Daisy Group - On The Money? - 18/10/10
Posted by Kevin Box on Mon, Oct 18, 2010 @ 09:42 AM
Paul Hill writes a share tipping column in Money Week where he
chooses each week a Gamble of The Week. This week it was Daisy Group. Daisy group provides business phone systems.
Daisy Group says in its press releases (taking out their hyperbolic adjectives)
Daisy Group has a buy and build strategy. Its platform supports the provision of its integrated voice and data services:
- its retail channel services more than 70,000 customers in the SME business market
- its wholesale channel services 850 active resellers providing a unified product set,
managed billing services, and white label maintenance and engineering
- its distribution channel is responsible for 250 active dealers and over 65,000
connections
Its range of products and services include access, hosting, voice (phone systems), managed services and mobile telephony.
It has according to house broker Liberium 70,000 customers who give it a turnover of £265m with a £40m EBITDA to March 2011. This is quite a stretch from the financials quoted to March 2010 in the annual report as follows
- Revenue for the 15 month period of £134.4m
- Adjusted EBITDA of £11.0m
- Positive underlying operating cash flow of £8.2m
The loss of £17.5m doesn’t seem to get much of a mention and the number of customers is going to have to improve as well to meet the headline figures.
If we assume that the brokers figures are correct for a second then the current market capitalisation of £251m means that every customer it has a value to the business of about £3,500. This is a great figure.
The figures for its wholesale and distribution channels indicate that they are paying commission to over 1,000 dealers and resellers who in turn “own” their customers. The figures for channels and customers are not clear so it is difficult to see what is where. BT also claim to support around 1,000 dealers and resellers.
Daisy Group is clearly a company on a mission to dominate the business telephone market with a well defined plan and proposition. It will be interesting to see if their buy and build strategy based on city money leads to the domination they hope for.
Written by David Hill, Chairman, Cloud Net