Good morning. It's a fairly short report today, as I'll be heading to the Islington Design Centre shortly for a Cenkos/Shares investor forum, as there are a few interesting companies having stands there. There are also several companies which I have been rather uncharitable about in these reports, so I might need to dispose of my name badge before approaching their stands!


Low & Bonar (LON:LWB)

Share price: 52p
No. shares: 327.8m
Market Cap: £170.5m

Final results for the year ended 30 Nov 2014 are out today. About two thirds of this group's turnover is in Europe, so they have suffered from a generally weak economy, and exchange rate weakness. So there was a profit warning in Sep 2014, but the company then put out a more reassuring trading update in Dec 2014, which I reported on here.

Looking at today's results, I'm moderately impressed that the company has performed alright, when up against macro & currency headwinds. As you can see from this highlights table in today's results, it had a reasonably good year before currency movements, with both turnover & profit solidly up in constant currency;

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This seems quite a lot of business for a market cap of £170.5m.

It clearly has some pricing power too, as the operating margin isn't bad. The group makes a wide range of niche industrial fabrics, and coatings, e.g. advertising hoardings, artificial grass, flooring materials, etc.

Net debt - as I've mentioned before, the level of net debt here is quite high, and the latest number reported is net debt of £88.0m. This has worried me in the past, but I've done a bit more digging, and note from the 2013 Annual Report that all borrowings are unsecured. That is a very good sign - as it means the bank is extremely relaxed with its exposure to the company, seeing it as extremely low risk.

The old bank facility was renewable in Feb 2015, so I've checked today's statement for more details on that, and am pleased to note that a new 5-year facility has been agreed, on improved terms;

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This looks OK then. If the banks are relaxed, why should I be worried? Well, bank managers can easily change their minds, especially in a recession, so it's not a stock that I would want to hold in a…

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