Daisy Group profits rise 3.9% but revenues continue to fall

Daisy Group profits rise 3.9% but revenues continue to fall

Unified comms provider Daisy Group has seen a 3.9% rise in gross profits to £67.3m but a revenue decline of 2.4%  to £173.9m as mobile termination rates and falling voice tariffs and usage continue to bite.

Reporting its interim results to September this year the company revealed a 1.8% increase in EBITDA to £27.8m and an overall operating loss of £11.9m, up 13%, including £33.5m of goodwill amortisation and £4.0m of exceptional costs.

Daisy said revenue from its retail division had reduced from £124.1m in the comparative period to £117.2 million, largely as a result of the reduction in fixed line call business and the agreed change in commercial arrangements with a key mobile partner. 

Revenue in the wholesale business fared better, rising to £33.7 million from £30.9 million following the introduction of mobile products to the reseller community in the prior period and the effect of the acquisition of The Net Crowd Limited in February 2013. 

Meanwhile Daisy Distribution saw revenues remain flat at £23.0m compared to £23.1m in the same period in 2012. These revenues were also boosted by the acquistion of MoCo, which added £1.5m to the pot.

In contrast Daisy’s data business revenue rose 13% to £38m, helped by Daisy’s acquisition of O2’s 2e2 data centre in May this year.

The company said the former 2e2, rebadged Daisy Data Centre Solutions, is performing ‘ahead of expectations’ with existing customers now happy with the change of ownership and the division building a ‘strong pipeline of business.’

Daisy also reported improving cross selling rates with the number of products per retail customer increasing to 1.86 from 1.81 and the proportion of retail customers taking three or more products increasing to 25% from 22% on the same period last year.

Daisy Group said it remained ‘cautiously optimistic’ and as a sign of confidence revealed plans to increase its total dividends for the year by 15%.

Matthew Riley, CEO of Daisy (pictured), said the company is pleased with the results, reporting that a number of managed services contract wins in the mid-market had strengthened the company’s position.

‘We have a good pipeline of opportunities going into the second half of the year,’ he added.

He also predicted good growth in Daisy’s services division following the acquisition of Indecs this year which, he said, combined with Daisy’s Servassure and Net Crowd businesses gives the company ‘credible scale’ in the partner services market. ‘We expect good growth from this business in the coming years,’ he added.

However analysts questioned the share price value of the company. In a briefing note Philip Carse, principal analyst at Megabuyte said: ‘Despite the gradual underlying improvements, there seems to be a disconnect with a share price that has doubled in the last year.'

He added: ‘Whilst we are fans of the B2B telecom reseller model, one can’t help feeling that the Telecoms & Networks bull run has run a bit too far given a still very tough market revenue outlook.’

Written by Mobile Today
Mobile Today


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