COMMS GROUP LTD — Investor Presentation 2022

Feb 23, 2022

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1[st] Half FY22 Results Presentation 24 February 2022

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 7 Business Update 14 Strategy and Outlook 17 Glossary 21

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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 communications (UCaaS) and managed IT and cloud services to businesses

We service our customers via three key divisions

Our goal is to enhance business agility through innovative cloud-based communications and IT solutions

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Voice Services
Data Services
Telco services Global specialist Leading ICT
domestically to UCaaS [1] provider managed
the to wholesale, services provider
Unified SME/corporate enterprise and with strong
Communications mid-market MNCs (>1,000 reputation for
Solutions (UCaaS) sectors employees) quality, expertise
(<1,000 and innovation
employees)
Managed IT & Cloud
www.nexttelecom.com.au https://commsgroup.global https://onplatinum.com.au
Services
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140 staff located across Sydney, Melbourne, Gold Coast, Singapore, Philippines

1 Unified Communications as a Service (UCaaS): a communications delivery model based on the cloud, that allows companies to access key comms services including telephony (voice), video, messaging, chat, collaboration, document storage supporting teamwork, agility, mobility and work from anywhere.

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COMMS GROUP | 4

Key timeline of events

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August 2020

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• Expands global MS Teams calling network to China, Philippines, Tokyo, the US and Europe

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August 2021

December 2020

September 2021

• Acquisition of SME telco Switched On, building base in Melbourne, increasing annualised revenue to $36m+

• Acquisition of leading SME telco provider Next Telecom increasing revenue to $30m+ annualised

• Partnership with Vodafone Fiji

• 700% increase in underlying EBITDA to $2.5m for FY20

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February 2022

• Acquisition of leading ICT Services provider onPlatinum

November 2020

August 2021

April 2021

• Re-branding of parent company

• Branding change with Next Telecom serving domestic SME & Comms Group serving global, wholesale and Enterprise

• Acquisition of Melbourne based telco infrastructure owner Binary Networks

April 2019

• Inaugural debt facility of $10m with CBA established

• to Comms

Group Limited

• Peter McGrath appointed as CEO & MD

• Guidance upgrade to annualised revenue of $50m+ and annualised EBITDA of $7m+

• 28% increase in underlying EBITDA to $3.2m for FY21

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COMMS GROUP | 5

Products & Services Overview

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A highly focused B2B telco with a full 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 “in-office” 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

Wholesale/Global

• SIP Trunks

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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

• Multi-carrier diversity services

• Access to Cloud Services

• Firewall 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

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Managed IT services

• 24x7 IT Managed services

• Provision of ICT hardware

• Security services

• Cloud based services (Azure, VMWare)

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

• Desktop as a service

• • Backup as a service

• SIP & MS Teams calling services wholesale

• Call Termination Services

• Global DIDs/Telephone numbers – 100+ countries

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COMMS GROUP | 6

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Financial Highlights

COMMS GROUP | 7

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Key financial highlights

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Continued trend in growing revenue and underlying EBITDA

1H FY22 Revenue 1H FY22 EBITDA[1] Up 91% Up 63% vs pcp to $17.3m vs pcp to $1.95m

1H FY 22 Gross Profit Up 76% vs pcp to $8.0m

1H FY22 Gross Margin 46% Core margin ↑ to 53%[2]

Annualised revenue[3 ] expected to be +$50m

Annualised EBITDA[1,3 ] expected to be +$7m

1 Underlying EBITDA excludes net interest, tax, non-cash share LTIP costs, rent, depreciation, amortisation and business, integration & restructuring costs. 2 Gross Margins excluding acquired businesses

3 Annualised underlying revenue & EBITDA including all acquisitions finalised during the year and the recent acquisition of OnPlatinum Australia

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COMMS GROUP | 8

Strong continued growth within the business

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Revenue Underlying EBITDA [1]
20 2.5
$17.3m
18
$16.1m $2m
16 2 $1.95m
14
12 1.5
$1.2m
10 $9.1m
8 1
6
4 0.5
2
0 0
H1 FY21 H2 FY21 H1 FY22 H1 FY21 H2 FY21 H1 FY22
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Strong revenue growth, increasing margins and solid EBITDA performance

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

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COMMS GROUP | 9

Financial Performance 1H FY22

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• Gross Margins excluding acquired businesses continue to improve adding 3% to be just under 53%

• Acquired businesses are trading within expectations

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

• Excluding acquisitions, OPEX costs increased by circa $0.8m from:

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

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

• Increases in general costs inc. staff costs & business setup costs

$M	H1 FY21	H1 FY22
Operating Revenue	9.1	17.3
Cost of Sales	(4.6)	(9.4)
Gross Profit	4.5	8.0
Gross Margin (group)	50%	46%
Operating expenses	(3.3)	(6.1)
Underlying EBITDA	1.2	1.9

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

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COMMS GROUP | 10

Financial performance over time

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Operating Revenue
30
25.1
25
20 19.1
16.1
15
9.4
92%
10
17.3
5 9.7 9.0
0
FY20 FY21 H1 FY22
1st Half 2nd Half
Revenue Breakdown by Division
20
15 5.1
10
4.7 12.2
5
4.3
0
H1 FY21 H1 FY22
SME Wholesale & Enterprise
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Gross Profit
12 11.4
10 9.0
8 6.9
4.4
6 78%
4 8.0
2 4.6 4.5
0
FY20 FY21 H1 FY22
1st Half 2nd Half
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Revenue by Service Type
20
1.4
15
6.0
10
1.6
1.7
5 9.9
5.7
0
H1 FY21 H1 FY22
Voice Data Managed Services
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COMMS GROUP | 11

