18th October 2007 : Leadcom voted "AIM International Company of the Year for 2007"




Main Web Site : http://www.leadcom-is.com/

Investor Relations Email : investorsinfo@leadcom-is.com

i too sold out about 10 days ago ..... somewhat prematurely i jumped back in at 54, so i hope the reality of the announcement is not as dire as the market seems to think ...... o'heads and costs are one thing, but more relevant is the importance of CALA to the whole, and that is something i do not know at all .....

PP - any thoughts on that?

From AFN, someone has worked it out and I'll not disagree.

"tunturiflyer - 1 Nov'07 - 15:43 - 6564 of 6565

In H1, the segment operating profit margin in CALA was 7.3%, compared to 16.4% in MEA, and 14.6% in APAC. Adding up the segment operating profits in all the regions you get $11.3 million, of which CALA contributed $1.7 million, i.e, about 15%.

So an optimist might think that prospects in MEA and APAC are so good, and the margins so high, why bother with low margin CALA, especially as there are some US players who are competiting in those regions.

What is more worrying is these comments about the rising expenses of an extra $3m. H1 operating profit was $8.095 million, a pretax profit margin of 9.5%. If they do $206 million, at this sort of margin, but lose $3 million in extra expenses, and say $1.7 million for no profit in CALA for H2, then it still means $15 million pre tax profit. Their tax rate maybe 31% for full year, (as per H1), so get about $10.35 million post tax, 5.2 million post tax, ($2:1) which I think is 4.2p a share.

so at 45.75 (current price) p/e would be 10.89 .... does not sound too demanding, but i wonder what the sector average is

That assumes the 9.5% margin has carried over to the 3rd quarter.
2517

seems like u bought into another dud cynic...........glad i aint in these and wont as long as u r in it...........u seem to be in all the dud shares

You can certainly pick them PP, first pele now lead, ive bought both. My problem I should of researched them better, like i did with National Grid and Kenmare. You must be really fed up as I had only invested reasonably small amounts.

have made reasonable money here in the past, and allowed greed to get the better of me ..... serves me right

certainly very happy to stay with my other duds like SCHE and POG and HAWK and PMO and IEC and TAN and NRK (short) etc etc etc ...... but yup, you're right to stay well away from those; too much quality for the likes of you!

i take it that all your investments are performing wondrously and that you would care to impart that info to everyone here ...... like maestro does!

Why ? What about RAS, AST, VYKE, BOI and many others which are well up on where I got in.

Leadcom for me is just slightly into a loss now, and for YTD is down about 15% now. Try looking at lots of stocks on YTD figures, plenty are much lower than 15%.

Everything is relative. Exceptional costs this year will not effect next year, and so, with 9p EPS forecast for 2008, the forward PER is now down to times 5. Even if you for some reason rip a whole penny off of that for US$ weakness, its less than times 6 forward PER.

Todays statement was a real surprise, on a bad day, and badly worded. However it does not take away from the fact they did 65m in Q3 and are on forecast for FY revenues.

So, while its still fresh yes, lots of people will have quick comment and move on, however, the company is still earning, still profitable and is also now very cheap - the old saying, when there is blood on the streets, its the time to buy.

PP .... personally, i thank you for your efforts and research and everything else on this stock ..... for certain peeps to try to put blame on you when the company seemingly drops a clanger is the typical reaction of those who are unable to accept that they alone are responsible for their own actions in all areas of life.

by the way, i always thought that when there was blood on the street there was someone lying there asking to be kicked!

Saddened by the sniping that comes along at moments like this, really quite pathetic, grow up guys.

As for duds looking at the boards cynic has probably had a very good two days.

I also bought some more yesterday, was up quite nicely, now all stopped out, even the bottom trawling at 48p. C'est la vie. However as stated fundamentals going forwards are good, this is overdone, will wait for dust to settle and stock up large.

