Trading Statement

14 January 2019

Gamma Communications plc

Trading Update

Growth in UK and expansion into Continental Europe

Full year EBITDA anticipated to be at the top of market expectations

Gamma Communications plc ("Gamma"), a leading, technology-based provider of communications services, is pleased to announce a trading update for the year ended 31 December 2018. This announcement is in advance of Gamma's Capital Markets Days in London and Edinburgh on the 15^th and 17^th January 2019 respectively, at which no new financial information will be provided.

Group overview

We are pleased to report that EBITDA for the year ended 31^st December 2018 is anticipated to be at the top of the range of market expectations, with revenue and adjusted EPS growing in line with consensus expectations, and significantly over the previous year. This reflects a continued strong demand in the UK business market for Gamma's portfolio of products and services.

Some of the highlights from the year include:

·     Continued strong growth in key products within the UK -

o  We continue to grow market share in SIP Trunking and Cloud PBX ("Horizon");

o  Access product (Broadband and Ethernet) volumes are also increasing at rates ahead of the general market.

·     Gamma has also expanded overseas for the first time, with the acquisition of Dean One in the Netherlands in October 2018. Management is pleased that the integration plan is in line with expectations. 

·     In December 2018, Dean One announced a strategic partnership with T-Mobile in the Netherlands and launched a "Mobile Wholesale" proposition across the Dutch market.  

·     Gamma is also able to offer services in Eire with the formation of Gamma Ireland.

·     In March 2018, Gamma will launch "Collaborate", its new Unified Communications product, which will be available as a bolt-on module to both existing and new Horizon customers, and will deliver exciting new features and a significant upsell and cross sell opportunity for both our customers and our channel partners.

·     The channel continues to grow and has had wins from partners such as Sabio and O2.

·     The direct business delivered significant new multi-year contract wins, including ALDI (UK & Ireland), BGL Group (financial services), Hidden Hearing and The London Stock Exchange Group.  In the Public Sector, Gamma achieved Stage 2 Health and Social Care Network (HSCN) compliance, in addition to being awarded new contracts with Fife and Thurrock Councils.

Cash

The closing net cash balance for the year was £35.5m compared to £31.6m at the end of the previous year, an increase of £3.9m in the year (which was achieved despite the acquisition of Dean One for an initial consideration of €13.2m). 

The Board expects to announce results for the full year ended 31 December 2018 on Tuesday 12 March.

Andrew Taylor, Chief Executive, commented on the results:

"We are pleased that Gamma has continued to grow strongly in the UK while simultaneously increasing our addressable market by expanding into Continental Europe.  We continue to improve our strong market share in our SIP and Cloud PBX products and we are excited to be introducing our new Collaborate product which will make our Cloud PBX product, Horizon, even more competitive.  Both our indirect and direct businesses continue to grow very well, with the latter performing strongly in the Enterprise and Public Sectors."