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Gamma holds steady during pandemic

Pre-tax profits climbed up by just over a fifth
Gamma holds steady during pandemic

Gamma Communications’ (GAMA) gross profits climbed almost a fifth to £93.1m over the six months to June, but chief executive Andrew Taylor described the period as a “game of two quarters”, as the final three months in the first half were impacted by the market-wide fallout of the coronavirus outbreak. 

IC TIP: Buy at 1,585p

Against this difficult macro backdrop, organic revenue growth came in at 9 per cent, which was in line with the rate achieved during the same period last year. The company’s ‘hibernation’ scheme, which enabled customers not using their services to suspend payment, has cost £1.2m - although management noted that most have now started paying again. 

Meanwhile, the company carried on with its expansive push in Europe, with four acquisitions in the first seven months of 2020 alone, leading to a £45m cash outflow in the period. But its acquisitive strategy has been funded by its considerable cash pile, which still sits at a healthy £42.5m.

Investec forecasts adjusted pre-tax profits of £57.7m and EPS of 47p in the 2020 full year, up from £50.7m and 40.2p in 2019.

GAMMA COMMUNICATIONS (GAMA)  
ORD PRICE:1,585pMARKET VALUE:£1.5bn
TOUCH:1,580-1,590p12-MONTH HIGH:1,755pLOW: 970p
DIVIDEND YIELD:0.6%PE RATIO:40
NET ASSET VALUE:179p*NET CASH:£42.5m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201915821.719.73.5
202017726.222.33.9
% change+12+21+13+11
Ex-div:24 Sep   
Payment:22 Oct   
*Includes intangible assets of £74.8m or 79p a share