capital markets day - the uk's complete cloud solutions

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CAPITALMARKETS DAYStrategic RefreshMay 2021

iomart.com

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1. Present iomart’s medium to long term strategy

2. Provide our view on the market opportunity for iomart

3. Outline strategic focus areas

4. Explain how we will support these from a brand and operations perspective

5. Outline the financial plan and KPIs

6. Meet the iomart team and provide an opportunity for Q&A

OBJECTIVES OF THE DAY

CAPITAL MARKETS DAY

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INTRODUCING THE LEADERSHIP TEAM

CAPITAL MARKETS DAY

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Content Person Role

Introduction Ian Steele Chairman

Strategic roadmap Reece Donovan CEO

Q&A Reece Donovan

Marketing Strategy Sharon Mars Leach CMO

Operational model and customer service Neil Christie COO

M&A re-fresh & evolving business model Scott Cunningham CFO

Q&A Reece Donovan

AGENDA

CMDCEO STRATEGIC ROADMAP

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In a year which will change many markets,responses will determine the winners

The Board’s strategy refresh process had input from across the business

We sought views of analysts and investors

Industry specific consultants helped us assess the speedand direction of our changing markets

We are very well placed - our infrastructure, customer baseand revenue model give us a great opportunity

Imperative to get the execution right

INTRODUCTION


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OVERVIEW OFIOMART

iomart.com

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SNAPSHOT OF THE BUSINESS


UK HEADQUARTERED PROVIDER OF CLOUD HOSTING AND MANAGED SERVICES

FOCUSED ON DIRECT SELLING TO THE UK MARKET AND UK HEADQUARTERED BUSINESSES IN THE SME SPACE

OVER 10,000 CUSTOMERS IN CLOUD SERVICES. OVER 70,000 CUSTOMERS IN EASYSPACE

400+ EMPLOYEES MAINLY IN THE UK WITH A SMALL TEAM IN THE US

13 DATACENTRES LOCATED ACROSS THE UK, LINKED BY 2000+ KMS OF PRIVATE NETWORK INFRASTRUCTURE, WITH OVER 25 POINTS OF PRESENCE GLOBALLY

£112M OF TURNOVER (FY21) WITHMARKET LEADING PROFITABILITY

FINANCIALLY RESILIENT, HIGH LEVELS OF RECURRING REVENUE, AND STRONG CASH GENERATION

20+ YEARS IN THE BUSINESS, 21 ACQUISITIONSIN THE LAST 10 YEARS, LISTED ON THEAIM MARKET OF THE LONDON STOCK EXCHANGE

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WHERE WE ARETODAY

iomart.com

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EVOLUTION SUMMARY TO-DATE

Phase 1Strong growth – 2007 to 2018

Market

Demand exceeding supply, limited competition

iomart

Good progress to £100m revenue, 40% margins

Successful mix of organic & inorganic growth

2007 – acquired core datacentre estate

Customer acquisition accelerated

Small acquisitions to bolster customers & assets

Strong focus on private cloud over colocation

Consulting and on-premise capabilities added

Mix of recurring & non-recurring revenue streams

9 datacentres and UK wide network in place

Phase 2Plateau – 2018 to 2021

Market

UK dedicated server market growth slows

Public cloud becomes widely accepted by SMEs

Covid-19 causes varied business disruption

iomart

Growth plateaued below 5%

Continue to generate good margins

Focus mainly on private cloud, including M&A

Sales team additional investment - yields two quick

Enterprise deals then stalls

Our ability to provide agile services is challenged

Phase 3April 2021 onwards

Build on our core

Align to the market

Invest in the growth areas

Improve service & skills

Focus on expertise

Be distinctive


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EXTERNAL MARKET REVIEW


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ASPIRATION

Exceed £200m+ revenue within 5 years

Be a leading secure hybrid cloud business - “iomart”

Be a trusted business & service partner for our customers

Expand our solution, service, skill and geographical reach


CONNECT, SECURE, SCALE

12CMDCEO STRATEGIC ROADMAP

Grow existing base and target Enterprise opportunities

Core Portfolio Organic Growth

New Services& Geographies

Acquisitions

Hybrid, Security, Digital Workplace (Unified Comms) & Connectivity

Expand customer base & skillsets inorganically

Run rate Revenue & EBITDA

Protect what we’ve got

STRATEGIC VALUE CREATION ROADMAP

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HYBRID CLOUD

CAGR20-24

16.6%

OPPORTUNITY

Hybrid cloud solutions allow customers to gain value from deploying capabilities

across a combination of on-premise, private and public clouds

WHAT IS IT? MARKET INSIGHTS

Public cloud adoption growing 100% public cloud not desirable Customers want options Avoid vendor lock-in Balance costs vs. flexibility Need to provide a path to public

OUR AMBITION WHAT WE NEED TO DO

To be a leading hybrid cloud managed services provider in the UK and beyond

servicing both SME and Enterprise customers

Target public cloud capabilities Expand our Microsoft skillsets Build out AWS skills Develop reference customers Partner in the short term for gaps Look for suitable acquisitions

