Gamma Communications Stock

Well good morning, everybody, and thank you to both of you who've got through the chief strike and turned up. But thank you to everybody who's dialing in and watching us on video. It's good to know that video conferencing is alive and well, and we may talk about that a little bit this morning.

For those of you who don't know me, I'm Andrew Belshaw, I'm Gamma's CEO, and I'm actually delighted to be presenting our first half results for 2025. Joining me a bit later is Bill Castell, our CFO.

This is what we're going to talk about this morning. So it's a fairly standard agenda. But without further ado, let me tell you how we got on in the first half of this year. We are really, really pleased and really proud of what we've managed to do in the first half of 2025 against actually quite difficult economic backdrop in both the U.K. and also in Germany.

As you see there, our revenue has grown at 12%, but we also grew EBITDA 14%, which Bill will come and talk to. And this morning, we're upgrading our EPS target for the year as well, which is, as I say, an achievement, I think, against the backdrop.

How have we managed to do that in difficult circumstances? Fundamentally, we've done it through acquisitions as well as organic. We've bought really well, and we'll talk about some of the things that we've acquired in Germany. And we've generated a lot of cash as well. So what we've been able to do is buy well and also return a number of cash to shareholders.

And so far in the first half of this year, we've returned over GBP 50 million. And based on the dividend we've announced this morning by the end of the year, we'll have returned GBP 60 million to shareholders. So we've had a fantastic good first half of the year. We've generated lots of cash, and we've done good M&A, and we've also returned cash to shareholders as well.

In terms of some of the highlights and some of the things that I wanted to pull out. We're excited about the traction that our U.K. SME business has got, what we call, Gamma business, where we're selling small and medium-sized businesses through our channel partners. We've continued to increase volumes in all of our core solutions.

So all of the products that we feel should be growing at this stage in the economy, they're all growing, which is great. Why are they growing? Well, fundamentally, they're great solutions, but also we spent a lot of time and effort on building out our portal. Our portal now makes our customer order journeys a lot easier.

It's easier for people to buy things from us, and that's what they're doing. And we've also worked with our partners to deliver new solutions for them. And throughout the course of the morning, we'll spend a bit of time talking about a deal that we've done with O2 Daisy, where we've helped them with a platform that they've acquired that we're offering them a managed service to look after that platform.

And also a deal that we've done with one of our larger partners, Clear Business, to provide first-line support to their customers. So it's not just about providing solutions, we're now providing managed services as well to some of our larger partners, which just helps strengthen that relationship and also inevitably drives more revenue for gamma.

Enterprise has also done really well. And in a minute, I'll talk to you about some case studies, just demonstrating our ability to upsell and cross-sell based on some of the acquisitions we've made.

And inevitably, this morning, we'll spend some time talking about Germany, where we're really proud of what we've done, what we've achieved, what we've integrated and the trajectory that we're on. I'm conscious there's people in the room who may not know very much about Gamma. I'm conscious that there's almost certainly people watching us on the video who may not know very much about Gamma.

So what I wanted to do is just go back to first principles really and just remind you why we think Gamma is a fantastic business and also why we think Gamma is a fantastic investment. Every single company, there is no company that survives without having a communications provider. Everybody needs whether it's video, whether it's voice, whether it's instant messaging, all businesses need to communicate with their suppliers, with their employees. And Gamma is a market leader in the U.K. and Germany.

And comms is fantastic because everything is sold recurring revenue, multiyear contracts. It's very, very predictable. Margins are stable. Cash generation is very good. And as I said earlier, we've been using that cash to do high-quality M&A and also to return cash to shareholders. So we think we're in a really privileged position.

Gamma is actually quite a unique business. And one of the problems that we have, as many of you who have worked with us for some time know, is there's nobody really quite like Gamma.

It's very difficult for me to explain Gamma in the context of other businesses. So we try and explain what Gamma is and what gamma does like this. We have some fantastic relationships with these businesses, people like Amazon, Cisco, Microsoft, great hyperscalers who produce fantastic communication solutions these days. But they need a route to market.

And what Gamma is able to do is we can take the solutions that these guys develop and we can put them through our local distribution reach all across Europe, reaching thousands of enterprise customers, tens of thousands of small businesses.

And really, we're fairly unique in that, but that's not all we do. We're not merely a distributor. We're a telecoms operator at heart. We have our own network. We're able to provide people with telephone numbers. We're able to connect calls to and from the public telephony network. So we're taking these solutions, these platforms that these people spend an awful lot of money developing. We plug them into the Gamma network.

So they just work with phone numbers, and we offer a managed service to all of these end users. And it's not just that.

We provide a fantastic quality of service through the portal. I mentioned that earlier, we spent a lot of money on the portal. So we're taking all of that. We're making it very, very easy to consume. And that puts us in a unique position, working with the hyperscalers, linking them into our network, producing or making it easy to consume through our portal and through the service that we provide.

So that all of these customers, all of them who need that communication solution I talked about earlier, can buy it from Gamma. And that fundamentally is the business model that we operate basically, we provide 3 things and businesses need pretty much all of these 3 things, and we've talked about it already.

The first thing we provide at the top there is a cloud communications platform. So you will hear many, many acronyms, and it's just like a really bad scramble hand. People talk about PBXs and CX and CC and CPaaS and CCaaS and UCaaS and all those things. But just think of a cloud communications platform like this. You can do video calling with it. You can do voice calling. You can actually make calls using phone numbers. I use that to do a phone call.

There's probably about 2 people who understand why you might use that motion for making a phone call. But if you're as old as me, you'll remember. So you might still doing voice calls. You might do instant messaging, and you'll do all of those things with your communications platform. Some of those at the bottom end of the market, we produce ourselves, so things like PhoneLine+.

And as I mentioned earlier, we work with the Cisco, Ericsson, LGs as well to provide top-end products. Calling, we've talked about a couple of times.

We don't just sell those communications platforms. We plug them into our network so that they just work out of the box and enable you to use phone numbers. If you haven't yet moved to the cloud and you're still using a hardware phone system as 40% of people in the U.K. are and 80% of people in Germany, we have a product called SIP trunking that enables you just to make and receive calls to the public telephony network, just dialing [ 207 ] numbers to be able to make a voice call. But many people now are using Teams, they're using Amazon solution, they're using a Cisco solution. We use exactly the same technology to enable you not just to do video with those solutions, but to be able to make voice calls as well.

And then we also work with some of the really big global cloud comms providers that you'll see in the top corner of the Gartner Magic Quadrant, who don't have a network in the U.K. and Gamma provides them wholesale services, and that's what we call our service provider business. So we leverage the power of our network to add value to those communications platforms.

And then finally, we do connectivity, Ethernet, broadband, mobile, these days, IoT as well. And we do that on a very CapEx-light basis. We're not digging up roads to lay our own fiber. We're not going out putting masks in the countryside. We partner with people like BT, PXC to provide Ethernet and broadband. And we partner with VodafoneThree and EE to provide mobile services to people. So between all of that, we think we have everything that any business could possibly need in order to communicate with, say, with its customers and with its suppliers.

And hopefully, to try and bring some of that to life, let me give you an example. Morrisons is one of our large enterprise customers. You probably know that because we've talked about it a few times. And back in March 2024, Morrisons approached us because they wanted to improve their network. They wanted to improve their in-store WiFi. Why did they want to do that? Well, they had a business need to be able to do that.

