Gamma Communications (GAMA) H2 2024 earnings summary

Executive summary

• Achieved 11% revenue growth to £579.4m and adjusted EBITDA up 10% to £125.5m for FY 2024, driven by organic and acquisitive expansion across all business units.

• Expanded customer base to over 1 million UK cloud platform users and over 500,000 cloud seats in Germany, establishing scale in the German market.

• Completed significant acquisitions in Germany (Placetel, Starface), UK (Bright Cloud, Satisnet), and Coolwave, enhancing product suite and geographic reach.

• Maintained high recurring revenue (89%) and strong cash generation, ending the year with £153.7m net cash.

• Plans to move to the Main Market progressing, with admission expected on 2 May 2025.

Financial highlights

• Adjusted EPS rose 13% to 85.1p, supported by interest income.

• Cash conversion was 96%, with adjusted cash at £120.4m and year-end cash balance of £153.7m.

• Progressive dividend policy continued, with full-year dividend up 14% to 19.5p.

• Share buyback of £27.3m completed; new buyback of up to £50m announced, supported by strong liquidity and new £130m RCF facility.

• Statutory profit before tax grew 34%; adjusted profit before tax up 14% to £111.9m; operating profit up 35% to £90.3m.

Outlook and guidance

• No formal profit forecast, but management expresses confidence in German integration and satisfactory group organic growth.

• Anticipates strong group growth in FY25, especially in Germany, supported by recent acquisitions and organic growth.

• Share buyback programme of up to £50m to run through H1 2025; new £130m revolving credit facility secured.

• One-off costs expected in 2025: STARFACE deal costs (£4-5m), Main Market move (~£2m), ongoing ERP implementation (~£1.5m), and UK employer national insurance changes to increase cost base by ~£2m.

• Continued focus on integrating German acquisitions and seeking further accretive M&A opportunities.