Chairman's statement

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Overview of results

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Group revenue for the year ended 31 December 2019 increased by �44.0m to �328.9m (2018: �284.9m) an increase of 15% on the prior year.� Adjusted EBITDA for the group increased by 31% to �63.5m (2018: �48.3m).� Fully diluted earnings per share for the year increased by 20% to 36.1p (2018: 30.0p).� Adjusted fully diluted earnings per share for the year increased by 35% to 40.8p (2018: 30.3p).� On a statutory basis PBT and profit from operations both increased by over 30%.

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The cash generated by operations for the year was �54.0m compared to �40.6m in 2018.� The closing cash balance for the year was �53.9m compared to �35.5m at the end of December 2018.� This cash balance has been increased whilst investing �12.4m on capital items, �7.5m on acquisitions and paying �9.2m in dividends.

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Overview of the year

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As outlined in this report, the year has been a period of strong strategic execution for Gamma with highlights including: -

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������� We launched Collaborate and a new Call Recording platform to expand our UCaaS offering, in November, we acquired Telsis which will enable us to develop a Contact Centre solution for release towards the end of 2020.

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������� Strong growth in our key products in the UK of SIP Trunking (units increase by 19%) and Cloud PBX (units increased by 20%).

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������� In addition, in March 2020, we acquired Exactive which enables us to support enterprise and public sector customers who choose solutions using Microsoft Teams.� This represents a fundamental part of our UCaaS strategy.

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������� In the Netherlands we grew our Cloud seats to over 22,000.� We also acquired Nimsys in February 2019, its integration has gone well and �Nimsys is growing strongly.� The performance of Dean One in the second half improved following a disappointing first half.

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������� We continue to focus on European expansion and throughout 2019 we conducted discussions with a number of potential acquisitions.� In February 2020, we made an offer for Voz Telecom in Spain which (when complete) will provide us with a foothold into the Spanish market which is set to grow significantly over the coming years.

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Board and employees

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I was delighted to welcome Henrietta Marsh to the board on 16 April 2019.� She brings a wealth of experience gained from serving on the boards of both private and listed companies.� Henrietta will chair the Remuneration Committee after the upcoming AGM.� Gamma has a strong and experienced Board. �We have improved our diversity on the Board and within the Senior Management Team in the last year but there is more to do and we will consider this with future appointments.

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The business now has 1,176 employees.� We continue to invest in all our employees and in particular we assist apprentices to gain valuable work experience, to continue their education and to obtain nationally recognised qualifications.� At present, we have 24 apprentices employed in IT, HR, Infrastructure Support, Software Development, Sales and Customer Service.� We have a good track record of offering permanent employment at the end of these apprenticeships and expanding opportunities for apprentices across the business remains a priority for Gamma. We consider diversity to be an important part of our culture at Gamma and run a number of programmes across our business to support and promote this.

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We encourage all employees to own shares in the company and in July 2019, we used our SIP Trust to award �500 of free shares to all of our UK employees.� The company also offered a sharesave scheme for the fourth year. Once again, it was particularly pleasing to see the exceptionally high take up, with 459 staff choosing to participate in the scheme (2018: 257).� Finally, we have launched an "Evergreen SIP" scheme which gives employees another opportunity to buy shares in the company in a tax efficient way.

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The Board recognises the high levels of support and commitment from its staff through a period of significant strategic planning and implementation and would like to express its thanks for their dedication, hard work and enthusiasm.

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Dividend

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Gamma remains committed to a progressive dividend policy which has increased between 10-15% every year since we listed in 2014.� Gamma has paid one third of the dividend as an interim dividend with the final two thirds paid as a final dividend once the results for the full year are known.

