Gamma Communications flags strong first half

Communications-as-a-service provider Gamma Communications said in an update on Tuesday that it performed “well” through its first half, with “”strong year-on-year adjusted EBITDA growth.

The AIM-traded firm said that in both the UK and Europe, its recurring revenue model combined with “selected” price increases and “strict” cost discipline helped to mitigate inflationary pressures.

That, it said, would ensure it had “good momentum” going into the second half of the year ending 31 December.

The group said it was proactively managing its supply chain, noting that given well-publicised delays in the availability of various hardware devices, it deliberately built the UK indirect business inventory to more than twice the levels it held pre-Covid.

Gamma said its balance sheet remained strong, with “significant” cash generation from its trading activities.

Closing net cash on 30 June totalled £72.6m, compared to £49.5m at the end of 2021.

That was after paying £1.7m of contingent consideration on acquisitions, and making early supplier payments to receive prompt payer discounts.

Looking ahead, the company’s board said it was positive on Gamma’s prospects.

In line with its statement at the annual general meeting, it 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.

“I’m very pleased to report on a strong first half performance,” said interim chief executive Andrew Belshaw.

“Gamma is leveraging the full breadth of its market-leading product set both through the channel and direct across all of our markets.”

Although not immune from the macroeconomic challenges ahead, Belshaw said Gamma’s recurring revenue model, strong cash generation and healthy balance sheet enabled it to continue to invest in its “undoubted” market opportunity.

“Churn and bad debt remains at low levels and these results demonstrate the resilience of the customer base and the importance they attach to Gamma’s products and services.”

Gamma said it would announce its results for the six months ended 30 June on 6 September.

At 1157 BST, shares in Gamma Communications were up 1.55% at 1,125.2p.

Reporting by Josh White at