SMALL CAP CONFERENCE November29 2016 - DHH …...the European emerging digital economies in which...

The internet platform of the Emerging Markets of Europe

SMALL CAP CONFERENCE

November 29 2016

Giandomenico SicaExecutive President

2Investor Presentation / Confidential

MISSION

Established in July 2015, DHH aims to be a reference point in the hosting and SaaS industry in the European emerging digital economies in which the Internet penetration is still in a “beginner” phase, such as Italy, the Balkans (Slovenia, Croatia, Serbia, Bosnia, Albania, Macedonia, Montenegro, Greece) and the central-eastern Europe (Bulgaria, Romania, Slovakia, Hungary).

We are operating a market conglomeration, on the belief that these “unusual geographies” have a great growth potential.

Currently DHH has a strong market presence in Italy, Slovenia, Croatia and Serbia


THE OPPORTUNITY

The emerging digital markets of Europe are one step behind with regard to internet use and the integration of digital technology.

Dominion Hosting Holding, taking a leadership position in these markets, would like to take advantage of the natural growth trend already in place in order to fill the gap with more mature geographies.

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Connectivity Human Capital Use of Internet Integration of Digital Technology Digital Public Services

Source: European Commission, Digital Agenda Scoreboard 2015 – Targets Progress Report


THE MARKET AT LARGE

Even though it is stable and mature, the hosting and SaaS industry is still a fast-growing one.

The market cap of the public companies in this field is 200bn$, while 10 years ago it was 17bn$.

Source: Bessemer Venture Partners – Cloud Computing https://www.bvp.com/hub


OUR ACTIVITY

DHH is 100% focused on the hosting and SaaS industry.

We have almost no operating debts (EUR 76k on EUR 3,5M of revenue) and we have a strong positive cash flow (operating cash flow is 137% of the EBITDA).

Business Lines

§ Domain registration;

§ Shared Hosting;

§ Dedicated Hosting;

§ Productivity tools (e.g. SSL, Website builder, Business Class Email).

Our target customers are small and medium businesses.

Business Model

§ We sell subscriptions (mainly annual subscriptions);

§ We are paid in advance for the service;

§ Our payments are recurring.


OUR FIRST YEAR

Milestones 2015:

Julcreation of

OctInvestment

Slovenia

NovInvestment

Croatia,Serbia

Decinvestment

Italy

After less than 1 year of operations we have:

4companies

45people

90.000customers

200.000domains

A pocket-sized multinational company:

67%of revenue

Is outside Italy

1/3of revenue

In Italy

1/3of revenueIn Slovenia

1/3of the revenue

In Croatia & Serbia

LeadershipIn Italy, Slovenia and

Croatia


HISTORICAL OUTLOOK

All companies bought by DHH were stable, profitable and strongly cash flow positive even before the acquisition.

From the moment they were founded, they started growing organically YoY from zero to the current value, almost without operating debts and with a strong cash flow.

After the acquisition, DHH works to increase the performance of its portfolio companies (organic growth, margins) throught the value provided by its “Centres of Excellence”.

2015

Revenues 633k 589k 1,2M 1M

EBITDA 82k 45k 128k 202k

EBIT 75k 40k 127k 125k

(All founded between 2000 and 2006)

(financials are in EUR)The financials data included in the table have not been audited


OUR VALUE PROPOSITION

The local companies, even though they are market leaders in their own countries, are toosmall to effectively support specialised functions such as marketing, business development and internal IT systems (billing, provisioning).

DHH as a group has created 3 Centres of Excellence (CoE) for specialised functions, servingthe needs of individual countries more efficiently and achieving greater prowess:

Increase organic growth and improve the efficiencyand margins in portfolio companies

GrowthCentre of Excellence

TechCentre of Excellence

OperationsCentre of Excellence

+ +


OUR CENTRES OF EXCELLENCE

Focus:

§ Group pricing strategies

§ Upselling/cross-selling action

§ Launch brand new products

GrowthCentre of Excellence

Goal:

§ To increase revenue

TechCentre of Excellence

Focus:

§ Optimisation of the IT systems and infrastructure

§ Technology purchase

§ KPI for all the systems

Goal:

§ To reduce costs

Goal:

§ To increase the margins

Focus:

