7/6/2011 12:44:00 PM
Daisy takes foot off acquisition pedal
Daisy Group is taking its foot off the acquisition pedal after the company’s preliminary results to 31 March 2011 revealed that its revenues virtually doubled to £266.3m and EBITDA increased by 270% from £11m to £40.7m in the same period.
The Group said progress for the year had been ‘impressive’ with operating losses reduced from £21m to £15.8m. It put the strong financial performance down to its strategy of ‘consolidating the fragmented SME and mid-market communications sector.’
Daisy’s decision to slow its acquisition drive marks a change of strategy that sees the company move to consolidate its rapid growth.
Daisy Group’s executive chairman Peter Dubens said: ‘While strategic acquisition opportunities will always be considered by the Group, we do not expect the volume of acquisitions to continue at the rate achieved to date.
‘Increasing the number of products and services existing customers take from Daisy will become an increasingly important part of the Group’s strategy to deliver long-term growth.’
However, the company still has a substantial war chest for acquisitions should it spy another likely target, with unused banking facilities of £21.5m and funds of around £27m.
Daisy Group said it expects to trade towards the upper end of the current market expectations for profit in the financial year ahead and also anticipates further improvement in cash generation.
Announcing the preliminary results, Dubens also revealed that Anthony Riley is stepping down as CFO to be replaced by Steve Smith, Daisy Group’s former corporate development director. Riley has left the firm ‘to pursue other interests’.
Analysts said the results showed a strong performance that justified Daisy Group’s aggressive acquisition strategy. A briefing note from IS Research said: ‘The market has belatedly woken up to Daisy’s progress, with the shares up 23% this month to 120p having trod water at about 100p for the last year while its peers have outperformed it.
'The second half performance, with the substantial improvement in margins and cash flow, should remove many of the doubts about Daisy’s ability to manage rapid growth and integrate multiple acquisitions. We will review our forecasts and valuation, but with Daisy trading on a prospective PE of just 9.3x, the shares have plenty of upside potential.’