Gamma Communications’ (GAMA) results for 2018 exceeded analysts’ expectations, with revenues and earnings bolstered by both its direct and indirect businesses. Indeed, direct business sales rose by 24.2 per cent to £70.9m. The group saw several customer wins here, including a five-year managed service contract with supermarket Aldi. This will entail Gamma providing one of the market’s largest wide-area-networks (WANs), covering Aldi’s estate across the UK and Ireland.
Revenues for Gamma’s indirect offering – implemented via channel partners – increased by 13.9 per cent to £211m. Here, the ‘traditional’ business – comprising calls, lines and trade with other carriers – saw a 5.1 per cent drop in sales to £47.9m. But this represented a slower decline than in 2017. While calls and lines continued to fall, carrier sales have started to recover – courtesy of demand from various 'non-traditional' carriers entering the UK market.
Meanwhile, the indirect business’s 'growth products' – such as data, mobile and SIP (session initiation protocol) – saw revenues rise by more than a fifth to £163m, with the gross margin here edging up slightly to 53 per cent.
Peel Hunt forecasts 2019 adjusted pre-tax profits of £40m and EPS of 34.7p, against £34.9m and 30.3p in 2018.
| GAMMA COMMUNICATIONS (GAMA) | ||||
| ORD PRICE: | 916p | MARKET VALUE: | £861m | |
| TOUCH: | 916-930p | 12-MONTH HIGH: | 944p | LOW: 640p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 129p | NET CASH: | £35.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 173 | 11.5 | 10.6 | 4.0 |
| 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 |
| % change | +18 | +30 | +24 | +11 |
| Ex-div: | 30 May | |||
| Payment: | 20 Jun | |||
| *2017 figures have been restated to reflect adoption of new accounting rules IFRS 15 | ||||
