Trading Statement

12 July 2018

Gamma Communications plc

Pre-close trading update

Strong first half performance across product range

Gamma Communications  plc ("Gamma"), a leading, technology based provider of communications services to the UK business market, is pleased to announce a trading update for the six months ended 30 June 2018.

Group overview

We are pleased to report that Gamma has continued to perform well through the first six months of the year.  Based on this performance, management expect the results for the full year to be at the higher end of the range of Board expectations.

Some of the highlights from the period include:

·      Andrew Taylor joined as an Executive Director in April 2018, and became Chief Executive in May 2018.  The transition and hand over period with Bob Falconer, his predecessor, has been well received and successfully completed.

·      Continued strong growth across direct and indirect channels in Gamma's SIP Trunking, Cloud PBX and data services, with margins consistent with the prior period.

·      Full Market launch of Connect, the fixed/mobile converged product that integrates a mobile user with the Gamma Cloud PBX service, Horizon.

·      Gamma's new high capacity national optical fibre network project was delivered on schedule and on budget.  This enables Gamma to deliver services at 10Gb/s and above in the second half of 2018.

·      Introduced Cityfibre into our Ethernet build out programme to provide higher speed access and carrier diversity.

Cash

Gamma continues to have a very robust balance sheet, with strong cash generation from its trading activities.  Cash conversion from EBITDA (adjusted for Share Based Payments) is anticipated to be in line with previous levels and the closing cash balance for the half year is approximately £36.9m compared to £31.6m at the end of the previous year.  The Directors expect to propose an interim dividend in line with the stated progressive policy.

The Board expects to announce results for the half year ended 30 June 2018 on Monday 3 September 2018. 

Andrew Taylor, Chief Executive, commented on the results:

"It has been a real pleasure getting to know Gamma since I joined the business in April 2018.  I have been impressed by the quality of our people and our very positive corporate culture, coupled with the strength of our technology and the relationships with our channel partners and customers.

"I am delighted to announce that in the first half of 2018 we have continued to deliver strong revenue and margin growth across all business areas, representing a very positive performance and excellent set of financial results.

"I am looking forward to working with everyone at Gamma, as we focus our efforts on further developing and growing our business during the coming years."