COMMS GROUP LTD — Investor Presentation 2022

Feb 6, 2022

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onPlatinum Acquisition

COMMS GROUP LIMITED (ASX: CCG)

C OM M S GROUP | 1 This document has been approved by the Board of Directors

Key Highlights

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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

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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[2]

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Expands the Company’s domestic footprint into QLD

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Expect base EBITDA contribution of $2m[3] (incl. synergies) and expected to grow overtime

1 ICT refers to Information Technology (IT) services as well as Communications Services. 2 For Comms Group, Corporate Mid-Market refers to larger organisations with typically 500+ employees and monthly spend (MRR) of typically > $5,000. 3 Annualised EBITDA contribution.

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C OM M S GROUP | 2

Strategic Rationale

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Consistent with the Company’s strategy of pursuing near term accretive acquisition opportunities

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Expansion of domestic footprint

• Provides access to

• customers in QLD and NSW via onPlatinum’s services to SME and

• corporate mid-market

• New base in QLD with significant resources and capabilities

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Transformational acquisition

• Adds ~$16m in total group revenue,

• representing a ~45% increase on current group revenue

• Full year FY22,

• underlying EBITDA

• guidance upgraded to $5m to $5.5m which includes 5 months trading from onPlatinum

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Extension of service offerings

• Delivers a high-quality corporate customer base

• Broadens Comms

• Group’s product set into the IT services market

• Extension of offerings to existing client base via onPlatinum’s

• managed IT services and cloud offerings

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Consistent with M&A strategy

• Targets expanding

• offerings & client base

• Post-acquisition,

• annualised revenue is expected to be over

• $50m and annualised underlying EBITDA of $7m+ including

• expected synergies from onPlatinum[1]

1 Based on full year contributions from all businesses acquired over the past 12 months

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C OM M S GROUP | 3

onPlatinum business overview

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Trading via the onPlatinum and Tango Technology businesses

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Managed services

Domestically to the SME/Corporate sector Managed services, provision of hardware, professional and security (Up to 1,000 employees) services

• ~ 54% of revenue

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Data services

Wide Area Network (WAN) maintenance and services, WAN provisioning and SDWAN offerings

~ 11% of revenue

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Cloud services

Desktop as a service, Office 365 services, Windows cloud services, and Backup as a service

~ 25% of revenue

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Voice services

A fully supported PBX hosted system combining traditional phone systems, VOIP and cloud computing

• ~ 10% of revenue

• A strong reputation for quality, expertise and innovation

• An award-winning business with a demonstrated history of sustainable growth

• Infrastructure services that support over 55,000 requests per month – with only 4,500 that require human involvement

• ~500 customers with average revenue per customer (ARPU) of circa $3,000 per month

• Aims to have customers on longer term contracts of 3+ years

• Servicing all capital cities and headquartered on the Gold Coast with over 60 employees

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C OM M S GROUP | 4

A single point of contact for all clients

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Specialising in information communications and technology needs for clients across a broad range of industries

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IT & Cloud

Managed IT, Cloud, Infrastructure, Network, Backups & data recovery

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Security

• EndPoint EDR, Firewall, Domain Controllers, Dark Web

• Assessment for

• domains, Risk Watch for O365

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Consultancy

Project delivery, Virtual CIO, Risk assessment, Advisory board, Policy & Procedure documentation

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Print

Integrated solutions, National service coverage, Workflow automation

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Communications

Phone, Internet, Digital presence

C OM M S GROUP | 5

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onPlatinum partners with industry leaders A client base that has grown to ~500 clients with 7500 end-points globally, since 2012

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One of just 14 Australian businesses authorised and approved by Microsoft to build third party hosted solutions privately

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C OM M S GROUP | 6

Acquisition consideration

An initial consideration of $12m and an additional out-performance earn out component up to $6m, taking the potential maximum consideration up to $18m

Upfront Payment of $10m	• Cash consideration of $8m subject to adjustment for working capital and net debt; and • $2m in CCG ordinary shares issued at the 30-day VWAP of approximately 10.5c per share, with 100% escrowed for a period of 12 months and 50% escrowed for a period of 18 months from the date of completion
Deferred Payment to be paid on 1 July 2022	• A further cash payment of $1m; and • $1m in CCG ordinary shares issued at the lower of the 30-day VWAP or the closing share price at the issue date
Out-Performance Payment (earn-out)1	• Up to $6m based on a calculation of 24 times 2Q FY23 (December Qtr. 2022) audited EBITDA, subtracting the Upfront and Deferred payments. By way of example, if 2Q FY23 audited EBITDA was $600k, then a $2.4m Performance Payment would be payable to the vendors ($600k x 24 = $14.4m, less Upfront of $10.0m, less Deferred of $2.0m, equals $2.4m) In the event of the Performance Payment being due, consideration will be paid as follows: • 80% cash; and • 20% in CCG ordinary shares issued at the lower of the 30-day VWAP or the closing share price at the issue date with a floor price of 5c per share

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C OM M S GROUP | 7

1 In the event onPlatinum outperforms, the vendors will be entitled to an Out-Performance Payment

Acquisition funding

Funded by a new debt facility of $10m established with the CBA and CCG shares issued to the vendors

• Approval by the Group’s existing bank, CBA, of a Term Loan facility of $10m • Includes an increase to existing working capital facilities (overdraft & credit and procurement card facilities) CBA Term Loan facility • The facility will cover in full the cash consideration components related to the Upfront and Deferred payments as well as associated transaction costs • Negotiated terms and conditions are favourable and typical for facilities of this nature

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C OM M S GROUP | 8

Disclaimer

The material in this presentation is a summary of Comms Group Ltd’s (CCG) activities and projections and is current at the date of preparation, 7 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 forwardlooking 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 forward-looking 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 forwardlooking statements (including without limitation, liability for fault or negligence.)

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 nonIFRS 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 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.

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 www.commsgroup.limited

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C OM M S GROUP | 9

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COMMS GROUP LIMITED (ASX: CCG) This document has been approved by the Board of Directors