A string of acquisitions and rising corporate demand for data helped Daisy Group (DAY), which provides IT and communications to small- and medium-sized companies, increase its adjusted cash profits by 3 per cent to nearly £58m.
That may be surprising, given that Daisy, like other telecoms providers, has struggled to offset falling fixed-line revenues. Its telephony network sales slipped 11 per cent to £142m in the year to 31 March. Its solution has been to diversify - it spent £35m on four acquisitions that added data centres, IT support and other services to its capabilities. Those purchases helped boost sales 18 per cent in both its data and systems divisions, to £85m and £38m respectively. They also helped Daisy widen its gross profit margin by almost 3 percentage points to 39.5 per cent.
The corrolary of this growth was that net debt climbed 40 per cent to £114m, while acquisition and integration costs reduced cash generated from operations. Daisy has renegotiated its borrowing facilities to allow more leverage and flexibility, providing firepower for further acquisitions.
Broker Liberum expects adjusted pre-tax profits of £45.8m in 2015, giving EPS of 13.6p, up slightly from £44.9m and 13.5p last year.
| DAISY GROUP (DAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 156p | MARKET VALUE: | £417m | |
| TOUCH: | 156-163p | 12-MONTH HIGH: | 207p | LOW: 127p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 43p* | NET DEBT: | 99% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010** | 134 | -11.2 | -8.9 | nil |
| 2011 | 266 | -19.7 | -4.7 | nil |
| 2012 | 349 | -18.8 | -3.5 | nil |
| 2013 | 351 | -23.5 | -6.4 | 4.0 |
| 2014 | 353 | -24.4 | -6.1 | 4.6 |
| % change | +0 | +4 | - | +15 |
Ex-div: 24 Sep Payment: 17 Oct *Includes intangible assets of £262m, or 98p a share **15-month period ended 31 Mar 2010 | ||||
