REG - Gamma Communications - Half-year Report
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RNS Number : 4981Y Gamma Communications PLC 09 September 2025
9 September 2025
Gamma Communications plc
Unaudited results for the six months ended 30 June 2025
Double digit growth driven by strong German performance. Full year Adj. EBITDA
in line with market expectations and Adj. EPS slightly ahead.
Gamma Communications plc ("Gamma" or "the Group"), a leading provider of
technology-based communication services across Europe, is pleased to announce
its unaudited results for the six months ended 30 June 2025.
Six months ended 30 June
2025 2024 Change (%)
Revenue £316.6m £282.5m 12%
Gross Profit £172.0m £145.8m 18%
Gross Margin 54% 52%
Adjusted EBITDA(1) £70.9m £62.2m 14%
Profit before tax ("PBT") £43.5m £48.5m (10%)
Adjusted PBT(1) £61.0m £56.0m 9%
Earnings Per Share (EPS) (fully diluted) 34.1p 36.7p (7%)
Adjusted EPS (fully diluted) (1) 47.9p 42.5p 13%
Interim dividend per share 7.4p 6.5p 14%
Adjusted cash generated by operations(1) £63.7m £62.2m 2%
Adjusted cash conversion(1) 90% 100%
Net (debt)/cash(1) (£21.6m) £142.9m (115%)
Key highlights
· Strong growth across key financial performance metrics following the
successful strategic, and immediately accretive, German acquisitions of
Starface and Placetel, and low single digit UK revenue growth largely due to
the macro-economic environment. Recurring revenue remains high at 90%.
Adjusted EBITDA increased by 14%, flowing through to Adjusted EPS which
increased by 13%.
· Share buyback of £45.1m completed in the period, following the £27.3m
buyback in 2024.
· Continuing healthy adjusted cash conversion of 90% has resulted in a net debt
position of £21.6m, demonstrating the Group's capacity to deleverage quickly
following the Starface acquisition and alongside the buybacks.
· Significant increase in total Cloud seats of 587k to 1.8m (up 50%) since June
2024. The full Cisco Collaboration suite is also now available to order across
Germany, the UK and Spain, with 28k users at the end of June (up 75% in the
half).
· Substantial progress in developing our new portal architecture in the UK and
Europe. UK Channel Partners can now order Horizon, PhoneLine+, the Cisco
Collaboration Suite and iPECS through a single portal and we have launched our
first pan-European offering "Operator Connect International".
· Impressive German performance led by the acquisitions of Starface and
Placetel, supplemented by solid organic growth. These acquisitions delivered
double digit proforma revenue growth against the same period last year(2) and
drove reported Group gross margin improvement to 54%, up two percentage
points. Our enlarged German business is now of significant scale, representing
c.20% of Group gross profit and 565k cloud seats.
· Move to the ESCC listing category of the Main Market of the London Stock
Exchange completed successfully on 2 May, with subsequent inclusion in the
FTSE 250 index in June.
Business unit performance:
· Gamma Business, our SME business unit, has increased gross profit to £97.4m
(H1 2024: £97.1m) underpinned by continuing volume growth. It has been well
placed to offer lower priced solutions, such as our internally developed
PhoneLine+ product, to those customers feeling the impact of the difficult
macro-economic environment.
· Gamma Enterprise grew gross profit to £30.9m (H1 2024: £28.9m) led by the
BrightCloud acquisition in July 2024, with some headwinds from competitive
pricing pressures and customer delays in committing spend.
· Germany(3) has increased gross profit to £34.4m (H1 2024: £9.8m) led by our
acquisitions of Starface, completed in February 2025, and Placetel, which have
performed strongly and delivered double digit proforma revenue growth(2).
Outlook
For the year ending 31 December 2025, the Board expects Adjusted EBITDA to be
in line with current market expectations(4), with Adjusted EPS slightly ahead.
Looking further forward, we expect continued strong growth in Germany, and in
the UK we are implementing a combination of growth initiatives and cost
reductions to offset some near-term challenges to gross profit growth and
underpin our continued Adjusted EBITDA performance.
Andrew Belshaw, Chief Executive Officer, commented:
"Gamma has achieved another strong set of results. Our German business,
bolstered by our recent acquisitions (Starface and Placetel) has performed
particularly strongly, while the performance in the UK has been resilient in
spite of a continuing challenging macro-economic backdrop for SMEs.
We continue to view M&A as a key tool to complement our organic growth.
Our robust business model is underpinned by a high recurring revenue base from
solutions that are critical to the businesses that use them, strong cash
generation and available liquidity. This leaves us well placed to maximise the
M&A opportunity even in challenging macro-economic times. Our highly cash
generative approach will allow us to continue to return cash to shareholders."
(1) See section Alternative Performance Measures
(2) On a proforma unaudited historical GAAP basis
(3) Germany is now reported as a separate business unit within Gamma Europe
(4) Company compiled range is based on known sell side analyst estimates. The
current consensus range for full year 2025 Adjusted EBITDA £139.4m - £143.1m
and Adjusted EPS (fully diluted) 89.9p - 93.9p, as at 8 September 2025.
Enquiries:
Gamma Communications plc Tel: +44 (0)333 006 5972
Andrew Belshaw, Chief Executive Officer CompanySecretary@gamma.co.uk
Bill Castell, Chief Financial Officer
Rachael Matzopoulos, Company Secretary
Teneo (PR Adviser) Tel: +44 (0)207 353 4200
James Macey White / Matt Low / Ollie Simmonds Gamma@teneo.com
Gamma Communications plc is a leading provider of technology-based
communication solutions across Europe. With over 2,200 employees and listed on
the Main Market of the London Stock Exchange, Gamma helps organisations
connect and collaborate through solutions including Unified Communications,
voice enablement, connectivity, mobile and security.
Gamma's vision is a better-connected world - working smarter for the benefit
of businesses, people and the planet. Selling exclusively to businesses and
public sector organisations, Gamma's core markets are the UK and Germany, with
additional presence in Spain and the Benelux region.
In the UK, Gamma serves SMEs through an extensive network of over 1,500
channel partners (Gamma Business). For larger businesses and public sector
organisations, Gamma Enterprise engages directly to design, deliver, and
support complex, integrated communications solutions.
In Europe, Gamma has its largest presence in Germany, where it operates
through a combination of a strong partner network and a self-service digital
platform and is now one of the country's leading cloud communications
providers, following strategic acquisitions.
For more information about Gamma and its comprehensive range of products and
services, please visit gammagroup.co
Chief Executive Review
I am pleased to report that we remain firmly on track to meet expectations for
our financial performance in FY25.
Our newly expanded German business has performed well in the first half of
FY25 with both our acquisitions (Starface and Placetel) delivering strong
results and each achieved double digit proforma revenue growth against the
same period last year. Our strategy to build a scale business in a market
which is underpenetrated for Cloud Communications Solutions is progressing
well and will support growth for many years to come. Our aim remains to build
a German business of comparable scale to the UK and we have made meaningful
progress towards this goal.
In the UK we have improved our Contact Centre offerings with AI, and will
shortly offer a wide choice of fibre providers for broadband and ethernet. We
are seeing sales of the Cisco communications suite increasing (and this is
before our full market launch in October). We have also re-energised the
Channel with "Edge" our market leading Channel Proposition which helps our
Partners to win new business in the Cloud Communications market.
We highlighted previously that the first half of FY24 was one of our best
trading periods - we added more Cloud seats in H1 2024 than we had done for a
long time. However, since the UK budget in November 2024 and the resultant
negative impact on small business confidence, net additions for Cloud
Communications Solutions have slowed. We added 23,000 seats in the first half
of FY25, versus 48,000 seats in H1 2024. While businesses are investing in
cloud communications, some are currently buying the cheaper product options
available. The investments we have made to broaden our portfolio allows us to
react to these cyclical pressures. For example our PhoneLine+ product, which
we launched in 2021, has benefitted from this trend to spend less and so we
have continued to win business from those customers who, in light of the
current macro-economic environment, prefer a lower cost solution with fewer
features. We have also introduced new variants of PhoneLine+ which will allow
customers to upgrade to add additional features or services, as business
confidence improves.
As well as cyclical pressures, we have seen some one-off headwinds such as
legacy broadband customers moving to fibre due to the PSTN switch off and
price pressure in Ethernet. We have responded by being more efficient through
reviewing our cost base, and are reducing costs whilst protecting the
investments required to fully benefit from the positive trends in our market.
Looking further ahead, we are excited about the significant medium-term
opportunities for growth in both the UK and Germany. This is underpinned by
the strength of our market position in the UK and our ongoing investment in
Germany.
I would like to thank our staff for their continued hard work through the
first half of the year, which has come amidst challenging trading conditions
in our core markets and alongside the integration of our largest acquisition
to date.
Our markets and performance
In previous reports I have identified a number of market trends which I
believe will drive our growth for the medium-term and I want to revisit these
themes. We are confident that the current conditions are cyclical and that we
can continue to grow in our key markets - both in terms of units to be sold
and the achievable average revenue per user ("ARPU").
Customers are requiring more complex communications solutions
We had previously noted that both changing working patterns (e.g. hybrid and
home working) and new technologies (e.g. AI) mean that businesses are becoming
more demanding in what they require from their communications systems. Over
the last few years we have been able to increase our ARPU by upselling more to
existing customers.
As noted above, in light of the current trading environment notably in the UK
SME sector, we are seeing a trend of customers opting to invest in lower cost
cloud communication systems. Similarly, upselling in the current business
climate is difficult as customers navigate increasing cost pressures across
their businesses. However, we are confident that when the economy improves and
business confidence within SMEs increases, the trend will revert to what we
have seen previously and customers will spend more on their communications,
because ultimately this will make their operations more efficient. In
anticipation of this, we continue to launch new solutions to market. A good
example is the AI receptionist tool which we will launch in the fourth quarter
- for many of our customers it will save them time and reduce their costs. Our
mission continues to be to sell the value of what we do to our end users.
We have also launched improved variants of our PhoneLine+ product including
eSIM, enhanced telephony features for business (e.g. integrated voice
response) and WhatsApp integration. Customers can upgrade at a time of their
choosing to take advantage of these and other new features.
German Cloud market is still under-penetrated
We have consistently set out the case for there being an exciting market
opportunity for Cloud Communications in Germany. It is the largest business
communications market in Europe and the proportion of sales of communications
solutions which are based in the cloud is one of the lowest in Europe.
Over the last twelve months we have made significant investments into Germany
through the acquisitions of Starface and Placetel. Since first entering the
market in 2020, we have tracked these businesses and we were convinced they
were the right acquisitions for Gamma. I am pleased we have been able to close
both deals and that, despite the distraction of the integration process, both
businesses have continued to grow strongly.
In the first half of 2025, we added 29,000 seats in Germany (on a pro-forma
basis) and at the end of the first half, Gamma had 565,000 Cloud Seats in
Germany (compared to 1,063,000 in the UK). This is a strong performance in a
market which is still in the early stages of adoption (and against a weak
economic backdrop).
As well as the organic growth potential, we continue to seek additional
acquisitions to improve our scale and market position in Germany. We see an
opportunity to expand our connectivity offering (broadband and ethernet) as
well as an opportunity to build businesses serving each of Enterprise and
Service Provider customers.
We are excited at the prospects for growth in the German market and we expect
the German market to be a significant driver for growth.
Hardware PBX to cloud migrations
In the UK, hardware users have been migrating to the Cloud for nearly fifteen
years. The trend continues with c40% of the UK market still to move. Customers
who have been using Gamma SIP will move to other Gamma solutions such as Cloud
Communications or voice enablement of Microsoft Teams. While there is always
risk in a migration that customers may find alternative providers, the
migration is positive for Gamma as we increase the unit gross profit we make
from each user on a migration to a Gamma Cloud Communications solution.
