Daisy doubles turnover but warns deal flow will slow
ACQUISITIVE business telecoms firm Daisy Group hailed a year of “growth and further transformation” in the year to March 31, 2010 as revenues virtually doubled to £266.3m (£134.4m).
However, the firm continued to rack up losses – matching last year’s pre-tax loss figure of £19.7m.
Chief executive officer Matthew Riley argued that the company had achieved growth in adjusted earnings before interest, tax, depreciation and amortisation to £40.6m, up from £11m in the previous year. He also said that the company’s underlying earnings per share had grown and that its free cash flow had remained strong despite some heavy investment in the business.
He also said that the rate of acquisitions undertaken but the company would slow compared with historic levels of activity, but that the businesses it has bought to date have performed well, adding that the company’s current trading was at the higher end of current market expectations.
“The acquisitions we have completed are already yielding significant strategic benefits, material financial synergies and have enhanced the breadth of our product offering for customers.
“Against an uncertain macro economic backdrop, we have delivered a strong set of results, with particularly robust levels of free cash flow. At the same time, our acquisitions have strengthened our product portfolio and positioned us well for future growth.”
The acquisition spree saw it take on eight new strategic acquisitions during the year, including the purchase of Bury-based Outsourcery’s mobile business, Wigan-headquartered Spiritel and the Fone Logistics business, among others. It also disposed of a WiMax business inherited as part of the reverse takeover which gave the group a stockmarket listing last year.
The purchases cost the firm £99.9m – £81.8m in cash and a further £8.1m in acquiring customer databases – and its net debt shot up to £66.2m (2010: £8.4m) as a result. However, it generated £29.7m in cash, compared with a cash shortfall of £1.6m in the prior year. It also increased its banking facility from a £75m deal agreed last June to £115m in February when Barclays joined its banking syndicate.
Riley said: “We have continued to deliver on our strategy to consolidate the fragmented SME and mid-market communications sector.
“Our disciplined and diligent approach to integration has been maintained and all acquisitions completed before February 2011 were fully integrated before the financial year end.
“We have in place the platform, the systems, the people and the product set to allow us to continue to grow both organically and via strategic acquisitions where the opportunity arises.”
The firm also announced this morning that former Ernst & Young partner Steve Smith has been promoted to the position of Chief Financial Officer, replacing Anthony Riley who will leave the firm by the end of August.
Riley said: “Since Steve has been with the group he has been instrumental in its development, and we believe that his experience and knowledge will be a key asset to the Board throughout Daisy Group’s next phase of growth.
“I would like to thank Anthony for all his work for the shareholders and board as chief financial officer of Daisy Group. During his time in office he has successfully helped guide the business through a period of significant growth, primarily through the completion of a series of acquisitions, and the successful completion of a new £75m banking facility, which was later increased to £115m. I wish him all the success in his future ventures.”
