ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for discussion Register to chat with like-minded investors on our interactive forums.

GAMA Gamma Communications Plc

1,360.00
0.00 (0.00%)
Last Updated: 09:46:20
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Gamma Communications Plc LSE:GAMA London Ordinary Share GB00BQS10J50 ORD 0.25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1,360.00 1,360.00 1,364.00 1,368.00 1,358.00 1,366.00 12,637 09:46:20
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Radiotelephone Communication 484.6M 49.3M 0.5062 27.02 1.33B

Gamma Communications PLC Half-year Report (0095J)

06/09/2016 7:00am

UK Regulatory


Gamma Communications (LSE:GAMA)
Historical Stock Chart


From Mar 2019 to Mar 2024

Click Here for more Gamma Communications Charts.

TIDMGAMA

RNS Number : 0095J

Gamma Communications PLC

06 September 2016

6 September 2016

Gamma Communications plc

Unaudited Interim Results for six months ended 30 June 2016

Continued growth in key products and results ahead of expectations

Gamma Communications plc ("Gamma"), a leading, technology based provider of communications services to the

UK business market, is pleased to announce its unaudited results for the six months ended 30 June 2016.

Financial highlights

 
                                       Six months ended 
                                            30 June 
----------------------------------  ---------------------  ------- 
                                          2016       2015   Change 
                                                               (%) 
----------------------------------  ----------  ---------  ------- 
 Revenue                             GBP104.7m   GBP92.4m   +13.3% 
----------------------------------  ----------  ---------  ------- 
 Gross profit                         GBP47.7m   GBP39.2m   +21.7% 
----------------------------------  ----------  ---------  ------- 
 Gross margin                            45.6%      42.4% 
----------------------------------  ----------  ---------  ------- 
 EBITDA                               GBP14.9m   GBP11.2m   +33.0% 
----------------------------------  ----------  ---------  ------- 
 Adjusted EBITDA*                     GBP16.3m   GBP13.0m   +25.4% 
----------------------------------  ----------  ---------  ------- 
 PBT                                  GBP10.6m    GBP7.6m   +39.5% 
----------------------------------  ----------  ---------  ------- 
 Adjusted PBT *                       GBP12.0m    GBP9.4m   +27.7% 
----------------------------------  ----------  ---------  ------- 
 EPS (fully diluted)                      9.1p       6.7p   +35.8% 
----------------------------------  ----------  ---------  ------- 
 Adjusted EPS* (fully diluted)           10.1p       8.2p   +23.2% 
----------------------------------  ----------  ---------  ------- 
 Interim dividend per share               2.5p       2.2p   +13.6% 
----------------------------------  ----------  ---------  ------- 
 Net operating cash inflow 
  before tax**                        GBP13.8m   GBP10.9m   +26.6% 
----------------------------------  ----------  ---------  ------- 
 Net operating cash inflow 
  before tax** / Adjusted EBITDA*        84.7%      83.8% 
----------------------------------  ----------  ---------  ------- 
 

* "Adjusted" is defined as being before share based payments of GBP1.4m (2015:GBP1.8m) and exceptional items of nil (2015:nil) (see note 4) (and associated tax effects in the case of adjusted EPS)

** Net operating cash inflow before tax is defined as "Net Cash flows from operating activities" plus "Taxes paid" before exceptional cashflows

Operational highlights

   --      Installed SIP Trunks increased from 360,000 at 31 December 2015 to 413,000 (+14.7%) 
   --      Cloud PBX users increased from 142,000 to 188,000 (+32.4%) 

-- Gross profit from indirect business increased from GBP30.3m in the first half of 2015 to GBP37.6m (24.1%)

   --      The number of active Channel Partners grew from 834 at 31 December 2015 to 906 (+8.6%) 
   --      Strong growth in direct business, gross profit up from GBP8.9m to GBP10.1m (13.5%) 

-- Key new contracts include Strutt & Parker, Menzies LLP, Berendsen plc, Morrisons Utility Services and a large financial institution.

-- Good progress in the public sector, new contracts include Symphony Housing Group, AQA, Betsi Cawaladr Health Board, East and North Herts NHS Trust.

   --      Full Mobile (MVNO) service developed on time 
   --      Product pipeline remains strong and service quality remains high 

Bob Falconer, Chief Executive Officer, commented:

"We are very pleased with the progress we have made across several fronts in the first half of 2016. Our strategic products have continued to add volume and we are seeing an acceleration in the take-up of our data services. Getting our new full MVNO mobile capability ready for service by June as planned has been a major achievement and positions the business extremely well for the future."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:

 
 
 Gamma Communications             Tel: +44 (0)333 006 
  plc                                            5972 
  Bob Falconer, Chief 
  Executive Officer 
  Andrew Belshaw, Chief 
  Financial Officer 
  Malcolm Goddard, Company 
  Secretary 
 Investec Bank plc (NOMAD         Tel: +44 (0)207 597 
  & Broker)                                      5970 
  Dominic Emery / Sebastian 
  Lawrence 
  Patrick Robb / Matt 
  Lewis 
 Tulchan Communications           Tel: +44 (0)207 353 
  LLP (PR Adviser)                               4200 
  James Macey White / 
  Matt Low 
 

Notes to Editors

Gamma is a rapidly-growing technology-based provider of communications services to the UK business market. Gamma's services, such as Cloud PBX, Inbound Call Control Services and SIP Trunking, are designed to meet the increasingly complex voice, data and mobility requirements of businesses, through the exploitation of its know-how

and its own intellectual property.

Gamma also provides business-grade mobile and data services and, as a consequence of its history, has a substantial voice service capability. These services enable Gamma to provide

a comprehensive range of communications services.

Gamma has enjoyed strong organic revenue and EBITDA growth driven by a high percentage of repeat revenues. The business had 717 employees at 30 June 2016. It operates across six main locations - headquartered in Newbury - with offices in London, Manchester, Glasgow, Portsmouth and Budapest.

Chairman's Statement

Introduction

I am very pleased to present the unaudited results for the half year ended 30 June 2016.