§ Common processes across the companies

§ Organization best practices

§ KPI for all the employees

OperationsCentre of Excellence


OUR BRANDS / Domovanje

Domovanje.com started as a side project of the web agency Klaro but its potential was quickly recognised and it was spun out as an independant company in 2005. The constant focus on the standardisation of business practices meant that the company was in such a good shape that it could successfully handle the acquisition of the larger competitor Domenca.com. The company is today the largest Slovenian web hosting provider and is still growing its market share.

www.domovanje.com

MAIN FINANCIALS

Financials in € .000 2014 2015 Var %

Revenue 598 633 +5%EBITDA 75 82 +9%EBIT 53 75 +41%

Created by the founders of DHH

40.000+ Domains

30% Market share

The financials data included in the table have not been audited


OUR BRANDS / Domenca

Domenca.com was the first company to offer domain name registration to Slovenian customers in their language. From its humble beginnings in 1999, the company grew together with the market and became the leading domain registration provider in the country. It is the only company in Slovenia that offers all ccTLD registration. The company also offers domain portfolio management services to some of the largest Slovenian companies.

www.domenca.com

Successful turnaround by the founders of DHH in 2012

MAIN FINANCIALS


Revenue 511 589 +15%EBITDA 28 45 +60%EBIT 13 40 +207%



OUR BRANDS / Plus hosting

Plus hosting was founded in 2001. Through organic growth and a couple of small acquisitions, it quickly became the largest hosting provider in Croatia with more than 20% market share and twice the size of its nearest competitor. The company is well-known for its technical competence and high quality of customer support. This reputation is creatingdemand for its system administration services.

www.plus.hr

13.000+ Domains

23% Market share

Early-stage presence in Serbia

MAIN FINANCIALS


Revenue 894 1M +11%EBITDA 142 202 +42%EBIT 76 125 +64%



OUR BRANDS / Tophost

Tophost was founded in 2004 with the clear goal to become the leading italian player in the field of low-cost web hosting services. Only a few months later, the company became a leader in the provision of shared platforms and services at a very affordable cost, offeringcomplete and innovative solutions at the less of competitors. Tophost established itself very quickly not only for its convenience but also for its advanced purchasing system.

www.tophost.it

140.000+ Domains

5% Market share

EBITDA +800% after the investment

MAIN FINANCIALS


Revenue 1,2M 1,2M +0%EBITDA 13 128 +884%EBIT 13 127 +876%



PROFIT AND LOSS

PROFIT AND LOSS (€/000)2014

(consolidated proforma IAS)

2015 (consolidated pro forma

IAS - audited)% growth

30/6/16(consolidatedIAS - audited)

Net sales 3.374 3.542 +5,0% 1.925

Turnover 3.445 3.723 +8,1% 1.935Gross margin 1.077 1.306 +21,2% 614

% on net sales 31,9% 36,9% 31,9%

EBITDA 281 523 +85,8% 184

% on net sales 8,3% 14,8% 9,5%

EBIT 163 308 +89,7% 131% on net sales 4,8% 8,7% 6,8%

Net profit 88 236 +166,8% 66% on net sales 2,6% 6,7% 3,4%

We created DHH in 2015 and we made all the investments this year

2014 is for representation purpose only in order to have a historical outlook on the results of portfolio companies before the investments

As a first step after the investments, we focused on margin optimization in our portfolio companies


BALANCE SHEET

BALANCE SHEET (€/000)2014

(consolidated pro forma IAS)

2015 (consolidated pro forma IAS

- audited)

Non current assets 4.551 4.542

- tangible assets 248 202

- intangible assets 32 96

- investments 4.201 4.201

- other non current assets 70 43

Net Working Capital (*) (602) (865)

- Operating Working Capital (149) (38)

Non current liabilities 0 (5)

Net invested capital 3.949 3.672

Net assets 3.288 3.416

Net financial position 661 256

- cash (253) (614)

- financial debts 914 870

NFP / Ebitda 2,4x 0,5x

Funding sources 3.949 3.672

(*) The net working capital is negative thanks to the deferred revenues.


