Trading Statement

23 January 2018

Gamma Communications plc

Trading Update

Continued growth in key markets

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 2017.

Group overview

We are pleased to report that Adjusted EBITDA* for the year ended 31 December 2017 is 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 in all non-traditional products -

o SIP Trunking and our Cloud PBX ("Horizon") continue to grow ahead of the market;

o Volumes of access products (Broadband and Ethernet) are increasing as a result of past investment; and

o Volumes growing as our mobile proposition becomes more established.

· Gamma successfully launched its fixed/mobile converged offering in December 2017.

· The direct business made further progress with significant new contract awards including; Care UK, Rush, Stackhouse Poland and Thrifty UK (the latter has adopted Gamma's cloud compute platform). Our Public Sector base continues to grow with key wins from Merseyside Police and Norfolk and Suffolk NHS Foundation Trust.

· The new high capacity national optical network project is on schedule and on budget. This will enable Gamma to deliver services at 10Gb/s and above in the second half of 2018.

Cash

The closing net cash balance for the year was £31.6m compared to £28.2m at the end of the previous year, an increase of £3.4m in the year. This was achieved despite a significant capex programme for the year which included c£13m spent on the network (of which c£5m was spent on the new national network).

The Board expects to announce results for the full year ended 31 December 2017 on Thursday 22 March.

Bob Falconer, Chief Executive, commented on the results:

"We are pleased that Gamma has continued its strong, organic growth across both its markets and its product range during 2017. In the channel, we have successfully increased our focus on helping to grow the market share of those partners that work closely with us, whilst our direct business successfully pursues opportunities in the larger enterprise and public sector markets. The launch of our first converged fixed/mobile offering in December also brings new opportunities."

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