Daisy seals latest buy-out despite £16m FY10 loss

Matthew Riley: MurphX strengthens our position in the data sales arena and is another step towards us consolidating this fragmented marketplace

Despite suffering an eight-figure loss in its recently completed fiscal year, Daisy Group has continued its shopping spree with the acquisition of ISP MurphX.

For the 15 months to the end of March, the Lancastrian comms firm posted sales of £134.4m but endured a net loss of £16.2m. During the period Daisy closed seven acquisitions and recently secured £75m in bank funding to continue its consolidation quest. Last week it hived off its Wimax business to UK Broadband for £12.5m in cash.

The company's latest buy-out was sealed today, with Hampshire-based MurphX joining the Daisy stable in a £4.8m cash deal. Further money will be payable if EBITDA growth targets are met over the next three years. The ISP's management team will remain in place to help smooth the integration process.

For the five months to the end of April, MurphX banked EBITDA of £500,000 on sales of £4.8m. Daisy chief executive Matthew Riley said the acquisition would fortify his company's unified communications offering in the SME space.

"This is a highly complementary business that strengthens our position in the data sales arena and is another step towards us consolidating this fragmented marketplace," he added.

In the Chairman's Statement accompanying the results, executive chairman Peter Dubens wrote: "The last 15 months has seen a complete transformation of the business from a niche wireless broadband business to a leading UK provider of unified communications to the SME and mid-market sector."

He revealed that, as of 31 March, Daisy had cash and equivalents equalling £20m, leaving the company with net debt of £8.3m. The comms specialist will " continue [to take a] prudent approach to debt levels", said Dubens, and will strive to maintain a net debt to adjusted EBITDA ratio of 2.5.

Daisy's current portfolio covers four product areas: network services, data products, maintenance and mobile kit. Dubens said the company's ultimate goal is to offer all four "from a single platform, with a single customer bill".

"Daisy has made very solid progress towards achieving this goal," he added.

In his closing summary, Dubens said the cost savings provided by the integration of acquisitions will be evident in Daisy's 2011 fiscal results. He said the firm was well on the way to becoming the dominant force in the UK's SME telecoms market.

"The market environment remains difficult for smaller, sub-scale operators and this will provide further acquisition opportunities during the current financial year," he said. "The recently completed bank funding provides Daisy with the capability to pursue those opportunities."