We continue to observe the trend of customers migrating from SIP to a Cloud
Communications system. Due to the lower levels of economic activity in FY25,
the rate of conversion in our SIP base has slowed in the first half to 30,000
compared to 36,000 in the second half of FY24.
We did see a small number of our SIP customers rationalising their service to
save costs but the effect of this is not material, reducing monthly gross
profit by only £56,000.
More positively, we have made good progress in winning business from customers
moving from SIP to a solution which involved voice enabling Microsoft Teams. I
am pleased that in the first half of FY25 we added 56,000 users in the UK
compared to 28,000 users in the same period in FY24 - a significant increase.
While there are some larger customer wins within this figure we are pleased
with this improved conversion. We continue to work on making the order journey
as easy as possible for customers who wish to move from Gamma SIP to one of
our other solutions, including but not limited to the voice enablement of
Microsoft Teams.
The market for Cloud Communications in the UK continues to grow but as it
matures and compliance with regulation becomes more onerous we see some of our
competitors considering an exit from the market. This provides us with
opportunities to add large bases into the Gamma estate. An example of this is
the deal we have recently done with O2 Daisy - one of our largest and longest
standing partners. O2 Daisy recently acquired another UK Partner which had its
own Cloud Communications platform. Running a communications platform is
increasingly complex and O2 Daisy has partnered with Gamma to manage the users
on that platform. Due to the nature of the transaction the ARPU which Gamma
makes on these users is significantly lower than normal but transactions of
this nature enable us to grow our base. The additional benefit of this
transaction is that we can now work with a trusted partner to sell Cloud
Communications solutions to customers of Virgin Media - O2 (following the
merger of Daisy with that business).
PSTN switch off in the UK
The final growth driver we had identified is the PSTN switch off in the UK.
The "old" copper based network is currently due to be turned off in early
2027. This was a delay from the original date and therefore it has not driven
growth in sales of Cloud Communications Solutions as much as we would have
hoped throughout FY24 and FY25. Notwithstanding, we are encouraged by the
growth of PhoneLine+ (which is the solution we have built for micro-businesses
who had relied on single lines) and we now have 45,000 seats (an increase of
32% in the half year).
We have also previously highlighted the negative aspect of the PSTN switch
off. A number of our end users are still taking copper based broadband
solutions. These will no longer be available following the switch off and
users will have to replace them with fibre-based products. Gamma makes a lower
gross profit per unit when customers switch from copper-based solutions to
fibre-based ones. This headwind has reduced gross profit in Gamma Business by
£1.5m in the first half of FY25 compared to FY24. We estimate that gross
profit will be further reduced by a similar amount each half year until the
end of FY26, with a smaller impact into 2027 depending on the speed of
migration. We seek to offset this loss in gross profit by increasing our
market share in the fibre market and, with this aim, we are launching a
"comparison site" where our Channel Partners can compare the offerings from
various fibre providers to pick the best one (in terms of price and features)
for their end customers. The first wave of providers includes BT and PXC, and
more will follow.
The final opportunity afforded by the PSTN switch off is to replace single
lines into "non-voice" applications (for example lifts and burglar alarms). On
1 July we launched our Fusion IoT service to the UK Channel. This now gives
our partners a solution which can be used to replace these single lines using
mobile data services. We have had success selling this solution to Channel
Partners in Germany and into our Enterprise customers (such as the AA and
Centrica) and it is now available to our UK Channel Partners. An eSIM variant
of Fusion IoT will be launched in the UK and Germany before the end of the
year.
Strategic update
Develop a common pan-European solution set.
During the first half of the year, we continued to invest in our pan-European
product set.
A significant development has been to launch our "Single Sign On" for our
"new" portal architecture in UK and Europe. This both enables us to launch new
solutions more quickly than we have been able to in the past and to launch
common solutions across Europe. Our first pan-European solution launch has
been "Operator Connect International" which is a single solution for all of
our European businesses - using one portal, customers can now provision
Operator Connect (which voice enables Microsoft Teams) in 14 European
countries.
In the UK we have rationalised our portals and brought the iPECS suite of
solutions into the main portal. All of our partners can now order Horizon,
PhoneLine+, the Cisco Collaboration Suite and iPECS through the same, common
portal.
In addition, our improvements to the portal mean we can now add new devices
(such as phone handsets) within hours rather than months. This is very
important as we see a growth opportunity for adding entire customer bases into
Gamma. When customers migrate, they will have existing handsets which they
would rather not swap out and therefore the ability to add new handsets into
the portal quickly is important.
We continue to work with Cisco to launch an "out of the box" collaboration
solution into the SME market around Europe. This involves a combination of
Cisco software operating seamlessly with Gamma's network capabilities. By
August 2025, our run rate of additions of the Cisco solution had increased to
over 2,000 per month and was rising. In Spain the launch of the Cisco
Collaboration Suite has attracted a new large Channel Partner who has already
added the Cisco Collaboration Suite for Gamma to their portfolio, aiming to
replace legacy self-managed Cloud PBX systems. This partner has committed to
deploy 40,000 seats over the next five years.
In addition, we have launched voice enablement for Cisco products and we hope
to enable solutions of more providers in due course; this is in addition to
voice enablement for Microsoft Teams. We continue to be an important partner
for the global hyperscalers as they continue to build cutting-edge products
for the market.
In Germany, we have already started to rationalise our product set as we focus
on Starface and the Cisco Collaboration Suite. We will shortly have a version
release of Starface which will provide AI features to customers.
Develop multiple routes to market in each country in which we operate.
We now have four routes to market -
· We sell digitally direct to end users over the web in the UK (via CircleLoop)
and in Germany (via Placetel). Our digital business in Germany is growing
strongly and we plan to extend it into adjacent geographic markets throughout
FY26.
· We have our well established Channel business selling through partners to SMEs
in UK, Spain, Netherlands and Germany.
· We have a business unit selling directly to Enterprise customers - primarily
in the UK but we see expansion into Europe as a significant growth
opportunity.
· Finally, our Service Provider business provides carrier services to other
communications platform providers who do not have an in-country network. We
serve many of the service providers in the Gartner Magic Quadrant. This is
also primarily focused on the UK but with significant opportunity for
international expansion in Europe and beyond.
In our UK Channel business, we have signed a landmark deal with Clear Business
to provide a fully managed service for connectivity and voice to their end
users on an outsourced basis. The Gamma support team will use its expertise to
provide Clear Business' customers with the highest level of service. This
allows the Clear Business team to focus on their sales efforts resulting in
growth to both Gamma and Clear Business. We see an opportunity to offer this
service to a number of our Channel Partners (and discussions are already
underway with some). The service will increase customer profitability.
Become a trusted partner to Enterprises across Europe, transforming their
communications estates.
While we have had a number of exciting new logo wins in the half, we are
facing a short-term headwind driven by the strong competition in ethernet
pricing from the number of alternative networks now providing fibre. There is
a "price war" ongoing as alternative network providers try to fill their
networks to recoup their investment. The effect of this on Gamma's Enterprise
business is that when we have contracts for renewal we are having to discount
fibre pricing significantly. This results in the retention of business but
with a price reduction on the network elements of our offering. This headwind
has reduced gross profit by £1.0m in the first half of FY25 compared to FY24
continuing in H2. We estimate that gross profit will be further reduced by
£3.0m in FY26. We believe that after this, pricing will stabilise as the
market reaches its natural nadir.
Despite this challenge, we delivered strong new business performance with
significant contract wins across multiple sectors. Specsavers adopted our
Cisco Collaboration solution for UCaaS and CX, which we were able to win as a
result of skills acquired in the BrightCloud acquisition. Sureserve Group
contracted for our SmartAgent service. In the Public Sector, we sold Microsoft
UC solutions to Barnsley Council, Westminster City Council, East & West
Cheshire Borough Councils, and the London Borough of Tower Hamlets, along with
a mobile service for the City of Wolverhampton. We are pleased that we
continue to win business, however we are seeing some delayed decision making
in the current economic climate.
As a managed service provider, delivering new services to existing customers
is key and demonstrates our deepening customer relationships. To that end,
Zigup plc (a Secure SD-WAN customer) adopted Microsoft Teams Phone, while The
AA (a Fusion IoT customer) deployed our SD-WAN, and Morrisons and The Scott
Group embraced our Managed Cyber services, a capability delivered by our
Satisnet acquisition.
Despite the current economic conditions and the fibre market in general, we
remain confident in the growth prospects of our Enterprise business both in
the UK and also across Europe.
Create an organisation that engages all our people with a common set of values
and goals.
We have continued to drive greater diversity across our workforce, aiming to
increase representation of women in areas such as technology, sales, and
leadership roles (managers, heads of function, and directors). We ran targeted
focus groups with women in these roles, surfacing clear, recurring themes that
will inform future initiatives. We also laid the groundwork to better
identify, assess, and support high-potential women at senior levels.
Our latest external apprentice recruitment campaign also successfully reached
underrepresented groups. Nearly half of all offers went to high-potential
women who are at an early stage in their careers, in critical skills areas
including engineering, design, analysis and customer support.
Outlook
For the year ending 31 December 2025, the Board expects Adjusted EBITDA to be
in line with current market expectations, with Adjusted EPS slightly ahead.
This will be underpinned by the success of our expanded German business, which
we expect to continue to grow well.
We are implementing growth initiatives in the UK, such as strengthening our
solution set and measures to deepen our relationship with the Channel. One-off
headwinds exist in the UK related to the PSTN switch off and ethernet price
competition. We estimate a resulting reduction in gross profit of
approximately £6m in FY26 compared to FY25. We are reviewing the efficiency
of our operations and have commenced a UK restructuring in the second half
affecting up to 5% of our Group staff which is projected to save £6-8m of UK
annual operating costs (across both Gamma Business and Enterprise) from FY26.
Given the one-off nature of this activity, the associated restructuring cost
of approximately £3m will be treated as an exceptional item in 2025. We
expect these growth initiatives, combined with the cost reductions, to offset
these near-term challenges to gross profit growth and underpin our continued
Adjusted EBITDA performance.
Gamma has a robust business model, based on a high recurring revenue base from
solutions that are critical to the businesses that use them. The track record
of cash generation and profitability ensures that we are well placed to
maximise the opportunities ahead - ensuring we continue to deliver sustainable
value for all stakeholders. The Board is positive about the outlook for
Gamma.
I look forward to working with our customers, partners and colleagues for the
benefit of all our stakeholders as we continue to grow the business over the
coming years.
Andrew Belshaw
Chief Executive Officer
Supplementary information on product volumes
The following reporting of data is under review as we consider how to simplify
reporting going forward.
The table below shows the number of Cloud PBX seats in UK and Europe:
Cloud PBX seats - UK & Europe June December H1 25 change June 2024 H1 24 change (%)
(000's) 2025 2024 (%)
UK - Total* 1,063 1,040 2% 1,002 5%
Europe 687 434 58% 161 0%
-- Of which is Germany (+) 565 311 82% 38 12%
-- Of which is Other Europe 122 123 (1%) 123 (3%)
*UK Cloud PBX seats excludes seats resulting from the migration of the O2
Daisy base and are at a lower margin.
(+)On a proforma basis, including Starface seats at 31 December 2024, Cloud
PBX seats in Germany were 536,000 and therefore H1 growth was 5%.