Overview of Results

Group revenue for the half year ended 30 June 2016 increased by GBP12.3m to GBP104.7m (H1 2015: GBP92.4m) an increase of 13.3% on the prior year and it is particularly pleasing that all of this growth is organic. Of this increase, GBP10.0m came from the indirect channels business where revenue increased to GBP83.0m (H1 2015: GBP73.0m) while GBP2.3m came from the direct business which saw revenue increase to GBP21.7m (H1 2015: GBP19.4m). Gross profit for the six months to 30 June 2016 rose to GBP47.7m, an increase of 21.7% compared to the GBP39.2m achieved in the same period of 2015, whilst the gross margin increased to 45.6% (H1 2015: 42.4%). Adjusted EBITDA for the group increased by 25.4% to GBP16.3m (H1 2015: GBP13.0m).

Adjusted fully diluted earnings per share for the half year increased by 23.2% to 10.1p (H1 2015: 8.2p).

The net operating cash inflow (pre-tax) for the first half was GBP13.8m compared to GBP10.9m in H1 2015. This represents a cash to adjusted EBITDA conversion ratio in respect of 2016 of 84.7% compared to 83.8% for H1 2015. Net cash as at 30 June 2016 amounted to GBP27.8m, up from GBP24.8m as at 31 December 2015. The business has invested in its network, particularly the new mobile platform, using some of its cash reserves.

Dividend

Gamma is committed to a progressive dividend policy. The Board is therefore pleased to declare an interim dividend, in respect of the six months ended 30 June 2016, of 2.5pence per share (2015: 2.2 pence) which, will be payable on Thursday 20 October 2016 to shareholders on the register on Friday 23 September 2016.

Business Development

Gamma's strategic intent in 2016 is to retain its market leadership in core strategic products, reduce its cost of delivery on data, and bring to market the fruits of some innovative development work. I am delighted to report that the business is already ahead of plan on all of these fronts. The development on time of the mobile service has been a major achievement overcoming significant technical and commercial challenges. We look forward to a very constructive relationship with Hutchison 3G UK Ltd, our primary partner for radio access.

We have added 72 new channel partners and had significant contract wins in the direct enterprise and public sector markets, including Strutt & Parker, Menzies LLP, Berendsen plc and Morrisons Utility Services. Of particular note the company has entered contracts to provide UK SIP Trunking services for a large financial institution. The three year contract will replace the legacy voice connectivity services currently in use, with final roll-out dependent on meeting strict acceptance criteria over the coming months.

Good progress has also been made in the public sector. Key new contracts include Symphony Housing Group, AQA, Betsi Cawaladr Health Board, East and North Herts NHS Trust.

Board and Employees

As of the 30 June 2016, Gamma had 717 employees, an increase of 47 from 31 December 2015. This growth has been driven by the general expansion of the business and the development and operation of new services, in particular the new mobile capability. Ongoing operational gearing efficiencies have helped adjusted EBITDA grow from 14.1% of revenue in the first half of 2015 to 15.6% of revenue in the first half of 2016. The Board will continue to invest to improve efficiency.

The Board would like to express its thanks to all of Gamma staff for their dedication, hard work and enthusiasm. The company introduced a 3 year sharesave scheme and it was particularly pleasing to see the exceptionally high take up with 307 staff choosing to participate.

Outlook

The Board looks forward enthusiastically to the remainder of 2016 and beyond. The emerging market for converged fixed and mobile services presents many opportunities, and Gamma is well placed to exploit these with its clear focus on the UK business market and its commitment to new product development. We believe that Gamma has the experience, cash reserves, resources and capabilities to continue to achieve its objectives.

Richard Last

Chairman and Independent Non-Executive Director

Chief Executive Review

Introduction

We are very pleased with the continued momentum of the business in the half year ended 30 June 2016. In particular our strategic products of SIP Trunking and Cloud PBX have shown excellent growth adding 53,000 SIP channels and 46,000 Cloud PBX seats respectively. Our data products have also grown well in a mature market as we continue to invest in the underlying infrastructure and take advantage of a competitive final mile access market.

Mobile

As planned, in June we brought our new business-focussed Full MVNO into active service and began the process of transferring customers from our current Thin MVNO with Vodafone. Our new service is designed for businesses, and features full 4G capability. The primary radio access network in the UK is provided by Hutchison 3G UK Ltd, whilst separate roaming agreements are now in place.

During the fourth quarter of 2016, the service will be marketed more widely to new channel partners and direct business customers, with Gamma positioning itself as the fourth mobile operator in the UK business market.

Having direct ownership of the systems controlling fixed voice, data and mobile services positions the business well for the future provision of more converged communications.

Indirect Business Channel

The channel remains our primary route to market and we continue to develop our services and processes to make it straightforward and rewarding for channel operators to work with us. The number of partners actively trading with us has increased from 834 to 906 The trend for the channel to move from providing niche services such as IT support, or PBX installation, to a full ICT bundle continues, and this opens up further opportunities with new channel partners that previously may not have engaged. Whilst the channel is traditionally focussed on the SME market a notable trend has been for channel partners to win larger mid-market deals such as the success of Olive Business Solutions Limited in securing a contract with Scania (Great Britain) Limited to transform their communications estate.

Direct Business Channel

In the Enterprise market, the business has had considerable success:

-- Strutt & Parker, the UK's largest independent property partnership, contracted with Gamma for a complete data, voice and mobile infrastructure. This three year agreement, will see Gamma take over the existing fixed and mobile voice services for all Strutt & Parker UK branches and migrate them onto Gamma's next generation cloud-based platforms.

-- Menzies LLP, a top 20 UK accountancy firm, also selected Gamma to deliver a high capacity managed network across its UK sites.

-- Berendsen plc selected Gamma to implement and manage a new data and voice infrastructure across its UK business. This 100 plus site network will deliver Berendsen a consolidated voice architecture using Gamma leading SIP services as well as providing increased bandwidth for applications delivery.

-- Morrison Utilities have entered a managed service agreement for the delivery of cloud telephony to a number of its sites.

-- UHY Hacker Young entered a five year agreement for Gamma to install and support a Cloud PABX solution across its London and Nottingham locations.

-- Pret a Manger chose to extend its existing agreement with Gamma to supply the retailer with managed data and voice services until early 2019.

Meanwhile work continues to prepare to provide UK SIP Trunking services for a large financial institution. The three year contract will replace the legacy voice connectivity services currently in use, and final roll-out remains dependent on meeting strict acceptance criteria.

In the public sector traction is building with strong bid success rates. Recent wins include the provision of Cloud PBX for Symphony Housing Group; Cloud contact centre services for Assessment and Qualification Alliance (AQA); SIP and Ethernet services for Betsi Cawaladr Health Board; a national network for Cabot Learning: and a multi-site data network and SIP Trunking for East and North Herts NHS Trust.