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The Board is pleased to propose a final dividend, in respect of the year ended 31 December 2019, of 7.0 pence per share (2018: 6.2 pence) an increase of 13%.� Subject to shareholder approval at the forthcoming AGM, this will be payable on Thursday 18 June 2020 to shareholders on the register on Friday 29 May 2020.� When added to the 3.5 pence interim dividend (2018: 3.1 pence) this makes a total dividend declared of 10.5 pence for the year as a whole (2018: 9.3 pence).

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Governance

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During 2018 we adopted the QCA Corporate Governance Code (2018 edition) (the 'QCA Code').�

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Environmental

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As a business which enables other companies to reduce their carbon footprint by communicating and collaborating from multiple sites and thereby avoiding travel, we continue to challenge ourselves on our own environmental credentials.� We run a certified CarbonNeutral� network and we have also now committed to supporting the UN Sustainable Development Goals.

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The Board has considered the emerging effects of climate change on the future of the business and we consider them to be low risk.

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Outlook

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The Board is positive about the outlook for the Group in 2020 and beyond.

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We have discussed the potential impact of Covid-19 on the business which (to date) has been very limited.� Notwithstanding, this remains a matter of close attention for the Board. �In particular we will take measures to ensure the safety of our channel partners, customers, employees and other stakeholders.� We are taking regular advice and following guidance from the government and public bodies.� We have a sub-group of our Senior Leadership Team who are monitoring the situation on a daily basis and communicating the latest advice to staff.

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With respect to our day-to-day operations we are able (should it become necessary) to operate our business with almost all staff working from home.� We have stress tested our network to ensure that this is achievable.� We believe we will be able to continue to support our customers fully.

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The potential impact of the Covid-19 health crisis on the short-term results is difficult to assess at this time.� We have a resilient business model and at this point we have seen little effect on our business.� We suspect that we may see fewer orders as channel partners and end customers are beginning to introduce travel and meeting restrictions which will make customer visits and lead generation more difficult.� With respect to existing orders, installations which require engineers to visit a site are also likely to be delayed and hence revenues will be delayed.� At the time of writing it is impossible to know how long this situation is likely to continue for.� We have a strong balance sheet and a robust business model and we expect to be able to weather the crisis.�

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In the longer term, our product set is well suited to organisations that wish to be able to work remotely or as part of their disaster recovery plans.� Whilst the current crisis is not desirable, we believe that the experience will demonstrate the advantages of UCaaS to businesses of all sizes across all industries.

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As a predominantly channel-focused business, Gamma will continue to concentrate efforts and investment on strengthening our relationship and capabilities to support the channel to be successful both in the UK and mainland Europe.� We will also ensure that in the direct business, we continue to focus on growth with larger enterprises and the public sector, and on building on an already strong reputation for operational excellence and service quality.� Our support for enterprise customers may involve offering solutions which will include products from other suppliers (for example Microsoft Teams) as well as our own product set.

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Richard Last

Chairman

Chief Executive Review

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I am pleased to report another excellent set of financial results for 2019 which demonstrates the initial success of the strategy which we set out at the start of 2019.

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As well as executing against our short-term commitments, throughout 2019 we focused heavily on planning and executing against our medium and longer-term growth strategy for Gamma.

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Both our Direct and Indirect channel businesses have continued to perform strongly, and throughout 2019 we were awarded several new multi-year customer and partner contracts.� This has enabled us to strengthen both our contracted backlog and revenue and margin visibility, ensuring that we continue to benefit from a very high percentage of recurring revenue and margin.

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We have continued to invest and strengthen our sales, service and delivery capabilities across Gamma, and our continued focus and investment on product development will deliver new and exciting product launches during 2020, including a cloud contact centre offering.� Development of a cloud contact centre offering is a frequent request from channel partners and end users and will open up a part of the market in the larger SME space.� Supporting the success of our indirect channel partners is a priority, and we continue to develop and strengthen our self-serve partner portal, while ensuring that our digital platforms (Gamma Academy and Gamma Accelerate) enable our partners to create new opportunities, win market share and drive increased levels of revenue and margin for both their businesses and Gamma.