They had an e-commerce partnership with Amazon that meant that they needed to have much better in-store WiFi. They also wanted their customers to have an in-store WiFi experience as well, partly because people seem to want to watch things as they go around the supermarket and partly because their loyalty scheme was mobile-based, and they needed people to be able to access things on their mobile in store. And their existing in-store WiFi just wasn't quite working for them.

Gamma displaced an incumbent that they had working with them for 12 years. And we built a network that serves 400 large Morrisons supermarkets and 1,200 of the smaller convenience stores. It provides really good quality WiFi in store. Why did we win that? Well, yes, inevitably, it comes down to commercials a little bit. But fundamentally, we listened to Morrisons.

We understood the business problems that they were trying to solve and we solve them for Morrisons. So we've won the network, which is fantastic, and that's a great starting point.

But then roll on a little while and the PSTN network, the public telephony network, the old copper network, BT is switching that off soon. And Morrisons wanted to get a little bit ahead of the curve on that. And those 1,200 convenience stores that they had, they just had old legacy single lines going into the stores. And that was problematic, a, because the technology was going, but b, because a lot of people in those stores are just spending time answering the phone.

They were answering the phone with fundamentally the same queries about what time are you opening, what time are you closed. So we put PhoneLine+ into those 1,200 stores. It's a single-line replacement product. It's designed for smaller businesses, but actually it works for Morrisons because those 1,200 convenience stores don't behave like one large organization. They actually replace -- behave like 1,200 smaller businesses.

And what PhoneLine+ was able to do is it brought things like an IVR. So that actually for the most basic queries, what times you open and shut, you can deal with that on an automated voice response. You don't need a person to answer the phone. PhoneLine+ also works with deck phones. So actually people could just carry the phones around the store with them.

PhoneLine+ also enables you to divert calls to the head office, if that's what you need to do when a store is shut. So what it enables people in store to do is spend less time answering the phone, more time serving customers and fundamentally gives Morrisons customers a better experience and it saves Morrisons a bit of money. And then coming on to April 2025. As you'll all be well aware, there was a period in Q1 when a lot of British supermarkets were undergoing cyber attacks. We were actually already working with Morrisons on a cyber solution.

We were partnering with Cisco to take a cyber solution into Morrisons, and we were testing it. We were piloting it when Morrisons had an attack. And the pilot that we had in place was able to deflect that attack and what better testament for us and to be able to win business. So we now have a secure connectivity project in play with Morrisons. And in terms of the revenue that we made, it's about 120% more -- well, 20% more, it's 120% of what we started with.

So 20% more revenue that we're making at this end than we were over there, just through that kind of upsell motion as we take that big portfolio of solutions we've got into one of our key customers. This customer is Lexington & Co., a solicitors.

Now hopefully, you've never heard of them. And the reason I'm saying, hopefully, you never heard of them because we made them up. It's not a real customer, but it's indicative of the type of customers or small businesses that our 1,000 channel partners work with in the U.K. on a day-to-day basis. And we have tens of thousands of companies like this that Gamma works with.

So if you can imagine a small legal practice in a provincial town in the U.K. maybe operating out of one office, the sort of place where you go to get your will done or the sort of place where you go to get some conveyancing, that's Lexington.

And if you think back to 2010, what they would have had is probably a series of single lines just going into their building, single phone lines like that you're paying line rental for each month. And the first thing we'd have done to a partner back in 2010 is we sold them SIP trunking. So it's Gamma SIP trunking. At that point, we're not replacing their hardware phone system that they're using to put you on hold or to divert your call around the building or run their voice mail.

We're just giving a better voice experience and a cheaper voice experience through SIP. And then hopefully, what we do once we sold them SIP trunking is we actually upsell our DR products on top of that. So we have something called SIP trunk call manager. So in the winter, when it's snowy and nobody can get into the office, they can divert calls directly to the home. You can't do that with a hardware box, but you can do it with Gamma SIP trunking going into that hardware box.

Why is that important? Well, if you ever dealt with a lawyer, you know that if they're on the phone to you, they're billing you. So they kind of like being able to connect those calls. So this is really just a revenue generation tool for them as well as a customer service tool. And then as they get big, they open a second office. And rather than keep their existing copper based broadband, we sell them Gamma Ethernet.

They have a much bigger bandwidth. They can get rid of all of those legal books that lawyers like on their shelves because now they're just going into the Internet and they can have a really good Internet experience because Ethernet gives you the bandwidth to do that. It also enables you to start networking 2 offices together as they expand. And then you come over here to sort of 2020, COVID hit, and you have a whole bunch of lawyers sitting at home using Teams a lot, thinking actually, this is quite good.

Do we actually need that hardware box anymore? Probably not. So what we can do now is we can move the phone numbers that we've been using for years and years and years on to Teams so we can answer calls and make calls using Teams because again, lawyers, not everything is a video call when they're phoning their clients, they're not setting up a video call every time if they're just phoning to check one small thing on a will that you want writing.

They're not going to do a video call for that. They will just phone you. They need to be using phone numbers as many small businesses do. And if you remember from some of the things that Bill has talked about before, when we go through that motion of moving from SIP trunking to Operator Connect, typically, we double our ARPU. So this is a great thing for Gamma that they've chosen to work with Microsoft and they've chosen to take Operator Connect and moved on from SIP trunking.

And the story doesn't end there because what we do in the future is we'll work with companies like Lexington to provide them with security. So we have a great product called Candio. It's an upsell product. And what that does is it just lets Lexington know if any of their customer data has been stolen and is sitting on the dark web. I'm sure over time as well, they'll open more offices and they'll need that Ethernet turned into an SD-WAN.

I'm sure they'll work out that actually Teams doesn't quite do everything they needed it to do. It doesn't quite do everything that box did, and they might want Teams to work with a Cisco product or IPX or maybe even Gamma's Horizon product to give them more functionality around core routing, and we can do all of that. They may want it connecting in some sort of CRM system or in some sort of contact system, and we can do all of that as well.

And again, I hope you can see that portfolio of products and services that Gamma has, we can use and are using to upsell for the biggest businesses like Morrisons and these small regional local businesses as well. So hopefully, if you're new to the Gamma story and sorry, it took a little while, that just helps you understand a little bit about what Gamma is about and what we do.

Let's talk a little bit about the market in the first half of the year. And we'll kind of start with this slide. And what we're doing is for the last 18 months, I think, probably the last 3 times that we've been to present on the set of results, we've identified these 4 growth drivers that we've talked about consistently.

And one of the features that Bill will come and talk about at the moment is actually the U.K. business isn't quite growing at the rate that we were hoping it would grow at this point. And why is that?

Well, as you can see there, we think the markets are still there, and I'll come and talk to why we think that is at the moment. I think our execution is good. I don't think it's been great. I think it's been good. But the macro is really hurting us. As we said when we did our full year results in March, ever since the budget in November, we've seen reduced levels of activity in small businesses in the U.K. We've seen fewer people starting a small business.

We've seen fewer people growing a small business. And that macro has been causing us a bit of a problem. But we believe over time, at some point, the macro will improve. We believe the markets are there, and we believe we have the solutions, and we believe we can get the execution right to be able to still exploit these growth drivers. So if you look at the top thing, customers needing more complex solutions.

Part of the reason of going through those 2 case studies is just to demonstrate to you that we have the solution portfolio to upsell into our customer base. At the moment, we're finding a lot of customers are very nervous about spending money and they're not necessarily making that upsell motion. But we think the market is there. We think the execution is there. And we think when the macro comes back, we'll be in a really good place.

