Gamma Communications sees solid H1 growth as German acquisitions boost top line

(Sharecast News) - Telecommunications business Gamma Communications said on Tuesday that it had delivered double-digit growth in the six months ended 30 June, driven by a strong German performance, leading it to hike its full-year adjusted earnings per share guidance. Gamma said revenues rose 12% year-on-year to £316.6m in the first half, driven by an "impressive German performance" and "low single digit" UK revenue growth. It also said that recurring revenue remained high at 90%.

Adjusted underlying earnings climbed 14% to £70.9m, with margins expanding by 20 basis points to 54%, while pre-tax profits slipped 10% to £43.5m, and fully diluted adjusted earnings per share advanced 13% to 47.9p.

On the other hand, Gamma also revealed that it had swung to a net debt position of £21.6m at the end of the half, down 115% from a net cash position of £142.9m at the same time a year earlier.

The FTSE 250-listed group, which raised its interim dividend per share by 14% to 7.4p, stated that it had made "substantial progress" in developing its new portal architecture in the UK and Europe and that its solid German performance was led by the acquisitions of Starface and Placetel, supplemented by solid organic growth.

For the year ending 31 December, Gamma added that it now expects adjusted underlying earnings to be in line with current market expectations, while adjusted earnings per share were seen slightly ahead of expectations.

Chief executive Andrew Belshaw said: "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 macroeconomic backdrop for SMEs.

As of 0850 BST, Gamma Communications shares were up 9.96% at 1,170p.

Reporting by Iain Gilbert at Sharecast.com