Hytera and Sepura have reached agreement on the terms of a recommended cash offer. The acquisition values Sepura at £74m or 20p/share, a 36% premium to the closing price prior to announcement of discussions.
Cambridge-based tech firm in talks with Hytera about a possible takeover
We publish estimates to reflect FY EBITDA guidance being cut by 60% due to order delays. The CEO has stepped down for health reasons.
Expected orders have not materialised. The FY outlook to March has significantly deteriorated. EBITDA guidance will be missed by c. 60%. The CEO has stepped down for health reasons.
The balance sheet has been repaired, a significant contract to supply New York City Transit was formalised on Friday and earnings quality is set to improve. H1 results will look weak but this is known.
FY16 results and details on the capital raising have been announced. FY17 adj EBITDA guidance is cut by 30%. £65m has been raised at 35p to significantly strengthen the balance sheet.
accesso Technology (ACSO LN) Consistent growth, increasing margins and few risks | Earthport (EPO LN) Solving a $9.3bn+ problem | Gresham Computing (GHT LN) Positive AGM statement | Howden Joinery Group (HWDN LN) Strong trading in recent 8 weeks. Low end f/casts to edge up | James Fisher & Sons (FSJ LN) Trading in line | NCC Group (NCC LN) Strong revenue growth, margins lower | Oxford BioMedica (OXB LN) Final results and portfolio review | Redde (REDD LN) Strong trading continues in H2 | Sepura (SEPU LN) Financing resolution required to unlock potential | Synthomer (SYNT LN) Positive start to 2016 | Victrex (VCT LN) Resolution of US Federal Trade Commission Inquiry
Companies: ACSO EPO GHT HWDN FSJ NCC REDD SEPU SYNT VCT OXB
The disappointing trading in the year to Mar 2016 and year end net debt position of €119m mean a resolution to its capital structure is required in order for the group to convert its significant opportunities. Until this is resolved, we expect the shares to be under pressure and may well trade below intrinsic value. The market backdrop and fundamental market position of the company remain attractive and we believe its growth prospects, particularly in the US, the largest PMR market, are exciting.
FY16 EBITDA came in at €17m (vs €16-20m range). FY17 EBITDA guidance of €38m is reiterated. The balance sheet is stretched and discussions with debt providers are ongoing. An equity raise of up to £50m (29% of current mkt cap) is proposed. This would reduce FY17 Net debt / EBITDA to around 1.3x.
Sepura confirmed adjusted EBITDA in the year to Mar 2016 will be €17m. Net debt is expected to be €119m and discussions with the banks are ongoing. The group commenced discussions with major shareholders regarding an equity capital raise of up to £50m. Our forecasts are currently under review and we expect to issue revised forecasts shortly as we waited for confirmation of the year end position of the group. The market backdrop and fundamental market position of the company remain attractive and we believe its growth prospects, particularly in the US, the largest PMR market, are exciting. However, there is a pressing need to secure the appropriate capital structure to give it the financial flexibility to convert its opportunities.
FY16 eps cut by 58% to reflect the mid-point of the ebitda range announced on Monday. Management are confident in FY17e ebitda but FY17 eps is cut by 12% to reflect higher interest.
In a disappointing update, FY16 Adj EBITDA is now expected to be €16m - €20m vs. expectation of €31m. This is due to 1) DMR and Applications being below expectations, 2) two significant new Systems and Devices orders slipping into Q1 FY17 and 3) a €2.6m FX headwind.
Following the transformational acquisition of Teltronic, Sepura can now access a much wider share of the $14bn Professional Mobile Radio (PMR) market, with a broader product portfolio and geographical footprint including the key US market. With a strong track record of delivery against expectations, we remain confident on execution and expect strong earnings growth over the next few years. We believe the group is an even more strategic vendor in a market set for continued growth.
The trading update on 22 Oct already flagged some of the highlights of today’s strong interim results. 34% organic revenue growth, robust profit performance despite adverse currency impacts, on-track integration of Teltronic, much increased closing order book and a strong track record of execution leave us confident of H2 and its growth prospects in the year to come. We believe the combined Sepura and Teltronic business has the product breadth and scale to effectively go after its €3.3bn addressable market. We re-iterate our Buy rating.
As highlighted in the October update, the group has performed well in H1. Trading is in line with FY expectations but there are reasons for optimism. Organically, H2 is an easier hill to climb. Teltronic, acquired in May, is on track with actions already taken that will deliver the target cost synergies. The first significant win combining Teltronic infrastructure and Sepura terminals has been secured.
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CAP-XX Ltd* (CPX.L, 3.1p/£10.1m) | Gfinity plc* (GFIN.L, 1.675p/£12.0m) | MTI Wireless Edge Ltd* (MWE.L, 38.5p/£33.8m) | Newmark Security plc* (NWT.L, 1.05p/£4.9m) | Mirada plc* (MIRA.L, 95.0p/£8.5m)
Companies: CPX GFIN MWE NWT MIRA
EVR partners with Live Nation for virtual festival
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC STU GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
For the six months to 30 September 2019 (H1 FY20) AdEPT Technology Group reported Revenue +26.4%YoY to £30.8m inclusive of acquisitions, with organic growth of +2.5%YoY. Fixed Line Communications comprised 18.5% (£5.7m), -10.7%YoY, whilst Managed Services grew 39.5%YoY to £25.1m inclusive of the acquisition of Advanced Computer Systems UK Ltd. (ACS) to reach 81.5% of revenue; underlying organic growth was 7.9%YoY. EBITDA (adj.) of £6.1m grew 18.3%YoY; a 19.8% margin. The interim dividend was 5.1p/share (H119: 4.9p) +4%YoY. Period-end senior net debt was £31.5m (FY19: £27.1m) 2.6x EBITDA (FY19: 2.5x), with cash at £4.6m.