PSTN switch off, less to do with the macro. This is more to do with BT turning off the legacy phone network in 2027. So we think that will happen. In terms of the market, we have a fantastic opportunity to be selling to businesses who've been using a single line who need to move to a cloud product. And that's why we built PhoneLine+ and you see that PhoneLine+ units grew quite a lot in the first half of this year. So we're pleased with how PhoneLine+ is doing.

We've also indicated a headwind, and we've been indicating this over the last few years. Customers who are using copper-based ADSL broadband need to move to fiber. And bluntly, we make less money on that. And it's going to cost about GBP 5 million of GP over the course of the next year, 18 months as people move from ADSL onto fiber.

We're just going to see that one-off headwind.

When it's gone, it's gone. But that's why we kind of call that a bit of the market a bit red. In terms of our execution there, PhoneLine+ is now a much better product than it was in the first 6 months of the year. So I think PhoneLine+ did well. I think it could have done better, and I think we will execute better in the second half of this year.

Now we've got additional things that you can add on to PhoneLine+, things like being able to use it with eSIM, things like being able to integrate it with WhatsApp. PhoneLine+ is now a better product. We also have better fiber products. We're selling fiber products from more fiber providers, and we'll be adding new fiber providers to the portal throughout H2. So I think our execution could have been better in H1.

It will be better in H2. We also talked about SIP converting to other things. And I mentioned Lexington, they moved SIP to Operator Connect, and that doubled the revenue for us, which was fantastic. Again, we're not seeing -- and you can see the sort of figures in the first half of this year for those of you that sort of track our SIP numbers, fewer people have been moving away from SIP in the first half of the year.

And that's just a macro thing. People just aren't really doing anything at the moment. The people just sticking with what they've got. The market is absolutely there. In the first half of the year, we didn't have Cisco fully launched. Cisco gets completely launched in October of this year. We're still putting something like 100 to 200 seats a week on to Cisco in the U.K. at the moment.

We're putting 2,500 a month on Cisco in Germany. But in the U.K., it's about 100, 200 a week at the moment. We still not launched it's very -- still not launched it properly. It's a very manual process, and that will all be automated from October, and we expect to see that take-up increase, and that's really aimed at a lot of these SIP businesses.

Germany, let's not forget that the German macro is not great either, but we have a fantastic business in Germany, and we are really, really proud of what we've achieved and what our German teams have achieved in the first half of this year.

We think the way that STARFACE is going to sort of perform throughout the rest of this year, we suspect that the multiple we acquired STARFACE for is going to come out to be about 11.5x EBITDA. As I said at the beginning, we think we've bought well. I think our entire German business is actually going to end up having been bought on single-digit EBITDA multiple, which for a business that's doing double-digit growth, I think we've bought well in a really exciting market.

You can see the size of our business. Revenues over GBP 50 million for the first half, so it will be over GBP 100 million for the year. EBITDA just under GBP 11 million for the first half. So that will be up into the 20s for the full year, over 0.5 million seats. 29,000 cloud seats put on in Germany is actually slightly more than we put in the U.K. in the first half as well.

And it's really, really exciting thing about Germany is this market potential. It's not like the whole of Bavaria is converted to cloud and nowhere else has.

It's just illustrative. But basically, only 20%, some people say it's near 15% of the German market has converted to cloud. We've still got 80% of the largest business communications market in Europe to convert to the products and the solutions that we sell. So we just kind of carry on executing and we carry on growing, but it's so much more than that. We have the opportunity to do more M&A.

We have the opportunity to do some things with Teams and Operator Connect is now launched in Germany. Connectivity is really important in the U.K., Ethernet and broadband contributes 20% of our GP. In Germany, it's only 2%. We can do some things with enterprise, and we can do some things with service providers.

So as I stand here, I am very, very confident that those growth drivers that we've been talking about will continue to take Gamma going forward. Yes, we've got poor macro. Yes, we've got some headwinds, but we can see growth going into '26, going into '27 and far beyond that because of the fundamentals of our industry.

And with that, I'm going to hand over to Bill, who is going to talk about the financials for the first half of the year. Thanks, Bill.

Good morning, and thank you to those in the room for making it through the underground chaos. I'm Bill Castell, I'm Gamma's CFO. Following a CEO's formerly being the CFO, he was always going to put some financial numbers in the first half, but I will expand on those. I've got around 9 slides. Those who know Gamma will recognize many of the slides.

We've been very busy in this first half of 2025. So I've included a slide that takes us from reported numbers to adjusted because we've had the STARFACE acquisition and not forgetting moving to the main market, the FTSE 250 entering the market in May 2 and the FTSE 250 shortly thereafter in June.

So moving on. The first slide, Andrew highlighted that revenue was up 12% to GBP 316.6 million. You'll notice double-digit growth across all of the top here. Adjusted EBITDA was up 14% to GBP 70.9 million and adjusted EPS, it all flowed through. So EPS was up 13% to 47.9p. A lot of that heavily supported by our acquisition, STARFACE, also not forgetting Placetel, both of which we didn't own in the first half of 2024. That flowed through to cash. So the top was P&L. At the bottom, you can see our strong cash generation.

That was at 90% on adjusted cash conversion of GBP 63.7 million. We moved into a net debt position, should be no surprise. We bought STARFACE on February 19 and used a lot of the cash that was outstanding at the end of 2024 and moved into a slight net debt position of GBP 21.6 million, which I'll cover later on as we have a revolving credit facility of up to GBP 130 million, so well within that credit facility.

I changed the title on the bottom right. It used to just be dividends, but we have now returned twice once in 2024. We returned GBP 27.3 million. This year, it was 45 -- sorry, this half was GBP 45.1 million via a share buyback. And we've continued with our progressive dividend policy, up 14% at 7.4p for the half year dividend.

That brings the cash that we've announced this year to GBP 64.1 million. So that was the final dividend we paid at the beginning of the year, the share buyback and today, the GBP 6.9 million thereabouts. So it gives you an indication of the amount of the cash, not only are we doing M&A, but certainly a balanced capital allocation approach and returning cash to shareholders.

Now going on to the main principal statements. The income statement. Here, I've already talked about some of the headline double-digit growth, but let me just kind of remind you of a few other characteristics of Gamma, which are consistent with prior periods. In actual fact, our recurring revenue was up 1% to 90%. So 90% of Gamma's revenue is recurring at GBP 285.3 million.

We also saw an improvement in the gross profit margin. You'll see there over 270 basis points, moving 51.6% to 54.3%. So the gross profit margin flowed through actually to an EBITDA margin slight improvement of 40 basis points. But that EBITDA -- that gross profit margin was heavily led by the German business. 75% of our German business is now in the cloud communications space, which is in the high 70s, 80, 90s gross profit margin.

So Germany now represents around 20% of our gross profit and therefore, feed through to that gross profit margin. But I will go through that in more detail shortly. I've already talked about the double-digit EBITDA growth. We did have some exceptional and adjusting items, which I will go forward, but those are mainly relating to the STARFACE acquisition and the main listing. And as you'll see at the bottom, our PBT was up 9%. Previous periods, we did have interest income from that cash balance.

In prior periods, obviously, we used that cash for the STAFACE acquisition, and that's why the adjusted profit before tax is slightly lower than double digit, but still a very healthy 9%. And adjusted EPS because we use that cash to buyback shares. When we look at the weighted average shares outstanding, those have gone down, and therefore, we are at 13,1-3,13% growth year-on-year on adjusted EPS.