The table below shows the change in the number of SIP Trunks which provide
voice enablement to various hardware PBXs and voice applications:
Voice Enablement - UK & Europe June December H1 25 change June 2024 H1 24 change (%)
(000's) 2025 2024 (%)
SIP Trunks enabling traditional hardware PBX
- UK 902 932 (3%) 968 (5%)
- Europe 201 206 (2%) 204 3%
-- Of which is Germany 194 199 (3%) 197 3%
-- Of which is Other Europe 7 7 0% 7 0%
SIP Trunks enabling a non-Gamma Cloud PBX
- UK 498 481 4% 451 13%
- Europe - - - - -
Voice enabled MS Teams users (either Operator Connect or MS Teams Direct
Routing)
- UK 523 467 12% 457 7%
- Europe 17 14 21% 12 33%
The table below shows the number of CCaaS seats:
CCaaS seats - UK & Europe June December H1 25 change June 2024 H1 24 change (%)
(000's) 2025 2024 (%)
UK - Total* 48 45 7% 40 33%
Europe 5 5 0% 4 0%
*CCaaS seats for Horizon Contact users also take a "Base Horizon" seat
(therefore 31,000 seats are separately disclosed within Cloud PBX seats).
Financial Review
Overview
During the six months ended 30 June 2025, Gamma has increased overall revenue
by 12% to £316.6m (H1 2024: £282.5m) and gross profit by 18% to £172.0m (H1
2024: £145.8m). Group Adjusted EBITDA increased by 14% to £70.9m (H1 2024:
£62.2m), profit before tax decreased by 10% to £43.5m (H1 2024: £48.5m)
primarily due to the one-off impact of exceptional costs in the period which
when excluded mean that Adjusted profit before tax increased by 9% to £61.0m
(H1 2024: £56.0m). EPS (fully diluted) decreased to 34.1p (H1 2024: 36.7p)
whilst Adjusted EPS (fully diluted) increased by 13% (H1 2024: 13%) to 47.9p
(H1 2024: 42.5p). Acquisitions have significantly contributed to this
performance. Excluding acquisitions, revenue increased by 1%, gross profit
remained in line with the prior year and Adjusted EBITDA increased by 3% on an
organic constant currency basis. We now report our enlarged German business
("Germany") as a separate business unit following our recent acquisitions of
Starface and Placetel, as it represents 79% of Europe and 20% of the Group
based on H1 2025 gross profit.
We assess the performance of the group using a variety of alternative
performance measures ("APMs"). Reconciliations from the most directly
comparable IFRS measures are in the APM section.
Revenue and gross profit
Gamma Business
Six months ended 30 June 2025 Six months ended 30 June 2024 Increase
£m £m
Revenue 186.0 184.1 +1%
-- Of which Service Provider 43.5 43.3 0%
Gross Profit 97.4 97.1 0%
-- Of which Service Provider 21.3 20.9 +2%
Gross Margin 52.4% 52.7%
Gamma Business has increased gross profit, underpinned by continuing volume
growth in our UCaaS portfolio, particularly in SIP Cloud solutions, and there
were higher net additions on our internally developed PhoneLine+ product,
which are both at lower ARPU. In addition the continued migration of
Connectivity products from higher-margin copper to lower-margin fibre
solutions (which has reduced gross profit by £1.5m in H1 2025 compared to H1
2024), has been offset by the impact of our annual inflationary price rises.
Service Provider, which is reported within Gamma Business, contributed 23% of
revenue and 22% of gross profit in Gamma Business. The Service Provider
business provides carrier services such as hosting telephone numbers and
connecting calls. It saw strong growth in SIP trunks supporting non-Gamma
Cloud PBX solutions, where our network capability supports the growth of large
customers, including hyperscalers. This was offset by a fall in voice traffic.
Gamma Enterprise
Six months ended 30 June 2025 Six months ended 30 June 2024 Increase
£m £m
Revenue 66.5 61.0 +9%
Gross Profit 30.9 28.9 +7%
Gross Margin 46.5% 47.4%
Overall growth in Gamma Enterprise has been positive, with the acquisition of
BrightCloud, completed in July 2024, contributing £3.6m (2024: £nil) of
inorganic revenue and £2.0m (2024: £nil) of inorganic gross profit. On an
organic basis, revenue growth was 3% and flat for gross profit as we
experienced some headwinds when renewing customers due to fibre and network
price pressures. This has reduced gross profit by £1.0m in the period. We
have also experienced some customer delays in committing spend, impacting both
existing and new orders. Nonetheless we have won new contracts across our
target markets with notable wins for SD-WAN with Utilita, Microsoft Teams with
Barnsley Council and Westminster City Council, and cyber services for
Morrisons.
Germany
Six months ended 30 June 2025 Six months ended 30 June 2024 Increase
£m £m
Revenue 49.1 21.8 +125%
Gross Profit 34.4 9.8 +251%
Gross Margin 70.1% 45.0%
Overall growth in Germany has been strong, led by the acquisitions of Starface
and Placetel, acquired in February 2025 and September 2024 respectively. Both
have performed strongly, in particular increasing UCaaS seats. Starface and
Placetel each achieved double digit proforma revenue growth* against the same
period last year, when they were under prior ownership. The German organic
gross profit growth was 4% on a constant currency basis, which is a solid
performance given our focus has been on the Starface and Cisco Collaboration
Suite products as we have started to rationalise our product sets in Germany.
Organic UCaaS seats have also increased, partly offset by declines in some
legacy products (Epsilon and Broadband). Gross margin has increased
significantly as Starface and Placetel have generated meaningfully higher
gross margins than our existing business as neither incurred significant
licensing cost for their products and currently do not sell mobile through
their channels.
* on a proforma unaudited historical GAAP basis
Operating expenses
Operating expenses increased from £100.1m in H1 2024 to £127.6m. We break
these down as follows:
Six months ended 30 June 2025 Six months ended 30 June 2024 (Decrease)/
Increase
£m £m
Operating expenses excluding research and development costs, depreciation, 92.9 73.5 +26%
amortisation and exceptional items
Research and development costs 7.6 10.7 (29%)
Depreciation & amortisation (excluding business combinations) 10.2 9.6 +6%
Amortisation of intangibles arising due to business combinations 9.6 6.3 +52%
Exceptional items 7.3 - -
Total operating expenses 127.6 100.1 +27%
Operating expenses excluding research and development costs, depreciation,
amortisation and exceptional items increased by £19.4m (26%) comprising the
following:
· German costs increased by £17.1m to £24.1m (H1 2024: £7.0m) following the
acquisitions of Starface and Placetel. On an organic constant currency basis,
operating expenses increased by £0.4m (6% compared to gross profit growth of
4%).
· The UK businesses' costs increased by £5.5m to £59.6m (H1 2024: £54.1m),
including the impact of the acquisition of BrightCloud. On an organic basis,
operating expenses increased by £3.5m (6% compared to flat organic gross
profit growth). This was primarily due to inflation, the increase in
employer's NI and a small increase in headcount.
· Central costs (excluding the exceptional items discussed below) reduced by
£2.3m to £2.5m (H1 2024: £4.8m). This reduction included a net contingent
consideration release of £1.5m (H1 2024: £nil) related to the Satisnet and
Pragma acquisitions. Central costs also benefited from a net gain of £1.4m on
mark to market movements on USD forward exchange contracts and the foreign
exchange movement on Placetel deferred consideration. However, we have
excluded this net £1.4m gain when determining Adjusted EBITDA and Adjusted
EPS, treating it as another adjusting item, as it reflects external market
factors and not the Group's trading performance.
Research and development costs decreased £3.1m (29%) to £7.6m (H1 2024:
£10.7m). As reported previously, we ceased developing some of our own
collaboration software at the end of 2023 and redeployed resources onto new
development projects late in H1 2024, including our new Channel Partner Portal
and enhancing our voice applications, which are still ongoing. This
temporarily elevated costs expensed in H1 2024, with a corresponding decrease
in capitalisation at the time. The amount expensed versus capitalised in H1
2025 is in line with historical levels.
Depreciation and amortisation on tangible and intangible assets (excluding
business combinations) increased to £10.2m (H1 2024: £9.6m) reflecting an
increased level of leased right-of-use assets from Starface and Placetel.
Amortisation of intangible assets arising due to business combinations
increased to £9.6m (H1 2024: £6.3m). This reflects an increased level of
intangible assets following the BrightCloud, Placetel and Starface
acquisitions, all of which have completed since H1 2024.
Exceptional Items
As noted in the Full Year results presentation on 25 March 2025, certain
material one-off costs were anticipated to be adjusted for in 2025. These
totaled £7.3m (H1 2024: £nil) and include costs associated with the
acquisition of Starface (£5.1m) and one-off costs associated with the Group's
move to the Main Market of the London Stock Exchange (£2.2m). These have been
classified as exceptional given their size and nature. The cash cost of these
exceptional items in the period was £6.5m (H1 2024: £2.2m), with the
remainder payable in H2 2025.
Starface acquisition costs
The acquisition of Starface was of significant scale and so the Group incurred
material one-off costs. These principally related to adviser fees, including
deal contingent success fees, and costs incurred to cap the amount of GBP
potentially payable given the acquisition consideration was EURO
denominated.
Costs associated with move to the Main Market of the London Stock Exchange
The Group's move of its listing from the AIM to the Main Market of the London
Stock Exchange resulted in significant one-off costs, comprising adviser and
admission fees.
Adjusted EBITDA
Adjusted EBITDA grew from £62.2m to £70.9m (14%), primarily driven by the
gross profit growth from acquisitions across the Group. It grew at a lower
rate than gross profit, as whilst the businesses acquired since June 2024 have
higher gross profit margins than the existing Group, they have relatively
higher operating expenses. Adjusted EBITDA also benefited from a net
contingent consideration release of £1.5m (H1 2024: £nil) related to the
Satisnet and Pragma acquisitions, following an assessment of current trading
compared to earn out related thresholds and the expected timing of such
payments.
There was also a net gain of £1.4m on mark to market movements on USD forward
exchange contracts and the foreign exchange movement on Placetel deferred
consideration. We have excluded this net gain from Adjusted EBITDA, treating
it as an other adjusting item, as it reflects external market factors and not
the Group's trading performance.
We continue to exclude the costs of the ongoing implementation of the new
Finance ERP system from Adjusted EBITDA. These incremental costs were £0.8m
(H1 2024: £0.6m) and are recorded as other adjusting items as the anticipated
total cost of c.£3m for the implementation across 2024 and 2025 is considered
significant. The implementation is expected to complete in the UK around the
end of this year. We are considering how we extend this implementation as we
continue the integration of our enlarged German business.
Profit before tax and Adjusted PBT
Profit before tax decreased from £48.5m to £43.5m (-10%) whilst Adjusted PBT
grew from £56.0m to £61.0m (9%).
Adjusted PBT was similarly impacted by the items which impacted Adjusted
EBITDA above. It grew less than Adjusted EBITDA as net finance costs increased
to a net expense of £0.9m (H1 2024: net income of £2.8m). This followed the
use of a significant portion of our cash holdings and drawdown on the
Revolving Credit Facility ("RCF") to fund the acquisition of Starface, which
led to a corresponding reduction in interest income and increase in interest
expense. Interest on borrowings resulting from the RCF was £1.1m (H1 2024:
£Nil).
Profit before tax was also impacted by the one-off impact of £7.3m of
exceptional costs incurred in the period and an increase in amortisation of
intangibles arising due to business combinations of £3.3m, as previously
described.
Taxation
The effective tax rate was 26% (H1 2024: 26%) based on applying the expected
full year effective rate.
The benefit in 2025 from the recognition of a successful £1.9m historical
multi-year patent box claim has been largely offset by the impact of costs
incurred on the Starface acquisition and the move to the Main Market which are
disallowable for tax. The remaining benefit has been offset by increased
profits generated in Germany which are taxed at a higher rate.
