England’s oldest toiletries company fails 5 Strikes. Instead Richard’s attention drifts towards the cloud. Gamma Communications has one strike, which is no impediment to investment. The company falls at the second hurdle though.
Only one of the companies that has published an annual report since I last updated you has passed my minimum quality filter. That’s partly because we are past peak annual reporting season and partly because I am on holiday.
I wrote this article in advance, and only a week after my previous update. We’ll catch up on three weeks of annual reports when I return (yippee!).
5 Strikes
The one pass is Potter & Moore, a name I did not recognise even though it passed the filter in 2024 and I awarded it four strikes.
Potter & Moore changed its name from Creightons last April. Creightons acquired the Potter & Moore business in 2003. The name change means the company can trace its history and name back to two eighteenth century lavender gardeners who founded the first English toiletries company.
| Name | TIDM | Prev AR | Strikes | # Strikes |
|---|---|---|---|---|
| PAM | Potter & Moore | 22/7/26 | – CROCI – Growth – ROCE – Shares | 4 |
| Click here for our 5 Strikes explainer | 24/07/2026 | |||
P&M won’t trouble us this year because it still has four strikes to its name. I only consider shares with less than three strikes.
The next one of those on my list of All the 0’s, 1’s and 2’s (see below) is Gamma Communications.
Gamma has been the subject of takeover interest from two consortia. One, led by private equity firm Oakley Capital, has pulled out of discussions, and the other has fractured. One of its members has pulled out leaving the other, Epiris, talking to Gamma on its own.
Last week, the deadline by which Epiris has to make up its mind was extended for the third time by the Takeover panel. Decision day is now 5 September.
Epiris is a private equity company. It invests in complex situations and transforms companies that have lost their way. That description is the antithesis of the perfect 5 Strikes share: A straightforward business that can be relied on to continue doing what it does well.
Gamma and Epiris have been in takeover talks since April. I must admit, if private equity firms with access to management and industry expertise are struggling to make the case for investment, my chances are low.
Watch me crash and burn:
Gamma Communications [? Acquisitions – Holdings]
I only gave Gamma one strike, for directors’ shareholdings. Chief executive Andrew Belshaw owns 96,700 shares, which are worth just over £900,000, less than the £1.4 million he earned in 2024. Although he was appointed quite recently, in 2022, he was promoted from chief financial officer, a position he had held since Gamma floated in 2014.
The other directors have tiny stakes, and the modest size of the chief executive’s holding doesn’t mean the business is a bad one. I would just prefer it if management had more skin in the game.
It was while I was examining Gamma’s acquisitions that doubt started to creep into my mind. I had questions about them, even though the minimum quality filter rules out companies that have spent beyond their means (technically they have spent more on acquisitions than they have earned in free cash flow over the last eight years).
In two recent years, Gamma has spent more than it has earned. In its last full year (to December 2025) it spent a lot more (nearly 2.5 times free cash flow, highlighted in the table):
Source: Sharescope. Custom 5 Strikes table is available from Financials > Custom > Setting > Add from Library > 5 Strikes – Richard Beddard.
Introducing a large business into another changes it. This can disrupt the acquirer and makes its prior financial history less useful as a guide to what might happen in the future.
In 2025, Gamma splurged to acquire Starface, a German cloud based telephony provider. The acquisition made Gamma, which was already operating in Germany, one of the leading cloud telecom providers for SME’s (Small and Medium Enterprises) there.
The German cloud based telephony market is Europe’s largest, Gamma says, but it is less developed than the UK’s because cloud applications perform less well over old-school copper wire than much faster fibre, and more German businesses rely on copper.
In 2020, the other year Gamma spent more than it earned on acquisitions, the company acquired four businesses. All of them had European operations.
Starface joined Gamma on 20 February 2025, so it will contribute nearly two months more revenue in the year to 2026 than it did in the year of acquisition. Even so, Gamma is still mostly a British provider of communications products and services.
Gamma allows businesses to call each other using voice, video and text. Some of the systems Gamma provides are home grown, like Horizon, a cloud-based phone system, but it also hosts and manages third party communication platforms like Cisco Webex.
By bundling services over its own network, it says it offers customers peace of mind. The network was available 99.999% of the time in 2026.
Primarily Gamma earns revenue from a combination of subscriptions, line rentals, and voice and data traffic.
It sells directly to large businesses, including many famous names. It reaches smaller businesses through over 1,500 channel partners (resellers).
