Daisy cuts 300 jobs but plans more deals
Telecoms firm cuts overheads but plans more acquisitions in 2010
Fast-growing telecoms firm Daisy Group has reported that it is to cut 300 jobs and relocate a further 150 as it integrates acquired companies and gears up for more deals in 2010.
Daisy will cut 300 jobs from its current headcount of 1,150 and relocate a further 150 positions from the south east to its Nelson, Lancashire base as it closes offices of acquired companies and moves customer accounts onto its own systems.
“As part of our growth plan, earlier this year we acquired four businesses, two of which were in administration. Since that time we have worked with each of these businesses to remove duplication of roles, processes and systems and to consolidate our operations. As always, we will do everything we can to ensure that people who no longer have a job are treated fairly,” Riley told Growing Business.
“Integration is going well and nearly complete on all four deals. This will be completed by the financial year end. We’ve taken 13 separate billing systems and scaled down to two, premises have been rationalised and all our fixed line network service customers will be serviced from the same integrated CRM and billing platforms.”
The company has also decided to divest the wireless businesses it acquired as part of its reverse takeover of Freedom4 this year and reportedly expects to raise £20m from the sale.
“Freedom4 is not core to the Daisy Group and so we are considering our strategic options. No decisions have yet been made,” Riley said.
Its aggressive acquisitions strategy will resume next year after it has completed the integration of the companies it has purchased.
“While the integration of the acquired businesses remains our immediate focus, we are continuing to assess further opportunities to grow market share through acquisition,” Riley said.
He added that the company expects revenues of £225m and EBITDA of £37m at the company’s year end next March.
Last month, Riley told Growing Business that there are still more than 600 voice resellers and 1,000 data resellers in the UK which collectively represent “a massive opportunity” for further acquisitions.
FinnCap analyst Andrew Darley said the market would be concerned about motivation among staff after a significant cut to the workforce.
“Employee demotivation at the loss of 26% of the surviving workforce of previously troubled businesses will be the unfortunate flipside to the obvious strategic imperative to exploit synergies and generate efficiencies,” he said.
Daisy’s shares lost 2.5p to 94p in response to the update, which also showed that the company made a pre-tax loss of £2.1m in the nine months to September 30.
“We’re busy integrating the businesses, which as usual incurs some exceptional charges, which pushes down the profit. Once the integration is done we’ll be on the growth path and are comfortable with the market expectations for the end of this year and the next, when you will start to see a more normal run rate,” Riley said.
© Crimson Business Ltd. 2009