Net debt, financing and cash flows
The Group had Net debt of £21.6m (H1 2024: Net cash £142.9m). Net debt
comprises borrowings of £46.8m (H1 2024: £nil) less cash and cash
equivalents of £25.2m (H1 2024: £142.9m).
In January 2025 the Group agreed a three-year £130m multicurrency Revolving
Credit Facility. £47m, net of repayments, was drawn down during the period,
of which £30m was initially drawn down in February 2025 to part fund the
Starface acquisition.
Cash generated by operations was £53.1m (H1 2024: £59.6m). The reduction was
primarily due to the cash impact of the exceptional and other adjusting items
previously described, totalling £10.6m. When these items are excluded, as per
the definition, Adjusted cash generated by operations increased to £63.7m (H1
2024: £62.2m). Adjusted cash conversion remained strong at 90% (H1 2024:
100%), which compares to 96% for the year ended 31 December 2024.
The impact of working capital has been a period-on-period relative outflow
totalling £6.8m. This is primarily from a relative outflow of £7.6m on trade
and other receivables and contract assets. This was due to increased
prepayments, customer incentives and contract assets some of which are the
result of our cloud platform support agreement with O2 Daisy.
Tax paid increased to £13.7m (H1 2024: £13.2m). This includes a £1.9m
partial payment of the tax liabilities acquired with Starface and £0.8m
related to Starface's 2025 post acquisition trading.
The primary cash items which are not directly related to trading were:
· £157.4m was the total payment for acquisitions net of cash acquired (H1 2024:
£9.0m). This comprises £152.2m for the acquisition of Starface (net of cash
acquired of £14.8m and including the repayment of borrowings acquired of
£14.6m presented within financing activities in the cashflow), £1.5m for the
acquisition of Allnet (net of cash acquired) and £1.5m for the acquisition of
Desatel. This also includes £2.2m of deferred consideration paid for Placetel
and BrightCloud.
· £47m of the RCF was drawn down net of repayments (H1 2024: £1.5m repayment
of German borrowings) to part the fund the acquisition of Starface and the
share buyback.
· £45.1m of own shares were repurchased, with £34.9m paid in cash in the
period as part of the share buyback programme announced in March 2025 (H1
2024: £12.6m). This is discussed further below
· £12.1m was paid as dividends (H1 2024: £11.1m).
· Capital spend was £9.6m, which is an increase from £7.8m in H1 2024. This is
discussed below.
· £1.8m of interest income on cash and cash equivalents partly offset by £1.5m
of interest paid on borrowings (H1 2024: £3.6m interest income only). This
reflects the move from a net cash to net debt position following the
acquisition of Starface in February.
Capital spend
Capital spend in H1 2025 was £9.6m (H1 2024: £7.8m), broken down as follows:
· £8.5m on the capitalisation of development costs incurred during the period
(H1 2024: £4.7m). This increase in capitalisation was primarily the result of
continued development of our new Channel Partner Portal and enhanced voice
applications, which commenced late in H1 2024. Capitalisation rates remain
similar to H2 2024.
· £1.1m on the core network, including increasing capacity as well as computer
equipment (H1 2024: £1.4m).
Adjusted EPS (fully diluted) and EPS (fully diluted)
Adjusted EPS (fully diluted) increased from 42.5p to 47.9p (13%) which
compares to a 13% increase in H1 2024. The growth was primarily driven by
Adjusted PBT growth of 9% as previously described, supplemented by a 3%
benefit from the share buybacks in 2025 and 2024. As explained in the later
APM section, we have amended Adjusted EPS (fully diluted) to exclude the
benefit of a successful historical multi-year patent box claim of £1.9m
recognised in the period, given its multi-year nature which does not reflect
current period trading performance. EPS (fully diluted) decreased from 36.7p
to 34.1p (7% decrease) primarily reflecting the fall in profit before tax of
10%.
Acquisitions
The acquisition of Starface in February 2025 was the main driver of a £204.8m
increase in intangible assets from £189.3m to £394.1m. This included
acquisition related intangible asset additions of £197.5m comprising customer
contract intangibles of £87.7m, development cost intangibles of £14.9m,
brand intangibles of £6.6m and goodwill of £88.3m. The small acquisitions of
Desatel and Allnet contributed a further £4.3m of intangible assets. In
addition, £34.0m of deferred tax liability was recognised on acquired
Starface intangible assets.
The acquisition of Starface also increased Group contract liabilities, leased
right-of-use assets, lease liabilities (included within financial
liabilities), trade and other receivables and cash and cash equivalents as at
30 June 2025.
Share buyback
At 30 June 2025, the announced end date of the 2025 buyback, a total of
3,736,038 Ordinary Shares had been purchased at a value of £45.1m, out of the
announced programme of up to £50m. £10.2m remained payable in July and is
included in other payables at 30 June 2025. The shares purchased in the period
were cancelled resulting in a £45.1m reduction in retained earnings.
Capital allocation policy
Gamma has a strong balance sheet and continues to generate significant
operating cash flow with liquidity maintained through its £130m multicurrency
Revolving Credit Facility. The Board's main priorities when it comes to our
cash is to enhance the growth of the business, both organically and through
selective acquisitions, and to reward shareholders through growth in earnings
alongside our progressive dividend policy whilst retaining a robust capital
base.
The Board will continue to keep its capital allocation policy and potential
further distributions to shareholders under review, including potential
further share buybacks having now undertaken £72.4m of buybacks in total in
2024 and 2025. It will continue to maintain sufficient liquidity to balance
this with opportunities for investment in organic and inorganic growth.
Principal risks and uncertainties
The principal risks faced by the Group continue to include the risks set out
in the Annual Report for the year ended 31 December 2024. These are that
product development becomes misaligned with market needs, unplanned service
disruption, data loss and cyber-attacks, over-reliance on key suppliers,
inability to attract and retain top talent, failure to adapt and develop new
routes to market, uncertain competitive landscape causes loss of market share,
unsuccessful M&A activities and legal and regulatory non-compliance.
Further details can be found in the Annual Report for the year ended 31
December 2024.
Dividends
The Board has declared an interim dividend of 7.4p (2024: 6.5p). This is an
increase of 14% and is in line with our progressive dividend policy. The
interim dividend is payable on Thursday 16 October 2025 to shareholders on the
Register as at Friday 19 September 2025.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are consistent with those
set out in the Annual Report for the year ended 31 December 2024. In assessing
going concern management and the Board have considered:
· The principal risks faced by the Group as set out above. These are consistent
with those found in the Annual Report for the year ended 31 December 2024.
· The financial position of the Group.
· The strong liquidity position - at 30 June 2025 the Group had cash and cash
equivalents of £25.2m and £83m of the revolving credit facility undrawn
providing total liquidity of £108.2m (31 December 2024: £153.7m). The Group
has drawn £47.0m of the RCF at 30 June 2025 repayable in January 2028.
· Budgets, financial plans, associated future cash flows and sensitivity
analysis, which incorporate completed acquisitions up to the date of this
interim statement and the completed share buyback programme, including
liquidity, borrowings and covenants.
The Directors are satisfied that the Group has adequate financial resources to
continue in operational existence for the foreseeable future, being a period
of at least twelve months from the date of this report. Accordingly, the going
concern basis of accounting continues to be used in the preparation of these
condensed consolidated financial statements.
Bill Castell
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. Because these statements
involve risks and uncertainties, including both economic and business risk
factors, actual results may differ materially from those expressed or implied
by these forward-looking statements. The Group undertakes no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise.
Responsibility Statement
We confirm that to the best of our knowledge:
· the condensed set of interim financial statements has been prepared in
accordance with IAS 34 "Interim Financial Reporting";
· the Interim Management Report includes a fair review of the information
required by DTR 4.27R (indication of important events and their impact on the
financial statements during the first six months of the year 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 any
material changes therein during the first six months of the year).
By order of the Board
8 September 2025
Independent Review Report to Gamma Communications plc
Conclusion
We have been engaged by Gamma Communications plc ("the Company") and its
subsidiaries (together "the Group") to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2025 which comprises the condensed consolidated statement of profit or
loss, the condensed consolidated statement of comprehensive income, the
condensed consolidated statement of financial position, the condensed
consolidated statement of cash flows, the condensed consolidated statement of
changes in equity and related notes 1 to 13.
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 2025 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). 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
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.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this
report.
Use of our report
This report is made solely to the Company in accordance with ISRE (UK) 2410.
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.
Deloitte LLP
Statutory Auditor
Reading, United Kingdom
8 September 2025
Condensed consolidated statement of profit or loss
For the six months ended 30 June 2025
30 June 2025 30 June 2024
Note £m Unaudited £m Unaudited
Revenue 3 316.6 282.5
Cost of sales (144.6) (136.7)
Gross Profit 172.0 145.8
Operating Expenses (127.6) (100.1)
Of which exceptional items 4 (7.3) -
Profit from operations 44.4 45.7
Finance income 2.0 3.6
Finance expense (2.9) (0.8)
Profit before tax 43.5 48.5
Tax 5 (11.1) (12.7)
Profit after tax 32.4 35.8
Profit attributable to:
Equity holders of Gamma Communications plc 32.4 35.8
Non-controlling interest - -
32.4 35.8
Earnings per share attributable to the ordinary equity holders of the Company:
Basic per Ordinary Share (pence) 6 34.2p 36.8p
Diluted per Ordinary Share (pence) 6 34.1p 36.7p
Adjusted earnings per share is shown in note 6.
All income recognised during the period was generated from continuing
operations.
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2025
30 June 2025 30 June 2024
£m Unaudited £m Unaudited
Profit after tax for the period 32.4 35.8
Other comprehensive income/(expense)
Items that may be reclassified subsequently to the statement of profit or loss
Exchange differences on translation of foreign operations before tax 6.7 (0.9)
Tax effect of exchange differences on translation of foreign (0.6) 0.3
Total comprehensive income 38.5 35.2
Total comprehensive income for the period attributable to:
Equity holders of Gamma Communications plc 38.5 35.2
Non-controlling interest - -
38.5 35.2
Condensed consolidated statement of financial position
As at 30 June 2025
30 June 2025 30 June 2024* 31 December 2024
Note £m Unaudited £m Unaudited £m
Audited
Assets
Non-current assets
Property, plant and equipment 8 40.8 33.6 33.6
Intangible assets 9 394.1 164.7 189.3
Deferred tax asset 7.9 5.7 8.6
Trade and other receivables 10.6 11.1 8.7
Contract assets 12.6 3.6 6.7
466.0 218.7 246.9
Current assets
Inventories 8.4 12.2 10.0
Trade and other receivables 86.6 83.9 80.4
Contract assets 40.0 33.8 35.0
Cash and cash equivalents 25.2 142.9 153.7
Current tax asset 2.0 5.0 2.0
162.2 277.8 281.1
Total assets 628.2 496.5 528.0
Liabilities
Non-current liabilities
Other payables 0.1 0.1 0.1
Other financial liabilities 10 60.6 5.4 5.9
Provisions 1.4 1.4 1.4
Contract liabilities 13.7 13.0 13.3
Acquisition-related liabilities 10 13.0 8.4 22.0
Deferred tax liability 50.3 13.2 17.6
139.1 41.5 60.3
Current liabilities
Trade and other payables 90.7 78.0 68.4
Other financial liabilities 10 3.1 2.0 2.0
Provisions 0.8 1.6 0.9
Contract liabilities 24.5 16.4 18.5
Acquisition-related liabilities 10 10.3 1.5 4.5
Current tax liability 3.9 0.6 0.7
133.3 100.1 95.0
Total liabilities 272.4 141.6 155.3
Net assets 355.8 354.9 372.7
Equity
Share capital 11 0.2 0.2 0.2
Share premium reserve 23.3 23.3 23.3
Other reserves 12 (10.4) (7.2) (18.2)
Retained earnings 343.6 339.5 368.3
Equity attributable to owners of Gamma Communications plc 356.7 355.8 373.6
Non-controlling interest 0.2 0.2 0.2
Written put options over non-controlling interest (1.1) (1.1) (1.1)
Total equity 355.8 354.9 372.7
* For re-presentation of comparatives refer to note 1, section Consolidated
statement of financial position.