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The Gamma Academy delivered 19,992 training courses to channel partners during 2019 (2018: 16,602).� Gamma Accelerate delivered a significant increase in marketing campaigns run by channel partners during the period with 870 of Gamma's partners now actively using the platform (2018: 732).

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We offer a product set which can be used by other businesses to reduce their carbon footprint and we are proud that we are certified CarbonNeutral�.� Notwithstanding, we continue to work hard to reduce our energy consumption.� We last monitored our CO2 emissions between July 2017 to June 2018 which were 2,332 tonnes of CO2.� This was a reduction of 5% compared to the previous twelve months.

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Strategy

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Our strategy has four key elements.

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Evolve our strong cloud telephony position into the Unified Communications as a Service ("UCaaS") market

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We focus on the UCaaS market in the UK and Europe and this is expected to grow by 12% annually over the coming five years.

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We continue to execute well in the UK and are one of the market leaders in both our core products of SIP and Cloud PBX.� In SIP Trunking we have now increased our market share to 31% in the UK.� In Cloud PBX we have increased the number of seats from 435,000 to 522,000 which gives us a market share of 11%.

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As a first stage in building a broader UCaaS proposition, we launched a suite of Collaboration services in the first half of 2019.� Gamma Collaborate launched as a fully integrated bolt-on to our market leading Horizon product and now has 9,000 users.� We also launched a new integrated Gamma call recording service and a Subscription Management Service, which enables our partners to better manage their estate of seats on the platform.

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In November 2019, we acquired Telsis for �4.3m which brings additional product and software development capabilities to Gamma, and which will allow us to launch a fully integrated cloud contact centre module into our UCaaS suite later in 2020.

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In the Netherlands we have increased Cloud seats to 22,000 and in February 2020, we made an offer to acquire Voz Telecom in Spain which (if accepted by the shareholders) will give us 40,000 Cloud PBX seats in the Spanish market.

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By growing our base of SIP and Cloud customers and developing new integrated modules we are able to upsell and cross-sell into our existing customer base as well as selling to end users who require more functionality.

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Where enterprise customers require the functionality of Microsoft Teams, we have now launched a variant of our SIP product which is technically better suited to Teams.� This has a commercial wrap which will enable our indirect channel partners to sell SIP more easily alongside Teams.� We also acquired Exactive in February 2020 which provides us with the capability to deploy Teams into customers who require this solution.

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Build on our Fixed and Mobile Telecom strength to differentiate our proposition from pure "Over the Top" (OTT) players

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As part of our detailed analysis of the marketplace and our long term strategy development during the year, we reinforced our view that being able to offer a fully integrated suite of connectivity products will be a key differentiator for us from other Cloud PBX providers who only offer an "over the top" software solution.

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We continue to offer data access services (Broadband and Ethernet) in the UK and we ended the year with 111,000 Broadband circuits and 13,900 Ethernet circuits.�

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The business focused Data services market is undergoing a change, driven by the investment in fibre services from the current large players, such as BT and TalkTalk, and new infrastructure providers such as CityFibre.� This is effectively developing a model where services such as Fibre to the Premises ("FTTP") and Fibre to the Cabinet ("FTTC") can provide high bandwidth broadband services at a cost-effective price that will meet the requirements of the majority of SME businesses.� Ethernet services will be used to support larger SME / Midmarket customers as they will move to the higher bandwidth services which Ethernet offers to future proof their requirements.� Gamma continues to work with BT, TalkTalk and other suppliers to ensure that we can offer a full suite of high bandwidth services to customers as the market evolves.

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Some users will access our service over mobile data links (either in addition to or instead of fixed fibre).� In the UK we have an agreement with Three UK and started a project to move to a new platform which will give customers increased functionality (for example 5G) but at a reduced cost to Gamma.� We expect the new service to go live in early 2021 and for cost savings to be recognised towards the end of 2021.

