Daisy Group

HOLD

30/11/2011 Ben Jaglom

Communications concern Daisy Group (DAY) reported a paring of losses following an acquisitive spree.

The AIM 50 constituent declared a loss before tax of £8.9m (2010: £9.8m) on sales of £175.9m (2010: £120m) for the six months to September. Net debt stood at £79.7m (2010: debt of £3.8m).

The Lancashire-headquartered venture noted that it had purchased telephone systems specialist Telient for £15.1m, following a year in which it added a number of businesses to its fold. Its networks division saw sales climb by 42% to £73.8m while its data operations rose 19% to £33.5m. Meanwhile mobile grew revenues 29% to £51.2m and systems improved 10% to £17.5m.

Chief executive officer Matthew Riley remarked that the results saw what he described as a 'healthy increase in market share' adding that the focus for Daisy is now on 'Driving further organic growth' while considering acquisitions that 'provide clear value for shareholders'.

Analysts at finnCap are forecasting adjusted pre-tax profits of £52.2m (EPS: 14.5p) on sales of £348m. In 2013 adjusted pre-tax profits of £57m (EPS: 15.9p) on revenues of £354.7m are penciled in.

A company that has put considerable emphasis in the last few years on acquiring a large number of concerns, time will tell to what extent its portfolio of businesses have successfully integrated. Having lost 17.6% since our last comment this June at 125p we retain our hold rating for the time being.