'More headroom' for M&A as Daisy sales stall and losses widen

Comms firm posts flat revenue and increased operating loss but claims it is beating a path to more consolidation

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Daisy Group claims changes to its banking facilities will give it "more headroom" to pursue further acquisitions after a year in which revenue stalled and operational losses widened.

For the 12 months to 31 March, sales at the London-listed comms outfit rose a fraction of a percent to £352.7m. Operating losses increased 6.5 per cent to £17.9m, with loss per share standing at 6.06p. Cash generation from operations in FY14 was £44.2m, some £3.4m lower than the prior year, while free cashflow was down by a similar amount to £34.9m.

Net debt rose £32.8m over the course of the year to £114m. The vast majority of this was owed to Daisy's six banking backers, and the company reached year-end with £40m in unutilised bank facilities. This compares with a total of £80m 12 months previously.

But chief executive Matthew Riley claimed that there is still plenty of scope for consolidation, after a year in which the firm closed four acquisitions: Moco; Indecs; ABSE; and 2e2's datacentre business. Since the start of the new year Daisy has also tied up a deal for Cisco and ShoreTel partner Layer 3.

"We have made good progress during the year from both an organic and inorganic perspective. The acquisitions we have made are performing ahead of expectations and help to provide a better balanced product portfolio mix, which positions us well for the continued convergence of IT and communications," said Riley.

"Looking forward, we expect to continue with our inorganic strategy alongside our key organic objective of cross-selling. Changes to our bank facilities have increased the headroom available for further accretive acquisitions and notwithstanding our desire to pursue these acquisitions, the board will consider the return of capital by way of share buybacks to maintain an efficient capital structure."

Stories in the national press several months ago linked global cable company Liberty Group - which owns Virgin Media - to a buyout of Daisy. But informal talks reportedy broke down over price, with Daisy seeking a £100m premium on a share capitalisation that stoof at £500m at the time.