The average contract length in the direct business continues to improve and churn levels among enterprise customers remain low.

Development

Whilst the final stages of development on the 'full MVNO' platform have been the primary focus (and have required capital investment), the business has nevertheless continued to develop and enhance its existing portfolio.

In May we launched SIP Trunk Call Manager. This product adds value to SIP Trunks by providing the option to readily add software based call control features such as time of day routing and call queuing to a SIP Trunk either at the point of provisioning or later, further differentiating the product from competitor offerings and adding value and margin opportunities for our channel partners.

In the first stage of a programme to reduce the underlying cost of our ethernet product, we completed the build out of infrastructure to 19 BT exchanges in the London area. This has significantly reduced the last mile costs in these highly competitive locations and improves the competitiveness of SIP/ethernet bundles. The Converged Private Network service, which provides data connectivity to multi-sited businesses, has been enhanced with the addition of both Virgin Media and TalkTalk Business to the access options.

Plans are also well advanced to test the demand in the channel for a "Cloud Compute service" and to broaden further the range of Gamma products our channel partners can take to their business customers.

Behind the scenes, significant progress has been made in realising the benefits of earlier investments in core network infrastructure. The completion of this so-called New Voice Architecture later in 2016 will bring considerable benefit in terms of simplifying our core capability, reducing our costs, increasing capacity and providing higher levels of resilience and availability.

The Loop

Driven by customer demand 'The Loop', Gamma's unique metropolitan area fibre network in the Greater Manchester area, has now been extended by 23km to 150km, and now includes Media City in Salford Quays. As a result, the number of customers directly connected to The Loop has grown to 32 with the recent additions of the BBC, NHS Salford Royal Hospital, and Manchester Metropolitan University.

Employees

We were once again pleased to be recognised as one of The Sunday Times "Best 100 Companies to Work For 2016". Whist a welcome and encouraging vote of confidence from Gamma's employees, the strong academic research behind the criteria for Best Companies confirms a strong correlation between the high levels of employee engagement looked for and business success generally.

Regulatory Environment and the Impact of the EU Referendum

We remain very actively engaged in regulatory matters. In particular we welcome the recent Ofcom proposals for a more independent Openreach.

The Board has considered the likely impact of the Brexit referendum result on the business and does not believe that it would have a material effect on Gamma over the next year. Notwithstanding, it has identified the following risk areas:

   --      Exchange rate movements adversely impacting capital costs of equipment 

-- Any general economic slowdown, although it is noted that the telecommunications industry has been resilient to such slowdowns in the past

-- Business pessimism reducing demand for new services, conversely increasing demand for services that improve efficiency

-- Any impact from a slowdown in investment in infrastructure by Gamma's suppliers (e.g. fibre investments)

   --      Any adverse impact from interest rate changes 

-- The consequence any restrictions of free movement of labour may have on Gamma's ability to hire highly skilled technical staff from the EU.

Outlook

The business strategy remains unchanged and resolutely focussed on bringing high quality new and disruptive services to the business market with the indirect channel as the primary route to growth. We expect the volumes to continue to grow in Cloud PBX and SIP, with data making a growing contribution to the business as our investment in reducing access costs continues. It is anticipated that this growth will more than offset the continued decline in Traditional calls and lines services. The new mobile service, in particular, presents a unique and exciting opportunity and Gamma is one of only a very small number of companies with the underlying capability to build true fixed and mobile converged services.

Bob Falconer

Chief Executive Officer

Financial review

Revenue

Indirect Business

Revenue from the indirect business grew from GBP73.0m to GBP83.0m and gross profit grew from GBP30.3m to GBP37.6m - an increase of GBP7.3m of gross profit from the first half of last year.

Gamma's "Growth" products comprise our Enabling products (data and mobile) and our Strategic product set (SIP, Cloud PBX and Inbound). Sales from our Growth products through the indirect channel grew from GBP43.7m in the first half of 2015 to GBP54.9m. This is driven by both the increase in the number of active channel partners and that they are selling more productsGross margin grew from 47.6% to 53.0% which reflects the fact that the main contributor to this growth was SIP Trunking which carries a higher margin than Traditional products.

In line with the general trends seen in the industry, the performance of the Traditional business (primarily traditional calls, lines and trade with other carriers) has continued its steady decline as gross profit has gone down to GBP8.5m (H1 2015: GBP9.5m). The number of channel partners actively trading with Gamma increased from 834 at the start of the year to 906 by 30 June. An increasing number of these new channel partners are IT focussed companies who only purchase the Growth products.

Direct Business

The direct business also continues to grow. Revenue increased from GBP19.4m in H1 2015 to GBP21.7m and gross profit from GBP8.9m to GBP10.1m. Gross margin increased from 45.9% to 46.5%.

The growth was attributable to sales of Growth products and gross profit on these products grew from GBP6.9m to GBP8.1m. This includes multi-product solution sales to larger enterprises. This is particularly pleasing because much of the new business is won on multi-year contracts.

Operating expenses

Operating expenses before exceptional items and share based payments grew from GBP26.2m to GBP31.4m. This was due to a number of factors:

-- The growth in the number of customers switching to Growth products for the first time continues to be a driver of overhead.

-- The new mobile platform cost GBP2.7m to support in the first half of 2016 which was overhead cost incurred without any corresponding improvement in margins from the reduced cost of sales. The comparable spend in the first six months of 2015 was GBP0.8m.

-- We also continue to increase our investment in product development and, whilst internal spend of GBP0.5m was capitalised in the first half, we spent more on the research and initial development of new product offerings and variants on our existing product set as we continue to build for the future.

-- The Group continues to invest in its systems to ensure that as sales increase, the number of customer service personnel required does not need to scale proportionately.

Adjusted EBITDA

The combination of increasing sales of new products and operational improvements means that adjusted EBITDA grew from GBP13.0m to GBP16.3m or 25%. This is in spite of the increased support costs of a mobile platform that has yet to generate any margin improvement benefits.

Share based payments

Share based payment charges for the first half were GBP1.4m (2015: GBP1.8m). We previously noted that we expected Share based payments to decrease this year and this is due to the unwinding of Long Term Incentives which were put in place just prior to the float in October 2014.

Exceptional items

There were no exceptional items in either period.