NET FINANCIAL POSITION

CONSOLIDATED PRO-FORMA NET FINANCIAL POSITION(consolidated pro forma IAS - audited)

Financials in € .000 2015 30/6/2016

Cash & cash equivalent +614 +952

Current financial credits +4 +0,7

Short term financial debts -76 -90

Long term financial debts -798 -702

TOTAL -256 +160

Portfolio companies almost don’t have loans to finance their operations

Short and long term debts are almost all related to the acquisitions, which have been partially funded with equity and partially with debt financing (a mix of bank loan + vendor

loan)


OUR ACQUISITION STRATEGY

Our growth plan is focused on the acquisitions of companies that we can optimise after the acquistion, improving the organic growth and the margins thanks to the work of our “Centres of Excellence”.

Market Leadership Position

§ In the hosting industry in the emerging markets of Europe.

§ In the vertical niches within the hosting and SaaS industry in the global market.

Consolidating markets in which we are already

present (Italy, Slovenia, Croatia and Serbia), in

order to strengthen ourmarket leadership

position.

Entering in new geographies (e.g. Bulgaria

Romania, Albania, Macedonia and

Montenegro) buying the market leaders and then

consolidating market presence.

Buying small global SaaScompanies active in the global market in order to integrate them with the

web hosting business and the related customerbase of DHH group.


KEY PEOPLE

The key people of DHH are experienced in the management of a public company (2 IPOs on the AIM market) and in M&A operations (> 10 acquisitions executed in the last years).

Antonio Baldassarraco-founder,

Board Member

§ BootstrappedSeeweb

§ Invested in Docebo(exit 2015)

§ Advises DHH on the group business strategy

Giandomenico Sica co-founder,

President

§ Former partner of Digital Magics (IPO 2013)

§ Director of MailUp(IPO 2014)

§ In charge of DHH group growthstrategy and M&A

All the key people are strongly committed to developing the company and all have a lock-up agreement (18 months on 100% of the shares).

Uroš Čimzarco-founder,

CEO

§ Bootstrapped Domovanje

§ Acquired Domenca

§ In charge of growthstrategies of portfolio companies in DHH

Matija Jekovecco-founder,

COO

§ Bootstrapped Domovanje

§ Acquired Domenca

§ In charge of DHH group finance and operations


SHAREHOLDERS

Seeweb 25,35%

Giandomenico Sica 14,08%

Matjaž Jazbec 7,63%

Uroš Čimzar 7,63%

Matija Jekovec 7,63%

Martin Romih 7,63%

Tomaž Koštial 0,46%

Market 29,57%

100% 100%

100%

DHH

DHH.Si Tophost

Plus

100%InfoNet/HostingIT


INDUSTRY MULTIPLES

The selected companies are in the Software as a Service (SaaS) industry. In the selection there arecompanies listed in the US, 4 companies listed on AIM UK and 2 companies listed on AIM Italia.

The characteristics of the selected companies (and of DHH industry in general) are:• High margins à average is 26% (EBITDA margin 2015);• Expected «high double digit» growth à revenue growth in 2015-17 equal to +30% and EBITDA growth

equal to 20% in the same period.

Market cap Stock value P/E EV/Revenue EV/EBITDA EBITDA MARGIN (%)Rev

GrowthEBITDA Growth

Market Company (€ mln) 1Y 2Y 2016 2017 2018 2016 2017 2018 2016 2017 2018 2015 2016 2017 2015-17 2015-17

NASDAQ LogMeIn 1.356 -5,5% 38,4% 32,2 27,4 n.a. 4,0 3,5 n.a. 15,7 13,4 n.a. n.a. 25,7% 30,0% 10,0% 55,0%NYSE Shopify 1.976 -8,7% 59,2% n.a. n.a. 138,8 5,8 4,2 3,4 n.a. 244,8 53,9 n.a. n.a. 1,7% 51,9% n.a.NASDAQ Wix 937 6,6% 55,4% n.a. n.a. 41,9 3,4 2,6 2,1 29,8 22,8 11,2 n.a. 11,3% 11,6% 30,4% n.a.NYSE ZenDesk 2.033 8,4% 53,4% n.a. n.a. n.a. 6,6 4,9 3,8 n.a. 116,7 48,4 n.a. n.a. 4,2% 38,2% n.a.AIM UK Centralnic 50 31,9% -33,8% 12,2 9,3 n.a. 1,8 1,5 n.a. 6,9 5,2 n.a. n.a. 25,4% 28,5% 56,7% n.a.AIM UK Dotdigital 155 48,8% 46,7% 27,2 21,3 17,4 4,6 3,7 3,0 16,3 12,7 10,4 32,0% 28,0% 29,3% 24,3% 18,8%AIM UK Iomart 325 12,7% 8,7% 18,9 15,2 14,0 4,0 3,6 3,3 9,6 8,3 7,8 43,1% 41,6% 43,1% 15,2% 15,2%AIM UK Redcentric 326 27,8% 71,7% 20,0 17,5 15,9 2,8 2,6 2,4 12,0 10,8 10,2 21,0% 23,3% 23,6% 13,6% 20,3%AIM Italia Mailup 26 2,6% 21,0% 23,6 18,5 13,0 1,1 1,0 0,9 6,6 5,4 4,3 11,1% 17,5% 18,9% 68,0% 119,1%AIM Italia Piteco 69 16,1% n.a. 14,7 13,7 12,4 4,8 4,5 4,2 10,5 9,6 8,6 42,5% 46,2% 46,8% 7,2% 12,4%

