AUSSIE BROADBAND LIMITED — Interim / Quarterly Report 2021

Feb 16, 2021

First Half FY2021 Results presentation

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Disclaimer

Not an offer

The material contained in this presentation is for information purposes only and is intended to be general background information on Aussie Broadband Limited (ABB) and its activities and is dated 17 February 2021. It is for information purposes only and is not, and should not be considered to be, an invitation, offer or recommendation to acquire shares or any other financial products

Summary information

The information in this presentation is supplied in summary form, is of a general background nature and does not purport to be complete or to provide all information that an investor should consider when making an investment decision. It should be read in conjunction with ABB’s periodic and continuous disclosure announcements filed with the ASX.

Not financial product advice

This presentation is for information purposes only and it is not financial product nor investment advice (nor tax, accounting or legal advice) nor a recommendation to acquire shares and has been prepared without taking into account the objectives, financial situation or needs of recipients of this presentation. It is not intended that it be relied upon as advice to investors or potential investors, who should make their own enquiries and investigations regarding an investment in ABB and in relation to all information in this presentation (including but not limited to the assumptions, uncertainties and contingencies which may affect the future operations of ABB and the value and the impact that different future outcomes may have on ABB) and before making any investment decisions, should consider the appropriateness of the information having regard to their specific investment objectives, financial situation or particular needs and should seek independent professional advice appropriate to their jurisdiction before making an investment decision. Neither this presentation nor anything contained in it forms the basis of any contract or commitment and no agreement to subscribe for securities will be entered into on the basis of this presentation. ABB is not licensed to provide, and this presentation does not constitute the provision of, investment or financial product advice in respect of ABB’s shares. Cooling off rights do not apply to the acquisition of ABB shares.

An investment in ABB shares is subject to investment and other known and unknown risks, some of which are beyond the control of ABB. ABB does not guarantee any particular rate of return or the performance of ABB, nor does it guarantee the repayment of capital from ABB or any particular tax treatment.

Future Performance

Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this presentation and include statements regarding ABB’s intent, belief or current expectations with respect to business and operations, market conditions, results of operations and financial conditions, including, without limitation, forecasted economic indicators and performance metric outcomes. This presentation contains words such as ‘will’, ‘may’, ‘expect’, ‘indicative’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘probability’, ‘risk’, ‘forecast’, ‘likely’, ‘estimate’, ‘anticipate’, ‘believe’, or similar words to identify forward-looking statements. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward-looking statements. These forwardlooking statements reflect ABB’s current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond the control of ABB, and have been made based upon ABB’s expectations and beliefs concerning future developments and their potential effect on ABB. There can be no assurance that future developments will be in accordance with ABB’s expectations. A number of important factors could cause ABB’s actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements, including but not limited to, general economic conditions in Australia and other jurisdictions in which ABB or its related bodies corporate operate; exchange rates; competition in the markets in which ABB will operate, the inherent regulatory risks in the businesses of ABB and the duration of the COVID-19 pandemic. Assumptions on which forward-looking statements in this presentation are based may or may not prove to be correct and there can be no assurance that actual outcomes will not differ materially from these statements.

None of the Associated Persons nor any other person referred to in this presentation makes any representation as to the accuracy or likelihood of fulfilment of the forward-looking statements or any of the assumptions upon which they are based. When relying on forward-looking statements to make decisions with respect to ABB, investors and others should carefully consider such factors and other uncertainties and events. ABB is under no obligation to update any forward-looking statements contained in this presentation, as a result of new information, future events or otherwise, after the date of this presentation. As such, undue reliance should not be placed on any forward-looking statement.

Past performance information given in this presentation is given for illustrative purposes only and is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood or achievement or reasonableness of any forward-looking statements.

Financial data

All amounts are in Australian Dollars ($ or AUD) unless otherwise indicated. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation.

