LRD – Laird – a terrible company

In December 2015, LRD (Laird) announced the acquisition of Novero, “a key supplier of integrated car connectivity”, for £47m.

Today, LRD published its finals, sending its shares down 7.%& to 162p in early trading. Although revenue is up 27%, operating cash flow is down 48%.

Net debt at year end increased from £200m to £344.6m, they have scrapped the final dividend, and announced a deeply-discounted rights issue to improve the balance sheet. The issue is 4 for 5 at 85p.

“The Novero integration is now complete and Novero is expected to deliver modest profitability in 2017”, according to their RNS. Let me paraphrase this: they blew £47m that they could ill afford on an acquisition that seems barely capable of scraping by.

According at Stockopedia, LRD’s ROCE has averaged 4.8% over the last 6 years. I am not surprised.

All I can say is that it is a lousy company run by lousy management. To be fair, a lot of management seemed to have been replaced, so I should reserve judgement on current management.

LRD has a value score of 82, and it will be an interesting case study in how the company performs after the rights issue. I am interested in seeing how it turns out.

Stay safe out there.


About mcturra2000

Computer programmer living in Scotland.
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