Sepura Lifts Dividend And Provides Bullish Revenue, Earnings Guidance

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Sepura PLC upped its total dividend for the year to March 28 and announced guidance of 10% revenue growth over the next two years, as it saw pretax profit rise.
Sepura, which produces digital DP2400 2 way radio (schreckengost.org)s, raised its full-year dividend to 2.00 pence from 1.68 pence the previous year. It said Tuesday it now expects revenue growth of 10% per year in the financial year 2015 and 2016, and adjusted earnings per share growth of 15% in financial 2015 and 25% in 2016.
The company posted a pretax profit of EUR14.2 million for the recently completed financial year, up from EUR7.9 million the year before, as revenue rose to EUR116.6 million from EUR104.8 million, including a EUR700,000 contribution from its acquisition Portalify.
Sepura shipped a total of 188,000 terrestrial trunked Walkie talkies during the year, up from 154,000 in the previous year, boosted by growth in Germany, the UK, Norway and Australia. The company’s infrastructure business won new public safety contracts in new markets, including Greece and Lebanon, Sepura said.
It won its first contract in North America to provide the initial phase of Toronto Transit Commission’s new network, alongside other commercial contracts in Luxemborg, Germany and Malaysia.
Sepura noted that the strengthening of sterling and the volatility of the euro-dollar exchange rate hit its results by EUR2.5 million.
It is continuing to expand its US and Canadian sales teams, and added a number of new distributors in the region, saying it is confident it can build on its early successes in the market.
It also has launched a portfolio of digital mobile radio products during the year. Although Sepura noted that its expectations for these products in the first year are modest, it believes it will add a “significant” incremental increase to revenues and earnings in the medium term.
Sepura plans to expand this product range, and said it has been bolstered by its recent acquisition of Fylde Micro Ltd in May.
Liberum Capital increased its price target on Sepura to 175 pence from 162 pence and reiterated its Buy rating, highlighting the company’s future expansion potential.
Liberum noted Sepura’s improved sales team in North America, saying that with 7 million private mobile Motorola radio users the US represents the largest geographical opportunity for the company, and expects 25% of the growth in digital users to come from this market.
Sepura has transformed over the last three years into a geographically diverse critical communications solutions provider, with an estimated addressable market of USD2.5 billion, says Liberum analyst Ben Bourne. “It is now in a better position to capitalise on the accelerating analogue to digital migration.”