Cambridge-based tech firm in talks with Hytera about a possible takeover
Companies: Sepura
Communications technology specialist Sepura Plc (LSE: SEPU), saw Group revenue fall more than 50% in the first half of the year, as the Cambridge-based tech company continued to experience challenging market conditions.
Group revenue fell to €43.3m from €92.9m last year, resulting in an Adj EBITDA loss of €10.6m and a pre-tax loss of €62.1m, versus the reported Adj EBITDA of €9.2m and pre-tax profit of €6.2m last year.
Management says they have taken actions to strengthen the business model, with initiatives to improve cash generation and cut costs:
"Cost reduction programme delivered €2.9 million of opex savings in H1 compared to H2/16"
CEO David Barrass said some of the company's cost-cutting initiatives had impacted short-term revenues and profitability, and it is worth noting that the firm's order backlog is 51.7% larger than H116, at €86.2m, and its closing net debt position is 23% better than last year, at €89.2m.
During the period, SEPU raised €73.7m from shareholders, had some of its banking arrangements revised, and reached an agreement with lenders to defer some debt repayments, "providing sufficient liquidity for at least the next 12 months".
As announced in early November, the company is in discussions with Hytera Communications about a possible takeover. The move pushed Sepura shares up 50%, but today's announcement has sent the share price down 10% in early trading.
Interim CEO David Barrass, said management had responded proactively to the challenging start to the year:
"We are also seeing positive initial results from our initiatives to reduce costs and improve cash generation, albeit with the expected short-term impact on revenues and profitability.
Our focus is on restoring shareholder value and, while there is considerable work needed to rebuild confidence in our business, I am encouraged by our strong order book for H2 and the commitment I have seen from our customers, partners and employees."