Gamma Communications PLC Trading Statement (9733E)
13 July 2021 - 04:00PM
UK Regulatory
TIDMGAMA
RNS Number : 9733E
Gamma Communications PLC
13 July 2021
Tuesday 13 July
Gamma Communications plc
Pre-close trading update
Continued growth in first half
Gamma Communications plc ("Gamma" or the "Group"), a leading
provider of Unified Communications as a Service ("UCaaS") to the
business markets in the UK, Germany, Spain, and the Netherlands, is
pleased to announce a trading update for the six months ended 30
June 2021. This is an update to the statement made at the time of
the AGM on 20 May 2021.
Group overview
We are pleased to report that the Group has continued to perform
well through the first six months of the year. Growth in the first
half has been in line with the rate associated with market
expectations for the full year. This is despite the first half
again being characterised by lock downs in all of our territories
which restricted sales activities for both Gamma and our
partners.
In both the UK and Europe, our financial model has continued to
be robust given that over 90% of revenue is recurring and billed
monthly. Cancellations of existing contracts continue to be at very
low levels and bad debt remains negligible.
United Kingdom
In our UK Indirect business, net additions across all UCaaS
products have been positive and in line with the previous
period.
The performance of the UK Direct business is slightly ahead of
our expectations. Growth has been closer to that of previous years
despite the lower order intake during the first lockdown period in
2020. We have been awarded several new contracts during the period,
including The Berkeley Group (Cloud Contact Centre and UCaaS), RSM
(MS Teams) and The Royal Berkshire NHS Trust (SIP)
Overseas: Netherlands, Spain and Germany
Despite the markets being at a relatively early stage of their
development, each of our overseas businesses continues to grow its
Cloud seat base. This has been coupled with positive net growth of
both SIP and Mobile. Despite some difficult COVID-19 related market
conditions, the overall performance of our overseas business has
been in line with our expectations.
Product development
We have successfully launched a number of key products in the
UK, some of which were demonstrated at our recent Capital Markets
Day. These include Phone Line + (a replacement service for
customers who currently use basic telephone services) and Horizon
Contact (our fully integrated Cloud Contact Centre solution). Phone
Line + was developed by our recent acquisition, Mission Labs, and
Horizon Contact was developed by the team at Telsis (which we
acquired in late 2019). We have also launched our new mobile
service in partnership with Three UK.
We are very pleased with our continued new product development
and, by the end of July, all Gamma customers will have the option
to fully integrate their Horizon Cloud service with Microsoft
Teams. This option will enable Microsoft Teams users to be able to
make and receive calls from their desktop as they would have done
previously with a traditional phone.
Corporate activity
On 3 March 2021, the Group acquired Mission Labs Limited for
GBP40.2m (on a cash free basis) with up to an additional GBP6.0m
contingent deferred consideration payable over the next three
years. Integration of the business has gone well and its early
performance has been slightly ahead of expectations.
We continue to actively appraise acquisition targets in Europe
to gain scale and to strengthen capabilities.
Cash
Gamma continues to have a very robust balance sheet, with strong
cash generation from its trading activities which were in line with
previous levels. Closing net cash at the half year is approximately
GBP25.4m compared to GBP48.0m at the end of the previous year - the
strong generation of cash from trading being offset by the
acquisition of Mission Labs for GBP40.2m and a further payment of
GBP5.0m in respect of our acquisition of HFO in 2020.
Outlook
Current management expectations for the full year ending 31
December 2021 are that results will be in the upper half of market
consensus estimates.*
The Board expects to announce results for the half year ended 30
June 2021 on Tuesday 8 September 2021.
Andrew Taylor, Chief Executive, commented on the results:
"Despite the ongoing COVID-19 related difficulties across the UK
and Europe, I am encouraged by our performance in the first half of
2021. All of our staff have continued to work incredibly hard to
keep the business running remotely and our ongoing support of
partners and customers has been excellent throughout the period. I
am pleased with the development of our UCaaS strategy both
organically and through the acquisition of Mission Labs, and with
the release of an exciting range of new UCaaS products, including
Phone Line Plus and Horizon Contact. I am delighted to welcome all
of our new colleagues from Mission Labs into the Gamma family and I
am pleased to see the continued growth of Circle Loop and Smart
Agent (being the new products we gained as part of the
acquisition)."
* The Company understand the range of market estimates for the
year ending 31 December 2021 to be as follows: -
-- Revenue GBP442.4m - GBP460.0m;
-- Adjusted EBITDA GBP86.0m - GBP95.0m; and
-- Adjusted EPS 54.9p - 63.1p.
Gamma Communications plc Tel: +44 (0) 333 006 5972
Andrew Taylor, Chief Executive Officer
Andrew Belshaw, Chief Financial Officer
Tulchan Communications LLP Tel: +44 (0) 207 353 4200
James Macey White
Matt Low
Investec Bank plc (NOMAD & Broker) Tel: +44 (0) 207 597
5970
Patrick Robb
Virginia Bull
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END
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