Cash flows

The cash balance at the end of the year was GBP27.8m, up from GBP24.8m at 31 December 2015.

The cash inflow before taxation was GBP13.8m which represents 84.7% of adjusted EBITDA for the year; in line with our historical rates of cash conversion. Cash conversion tends to be slightly lower in the first half of the year due to seasonal outflows such as bonus payments to staff.

Capital expenditure for the first half was GBP7.6m, which was an increase from GBP4.0m compared to the first half of 2015 but it was noted that a number of projects from H1 2015 were deferred to the second half which had artificially lowered the reported spend.

The Group continues to be debt free.

Capital expenditure

The Group spent GBP7.6m on capital which was split as follows.

Regular capex of GBP6.8m (being the normal levels of capex that Gamma spends to run the business) -

-- GBP2.6m was on increasing capacity and development of the core network as well as other minor items such as IT and fixtures and fittings (H1 2015: GBP2.0m).

-- GBP0.5m was the capitalisation of development costs incurred during the year, this is in line with previous years (H1 2015: GBP0.4m).

-- GBP3.7m was on customer premises equipment; this is "success based" expenditure and is expected to increase in line with sales in our data and Cloud PBX products (H1 2015: GBP1.6m).

Development capex of GBP0.8m (being additional capex which is required to develop new products and services or to drive efficiency) -

-- An additional GBP0.8m was spent on augmenting the mobile platform purchased in late 2014 in preparation for a live service in 2016 (H1 2015: GBP0.4m).

-- We had expected to see spend on our programme to build out our data network but it was negligible in the first half as spend has been deferred into 2017. At the time of IPO we noted that Gamma's national fibre agreement expired in 2020.. The business is now considering its options well in advance because it may become economically beneficial to do so. Any investment (capital or lease) could be funded from cash reserves.

Taxation

The effective tax rate for the first half of the year was 18.9% (2015: 18.4%). The tax rate is lower than the statutory rate for the year (20%) because the Group benefits from research and development tax credits.

Dividends

The Board has declared an interim dividend in respect of 2016 of 2.5pence per share payable on Thursday 20 October 2016 to shareholders on the register as at Friday 23 September 2016. This compares to 2.2p paid in 2015 and represents an increase of 13.6%.

Andrew Belshaw

Chief Financial Officer

MANAGEMENT STATEMENT

This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

-- the condensed set of interim financial statements has been prepared in accordance with IAS34 "Interim Financial Reporting";

-- the interim management report includes a fair review of the information required by DTR 4.27R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

-- the interim management report includes a fair review of the information required by DTR 4.28R (disclosure of related party transactions and changes therein).

By the order of the board

5 September 2016

INDEPENT REVIEW REPORT TO GAMMA COMMUNICATIONS PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 11. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Reading, United Kingdom

5 September 2016

Condensed consolidated unaudited statement of comprehensive income

For the six month period ended 30 June 2016

 
                                                                                    Six months      Six months     Year ended 
                                                                                         ended           ended    31 December 
                                                                                       30 June         30 June           2015 
                                                                       Notes              2016            2015           GBPm 
                                                                                          GBPm            GBPm        Audited 
                                                                                     unaudited       unaudited 
====================================================================  ======  ================  ==============  ============= 
 Revenue                                                                   3             104.7            92.4          191.8 
 Cost of sales                                                                          (57.0)          (53.2)        (109.5) 
====================================================================  ======  ================  ==============  ============= 
 Gross profit                                                                             47.7            39.2           82.3 
 Other operating income                                                                      -               -            5.7 
 Operating expenses                                                                     (37.2)          (31.6)         (65.5) 
====================================================================  ======  ================  ==============  ============= 
Operating profit before 
 share based payment, 
 depreciation, amortisation 
 and exceptional items 
 (adjusted EBITDA)                                                                        16.3            13.0           28.3 
Share based payment 
 expense                                                                                 (1.4)           (1.8)          (4.1) 
Exceptional items                                                          4                 -               -            5.7 
Operating profit before 
 depreciation and amortisation                                                            14.9            11.2           29.9 
Depreciation and amortisation                                                            (4.4)           (3.6)          (7.4) 
====================================================================  ======  ================  ==============  ============= 
 
 Profit from operations                                                                   10.5             7.6           22.5 
 Interest income                                                                           0.1               -            0.1 
====================================================================  ======  ================  ==============  ============= 
 Profit before tax                                                                        10.6             7.6           22.6 
 Tax expense                                                               5             (2.0)           (1.4)          (4.3) 
====================================================================  ======  ================  ==============  ============= 
 
   Profit after tax                                                                        8.6             6.2           18.3 
====================================================================  ======  ================  ==============  ============= 
 
                                                       Total 
                                                       comprehensive 
                                                       income 
                                                       attributable 
                                                       to the owner 
                                                       of the 
                                                       parent                              8.6             6.2           18.3 
====================================================================  ======  ================  ==============  ============= 
 
   Earnings per share                                                      6 
 Basic per ordinary share 
  (pence)                                                                                  9.5             7.0           20.4 
 Diluted per ordinary 
  share (pence)                                                                            9.1             6.7           19.6 
====================================================================  ======  ================  ==============  ============= 
 

Adjusted earnings per share is shown in note 6.

Condensed consolidated unaudited statement of financial position

At 30 June 2016

 
                                           Six months   Six months    Year ended 
                                                ended        ended   31 December 
                                              30 June      30 June          2015 
                                   Notes         2016         2015          GBPm 
                                                 GBPm         GBPm       Audited 
                                            unaudited    unaudited 
===============================  =======  ===========  ===========  ============ 
Assets 
Non-current assets 
Property, plant and 
 equipment                             7         26.7         19.6          23.4 
Intangible assets                                10.3         10.5          10.4 
Deferred tax asset                                2.0          1.5           2.0 
===============================  =======  ===========  ===========  ============ 
                                                 39.0         31.6          35.8 
===============================  =======  ===========  ===========  ============ 
 
  Current assets 
Inventories                                       2.6          1.1           2.3 
Trade and other receivables                      39.8         33.9          35.2 
Cash and cash equivalents                        27.8         16.1          24.8 
===============================  =======  ===========  ===========  ============ 
                                                 70.2         51.1          62.3 
===============================  =======  ===========  ===========  ============ 
 
  Total assets                                  109.2         82.7          98.1 
===============================  =======  ===========  ===========  ============ 
 