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In the Netherlands, we signed a long term strategic partnership with T-Systems in December 2018 which has enabled us to strengthen our proposition and market position with both our direct customers and indirect channel partners.� In the course of the first year we have added 7,000 mobile users.

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Expand to Europe to gain continued growth and scale

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We were disappointed with the performance of our Dutch business in the first half of 2019 as the announcement by the incumbent of the imminent closure of ISDN as a product resulted in revenues falling more rapidly than expected in this legacy part of the business.� However, performance was better in the second half and our largest Dutch business (Dean One) continues to increase its Cloud seats and Mobile connections.� Throughout 2019, we focused on strengthening both our product and partner proposition across the Dutch market. �In order to provide additional scale and capability, we also acquired Nimsys in February 2019, which has performed particularly well, and we are also happy with the performance of Schiphol Connect.

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As highlighted previously, we have made an offer to acquire Voz Telecom, which is the fourth largest Cloud PBX business in Spain (after the established telecoms providers such as the Mobile Network Operators "MNOs").� The acquisition of Voz Telecom will provide us with an important foundation within a key cloud growth market, which represents a key part of our European expansion strategy.� Voz Telecom supplies c40,000 Cloud PBX seats which equates to a market share of c5%.

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With an overall market size of c18m PBX seats (slightly smaller than the UK market) and a cloud penetration of only c5%, the Spanish market for Cloud PBX is forecast to grow rapidly in the future.

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We continue to monitor and assess other acquisition opportunities in both the Dutch and Spanish markets, which will complement and strengthen our position in both countries.� In addition, and as part of our stated strategy, we continue to assess acquisition opportunities in both the German and French markets, both of which are characterised with low cloud penetration levels and significant future growth potential.

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We do not expect Brexit to affect our plans for expansion or, indeed, to have a materially detrimental effect on the existing business.

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Continue to build on our digital capabilities to assure agility and sustain competitiveness

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We continue to invest in key programmes which will enable our digital transformation.

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Our strategic aim is to build a digital platform that will enable us to manage our business and to serve our customers more effectively and efficiently.� The first objective is to scale and grow economically by taking as many manual processes out of our back-office systems.� The second objective is to maintain our position of being easy to do business with.� We will build systems which will allow partners and end users to self-order, provision and serve.

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In 2019 we deployed Release 1 of the "Gamma Hub", our whole business digital platform that will underpin the continued rapid growth of our direct business.� Release 1 is the foundation stage of a four-year programme that will transform us into a digital-first organisation and assure agility and sustain competitiveness through intelligent automation and customer self-serve.�

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In this release, we delivered a single customer support and ticketing platform which will support direct customers across all of our market segments and all of our products and services, with a rich engagement and support tool.� This allows us to create deeper more meaningful relationships with each and every customer. �Additionally, we deployed a new customer CRM tool with market-leading sales and marketing automation allowing us to track, nurture and develop opportunities and customers, from our very first engagement, through to in-life support.

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In 2020 we will be implementing Release 2, which will start to transform our customer delivery and service management processes creating one seamless and 'digitally connected' experience across the whole customer lifecycle.� As part of this phase, we will be streamlining our operating model to lay the foundations for delivering a consistent, high quality yet tailored service experience at scale across all our customer segments.

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Gamma values

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During 2019 we surveyed our staff to understand the values which underpin Gamma as an organisation.� We were delighted with the level of engagement and response from our staff, and that a number of common themes emerged across all groups of staff at all locations.� We have distilled all of these contributions to agree Gamma's core Values:

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������ Aim high

������ Consider others

������ Think differently

������ Stronger together

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These values were launched in early 2020 as part of a companywide values program, which included a full brand refresh and the launch of our new Gamma websites. �We also introduced a new company strapline "Working Smarter Together" which seeks to sum up our aspirations as a business.� In addition to this, we also refurbished our offices across Gamma with a particular focus on our Manchester and Glasgow offices.