Investors should also be aware that certain financial data included in this presentation including EBITDA and measures described as “pro forma”, are “non-IFRS financial information” under ASX Regulatory Guide 230 (Disclosing non-IFRS financial information). The non-IFRS financial information financial measures do not have a standardised meaning prescribed by Australian International Financial Reporting Standards (AIFRS) and, therefore, may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with AIFRS. Investors are cautioned, therefore, not to place undue reliance on any non-IFRS financial measures included in this presentation

Disclaimer

No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability or fairness of the information, opinions and conclusions contained in this presentation. Any information in this presentation is made only at the date of this presentation, and opinions expressed reflect ABB’s position at the date of this presentation, and are subject to change. ABB is under no obligation to update this presentation. Neither ABB, its related bodies corporate, shareholders or affiliates, nor any of their officers, directors, employees, affiliates, agents, contractors, advisers or any other associated persons (collectively, “Associated Persons”) represents or warrants in any way, express or implied, that the information, opinions, conclusions or other information contained in this presentation, any of which may change without notice, is fair, accurate, complete, reliable, up to date or correct. ABB does not represent or warrant that this presentation is complete or that it contains all material information about ABB or which a prospective investor or purchaser may require in evaluating a possible investment in ABB or an acquisition or other dealing in ABB shares. To the maximum extent permitted by law, ABB and its Associated Persons each expressly disclaims and excludes all direct, indirect, consequential or contingent loss, damage or liability (including, without limitation, any liability arising from fault or negligence) that may arise from, or is connected to, this presentation, or the use of this presentation, or any other written or oral information provided by or on behalf of ABB.

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Agenda

First half 1 result Looking 2 ahead 3 Questions

Hauling 720 core optic fibre through the Sydney Harbour Tunnel.

Summary

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Continued strong organic growth across both residential and business segments.

Strong Financial Growth

• Revenue up 89% to $157.4m ($83.4m 1H20)

• EBITDA up 87% to $7.3m ($3.9m 1H20)

Strong organic connection growth

• Residential broadband up 30% to 313,193 services and Business broadband up 49% to 29,441 services since June 2020

• Total broadband services up 31% to 342,634 services since June 2020

Fibre project progressing well

• 79km now in the ground, 6 data centres and 7 nbn POIs now connected representing 7% of the project complete

• Build pipeline now running at scale with 150km of fibre to 8 data centres and 17 POIs under construction

• First direct customer connections active on the network

Broadband services

Taking market share in a highly competitive market

• Broadband market share (excluding satellite technology)

• 4.2% (up from 2.8% at December 19)

• The nbn network roll out is largely complete. Currently 70% of sales are from customers switching nbn providers and this is expected to increase

• 71,566 net residential additions

• 9,707 net business additions

Residential broadband

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350,000
300,000
250,000
200,000
150,000
100,000
Jun-19 Dec-19 Jun-20 Dec-20
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• 100% organic growth

Churn better than forecast

• Average residential connection churn for the period was 1.9% per month (forecast 2.1%)

• Forecast was higher for the period due to price rises from September to December 2020

• Average residential customer churn for the period was 0.9% per month

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Business broadband
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30,000
25,000
20,000
15,000
10,000
5,000
Jun-19 Dec-19 Jun-20 Dec-20
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Complementary services

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70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
Single line VoIP Mobile FetchTV
Jun-19 Dec-19 Jun-20 Dec-20
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Single line VoIP growth is stronger due to increased business customer signups.

Mobile growth is improving due to more competitive plan offerings and increased sales focus.

Expecting further mobile growth from Q4FY21 with new MVNO agreement signed and increased marketing focus to promote complementary services to existing customers.

FetchTV is only sold in the residential segment. Mobile & single line VoIP includes both residential & business segments.

Fibre network

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Victoria

• 6 data centres and 7 nbn POIs connected

• 68km of fibre completed for this segment

• Network is active and carrying customer traffic

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New South Wales

• Connections to 6 data centres and 6 nbn POIs at an advanced stage of construction - due to be completed by March 2021

• 10.2km of fibre completed in this segment including through Sydney Harbour Tunnel

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Western Australia

• Connections to 2 data centres and 4 nbn POIs under construction.

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• Have signed over 300 MSP partners on to the Carbon platform.

• Carbon is now billing in excess of $275,000 per month and is growing rapidly.

• Have recently launched Hosted PBX on to Carbon allowing MSPs to deliver business voice services to their clients.