  Liabilities 
Non-current liabilities 
Provisions                                        1.4          1.2           1.4 
Deferred tax liability                            0.4          0.1           0.4 
===============================  =======  ===========  ===========  ============ 
                                                  1.8          1.3           1.8 
===============================  =======  ===========  ===========  ============ 
 
  Current liabilities 
Trade and other payables                         32.6         25.2          27.3 
Current tax liability                             2.4          1.7           2.3 
===============================  =======  ===========  ===========  ============ 
                                                 35.0         26.9          29.6 
===============================  =======  ===========  ===========  ============ 
 
  Total liabilities                              36.8         28.2          31.4 
===============================  =======  ===========  ===========  ============ 
 
  Issued capital and reserves 
  attributable to owners 
  of the parent 
Share capital                          8          0.2          0.2           0.2 
Share premium reserve                             3.7          3.4           3.7 
Merger reserve                                    2.3          2.3           2.3 
Share option reserve                              2.7          2.9           3.8 
Investment in own shares                        (0.8)        (0.3)         (0.8) 
Retained earnings                                64.3         46.0          57.5 
===============================  =======  ===========  ===========  ============ 
 
  Total equity                                   72.4         54.5          66.7 
===============================  =======  ===========  ===========  ============ 
 
  Total equity and liabilities                  109.2         82.7          98.1 
===============================  =======  ===========  ===========  ============ 
 

Condensed consolidated unaudited statement of cash flows

For the six month period ended 30 June 2016

 
                                              Six months   Six months     Year ended 
                                                   ended        ended    31 December 
                                                 30 June      30 June           2015 
                                      Notes         2016         2015           GBPm 
                                                    GBPm         GBPm        audited 
                                               unaudited    unaudited 
==================================  =======  ===========  ===========  ============= 
Cash flows from operating 
 activities 
Profit for the period 
 before tax                                         10.6          7.6           22.6 
Adjustments for: 
Depreciation of property, 
 plant and equipment                      7          3.8          2.9            6.1 
Amortisation of intangible 
 assets                                              0.6          0.7            1.3 
Share based payment expense                          1.4          1.8            4.1 
Interest income                                    (0.1)            -          (0.1) 
==================================  =======  ===========  ===========  ============= 
                                                    16.3         13.0           34.0 
==================================  =======  ===========  ===========  ============= 
(Increase) in trade and 
 other receivables                                 (7.4)        (1.6)          (3.3) 
(Increase) in inventories                          (0.3)            -          (1.2) 
Increase/(decrease) in 
 trade and other payables                            5.2        (0.7)            0.4 
Increase in provisions 
 and employee benefits                                 -          0.2            0.5 
Taxes paid                                         (1.9)        (0.8)          (2.2) 
==================================  =======  ===========  ===========  ============= 
 
  Net cash flows from operating 
  activities                                        11.9         10.1           28.2 
 
  Investing activities 
Purchases of property, 
 plant and equipment                               (7.1)        (3.6)         (10.6) 
Expenditure on development 
 costs                                             (0.5)        (0.4)          (0.9) 
Payment of deferred consideration                      -        (0.1)          (0.1) 
Repayment of loans made 
 to individuals to subscribe 
 for shares (Note 9)                                 2.6          0.3            0.5 
Interest received                                    0.1            -            0.1 
==================================  =======  ===========  ===========  ============= 
 
  Net cash used in investing 
  activities                                       (4.9)        (3.8)         (11.0) 
Financing activities 
Share issues                                           -          0.2            0.5 
Investment in own shares                               -        (0.3)          (0.8) 
Dividends paid                                     (4.0)        (3.5)          (5.5) 
==================================  =======  ===========  ===========  ============= 
 
  Net cash used in financing 
  activities                                       (4.0)        (3.6)          (5.8) 
Net increase in cash 
 and cash equivalents                                3.0          2.7           11.4 
Cash and cash equivalents 
 at beginning of period                             24.8         13.4           13.4 
==================================  =======  ===========  ===========  ============= 
 
  Cash and cash equivalents 
  at end of period                                  27.8         16.1           24.8 
==================================  =======  ===========  ===========  ============= 
 

Condensed consolidated unaudited statement of changes in equity

For the six month period ended 30 June 2016

 
                            Share capital  Share premium    Merger  Share option   Investment   Retained  Total equity 
                                     GBPm           GBPm   reserve       reserve           in   earnings          GBPm 
                                                              GBPm          GBPm   own shares       GBPm 
                                                                                         GBPm 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  1 January 2016                      0.2            3.7       2.3           3.8        (0.8)       57.5          66.7 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
Issue of shares                         -              -         -         (2.2)            -        2.2             - 
Recognition of share 
 based payments                         -              -         -           1.1            -          -           1.1 
Dividends paid                          -              -         -             -            -      (4.0)         (4.0) 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
Transaction with owners                 -              -         -         (1.1)            -      (1.8)         (2.9) 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  Profit for the year                   -              -         -             -            -        8.6           8.6 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
Total comprehensive income              -              -         -             -            -        8.6           8.6 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  30 June 2016                        0.2            3.7       2.3           2.7        (0.8)       64.3          72.4 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  1 January 2015                      0.2            3.2       2.3           2.4            -       43.1          51.2 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
Issue of shares                         -            0.2         -         (1.2)            -        1.1           0.1 
Deferred tax on share 
 based payments                         -              -         -             -            -      (0.9)         (0.9) 
Recognition of share 
 based payments                         -              -         -           1.7            -          -           1.7 
Investment in own shares                -              -         -             -        (0.3)          -         (0.3) 
Dividends paid                          -              -         -             -            -      (3.5)         (3.5) 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
Transaction with owners                 -            0.2         -           0.5        (0.3)      (3.3)         (2.9) 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  Profit for the year                   -              -         -             -            -        6.2           6.2 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
Total comprehensive income              -              -         -             -            -        6.2           6.2 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
  30 June 2015                        0.2            3.4       2.3           2.9        (0.3)       46.0          54.5 
==========================  =============  =============  ========  ============  ===========  =========  ============ 
 
 

Notes forming part of the condensed consolidated unaudited interim financial information

For the six month period ended 30 June 2016

1. Basis of preparation

The unaudited interim consolidated financial information for the six months ended 30 June 2016 has been prepared following the recognition and measurement principles of IFRS as adopted by the European Union and in accordance with International Accounting Standard 34 Interim Financial Reporting ('IAS34'). The interim consolidated financial information does not include all the information and disclosures required in the annual financial information, and should be read in conjunction with the audited statutory financial statements for the year ended 31 December 2015.

