Gamma Communications Regulatory News (GAMA)

4 July 2017

Gamma Communications plc

Pre-close trading update

Momentum maintained delivering strong results

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 2017.

Group overview

We are pleased to report that Gamma has continued to perform well through the first six months of the year. Some of the highlights from the period include:

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

· Continued good progress with our direct business, with significant new contracts including Macmillan Cancer Support and Savills. In the Public Sector, prior investment in this market is delivering success with several new contracts in health and education including the Central Manchester University Hospitals NHS Foundation Trust.

· Network investment and strategic partnerships with other carriers is accelerating data growth, whilst our Manchester venture "The Loop" has been selected by euNetworks for the provision of a significant network extension.

· Successful launch of an online marketing platform together with supporting programme - "Gamma Accelerate" - to help Channel Partners drive new business opportunities for Gamma products.

· Launch of Cloud Compute and Backup, providing packaged server applications for small to medium businesses.

· Extension of the Horizon Cloud PBX service to provide increased integration with specific vertical CRM applications in areas such as health.

· We remain on target for the launch of our fixed/mobile converged product later this year. With the migration from the previous Vodafone Thin MVNO now complete, Gamma's own Full MVNO service is now showing sound underlying growth.

Cash

Gamma continues to have a very robust balance sheet, with strong cash generation from its trading activities. Cash conversion from adjusted EBITDA* will be slightly lower than originally guided because Gamma has taken the opportunity to pay some suppliers in advance in return for improved commercial terms. Consequently, the closing cash balance for the half year is approximately £28.7m compared to £28.2m at the end of the previous year. The Directors expect to propose an interim dividend in line with the stated progressive policy.

The Board expect to announce results for the half year ended 30 June 2017 on 5 September 2017. 

Bob Falconer, Chief Executive, commented on the results:

"The first half of 2017 has been another period of solid progress for Gamma. We have continued to successfully grow revenue and margin across our core business areas, and I am particulalrly pleased with the progress we're now making in the Public Sector. Other initiatives, such as Gamma Accelerate, are enabling our primary route to market - the channel - to use Gamma products to increase its market share. We continue to place growing resources on continually enhancing our current products whilst developing exciting new capabilities with significant potential."

*Adjusted EBITDA is EBITDA before exceptional items and share based payments