Dollar won't stay weak in the long-term in two years time these will likely be double what they are now.

not sure that i've had a "good 2 days" but almost certainly better than some friends here ...... certainly glad i took some money off the table, even if i may well have thrown some back this afternoon when buying LEAD.

certainly my DOW short is working, though it was a bit scary last night .... and NRK short is also ticking up the profits ..... IEC and POG and HAWK have also done well.

on the other side, my Cable short is proving a bit costly at the moment, but shall wait and see ..... and also SOLA, very much to my surprise, has not tumbled, perhaps on the basis that Remnimbi(?) is very strong

BB's are meant to discuss co shares and their merits or otherwise, not for apportioning blame or having a go, because a share you own has gone wrong. I endorse cynic's comments re PP, the effort & research PP does are very much appreciated by many here, and as steveo says grow up, and take responsibility for your own actions, neither PP or anyone else has forced anybody to buy/sell shares.

Now, LEAD they do look cheap, haven't bought yet may look again tomorrow.
Good luck all.
2517

this is only bad news if you owned the stock previous to today's news. For anyone else it's a superb buying oportunity. The price now more than reflects the mildly negative'ish news. Buy.

Why has this fallen like lead today???


Leadcom says 9-mth revenues over 149 mln usd; sees strong growth in 2008 UPDATE - AFX

(Adds further details)

LONDON (Thomson Financial) - Leadcom Integrated Solutions Ltd said its revenues for the nine months to Sept 30 exceeded 149 mln usd, and that it expects continued strong growth in 2008, while 'at least' maintaining its normal standards of profitability.

In a statement ahead of its third-quarter results, the telecommunications solutions provider said its growth in revenues has been translated to the expected operating profitability, apart from the Caribbean and Latin America (CALA) region.

Leadcom said it has traded in line with its expectations, with the exception of the CALA region and a significant rise in its financial expenses, and that it expects to report full-year revenues of 206-210 mln usd.

The company said that it has decided not to take up any new engagements with a major customer -- a telecom equipment vendor -- in the CALA region, as its year-to-date engagements with the client have contributed extremely low profits.

This business sector is therefore expected to be treated as discontinued, Leadcom said.

Despite the operational challenges in CALA, Leadcom said its cash flow in the third quarter continues to be on track, including the cash injected into YTelcom SAS, the business which it acquired in August.

TFN.newsdesk@thomson.com

The finance costs is the shocker to the system, and nobody was expecting that it seems for Q3. The effects of the dollar were to be expected and why I had used the 5.5+ and 9+ for 07 and 08 EPS figures, I was expecting some fall out from dollar weakness.

I would at this stage go for a \"worst case\" scenario :

2007

Turnover $206 mill
Normalised operating profit 10% give $20 mill
Exceptional $5 mil (3m+1m+spare 1m)
Tax of 31% of $15 mill
Net profit $10.35 mill
120 mill shares in issue

Exchange rate $2.08 to £1
EPS 8.625 Cents = 4.1p
Write it down for luck and so call it 4p for this year.

Going forward to next year with the vendor removed from CALA and margins increasing in that region on lower revenue, ignoring the CPI figure but taking in dollar weakness to be sure to be sure, knock a full penny off of forecast EPS and reduce down to 8p for 2008 from 9p.

You\'d end up with 4p for 2007 and 8p for 2008.

Should the dollar appreciate in the coming 12 months (and expectation is it will) then you can start adding back a million here and there and you might get your 9p EPS back for 2008.

I have not added in any CPI correction for 2008 as the forecast is for 1.5% over the coming 12 months in Israel (as opposed to the shocker 2.5% for just Q3 07).

This from the JPost :

\".......Israel\'s consumer prices rose the most since 2002, jumping 2.5 percent during June, July and August, the three-month period upon which Israeli accounting laws require companies to base third-quarter earnings. Price growth has since slowed, with a recent Bank of Israel economist poll showing anticipated inflation of 1.5% in the next 12 months. Comparatively, second-quarter inflation rose only 0.7% and third-quarter inflation last year rose 0.2%.