The condensed interim financial information contained in this interim statement does not constitute financial statements as defined by section 434(3) of the Companies Act 2006. The condensed interim financial information has not been audited. The financial information for the year ended 31 December 2015 is derived from the audited statutory financial statements for the year ended 31 December 2015, which was unqualified and did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006.The comparative financial information for the period ended 30 June 2015 does not constitute statutory accounts for that period.

There are no additional standards or interpretations applicable to the Group for the accounting period commencing 1 January 2016 for adoption.

In preparing the condensed interim financial information the Directors have considered the Group's financial projections, borrowing facilities and other relevant financial matters, and the Board is satisfied that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the financial information, the condensed financial information for the six month period were approved by the board on 5 September 2016.

2. Accounting policies

The accounting policies adopted are consistent with those followed in the preparation of the audited statutory financial statements for the year ended 31 December 2015.

Some of the significant accounting policies require management to make difficult, subjective or complex judgments or estimates. The policies which management consider critical because of the level of complexity, judgment or estimation involved in their application and their impact on the financial Information are:

   --                 Valuation of intangibles 
   --                 Impairment of goodwill 
   --                 Taxation 
   --                 Leasehold dilapidations 
   --                 Capitalisation of internal development costs 
   --                 Share based payment charges. 

3. Segment information

The Group has two main operating segments:

(R) Indirect - This division sells Gamma's traditional and growth products and services to channel partners and contributed 79% (2015: 79%) of the Group's external revenue; and

(R) Direct - This division sells Gamma's traditional and growth products and services to end users in the SME, Enterprise and public sectors. They contributed 21% (2015: 21%) of the Group's external revenues.

There are no material non UK segments and no material non-current assets outside the UK.

Both operating segments sell a combination of traditional products (which is mainly voice traffic from which revenues are derived from channel partners and other carriers as well as rentals for wholesale lines) and growth products (which consist of IP voice traffic, rental income derived from SIP Trunking, hosted IP voice systems and Gamma's hosted inbound product and data products). Growth products were formerly known as New products but management believes that Growth is a better description of the product set. There is no change in underlying classification.

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer products and services into different markets. They are managed separately because each business requires different marketing strategies and are reported separately to the Board and management team.

Measurement of operating segment profit or loss, assets and liabilities

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

The Group evaluates performance on the basis of profit or loss from operations but excluding non-recurring losses, such as goodwill impairment, and the effects of share based payments.

Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount being applied to encourage use of Group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.

Loans and borrowings are allocated to the segments based on relevant factors (e.g. funding requirements). Details are provided in the reconciliation from segment assets and liabilities to the Group position.

 
                                         Indirect  Direct  Total 
                                             GBPm    GBPm   GBPm 
====================================  ===========  ======  ===== 
Period to 30 June 2016 
Traditional products and services            28.1     5.3   33.4 
Growth (being strategic and 
 enabling) products and services             54.9    16.4   71.3 
====================================  ===========  ======  ===== 
Total revenue from external 
 customers                                   83.0    21.7  104.7 
====================================  ===========  ======  ===== 
Inter-segment revenue                         7.3       -    7.3 
Traditional products and services             8.5     2.0   10.5 
Growth (being strategic and 
 enabling) products and services             29.1     8.1   37.2 
====================================  ===========  ======  ===== 
Total gross profit                           37.6    10.1   47.7 
====================================  ===========  ======  ===== 
 
Segment operating profit before 
 share based payment, depreciation, 
 amortisation and exceptional 
 items                                       11.8     4.5   16.3 
Share based payment expense                 (1.4)       -  (1.4) 
Segment EBITDA                               10.4     4.5   14.9 
Depreciation and amortisation               (4.0)   (0.4)  (4.4) 
====================================  ===========  ======  ===== 
 
  Segment profit                              6.4     4.1   10.5 
====================================  ===========  ======  ===== 
Interest income                               0.1       -    0.1 
Tax                                         (1.2)   (0.8)  (2.0) 
====================================  ===========  ======  ===== 
Group profit after tax                        5.3     3.3    8.6 
====================================  ===========  ======  ===== 
 

External revenue of customers has been derived principally from the United Kingdom and no single customer contributes more than 10% of revenue.

 
                                  Indirect  Direct  Total 
                                      GBPm    GBPm   GBPm 
================================  ========  ======  ===== 
Additions to non-current assets        7.3     0.3    7.6 
================================  ========  ======  ===== 
Reportable segment assets             77.1    32.1  109.2 
================================  ========  ======  ===== 
Reportable segment liabilities        14.9    21.9   36.8 
================================  ========  ======  ===== 
 
 
                                      Indirect  Direct  Total 
                                          GBPm    GBPm   GBPm 
====================================  ========  ======  ===== 
Period to 30 June 2015 
Traditional products and services         29.3     5.4   34.7 
Growth (being strategic and 
 enabling) products and services          43.7    14.0   57.7 
====================================  ========  ======  ===== 
Total revenue from external 
 customers                                73.0    19.4   92.4 
====================================  ========  ======  ===== 
Inter-segment revenue                      4.6       -    4.6 
Traditional products and services          9.5     2.0   11.5 
Growth (being strategic and 
 enabling) products and services          20.8     6.9   27.7 
====================================  ========  ======  ===== 
Total gross profit                        30.3     8.9   39.2 
====================================  ========  ======  ===== 
 
Segment operating profit before 
 share based payment, depreciation, 
 amortisation and exceptional 
 items                                     9.4     3.6   13.0 
Share based payment expense              (1.8)       -  (1.8) 
Segment EBITDA                             7.6     3.6   11.2 
Depreciation and amortisation            (3.2)   (0.4)  (3.6) 
====================================  ========  ======  ===== 
 
  Segment profit                           4.4     3.2    7.6 
====================================  ========  ======  ===== 
Interest income                              -       -      - 
Tax                                      (0.8)   (0.6)  (1.4) 
====================================  ========  ======  ===== 
Group profit after tax                     3.6     2.6    6.2 
====================================  ========  ======  ===== 
 

External revenue of customers has been derived principally from the United Kingdom and no single customer contributes more than 10% of revenue.