MEDIAN 14,1% 35,6% 21,3 17,5 36,2 3,9 3,2 2,9 13,4 45,0 19,3 30,0% 27,4% 23,8% 31,5% 40,1%MEAN 10,5% 46,7% 20,0 17,5 15,9 4,0 3,5 3,2 11,3 11,8 10,3 32,0% 25,5% 26,1% 27,3% 19,5%Low -8,7% -33,8% 12,2 9,3 12,4 1,1 1,0 0,9 6,6 5,2 4,3 11,1% 11,3% 1,7% 7,2% 12,4%High 48,8% 71,7% 32,2 27,4 138,8 6,6 4,9 4,2 29,8 244,8 53,9 43,1% 46,2% 46,8% 68,0% 119,1%

Source: Bloomberg and public data


STOCK TREND: SHARE + WARRANT

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7/27/2016 8/7/2016 8/18/2016 8/29/2016 9/9/2016 9/20/2016 10/1/2016 10/12/2016 10/23/2016 11/3/2016 11/14/2016 11/25/2016

DHH: share + warrant FTSE AIM Italia FTSE MIB

-0,8% -2,1%+3,8%

IPO Price: € 10


FIRST 60 DAYS AFTER IPO

Started the market concentration in Croatia

Acquisition of:

MAIN FINANCIALS - InfoNet

Financials in € .000 2015 % 2014 % delta

Revenue 352 307 14%Net profit 96 27% 80 26% 20%

Purchase price: 466k EUR< 4x EV/EBITDA < 5x EV/Net profit


INVESTMENT SUMMARYWhy to invest in Dominion Hosting Holding

Dominion Hosting Holding (DHH) is building the internet platform of the Emerging Markets of Europe.

DHH is serving the basic needs of small and medium businesses that want to succeed online, offering domain registration services, web space and productivity tools to work via internet (e.g. business email).

Highlights

Growth company, profitable, strong positive cash flow, with almost zero operating debt;

International, strong market presence in 4 countries (Italy, Slovenia, Croatia and Serbia);

Experienced and committed management team with a strong track record in:

⦿ bootstrapping successful tech businesses in the hosting and software as a service industry

4 profitable web hosting companies created in the last 10 years;

⦿ executing cross border acquisitions

8 successful international acquisitions executed in the last 3 years;

⦿ listing and managing companies on public markets

3 IPOs on the Italian Stock Exchange in the last 5 years;

The market is growing fast. The market cap of public companies in this field (hosting and software as a service) is 200bn$, while ten years ago it was 17bn$. It is expected to be 500bn$ by 2020 (source: Bessemer Venture Partners https://www.bvp.com/hub).


LIST OF PARTIES

Nomad

Advance SIMGlobal coordinator

EnVent Capital MarketsJoint bookrunner

CFO SIM

Audit firm

BDOLaw firm

Eunomia


APPENDIX / DHH Warrant

Issuance Ratio For free 1 warrant for 1 ordinary share

Strike PriceIPO + 15%

Subscription Price Accounting Par (parità contabile) being equal to Euros 0.10

Exercise Ratio (Monthly Average Price - Strike Price) / (Monthly Average Price -Subscription Price)

Exercise periodThe period between January 1 2018 (included) and July 15 2012 (included). If there are the conditions, it is possible to exercise the warrant during this period

THANK YOU

For further information, please visit www.dominion.it

SMALL CAP CONFERENCE November29 2016 - DHH …...the European emerging digital economies in which...

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