Condensed consolidated statement of cash flows
For the six months ended 30 June 2025
30 June 2025 30 June 2024
Note £m Unaudited £m Unaudited
Cash flows from operating activities
Profit for the period before tax 43.5 48.5
Adjustments for:
Depreciation of property, plant and equipment 4.2 4.4
Depreciation of right-of-use assets 1.4 1.2
Amortisation of intangible assets 9 14.2 10.3
Change in fair value of contingent consideration/put option liability (1.5) -
Share-based payment expense 1.6 1.1
Interest income (2.0) (3.6)
Finance expense 2.9 0.8
Other non-cash movements* (1.3) -
63.0 62.7
(Increase) in trade and other receivables and contract assets (15.5) (7.9)
Decrease/(increase) in inventories 2.6 (3.9)
Increase in trade and other payables 6.4 7.2
(Decrease)/increase in contract liabilities (3.0) 3.2
(Decrease) in provisions (0.4) (1.7)
Cash generated by operations 53.1 59.6
Taxes paid (13.7) (13.2)
Net cash flows from operating activities 39.4 46.4
Investing activities
Purchase of property, plant and equipment (1.1) (1.4)
Purchase of intangible assets 9 (8.5) (6.4)
Interest received 1.8 3.6
Acquisition of subsidiaries net of cash acquired 13 (142.8) (9.0)
Net cash used in investing activities (150.6) (13.2)
Financing activities
Lease liability repayments (2.1) (2.0)
Proceeds from borrowings 89.0 -
Repayment of borrowings (42.0) (1.5)
Repayment of borrowings acquired with acquisitions (14.6) -
Interest paid (1.5) -
Share issues 0.2 0.6
Dividends (12.1) (11.1)
Repurchase of own shares (34.9) (12.6)
Net cash used in financing activities (18.0) (26.6)
Net (decrease)/increase in cash and cash equivalents (129.2) 6.6
Cash and cash equivalents at beginning of year 153.7 136.5
Effects of exchange rate changes on cash and cash equivalents 0.7 (0.2)
Cash and cash equivalents at end of period 25.2 142.9
*Primarily relating to deferred consideration included in financing activities
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2025
Share capital Share premium reserve Other reserves Retained earnings Total Non-controlling interest Written put options over non-controlling interest Total equity
£m £m £m £m £m £m £m £m
1 January 2024 0.2 22.9 6.9 315.1 345.1 0.2 (1.1) 344.2
Issue or reissue of shares - 0.4 (1.6) 1.6 0.4 - - 0.4
Share-based payment expense - - 1.1 - 1.1 - - 1.1
Share buyback(1) - - (14.9) - (14.9) - - (14.9)
Treasury share allocations(2) - - 1.9 (1.9) - - - -
Dividends paid - - - (11.1) (11.1) - - (11.1)
Transactions with owners - 0.4 (13.5) (11.4) (24.5) - - (24.5)
Profit for the period - - - 35.8 35.8 - - 35.8
Other comprehensive expense - - (0.6) - (0.6) - - (0.6)
Total comprehensive income/(expense) - - (0.6) 35.8 35.2 - - 35.2
30 June 2024 0.2 23.3 (7.2) 339.5 355.8 0.2 (1.1) 354.9
1 January 2025 0.2 23.3 (18.2) 368.3 373.6 0.2 (1.1) 372.7
Issue or reissue of shares - - (0.7) 0.7 - - - -
Share-based payment expense - - 1.6 - 1.6 - - 1.6
Share buyback(1) - - - (45.1) (45.1) - - (45.1)
Allocation to Treasury Shares - - 0.8 (0.6) 0.2 - - 0.2
Dividends paid - - - (12.1) (12.1) - - (12.1)
Transactions with owners - - 1.7 (57.1) (55.4) - - (55.4)
Profit after tax - - - 32.4 32.4 - - 32.4
Foreign exchange - - 6.1 - 6.1 - - 6.1
Total comprehensive income - - 6.1 32.4 38.5 - - 38.5
30 June 2025 0.2 23.3 (10.4) 343.6 356.7 0.2 (1.1) 355.8
(1) Represents shares purchased under the 2024 buyback programme. Share
purchased under the 2025 buyback programme were immediately cancelled rather
than held in Treasury.
(2) Treasury share allocations relates to treasury shares which have been used
to satisfy share options and other employee share plans.
Notes to the interim financial information
For the six months ended 30 June 2025
1. Basis of preparation
The condensed consolidated interim financial information (interim financial
information) included in this half‑yearly financial report has been prepared
in accordance with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the United Kingdom. The interim financial statements
do not constitute statutory accounts within the meaning of the Companies Act
2006 and should be read in conjunction with the Group's Annual Report and
Accounts for the year ended 31 December 2024, which was prepared in accordance
with IFRS as adopted by the United Kingdom.
One new amendment, Amendment to IAS 21 Lack of exchangeability, was applied
for the first time in the period. The amendment had no material impact on the
condensed consolidated financial statements.
Condensed consolidated statement of financial position
As disclosed in our audited results for the year ended 31 December 2024, the
Group revised the presentation of the consolidated statement of financial
position to combine line items presented separately in previous periods. The
Group presented a new combined liability called acquisition-related
liabilities following recent acquisitions and the similar nature of the line
items. This comprised contingent consideration and put option liability,
previously presented separately, and deferred consideration, previously
included within trade and other payables. The revised presentation was
considered to be simpler to the user of the accounts. The 30 June 2024
comparative has been re-presented to be consistent with the revised
presentation format. The revision has no impact on the Condensed consolidated
statement of profit or loss or cash flows or total liabilities, assets or net
assets.
2. Accounting policies, judgements and estimates
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 2024 other than for the new amendment applied for the first time
as outlined in note 1 and which did not have a material impact on the
condensed consolidated financial statements.
Critical accounting estimated and judgements
Preparation of the condensed consolidated interim financial information
requires the Group to make certain estimations, assumptions and judgements
regarding the future. Estimates and judgements are continually evaluated based
on historical experience and other factors, including best estimates of future
events. In the future, actual experience may differ from these estimates and
assumptions. Consistent with the financial statements for the year ended 31
December 2024, revenue recognition remains a critical accounting judgement.
However, Placetel deferred consideration is no longer considered a critical
accounting judgement as it was specific to the prior year. There continue to
be no key accounting estimates, consistent with the year ended 31 December
2024. No new items have been identified in the six months ended 30 June 2025.
3. Segment information
The Group's operating segments are outlined below:
· Gamma Business - This segment sells Gamma's products to smaller businesses in
the UK, typically with fewer than 250 employees. This segment sells through
different routes, including the channel, direct, digital and other carriers
who sell to smaller businesses in the UK. It contributed 59% (H1 2024: 65%) of
the Group's external revenue.
· Gamma Enterprise - This segment sells Gamma's products to larger businesses in
the UK, typically to those with more than 250 employees. Larger organisations
have more complex
needs, so this business unit sells Gamma's and other suppliers' products to
Enterprise and Public Sector customers, together with an associated managed
service wrap and ordinarily sells directly. It contributed 21% (H1 2024: 22%)
of the Group's external revenue.
· Germany - This segment consists of sales made through Gamma's German
businesses. It contributed 16% (H1 2024: 8%) of the Group's external revenue.
· Other Europe - This segment consists of sales made in the remainder of Europe
through Gamma's Spanish and Dutch businesses. It contributed 4% (H1 2024: 5%)
of the Group's external revenue.
· Central functions - This segment comprises the central management team and
wider Group costs.
Change in segmental reporting
Over the last year the Group has expanded its presence in Germany following
the acquisitions of Starface and Placetel. As a result, and to align with
internal management reporting, we have split our European segment into two
segments: Gamma Germany and Other Europe. This change in reporting structure
has taken effect for reporting in 2025 with prior year comparatives also
given.
Measurement of operating segment profit or loss, assets and liabilities
The accounting policies of the reporting segments are the same as those
described in the summary of significant accounting policies. The Board and
Executive Committee evaluate performance on the basis of earnings before
interest, tax, depreciation, amortisation, exceptional items and other
adjusting items ("Adjusted EBITDA"). Inter-segment sales are priced in line
with 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.
External customer revenue has been derived principally in the geographical
area of the operating segment and no single customer contributes more than 10%
of revenue.
Gamma Business Gamma Enterprise Gamma Germany Other Central functions Total
Europe
Period to 30 June 2025 £m £m £m £m £m £m
Segment revenue 195.3 67.1 49.1 15.2 - 326.7
Inter-segment revenue (9.3) (0.6) - (0.2) - (10.1)
Revenue from external customers 186.0 66.5 49.1 15.0 - 316.6
Timing of revenue recognition
At a point in time 8.6 7.0 15.0 0.7 - 31.3
Over time 177.4 59.5 34.1 14.3 - 285.3
186.0 66.5 49.1 15.0 - 316.6
Gross profit 97.4 30.9 34.4 9.3 - 172.0
Adjusted EBITDA 47.2 15.8 9.4 2.4 (3.9) 70.9
Exceptional items - - - - (7.3) (7.3)
Other adjusting items (0.8) - - - 1.4 0.6
EBITDA 46.4 15.8 9.4 2.4 (9.8) 64.2
Gamma Business Gamma Enterprise Gamma Germany Other Europe Central functions Total
Period to 30 June 2024 £m £m £m £m £m £m
Segment revenue 196.2 62.8 21.8 15.8 - 296.6
Inter-segment revenue (12.1) (1.8) - (0.2) - (14.1)
Revenue from external customers 184.1 61.0 21.8 15.6 - 282.5
Timing of revenue recognition
At a point in time 10.7 5.6 12.0 1.5 - 29.8
Over time 173.4 55.4 9.7 14.2 - 252.7
184.1 61.0 21.7 15.7 - 282.5
Gross profit 97.1 28.9 9.8 10.0 - 145.8
Adjusted EBITDA 46.1 15.8 2.8 2.3 (4.8) 62.2
Exceptional items - - - - - -
Other adjusting items (0.6) - - - - (0.6)
EBITDA 45.5 15.8 2.8 2.3 (4.8) 61.6
A reconciliation of Adjusted EBITDA, the Group's measure of segment profit, to
the Group's profit before tax for the period is included below:
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Profit before tax 43.5 48.5
Finance income (2.0) (3.6)
Finance expense 2.9 0.8
Profit from operations 44.4 45.7
Depreciation of property, plant and equipment and right-of-use assets 5.6 5.6
Amortisation from intangible assets 14.2 10.3
EBITDA 64.2 61.6
Exceptional items 7.3 -
Other adjusting items: (0.6) 0.6
Adjusted EBITDA 70.9 62.2
Further details on the definition and calculation of Adjusted EBITDA are
included in the APM section.
Geographic segmentation
The UK is the Group and Company's country of domicile and is where most
revenue is generated, which is from external UK customers. The geographic
analysis of revenue presented below is based on the country in which the
customer is invoiced. The geographic analysis of non-current assets, which
excludes deferred tax assets and financial instruments, is based on the
location of the assets.
