Daisy Group on Tuesday unveiled changes to its banking facilities as part of its renewed drive towards acquisitions, which came as the group reported an in-line set of annual results.
Describing its performance as "robust", the AIM-listed telecoms provider reported pre-tax losses of £24.4m for the year ended March 31st, compared to £23.5m a year earlier. That came despite a slight increase in revenue, from £351.5m to £352.7m, which was offset by higher operating costs.
The group is now targeting further cash generative acquisitions, following the success of Daisy Data Centre Solutions, MoCo and Indecs last year.
Matthew Riley, Chief Executive Officer of Daisy Group, said: "We have made good progress during the year from both an organic and inorganic perspective. The acquisitions we have made are performing ahead of expectations and help to provide a better balanced product portfolio mix, which positions us well for the continued convergence of IT and communications [...]
"Looking forward, we expect to continue with our inorganic strategy alongside our key organic objective of cross-selling. Changes to our bank facilities have increased the headroom available for further accretive acquisitions and notwithstanding our desire to pursue these acquisitions, the board will consider the return of capital by way of share buybacks to maintain an efficient capital structure.
"We view the year ahead with optimism and, with confidence in the cash-generating capability of our business, we remain committed to growing the dividend by 15% in the current year."
The final dividend was proposed at 3.1p a share, which takes the full dividend to 4.6p, up from 4p a year earlier.
Changes to debt facilities
Daisy's banking syndicate has agreed to remove the term loan amortisation on its facilities, which it explained will give it the further capacity for acquisitions and the increase in permitted leverage, in some circumstances, to 3.0 times annualised adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).
Net debt at the period end totalled £114m, up from £81.2m a year earlier.
Broker finnCap said this was "substantially above the comfort zone for the equity markets, although clearly not the six supportive banks".
It continued: "However, in the absence of prospective unmodelled acquisitions, the operating fundamentals are strong, the yield to March 2015 exceeds 3%, and the recent share price weakness offers a buying opportunity considering our unchanged target price of 185p."
Industrial rental group Ashtead reaped the benefits of heavy investment in its fleet as profits flew higher than record levels in the year to April 30th, helping earnings beat expectations comfortably.
The UK-headquartered company, whose larger US business is seen as a play on the slow-burning US non-residential construction recovery, lifted underlying revenues 24% to £1.48bn and earnings before interest, tax, depreciation and amortisation (EBITDA) 34% to £685.1m.
Chief Executive Geoff Drabble said the 50% jump in pre-tax profits to a record level of £362.1m was particularly pleasing as it was achieved in parallel with management's commitment to increasing return on investment (ROI), which increased from 16% to 19% for the group, with debt leverage also maintained a less than two times EBITDA.
Underlying earnings per share rose 51% to 46.6p, ahead of consensus expectations of 45.5p.
While the US construction recovery is taking longer than expected, optimism is increasing in the industry and data has shown construction activity up 4% year-on-year in the first quarter.
Drabble and his team have acted in anticipation, investing £741m in the rental fleet and a further £103m on acquisitions during the year and anticipate growing the fleet in the coming year in the "low to mid teens percent" range and will continue to open greenfield sites and make bolt-on purchases that expand market share and profitability.
He added that there was current planning for around 50 new locations in the new financial year.
"With both divisions performing well and beginning to enjoy recovering markets, we are well positioned for further growth and the board looks forward to the medium term with continued confidence," he said, mentioning the strong performance continuing in May. The full year dividend increased to 11.5p, from 7.5p.
Both the US's Sunbelt and the UK's A-Plant businesses performed well during the year.
At Sunbelt, rental revenue grew 23%, driven by a 17% increase in fleet on rent and 4% improvement in yield.
Sunbelt continued to take market share with the rental market as a whole growing 6% in 2013, as estimated by IHS Global Insight.
A-Plant, with the acquisition of Eve Trakway, delivered rental revenue up 33% on the prior year reflecting 21% more fleet on rent and a 9% improvement in yield.