Cobham - not a pretty sight....

[Davidsb]

http://www.investegate.co.uk/cobham-plc ... LC%20Alert

Underlying Trading Profit

Group underlying trading profit is expected to be £225m. This includes £20m of year end adjustments, which have been deducted from the draft management accounts trading profit of £245m, as announced in the 11 January 2017 post-close trading update.

Exceptional Items

There are further amounts that will be recognised as exceptional items and excluded from underlying trading profit. The key components of these adjustments are as follows:

1) Impairments of goodwill and intangible assets:
The Group will recognise a total non-cash impairment of goodwill and other intangible fixed assets of £574m.

2) Revisions of the carrying values of other assets:
A charge of £33m has been taken against other assets in the balance sheet.

3) Estimates of fixed price contract profitability:
In total a £179m charge, including KC-46, has been taken against certain contracts reflecting increased estimates of costs to complete and, in some cases, lower recovery from customers.

4) Legal and other provisions:
£25m of charges have been taken to cover the estimated exposure on a number of legal, environmental, warranty and other regulatory matters across the Group.

I make that £811m of exceptional items - let's hope newly appointed CEO David Lockwood, together with newly-appointed Chairman Mike Wareing and newly appointed CFO David Mellors, have no more surprises in store for us on 2nd March.

[JohnnyCyclops]

Down 20% at the opening bell. Now 110p.

I wonder if the dividend will suffer.

We added to the HYP a year ago, at 246p and a reliable dividend.

Ho hum.

Testing the resilience of a 35-stock HYP.

[Dod1010]

I would be surprised if the dividend did not suffer. Problems seldom come singly and this will be yet another illustration of kitchen sinking by a new CEO etc. All three can truthfully say' Nuthin' to do with us Guv'.

Dod

[jackdaww]

sold all mine last year at around 270.

now in bargain territory ?

[monabri]

That's a bit below the belt JD! I'm sure we will all "experience" this sooner or later.

[jackdaww]

That's a bit below the belt JD! I'm sure we will all "experience" this sooner or later.

sorry , i have had many compensating disasters.

[Minesadouble]

Fifth profit warning in two years is inexcusable from my point of view.
Much like Pearson which I sold recently.
I can stomach a mistake or surprise, but this smacks of a company in which the management has lost control.
Am I being unreasonable?

[minerjoe]

I think personally, this one will now go from my portfolio. I waited to see if there was a recovery and frankly I havent been inspired. I bought 3k worth in 2015 and I have had a 60% loss on my initial capex. Now the final dividend has gone - who knows when it will be back and another rights issue come out.

My next buy in going to be NG, BA. or KCOM - I think these are better, more reliable places. COB has lost my trust

[Dod1010]

These developments should surprise no one. Loss of the three senior people at the same time in any company is in itself enough to indicate big problems and the new management are bound to write down/off everything in sight. That is a classic move because a) they truthfully blame the previous management and b) give themselves a nice clean sheet so that (hopefully) they can show decent results. I sold at £1.60 and certainly would have nothing to do with them at this time. No one possibly tell the future for Cobham at the moment.

Another rights issue? Very possibly but many of the exceptionals are non cash items. Nevertheless they are going to shrink the Balance Sheet.

Dod

[Minesadouble]

Sorry I should have disclosed I don't hold......thankfully.

British Aerospace is my only holding in the sector......again thankfully.

[CommissarJones]

I wonder if the dividend will suffer.

I would be surprised if the dividend did not suffer.

I concur with Dod - we know already the final divi for 2016 has been scrapped, and at this point it would not surprise me in the least if COB suspended divis indefinitely. When the company itself says, "The balance sheet is clearly not strong enough to properly support the operations of the Group, given the important role it plays in many customer programmes," that indicates to me the payment of divis will be a low priority. I looked at COB a couple of times but never bought in, condolences to holders.

[Bouleversee]

Yet another dud in my portfolio. HYP doesn't seem to be working for me. The only shares I have made money from don't figure here.

[Gilgongo]

HYP doesn't seem to be working for me.

YHP is a long-term (20+ years) buy and hold strategy and is bound to have setbacks in the build stage. In a well-balanced HYP, Cobham's crash will be a mere fluctuation, causing at most a 5% dent in the overall portfolio.

The only shares I have made money from don't figure here.

If they don't figure here, you will only make money when you sell them.

[BarrenWuffett]

Yet another dud in my portfolio. HYP doesn't seem to be working for me. The only shares I have made money from don't figure here.

Yes, it was regular disappointments such as this which gradually eroded my faith in hyp as a strategy and I moved on to other more successful ways to invest in 2014/15.

Cobham is just one of many failures in recent years for the unsuspecting income seeker - with me it was Tesco, Centrica, Billiton and Amec. Luckily I have done a lot better with my income ITs such as City of London, Finsbury and Aberforth Smaller.

[JohnnyCyclops]

I'm just not seeing the signs in the dividends. They were clipping along most years at a flat 10% rise. There was a 20% in 2007, and 33.3% in 2011.

The adjustment is to reflect the 2016 rights issue.

[JohnnyCyclops]

Yes, it was regular disappointments such as this which gradually eroded my faith in hyp as a strategy and I moved on to other more successful ways to invest in 2014/15.

But strategy has to support objectives, and objectives need an overall goal. Strategy on its own doesn't do anything. Your goal may not have suited HYP style investing in the first place. Nor may your objectives. It may not have been down to strategy, nor execution.

Success is not measured by whether a strategy works, but whether goals and objectives are achieved.

[AJC5001]

Cobham is just one of many failures in recent years for the unsuspecting income seeker - with me it was Tesco, Centrica, Billiton and Amec. Luckily I have done a lot better with my income ITs such as City of London, Finsbury and Aberforth Smaller.

So, do City of London, Finsbury and Aberforth Smaller not hold any Tesco, Centrica, Billiton and Amec?

Adrian

[kempiejon]

So, do City of London, Finsbury and Aberforth Smaller not hold any Tesco, Centrica, Billiton and Amec?

And did they hold years ago and have they been buying now?

[77ss]

My next buy in going to be NG, BA. or KCOM - I think these are better, more reliable places. COB has lost my trust

Not so sure about KCOM. I sold after the commitment to 10% dividend increases expired.

Sure, with the recent fall in share price, the yield on offer is now good, but I wouldn't expect much in the way of increases.

[Dod1010]

Yet another dud in my portfolio. HYP doesn't seem to be working for me. The only shares I have made money from don't figure here.

Yes, it was regular disappointments such as this which gradually eroded my faith in hyp as a strategy and I moved on to other more successful ways to invest in 2014/15.

Cobham is just one of many failures in recent years for the unsuspecting income seeker - with me it was Tesco, Centrica, Billiton and Amec. Luckily I have done a lot better with my income ITs such as City of London, Finsbury and Aberforth Smaller.

What of course BW illustrates is the benefits of diversification as demonstrated by the quoted ITs. It seems a strange reason to condemn a HYP strategy. You either diversify and hold 35 shares and up wards (and almost guarantee a failure or three) or you go to the other end and hold no more than say 20 shares sticking to the tried and tested (not to say they will not produce a problem either of course, but it means you will likely avoid the problem shares he has quoted).

I am satisfied that HYP works at least as well as any other strategy. The key is in his phrase 'the unsuspecting' income seeker. You cannot be an unsuspecting anything when investing. You must suspect everything and keep on your toes.
Dod

Moderator Message:
General note to posters. Although mentioning IT's is allowed, depending on context, they are not part of the overall HYP practical . Thanks. Raptor.