Gamma Communications (GAMA) increased gross profits by a fifth to £98.8m in 2016 on the back of a 340 basis point margin expansion. Below that line, pre-tax and earnings figures for the previous year were flattered by a one-off gain of £5.7m, but strip that out and earnings per share were well up year on year. Gamma also bolstered an already robust cash position through adjusted net cash inflows of £31.3m, representing 91.5 per cent of cash profits for the year.
The business telecoms group continued to broaden its technological capabilities, enabling it to work closely with communications outsourcers and systems integrators. These businesses are viewed as "natural partners" for Gamma's commercial channel network, which expanded from 834 to 970 partners through the period. However, Gamma also managed to secure a number of high-profile customers through its direct business arm, including UK estate agency Strutt & Parker. Revenues grew at roughly the same rate in both business strands, buoyed by continuing strong demand for cloud PBX and SIP trunking (voice over internet) systems.
Analysts at Investec expect adjusted pre-tax profits and EPS of £26.2m and 22.7p, respectively, for the December 2017 year-end (2016: £24.9m/21.6p).
| GAMMA COMMUNICATIONS (GAMA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 473p | MARKET VALUE: | £434m | |
| TOUCH: | 470-485p | 12-MONTH HIGH: | 532p | LOW: 363p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 87p | NET CASH: | £28.2m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 137 | 9.6 | na | nil |
| 2013 | 149 | 11.5 | 10.5 | nil |
| 2014 | 173 | 11.5 | 10.6 | 3.95 |
| 2015 | 192 | 22.6 | 20.4 | 6.60 |
| 2016 | 214 | 21.6 | 19.4 | 7.50 |
| % change | +11 | -4 | -5 | +14 |
Ex-div: 1 Jun Payment: 22 Jun | ||||
