COMMS GROUP LTD — Interim / Quarterly Report 2023

Feb 21, 2023

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1[st] Half FY23 Results Presentation 22 February 2023

COMMS GROUP LIMITED (ASX: CCG)

https://commsgroup.limited

1 This document has been approved by the Board of Comms Group Ltd

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Agenda

Company Overview 3 Financial Highlights 5 Business Update 12 Strategy and Outlook 14 Appendix & Glossary 16

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COMMS GROUP | 2

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Company Overview

COMMS GROUP | 3

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Comms Group at-a-glance

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A leading B2B provider of cloud-based communications and managed IT services to businesses

We service our customers via three key divisions

We enhance business agility through innovative cloud-based communications and IT solutions

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Global
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Telco service Specialist UCaaS Award-winning IT provider to and CPaaS provider Managed Service Australian SME & to Wholesale, Provider supporting corp. mid-market Enterprise and corporate sectors (<1,000 Global MNCs customers' ICT employees) with (>1,000 employees) needs, focusing on the latest products with global network innovation and and award winning reach. developing longcustomer service. term relationships. www.nexttelecom.com.au https://commsgroup.global https://onplatinum.com.au

• Located across Sydney, Melbourne, Gold Coast, Singapore, Philippines, UK

• Refer https://commsgroup.limited/managementteam for management team

Note: Refer glossary for definitions.

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COMMS GROUP | 4

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Financial Highlights

COMMS GROUP | 5

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Key financial highlights

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Continued trend in growing revenue and underlying EBITDA

H1 FY23 H1 FY23 H1 FY23 Revenue Underlying EBITDA[1] Gross Profit Up 50% Up 16% Up 54% vs pcp to $26.0m vs pcp to $2.3m vs pcp to $12.2m

H1 FY23 Gross Margin 47%

1 Underlying EBITDA excludes net interest, tax, non-cash share LTIP costs, rent, depreciation, amortisation, business acquisition, integration, restructuring and non-recurring costs.

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COMMS GROUP | 6

Continued growth of the business

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Total Revenue
30
$26.0m
$24.0m
25
20 $17.3m
$16.1m
15
$9.1m
10
5
0
H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23
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Underlying EBITDA [1]
2.5 $2.30m
$2.10m
$2.00m $1.95m
2.0
1.5
$1.20m
1.0
0.5
0.0
H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23
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Continued revenue growth, increasing margins and solid EBITDA performance

1 Underlying EBITDA excludes net interest, tax, non-cash share LTIP costs, rent, depreciation, amortisation, business acquisition, integration, restructuring and non-recurring costs.

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COMMS GROUP | 7

Financial Performance 1H FY23

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• Gross Margins overall increased to 47% including acquired businesses for the full period.

• Doubtful debts have been kept to a minimum with little impact on collections.

• Opex costs increased by $3.8m to $9.9m, $3.5m of which is accounted for by the inclusion of onPlatinum for the full period.

• Other Opex cost increases, which resulted in reduced EBITDA margins included:

• Investment in new business development (sales), management & operations staff.

• IT costs inc. global IaaS hosting costs and SaaS related development costs.

$M	H1 FY22	H1 FY23
Operating Revenue	17.3	26.0
Cost of Sales	(9.4)	(13.8)
Gross Profit	8.0	12.2
Gross Margin (group)	46%	47%
Operating expenses	(6.1)	(9.9)
Underlying EBITDA	1.9	2.3

*Operating Expenses exclude business acquisition, integration and restructuring costs and share based payments

• Increases in some corporate costs.