 
                                  Indirect  Direct  Total 
                                      GBPm    GBPm   GBPm 
================================  ========  ======  ===== 
Additions to non-current assets        3.7     0.3    4.0 
================================  ========  ======  ===== 
Reportable segment assets             57.6    25.1   82.7 
================================  ========  ======  ===== 
Reportable segment liabilities        13.8    14.4   28.2 
================================  ========  ======  ===== 
 

4. Exceptional items

There were no exceptional items in either period.

5. Taxation on profit on ordinary activities

Tax expense is recognised based on management's best estimate of the weighted average annual tax rate expected for the full year. The estimated average annual tax rate used for the year to 31 December 2016 is 18.9% (the estimated tax rate for the first half to 30 June 2015 was 18.4%).

Taxes on profit in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 
                                                      Six months   Six months 
                                                           ended        ended 
                                                         30 June      30 June 
                                                            2016         2015 
                                                            GBPm         GBPm 
---------------------------------------------------  -----------  ----------- 
 Current tax expense 
 Current tax on profits for the year                         2.1          1.7 
 Adjustment in respect of prior year                           -        (0.2) 
---------------------------------------------------  -----------  ----------- 
 Total current tax                                           2.1          1.5 
---------------------------------------------------  -----------  ----------- 
 Deferred tax expense 
 Origination and reversal of temporary differences         (0.1)        (0.1) 
---------------------------------------------------  -----------  ----------- 
 Total tax expense                                           2.0          1.4 
---------------------------------------------------  -----------  ----------- 
 

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows:

 
                                                Six months   Six months 
                                                     ended        ended 
                                                   30 June      30 June 
                                                      2016         2015 
                                                      GBPm         GBPm 
---------------------------------------------  -----------  ----------- 
 Profit before income taxes                           10.6          7.6 
 
 Expected tax charge based on the standard 
  rate of United Kingdom corporation tax 
  at the domestic rate of 20% (2015: 20.25%)           2.1          1.5 
 Expenses not deductible for tax purposes                -          0.2 
 Additional deduction for R&D expenditure            (0.1)        (0.1) 
 Adjustment in respect of prior year                     -        (0.2) 
---------------------------------------------  -----------  ----------- 
 Total tax expense                                     2.0          1.4 
---------------------------------------------  -----------  ----------- 
 
 

The Finance Act 2013 included provision for the main rate of corporation tax to reduce to 20% from 1 April 2015. The Finance Act 2015 includes provision for the main rate of corporation tax to reduce to 19% for the year beginning 1 April 2017, with a further reduction from 19% to 18% for the year beginning 1 April 2020.

6. Earnings per share and dividends

Earnings per share

The calculation of basic earnings per Ordinary Share is based on a profit after tax of GBP8.6 m for the six months ended 30 June 2016 (Six months ended 30 June 2015: GBP6.2m) and 90,799,608 Ordinary Shares for the six months ended 30 June 2016 (Six months ended 30 June 2015: 89,132,949 Ordinary Shares), being the weighted average number of Ordinary Shares in issue during the period.

The diluted earnings per Ordinary Share is calculated by including in the weighted average number of shares the dilutive effect of potential Ordinary Shares related to committed share options. For the six months ended 30 June 2016 the diluted Ordinary Shares were based on 94,286,518 Ordinary Shares (Six months ended 30 June 2015: 92,300,037) that included 3,486,910 potential Ordinary Shares (Six months ended 30 June 2015: 3,167,088).

The following reflects the income and share data used in the calculation of adjusted earnings per share computations before share based payments, one-off costs and their associated tax effect.

 
                                         Six months  Six months 
                                              ended       ended 
                                            30 June     30 June 
                                               2016        2015 
                                               GBPm        GBPm 
                                          Unaudited   Unaudited 
                                               GBPm 
=======================================  ==========  ========== 
Profit for the year                             8.6         6.2 
Exceptional items                                 -           - 
Share based payment costs                       1.4         1.8 
Less tax benefit associated with share 
 based payment costs                          (0.5)       (0.3) 
=======================================  ==========  ========== 
Adjusted profit after tax for the year          9.5         7.7 
=======================================  ==========  ========== 
 

The adjusted diluted earnings per Ordinary Share is calculated by including in the weighted average number of shares the dilutive effect of all potential Ordinary Shares as management believe they will all be exercised. For the six months ended 30 June 2015 the diluted Ordinary Shares were based on 94,395,910 Ordinary Shares (Six months ended 30 June 2015: 93,774,584) that included 3,596,302 potential Ordinary Shares (Six months ended 30 June 2015: 4,641,635).

 
                                              Six months  Six months 
                                                   ended       ended 
                                                 30 June     30 June 
                                                    2016        2015 
                                                     No.         No. 
                                               Unaudited   Unaudited 
============================================  ==========  ========== 
EPS 
--------------------------------------------  ----------  ---------- 
Weighted average number of Ordinary 
 Shares for basic earnings per share          90,799,608  89,132,949 
Effect of dilution resulting from share 
 options                                       3,486,910   3,167,088 
============================================  ==========  ========== 
Weighted average number of Ordinary 
 Shares adjusted for the effect of dilution   94,286,518  92,300,037 
--------------------------------------------  ----------  ---------- 
 
Adjusted EPS 
--------------------------------------------  ----------  ---------- 
Weighted average number of Ordinary 
 Shares for basic earnings per share          90,799,608  89,132,949 
Effect of dilution resulting from share 
 options                                       3,596,302   4,641,635 
============================================  ==========  ========== 
Weighted average number of Ordinary 
 Shares adjusted for the effect of dilution   94,395,910  93,774,584 
============================================  ==========  ========== 
 
Adjusted earnings per Ordinary Share 
 - basic (pence)                                    10.5         8.6 
Adjusted earnings per Ordinary Share 
 - diluted (pence)                                  10.1         8.2 
============================================  ==========  ========== 
 

There have been no material transactions involving Ordinary Shares or potential shares between the reporting date and the date of completion of the financial statements.

Dividends

A final dividend of 4.4p was paid on the 23 June 2016 (2015: 3.95p).

The Board have declared an interim dividend of 2.5p per share payable on Thursday 20 October 2016 to shareholders on the register as at Friday 23 September 2016. In the prior year an interim dividend of 2.2p was paid.

