Ricardo's (RCDO) full-year figures precipitated a double-digit share price rise as investors responded to an 18 per cent increase in like-for-like orders and a 30 per cent rise in underlying earnings. The group continues to expand and diversify operations beyond its historic automotive base, but even when you disregard the effect of acquisitions, organic revenues at £274m were still 7 per cent in advance of the previous full-year.
Nevertheless, Ricardo continues to scale up through suitable bolt-on acquisitions. The group augmented its consultancy services, adding expertise in the rail and water markets through deals to acquire Lloyd's Register Rail and Cascade Consulting. And subsequent to the period-end it brought Motorcycle Engineering Italia within the fold; a business formed from the operating assets and employees of vehicle design house Exnovo.
Investors can be satisfied on the operational front. The expansion of Ricardo's engine-building facility is now complete, effectively doubling capacity and capabilities to deal with increased demand for engine variants. Meanwhile, production of engines for the McLaren 650S, 675LT and P1 supercar continues in line with expectations. The group can't afford to stand still, so investment in research and development continues apace. A total of £9.4m was spent in the period under review (£9.8m in 2015) before government grant income of £1.3m.
The only negative was linked to the performance products segment, where underlying operating profits fell by £1.3m to £6.4m. Performance was affected by lower one-off software licence sales and reduced shipments of high-performance and monorail transmissions in the year, although this was partially offset by increased volumes in respect of the new engine supply contract for McLaren.
Prior to these figures, Berenberg was expecting EPS of 51p for the year to June 2017, rising to 54p the following year.
| RICARDO (RCDO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 890p | MARKET VALUE: | £471m | |
| TOUCH: | 884p-890p | 12M HIGH / LOW: | 925p | 645p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 264p* | NET DEBT: | 25% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 197 | 17.6 | 29.3 | 12.4 |
| 2013 | 230 | 20.7 | 32.5 | 14.0 |
| 2014 | 236 | 23.5 | 36.9 | 15.2 |
| 2015 | 258 | 22.9 | 35.6 | 16.6 |
| 2016 | 332 | 33.0 | 48.6 | 18.1 |
| % change | +29 | +44 | +37 | +9 |
Ex-div: 20 Oct Payment: 11 Nov *Includes intangible assets of £92.3m, or 174p a share. | ||||