I'll go through the business units now. We'll start off with Gamma business. Andrew has already mentioned the challenging U.K. macro environment, so I won't go through more of that. Our organic growth is very similar, what it is the same as our headline growth because of -- we didn't have any acquisitions year-on-year within the Gamma business segment. And so you can see revenue growth of 1% and flat at the gross profit level.

Andrew alluded to some of the macro, but we also had the connectivity structural impact of around 18 months, we believe, which is relating to the PSTN switch-off, which impacted us GBP 1.5 million in the half. And when I come back to the modeling assumptions going forward, we'll talk about how that's following through in '25 and '26.

There were a couple of other things associated with voice traffic with specific customer, HLC, which if you phoned up to get your tax returns in, you'll know they've become more efficient, so less traffic going through there.

And then there's also -- as the SIP PBX does get rationalized, albeit the level of churn on our SIP PBX when you look at our volume actually reduced compared to the prior period. So we had 30,000 chunks come off compared to a higher number in the previous 3 halves. And then gross profit without those kind of structural elements would have been an underlying 3% rather than the flat number you saw there.

If we move on to Enterprise, there is a difference between the headline and organic here, which you can see on the tables -- sorry on the graphs on the right-hand side. So revenue was up 9%, 3% organic and gross profit was up 7%, flat, similar to Gamma business. And it's a similar story. The M&A was BrightCloud. If you remember that transaction we did in the Cisco CX space, which has allowed the gross profit to be up at 7%.

Similar to the Gamma business, there are with the Ethernet, we're seeing pricing challenges, which resulted in a GBP 1 million reduction in the half versus half 1 2024. Without that, gross profit would have been an underlying 3% Key wins. Morrisons at the bottom, I won't go through. You've just seen the case study. That's the last part of that, the cyber the gamma Secure.

Utility, we had SD-WAN and Westminster City Council, Microsoft Teams, just to prove the case study to say, the variety of communication products and solutions we're providing our enterprise customers.

Now Germany. As I mentioned previously, Germany is now 20% of the group and 79% of Europe. As a result, I alluded to this at the year-end back in March for 2024 year-end results. Germany is going to be bought out and has been now as a separate business unit given its contribution and profitability to the overall group on that side. Not often do you sit down or stand up even and present 125% year-on-year growth in revenue or even 251% growth in gross profit.

But I think that shows the size of the acquisition, both STARFACE and Placetel, STARFACE now representing nearly 60% of the overall German business on that side. Organically, gross profit did grow 4% in Germany. And in actual fact, if you know our former -- well, we still have the HFO business, but we do have mobile and other businesses. When you look at the UCaaS side, that was growing at 6% on an organic basis pre-Placetel and pre-STARFACE. So across the board, Germany has been growing on that side.

You can see, as I alluded to right at the beginning on the first slide, our gross profit margins have jumped significantly from 43.4% to 70%, and that is the mix I was talking about with STARFACE and Placetel being cloud communications both of those within the 80s, one at the bottom end of the 80s, one at the top end of the 80s of gross profit margin. Sorry, I should just allude -- I shouldn't forget Spain and Netherlands.

Those have been categorized as other Europe now. There are details in the RNS towards the back end of that. Those both grew at the EBITDA level and just now represent just under 5% of our group gross profit. So Spain and Netherlands still very important, but clearly, Germany is now the main part of our European business.

I put the word strong balance sheet in there. I just wanted to reiterate the strength that we had there.

Net debt of GBP 21.6 million. As I said before, we do have a borrowings of GBP 46.8 million on the RCF, which allows us GBP 83 million of liquidity because we have GBP 130 million RCF. A lot of the changes you see in the balance sheet are related to the STARFACE transaction. You can see the increase in intangible assets in the noncurrent assets and the knock-on impact on that.

When you look at the retained earnings, we are generating profit after tax. As a result of the share buyback, we canceled many of the -- all of the shares on the GBP 45.1 million. Those are a deduction at the retained earnings. So that's why when you look at 31st December 2024 versus 30 June on 2025, you'll see the retained earnings has come down as a result of those cancellation of those shares.

The deferred consideration has gone up as a result of our place still. Some of you will recall that we have a committed spend with Cisco. And as a result, part of that has come through as the deferred consideration. So moving on to cash flow. Straight in the first slide, I talked about the 90% cash conversion. You'll see here as well, I mentioned at year-end that it was likely that CapEx would increase and that has gone up to GBP 9.6 million.

That is similar to the H2 2024, H1 2024, we alluded that, that would be a low point of our CapEx. And I will, in a moment, guide you on the modeling assumptions where we feel the year-end is going to come through on that. Cash at the end of the period, GBP 25.2 million. When you take off the GBP 46.8 million, that's where you get to the net debt of GBP 21.6 million.

Very healthy cash. As of this morning, before opening, it was an 8% cash yield. I don't know where we are now, but I know there was a positive response this morning to our results.

So that would now be in the 7% on that side of things. So we've returned, as you see on the slide, GBP 57.2 million to shareholders through a combination of share repurchases and dividends. When you add the dividend just announced, that gets to the GBP 64.1 million that I mentioned right at the beginning. A very attractive approach. And I should say the capitalized -- although CapEx has gone up, the capitalization rate is very similar to H2 2024.

So when you look at the percentage rate in the RNS, you'll see it's very similar to H2 2024. This is the new slide. So what this slide does is walks left to right from our reported EBITDA to our adjusted measure. And then on the bottom, similarly, operating cash flow to adjusted. You can see that the 2 principal items are the ones I mentioned before, the STARFACE acquisition costs. Those are one-off transaction costs related to our purchase and then the move from AIM to Main.

Again, that is a one-off as we move to the main listing and the FTSE 250. The ERP implementation continues. The HR system is up and live and running. This is the final part as we go into H2 should be the final expenditure on the Microsoft Dynamics in relation to the U.K.

We're still assessing now we've got a bigger German business, the rollout of Dynamics in the future into Germany on that side. I always wanted to show as well that the adjustments don't just go up, some go down. We did make GBP 1.4 million on the FX associated with the U.S. dollar versus pound exchange rate. However, this is, as we see it, FX and not to do with the operations of the business. And therefore, we have stripped that out of our EBITDA in H1 results that you've seen.

More to do with the operating cash flow, both with the Placetel acquisition, STARFACE, there was cash related to specific parts of the deal. The Placetel was in relation to employee and pensions. We received cash as part of the deal with Placetel, and we've used that cash to pay off. So that's a one-off transaction cost more related to the M&A than operating the business.

And then the STARFACE, if I just spend a few seconds explaining this, STARFACE have an attractive working capital in respect that they bill for maintenance cost upfront in January, February for the 12 months following.

And we bought STARFACE in February. So they've already collected that cash, so if you look within the RNS, you'll see actually there was a large part of cash that we inherited or purchased with the balance sheet of STARFACE, and that was just collecting the cash upfront. We've recognized, as you would, the EBITDA and revenue through the period in line with when that maintenance was provided. And therefore, this is just a one-off in this year because we'll be in a fortunate position for cash conversion purposes that in January, February, we will be doing the same and receiving all the cash upfront for the next 12 months.

So that's something positive to look forward to in H1 2026 in relation to cash collection. The final slide, where I see a lot of the analysts in the room perk up on that side. This is the modeling considerations. As the RNS said and Andrew said in his first statement, we're pleased to say that we are confirming that we are happy with the range of adjusted EBITDA out there in the market with consensus.

