Gamma Communications (GAMA) H1 2026 earnings summary

Executive summary

• Revenue grew 4% year-over-year to £330.0m, with organic revenue up 2% and gross profit up 4% to £178.1m, driven by strong German SME growth and resilient Service Provider performance despite UK SME headwinds.

• Adjusted EBITDA increased 2% to £72.5m, though organic EBITDA declined 1%; profit before tax rose 15% to £50.1m due to the absence of exceptional items.

• Adjusted EPS was flat at 47.7p, while fully diluted EPS increased 18% to 40.2p, reflecting share buybacks.

• Recurring revenue remained high at 90% of total revenue.

• A recommended cash offer from Epiris at a 53% premium to the undisturbed share price was agreed, with completion expected in H1 2027.

Financial highlights

• Adjusted cash generated by operations was £70.3m, with a 97% adjusted cash conversion rate, up 10% year-over-year.

• Net debt reduced to £3.8m from £21.6m year-over-year, with £104.5m of undrawn revolving credit facility.

• ROCE improved to 30% from 28% in the prior year.

• £34.5m was returned to shareholders, including £21.1m in share buybacks and £13.4m in dividends.

• Final dividend of 14.8p per share paid; no further dividends planned before acquisition completion.

Outlook and guidance

• Acquisition by Epiris is expected to accelerate growth through increased investment and AI adoption.

• Management expects continued growth in Germany and international expansion, with ongoing UK SME challenges.

• No further dividends or share buybacks planned until the acquisition is completed.

• The Board views the acquisition as providing certainty and value to shareholders.

• Completion of the acquisition is anticipated in the first half of 2027, pending approvals.