A mass shift to remote working has heightened the importance of reliable and versatile corporate communications infrastructure. This is good news for Gamma Communications (GAMA), as it moves to a unified-communications-as-a-service (UCaaS) model. The group acquired Telsis in November last year and Exactive this March - the former of which will enable the company to launch a fully integrated cloud contact centre solution in late 2020.
The communications services provider continued to expand its presence in Europe and made an offer for Voz Telecom in Spain, which is expected to complete in April. But in the face of Covid-19, chief executive Andrew Taylor said that the company “will certainly slow down” its acquisitive approach until it is able to fully assess the impact of the virus.
Closer to home, its main operations in the UK posted strong growth, with gross profits in its Indirect business up by over a fifth to £119m and its Direct business up 17 per cent to £38.2m. Its key high-margin services performed well, with units in cloud telephony products ‘SIP Trunking’ and ‘Cloud PBX’ up by 19 per cent and 20 per cent respectively. But there is increasing competition in the wider UCaaS market, and CFO Andrew Belshaw conceded that it will inevitably put pressure on product margins.
Broker Peel Hunt expects normalised pre-tax profits of £53.4m and EPS of 43.2p in 2020, against £50.7m and 40.2p in 2019.
| GAMMA COMMUNICATIONS (GAMA) | ||||
| ORD PRICE: | 994p | MARKET VALUE: | £942m | |
| TOUCH: | 910-1,030p | 12-MONTH HIGH: | 1,495p | LOW: 910p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 161p* | NET CASH: | £41.3m** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 192 | 22.6 | 20.4 | 6.6 |
| 2016 | 214 | 21.6 | 19.4 | 7.5 |
| 2017 (restated)*** | 242 | 26.5 | 24.5 | 8.4 |
| 2018 | 285 | 34.5 | 30.3 | 9.3 |
| 2019 | 329 | 45.2 | 36.6 | 10.5 |
| % change | +15 | +31 | +21 | +13 |
| Ex-div: | 28 May | |||
| Payment: | 18 Jun | |||
| *Includes intangible assets of £37.4m, or 39.4p a share **Includes lease liabilities of £12.6m ***2017 figures have been restated to reflect adoption of new accounting rules IFRS 15 | ||||