You'll see in the footnote at the bottom there, that's a range of GBP 139.4 million to GBP 143.1 million adjusted EBITDA for 2025 for the full year, and we're happy that we're within that range.

On the adjusted EPS, actually, we've announced today that we feel that we'll be slightly above the range. So the top of the range there is 93.9p. We're saying we're going to be slightly above that 93.9p. So that's the guidance in relation to the full year 2025 or I should say, modeling considerations.

Cash conversion this half is 90%. We continue, as I have for the last 3 years, say that this is a 90% plus business in relation to cash conversion, reiterating that. CapEx expected to be in the range of GBP 21 million to GBP 24 million, which is a bit up. The second half will be a bit up from the first half of the year as we have the full STARFACE capitalization coming through. Now the next bit is actually in relation to 2026.

So we're not formally guiding to any numbers in 2026 as we have done in other years, we don't do it at this point in time. However, we did want to reiterate since we have raised this headwind in 2025 to explain the headwind in '26 in relation to PSTN and connectivity. We've highlighted that to be GBP 6 million in gross profit for our 2026 numbers.

And we've also highlighted as well as our growth initiatives that are ongoing that we have taken a view as an ongoing operational efficiencies to review our U.K. business since we've been growing substantially in the last 10, 15 years and identified some efficiencies that can be made there, the total on a run rate basis, and it will be entering 2026.

So this restructuring is taking place in this fourth quarter, there will be a run rate saving of GBP 6 million to GBP 8 million, which at least offset, if not more, the GBP 6 million headwinds that we've just mentioned. So those are modeling assumptions that we're sharing now. There will be a restructuring costs associated, one-off restructuring costs with some of that headcount.

As you will see in the RNS, we talked about up to 5% of the 2,200 workforce. Just to reiterate, this is a U.K.-based restructure, not gamma-wide, continued investment, in particular in Germany going forward.

With that, I'll conclude and hand over back to Andrew to talk a bit more about the business outlook and further move on to Q&A after that.

Thank you very much indeed. Yes, let's talk about the future. We think the future is bright. The future is purple, maybe, I don't know. As Bill said, we are very confident as we sort of sit here nearly 3/4 of the way through the year in the outlook for '25. We're very happy with where you as the analyst community have got us. I said at the beginning that Gamma is predictable.

We have lots of visibility. So it would be remiss of us not to say something about '26. As Bill said, we don't guide to '26. But we're able to see even now what we think the headwinds are going to be. But we're also able to see what growth initiatives we've got, and I'll talk to those in a second. And we're also able to see where we can be a little bit more efficient in the way we operate.

So actually, as we sit here, we're reasonably confident in where we're going to turn out in '26.

Let's just talk about some of those growth drivers. And these are growth drivers that will take us through 2026 into 2027 and in some cases, well into the 2030s. I hope you've seen this morning and one of the reasons we spent a bit of time doing the case studies is we have a really strong solution set. I know sometimes it can be quite complicated because we do things with Microsoft and we do things with Cisco, and we've got lots and lots of things, and we've got more things.

We're introducing new variants of PhoneLine+ that will both increase the addressable market and increase the ARPU that we can get from that solution. Contact center is becoming a big thing, AI-powered contact center, even into smaller businesses like Lexington that we talked about earlier on that may never have had a contact center may not think it needed one.

But fundamentally, we think they'll be buying some contact center type products going forward. We're introducing more fiber providers and AI is going to be more and more core to everything we do, and we feel we can monetize that because as our customers use AI in their communications products, that will save them costs, and therefore, we are adding value to their business, and we feel it out to be monetized.

So we think we've got -- we know we've got a complicated solution set. Unfortunately, it's going to get more complicated, but that will give us a bigger addressable market, bigger share of wallet. When we talked this morning about our Edge proposition, but we have a phenomenal amount of data on our end customers and what they do and the calls that they make, and we can use AI tools to work with our partners to identify what business is doing in the round, what different types of businesses are doing.

And then we can help our partners market into certain segments and certain sectors of the economy that will help our channel partners grow and Edge is very exciting. And if you follow Gamma on LinkedIn, which you really should do, you'll see more about Edge. We have the potential to gain large blocks of seats. We talked this morning about the arrangement that we've got with O2 Daisy, where we've effectively taken in the platform that Daisy acquired on one of their recent acquisitions.

Running a small subscale platform is now really expensive. The regulatory regime in the U.K. makes that hard. And we're talking to more of our partners about similar types of deals that just bring us a bigger market share and a bigger opportunity to earn revenue and margin. And we're also talking to our partners about the type of deal that we did with Clear Business, where we can offer first-line support to their customers.

Again, it just frees up our partners to go and do what they do really, really well selling.

Don't have to worry about running a platform, don't have to worry about first-line support. We can do all of that for them. We can give them the smarts with the Edge program and our partners can go and accelerate their businesses. And that's true across the whole of Europe. It's not just restricted to the U.K., but the U.K. market is more mature. So you see these things happening in the U.K. earlier than Germany.

Germany, the maturity the market means that German market is going to grow for 10 years, at least 10 years. It's 20% penetrated. We said many, many times, the German market today looks and feels like the U.K. market felt 10 years ago. We think we've got a lot of growth to come. And not just in Germany, remember, a lot of our German business is digital through Placetel.

And I'm sure when I'm here in 12 months' time talking to you, we'll have been talking about how we're moving Placetel outside of Germany and looking at doing a digital offering in some adjacent countries. Our partnerships with people like Cisco, Microsoft, Amazon have never been stronger. And again, in 12 months' time, I'm sure I will be mentioning new logos of new people that we're partnering with to bring new solutions to those thousands of businesses that our distribution channel reaches across Europe.

We're working really, really well together with some of these big global giants. And as they improve their products and they improve their solutions, we carry on knitting them into our network, making them accessible on our portal to be able to take them to thousands of end users. And then finally, the one we haven't really talked about very much this morning, but we can cover in Q&A, our service provider business, where we're providing effectively an outsourced network to some of those other businesses that run cloud communications platforms.

We do that really, really well in the U.K. It's growing well in the U.K. And we said before, over the course of the next 18 months, so throughout 2026 and into 2027, we will be taking that outside of the U.K. into Europe and possibly even beyond Europe. following our customers wherever they go around the globe. And we see that as well being a growth driver for us. So as we sit here today, I'm really encouraged by '25.

I'm really encouraged by the visibility we've got in '26. And I can see growth coming from so many different areas in the business. And you come back to the fundamentals of Gamma, every single business needs a communications provider, and we are market-leading in the 2 largest economies in Europe. Revenues are recurring. All of those solutions that we've talked about, the sole as managed services recurring revenue basis.

They're high margin, stable margin, cash generative. And that cash, as we said before, it gives us the opportunity to do M&A, to do things like Placetel, to do things like STARFACE, to look for other businesses in Germany and across the rest of Europe and maybe even further afield over time, but it also gives us the ability to return cash to shareholders.

As Bill said, we'll return over GBP 60 million cash to our shareholders this year as well as doing good quality accretive M&A. So we think the Gamma story is a good one. We think the first half is good. We think the future is good. And I'm very, very pleased with where the business has been in the first half of this year and where we're going, going forward.

So with that, we'll stop, and we will hand over to Q&A.

