Gamma Communications (AIM:GAMA) said it has performed well throughout the COVID-19 crisis in a trading update for the six months ended 30 June 2020, with EBITDA and EPS for the full year now expected to be ahead of consensus market estimates.
In the UK and Europe, the group’s financial model continues to be “robust”, it said, given that 93% of revenue is recurring and billed monthly. Existing contract cancellations continue to be at minimal levels while the group said it has seen no increase in the level of bad debt.
The AIM-listed communications provider also said that recent acquisitions in both Spain and Germany has provided the group with increased scale across Continental Europe while also accelerating the development of its technology.
It noted its recent €8.1m acquisition of GnTel, a Cloud PBX provider, which is to be fully integrated into the group’s Netherlands business andwill provide gain additional access to a new group of partners.
The group also highlighted a “very robust” balance sheet alongside strong cash generation from its trading activities which it highlighted were in line with previous levels.
Closing net cash at the half year is around £37.7m compared to £53.9m at the end of the previous year prior due to the acquisitions of Voz and Exactive during the period.
The company said it has decided against the Government’s furlough scheme and that it expects to propose an interim dividend in line with its stated progressive policy.
Shares in Gamma Communications were trading 3.74% higher at 1,515p on Monday.
Gamma has continued to appraise acquisition targets in Europe to enter new territories and to gain scale and strengthen capabilities in countries which it is already operating in while the group also continues to progress its product development and digital programme.
Furthermore, management now expects that EBITDA and EPS for the full year to be ahead of consensus market Revenue, Adjusted EBITDA and EPS estimates of £373.2m, £71.8m, and 46.5p respectively.
"I am encouraged by our performance in the first half of 2020 given the difficult economic conditions,” said Andrew Taylor, Chief Executive of Gamma Communications.
He added, “Our staff have worked incredibly hard to keep the business running remotely and to ensure that we continued to deliver an excellent level of support to both our channel partners and our end users.”
“I am very pleased with our continued focus on delivering against our near-term commitments as well as the execution of our longer-term UCaaS strategy, as exemplified by our geographical expansion into both Spain and Germany, and the strengthening of our UCaaS capabilities through the acquisitions of Exactive and Telsis in the UK.”
Gamma will publish its half-year results for the period ended 30 June 2020 on Tuesday 8 September 2020.
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