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Legend Reports Stronger Second Half Earnings

  • 03 September, 2007 11:21

<p>Adelaide, September 3, 2007 – Legend Corporation (ASX:LGD) today announced an earnings before interest and tax (EBIT) of $5.4 million on revenue of $96 million. Net profit after tax stands at $2.2 million for the half, resulting in net profit after tax of $1.9 million for the full year.</p>
<p>Legend has rebounded from an unprecedented and harsh operating period in the second half of the last financial year with strong performance, improving margin and operating cash flows whilst reducing debt and inventories.</p>
<p>The financial result for the 2007 financial year was negatively affected by the integration costs from the acquisition of two businesses. Legend’s memory business was also impacted by a global decline in demand for memory products and certain computer components which resulted in significant price declines across a number of product lines.</p>
<p>Key points for the full year financial results include:</p>
<p>Increase in gross profit by 61.9% to $38.7 million;
Revenue $193.5m (30 June 2007);
Strong positive operating cash flow for the full year of $11.5 million;
Net Debt (post acquisition) has been reduced to $30.7 million as at 30 June 2007 from $39.4 million as at December 2006;
Acquired companies IES and Cabac performing well. The full year results include 8 months contribution from IES and a full 12 months from Cabac;
Inventories at 30 June 2006 were $42.2 million and were increased by $12.8 million through acquisitions of Cabac and IES. Legend has aggressively reduced inventory by $17.7 million. As at 30 June 2007 total inventories were $37.3 million.</p>
<p>According to Legend Chief Executive Officer, Bradley Dowe, these results illustrate that the benefits of Legend’s long term strategy are now beginning to be realised.</p>
<p>“In the past twelve months, Legend made a calculated decision to diversify our core capabilities by acquiring Cabac and IES, which lever our key strengths in engineering, sales and distribution. Now that the integration is materially complete, we are seeing the advantages of an expanded product range and market reach, and an increase in intellectual property and engineering expertise to continue export growth. The stabilisation of the memory market and our decision adjust our sales product mix and consolidate manufacturing has also supported our growth in the second half of the financial year”.</p>
<p>Future growth will be driven by a continued focus on quality of earnings, continued improvement in margin contribution from new product lines and the continued strengthening of Legend’s business across all geographies. Key focuses include:</p>
<p>Legend will continue to focus on quality of earnings, increasing gross profit margins and reducing working capital;
Expanding export markets with specialist sales and marketing resources recruited to expand semiconductor sales in the USA;
An expected increase in demand for memory products in the Australian market over the next twelve months as the new Microsoft Vista operating system gains traction;
The company will continue to review acquisition opportunities in the electronics and electrical industry which strengthen Legend’s sales and distribution capacity, technology and engineering base and meet Legend’s financial criteria.</p>
<p>Legend expects the 2008 financial year will see continued positive operating cash flows and improvements in profitability.</p>
<p>Legend is targeting EBIT for the 2008 financial year to be in the range of $12.1million to $14.7 million implying growth of 46% to 56% and NPAT to be in the range of $6.7 million to $8.4 million implying growth of 71% to 74%.</p>

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