Daisy Group operating losses widen in mixed first half

Business comms and network provider Daisy Group has seen its revenues slide and operating losses widen, but insists its underlying performance remains strong

Business communications and networking provider Daisy Group has seen its revenues slip and its year-on-year operating losses widen at the end of a mixed first half for the expansive firm.

In a statement of its results released to the market on 3 December, Daisy revealed its sales fell by just over £4m compared to this time last year, down to £173.9m, while operating losses widened by £1.4m to £11.9m.

Daisy said that its slumping sales came mostly thanks to a continuing – and expected – decline in fixed-line network services and an agreed change in contractual terms with a key mobile partner.

However, it went on, changes in the mix of business and a sharp eye on costs meant that its adjusted EBITDA was up by 2% to £27.8 million.

The group booked substantial gains in its midmarket customer base in the first half of the financial year, in particular with certain public sector and large corporate clients, and this progress meant it saw more investment in both capital expenditure and working capital.

Daisy bosses pointed to a number of first half highlights suggesting that the news was not all bad, with its Retail business bagging a number of long-term managed services wins; a healthy increase in cross-selling between its divisions; a declining reliance on fixed line call revenues; and the exceptional performance of the former 2e2 datacentre business, Daisy Data Centre Solutions Limited, which as previously reported by MicroScope, has succeeded in arresting the flight of a number of spooked 2e2 customers.

By division, Daisy Retail made sales of £117.2m, while Wholesale came in at £22.7m and Distribution, £23m, with both Retail and Distribution seeing sales decline, although a number of assets have been transferred across to its other units in order to “better reflect how the business is currently being managed.”

Daisy Wholesale’s healthy growth of £2.8m year-on-year came following the introduction of new mobile products to its reseller customers, but at Daisy Distribution, a slight decline of approximately £100,000 came in spite of a modest contribution from the acquisition of MoCo.

CEO Matthew Riley spoke of a strong pipeline heading into the second half of Daisy’s fiscal year, and noted the firm’s more credible scale in partner services following its acquisition of MSP Indecs.

Customarily, Riley also had a little something for Daisy acquisition watchers, saying the market was still highly fragmented and open to more M&A activity.

“We are focused on driving organic growth whilst investigating strategic acquisitions that provide clear value for our shareholders,” he said.

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