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COMMS GROUP | 8

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Financial performance over time

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Operating Revenue
45 41.0
35
25.1 23.7
25
19.1
16.1
15 9.4
26.0
17.3
5 9.7 9.0
-5 FY20 FY21 FY22 H1 FY23
1st Half 2nd Half
Revenue by Business Unit
30
26.0
23.7
25
20 16.1 17.3 6.6 8.2
15 5.1 4.9 5.6
5.5
9.0
10
5 4.7 10.6 12.2 12.2 12.2
4.3
0
H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23
SME Global ICT
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Gross Profit
19.1
20
15
11.4 11.1
9.0
10
6.9
4.4
12.2
5
8.0
4.6 4.5
0
FY20 FY21 FY22 H1 FY23
1st Half 2nd Half
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EBITDA by Business Unit
4.1
6
3.2 0.4
1.4
4 2.3
2.1
0.9
2 3.8 0.5
2.4
1.8
0
-1.3 -1.5 -0.9
-2
FY21 est FY22 H1 FY23
SME Global ICT Corporate Centre / Overheads
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COMMS GROUP | 9

Cash Flow

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$M	H1 FY22	H1 FY23
Underlying operating cashflows	1.4	1.1
Less: Payment of business acquisition, restructuring, integration and one-off costs	(0.6)	(0.5)
Net cash from operations	0.8	0.6
Plus: net proceeds from borrowings	-	1.0
Less: rent (lease) payments	(0.2)	(0.6)
Less: net investing activities	(3.9)	(2.1)
Net cash inflows	(3.3)	(1.1)
Opening cash	5.5	2.9
Closing cash	2.2	1.8

• Underlying operating cashflow $1.1m.

• Net proceeds from borrowings includes $1.3m term loan drawdown to fund OnPlatinum Tranche 2 payment and loan repayments of $0.3m.

• Investing activities include $1.0m Tranche 2 payment for onPlatinum and final payment for Switched On of $0.5m.

• Expectation is that business continues to be fully funded for current growth profile with no additional capital needed. Group continues to generate positive cashflows moving forward.

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COMMS GROUP | 10

Balance Sheet

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• Strong balance sheet, net assets $32.3m representing an increase of $2.3m since 30 June 22.

• Cash of $1.8m at 31 Dec 22 post the final acquisition payment of $0.5m for Switched On and Tranche 2 payment for onPlatinum of $1.0m.

• $9.1m debt at 31 Dec 22 amortising at $1.0m per annum.

• Intangible assets $44.6m a decrease of $1.1m from 30 June 2022.

• Carried forward tax losses of $1.4m.

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30 June 31 Dec
$M
2022 2022
Working Capital (current assets less
(4.4) (0.2)
current liabilities)
Non-Current Assets 51.6 49.4
Non-Current Liabilities 17.2 16.9
Net Assets 30.0 32.3
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COMMS GROUP | 11

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Business Update

COMMS GROUP | 12

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Business Update

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OVERALL

PERFORMANCE

• Businesses continues to see good customer demand.

• Additional staff hires and some opex increases being experienced in order to support growth initiatives.

• Some additional oneoff legal and bus dev’t costs of circa $0.3m to $0.4m incurred in period.

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STRONG NEW SALES

• Continuing strong new sales levels - tracking to FY22 levels or better.

• New sales contacts signed for 6 mths to end Sept-22 of $4.5m ARR.

• Strong Jan-23 new sales of $0.5m ARR.

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INVESTING FOR FURTHER GROWTH

• ONP earn out ended 31 Dec 22 - don’t expect further consideration payable at this stage.

• Synergy plan commencing. Expect original business case of $2m EBITDA to be achieved from base business + synergies.

• Plan formulated for NextONP co-sell synergies

• Significant work undertaken last 6 months on Asia Pac strategy inc. expansion & licences in 6+ countries.

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KEY CUSTOMER WINS GLOBALLY

• Some good wins with global carriers and global contact centre providers YTD.

• Three new large Asia Pacific carrier partnerships established.

• Solid progress made with Vodafone with some new initiatives underway. Expect to see solid increases in revenue commencing in CY23

1 Underlying EBITDA excludes net interest, tax, non-cash share LTIP costs, rent, depreciation, amortisation, business acquisition, integration, restructuring and non-recurring costs.

