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News From Sepura 7 July 2015


SEPURA, the Cambridge based company that is heavily focused on providing communication systems for amongst others emergency services and hazardous working environments, has delivered some solid full year results this morning.

This concerns the year to 27 March 2015, where EBITDA came out at €17m while the reported adjusted diluted EPS was 9c on revenue of €131.2m.

No doubt fans of the company will be pleased with the numbers today, which represent impressive year on year growth, the shares appreciating 3.5p this morning to £1.64p.


Although Sepura’s shares are arguably highly rated, it remains from what I can see a quality operation, with exciting growth potential for the longer term.

Regular visitors to the site will be aware that I have covered Sepura a number of times here and in the weekly column, having also visited the Cambridge premises and met up with management, who I believe are an impressive bunch.

There has clearly been some strong momentum building within the operation on the back of a well founded strategy and which now, takes on a real global feel as demonstrated by the numbers.


Indeed, the companies order book at the period end had reached record levels where its core markets have proved resilient and sustainable, while new areas such as DMR (Digital Mobile Radio) and other applications are also gaining notable momentum.


Sepura has like others, assisted its organic growth with some shrewd earning enhancing acquisitions, which should now be significantly boosted by the purchase of Teltronic, made after the period end.


Broker N+1 Singer suggests this is something akin to a game changer for the operation, expanding scale, geographic reach along with the customer base and product range.       

Importantly, from an investment perspective cash conversion is strong, while the progressive dividend policy continues apace, now representing a 20% year-on-year increase.


Some potential investors watching the stock may conclude that in trading on a forward PER of 19, the shares now have a fairly priced look about them, which will no doubt deter those not wishing to buy at the perceived top.


However, the potential for further significant growth, along with an implied PEG of 0.5x for the financial year in progress, may be alternative factors to consider in the mix and will no doubt reassure holders sitting on a tidy profit.

Brokers appear to remain pretty warm to the story too, with Liberum putting a £2.02p price target on the stock, while Panmure opts for £1.90p.


New orders from Saudi Arabia, continued wins in Germany along with a €2.3m applications contract from the Finnish National Police also serve to further underline the increasing and expanding mix.


An accelerated penetration within N. America on the back of the Teltronic acquisition should also add to the potential upside, while the forecast increase in DMR revenue by 2017 to more than €16m euros would appear to bode well and allay previous fears of limited potential in the area.

For those looking for the longer term potential within Sepura expectations are for total revenues to hit €239m by 2017, delivering adjusted pre-tax profits of €33.1m


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