Gamma Communications Regulatory News (GAMA)

15 January 2020

Gamma Communications plc

Trading Update

Strong growth in UK and Netherlands

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

Gamma Communications plc ("Gamma"), a leading, technology-based provider of communications services, announces a trading update for the year ended 31 December 2019.

Trading

We are pleased to report a financial performance significantly ahead of last year with adjusted EBITDA and adjusted EPS for the year ended 31st December 2019 expected to be slightly ahead of consensus*, with revenues growing in line with market consensus expectations. This performance reflects a continued strong demand in the UK and Dutch business markets for Gamma's portfolio of products and services.

Cash

The closing net cash balance for the year was £53.8m compared to £35.5m at the end of the previous year, an increase of £18.3m in the year. This increase has been achieved despite a cash outflow in respect of acquisitions of £7.5m (Nimsys in the Netherlands in February and Telsis in the UK in November).

Overview of the year

Some of the highlights from the year include:

·; Continued strong growth in key products within the UK -

o We continue to grow volumes in SIP Trunking and Cloud PBX ("Horizon").

o Positive market reception for Collaborate, our fully integrated Unified Communications offering.

o Broadband and Ethernet volumes increased at rates ahead of the general market.

·; Our business in the Netherlands continues to increase volumes in its Cloud PBX and Mobile offerings at rates ahead of market growth. We acquired Nimsys in February 2019 to expand our presence in the Netherlands and the integration of that business has gone well.

·; We continue to develop our Unified Communications as a Service ("UCaaS") product road map.

o In March, we launched "Collaborate", which provides video and audio conferencing and instant messaging services which are fully integrated into Horizon.

o In November, we acquired Telsis, a developer of UCaaS solutions for small to medium size enterprises. This brought a combination of specialist development skills and engineering expertise to Gamma which will enable Gamma to expand its UCaaS offering.

o We will shortly launch a specific SIP Trunking product to support the deployment of Microsoft Teams (which is typically used by larger corporates).

·; The direct business in the UK has grown new sales and its order book significantly in 2019. This provides a strong foundation to meet our aspirations for growth in 2020 and beyond. We have also successfully focused in 2019 on upselling and cross selling to existing customers which has delivered significant year on year growth.

The Board expects to announce results for the year ended 31 December 2019 on Tuesday 17 March.

Andrew Taylor, Chief Executive, commented on the results:

"We are pleased that Gamma has continued to grow strongly in both the UK and the Netherlands. Our core SIP and Cloud PBX products continue to perform well and we are pleased with the progress of Collaborate. We are excited about the possibilities that the acquisition of the Telsis development capability affords for future product development."

END

* Note: Company compiled consensus expectations for Revenue, Adjusted EBITDA and EPS are £329.8m, £62.3m, and 39.9p respectively.