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8.
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8.
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Investing in customer growth

Lower cost to acquire

Strong business growth

• Lower than forecast cost to acquire achieved in 1H21

• Overall marketing spend was $9.7m, 16% under budget whilst still achieving sales in excess of forecast

• New business campaigns have generated strong sales growth and raised brand awareness in the business segment

• Several national chains signed as key clients

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“ Fast painless setup and
a network that just works
for business.”
– ProMet101 Consulting. Mining, consulting & research.
#cantbeatfeedback
Aussie Broadband. Building better businesses with high-speed nbn™.
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Essential Business Bundle Call us on 1300 480 905
nbn™ 100 plan Included Premium VoIP plan
$99/month with unlimited dataTypical evening speeds: 86Mbps Static IP Included local, national & mobile callsFREE for the first 6 months!
Australian-based Priority support Award-winning No lock-in
customer service for businesses internet^ contracts
Promotional code: VOICE20
Visit aubb.me/business or scan the QR code to get started.
Service not available at all premises. Full terms and conditions available at aubb.me/terms. Offer code expires 30.09.2020 and only available on Small Business plans.
$99 price point promotes 100/40 speeds with unlimited data plan, and typical evening speeds of 86Mbps. Typical evening speeds valid as at March 2020. Bundled
with $20 Premium VoIP plan at no cost for the first 6 months with promotional offer applied, then total cost $119/month after. VoIP is for a single phone line and requires
VoIP compatible modem. Offer valid for ABN holders only. ^Winner of Canstar’s most satisfied nbn™️ customer award 2019. CBFBUS-CPC-1
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“ Australian call centre,
say no more”
- RonnieB, ProductReview
#cantbeatfeedback
Most satisfied nbn™ customers
Rated five stars in the 2019 Canstar Blue awards
for overall satisfaction, speed and reliability,
ease of sign-up and customer service.
$69/month
100% Australian support
When you need support our 100% Australian-based team will be there to help. Unlimited data
No lock-in contract, no setup fee
We believe our service is so good you won’t
want to go with anyone else, so you can
connect with us free of any unnecessary fees or commitments. Australian support
Fast, easy setup
A fast, easy setup is important when swapping
over to the nbn™, so we’ve made it easy -
enclosed is our nbn™ connection guide to walk you through the process. First month free
Your area is now live. Sign up to the nbn™ today!Call our Australian-based team on Use the code
1300 280 905 or sign up online AUSSIEFREE
aussiebroadband.com.au/saynomore
your broadband service prior to your first invoice being raised. Full terms and conditions available at aussiebroadband.com.au. Code expires 31.07.2020. CBFGRN20Things you should know. Service not available at all premises. All prices are subject to change without notice. * Additional charges may apply for a new housing development or subsequent line installation. $69 Unlimited data bundle uses the nbn™25 speed tier with typical evening speeds of 22 mbps. Promo code AUSSIEFREE provides a credit to the value of the first month of
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“ Finally, I am no longer hearing:
‘Dad! The internet’s not working’.”
– Paul B, ProductReview
#cantbeatfeedback
Aussie Broadband. Bringing peace to your home.
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Need internet that can keep up with your family?
Internet for Entertainment Best in class
everyone at your fingertips and reliable
Browse, stream and game! Whether it’s movie nights, binging your Industry leading reliability means
All at the same time with our range favourite show or watching the big spending less time on the phone with
of high speed plans, perfect for game, our broadband is built to meet us and more time doing things that
making sure no one misses out. the demand with optional Fetch really matter. Rated Canstar Blue’s Most
entertainment bundles. satisfied customers for 2019 and 2020
Get $10 off your first 6 months! Use code: PEACE
Call our Australian-based team on 1300 280 905
or sign up online aussiebroadband.com.au/peace
Additional charges may apply for new developments or subsequent line installs. Service not available at all premises. Promo code PEACE
provides $10 credit to the first 6 months Internet service. Offer only available on 50/20, 100/20, 100/40 and 250/25 unlimited plans.
Offer valid until 28/02/2021. Full terms and conditions available at aussiebroadband.com.au/legal.
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Building our brand

Continuing to build brand awareness

• Increased use of above-the-line channels such as TV and billboards has built higher brand awareness.

• This strategy has supported further scaling of our direct mail and digital campaigns.