If that doesn’t sound complicated to you, I fear I have left something out, in fact I am sure I have over-simplified so I can make sense of it. The industry jargon in Gamma’s annual report is intimidating.
The telecoms industry is at the tail end of a big shift in the UK, where the old copper telephone network is being switched off in January. Gamma has grown as customers have migrated to cloud platforms running on fibre.
Now most companies have switched, Gamma believes growth in the UK will increasingly come from pinching other providers’ customers and selling existing customers new products and services, rather than customers migrating to fibre solutions from legacy copper.
The prospect of muted growth in the UK, probably explains Gamma is seeking a second wind in Germany.
Then there is Artificial Intelligence (AI). Gamma identifies AI as an emerging risk. It says the level of research and development required to better its products or commoditise the market “would be substantial and likely to be prohibitive”, but I wonder how confident we can be of that.
Gamma is far from being a bust. But maturing markets, technological disruption, and a big overseas takeover have given me too much to think about. I feel there must be easier problems to solve.
Perhaps it has given its private equity suitors headaches too.
All the 0’s, 1’s and 2’s
This is the list of all the shares that have achieved less than three strikes so far this year, ordered by strike and then annual report date. The companies with no strikes that reported longest ago are at the top of the list. By and large, I am working through the list from top to bottom.
No new shares have joined the list, but I have linked to new articles on Autotrader, Cranswick, Tatton Asset Management and Bloomsbury Publishing.
12 shares have achieved no strikes, 20 shares have one strike, and 39 strikes have 2. The total number of shares with less than three strikes so far this year is 71.
| Name | TIDM | Prev AR | Strikes | # Strikes | Link |
|---|---|---|---|---|---|
| CER | Cerillion | 12/1/26 | 0 | > | |
| HWDN | Howden Joinery | 25/2/26 | ? Holdings | 0 | > |
| PRV | Porvair | 11/3/26 | ? Holdings | 0 | > |
| NICL | Nichols | 23/3/26 | 0 | > | |
| MGNS | Morgan Sindall | 24/3/26 | 0 | > | |
| QTX | Quartix | 25/3/26 | ? ROCE | 0 | > |
| CCC | Computacenter | 8/4/26 | 0 | > | |
| FOUR | 4imprint | 14/4/26 | ? Holdings | 0 | > |
| KEYS | Keystone Law | 13/5/26 | 0 | > | |
| AUTO | Autotrader | 8/6/26 | 0 | > | |
| TAM | Tatton | 16/6/26 | 0 | > | |
| CWK | Cranswick | 30/6/26 | ? Growth | 0 | > |
| BOWL | Hollywood Bowl | 5/1/26 | – Debt | 1 | > |
| MEGP | Me Group | 23/3/26 | – Growth ? ROCE | 1 | > |
| ALFA | Alfa Financial Software | 24/3/26 | – Growth | 1 | > |
| GAMA | Gamma Communications | 24/3/26 | ? Acquisitions – Holdings | 1 | |
| INCH | Inchcape | 24/3/26 | – Growth | 1 | |
| ROR | Rotork | 27/3/26 | – Holdings ? Growth | 1 | |
| CKN | Clarkson | 30/3/26 | ? Growth – ROCE | 1 | |
| RMV | Rightmove | 30/3/26 | – Holdings | 1 | |
| IMI | IMI | 31/3/26 | ? Holdings – Debt ? Growth | 1 | |
| FDM | FDM | 10/4/26 | – Growth | 1 | > |
| HILS | Hill & Smith | 10/4/26 | – Holdings ? Acquisitions | 1 | |
| NXT | Next | 16/4/26 | – Debt | 1 | |
| BAG | Barr (AG) | 21/4/26 | ? Acquisitions ? Growth | 1 | |
| SAG | Science | 21/4/26 | ? Growth | 1 | |