It's Harvey Robinson from Panmure Liberum. Just a couple of questions on organic growth. In Germany, obviously, good GP organic growth. But could you remind us why -- you mentioned at the time of the STARFACE deal, there's some shift going on there and there in terms of revenue growth. Can you just unpack why revenue growth is less so, certainly as stated in the statement for German organic growth?

And then obviously, headwinds in the U.K., do you have a feel for how much that has sort of held you back in organic terms on the revenue side? I mean the speculation, have you seen much down shifting to PhoneLine+ within customer base?

Great. So I think the 2 questions, if I take the U.K. first. Andrew talked about it, we did grow net adds in the cloud communications by 23,000 in the U.K. So although we say gross profit is flattish, we are still growing volume. You hit the nail on the head there. When we look at the nature of that volume growth is we've now got a whole suite of products, and we're very happy that we do have that suite.

We have Horizon, which retails at 795. You have PhoneLine+ at 395. We have IPEX, which is somewhere between the 2 near the top end. And you're spot on, when we look at those net adds, more of those have been in the PhoneLine+ space than Horizon. And that is related to the macroeconomic environment where we're finding businesses that they need cloud communications, but given the economic environment are choosing the cheaper one, which is great while we have PhoneLine+.

And we are building we call it internally PhoneLine+++, it's called PhoneLine Office. We're building those similar to what we did with Horizon with the bolt-ons. We have that with PhoneLine+ where you can have WhatsApp integration amongst many other things. So we do see an opportunity there to upsell from PhoneLine+. But in this half, we have seen good healthy growth in PhoneLine+.

Horizon is still growing net adds, but PhoneLine+ and IPX are growing more than Horizon. So that's the U.K. hopefully answers that question, which does relate in a bit of the ARPU conversation that I'm sure we'll have later.

The second one in relation to Germany. So when you talk about organic, that excludes STARTFACE and Placetel. So I think we've talked about the double-digit growth that you have in those businesses. So organic is more the HFO business, which you're right, was 4% of the gross profit.

I did show historically before we had STARFACE, Placetel, a slide that showed Germany where we looked at cloud communication growth versus traditional -- what we call traditional revenue, which is more similar in connectivity. There's not much connectivity, by the way, in Germany, we only have 2% of our business connectivity versus 20% in the U.K., so we see that as a future opportunity.

But we do have the mobile Epsilon business, which is a healthy mobile reseller. Its margins are closer to 20%, but that revenue is always quite flat. It's not a growing market on mobile. So that brings down the average. So when you actually look at the cloud communication revenue space, that in our organic business, so pre-Placetel and STARFACE, that was growing about 5.66%. So that business has been growing.

It's more what we call the traditional revenue and also the mobile revenue that has brought down the kind of organic story for the revenue versus now cloud communications higher margin. So that's why you're seeing this gross profit margin of 4% with the revenue lower because we're selling more of the higher-margin product in the HFO.

One final comment because you didn't answer it though, is that we bought Placetel at September last year, STARFACE February. As you can imagine, a lot of focus STARFACE is our own proprietary software. Placetel is a lot of the focus, although we've called organic, I think if we haven't bought Placetel, STARFACE than the HFO numbers that kind of 4% gross profit would have been a higher number because the attention has been about growing STARFACE cloud communications and also Cisco collaboration suite, including Webex through Placetel.

So there's a bit of a, if you like, a reduction in the organic as a result of the focus now moving to the inorganic with STARFACE, Placetel.

I'm just trying to get a feel for what organic, if you like, like-for-like spot German growth is today. I mean...

Yes. Well, so I think if you look at STARFACE...

Is GP a good guide? Is that a good guide?

Yes. So I think GP is and then that with STARFACE and Placetel. So HFO now represents about 25% of our German business. So 75% is now Placetel and STARFACE. Those are cloud communication businesses with high gross profit margin growing double digit, which is why we're excited.

James Lockyer from Peel Hunt. On the enterprise side of it, it was great Morrisons case study there. But I think you've got low single-digit market share within that space at the moment. Given the Enterprise market is a bit tougher as well, I guess first thing is, can you -- do you still feel confident in a tough market, you can grow there?

And that lovely 20% increase in Morrisons revenue, what do you think your existing customers could do? Is there option there with existing to expand that? And second question there, 2 for Bill, please.

On the GBP 6 million gross profit hit you've mentioned, can you just give a bit of color just around how you got to that number and the confidence around that? Could it be worse than that? I guess, is the main concern. And given you've done up to GBP 8 million savings, is that sort of a buffer there?

So how should we think about that? And of those that did shift from SIP to cloud in the period, any -- sort of any color around where they went? What proportion went to 0, went to 60p, went to -- just to give us an idea on that, please?

So yes, so Enterprise, we haven't spent quite as long talking about that this morning. The Enterprise business, I think it's probably fair to say it's doing okay. I mean we've been fairly consistent, I think sort of saying that our view of the macro is that it's -- the smaller you are as a business, the more it seems to be hurting is what we're seeing.

So those really kind of tiny businesses just don't seem to be doing anything. It filter through a little bit to enterprise, but I wouldn't kind of say we're in sort of full-blown recession with Enterprise at all. We do have, and we sort of alluded to this in the RNS, there is a headwind in our Enterprise business around fiber and a lot of the net kind of undercutting each other on pricing.

So we're seeing some of those Ethernet prices come down. So just in the interest of full disclosure, I give you the sort of Morrisons example when that comes up for renewal in 5 years on the fiber, you would expect us to get chipped away a little bit on that. So yes, we've got the upsell motion, but you have that as a headwind, and we've kind of called that out, and we've taken that into account in our confidence in FY '26.

I think what we are seeing, and hopefully, you sort of saw it on Morrisons is where we bought businesses like Satisnet, we didn't really talk about BrightCloud and the contact center side of things this morning. But where we're buying those businesses, we are able to upsell. Now upsell in Enterprise and particularly in public sector is not a swift job.

It's not like you will walk in -- I mean, we didn't sort of put the times of when we first engaged with Morrisons on all of those individual things in that, but it wasn't like we just sort of rocked up and got a sale done in 24 hours. So these things take time. And therefore, sometimes the cross-sell motion takes time.

And I'm sure we were sort of careful not to kind of say the things we might sell Morrisons because they may or may not get upset about it. But I mean, I'd be disappointed if we didn't have a conversation with them about a contact center at a point in time because obviously, they've got one and they use it.

So when that kind of comes up for grabs, hopefully, we can go and bid them and put an excellent bid together. So I think the businesses we bought, they're doing well. Satisnet is doing well. Security side of things is doing well. Again, the very fact we work with people like -- we kind of get hung up on Cisco a little bit and think it's just all about their collaboration tooling.

They've got some phenomenal network tools and particularly some phenomenal security tools, and we take those particularly into our enterprise businesses. So I think, yes, we've got a really, really strong portfolio, and that upsell motion is still very much there, but it's a little bit harder than it was.

Thanks questions, James. So I'll take it in reverse order, so talk about SIP PBX first. I think the point just to reiterate, which I hopefully I got across, SIP PBX in the half went down 30,000. So it has still gone down. But when you look at half 1 2024, it went down 51,000. So interestingly, if you like, the rate of churn has slowed down, which does, one, obviously, the SIP PBX generates quite a lot for us, but that migration is happening, but it's not accelerating at this point on that side.

