Shares in Sepura (SEPU) plummeted by a third after the maker of digital radios and communication terminals sounded the profit alarm for the second time in three months. Depressed markets, order delays and underperforming products conspired to send adjusted operating profits down 17 per cent to €12.4m (£10.4m) in the reported period.
Uncertainty over the UK's new emergency services network, Brazil's weak economy and depressed energy markets in Russia and Australia took their toll. Moreover, Sepura's digital mobile radio (DMR) and applications businesses delivered tepid growth, the stronger US dollar raised product costs and two key contracts were delayed.
Management also decided to shutter its DMR business, citing the extra investment needed to penetrate that market. Accordingly, it slashed revenue and adjusted cash profit forecasts for this financial year by around €24m and €11m, respectively. It also revised its business model to focus on generating cash, widening profit margins, winning recurring business and targeting established markets.
Net debt surged to €119m due to inventory expenses, customers delaying payments and the costs of acquiring and integrating Spanish peer Teltronic. In response, management has suspended the dividend and plans to raise €65m via a placing and open offer.
Prior to these results, broker N+1 Singer expected adjusted cash profit of €33.6m for the April 2017 year-end, giving EPS of 11.5¢ (from €17.1m and 8.3¢ in FY2016).
| SEPURA (SEPU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 41.5p | MARKET VALUE: | £77m | |
| TOUCH: | 41.25-41.5p | 12-MONTH HIGH: | 198p | LOW: 46p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 75¢ | NET DEBT: | €119m | |
| Year to 1 Apr | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 83.0 | 4.6 | 4.5 | 1.46 |
| 2013 | 105 | 7.9 | 6.6 | 1.68 |
| 2014 | 117 | 14.2 | 9.5 | 2.00 |
| 2015 | 131 | 16.7 | 10.9 | 2.40 |
| 2016 | 190 | -19.0 | -6.1 | 0.79 |
| % change | +45 | - | - | -67 |
*Includes intangible assets of €177m, or 96¢ a share | ||||
