Legend Corporation Limited posts flat year as share price slides

Legend Corporation Limited (ASX:LGD) has managed to stave off tough conditions to post a 2% rise in profit.

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What: Legend Corporation Limited (ASX: LGD) has reported a result in line with previously provided guidance.

For the 12 months ending June 30 2015:

  • Revenue was flat at $102.3 million
  • Gross margins improved from 43.6% to 44.3%
  • Net profit after tax increased 2% to $6.9 million
  • Earnings per share were flat at 3.1 cents
  • Net debt increased to $21.2 million from $13.1 million
  • A final dividend of 1 cent per share was declared. The stock will trade ex-dividend on September 23, with payment occurring on October 23.

So What: Legend's results are pleasing in the context of the headwinds the group has faced over the past year.

Legend's major division of 'Electrical, Power and Infrastructure' experienced revenue decline of 9% and operating profit sunk 39%. This result was despite the strong activity in residential construction with Legend citing "a significant decline in demand from the electrical wholesale market which has, in years past, been the most important channel to this market."

Adding to this impact has been ongoing weakness in commercial construction, engineering construction in the resource sector and infrastructure (power networks) sector.

Pleasingly, management has successfully offset the declines from its major division by growing earnings in its two other divisions.

'Innovative Electrical Products' recorded a 23% jump in revenue and a 63% leap in operating profit with "support from an existing customer and defence related contracts" singled out as key contributors.

'Gas and Plumbing' is a new division created from the acquisition in May of SCE. Had SCE been owned for a full 12-month period the division would have contributed $28.4 million to revenue and $1.7 million to earnings before interest, tax, depreciation and amortisation.

Now What: Given the result had been well flagged to the market, there were no surprises when the company released its full year numbers on Friday with the share price finishing flat at 27.5 cents. This in itself was a very good result considering the 1.4% smashing that the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) endured.

With a trailing price-to-earnings ratio of 8.9x and fully franked dividend yield of 6.4% this $59 million company could be one for the watch list.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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