7. Property, plant and equipment

 
                                     Customer 
                          Network    Premises     Computer    Fixtures 
                           assets   equipment    equipment         and    Total 
                             GBPm        GBPm         GBPm    fittings     GBPm 
                                                                  GBPm 
======================  =========  ==========  ===========  ==========  ======= 
 
  Cost 
At 1 January 2015            41.8         1.9         12.5         1.5     57.7 
Additions                     1.5         1.6          0.5           -      3.6 
Disposals                       -       (0.1)            -           -    (0.1) 
Reclassification              0.9           -        (0.9)           -        - 
======================  =========  ==========  ===========  ==========  ======= 
At 30 June 2015              44.2         3.4         12.1         1.5     61.2 
======================  =========  ==========  ===========  ==========  ======= 
Depreciation 
At 1 January 2015            27.0         0.8         10.0         1.0     38.8 
Charge for the period         1.9         0.4          0.5         0.1      2.9 
Disposals                       -       (0.1)            -           -    (0.1) 
Reclassification              0.3           -        (0.3)           -        - 
======================  =========  ==========  ===========  ==========  ======= 
At 30 June 2015              29.2         1.1         10.2         1.1     41.6 
======================  =========  ==========  ===========  ==========  ======= 
Net book value 
At 1 January 2015            14.8         1.1          2.5         0.5     18.9 
======================  =========  ==========  ===========  ==========  ======= 
At 30 June 2015              15.0         2.3          1.9         0.4     19.6 
======================  =========  ==========  ===========  ==========  ======= 
 
  Cost 
At 1 January 2016            45.9         5.8          4.6         0.5     56.8 
Additions                     2.5         3.7          0.8         0.1      7.1 
Disposals                       -       (0.4)            -       (0.1)    (0.5) 
At 30 June 2016              48.4         9.1          5.4         0.5     63.4 
======================  =========  ==========  ===========  ==========  ======= 
Depreciation 
At 1 January 2016            29.4         1.7          2.2         0.1     33.4 
Charge for the period         1.9         1.3          0.5         0.1      3.8 
Disposals                       -       (0.4)            -       (0.1)    (0.5) 
At 30 June 2016              31.3         2.6          2.7         0.1     36.7 
======================  =========  ==========  ===========  ==========  ======= 
Net book value 
At 1 January 2016            16.5         4.1          2.4         0.4     23.4 
======================  =========  ==========  ===========  ==========  ======= 
At 30 June 2016              17.1         6.5          2.7         0.4     26.7 
======================  =========  ==========  ===========  ==========  ======= 
 

The estimated cost of the property, plant and equipment which the Group is contractually committed to purchase at 30 June 2016 is GBPnil (30 June 2015: GBPnil).

8. Share capital

 
                                            2016    2016 
                                          Number    GBPm 
-----------------------------------  -----------  ------ 
 1 January 2016 
 Ordinary Shares of GBP0.0025 each    90,250,607     0.2 
 
                                          Number   Notes 
-----------------------------------  -----------  ------ 
 1 January 2016                       90,250,607 
 23 March 2016                            32,500     (a) 
 31 March 2016                         1,022,536     (a) 
 18 April 2016                            50,000     (a) 
 30 June 2016                            207,856     (a) 
 30 June 2016                         91,563,499 
-----------------------------------  -----------  ------ 
 
   (a)   Ordinary shares were issued to satisfy options which have been exercised. 
 
                                            2016   2016 
                                          Number   GBPm 
-----------------------------------  -----------  ----- 
 30 June 2016 
 Ordinary Shares of GBP0.0025 each    91,563,499    0.2 
 
 

9. Related party transactions

As at 30 June 2016 an amount of GBPnil (30 June 2015: GBP2.7m) was owed to the Group by key management personnel; this sum includes GBPnil (30 June 2015: GBP50,000) owed by Andrew Belshaw and GBPnil (30 June 2015: GBP2,591,460) owed by Bob Falconer.

On 6 May 2014, a subsidiary (Gamma Telecom Holdings Limited) made an interest free loan of GBP50,000 to Andrew Belshaw to enable him to repay a loan of GBP50,000 from the Employee Benefit Trust. This loan was repaid in full on the 2 December 2015.

The loan previously held by Bob Falconer was repaid in full on the 31 March 2016. On 2 October 2014, the Company agreed certain arrangements with Bob Falconer to enable him to maintain his holding of 5% of the issued Ordinary Share capital of the Company for the purposes of enabling him to benefit from "entrepreneur's relief" from UK capital gains tax. In order to achieve this, Bob Falconer agreed to pay to the Company the sum of GBP3.1m, being GBP0.9375 in respect of each of the 3,356,528 B1 shares held by him, such that each of his B1 shares converted into one Ordinary Share (each, a "Converted Share"). To part fund that payment, the Company's subsidiary, Gamma Telecom Holdings Limited, made an interest free loan to Bob Falconer of GBP2.6m ("Loan"). Had Bob Falconer ceased to be a Director of the Company the Loan was repayable on expiry of his notice period or three months after termination if no notice period applied. The Loan was also repayable if Bob Falconer disposed of the Converted Shares or upon certain events of default, including his bankruptcy or within six months of his death. There was also a part repayment obligation if Bob Falconer sold only part of the Converted Shares. The Loan was secured by an unregistered charge over 1,580,159 Ordinary Shares registered in Bob Falconer's name. As part of these arrangements, the Company cancelled Bob Falconer's options over 549,132 A shares in return for a cancellation payment to Bob Falconer of GBP1.6m, being equal to the capped value of the A shares pursuant to the terms of the Company's articles of association in force at that time less the option exercise price for those A shares. Bob Falconer used part of the cancellation payment to repay a loan of GBP0.3m which had previously been made by Gamma Telecom Holdings Limited to him in April 2014.

Dividends totalling GBP0.3m (being the final dividend for 2016) were paid in the first half of the year in respect of ordinary shares held by the Company's directors (2015: GBP0.3m).

10. Events after the reporting date

There were no reportable events after the balance sheet date.

11. Ultimate controlling party

There is no ultimate controlling party. Gamma Communications plc is the ultimate controlling party of the Gamma Communications Group.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR BLGDCUUGBGLU

(END) Dow Jones Newswires

September 06, 2016 02:00 ET (06:00 GMT)

1 Year Gamma Communications Chart

1 Year Gamma Communications Chart

1 Month Gamma Communications Chart

1 Month Gamma Communications Chart

Your Recent History

Delayed Upgrade Clock