term growth initiatives and share based expenses, from 1H FY15 4

Listen. Innovate. Solve. GROWING REVENUES AND OPERATING CASH FLOW

Growth underpinning further reinvestment Growth underpinning further reinvestment  ($m) 1H17 1H16 Change Operating Revenue up 1.2% to $47.0m – Composition of revenue continues to evolve with a Total Revenue 47.0 46.4 1.2% further increase in revenue from the Company’s Ericsson/nbn Fixed Wireless contract Reported EBITDA 0.7 5.1 (86.7%) – Growth Businesses accounted for 77% of 1H17 Revenue, compared to 67% in 1H16 EBITDA (adjusted for cumulative 12.5 8.9 40.5%  Decrease in reported EBITDA to $0.7m growth investments) 1 – Further investment into additional workforce ($4.0m) and infrastructure ($1.0m) to support (Loss)/Net profit after (1.7) 2.3 medium-term growth initiatives tax  Increase in EBITDA (adjusted for cumulative growth Earnings per share (cps) (1.2) 1.8 investments) to $12.5m – Increasing proportion of Revenue from high-margin business 1 Excludes investment within operating expenditure relating to additional staff and infrastructure to support long term growth initiatives and share based expenses, from 1H FY15 6

Continuing to increase Growth Businesses revenues Continuing to increase Growth Businesses revenues  Growth Businesses comprises M2M & Fixed Wireless (current revenue streams) – revenue up 16% to $36.3m  Traditional Business revenue decreased to $10.6m due to slow down in orders from powerline and filters business 46.4 47.0 Traditional business Growth business 10.6 15.2 30.5 30.5 Revenue split ($m) 15.8 17.0 36.3 31.2 14.7 13.5 1H14 1H15 1H16 1H17 Revenue split (%) 23% 48% 52% 44% 56% 67% 33% 77% 7

Continued growth in EBITDA adjusted for growth investments Continued growth in EBITDA adjusted for growth investments Business growth is underpinning further investment to support long term global growth opportunities  Growth investments made in staff and infrastructure position NetComm for global opportunities in key M2M, Fixed Wireless and DPU markets  In line with strategy of planned operating investment over FY17 12.5 Cumulative prior period growth investments ($m) Current period growth investments ($m) 8.9 6.8 Reported EBITDA ($m) 7.9 1.8 6.8 1.0 2.0 3.8 0.8 3.2 3.3 5.0 1.0 3.0 2.0 5.0 5.1 3.2 2.3 2.0 1.1 0.7 1H14 2H14 1H15 2H15 1H16 2H16 1H17 8

Substantial investment in people to fuel long term global growth Substantial investment in people to fuel long term global growth Reinvestment in people and infrastructure in line with our growth strategy is further enhancing our capabilities as we pursue and deliver on multiple global opportunities 1H17 2H16 1H16 2H15 Engineers 61 80 91 125 Sales & 31 37 29 34 Marketing Other 18 20 23 31 9

Strong balance sheet supports growth Strong balance sheet supports growth  No bank debt with Cash balance of $29.8m ($m) 31 Dec 16 30 Jun 16 Change – Provides flexibility to support current and future M2M, Fixed Wireless and DPU growth Cash and equivalents 29.8 36.5 (18.4%) opportunities  Cash used to fund investments in staff and Other assets 66.0 54.9 20.2% infrastructure Total assets 95.8 91.4 4.8%  Conservative balance sheet maintained with access to a currently unutilised banking facility of close to Borrowings 0.1 0.1 (15.3%) $15m  Strong balance sheet is conservatively structured to Other liabilities 20.3 14.0 44.6% support global growth initiatives currently being pursued Total liabilities 20.4 14.1 44.3% Total equity 75.4 77.3 (2.4%) 10

Strong increase in operating cash flows Strong increase in operating cash flows  $6.1m cash provided by operating activities ($m) 1H17 1H16 – Strong turnaround in operating cash flow of $10.4 million reflects tighter management of Net cash flows from operating 6.1 (4.3) working capital activities  Net cash flows from investing $12.8m cash used for investing activities (12.8) (5.6) activities – In line with growth strategy we have continued to invest in engineering Net cash flows from financing capabilities to support product development (0.0) 8.4 activities and long term growth Net (decrease) / increase in cash (6.7) (1.5)  Net decrease in cash of $6.7m – Conservative use of funds to support growth opportunities in M2M, Fixed Wireless and DPU markets 11

Listen. Innovate. Solve. OPPORTUNITIES IN RAPIDLY GROWING MARKINGS

Our methodology Innovation is applied to develop a Customer requirement met, exactly. We listen to our customers and unique device to meet the customer’s Problem solved identify their specific needs requirements 13