| ELCO | Eleco | 9/5/26 | – Holdings ? Growth | 1 | |
| LSC | London Security | 15/5/26 | – Holdings | 1 | |
| W7L | Warpaint London | 22/5/26 | – Shares ? Growth | 1 | |
| PETS | Pets at Home | 9/6/26 | – Holdings ? Growth | 1 | |
| BMY | Bloomsbury Publishing | 19/6/26 | – Growth | 1 | > |
| HLMA | Halma | 24/6/26 | ? Holdings ? Acquisitions | 1 | |
| XPS | XPS Pensions | 13/7/26 | ? Holdings ? Debt | 1 | |
| RWS | RWS | 8/1/26 | ? Acquisitions – Growth – ROCE | 2 | > |
| IHP | IntegraFin | 9/1/26 | – CROCI | 2 | |
| RFX | Ramsdens | 15/1/26 | – CROCI ? Growth ? ROCE | 2 | > |
| REL | RELX | 19/2/26 | ? Holdings – Debt ? Growth | 2 | > |
| IHG | InterContinental Hotels | 26/2/26 | ? Holdings – Debt | 2 | |
| DATA | GlobalData | 2/3/26 | ? Acquisitions – Debt ? ROCE | 2 | > |
| GSK | GSK | 6/3/26 | ? Holdings – Debt ? Growth | 2 | |
| MONY | Mony | 9/3/26 | – Holdings ? Growth | 2 | |
| STEM | SThree | 9/3/26 | – Holdings – Growth | 2 | |
| CTEC | ConvaTec | 10/3/26 | ? holdings – Debt ? Growth ? ROCE | 2 | > |
| BNZL | Bunzl | 17/3/26 | ? Holdings – Debt – Growth | 2 | > |
| HIK | Hikma Pharmaceuticals | 18/3/26 | ? Acquisitions – Debt | 2 | |
| YU. | Yu | 18/3/26 | – CROCI ? ROCE | 2 | |
| JSG | Johnson Service | 19/3/26 | – Holdings – Debt | 2 | |
| ITRK | Intertek | 20/3/26 | ? Holdings – Debt ? Growth | 2 | |
| BA. | BAE Systems | 24/3/26 | ? Holdings ? Acquisitions – Debt ? Growth | 2 | > |
| DOM | Domino’s Pizza | 24/3/26 | – Holdings – Debt ? Growth | 2 | |
| LUCE | Luceco | 25/3/26 | ? Acquisitions – Debt ? Growth ? ROCE | 2 | |
| BBY | Balfour Beatty | 2/4/26 | – Holdings ? CROCI ? Growth – ROCE | 2 | |
| APTD | Aptitude Software | 8/4/26 | – Holdings ? Acquisitions – Growth | 2 | |
| IGG | IG Group | 8/4/26 | – Holdings – Growth | 2 | |
| SPX | Spirax | 8/4/26 | – Holdings – Debt ? Growth | 2 | |
| SVS | Savills | 9/4/26 | – Holdings – CROCI ? Growth ? ROCE | 2 | |
| MACF | Macfarlane | 10/4/26 | – Holdings – Debt ? Growth | 2 | > |
| PAGE | Page | 13/4/26 | – Holdings? CROCI – Debt – Growth – ROCE | 2 | |
| CAML | Central Asia Metals | 15/4/26 | – Growth ? ROCE | 2 | |
| FEVR | Fevertree Drinks | 20/4/26 | – CROCI – Growth | 2 | |
| JDG | Judges Scientific | 22/4/26 | ? Acquisitions – Debt – Growth | 2 | > |
| WINK | M Winkworth | 24/4/26 | – Holdings – Growth | 2 | |
| EKF | EKF Diagnostics | 27/4/26 | ? CROCI – Growth ? ROCE | 2 | |
| IOF | Iofina | 1/5/26 | ? CROCI – ROCE ? Shares | 2 | |
| AEO | Aeorema Communications | 18/5/26 | – CROCI ? Growth ? ROCE | 2 | |
| ASY | Andrews Sykes | 18/5/26 | – Holdings – Growth | 2 | |
| CARD | Card Factory | 21/5/26 | – Holdings – Debt | 2 | |
| ANP | Anpario | 1/6/26 | ? CROCI – Growth ? ROCE | 2 | > |
| QQ. | QinetiQ | 10/6/26 | ? Holdings ? Acquisitions ? Growth – ROCE | 2 | |
| OXIG | Oxford Instruments | 23/6/26 | – Holdings – Growth | 2 | > |
| REC | Record | 23/6/26 | – Holdings – Growth | 2 | |
| POLR | Polar Capital | 3/7/26 | ? Holdings – Growth | 2 | |
| Click here for our 5 Strikes explainer | 24/07/2026 | ||||
Richard Beddard
Contact Richard Beddard by email: richard@beddard.net, web: beddard.net
This article is for educational purposes only. It is not a recommendation to buy or sell shares or other investments. Do your own research before buying or selling any investment or seek professional financial advice.