Only Public Cloud

Hybrid

Only Private Cloud


£m

Source: Modelled from Synergy Research Group, December 2020

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SECURITY

CAGR20-24

9.7%

The provision of security services covering monitoring, event detection

and resolution in order to help customers protect their businesses from

cyber events


Significant remote / hybrid working Rapid deployment of new solutions Increase in ransomware attacks Business ops cannot be impacted Security now a Boardroom issue Increase in security services demand


To be recognised within the security sector as an emerging leader in

delivering 24/7 security services with the unique benefit of fully-managed

remediation

Continue to sell our new service Build out additional capabilities Ensure robust 24x7 operations Acquire new skillset & customers Look for possible acquisitions

0.370.50

0.660.79

0.901.02

1.15

2018 2019 F 2020 F 2021 F 2022 F 2023 F 2024


OPPORTUNITY

£b

Source: IDC Research, Inc, November 2020

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CONNECTIVITY

Provision of bespoke networking between any UK location, utilising our

existing network alongside our partners and suppliers to deliver cost effective,

highly resilient & managed connectivity services for our clients


Increase in remote / hybrid working Rural locations suffering Poor user experience using apps Interrupted video / voice calls Lack of connectivity resilience Limited monitoring & QoS


To extend our current capabilities in order to provide a one-stop shop (if

required) for our customers’ total connectivity needs

Limited investment required Heighten awareness of our offering Develop our partner relationships Bundle connectivity packages Engage customers having issues


CURRENT NETWORK

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DIGITAL WORKPLACE - UNIFIED COMMS

CAGR20-24

20%+

OPPORTUNITY

Provides the basis for organisations to bring together multiple legacy systems

into a single unified platform which enables their employees to communicate

with any device anywhere


Small market but important Demand for hybrid working Desire for richer, more diverse

comms Need to simplify / consolidate

systems Screen interaction more common Remove need for desk phones


Digital Workplace - To be able to offer selected unified communications services to our customers. This is

currently a gap in the iomart portfolio.

Partner play Partner identified & engaged Build out options being worked First opportunities being pursued

IP PBXOn-Premise UC Applications

Pure and Hybrid Voice Comms

UCaaS (Applications)

UCaaS (Voice)


£m

Source: IDC Research, Inc, August 2020

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REINFORCING OUR VALUE PROPOSITION


Hybrid Cloud

Connectivity

Security

Unified Comms


ORGANISATION, CULTURE & VALUES

Our people are at the heart of what we do

Align around our company values

Deliver on results – be ambitious

Embed learning into the way we work – be curious

Care for our people, society and the environment

One iomart

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STRATEGIC PILLARS

GROW

1. New enterprise customer wins

2. No of customers taking new services

3. Successful bolt on acquisitions

DELIVER

1. Customer satisfaction

2. Technical roadmap

3. Partner relationships

ENABLE

1. Consolidation of remaining sub-brands

2. Consolidation of legacy systems & tools

3. Continued ESG improvement

ONE IOMART TEAMpowered by a flexible, learning

and ambitious organisation



WHAT HAS BEEN DONE, WHAT IS NEXT

FY21 FY22 FY23

Connectivity & Unified Communications Rollout

Hybrid Service Rollout

Security Maturation

Security Expansion

Sales, Operational and Organisational Improvements

Geographical ExpansionBrand Development

M&AStrategy Development

Transition & Close out FY21Hybrid Prep

ESG

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MARKETING STRATEGYSharon Mars-LeachCMO

iomart.com

22CMDCMO - MARKETING STRATEGY

CREATING A BRAND STRATEGY

Why iomart exists and who we are

How iomart behaves and action we take

What iomart saysand how we say it

How we make our customers and people feel


OUR APPROACH


we make you unstoppable by enabling you to

connect, secure and scale anywhere, anytime.

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ACROSS THE CUSTOMER JOURNEY

Customer is passive / not actively looking for product or unaware they need a solution.

Represents majority of target market at any given time.

Customer is active / looking for product and researching options (why, what and how).

Represents minority of target market at any given time.

Customer is active / transacting with the business to purchase their chosen product or solution.


Customer is mainly passive / has purchased the product or solution and is using (or has used) it.



BRAND LAUNCH TIMELINE

H1 (FYE22)

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OPERATIONAL MODEL AND CUSTOMER SERVICENeil ChristieCOO

iomart.com

28CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE

A STRONG FOUNDATION

Owned datacentre assetsOwned fibre network24/7 Service operations

Private connectivityAutomated infrastructureSymbiotic security model

Leaders in transformationService accountabilityTrusted advisors for change

29CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE

ONE IOMART

A suite of the underlying tooling is being harnessed to deliver the futureproduct and service portfolio and deliver competitive advantages

Automated infrastructure provisioning

Turnkey cloud provisioning

Highly automated specialist webhosting

Devops tooling and Container Security

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CUSTOMER JOURNEY

CMDCOO - OPERATIONAL MODEL AND CUSTOMER SERVICE

Introduction of a service team to work across the business and put the

customer experience at the heart of everything we do

OperationsSales

Service

RUNBUILDPLAN

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M&A REFRESH & EVOLVING BUSINESS MODELScott CunninghamCFO

iomart.com

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14.6

33.0

13.6

61.5

1.3

FY08 to FY21 M&A - Equity Deal Value (by area)

