LONDON (Alliance News) - Critical communications company Sepura PLC on Tuesday said it swung to a big loss in the first half of its financial year due to writedowns and a halving in revenue.
Sepura revealed a pretax loss of EUR62.1 million in the half-year to the end of September, compared to a EUR6.2 million interim profit a year prior. The group booked EUR36.9 million of impairment charges in the half, primarily related to withdrawing from the digital mobile radio market but also including one-off financing and restructuring costs.
The impairments were exacerbated by revenue more than halving to EUR43.3 million from EUR92.9 million. Revenue had been expected to fall year-on-year due to the end of a substantial one-off contract in Saudi Arabia but order intake proved weaker than expected in the half, hitting revenue further.
The group said the sluggishness was driven by delayed refresh cycles in its core markets and further uncertainty about the Emergency Services Network in the UK.
Sepura said trading has remained slower than expected, though it said its robust order backlog should result in a better second half. It expects revenue for the full year will be EUR125.0 million to EUR135.0 million, compared to EUR189.7 million a year before.
In early November, Sepura revealed it was holding preliminary talks with Chinese radio transceivers and radio systems maker Hytera Communications Corp about a possible takeover. Those talks continue, Sepura said on Tuesday.
As those talks go on, Sepura said it is reviewing a range of strategic options. It also said it will require a waiver of some of its lending covenants from March 2017, based on the bleak outlook for its current financial year. Its lenders have agreed to defer some debt payments, it said, which should shore up its financial position for the next 12 months.
Sepura shares were down 5.8% to 20.50 pence on Tuesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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