19 May 2022

Gamma Communications plc

AGM trading update

Continued strategic delivery - growth across all markets

Performance on track for 2022

Ahead of the Annual General Meeting ("AGM") to be held later today at Investec, 30 Gresham St, London EC2V 7QN, Gamma Communications plc ("Gamma" or the "Group") has produced the following update on trading.

Group overview

Gamma has continued to grow throughout the first part of 2022, while successfully executing against its longer-term growth strategy.  The Group has seen growth in its three operating segments and we expect this positive momentum to continue through the rest of the year.

A selection of highlights in the first part of the year includes:

·    Growth in gross profit in the Indirect Business for 2022 will be consistent with the previous year (c8% growth year on year).

·    New project wins for the UK Direct business will drive growth in the second half of the year; revenue growth will approach 10% (2022 against 2021).  We have experienced minimal impact from the well-publicised chip shortage. 

·    Strong momentum in Cloud PBX across our European business, with Germany in particular performing well. 

·    ARPU has been maintained through the successful up-sell of additional modules to Unified Communications as a Service ("UCaaS") customers.

·    We continue to monitor inflationary pressures - and do not expect any material impact to our financial performance in 2022.

Balance Sheet

Our balance sheet remains strong and underlying trading continues to generate cash.  Gamma had net cash of £54.0m at 30 April 2022; this is after paying £1.7m of contingent consideration on acquisitions and making early supplier payments of £6.7m to receive prompt payer discounts. 

Dividend

The proposed final dividend in respect of the year ended 31 December 2021 will be put to the normal shareholder vote at the AGM later this morning. The proposed final dividend is 8.8 pence (2020: 7.8 pence) being £8.5 million in cash terms. When added to the 4.4 pence interim dividend (2020: 3.9 pence) this will equate to a total dividend declared of 13.2 pence for the full year (2020: total 11.7 pence).

Outlook

The Board remains very positive about the prospects for Gamma.  The Group continues to deliver against its long term growth strategy.  Gamma has a compelling, technology-led product portfolio, effective routes to multiple customer bases and a number of market leadership positions.  The business is in a strong financial position, which enables it to continue to invest in products and market development.

Based on our trading in the first part of the year, we expect adjusted EBITDA and adjusted EPS for the year ending 31 December 2022 to be in the upper half of the range of market forecasts*.

The Board will provide its next trading update prior to the publication of the half year results on Tuesday 6 September.

* Note: Company compiled range is based on sell side analyst estimates which have been updated to take into account Gamma's 2021 audited results.  The ranges are Adjusted EBITDA £101.0m - £106.8m and Adjusted EPS 66.6 pence - 74.6 pence.