The Group's revenue from external customers by geographical location is
detailed below:
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
UK 235.1 227.8
Germany 53.6 28.5
Rest of Europe 24.5 23.1
Rest of World 3.4 3.1
Total 316.6 282.5
The Group's non-current assets, which excludes deferred tax assets and
financial instruments, by geographical location are detailed below:
30 June 2025 31 December 2024
£m £m
UK 197.6 141.3
Germany 200.0 56.6
Rest of Europe 47.4 36.2
Total 445.0 234.1
Product segmentation
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Revenue recognised over time (recurring)
Voice and data traffic 53.8 52.8
Subscriptions and rentals 219.8 194.0
Installation fees and other (over time) 11.7 5.9
Total revenue recognised over time (recurring) 285.3 252.7
Revenue recognised at a point in time
Equipment sales 15.5 15.0
Commissions 11.0 11.8
Installation fees and other (at a point in time) 4.8 3.0
Total revenue recognised at a point in time 31.3 29.8
Total revenue 316.6 282.5
4. Exceptional items
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Acquisition costs 5.1 -
Listing costs 2.2 -
Total exceptional items 7.3 -
The acquisition of Starface, see note 13, was of significant scale and so the
Group incurred material one-off costs. These principally related to adviser
fees, including deal contingent success fees, and costs incurred to cap the
amount of GBP potentially payable given the acquisition consideration was EURO
denominated. This is considered exceptional by virtue of the size of the
acquisition and the level of costs incurred.
The Group's move of its listing from the AIM to the Main Market of the London
Stock Exchange resulted in significant one-off costs, comprising adviser and
admission fees. This is considered exceptional due to the one-off nature of
the transaction.
The total cash cost of these exceptional items in the period was £6.5m (2024:
£2.2m). The tax effect of exceptional items was £nil (2024: £nil).
5. Taxation on profit on ordinary activities
Tax expense is recognised based on management's best estimate of the weighted
average effective annual tax rate expected for the full financial year. The
estimated average annual tax rate used for the period to 30 June 2025 is 26%
(30 June 2024: 26%).
6. Earnings per share
Six months ended 30 June 2025 Six months ended 30 June 2024
Earnings per Ordinary Share - basic (pence) 34.2 36.8
Earnings per Ordinary Share - diluted (pence) 34.1 36.7
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Profit after tax attributable to equity holders of the Company 32.4 35.8
Shares No. No.
Basic weighted average number of Ordinary Shares 94,600,378 97,259,972
Effect of dilution resulting from share options 325,139 163,474
Diluted weighted average number of Ordinary Shares 94,925,517 97,423,446
Adjusted earnings per share is detailed below:
Six months ended 30 June 2025 Six months ended 30 June 2024
Adjusted earnings per Ordinary Share - basic (pence) 48.0 42.6
Adjusted earnings per Ordinary Share - diluted (pence) 47.9 42.5
7. Dividends
A final dividend of 13.0p was paid on 19 June 2025 (2024: 11.4p). The Board
has declared an interim dividend of 7.4p per share payable on 16 October 2025
to shareholders on the Register as at 19 September 2025. In the prior year an
interim dividend of 6.5p was paid.
8. Property, plant and equipment
30 June 2025 30 June 2024 31 December 2024
£m £m £m
Owned property, plant and equipment 25.1 27.4 27.0
Leased right-of-use assets 15.7 6.2 6.6
Total Property, plant and equipment 40.8 33.6 33.6
9. Intangible assets
Goodwill Customer contracts Brand Development costs Technology Total
£m £m £m £m £m £m
2025
Cost
At 1 January 2025 135.0 78.6 5.9 67.8 35.5 322.8
Additions - - - 8.5 - 8.5
Acquisition of subsidiaries 91.8 88.3 6.8 14.9 - 201.8
Foreign exchange 4.8 4.5 0.3 0.8 0.2 10.6
At 30 June 2025 231.6 171.4 13.0 92.0 35.7 543.7
Amortisation
At 1 January 2025 19.8 46.3 1.8 40.9 24.7 133.5
Charge for the period - 6.6 0.8 5.3 1.5 14.2
Foreign exchange 0.5 1.3 - 0.1 - 1.9
At 30 June 2025 20.3 54.2 2.6 46.3 26.2 149.6
Net book value
At 1 January 2025 115.2 32.3 4.1 26.9 10.8 189.3
At 30 June 2025 211.3 117.2 10.4 45.7 9.5 394.1
Goodwill Customer contracts Brand Development costs Technology Total
£m £m £m £m £m £m
2024
Cost
At 1 January 2024 133.2 56.7 2.2 52.3 24.4 268.8
Additions - - - 4.7 1.7 6.4
Acquisition of subsidiaries - 1.5 - - 6.0 7.5
Reclassifications(1) (11.4) 13.7 1.8 - 3.5 7.6
Disposals - - - (0.1) - (0.1)
Foreign exchange (1.0) (0.9) (0.1) (0.1) (0.1) (2.2)
At 30 June 2024 120.8 71.0 3.9 56.8 35.5 288.0
Amortisation
At 1 January 2024 20.5 37.4 1.1 33.2 21.9 114.1
Charge for the period - 5.1 0.3 3.8 1.1 10.3
Disposals - - - (0.1) - (0.1)
Foreign exchange (0.4) (0.6) - - - (1.0)
At 30 June 2024 20.1 41.9 1.4 36.9 23.0 123.3
Net book value
At 1 January 2024 112.7 19.3 1.1 19.1 2.5 154.7
At 30 June 2024 100.7 29.1 2.5 19.9 12.5 164.7
(1) In the prior period we reclassified the balances between goodwill,
customer contracts and brand, with corresponding adjustment to deferred tax,
as a result of the finalisation of the fair value accounting for the Pragma
acquisition. The other reclassification amount of £3.5m in 2024 related to
technology intangible assets to better align with other similar transactions.
These assets were previously included within inventory.
Amortisation of intangible assets is charged to the consolidated statement of
profit or loss and included in operating expenses.
Development costs comprise the cost of internally generated development
projects and development projects acquired through business combinations.
Amortisation charge for the period for development costs and technology
includes amounts arising from business combinations of £1.5m and £0.7m
respectively (H1 2024: £0.4m and £0.5m).
10. Financial Instruments
The tables below set out the measurement categories and carrying values of
financial assets and liabilities with fair value inputs where relevant.
Measurement category Carrying value 30 June 2025 Fair value basis of measurement Fair value hierarchy Carrying value 31 December 2024
£m £m
Financial assets
Non-current
Contract assets Amortised Cost 12.6 6.7
Other receivables Amortised Cost 0.5 0.7
Current
Cash and cash equivalents Amortised Cost 25.2 153.7
Net trade receivables Amortised Cost 58.2 55.7
Contract assets Amortised Cost 40.0 35.0
Other receivables Amortised Cost 2.8 3.5
139.3 255.3
Financial Liabilities
Non-current
Other payables Amortised cost 0.1 0.1
Other financial liabilities:
Borrowings Amortised cost 46.5 -
Lease liabilities Amortised cost 13.9 5.9
Derivative liabilities Fair value through P&L 0.2 Fair Value based on market inputs Level 2 -
Acquisition related liabilities:
Deferred Consideration Amortised cost 10.9 13.0
Contingent consideration Fair value through P&L 0.7 Fair value weighted expected returns methodology Level 3 7.7
Put option liability Fair value through P&L 1.4 Fair value weighted expected returns methodology Level 3 1.3
Current
Trade and other payables(1) 81.4 64.8
Other financial liabilities:
Borrowings Amortised cost 0.3 -
Lease liabilities Amortised cost 2.5 2.0
Derivative liabilities Fair value through P&L 0.3 Fair Value based on market inputs Level 2 -
Acquisition related liabilities:
Deferred Consideration Amortised cost 3.6 4.4
Contingent consideration Fair value through P&L 6.7 Fair value weighted expected returns methodology Level 3 0.1
168.5 99.3
(1) Included within other payables is a £10.2m (2024: £Nil) payable for the
shares acquired in the last week of June under the share buyback, payable in
July.
For trade and other receivables, contract assets, cash and cash equivalents,
provisions, and trade and other payables fair values approximate to book
values due to the short maturity periods of these financial instruments. The
fair value of borrowings is not materially different from its carrying amount,
due to the floating interest rate, linked to SONIA, aligning it with the
current market level.
Derivative liabilities relate to foreign currency forwards, with a nominal
value of $19.9m (£14.5m), measured at fair value which are classed as level 2
in the fair value measurement hierarchy as they have been determined using
significant inputs based on observable market data. The fair values are
derived from forward exchange rates at the reporting date.
Deferred consideration
30 June 2025 31 December 2024
£m £m
Current 3.6 4.4
Non-current 10.9 13.0
14.5 17.4
Deferred consideration relates to fixed amounts payable with regard to
acquisitions. The reconciliation of the carrying amounts is as follows:
Satisnet BrightCloud Placetel Total
£m £m £m £m
At 1 January 2025 0.5 0.2 16.7 17.4
Deferred consideration settled - (0.2) (2.0) (2.2)
Unwinding of discount - - 0.6 0.6
Foreign exchange movements - - (1.3) (1.3)
At 30 June 2025 0.5 - 14.0 14.5
Borrowings
30 June 2025 31 December 2024
£m £m
Unsecured
Revolving Credit Facility 46.8 -
Total Borrowings 46.8 -
Of which:
Current 0.3 -
Non-current 46.5 -
In January 2025, the Group agreed a three-year £130m multicurrency Revolving
Credit Facility ("RCF"), with option to extend for a further 12 months. £30m
of this was drawn in February 2025 to enable the acquisition of Starface.
£47.0m was drawn as at 30 June 2025.
The total transaction costs incurred on signing the RCF were £0.7m. The RCF
is stated net of unamortised transactions costs of £0.5m (2024: £nil) and
interest payable of £0.3m. These deferred financing fees have been
capitalised and are being amortised over the expected life of the facility.
The current portion relates to interest, which is payable within 3 months. The
RCF incurs interest on drawn balances at a margin between 1.5% and 2.25% above
SONIA, dependant on leverage, and between 0.5% and 0.8% on undrawn balances.
Loan covenants
The following covenants relate to the RCF, and are tested on a 12-month
rolling basis:
- Leverage, defined as total net debt to EBITDA, not to exceed 3.0x;
and
- Interest cover, defined as EBITDA to net finance charges, not to
be less than 4.0x.
The Group has significant headroom against both of these covenants throughout
the period.
Interest rate risk
The Group finances its operations through a mixture of retained profits, cash
and the RCF. The Group's RCF, and deposits are at floating rates. No interest
rate derivative contracts have been entered into during the period.
Currency risk
The Group operates primarily in the United Kingdom, Germany, The Netherlands
and Spain with smaller operations in Ireland. In both our UK and European
operations, the level of receipts and payments which are not denominated in
the local currency of the country are small. The exception to this is the
Group's exposure, in both the UK and Europe, to the US Dollar resulting from
software and cloud purchase commitments. The Group manages the exposure for a
foreseeable period on these future cash flows through foreign currency forward
contracts. Foreign exchange movements are recognised in operating expenses
except where they relate to financing. Foreign exchange movement on financing,
including intercompany borrowings, are recognised as part of net finance
expense/ income.
Liquidity risk
The Group's policy is to ensure that it has sufficient funding and undrawn
facilities to meet any foreseeable cash requirements. The Group actively
monitors the level of cash balances and drawn RCF seeking to appropriately
balance the two. Current and forecast covenant headroom are actively
monitored.
Financial instruments measured at fair value
Liabilities measured at fair value are remeasured at each reporting date and
their value are illustrated in the table below:
30 June 2025 31 December 2024
Financial liabilities £m £m
Level 2
Forward exchange contracts (nominal value $19.9m) 0.5 -
Level 3
Contingent consideration 7.4 7.8
Put option liability 1.4 1.3
9.3 9.1
During the period the Group held mark to market forward exchange contracts
with a nominal value of $19.9m (£14.5m), to limit potential foreign exchange
exposure that could arise on certain of the Group's USD commitments including
the next two year's Placetel deferred consideration payments which are
denominated in USD.
