Small-cap focus: Technology - Financial Times

Laird, the UK electronics group, blamed slower-than-expected production of mobile devices for a near one-third drop in earnings © Bloomberg

The UK technology sector received an unprecedented vote of confidence last weekend, when SoftBank said it was working with Saudi Arabia’s sovereign wealth fund to launch one of the world’s largest technology investment funds in London.

But in the days that followed, some of Britain’s best-known technology groups faltered, with two FTSE 250 companies, Laird and NCC, having millions wiped off their market capitalisations amid a profit warning and cancelled contracts. One bright spot was the Aim-listed ticketing technology business Accesso, which received an unanticipated boost from a new tie-up in Australia.

Laird

Laird, the UK electronics company that makes components for Apple and Samsung smartphones, lost almost half of its stock market value on Wednesday, after a profit warning prompted the company’s largest ever intraday share price fall.

Shares in the FTSE 250 technology group plunged 48 per cent on Wednesday morning after it blamed slower-than-expected production of mobile devices and “unprecedented pricing pressures” for a near one-third drop in earnings. The fall gave the company a market capitalisation of less than £450m.

Laird cut its forecast for full-year underlying pre-tax profit by more than 30 per cent to £50m, despite its revenue in sterling terms rising 29 per cent to £207m in the third quarter. But after stripping out the positive impact of currency movements and acquisitions, group sales were down 4 per cent in the period.

Laird makes antennas for cars, wireless receiver components and electromagnetic shields for smartphones for customers such as BMW.

Tony Quinlan, chief executive, blamed wider market conditions for the profit warning, but analysts at the company’s house broker, Numis, suggested the issues were specific to the manufacturer, as the latest Apple supply chain data had indicated there was strong demand for its latest iPhone.

NCC

Shares in the UK cyber security company NCC Group dropped more than a third on Thursday, after the Manchester-based company revealed a “number of setbacks”, including three lost contracts and delayed contract renewals, at least one of which was linked to Brexit uncertainty.

NCC said that group revenues had increased 36 per cent to £79.6m in the four months to the end of September, compared with the same period last year.

But the FTSE 250 company said it had “experienced a number of setbacks” in its assurance division, including “three large unrelated contract cancellations, a large contract deferral and difficulties with some managed services contract renewals”.

The cyber security group fell short of issuing a profit warning, saying it was “too early to quantify the likely impact in the current financial year”.

But investors were rattled, sending shares in the company down as much as 35 per cent on Thursday morning, giving the group a market capitalisation of £610m.

Some analysts insist the demand for cyber security services will continue to grow as there are heightened concerns among companies and governments around data protection.

But others warn that NCC’s margins are likely to come under further pressure.

“We believe [the recovery] will be challenging given the expectation of group margins improving this year,” said Daud Khan of Canaccord Genuity, who added that he expected consensus estimates for the company’s full-year profits to be cut by 10 per cent.

Accesso

Shares in Accesso, the British company that has supplied queue-tackling technology to entertainment venues ranging from the London Eye to Dolly Parton’s Dollywood theme park, jumped more than 3 per cent on Tuesday morning after the London-listed group announced a new multiyear contract in Australia.

Accesso said a three-year agreement with Village Roadshow Theme Parks would see its technology in use across nine of Australia’s most-visited water parks.

The company, which was formerly called Lo-Q, started with a handheld device allowing people to jump queues at theme parks. Now a fully-fledged ticketing business, Accesso provides technology based on the belief that eventgoers will pay a premium for shorter queues.

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