Trading Statement

23 January 2017

Gamma Communications plc

Successful execution of growth strategy

Full year results anticipated to be slightly ahead of market expectations

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 year ended 31 December 2016.

Group overview

We are pleased to report that Adjusted EBITDA* for the year ended 31 December 2016 are anticipated to be slightly ahead of market expectations. This reflects a strong demand in the business market for Gamma's portfolio of products. Some of the highlights from the year include:

· Continued strong growth and increasing market share in Gamma's SIP Trunking, Cloud PBX and data services, with margins holding

· Continued growth in the number of channel partners in our indirect business

· Good progress with our direct sales business including significant wins including a large financial institution, Reed and Nando's

· Contract lengths continue to increase in the direct business

· Gamma successfully launched its Mobile Service and continues to develop its converged offering

Cash

Gamma continued to generate strong cash from its trading activities. Cash conversion from EBIT remained strong despite capital spend based on the success of the Cloud PBX product and payment of dividends. As a result, the closing cash balance for the year was approximately £28.2m compared to £24.8m at the end of the previous year. The Directors expect to propose a dividend in line with the stated policy.

The Board expect to announce results for the full year ended 31 December 2016 in late March 2017. 

Bob Falconer, Chief Executive, commented on the results:

"We are pleased with the performance of Gamma throughout 2016. While the competitive pressures in our market are well publicised, our differentiated strategy has led to strong growth across all of our markets. We continue to invest significantly in product development, our channel and making the company easy to do business with"

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