The Group's finance team performs valuations of financial items for financial
reporting purposes and in consultation with third-party valuation specialists
for complex valuations. Valuation techniques are selected based on the
characteristics of each instrument, with the overall objective of maximising
the use of market-based information.
Both the contingent consideration and put option liability were valued using a
probability weighted expected returns methodology, using a risk-adjusted
discount rate appropriate to the individual characteristics of the
transaction. Movements in the fair value are charged through the Consolidated
statement of profit and loss. The key input used in the valuations are the
financial forecasts of the acquired entity, where the most important
assumption is the future revenue forecast, and the discount rate.
Contingent consideration
30 June 2025 31 December 2024
£m £m
Current 6.7 0.1
Non-current 0.7 7.7
7.4 7.8
Contingent consideration relates to future anticipated payments to vendors
which are dependent on the future financial performance of acquired entities.
At 30 June 2025, the fair value of contingent consideration liabilities
amounted to £7.4m (31 December 2024: £7.8m). The potential undiscounted
amount of future payments that could be required under the contingent
consideration range from £0.1m to £18.7m (31 December 2024: £0.1 to
£18.1m).
The reconciliation of the carrying amounts of contingent consideration is as
follows:
Satisnet Pragma BrightCloud Allnet Total
£m £m £m £m £m
At 1 January 2025 2.8 4.7 0.3 - 7.8
Acquisition of subsidiaries - - - 0.6 0.6
Change in fair value of contingent consideration:
Unwinding of discount 0.1 0.4 - - 0.5
Other change in fair value (2.4) 0.9 - - (1.5)
At 30 June 2025 0.5 6.0 0.3 0.6 7.4
Contingent consideration for Allnet is based on future operating expenses
targets for the financial years ending 31 December 2025 and 31 December 2026.
Consideration of up to £0.6m may be payable. The fair value of £0.6m at 30
June 2025, is split between £0.3m current and £0.3m non-current and is based
on a payout of £0.6m.
The fair value of contingent consideration for Satisnet is £0.5m at 30 June
2025, which takes into account the weighted probability of payout, is split
between £0.1m current and £0.4m non-current and based on a payout of £0.5m
(31 December 2024: £3.2m). After the impact of the unwinding of the discount,
a decrease of £2.4m was required which has been recorded within operating
expenses, representing an unrealised gain.
The fair value of contingent consideration for Pragma is £6.0m at 30 June
2025, which takes into account the weighted probability of payout, is current
and based on a payout of £6.4m (31 December 2024: £6.4m). After the impact
of the unwinding of the discount, an increase of £0.9m was required following
a change in the expected payment date which has been recorded within operating
expenses, representing an unrealised loss.
The changes in fair value of contingent consideration have resulted in a
£1.5m credit to operating expenses in H125. In H125 acquisition related
professional adviser costs not deemed as exceptional total £0.3m (H1 2024:
£0.6m) and have been debited to operating expenses.
Put option liability
30 June 2025 31 December 2024
£m £m
Non-current 1.4 1.3
1.4 1.3
The put option liability is an option for the previous owners to sell or for
the Group to acquire the remaining 5% of the shares in Pragma. At 30 June
2025, the fair value of put option liabilities amounted to £1.4m (31 December
2024: £1.3m) with the £0.1m movement arising from the unwinding of the
discount. The fair value of £1.4m at 30 June 2025 is based on a payout of
£1.8m (31 December 2024: £1.8m) which takes into account the weighted
probability of payout. The potential undiscounted amount of future payments
that could be required under the put option liability range from £nil to
£2.9m respectively (31 December 2024: £nil to £2.9m).
11. Share capital
Number £m
1 January 2025
Ordinary Shares of £0.0025 each 97,500,389 0.2
Movement
March* (925,000)
April* (1,579,000)
May* (125,000)
June* (1,107,038)
30 June 2025
Ordinary Shares of £0.0025 each 93,764,351 0.2
* Ordinary shares purchased and cancelled under the share buyback programme.
In the period ended 30 June 2025, 3,736,038 Ordinary Shares of 0.25 pence each
were acquired by the Company and cancelled (30 June 2024: 1,003,372 Ordinary
Shares of 0.25 pence each were acquired by the Company and held in Treasury).
57,527 (30 June 2024: 83,460) were transferred from Treasury to settle
exercised share options.
At 30 June 2025, 1,666,123 shares were held in treasury (30 June 2024:
919,912), representing 1.8% (30 June 2024: 0.9%) of issued share capital. The
shares held in treasury do not have voting rights. The number of Ordinary
Shares with voting rights was 92,098,228 (30 June 2024: 96,580,477), therefore
the total issued share capital at 30 June 2025 was 93,764,351 Ordinary Shares
(30 June 2024: 97,500,389 Ordinary Shares).
12. Other reserves
Merger reserve Share option reserve Foreign exchange reserve Share reserve Total other reserves
£m £m £m £m £m
1 January 2024 2.3 7.2 (1.9) (0.7) 6.9
Issue of shares - (1.6) - - (1.6)
Share-based payments - 1.1 - - 1.1
Share buyback(1) - - - (14.9) (14.9)
Treasury share allocations(2) - - - 1.9 1.9
Other comprehensive income - - (0.6) - (0.6)
30 June 2024 2.3 6.7 (2.5) (13.7) (7.2)
1 January 2025 2.3 7.4 (3.2) (24.7) (18.2)
Issue of shares - (0.7) - - (0.7)
Share-based payments - 1.6 - - 1.6
Treasury share allocations(2) - - - 0.8 0.8
Other comprehensive income - - 6.1 - 6.1
30 June 2025 2.3 8.3 2.9 (23.9) (10.4)
(1) Represents shares purchased under the 2024 buyback programme which were
held in Treasury. Shares purchased under the 2025 buyback programme were
immediately cancelled.
(2) Treasury shares allocations are treasury shares which have been used to
satisfy share options and other employee share plans.
13. Business combinations
Summary of acquisitions 2025
On 19 February 2025 the Group completed the acquisition of 100% of SF
Technologies Holdings GmbH ("Starface"). Germany holds strategic importance
for Gamma, as it represents the largest, and growing, cloud PBX market in
Europe, with significantly lower cloud penetration in a larger SME market than
the UK. The acquisition of Starface delivers on our strategy to establish a
new anchor in the European business, alongside our well-established UK
business. Starface is a market leader in the provision of proprietary business
communication and collaboration software solutions, tailored to fit the needs
of the German market. The company predominantly serves SME businesses in
Germany, as well as enterprises and the public sector via its nationwide
Channel Partner network, which also covers Austria and Switzerland.
The fair value of identifiable assets acquired and liabilities assumed, which
are provisional subject to potential revision if further information becomes
available, is as follows:
£m
Tangible fixed assets 7.3
Intangible assets - customer contracts 87.7
Intangible assets - development costs 14.9
Intangible assets - brand 6.6
Cash and cash equivalents 14.8
Inventories 0.9
Trade and other receivables 3.8
Trade and other payables (3.2)
Lease liabilities (6.5)
Current tax liability (4.5)
Bank loans(1) (14.6)
Contract liabilities (9.1)
Deferred tax liability(2) (34.0)
Total identifiable assets 64.1
Add: Goodwill 88.3
Net assets acquired 152.4
(1) Bank loans of £14.6m were repaid at the time of acquisition.
(2) Deferred tax liability arising on customer contracts, development costs
and brand intangible assets.
The value of the goodwill represents the prospective future economic benefits
that are expected to accrue from enhancing the portfolio of products available
to the Group's existing customers and access to new customers. The goodwill is
not deductible for tax purposes. The useful economic lives applied to the
Starface intangible assets are: customer contracts 20 years, development costs
7 years and brand 7 years.
£m
Satisfied by:
Cash paid 152.4
Total 152.4
£167.0m was the total payment for the acquisition of Starface, gross of
£14.8m of cash acquired and including £14.6m to repay, at the time of
acquisition, all Starface bank loans. The acquisition consideration reported
in the condensed consolidated statement of cash flows is £137.6m being the
£152.4m cash payment of the equity less the £14.8m cash acquired.
Acquisition related costs of £5.1m were recognised as an expense within
operating expenses in the Consolidated statement of profit or loss. Given
their non-recurring nature and materiality, these costs have been classified
as exceptional, see note 4. To fund the acquisition of Starface the Group
agreed a new multicurrency Revolving Credit Facility, for details on issue
costs refer to note 10 Financial Instruments.
Starface contributed £14.0m of revenue and £2.5m to the Group's profit after
tax for the period between the acquisition date and 30 June 2025. If Starface
had been acquired on 1 January 2025 the contribution to the Group's revenue
for the period would have been £18.6m and the contribution to the Group's
profit after tax would have been £3.2m.
During the period the Group also acquired 100% of the share capital of Allnet
Solutions Limited (known as "Allnet") for total consideration of £2.9m (gross
of £1.4m of cash acquired) and the trade and assets of Desatel B.V. (known as
"Desatel") for total consideration of £1.5m. Fair value accounting for these
acquisitions is completed and customer relationship intangibles assets of nil
and £0.6m, brand of nil and £0.2m and goodwill of £2.4m and £1.1m
respectively have been recognised.
Net cash outflow on acquisitions:
Starface Desatel Allnet Other Total
£m £m £m £m £m
Cash consideration 152.4 1.5 2.9 - 156.8
Less: cash acquired (14.8) - (1.4) - (16.2)
137.6 1.5 1.5 - 140.6
Deferred consideration payments during the period(1) - - - 2.2 2.2
Net outflow of cash - investing activities (Acquisition of subsidiaries net of 137.6 1.5 1.5 2.2 142.8
cash acquired)
Repayment of bank loans(2) 14.6 - - - 14.6
Net outflow of cash - financing activities (Repayment of borrowings acquired 14.6 - - - 14.6
with acquisitions)
Net cash outflow relating to acquisitions in the year 152.2 1.5 1.5 2.2 157.4
( )
(1) Deferred consideration relates to fixed amounts payable with regard to
acquisitions. Other relates to £2.0m Placetel and £0.2m Bright Cloud.
(2) Banks loans of £14.6m were repaid at the time of acquisition.
Summary of acquisitions 2024
During 2024 the Group acquired Coolwave Communications Limited ("Coolwave"),
BrightCloud Group Limited ("BrightCloud") and BroadSoft Germany GmbH (known as
"Placetel"). The fair value accounting for Coolwave and BrightCloud was
completed and disclosed in 2024. The fair value accounting for Placetel was
provisionally disclosed in 2024. This has now been completed and no changes in
the reported fair values have been made.
Alternative Performance Measures
The Group uses certain non-GAAP measures, called APMs, to assess the financial
performance of its business as outlined below. These are used by management
for internal performance analyses. The presentation of these APMs facilitates
comparability with other companies, although the Group's measures may not be
calculated in the same way as similarly titled measures reported by other
companies. These measures are also useful in connection with discussions with
the investment community. They should not be considered in isolation or as a
substitute for analysis of the Group's results reported under IFRS.
An explanation of the relevance of each of the APMs and a reconciliation of
the APM to the most directly comparable measure calculated and presented in
accordance with IFRS are set out below.