Then you look also at another thing that was impressive is that our Microsoft Teams, which we haven't really shouted about net adds was up 56,000. That's double this time last year. So we had 28,000 net adds. The reason I'm giving this is to explain. So what we're finding in the SIP BPX migration that those of the addressable market because there's always going to be a proportion when people move from SIP to cloud of rationalization where people say, look, there might have been 4 users for SIP trunk.

Do we need to have 10 SIP trunks? Do we need 40 and now do we just need 28, 29 users? So there is an element of rationalization, which changes over the period. But of the addressable, we definitely feel now we're winning our fair share from Microsoft Teams, whereas previously, as Andrew alluded to in his execution, we probably weren't where we needed to be on that.

And we feel we're winning our fair share in the cloud communications space. The key bit then goes back to are they moving to Horizon? Are they moving to IPEX? Are they moving PhoneLine+, more moving to PhoneLine+ because as they make that move, they're going for the cheaper version. Now we still make more money. We've gone through those dynamics before versus the SIP trunk when they move to our cloud communications, but I would love them to move to the kind of clearly higher ARPU product.

And then increasingly from October, we're going to have the Webex suite available as well, which will add to our armory from October onwards going forward on that. So that answers the second part of the question. The first part of your question on the confidence level, it is structural. And therefore, we can see how many units of ADSL that we have, for example, on.

And there's an assumption since it's January 2027 that the majority, if not all of that, moves to the lower-margin equivalents [indiscernible] or other products, and so it is math. So we know what we've got, we know what we're moving to. So certainly, in regard to the SME business, the Gamma business, it's a mathematical equation.

So the only question is, if PSTN gets switched out, then the impact in '26 might not be as much and it might get shifted into '27. So the quantum we know if Jan 2027 gets hit, then it will come in '26. If that shifts out, then time will shift out.

There are positives, as Andrew said, to PSTN. We're highlighting a negative. There are growth initiatives as all of the lines, SoHo, small office, home office come off their copper lines, we feel we have more of a chance with PhoneLine+, especially now with the added features we have to sell more of that going forward.

On the Enterprise side of things, we have looked across all of our contracts to see when they're coming up for renewal and pricing discussions are going to take place. So we have modeled that very specifically. And we've taken quite a conservative view on that in order to make sure that when we talk to you now about the GBP 6 million, we have confidence in that.

I'm hoping and hopefully, through negotiation, it doesn't turn out like that. But we know that at the moment, pricing in that Ethernet space is tough. And we've got examples of that from renegotiations that we've done, as we mentioned in the first half. So I have confidence in that number. We haven't put it forward. And clearly, with restructuring costs, a tough thing to do, but we have the math on that, and clearly, it's quite a precise number on that side of things. So yes, I do have confidence.

Ian Robertson from Progressive. A couple of questions. First of all, on Placetel licenses, you referred to the fact you could apply them internationally. Looking forward 3, 4, 5 years, what sort of percentage of the initial acquisition number do you think may actually be non-German in application? And looking within Germany, you have got the SIP hybrid PBX model. Is that working in a way you understand from the U.K. model or is it slightly different?

Yes. No, both really good questions. So I think on the Cisco question, as we sit here today, around 90% of those licenses are being utilized in Germany. But the U.K. percentage is increasing on a near daily basis. My gut feel, and it's only a gut feel and who knows, by the time of us getting to the end of that sort of 4-, 5-year commitment, it's going to be less than half of them being used in Germany.

And this goes back to -- we've already got one Spanish channel partner that's taken a sort of 5-year commitment to use some of them, yes, which is helpful. So yes, it's gut feel. I ask us in 5 years' time, we put the answer in an envelope and then just see who's closest in 5 years' time.

But I do see those solutions certainly gaining traction in the U.K. because they are. We're seeing that. And it's those larger -- the top end of SME customers who still got SIP going into, in some cases, is actually a Cisco PBX or maybe a Mitel PBX or whatever. Cisco's collab software is pretty much aimed at those kind of guys.

So as they begin to do that migration, I think we'll see more uptake in the U.K. As I say, we've got a couple of brand-new partners who just walked through the door in Spain just on the back of that relationship. So that's -- yes.

I think on the -- sorry, on the PBX Cloud hybrid, it's a bit of a novelty for us because it's not a motion we had in the -- if you go back to Gamma's roots, we never sold hardware in the U.K.

So we just kind of bounded into customers saying, do you want hardware or do you want cloud? Oh, you don't want cloud, you're not quite ready yet. Okay, we'll come back and see you in 18 months' time. And what STARFACE is able to do, which is why they're growing so strongly in the German market is go, okay, not sure about cloud, have a bit of hardware, and we can flick that to the cloud.

And as I probably said to you in the interest of full disclosure, the theory of that is brilliant and it works. In practice, what we're seeing is we're not seeing that many people who've originally gone for hardware flipping to the cloud. What we are seeing is that on a day-by-day basis, the percentage of sales, so I need to be a little bit careful how I phrase this, but we've been talking to STARFACE for a long, long time because we'd identified it as an acquisition target.

And we've seen that proportion of hardware being the majority of what they do, cloud being lower, that's now to the point where cloud is just beginning to overtake hardware. So even though if you bought hardware, you're not necessarily moving to cloud. If you're a new customer walking through the door, you're now more likely to be just taking cloud off the bat than you ask hardware.

And what I think will happen, yes, because it's a lot of these Mittelstand businesses as maybe the kind of older [ Petraco ] who figure sort of retires and leaves the business to the next generation, it seems that the next generation is much more cloud-ready and digital savvy and is willing to take cloud on.

So it may well be that we then begin to see the boxes kind of moving into the cloud as well. But yes, that's a minority at the moment.

Sorry. Hello, people online. Yes, how do people online ask questions? I should have checked that before we stood up.

I've got them ready.

Very good. Okay. Fantastic.

A few questions online. Firstly, from Martin O'Sullivan from Shore Capital. He highlighted the breadth of Gamma's portfolio and its ability to submit a wide range of business needs. Taking a customer like Morrisons as an example, how does Gamma typically approach land and expand within large accounts? Specifically, what portions of enterprise customers currently consume multiple solutions, how has that deepened over time? And what impact does multiproduct adoption have on metrics like ARPU, retention or contract longevity in the context of a land-and-expand scenario?

Yes. Okay. That's a very good question, and I'll probably not dignify it with a long an answer as it needs. But I think the reality of this is when you're dealing with these large Enterprises, it's around relationships with CIOs and CTOs because when you're going into an Enterprise, a CIO and a CTO, they kind of know what they're doing, right? So we're not turning up telling them how they should be running things because they know how they want to be running things.

What they want us to do is to listen, help them technically and obviously help them commercially. And we think we're pretty good at doing that. And as we saw on the Morrisons example, if you can do that with one thing, then you begin to earn the right to go and have other conversations with other things. I think it's like anything in life.

If you have a buyer who has a good experience on the first thing they buy from you, they're going to talk to you about other things coming down the track, and that is our experience our Enterprise business. And as we sort of said before, some of the things we get involved in with enterprise, like actually go back 6 or 7 years, the very early days when we were doing things like voice enablement on Teams is because customers were asking us for it, and we had to work out how we were going to deliver it.

And we do get customers who want us to do things because we're easier to work with than some of our competition. Once you have that relationship and particularly once you can turn that into business and you can turn it into multiyear contracts, inevitably, it strengthens that relationship; inevitably, it strengthens the longevity of that. And that's what we see on many of our enterprise customers that once you're selling not just one thing, 2 things, 3 things, 4 things, the relationship deepens and the longevity goes out.

