Gamma Communications PLC Scheduled Trading Update (7696Z)
16 Janeiro 2024 - 4:00AM
UK Regulatory
TIDMGAMA
RNS Number : 7696Z
Gamma Communications PLC
16 January 2024
16 January 2024
Gamma Communications plc
Scheduled Trading Update
Full year adj. EBITDA and adj. EPS growth expectations
reiterated delivering significant cash generation*
Gamma Communications plc ("Gamma" or the "Company"), a leading
provider of Unified Communication as a Service ("UCaaS") solutions,
announces a trading update for the year ended 31 December 2023.
Overall, the Board anticipates reporting a group financial
performance which will demonstrate healthy year-on-year growth in
both adjusted EBITDA and adjusted EPS for the year ended 31
December 2023. This is in line with the market consensus that was
increased following the publication of our 2023 interim results in
September 2023.*
Trading
The UK business has continued its robust financial performance
throughout the year in both the Gamma Business (formerly Indirect)
and Gamma Enterprise (formerly Direct) business units. The strength
of our performance, supported by price rises earlier in the year,
mitigated the UK inflationary pressures. Both business units have
delivered similar margin and volume trends to those we shared in
our 2023 interim results.
Gamma Business has continued to expand its UCaaS offering
through both new external partnerships and the internal development
of our own software, such as PhoneLine+. This more recent external
approach includes a deeper long-term partnership with Cisco and a
unique UK partnership with Ericsson-LG (following the acquisition
of EnableX Group in December 2023). Given our UCaaS portfolio has
now been strengthened by these opportunities with market leaders,
there is likely to be a need to adjust the carrying value of
intangible development costs in relation to some of our own
products which had been in development. This will be a non-cash
exceptional item with detail provided at the full year results,
following completion of reviews and the normal full year audit
process.
Gamma Enterprise has continued to have significant contract
wins, including UK wide SD-WAN solutions for Redde Northgate plc
and the Denholm Group, and a Microsoft Teams implementation with a
Contact Centre as a Service ("CCaaS") overlay for Gloucester County
Council. There have also been a number of wins for our AWS
omnichannel contact centre, via our enablement tool Smart Agent,
with the Government Digital Project and Shawbrook Bank. In
addition, Satisnet Limited, the UK-based Managed Security Services
Provider that was acquired in August 2023 has been successfully
integrated.
In Europe, we have seen an improved year-on-year financial
performance. The German and Dutch businesses have been combined
under a single leadership team. The financial growth of our Spanish
business has been CCaaS led with the successful integration of the
Neotel business acquired in 2022.
Following organisational changes related to the expanded UCaaS
offering and the combining of the German and Dutch senior
leadership team, the Company carried out a restructuring exercise
in late 2023, impacting around 5% of the group's workforce. Given
the one-off nature of this cost, it will be treated as an
exceptional item.
Cash
The closing net cash balance was GBP134.8m (2022: GBP92.5m),
which demonstrates Gamma's continued high cash generation from
operations, which as a percentage of adjusted EBITDA remained above
100%. The sizeable GBP42.3m net cash increase year-on-year was
achieved after taking account of the cash outflow for the two
acquisitions and the payment of dividends to shareholders. The two
acquisitions were Satisnet for an initial cash payment, less cash
acquired, of GBP8.3m and EnableX Group for an initial cash payment
(including the repayment of EnableX borrowings), less cash
acquired, of GBP18.9m. The dividend payment to shareholders
increased 14.3% to GBP15.2m (2022: GBP13.3m). Capital expenditure
remained within guidance.**
The Board expects to announce results for the year ended 31
December 2023, including an update on the Company's approach to
capital allocation, on Monday 25 March 2024.
Andrew Belshaw, Chief Executive, commented:
"Our staff and partners have delivered another set of positive
results for Gamma across all our business units in the UK and
Europe.
We welcomed the Satisnet and EnableX teams to the group and I am
excited about the partnerships with a number of the global tech
giants which bring us enhanced access to leading edge UCaaS and
CCaaS solutions, such as Cisco's Webex AI Portfolio. I am also
pleased with the strong European 2023 financial performance, as
well as the work done on a Gamma-wide HR system that will be
operational in Q2 2024 and the launch of the Finance ERP system
project which will enhance our capabilities from 2025.
Gamma continues to deliver high cash generation, allowing for
the self-funding of bolt-on acquisitions while growing net cash by
45% to GBP135m and is well positioned to continue to grow in 2024
with strong relationships, our evolving in-house and third-party
solution set and Gamma's resilient recurring revenue model."
Note: Company compiled range is based on known sell-side analyst
estimates.
* The latest known sell-side analyst estimates for the full year
ended 31 December 2023 are adjusted EBITDA GBP113.8m - GBP116.0m
and adjusted EPS 74.2 pence - 77.4 pence.
** C apex guidance provided at the 2022 full year results (21
March 2023) and reiterated at the 2023 interim results (5 September
2023) of GBP22m-GBP25m for the year ending 31 December 2023.
Enquiries:
Gamma Communications plc Tel: +44 ( 0)333 006 5972
Andrew Belshaw, Chief Executive Officer
Bill Castell, Chief Financial Officer
Rachael Matzopoulos, Company Secretary
Investec Bank plc (NOMAD & Broker) Tel: +44 (0)207 597 5970
Patrick Robb / Virginia Bull
Teneo (PR Adviser) Tel: +44 (0)207 353 4200
James Macey White / Matt Low / Rebecca
Hamer
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January 16, 2024 02:00 ET (07:00 GMT)
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