UK companies are finding it cheaper and more convenient to receive voice, data, and mobile services from a single supplier. Catering to their demands helped Gamma Communications (GAMA) increase underlying pre-tax profit by 35 per cent to £16.7m.
The telecom services group, which listed on Aim in October, earns almost four-fifths of its revenues from its network of distributors. Gamma's indirect profits rose as it added nearly 100 more channel partners - taking the total to 725 - and enjoyed rising demand for multiple services. New offerings include SIP Trunks, which provide high-speed voice, video and data connectivity, and Cloud PBX, a remote telephony network.
Gamma's sales of new products soared by almost half to £95m. That fuelled strong growth in its direct segment, which also inked contracts with BDO International, Hearst Magazines and Oxford University. And Gamma's legacy voice business bucked the industry trend, increasing gross profit by 5 per cent due to tight cost control.
In December, Gamma acquired the control equipment that provides the core of a mobile network. Management expect to deploy it in 2016, reducing costs and improving its bundling of fixed-line, mobile and software services. However, the trade-off was that capital spending more than doubled to £12.1m.
Broker Investec expects pre-tax profit of £17.8m, giving EPS of 15.6p (from £17.1m and 15.4p in 2014).
| GAMMA COMMUNICATIONS (GAMA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 271p | MARKET VALUE: | £239m | |
| TOUCH: | 265-271p | 12-MONTH HIGH: | 290p | LOW: 187p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 58p* | NET CASH: | £13.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 131 | 7.3 | na | na |
| 2012 | 137 | 9.6 | na | na |
| 2013 | 149 | 11.5 | 10.5 | na |
| 2014† | 173 | 11.5 | 10.6 | 3.95 |
| % change | +16 | - | +1 | - |
Ex-div: 4 Jun Payment: tba *Includes intangible assets of £10.8m, or 12p a share †Gamma floated in October 2014 | ||||
