DORSET-based aerospace firm Cobham has revealed details of a “deeply disappointing” year which saw a massive increase in pre-tax losses.
It is issuing new shares worth £500million for the second time in months in a bid to reduce its debts.
The company, formerly called Flight Refuelling, employs around 1,200 people locally, at its headquarters in Wimborne and its facility at Bournemouth Airport.
Although it made an operating profit of £225m in 2016, it wrote down the underlying value of the business, sending full year pre-tax losses up from £39.8m to £847.9m.
Cobham chairman Michael Wareing said: “The board and I are deeply disappointed with events through 2016 and the poor outcome that has been delivered.
“While the board has already undergone significant change over recent months, it is my intention to effect a rolling programme of material board changes over the next two years.
“Our new management team, who has only been in place for a few weeks, has presented an initial diagnosis of the issues and a realistic assessment of the group’s operating and financial position.”
The series of write-downs of the company’s value included costs linked to its acquisition of Aeroflex in 2014 and an “onerous commercial arrangement” for its KC-46 air-to-air refuelling tanker.
The £500m rights issue will be used to pay down borrowing on its revolving credit facilities. It follows a similar issue last June which raised £506.7m.
Chief executive David Lockwood said: “Given the reality of Cobham’s current financial performance and our high leverage coming into the year, we have announced actions today to strengthen the balance sheet.
“This is needed to reassure our customers, to give us the flexibility to drive operational improvements and to provide us with a sustainable platform for the future.
“Cobham has a portfolio of businesses with leading positions in attractive markets, differentiated technologies and know-how, and an enviable customer list.
“This gives us confidence that Cobham can be reinvigorated over time, as our actions release its potential and demonstrate the value in our businesses.”
Cobham’s share price rose after Thursday’s results, from 120.5p at the start of trading to 138.6p at close. It stood at 135p just before 10am on Friday.
It had reached than £3 as recently as early 2015.
The company said management would be focused in 2017 on better control and execution, improved customer relationships, simplification of systems and strong and visible leadership.