Mass Hosting

Self Managed Infrastructure

Self Managed Infrastructure (Magento)

Cloud Managed Services

On-Premise Reseller

M&A: HISTORIC

CFO M&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS

M&A Execution

21 Acquisitions completed since April 2007. Total of £124m deal consideration

Funded from cash generation / revolver loan facility

M&A focussed on recurring revenue, “sticky” customer base, existing profitability and ability to consolidate resources

M&A Integration

21 Companies consolidated into 5 main UK trading legal entities

“Lift and shifts” from 3rd party DC providers to our own datacentre estate & network

Utilisation of central support functions

M&A: Recent impact on Group organic growth

Recent acquisitions included continued consolidation of UK Self

Managed Infrastructure (Dedicated Server) businesses:

- FY18 Dediserve & Simple Servers, FY19 Bytemark and

FY20 Memset - £20m deal value / £14m acquired revenue

Value enhancing but do not add to the Group Organic growth

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FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21

M&A Deal Value per year by area

Mass Hosting Self Managed Infrastructure Self Managed Infrastructure (Magento)

Cloud Managed Services On-Premise Reseller

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M&A: FUTURE

CFOM&A RE-FRESH; EVOLVING BUSINESS MODEL; NEW KPIS

Despite ongoing consolidation, the UK market place remains fragmented

Future M&A to focus on acceleration of Group’s Organic growth. Recurring revenue remains an unwavering criteria

Greater focus on capability expansion in Cloud related products & services

Within next 2 years focus on UK; Europe or North America could be considered thereafter

Hosting – Public Cloud

Data Centres – Retail Colocation

Hosting – Managed Hosting/Cloud

Cloud Platforms

Data Centres – DCH-focused Wholesale

Broader-comms/IT

players

Shared Hosting Domain Names

Digital Delivery Consulting

Infastructure Services

Telecoms & Networks

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REVENUE PORTFOLIO


Revenue Portfolio

Mass Hosting (Easyspace) Self Managed Infrastructure

Cloud Managed Services Non-Recurring

Cloud Managed Services

Sub-Brand: none

Professional Services Colocation & connectivity Managed Cloud Services BaaS, DRaaS, iMSS Public Cloud (Microsoft/AWS)

c. 1,400 Customers

Self Managed Infrastructure

Sub-Brand: Rapidswitch, Redstation, Dediserve, SimpleServers, Bytemark, Memset,Sonassi

Dedicated Servers Virtual Shared Servers Connectivity Magento hosting platform

c. 9,000 Customers

Non-Recurring

Sub-Brand: Cristie Data

Hardware Reselling & support Software Licences Professional services / consulting

c. 250 Customers

Domains & Mass Hosting

Sub-Brand: Easyspace & Hosting UK

Domain Names Shared Hosting Web packages

c. 70,000 Customers

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iomart Cost Base

People Cost

DC & Equipment (incl. depn)

Licences

Power

Bandwith/Connectivity

Reselling: hardware/software

Others

COST BASE: SHARED DELIVERY ASSETS


SHARED DELIVERY ASSETS: Recurring revenue streams make use of the datacentres, network infrastructure plus people resources

Most recurring revenue streams will have core costs of:

• Datacentre infrastructure & staffing• Power• Connectivity• Server & storage equipment requirements

More complex managed services add greater level of 3rd

party providers (including licence costs/extra connectivity), design & build costs and 24/7 support services. Any Hybrid offering would include Public Cloud consumption costs

PEOPLE DATACENTRE CONNECTIVITY LICENCING POWER

RECURRING REVENUE

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FINANCIAL KPI


TODAY MEDIUM TERM

£112m

37%

18%

17 %

> £200m

More than 30%

More than 15%

More than 15%

Speed & accuracy

depends on M&A and

timing

REVENUE

EBITDA %

PBT %

AVERAGE FREE CASH FLOW AS % OF REVENUE

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SUMMARY

iomart.com

38CMDSUMMARY

SUMMARY & CONCLUSIONS

STRONG PLATFORMOur infrastructure platform is proven, reliable and highly resilient with a highly skilled team capable of managing complex customer propositions

FANTASTIC CUSTOMER BASEWe have a fantastic and diverse customer base across multiple verticals from SMB to corporate, with multiple case studies, proving our ability to deliver

FINANCIAL STRENGTHStrong and predictable financial model, +90% recurring revenues and good cash generation to invest in future growth

SIGNIFICANT MARKET OPPORTUNITYWe have substantial headroom and clear customer demand to grow our propositions in hybrid cloud, security and other markets

CLEAR GROWTH STRATEGYWe have the capabilities, customers and clear strategic route-map in place for future growth, capitalising on our core strength with adjacent solutions, M&A and new geographies

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iomart retains full copyright ownership, rights and protection in all material contained in this document unless otherwise stated.No part of this document, in whole or in part, may be reproduced, stored, transmitted without prior written permission from the iomart Group PLC.This document is Copyright © 2020 iomart Group PLC

THANKYOUAny Questions?

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