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COMMS GROUP | 13

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Comms Group strategic imperatives

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Extend our S services in the T corporate R mid-market A sector with a T full ICT service E offering

T E G Y

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Become a key UCaaS and CPaaS provider throughout APAC region and globally to wholesale & enterprise sectors

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Grow to scale organically and via acquisitions to over $100m revenue with commensurate increase in profitability

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Expand domestically to become a national provider

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COMMS GROUP | 14

Outlook

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FY23 Revenue is expected to be $50m+

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Expect to start to see some solid growth in Global division from Vodafone & other Partners

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FY23 Underlying EBITDA is expected to be $5m+

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We expect to also continue to grow via strategic acquisitions as appropriate M&A opportunities arise.

“We are singularly focussed on continuing our growth journey and enhancing business agility through innovative cloud communications solutions for targeted businesses globally.”

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COMMS GROUP | 15

Appendix 1 - Products and services A full telco & ICT product suite and leading position as a global unified communications provider

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Voice services

Replace legacy ISDN/PABX lines

• Move traditional “inoffice” PABX to the cloud

• Advanced cloud business phone/hosted PBX (domestic)

Global PBX for International offices

Inbound 13/1300/1800 services

4G/5G Mobile & Mobile Broadband

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Data services

• High speed fibre-optic based data & internet services

• NBN services inc. NBN Enterprise Ethernet

• Own our own Layer 2 and Layer 3 (ISP) networks

• SD WAN in key capital cities

• Multi-carrier diversity services

• Access to Cloud Services

• Security (Firewall) services • SD-WAN/Firewall services inc. Velocloud (VMWare) and Fortinet specialisations

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Managed IT services

• 24x7 IT Managed services (highly structured and productised offering)

• Provision of ICT hardware

• Security services inc. Fortinet specialisation

• Cloud based services (Azure, VMWare)

• Own our own Cloud IaaS Virtual Server cluster (VMWare)

• Desktop as a service

• Backup as a service

• Managed telephony & data services

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Unified Comms Solutions (UCaaS)

• Industry leading Global Microsoft Teams calling (Direct Routing)

• Range of value-added applications

• Contact Centre

• Call Recording

• Call Analytics

• SMS messaging with integration to MS Teams

• Extensive Asia Pacific offering

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Wholesale/Global

• UCaaS & CPaaS services today

• Global MS Teams calling network

• Global hosted PBX

• SIP Trunks - various countries

• Call Termination Services

• Global DIDs/Telephone numbers provision

• 24x7 Global NOC and support

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COMMS GROUP | 16

Appendix 2 - Comms Group global network

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Comms Group is a leader in Microsoft Teams calling for global businesses.

Extensive international network with in-depth Asia Pacific coverage and carrier relationships.

Upgraded & expanded capacity of core Global voice network with 6 SuperPOP locations now in place – Sydney, Singapore, London, Frankfurt, US West & US East

Continue to expand network capability and capacity in key markets in Asia Pacific

Currently finalising adoption of service management portal for key partner clients allowing enhanced deployment of MS Teams calling services

