Gulf starts at Sheikh Adi-2 25/05/2012
Iraq-focused oil explorer Gulf Keystone Petroleum (GKP) has begun drilling at the Sheikh Adi-2 well in the Sheikh Adi block.
Daisy still on acquisition trail
Fast growing communications group Daisy (DAY) has reported figures in line with expectations, as it continues its plans to expand by acquisition.
Over the last eighteen months it has completed 15 deals, however Daisy argues that there are around 1,000 competitors so the market remains hugely fragmented. It seeks acquisitions of profitable companies, which when acquired are re-branded to Daisy, with the opportunity to deliver cost savings to clients and better buying as it seeks to maximise economies of scale.
In the year to March it achieved sales of £266.3 million and adjusted EBITDA of £40.7 million. However, the AIM counter reported a bottom line operating loss of £15.8 million due to the £42.4 million write-down of goodwill, as well as further exceptional costs of £10.4 million relating to redundancy and restructuring charges. During the year it completed eight acquisitions, and has generated £19 million of synergy savings.
In an interview with Growth Company Investor chief executive Matthew Riley said 'with 70,000 business customers there is huge scope to cross-sell our services', he argued that there was 'no reason to stop' acquiring - particulary given £25 million of headroom in its £115 million borrowing facility and the ability to offer shares as currency for deals.
British Telecom tends to be the largest competitor to Daisy, however it is winning market share due to its wide range of services from broadband to telephony systems. It generated £20.2 million of free cash flow (and this is expected to improve) so in the absense of further acquisiitons, is well placed to pay down its net debt position of £66.2 million.
Prior to results today broker Investec was predicting 2012 sales of £361.8 million, pre-tax profits of £45 million and EPS of 13.1p. In its outlook Daisy reports that profits should be towards the top end of expectations, so its not surprising the shares have edged up to a new high of 125p today. Though trading is good, there is the risk of customer attrition and potential integration risk. Hold.
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