Digital radio specialist Sepura's (SEPU) shares sank 6 per cent after revealing half-year numbers marred by a foreign exchange hit and the costs of investing in new products and routes to market. Adjusted cash profits shrank to €0.6m (£0.5m), from €3.6m a year ago, with adverse movements in the euro and US dollar versus sterling accounting for €2.3m of that drop.
The company hedges its operating expenses, which are mostly in sterling, by selling euros and buying sterling 12 months in advance. In the first half, those hedging contracts worked against Sepura with an average hedged rate of €1.27/£1 versus €1.14/£1 last year. This should, however, turn into a tailwind next year as the rates already contracted for next year are below current levels.
The dividend hike looks somewhat at odds with the depressed earnings, but there was some good news that Sepura says offers confidence on the outlook. First-half revenues were at a record levels; so too was the order book in the Systems base stations business - acquired last year. Sepura's aim is to offer the full solution to its customers, from base stations to the radio handsets and the applications that run on them. The acquisition of software applications developer Portalify in July means management can now tick off all these boxes.
Broker Investec Securities maintained its full-year pre-tax profit forecast at €12.4m, with adjusted EPS of 8.4¢ (from €10.2m and 7.8¢ in 2013).
| SEPURA (SEPU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 133p | MARKET VALUE: | £184.3m | |
| TOUCH: | 133p-134p | 12-MONTH HIGH: | 156p | LOW: 85p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 47¢* | NET DEBT: | 5% | |
| Half-year to 27 Sep | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 43.5 | 2.56 | 2.3 | 0.51 |
| 2013 | 46.0 | 1.07 | 0.8 | 0.59 |
| % change | +6 | -58 | -65 | +16 |
Ex-div: 11 Dec Payment: 7 Jan *Includes intangible assets of €50.9m, or 37¢ a share £1=€1.19 | ||||