The CPI is an index number measuring the average price of consumer goods and services purchased by households and the percent change in the CPI is a measure of inflation......... \"

******************************************

However, the issue with this statement is not about it contents (taking aside the CPI shocker) its all about the way it was written.

Having followed them for so long, I really am at a loss to explain or to even understand how they could, after what is a long time of very good PR, suddenly be so shocking at PR. This is why my earlier quip about it perhaps it was written so badly to get the seller out and finished at lower prices. I do fail to comprehend how firstly Yael and crew would allow such a terribly written piece of prose to be released, and also why Panmure and Blue Oar let it be released in that format.

It is extremely badly worded with regards to CALA. I would agree with Ptolemy that perhaps the 2.5% CPI figure for 2007 was not taken into account and someone suddenly realised that there was no chance like previous years to ignore a single quarter of events as it will be diluted by the following quarter and therefore better for a half year report, and therefore, as full financials must be reported for the quater in question now (as Leadcom is now on quarterly reporting), then an update was required.

Perhaps this is the overiding factor, that the 2.5% CPI figure is going to hurt the Q3 report and create a bit of an anomoly (which would not have been the case if just reporting a 2nd half come prelims) and with likely 700K$ requried to cover that CPI spike, it will have a big effect on EPS for Q3 when taken in with dollar weakness during Q3.

Quarterly reporting, live and die by the sword, you get much greater visibility, however with increased visibility you also get to hang your dirty linen in public if and when little events occur that could normally be hidden by being diluted in a half year or full year report.

Therefore, moving forward, the CPI issue should not effect Q4 as its now died down, however there will be no Q4 report as its Prelims. Rather sad that CPI was 2.5% during Q3, and Q3 now requires its own full report - but thats life. Brace yourself Sheila, Q3 ain\'t going to be pretty on the earnings front as a stand alone quarter.

Summary :

a/ It is a profits warning - but not one about a poor business, it is one where external pressures (Q3 CPI and Dollar distress) has caused the issues. They did have an issue with a single vendor in CALA, and have now addressed that.

b/ 4p (down from forecast 5p) EPS for the full year, and forecast 8p EPS for 2008 imv.

c/ Business is seeing strong trading and growth, which when taking into account forecast Israeli CPI for the coming 12 months, makes an 8p EPS forecast for 2008 very undemanding imv.

d/ Upside of any dollar appreciation, we have now had the washing of the weak dollar laundry in public (yet to be done by others is an added note), if it moves back in the coming 3 to 12 months, then all those loses becomes gains, and of course, sterling EPS is boosted.

e/ \"Black mark\" against the PR crew, sorry, that was attrocious wording in my opinion.


We are supposed to look forward, to lets look forward.

CALA margins will now increase on 40% reduced revenues. Plus point for margin watchers.
Time and Energy spent on CALA can be focussed on EMEA and AP where the better margin and higher growth levels are. Plus point.
Forecast CPI for the coming 12 months is 1.5% (equals under 0.4% per quarter averaged). Now aware as a Plus point.
Strong trading and growth. Plus point.
Q3 revenue well up at 64m$.
FY revenue forecasts at pre-upgrade levels (206m instead of 225m)
Cash projections are as per forecast. Big Plus point.

07 EPS will be lower than forecast, suggest 4p instead of 5p. Negative point.
08 EPS forecast should be reduced to cater for dollar. Negative point.
Continued dollar weakness. Negative point.
Badly worded statement. Negative point.

Good post PP, back in these this morning at 46.5p, time will tell if that was a good move, but i would consider as always, that the market has over-reacted somewhat...

O.k. should i be putting a stop in place...?!

Results on tuesday 6th now.
2517

Rightly or wrongly I've bought in @ 42p, seems wrongly atm.
2517

Catching a falling knife?