In terms of what percentage you're buying multiple things? I mean, it's a difficult one to answer because it sort of depends how you define multiple things because I mean the vast majority of Enterprise customers almost by definition are going to be taking a number of those solutions that had on what we call that 3x3 side and bundling those into a managed service.

So as far as they're concerned, they might be going, well, I just think I've got one thing because I've got one managed service contract with you Gamma. But actually within that, I've got a bundle and a nexus of things that's actually quite difficult for someone else to replicate. So it's -- I would kind of say most of our enterprise customers, if not all of them, are taking more than one of those services when we put that slide up.

I don't know if there's anything you want to add?

Contracted margin on the initial relationship and then you've talked about Morrison being 20% up on that, and that is the model, which is going to provide great service, build the relationship. And then as other contracts come up, then you're in the RFP for those and you've got the relationship.

And then the key bit is always be on the end of the phone or video conference, if there's an issue, respond quickly and help even if it's not directly your relationship, they've got it with someone else. And that's -- we've won quite a few contracts there where we've turned up to help solve other people's issues.

And I suppose the other thing I'd say is [indiscernible] verticals or within verticals maybe rather than across verticals. If you -- we've done quite well over the years with the universities because you solved problems for one university and they're all going to talk to each other and you can solve problems for some of their friends at other universities.

Same with large retailers at the moment. We've worked with [ Aladdin] milddle some years. Now we work with Morrisons. Yes, we've got other people in that ilk that we're working with and bidding for. And I can't remember what we disclosed and what we haven't. But you get this sort of general idea of once you're within one of those verticals, all of these CIOs and CTOs talk to each other, and that's very powerful as well. So it's not just retaining that one customer. It also enables you actually to go and work with some of the peers of that customer.

We've got another question from Martin. How is Gamma thinking about AI as a monetizable product line versus a standard feature to maintain competitiveness? Will the AI receptionist and other tools be built separately, bundled in higher tier plans or offered as a free feature? And is the AI being built internally, white labeled from a partner or developed through the STARFACE acquisition?

No. So we believe in some -- so if you think about AI, which is sort of why sometimes I struggle with it, it covers just a multitude of different things and gets involved in a multitude of different areas. So if you look at something like the Cisco collaboration tool set, so they have some really, really nice AI that sits at the core of that, that just gives you a much better voice experience.

It gives you a much better video experience, and that is just the package. And if you have a video call on Cisco versus some of the other products, I think you will find it's better because the way they do the codec -- sorry, the way they do the IP pushing over the web and the way they do the AI is just better, that's included in the price.

So some instances, yes, it's bundled in. In other instances, things like AI receptionist, we think that is a chargeable. If you are a small business and we can sell you a tool that fundamentally means you need to employ fewer people to be answering phones, we feel that is saving you money, we are adding value to you, and we should be deriving some of that value. So that should be chargeable.

Like all of these things, this market has a long, long, long way to go, and we'll be sitting here in 3 years' time, and we can kind of debate how it's all gone. But I think it's going to be a mixture of both of those things. I think there's definitely going to be some AI that's just in the bundle because it's very, very difficult to extract. I think where you have a slider of something that is very clearly an AI slitter that you can kind of have or not have, I think that probably is -- well, it definitely is chargeable, and we'll see how that market evolves.

Yes. And I think internally to work alongside because in our own company, we have service and operational parts, which I think can be enhanced by AI as well through operational efficiency.

Our next couple of questions are from Carl Murdock-Smith from Citi. You've mentioned a short-term headwind driven by strong competition in Ethernet pricing from the number of alternative networks now providing fiber. Why is this only a short-term headwind, not longer term in nature? And how much has this dynamic changed over the last year?

It's a really good question. Why do we -- so how much has it changed? It's changed in the last 12, 18 months. So where we're going and rebidding Ethernet or bidding Ethernet for the first time, we're seeing Ethernet unit pricing going down. Why do we feel it's short term? Because there is -- if you are building a network and you are a fiber provider, at some point, you have to start making money, and we can have a much longer conversation about altnets and so on and so forth. And this probably isn't the time or the place of the forum. But altnets do need to start making money at some point, and that's why we're sort of reasonably confident.

I think the other thing I said in SME, we've got a certain amount of volume that is on the higher-margin ADSL. Once that volume moves down, yes, you take the hit, which we talked about, but then your year-on-year is like-for-like because you've already taken the hit down in your GP. So that's why that is a move down. And then from that, as long as we grow volume, then it gets back to growth.

Next question is, in your release this morning, you mentioned that you are well placed to maximize the M&A opportunity even in challenging macroeconomic times. Do you see increased M&A opportunities given the challenging times? Are there any countries, verticals or product sets that are particularly missing from Gamma's current portfolio?

Yes, it's a really good question. So I mean, we always say we're looking for 2 things in M&A is desperately insightful. One is additional services or solutions that we can sell into the base. So when we did things like Satisnet security, BrightCloud Contact Center.

And we look for those businesses as and when they become available. We mentioned that AI would be one where if you can find people doing clever things with AI, that might be something that you want to acquire or you may just license that in and sell that to the base. So you don't always need to own these things.

Geography is also the important one. I think what we've learned over the course of the last 5, 6 years is actually doubling down on one geography as we've done with Germany, probably gives you a better return than not having scale in other geographies. So for the time being, we're still looking at whether there's anything additional we can do in Germany, both in terms of giving us a bit more market share, but also maybe some other solutions that we can sell.

And maybe if you had a look at the slide carefully, you might have some clues as to what that might be. And then we've always talked about other European countries, but I want to get Germany actually working properly integrated before we move on and think about doing something somewhere else.

Our final question from David [indiscernible] Financial. On capital allocation, given the significant cash flow the company generates, would it make sense to have a rolling opportunistic buyback authorization in the order of GBP 25 million to capitalize on the significant disconnect with the current share price and not impact your M&A strategy?

Yes, that's a really good question. And it's one that inevitably we talk about the Board. I mean just to be really clear, what we've said this morning, and I hope we said it clearly, is we do generate a lot of cash, and we think we've been pretty disciplined about doing good M&A and returning that to shareholders. So we don't see it as an either/or.

What we've done thus far, and I suppose to answer your question, David, is we've said we will open up a buyback for a period of time, and then we've closed that buyback. Right now, we're in a slight net debt position, and we kind of feel maybe just getting that down a little bit might be the best use of cash for the short term. I think that probably gets reviewed going into next year as to what we want to do in terms of what sort of cash balances we want to take, how much debt we want, where the share price is, what shareholders are asking for, what M&A targets are.

But we will kind of keep coming back to this balance of we know we need to do M&A because there's really good opportunities to do accretive M&A in Europe. And we hear shareholders loud and clear that they want cash returned, and we hope we can get the balance right in doing that.

And we have a structured approach with a driven rate of return, looking at share buybacks, looking at return hurdles for M&A, which is inherently more risky than organic. So we have hurdles, et cetera, internally. And clearly, we take the Board through that and through their decisions, and that's how we've done the share buybacks in the past, and it's a balanced approach going forward.

There are no further questions online.

Okay. Do we have any more questions in the room? Well, with that, thank you once again for braving the strike and coming over here. I really appreciate it. Thank you also for dialing in. We'll see many of you, I think, over the course of the next week as well. So looking forward to that. As you know, if you do have any other questions, you know where I am, you know where Bill is, but thank you very much indeed, and we'll see you in 6 months' time, if not before. Thank you.