• Prompted brand awareness increased from 33% in May 2020 to 38% in November 2020

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Melbourne Stars partnership

• Principal partners of the Melbourne Stars BBL cricket team for the 2020/21 season.

• First major sponsorship for Aussie which generated excellent coverage both on-ground and on TV.

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Customer experience

4.6 from 5523 reviews on

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• Customer satisfaction remained high even through price rise period of September to December

• Winner Customer Service Organisation of the Year, Large Business – Australian Service Excellence Awards

4.3 from 2782 reviews on

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4.8 from 1754 reviews on

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autsralianse enceawards
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Financial results

Revenue

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170
150
130
110
90
70
50
1H20 2H20 1H21
$ Millions
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Revenue up 89% to $157.4m due to:

• 81,273 net broadband additions in 1H21

• Growth in mobile, fetch TV and VoIP

• Strong growth in business broadband and Hosted phone

• Increase in retail broadband prices and lower than expected churn

EBITDA adjusted for IPO expenses

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9
8
7
6
5
4
3
2
1
-
1H20 2H20 1H21
(1)
$ Millions
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EBITDA adjusted for IPO expenses up 115% to $8.4m due to:

• Strong organic growth in both residential & business segments

• Marketing efficiency better than forecast albeit with net spend being lower than forecast due to additional nbn marketing rebates received and advertising mail delivery restrictions during COVID-19 lock downs

• Extended nbn CVC rebates yielded an above forecast benefit of $1.2m to the result.

Financial performance

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Profit and Loss
$’m H1FY21 H1 FY20 Change %
Revenue 157.4 83.4 89%
Network and hardware expenses (115.4) (64.5) -79%
Gross margin 42.0 18.9 122%
Gross margin % 26.7% 22.7% -
Marketing expenses (9.7) (3.0) -222%
Employee and administration expenses (23.9) (12.0) -99%
- -
IPO expenses (1.1)
EBITDA 7.3 3.9 87%
Depreciation and Amortisation (3.6) (2.5) -44%
Net interest expense (1.9) (3.1) 37%
Change in fair value of derivative (12.3) 0.3 4318%
Net profit before tax (10.5) (1.4) 673%
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• Revenue growth driven by ongoing volume growth

• Gross margin benefitting from static CVC charges for bulk of the year

• Significant increase in investment in marketing YoY fuelling revenue growth

• Employee and administrative costs almost doubling with both volume and upskilling in advance of IPO

• Embedded derivative associated with conversion mechanics of convertible note at IPO resulted in fair value adjustment

Financial position

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Balance Sheet
$’m Dec-20 Jun-20 Change
Cash and cash equivalents 50.4 21.4 29.0
Trade and other receivables 16.5 11.4 5.1
Other current assets 5.1 4.2 0.8
Property, Plant and Equipment 12.4 5.4 7.0
Right of use assets 13.9 12.4 1.5
Intangibles and financial assets 3.7 2.7 1.1
Total Assets 102.0 57.5 44.5
Trade payables and other trade liabilities 33.0 26.9 6.2
Lease liabilities 12.9 11.5 1.3
Employee benefit liabilities 3.0 2.2 0.8
Derivative - 10.4 (10.4)
Debt 0.5 27.2 (26.7)
Total Liabilities 49.4 78.3 (28.9)
Net Assets / (Liabilities) 52.7 (20.7) 73.4
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• Cash boosted by IPO proceeds

• Slight increase in debtor days with extended credit offered during COVID period

• PPE increase driven by fibre network construction

• Debt reduced through convertible note conversion and repayment of bulk of external debt ($5.0m)

Cash flow

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Cash flow statement
$’m H1FY21 H1 FY20 Change
Receipts from customers 171.5 90.4 90%
Payments to suppliers & employees (162.5) (88.5) -84%
Net interest payments (0.2) (0.3) 23%
Operating cash flows 8.8 1.6 453%
Payment for PPE (8.1) (1.9) -332%
Payment for Intangibles (1.4) (0.5) -145%
Investing cash flows (9.5) (2.4) -290%
Lease payments (2.7) (2.1) -32%
Proceeds from convertible note - 23.4 -100%
- -
Repayment of debt (5.0)
Net proceeds of IPO 37.4 - -
Other (0.0) (0.1) 93%
Financing cash flows 29.7 21.2 40%
Net increase in cash and cash equivalents 29.0 20.4 42%
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• Customer receipts and supplier/employee payments movements broadly consistent with financial performance • Strong correlation between EBITDA and operating cash flows in 1H FY21 • PPE spend related to fibre roll out • Intangible spend on systems development and IP addresses • Debt reduced through convertible note conversion and repayment of bulk of external debt • Successful IPO raised $40m gross proceeds