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COMMS GROUP | 17

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Glossar y

Term	Definition
Cloud Communications	The provision of key communications services from cloud servers based in data centres and over high speed internet connections.
Cloud PBX, Cloud Phone, Hosted PABX	A cloud PBX functions the same as an in office PABX but is hosted in a cloud server accessed via the internet. This is becoming the preferred option for providers and customers today. Comms Group operates a global Cloud Phone network.
Corporate mid-market	For Comms Group, this is larger organisations with typically 500+ employees and monthly spend (MRR) of typically > $5,000.
CPaaS	Communications Platform as a Service is a cloud-based platform that enables developers to add real-time communications features to their own applications without needing to build backend infrastructure and interfaces. Comms Group provides call termination (SIP Trunks), telephone numbers and management across multiple geographies.
CTS	Call Termination Services – provision of a service by wholesale service providers to terminate voice calls in different markets or countries and on to different networks such as mobile and fixed voice networks.
Data Service	A broadband service that delivers voice, video and data over a private network or the Internet. NBN and fibre optic services are the most common forms of data services in the SME and corporate mid-market. Comms Group operates a domestic Layer 2 (data) and Layer 3 (internet) network with key Points of Presence (PoPs) in Sydney, Melbourne & Brisbane and aggregates a range of layer 2 wholesale access services.
Enterprise	For Comms Group, this is organisations with typically > 1,000 employees and operating multi-nationally as an MNC.
Fibre (optic)	Use of fibre optic networks to carry digital signals (data) via light transmission at very high speeds, transforming the telco and cloud services market globally.
ICT	Information Communication Technology is an umbrella term that covers the wide range of IT services and Communications services provided to businesses.
MNC	Multi-national corporate whereby the corporation has offices, facilities and assets in multiple countries.
MRR	Monthly recurring revenue is the monthly recurring annuity style revenue received from customers.
NBN	Australia’s national broadband network, which is a wholesale open access data network, replacing older copper and cable broadband with optic fibre networks, high speed switches and other technologies.
PABX	A typically in-house telephone switching system that interconnects telephone extensions to each other as well as the outside telephone network known as the public switched telephone network (PSTN).
SD-WAN	A software-defined wide-area network (SD-WAN) uses software-defined network technology, such as communicating over the Internet with encryption between an organisation's locations. Allow companies to build higher-performance WANs using lower-cost and commercially available Internet access. SD-WAN is replacing traditional data networks such as MPLS.
SIP	Session Initiation Protocol - being the standard IP telephony signalling protocol used to manage voice calls over the internet.
SME	For Comms Group, this is small to medium enterprise typically up to 500 employees.
Unified Communications (UCaaS)	A communications delivery model based on the cloud, providing key communications services including telephony (voice), video, messaging, chat, collaboration, document storage supporting teamwork, agility, mobility and work from anywhere. Comms Group is a leading provider of MS Teams calling with a global network and offering.

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COMMS GROUP | 18

Disclaimer

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The material in this presentation is a summary of Comms Group Ltd’s (CCG) activities and results, and is current at the date of preparation, 22 Feb 2023. Further details are provided in the Company’s full and half year accounts and results announcements released to the ASX.

No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation (“forward- looking statements”). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of CCG and its Directors) which may cause the actual results or performance of CCG to be materially different from any future results or performance expressed or implied by such forward- looking statements.

Undue reliance should not be placed on forward-looking statements and except as required by law or regulation, CCG assumes no obligation to update these forwardlooking statements. To the maximum extent permitted by law, CCG and its related corporations, Directors, officers, employees and agents disclaim any obligations or undertaking to release any updates or revisions to the information in this presentation to reflect any change in expectation or assumptions and disclaim all responsibility and liability for these forward-looking statements (including without limitation, liability for fault or negligence.)

This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor.

Due care and consideration should be undertaken when considering and analysing CCG’s financial performance. All references to dollars are to Australian Dollars unless otherwise stated.

To the maximum extent permitted by law, neither CCG nor its related corporations, Directors, officers, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

Certain financial data included in this presentation may be “non-IFRS financial information” under Regulatory Guide 230 Disclosing non-IFRS financial information published by ASIC. [The non-IFRS financial information in this presentation may include underlying profit after tax]. CCG believes this non-IFRS financial information, where included, provides useful information to users in measuring the financial performance and conditions of CCG. The non-IFRS financial information measures do not have standardised meanings prescribed by International Financial Reporting Standards and, therefore, may not be comparable to similarly titled measures presented by other entities, nor should they be considered as an alternative to other financial measures determined in accordance with International Financial Reporting Standards. Undue reliance should not be placed on any non-IFRS financial information.

This presentation is not and should not be considered as an offer or an invitation to acquire shares in CCG or any other financial product and does not and will not form any part of any contract for the acquisition of shares.

This presentation should be read in conjunction with other publicly available material. Further information including historical results and a description of the activities of CCG is available on our website https://commsgroup.limited

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COMMS GROUP | 19

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COMMS GROUP LIMITED (ASX: CCG)

This document has been approved by the Board of Directors