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Environmental considerations

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We take our responsibilities to the wider environment seriously.� As a business which is based on multiple sites, we encourage our people not to travel but rather to use our own collaborative communications tools which both reduces our carbon emissions and promotes employee wellbeing.� One of our core values is "Consider Others" and as part of this we aim to reduce both our waste and our carbon footprint.� We are conscious of our power consumption and seek to buy capital equipment which uses less power than the legacy items it replaces.

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Summary and outlook

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I continue to be very pleased with the execution of both our short-term business objectives and our longer term 2023 strategy, which we outlined during January 2019 - the business is in good shape and our outlook is positive.� We have a robust business model with a high level of recurring revenue and margin, and we continue to stay focused on developing the products and services which enable our customers and our channel partners to be successful and win market share in their respective markets.� We continue to see competition across all core market segments, including the UCaaS, data and mobile product areas, where we believe we will see continued price pressure.� However, the quality and competitiveness of our products and the strength of our direct and indirect channel businesses provides confidence that we will continue to execute against our commitments.

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Throughout 2020 we will build on each of our strategic pillars:

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������ In UCaaS we will strengthen our partner and end-customer proposition through the launch our fully integrated cloud contact centre module and continue to develop the roadmap for our UCaaS product suite.

������ We will work with our strategic partners to deliver quality access technologies (ethernet, broadband and mobile) at competitive prices

������ We will continue to build our business in the Netherlands and continue to look for additional suitable acquisition opportunities to further develop our business across continental Europe.

������ We will further develop our portals internally and externally to give our customers and staff the best digital experience within our industry.

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As a final point, I would like to personally thank our staff, partners and customers for their contribution and ongoing support. Our performance during 2019 has been strong, and we remain optimistic about Gamma's future growth prospects.

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The Chairman's outlook statement provides our current assessment of the impact of Covid-19 on our future performance.

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Andrew Taylor

Chief Executive�Officer

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Financial review

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Gamma has performed well during the year, increasing revenue by 15% to �328.9m and gross profit by 26% to �166.5m. �We have seen this strong performance� across all the main areas of the business. This has resulted in adjusted EPS of 40.8p, an increase of 35% from the prior year.

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Revenue and gross profit

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UK Indirect

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Within the UK Indirect business, the gross profit from the traditional business (which includes calls and lines and trade with other carriers) has seen a slight increase from the previous period which is contrary to the trends seen over the past few years. �The call and lines part of the business continues to decline but Gamma is now providing IP telephony services to other carriers which is offsetting this.�

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We group our data, mobile, SIP and Cloud PBX products as our "growth" products and revenue from growth product sales increased from �162.7m to �186.5m (+15%) and gross profit grew from �85.6m to �106.7m (+25%). The gross margin grew from 53% to 57%, which reflects the fact that the main contributors to this growth were SIP Trunking and our Cloud PBX product (Horizon) which have higher margins than other products.� Despite price pressure in Cloud PBX, margins are holding up due to fewer calls being used within bundled offerings.

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UK Direct

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The UK Direct business continues to grow strongly. �The growth was mainly attributable to sales to enterprise customers increasing by �8.3m. In Mid-Market revenue increased by �2.4m and public sector grew by �2.1m. This business continues to move from selling to smaller customers to larger enterprise businesses and public sector customers on multi-year deals. The order book remains strong with significant customer wins anticipated in the second half.

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The gross margin fell slightly because the margin on larger customers tends to be lower and also more of the new business wins have a higher proportion of access sales (typically Ethernet) which has a lower margin than the voice applications suite of products.

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Overseas

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Gamma acquired DX Groep in October 2018 and Nimsys in February 2019.� Consequently, it should be noted that the growth in the overseas business is not organic. As reported at the half year, the performance of the DX Groep business in the first half was below expectations as a significant amount of legacy ISDN business ceased due to changes made by the incumbent network provider in the Netherlands.� In the second half, the performance of the business has improved and sales of Cloud PBX and Mobile were strong.� Nimsys has also exceeded our expectations.

