One could almost hear the groans from Laird (LRD) shareholders. The wireless connectivity specialist confessed to a number of mistakes last year, asking investors to bail it out via a heavily discounted four-for-five rights issue.
Chief executive Tony Quinlan said 2016 was a "disappointing year, where challenging conditions in certain key end markets were compounded by discrete, but material, inefficiencies in our own operations". Laird is now paying for its over-optimism on the integration of troubled vehicle connectivity systems provider Novero, as well as failing to quickly adapt to a low oil price environment and the delayed ramp-up of new smartphones.
The fall in profits from these mis-steps plus internal investment and sterling weakness all helped widen the group's net debt to adjusted cash profits ratio to 3.2 times, forcing Laird to shelve its final dividend and initiate a rescue rights issue of 85p per share. The £175m of net proceeds raised from the cash call will be used to reduce gearing to more manageable levels and finance capex and self-help measures.
Broker Investec expects those self-help actions to yield upgrades to consensus as the year progresses. It forecasts 2017 adjusted pre-tax profit of £65.2m (from £51.1m in 2016), giving EPS of 16.4p per share.
| LAIRD (LRD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 168.3p | MARKET VALUE: | £457m | |
| TOUCH: | 168.3-168.5p | 12-MONTH HIGH: | 385p | LOW: 124p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | na | |
| NET ASSET VALUE: | 127p* | NET DEBT: | 98% | |
| Year to Dec 31 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 520 | 45.1 | 12.7 | 10.0 |
| 2013 | 537 | 43.2 | 11.5 | 12.0 |
| 2014 | 565 | 48.1 | 18.8 | 12.5 |
| 2015 | 630 | 15.4 | -3.1 | 13.0 |
| 2016 | 802 | -122.3 | -41.3 | 4.53 |
| % change | +27 | -894 | - | -65 |
Ex-div: na Payment: na *Includes intangible assets of £635m, or 234p a share | ||||
