Sepura shares nosedive after triple blow
Cambridge communications technology business Sepura saw 68 per cent ripped off its UK share price after posting a triple warning in a grim trading update.
Lower order intake, delays in key contract awards and the news that CEO Gordon Watling has been advised to take an extended leave of absence on medical grounds sent the stock into a tailspin. They were down 29.75p to a low of just 14p following the update.
The company is having to talk to lenders about a stay of execution on certain of its covenants from March 2017 but reassured shareholders that it had sufficient liquidity for its forecast needs.
Despite supplying technology for the recent Rio Olympics, that touch of gold looks to have been sadly and swiftly tarnished.
The trading update revealed: “Order intake in recent months has been lower than the board's expectations as a result of emerging delays in device refresh opportunities in a number of key markets, primarily through budgetary pressures which are extending product lifecycles.
“At the same time, key contract awards in the group's systems business have also been subject to delay. “The latest sales pipeline and associated timing indicates that order intake for the full year will have a significant impact on the group's FY17 revenues. As a result the board now anticipates adjusted EBITDA for the current financial year could be circa 60 per cent lower than its previous expectations.
“The group has sufficient liquidity for its forecast needs. The revised revenue expectations may require Sepura to discuss with its lenders a possible waiver of certain of its covenants from March 2017.
“Further significant savings are being targeted to realign fundamentally the cost base as part of the continual drive for operational efficiencies across the group.”
Richard Smith, acting CEO during Watling’s leave of absence, said: “It has become clear that we will not be able to meet our original adjusted EBITDA target.
“Realigning and reducing the cost base will help mitigate the impact of lower revenues in the current year. Our strong sales pipeline continues to give us confidence in the group's longer-term prospects.”
Watling has told Sepura that he has received medical advice to take an immediate and extended period of absence, to recover fully from injuries sustained in a motor bike accident in March.