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The initial acquisition price for DX Groep was �11.5m and no further consideration will be paid due to a greater than expected drop off of ISDN revenue in 2019. As a result, the liability for contingent consideration has been reduced to nil with an equivalent reduction in the carrying value of associated assets.� This is discussed under exceptional items below.

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The initial acquisition price for Nimsys was �3.7m with up to a further �3.2m payable dependent on performance in 2019 and 2020. Given the performance of Nimsys in 2019, we now estimate that all of the contingent consideration is likely to be paid.� Therefore, the aggregate consideration for the two Dutch businesses is likely to be �18.4m.�

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Operating expenses

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Operating expenses grew from �97.8m to �121.0m.

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We break these down as follows:

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Movements in cash based expenses were driven by:

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���� Within the UK Indirect Business, operating expenses have grown by 7.1% (compared to Gross Profit growth of 22.2%).� This demonstrates the success of programmes we have undertaken historically to ensure that we are running the business more efficiently.

���� In the UK Direct business, overhead increased by 22.6% (compared to Gross Profit growth of 16.5%).� The level of increase is mainly driven by our investment in our digital strategy programme, but we also continue to invest in additional sales heads to grow the business.

���� The increase in overseas costs is reflective of the inorganic growth and a full year of the DX Groep.

���� Central Costs have increased significantly year on year, which is due to a number of factors.� The first is that we are building a group function in anticipation of operating several businesses around Europe over the coming years.� A second factor is the cost of our strategy project.� Finally, we have incurred significant due diligence costs on acquisitions - some of which have completed whilst some were rejected.

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Depreciation and amortisation on tangible and intangible assets has increased from �12.1m in 2018 to �13.4m in 2019. This is driven by increased capital expenditure over the past few years.� The annual depreciation charge is now in line with the annual capital expenditure spend and is not expected to increase significantly.

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Share based payment costs have increased during the year because more executives have been included within the scheme and the rising share price has made the costs of employers NI for share grants higher than in previous years.

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Exceptional Items

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There were a number of exceptional transactions in the year, but all relate to the acquisition of either the DX Groep or Nimsys (both in the Netherlands).

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DX Groep

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An exceptional item relates to the contingent consideration which is due for the acquisition of the DX Groep. In preparing the statutory accounts for 2018 we made our best estimate of the contingent consideration. During 2019 a higher than expected attrition rate of legacy customers taking ISDN caused the revenues to be lower than expected. It should be noted that the margins made on ISDN in the Netherlands (c.40%) are much higher than in the UK and therefore this acceleration of churn from legacy products has had a disproportionate effect on profit. This means that we have both revised our estimate of the contingent consideration due and have also considered whether the intangible assets and goodwill which were acquired with the business require reduction.

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As a result of the above there are three exceptional items:

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������ A credit of �8.1m arising from the release of the contingent consideration.

������ A debit of �3.9m arising from the reduction in carrying value of the intangible assets.

������ A debit of �4.2m arising from the reduction in carrying value of goodwill.

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In addition to the exceptional items a credit of �1.0m relating to deferred tax movements in connection with the reduction in carrying value of intangible assets has been included within "adjusting tax items".

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Nimsys

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With respect to Nimsys, the opposite had occurred - the business had performed better than originally expected which meant our initial estimate of contingent consideration was too low and therefore it now needs to be increased.�

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Following the initial recognition of Nimsys contingent consideration in February 2019, the contingent consideration has been remeasured at the reporting date. The overall balance due has increased by �0.9m which we have charged to the statement of comprehensive income.� There is no tax effect.

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None of the items relating to either transaction are cash items. The alternative performance measures referred to herein have been adjusted for all of these items.�

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