We continue our series on data centre providers with a look at UK-based Daisy Group. One of the UKs largest suppliers of unified telecoms services to businesses, Daisy Group provides a range of services, including connectivity and maintenance, as well as cloud and hosting. Over the last decade, it has grown both organically and through acquisitions. It focuses only on the business market, and in particular, on small and medium-sized enterprises.
Acquiring Phoenix from the ashes
Daisys most recent takeover deal is of Phoenix, the managed services and cloud computing company. The deal agreed at the end of May also involves private equity firm Toscafund, and valued Phoenix at £135 million, with Daisy Group paying Phoenix shareholders £1.60 per share. City speculation had been that the cost might be much higher, with figures of £180 million suggested, but this price still represented a 24% premium on Phoenixs share price.
Phoenix has previously struggled in the cloud market, so its chief executive welcomed the offer, saying that it showed how far the company had come. For Daisy Group, the acquisition added to its portfolio. Its founder and executive chairman, Matthew Riley, hopes that the growth will mean that Daisy can become the first genuinely unified communications provider in the UK mid-market.
But what exactly is the acquisition building upon?
A potted history
Daisy was founded in 2001 in a deliberate attempt to disrupt the UK telecoms market. Throughout its life, it has grown both organically and by acquisition, and was floated on the UKs Alternative Investment Market in 2009. In 2015, Matthew Riley announced financial backing to buy back the company.
Daisy prides itself on its unified approach to communications. Its products and services include business broadband and telecoms, including mobile and VoIP, and Ethernet solutions. It also offers cloud computing, and a range of hosting services such as managed hosting, infrastructure as a service (IaaS) and colocation.
Daisys financial position looks reasonable. Last years annual report highlighted revenue growth of 0.3% to £352.7 million. The operating loss had increased from £16.8 million to £17.9 million as a result of acquisition and integration-related costs, but this was after amortisation of more than £60 million. Cash generation has decreased, due to an investment in working capital required to support Daisys increasing numbers of customers.
Perhaps more importantly, the company has focused on broadening its portfolio, and reducing reliance on voice business. Acquisitions have added considerably to the managed services and hosting side. The revenue shares of each area of business look well-balanced, with no overall reliance on any particular area. This should help to reduce the impact of any business or regulatory changes affecting particular sectors.
Daisys colocation business
Daisy currently has three data centres offering colocation, in Reading, London Docklands, and Manchester, with a fourth planned in North London. Service level agreements provide for 99.97% network and power availability in all locations, and beyond that, customers have the flexibility to choose their own service.
Customers can choose from quarter, half and full racks, together with a range of power density options. Redundancy is built in as standard, and with a dedicated Ethernet connection, there is a choice from 2Mbps up to 1Gbps. Daisys staff can also carry out certain activities on behalf of customers, in a remote hands option, which can include restarting servers, power cycling of equipment and observing, and describing and reporting on display information and indicator lights. They can even escort visitors to and from customers racks.
As you would hope, security is also tight at all the data centres. Customers can visit any time, but must give notice in advance, and bring suitable ID. Any visitors are accompanied by an engineer at all times, and visits are tracked on CCTV. The new North London Centre will have fingerprint recognition entry systems and similar state-of-the-art security. Information security is taken as seriously as physical security, with firewalls, intrusion detection and protection against Distributed Denial of Service. Support is available 24 hours a day, seven days a week and 365 days a year.
Balancing risk and reward
With its focus on providing unified communications services to the UKs midmarket and SME sector, Daisy Group has established a clear niche for itself. Its strategy of combining organic and acquisitive growth give it flexibility to respond to market circumstances. Its balanced portfolio, stemming from its unified approach, protects it against sector-related problems. With a keen eye on developments in the sector, Daisy is only likely to continue to grow.