Gain to date: 38.9% Original entry point: Buy at 648p, 18 January 2018
We knew half year results from Gamma Communications (GAMA:AIM) would be positive after July’s update, and so they proved.
The headline numbers show earnings before interest, tax, depreciation and amortisation (EBITDA) up 31% to £21.8m on revenues 18% ahead at £137.6m, albeit partly obscured by new accounting rules.
In short, the new rules affect the treatment of share based payments and depreciation, which now must be counted as part of the cost of doing business.
While this led to 2017 figures being restated there is no cash cost to the company, nor does it change Gamma’s fantastic positioning in the future of communications, especially as organisations increasingly adopt cloud-based solutions.
These are the first results under new chief executive Andrew Taylor and investors can take confidence from his plans to largely stick to the knitting that has worked so well for years.
But there is the hint that acquisitions and international growth may become more meaningful to the growth story down the line.