Companies: Adept Technology
FY 2019 was, as expected, a strong year for Gamma in financial terms with growth in Adjusted EBITDA of 31% a touch higher than we were expecting. Notably, that was achieved in a period where management has been pursuing its updated strategy which included investing in future growth and spending time assessing and undertaking acquisitions. The Group delivered well on its strategic aims during the year and it has announced further acquisitions in 2020. Gamma retains a strong balance sheet and we expect to see more deals in the future. It saw strong growth in the UK while its Dutch businesses were integrated and DX Groep saw a pick-up in H2. The near term business outlook is somewhat overshadowed by Covid-19 and we exercise a degree of conservatism as we upgrade our estimates to reflect the FY 2019 performance and the recent acquisitions. Nonetheless, the combination of organic and acquired growth produces a 5% upgrade in Adj. EBITDA for the current year which anticipates 15% growth on FY 2019’s strong number.
Companies: Gamma Communications
FY 2019 saw a strong financial and operational performance. The management team is working hard to optimise its sales strategy and pursue further cost reductions. The results of its efforts are already visible in much improved financials: growth in all the ongoing businesses and in all regions; and stronger margins from better revenue mix and streamlining. The sale of Automotive in February 2019 focused Telit on Industrial IoT, removed a heavy R&D burden and left the group very well-funded. Cash is to be partially returned to shareholders depending on the developing Covid-19 situation. Even in an uncertain times, the year leaves Telit very well placed with tremendous upside to build LT value through numerous opportunities as a global leader in the growing IoT market.
Companies: Telit Communications
Accelerated book build, board change and JSOP
Telit has moved to preserve its profit levels during the COVID-19 pandemic. The widespread lockdown of unknown duration is likely to slow some of its YoY revenue growth, and we trim our FY 2020 revenue expectations, although we do still continue to expect LFL growth (excluding the two months of Automotive in FY 2019). Despite its significant cash reserves from the disposal, management is prudently adopting a cost-reduction plan to ensure the company’s earnings are maintained at the targeted level. Notably this involves a temporary 15% salary reduction for senior management and a reduction in all areas of discretionary spending, including opex and capex. Strategic plans (such as long-term product development and the movement of production outside China) will be unaffected. We are pleased to hear the supply chain remains steady with minimal disruption in module production as the lockdown across Asia is partially lifted. At this stage, we leave FY 2021 forecasts unchanged, given a strong market position.
SigmaRoc's shares have fallen 34% in the last two months as the market underestimates the group's financial strength and infrastructure exposure. The group can withstand eight months without revenues, but this is academic as activity across the group is even now enough to generate positive cash flows.
Panoro Energy (PEN NO)C: Initiating coverage | 88 Energy (88E LN/AU): Acquisition in Alaska | BP (BP LN): Transaction in Alaska with Hilcorp renegotiated | Columbus Energy Resources (CERP LN): Oil discovery in Trinidad | Premier Oil (PMO LN) and Rockhopper Exploration (RKH LN): Sea Lion farm out (Falklands) exclusivity period extended | BP (BP LN): 1Q20 results | Equinor (EQNR NO): Dry hole in Norway | Getech (GTC LN): Business update | Hurricane Energy (HUR LN): Business update in the UK North Sea |IGas Energy (IGAS LN): Shutting some production in the UK | Lundin Energy (LUP SS): 1Q20 results | OKEA (OKEA NO): 1Q20 update in Norway | OMV (OMV AG): 1Q results | Premier Oil (PMO LN): Court approves schemes of arrangement | Royal Dutch Shell (RDSA/B LN): 1Q20 results and dividend reduction | RockRose Energy (RRE LN): Operational update in the UK | UK Oil & Gas (UKOG LN): £1.275 mm equity raise | Caspian Sunrise (CASP LN): Operating update in Kazakhstan | Exillon Energy (EXI LN): February and March production in Russia | Nostrum Oil & Gas (NOG LN): 1Q20 update in Kazakhstan | PetroNeft (PTR LN): Operations update | Genel Energy (GENL LN): Update in Kurdistan – While negotiations are ongoing the KRG will not exercise the notice of an intention to terminate the Bina Bawi PSC | ShaMaran Petroleum (SNM CN): Business update in Kurdistan | Tethys Oil (TETY SS): Production reduction in Oman | Total (FP FP): Dry hole in Lebanon | Aminex (AEX LN) and Solo Oil (SOLO LN): Licence extension in Tanzania | Far Limited (FAR AU): Update in Senegal | Lekoil (LEK LN): Final payment with Nigerian partner rescheduled | Orca Exploration (ORC.A/B CN): FY19 results | Savannah Energy (SAVE LN): Financial and operating update in Nigeria | San Leon Energy (SLE LN): Special dividend | Seplat Petroleum (SEPL LN): 1Q20 results
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Quite a good Q4 supported by improving commercial momentum in Europe. The annual EBITDA grew eventually by 2.6% yoy reflecting the cost programme’s success.
The €0.09 dividend is maintained.
Vodafone is more highly indebted after its deal with Liberty-Global, but its dividend (cut last year) seems now more in harmony with its balance sheet. Besides, the monetisation of its infrastructure is continuing. Given therefore the slight growth Vodafone should offer in the coming years, we maintain our Buy recommendation on the stock.
Companies: Vodafone Group
Major new exclusive concert series launched; Buy
NextVR acquired by Apple for speculated US$100m