Certain APMs including Adjusted EBITDA, Adjusted profit before tax ("Adjusted
PBT"), Adjusted EPS and Adjusted cash conversion, are all adjusted for
exceptional items (by virtue of their size, nature or incidence) and other
adjusting items to show the Group's core performance. Certain APMs are
adjusted for specific other items which are described in the relevant APM
definition below. Other adjusting items total (£0.6m) (H1 2024: £0.6m) and
comprise i) consistent with the prior period, the incremental costs related to
the implementation of new cloud-based Finance and HR systems of £0.8m (H1
2024: £0.6m) and ii) new in the period, the mark to market movement on USD
forward exchange contracts and the foreign exchange movement on the Placetel
deferred consideration totalling (£1.4m) (H1 2024: £nil). These are adjusted
as i) the total incremental cost over the implementation period is considered
significant and ii) the mark to market movements of the forward exchange
contracts and foreign exchange movements on the deferred consideration are
driven by macro-economic factors and are not linked to the Group's trading
performance. The adjustment for foreign exchange movements is limited to the
Placetel deferred consideration as the deferred considerations payments are,
in part, fixed by the forward exchange contracts and therefore the two
transactions are considered linked.
EBITDA and Adjusted EBITDA
EBITDA is presented because it is widely used by securities analysts,
investors and our peer group internationally to evaluate the profitability of
companies. EBITDA is defined as profit before tax excluding finance expense,
finance income, depreciation of property, plant and equipment, right-of-use
asset depreciation and amortisation of intangible assets. EBITDA eliminates
potential differences in core financial performance that can be caused by
variations in capital structures (affecting net finance costs), tax positions
(such as the availability of brought forward losses against which taxable
profits can be relieved), the cost and age of property, plant and equipment
and right-of-use assets (affecting relative depreciation expense), and the
extent to which intangible assets are identifiable (affecting relative
amortisation expense).
Adjusted EBITDA is a primary profit measure used internally by the Board to
assess financial performance of the Group and its segments. It is defined as
EBITDA (as defined above) adding back exceptional items and other adjusting
items (as described above).
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Profit before tax 43.5 48.5
Finance income (2.0) (3.6)
Finance expense 2.9 0.8
Profit from operations 44.4 45.7
Depreciation of property, plant and equipment and right-of-use assets 5.6 5.6
Amortisation from intangible assets 14.2 10.3
EBITDA 64.2 61.6
Exceptional items 7.3 -
Other adjusting items: (0.6) 0.6
Adjusted EBITDA 70.9 62.2
Adjusted profit before tax
Adjusted PBT is defined as profit before tax excluding exceptional items and
other adjusting items (described above), the amortisation arising from
business combinations and the unwinding of discounting on acquisition related
liabilities. These items are individually material items and/or are not
considered to be representative of the trading performance of the Group.
Amortisation of intangibles arising due to business combinations is excluded
because this charge is a non-cash accounting item based on judgements about
the assets' value and economic life. Its exclusion is consistent with industry
peers and how certain external stakeholders monitor the performance of the
business. Unwinding of discounting on acquisition related liabilities is
excluded because the amounts are non-cash accounting items and bear no
relation to the Group's trading performance in the period. This adjustment
improves comparability between acquired and organically grown operations.
Adjusted PBT is the primary profit measure used internally to reward
employees.
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Profit before tax 43.5 48.5
Exceptional items 7.3 -
Other adjusting items: (0.6) 0.6
Amortisation of intangibles arising due to business combinations 9.6 6.3
Unwinding of discounting on acquisition related liabilities 1.2 0.6
Adjusting items 17.5 7.5
Adjusted profit before tax 61.0 56.0
Adjusted earnings per share (fully diluted)
Adjusted earnings per share ("EPS") (fully diluted) is presented as management
believes it is important for understanding the changes in the Group's fully
diluted EPS, including improving comparability between acquired and
organically grown operations. Adjusted EPS (fully diluted) is defined as
Diluted EPS where the earnings attributable to ordinary shareholders are
adjusted by excluding exceptional items, other adjusting items, amortisation
arising due to business combinations and unwinding of discounting on
acquisition related liabilities (for the same reasons outlined previously in
relation to Adjusted PBT) and the tax on all of these items, because they are
individually or collectively material items that are not considered to be
representative of the trading performance of the Group. To not exclude the tax
impact of these items would give an incomplete picture. In addition, Adjusted
EPS has also been amended to remove the benefit of a historical patent box
claim in the period given its multi-year nature which does not reflect current
period trading performance.
Six months ended 30 June 2025 Six months ended 30 June 2024
Earnings per Ordinary Share - diluted (pence) 34.1 36.7
Adjusted earnings per Ordinary Share - diluted (pence) 47.9 42.5
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Profit after tax 32.4 35.8
Exceptional items 7.3 -
Other adjusting items (0.6) 0.6
Amortisation of intangibles arising due to business combinations 9.6 6.3
Unwinding of discounting on acquisition related liabilities 1.2 0.6
Patent box (1.9) -
Adjusting items 15.6 7.5
Tax relating to adjusting items (2.5) (1.9)
Adjusted profit after tax attributable to the ordinary equity holders of the 45.5 41.4
Company
2025 2024
No: No:
Diluted weighted average number of Ordinary Shares 94,925,517 97,423,446
Net (debt)/ cash
Net (debt)/ cash is presented as it is an important liquidity measure used by
management and the Board. Net (debt)/ cash is defined as borrowings less cash
and cash equivalents. IFRS 16 lease liabilities and contingent consideration
are not considered as debt for the purpose of quoting Net (debt)/ cash.
30 June 2025 31 December 2024
£m £m
Cash and cash equivalents 25.2 153.7
Borrowings (46.8) -
Net (debt)/ cash (21.6) 153.7
The following table reconciles movements in Net (debt)/ cash from the previous
period:
Cash and cash equivalents Borrowings Net (debt)/ cash
£m £m £m
At 1 January 2024 136.5 (1.7) 134.8
Repayments - 1.5 1.5
Net increase in cash and cash equivalents 17.8 - 17.8
Effects of foreign exchange rate changes (0.6) 0.2 (0.4)
At 31 December 2024 153.7 - 153.7
Drawdown of borrowings - (89.0) (89.0)
Repayment of borrowings - 42.0 42.0
Borrowings acquired with acquisitions - (14.6) (14.6)
Repayment of borrowings acquired with acquisitions - 14.6 14.6
Deferred financing fees - 0.7 0.7
Interest Payments on Borrowings - 0.8 0.8
Finance expense - (1.3) (1.3)
Net decrease in cash and cash equivalents (129.2) - (129.2)
Effects of foreign exchange rate changes 0.7 - 0.7
At 30 June 2025 25.2 (46.8) (21.6)
Adjusted cash conversion
Adjusted cash conversion is presented as management believe it is important to
understand the Group's conversion of Adjusted EBITDA (as defined previously)
to cash. The Group's Adjusted cash conversion is defined as Cash generated by
operations excluding the cash impact of exceptional items and other adjusting
items (which totalled £7.3m in the period (H1 2024: £2.6m)), divided by
Adjusted EBITDA, so as to exclude the impact of significant or one-off
transactions outside the normal course of trading.
In the period we have also adjusted for the cashflow impact of timing
differences between the income statement and cash flow recognition for certain
acquisitions related transactions. These are i) to exclude the one-off payment
in 2025 of a £1.7m non-trading related Placetel liability where no expense
was recognised as this was accrued in the opening balance sheet and ii) to
adjust operating cash inflow by £1.6m as a proxy for cash on Starface
maintenance revenue where such cash was received by Starface pre acquisition
but revenue was recorded post-acquisition.
Adjusted cash conversion is used to track and measure timing differences
between profitability and cash generation through working capital management,
including seasonality or one-offs.
Six months ended 30 June 2025 Six months ended 30 June 2024
£m £m
Cash generated by operations 53.1 59.6
Cash impact of exceptional items 6.5 2.2
Cash impact of other adjusting items 0.8 0.4
Acquisition related timing difference 3.3 -
Adjusted Cash generated by operations 63.7 62.2
Adjusted EBITDA 70.9 62.2
Adjusted cash conversion 90% 100%
Organic growth
Organic growth is presented as management believe it is important to
understand performance on a comparable basis. It is defined as total reported
growth excluding the contribution of material acquisitions for the first 12
months of ownership ("Inorganic growth") and excludes the contribution of
material disposals for the last 12 months of ownership ("disposals"), and the
impact of foreign exchange movements on the consolidation of our international
operations (calculated by taking the current year local currency results
translated into Pounds Sterling at the preceding year's foreign exchange rate
(1.196:1 Euros to Pound Sterling) and defined as "constant currency"). It is
used for internal performance analysis as it aids comparison of the current
year to prior years without being affected by factors which were not present
in both periods. It is calculated at an operating segment level and Group
level for revenue and gross profit. It is also calculated for Adjusted EBITDA
at a Group level.
Current year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2024
30 June 2025
Organic growth Inorganic growth Constant currency
Revenue £m £m % £m % £m % £m % £m
Gamma Business 184.1 1.5 1% 0.4 0% - - 1.9 1% 186.0
Gamma Enterprise 61.0 1.9 3% 3.6 6% - - 5.5 9% 66.5
Germany 21.8 - - 28.4 130% (1.1) (5%) 27.3 125% 49.1
Other Europe 15.6 (0.3) (2%) - - (0.3) (2%) (0.6) (4%) 15.0
Group Revenue 282.5 3.1 1% 32.4 11% (1.4) 0% 34.1 12% 316.6
Prior year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2023
30 June 2024
Organic growth Inorganic growth Constant currency
Revenue £m £m % £m % £m % £m % £m
Gamma Business 164.8 9.6 6% 9.7 6% - - 19.3 12% 184.1
Gamma Enterprise 53.0 2.6 5% 5.4 10% - - 8.0 15% 61.0
Germany 22.3 - - - - (0.5) (2%) (0.5) (2%) 21.8
Other Europe 16.1 - - - - (0.5) (3%) (0.5) (3%) 15.6
Group Revenue 256.2 12.2 5% 15.1 6% (1.0) 0% 26.3 10% 282.5
Current year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2024
30 June 2025
Organic growth Inorganic growth Constant currency
Gross profit £m £m % £m % £m % £m % £m
Gamma Business 97.1 0.1 0% 0.2 0% - - 0.3 0% 97.4
Gamma Enterprise 28.9 - - 2.0 7% - - 2.0 7% 30.9
Germany 9.8 0.4 4% 24.9 254% (0.7) (7%) 24.6 251% 34.4
Other Europe 10.0 (0.5) (5%) - - (0.2) (2%) (0.7) (7%) 9.3
Group Gross Profit 145.8 - - 27.1 19% (0.9) (1%) 26.2 18% 172.0
Prior year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2023
30 June 2024
Organic growth Inorganic growth Constant currency
Gross profit £m £m % £m % £m % £m % £m
Gamma Business 86.8 6.6 8% 3.7 4% - - 10.3 12% 97.1
Gamma Enterprise 25.4 1.4 6% 2.1 8% - - 3.5 14% 28.9
Germany 9.5 0.5 5% - - (0.2) (2%) 0.3 3% 9.8
Other Europe 9.5 0.8 8% - - (0.3) (3%) 0.5 5% 10.0
Group Gross Profit 131.2 9.3 7% 5.8 4% (0.5) 0% 14.6 11% 145.8
Current year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2024
30 June 2025
Organic growth Inorganic growth Constant currency
£m £m % £m % £m % £m % £m
Group Adjusted EBITDA 62.2 2.0 3% 6.9 11% (0.2) (0%) 8.7 14% 70.9
Prior year
Six months Components of growth Total reported growth Six months
ended
ended
30 June 2023
30 June 2024
Organic growth Inorganic growth Constant currency
£m £m % £m % £m % £m % £m
Group Adjusted EBITDA 56.5 4.3 8% 1.6 3% (0.2) (0%) 5.7 10% 62.2
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