Cash Flow

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$M	H1 FY21	H1 FY22
Underlying operating cashflows	0.4	1.5
Less: payment of restructuring costs	(0.2)	-
Less: Payment of business acquisition and integration expenses	(0.2)	(0.6)
Net cash from operations	0.0	0.9
Plus: net proceeds from capital raisings	3.5	-
Less: rent (lease) payments	(0.2)	-
Less: investing activities	(0.3)	(3.9)
Net cash inflows	3.0	(3.3)
Opening cash	2.4	5.5
Closing cash	5.4	2.2

• Underlying cashflow from operations $1.5m

• Underlying operating cashflows excluding payments for prior and post period items was $2.021m

• Other investing activity includes $3.7m for the acquisition of Switched On

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COMMS GROUP | 12

Balance Sheet

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• Strong balance sheet, net assets $28.3m

• Cash of $2.2m at 31 Dec 21 post the acquisition payment of $3.7m for Switched On acquisition.

• Nil debt at 31 Dec 21. Debt of $8.1m on 11 Feb 22 post acquisition of onPlatinum.

• Increase in Intangible assets from $23.7m to $29.0m

• Carried forward tax losses of $2.1m with a tax benefit of $0.5mm

$M	30 June 2021	31 Dec 2021
Working Capital (current assets less current liabilities)	4.6	1.1
Non-Current Assets	27.3	32.2
Non-Current Liabilities	3.9	5.0
Net Assets	28.0	28.3

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COMMS GROUP | 13

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Business Update

COMMS GROUP | 14

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1H FY22 Business Highlights

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Strong level of new sales closed in the 1[st] half across both SME and Global (Enterprise & Wholesale) divisions. Total of $235k new sales MRR closed in the half.

Further wins with Global MNCs in the 1[st] half. Some good wins in wholesale area inc. Vodafone Fiji partnership announced Sept 21.

Good pipeline of opportunities in both SME & Global. Strong Global prospect pipeline with offshore deals via strategic partners.

Announced the acquisition of Switched On Australia in Aug 21 and onPlatinum in Feb 22.

Continued focus on extracting synergies in acquired businesses as well as integrating businesses with common systems.

Key IT systems work undertaken to improve productivity and effectiveness of sales & operations teams. Upgraded ConfigurePrice-Quote tools and group wide service desk implemented.

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COMMS GROUP | 15

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OnPlatinum acquisition – entering IT services market

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Acquires a leading provider of ICT[1] services with a highquality customer base

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Extends Comms Group’s product offering, broadening product set into the IT services market. Provides strong cross sell opportunity.

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Adds ~$16m in total group revenue, a ~45% increase on current business revenue

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Strengthens Comms Group’s position in the corporate mid-market

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Expands the Company’s domestic footprint into QLD

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Base EBITDA contributions of $2m[2] (incl. synergies) and expected to grow overtime

1 ICT refers to Information Technology (IT) services as well as Communications Services. 2 Annualised EBITDA contribution.

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COMMS GROUP | 16

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Strategy & Outlook

COMMS GROUP | 17

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Comms Group strategic imperatives

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Extend our services in the corporate mid-market sector with a full ICT service offering

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Become a key UCaaS provider throughout the APAC region and globally, servicing the wholesale and enterprise (MNC) 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 | 18

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Group strategic positioning for growth Comms Group is positioning itself for sustained growth via key business strategies

Corporate mid-market and enterprise sectors

• Expansion targeting businesses with 50 to 1,000+ seats via additional products & services and via key acquisitions to add capabilities and build scale.

• Increased focus on selling to corporate customers.

Expansion into Asia/ROW

Expansion into Asia/ROW

• Building strong momentum in this space today via our leading UCaaS position with Microsoft Teams calling

• Focused on key alliances/partners (wholesale), Asia Pacific presence and servicing MNCs, particularly from Australia and Asia

• Potential to expand into other key continents over time (USA, Europe, Africa, South America)

Niche markets and network capabilities

• Including expansion into other parts of Australia

• Niche strategies adding key products, systems and network capabilities – via key acquisitions and enhancing Comms Group’s capabilities

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COMMS GROUP | 19

Comms Group Outlook

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Continued strong
pipeline of key new sales
deals
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Good prospects pipeline
with offshore deals via
strategic partners.
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FY22 revenue expected in
Post-acquisition of
Recently finalised
onPlatinum, Comms the range of $40m to $43m
acquisition of onPlatinum
Group annualised
adding circa 45% to
overall revenue. revenue [1] is expected to be Underlying EBITDA [1 ]
$50m+ and annualised expected to be $5m to
underlying EBITDA [1,2] of $5.5m which includes 5
$7m+. mths trading from
onPlatinum.
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“We are singularly focussed on continuing our growth journey and enhancing business agility through innovative cloud based communications & IT solutions”

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COMMS GROUP | 20

Glossary

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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.
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 | 21

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, 24 Feb 2022. 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 | 22

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COMMS GROUP LIMITED (ASX: CCG)

This document has been approved by the Board of Directors