Looking ahead

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Continued growth

Residential

• Marketing spend will be accelerated for the remainder of the year to take advantage of opportunities as they present

• Additional focus on bundling with new campaigns to target existing customers towards multiple products

• Using nbn focus on fast campaign to further target growth into 100 Mbps and above tiers

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Fibre project

Business

• Fibre build now operating at scale with over 150km currently under construction

• Adding further pre sales engineering functions to target customers with more complex needs

• Business specific marketing now operating at scale and providing strong lead generation

• Business sales call centre increased and achieving good conversion results

• Builds are now underway in Victoria, New South Wales and Western Australia

• Queensland and South Australia presently in final design

• Exploring partnerships to reduce the need to construct redundancy paths and access regional POIs not originally contemplated in the initial project design

• Pipeline of direct fibre customer orders building with signed orders ahead of forecast

Carbon

Network growth

• Focus now shifting from onboarding MSPs into scaling up order volume from existing MSPs

• Next phase of network expansion underway to take the company past the present 500,000 connection design

• Continued platform development with mobiles the next product to be added into the platform

• Presently assessing vendors and design pathways to support

• 1 million connections

Relaunch of mobiles

MVNO agreement signed with Optus Wholesale

• Will replace existing MVNO (mobile virtual network operator) agreement for access to the Telstra mobile network

• Will transition our existing 19,000 mobile customers on to the Optus network

• Flexible agreement with the ability for Aussie to create new plans without the need for wholesaler involvement

• We will offer 4G failover for both residential and business nbn customers

• Includes access to the full Optus 5G network and fixed wireless offering

• Expecting new plans and handsets to be available Q4 FY2021

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Refreshed marketing

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Switch to freakin’
fast internet
For a bloody good price.
5000+ 5 star reviews
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h
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Freakin' fast internet backed by
Save up to
our 100% Australian based team.
Home Fast Home Superfast $180
Typical evening speed 99Mbps Typical evening speed 248Mbps on freakin'
fast internet!
$89/month $99/month
for the first 6 months for the first 6 months Sign up online at
(normally $99/m) (normally $129/m) aubb.me/freakinfast
Unlimited data Unlimited data or use the
QR code below.
Use code: FAST10 Use code: FAST30
T&Cs. Additional charges may apply for new developments or subsequent line installs. Typical evening speeds (7pm-11pm). Based on the
ACCC Measuring Broadband Australia Report. Valid as of Dec 2020. Service not available at all premises, Advertised prices are inclusive
of the discounted offer, $10 off for 6 months on Home Fast plans and $30 off for 6 months on Home Superfast and Home Ultrafast plans.
General t&c's apply, for more info visit aussiebroadband.com.au/legal. Offer only available to new customers and valid until 31/03/2021
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Guidance

As noted by the Reserve Bank of Australia recently, a high degree of uncertainty continues to surround Australia’s economic outlook. The potential exists for further COVID-19 geographic lockdowns as outbreaks occur, with associated bandwidth usage impacting the company’s CVC and network costs.

The company is accelerating its investment in marketing in H2 which impacts short term EBITDA but drives long term growth. The company expects an impact from the NBN HFC stop sell which has been allowed for in the guidance below.

As a result, the Board provides the following updated guidance for FY2021:

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Updated Guidance for FY2021 Prospectus
Revenue $345 million to $355 million $338.0 million
Normalised EBITDA [1] $13.0 million to $15.0 million $12.3 million
Residential broadband [2] 380,000 to 410,000 368,172
Business broadband [3] 37,000 to 42,000 Not provided
Total broadband 417,000 to 452,000 Not provided
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1. Normalised EBITDA is EBITDA excluding IPO costs

2. Residential broadband connections

3. Business broadband includes small business, enterprise and wholesale services

Thank you investors@aussiebb.com.au

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