Gamma trading at upper end of market expectations

Gamma Communications said in an update on Thursday that it has continued to grow throughout the first part of 2022, while executing against its longer-term growth strategy.

The AIM-traded firm, which was holding its annual general meeting, reported growth in its three operating segments, with that positive momentum expected to continue through the rest of the year.

It reported growth in gross profit in its indirect business was set to be consistent with the previous year’s 8% rate.

New project wins for the UK direct business, meanwhile, were set to drive growth in the second half, with revenue growth expected to near 10% year-on-year.

Gamma said it had experienced “minimal impact” from the well-publicised chip shortage.

Strong momentum was described in cloud PBX operations across its European business, with Germany in particular performing well.

Average revenue per user was maintained through the successful up-sell of additional modules to its unified communications-as-a-service (UCaaS) customers, the board added.

The company said it was monitoring inflationary pressures, and was not expecting any material impact to its financial performance in 2022.

“Our balance sheet remains strong and underlying trading continues to generate cash,” the board said in its statement.

“Gamma had net cash of £54m at 30 April - this is after paying £1.7m of contingent consideration on acquisitions, and making early supplier payments of £6.7m to receive prompt payer discounts.”

Gamma said the proposed final dividend for 2021 was being put to the usual shareholder vote at the meeting on Thursday, with the dividend rising to 8.8p per share from 7.8p for 2020.

When added to the 4.4p, the board said it would equate to a total dividend of 13.2p for the full year, up from 11.7p.

“The board remains very positive about the prospects for Gamma - the group continues to deliver against its long term growth strategy.

“Gamma has a compelling, technology-led product portfolio, effective routes to multiple customer bases and a number of market leadership positions.

“The business is in a strong financial position, which enables it to continue to invest in products and market development.”

Based on trading in the first part of the year, Gamma said it expected adjusted EBITDA and adjusted earnings per share for the year ending 31 December to be in the “upper half” of the range of market forecasts.

Gamma said it would provide its next trading update before its half-year results on 6 September.

At 1222 BST, shares in Gamma Communications were up 1.77% at 1,139.84p.

Reporting by Josh White at Sharecast.com.