12.11.15
Ubisense Group PLC (the "Company")
Trading Update
Ubisense ("Ubisense" or the "Company") (LON:UBI), a market leader in enterprise location intelligence solutions, announces an update on current trading and an outlook for the current financial year ending 31 December 2015 ("FY15").
The Geospatial division has continued to trade satisfactorily. There is some significant deal concentration weighted towards the final weeks of FY15, in addition there is a good pipeline of opportunities to close for both FY15 and 2016. During the period the Company deployed with a number of its strategic partners, demonstrating ongoing demand for its solutions as well as validating its partner channel approach.
The RTLS division has been materially impacted by the recent well-publicised challenges facing the Company's large automotive customers, in Germany especially, and this has resulted in the downscaling, delay or cancellation of certain major deployment contracts and a likely lengthening of customer decision cycles in the wider industry.
Due to these unforeseen circumstances, there is a risk of a material revenue and subsequent profit shortfall against previous guidance for FY15. The Board's estimate is that second half revenues will now be in the range of £12.6-14.6 million (as against first half revenues of £10.4 million) and that full year FY15 revenues will therefore be in the range of £23-25 million. This range of outcomes should result in at least a small positive adjusted EBITDA for the second half, before non-recurring costs, but an adjusted EBITDA loss for the full year FY15.
As previously announced and as part of the stated strategic restructuring, the Board implemented some significant cost reduction initiatives early in the second half, resulting in annualised savings of £2.0 million. Given the challenging trading conditions highlighted above, the Board has decided to implement further cost actions over the coming months, with a view to achieving further annualised savings of approximately £3 million. A further exceptional charge of £1.7 million is expected in the second half of FY15 in relation to these measures, bringing the total exceptional charge in FY15 to £3.6 million.
Cash conversion this year has been adversely affected by restructuring costs and extended payment terms on certain contracts, impacting the collection of receivables. Gross cash at the end of October 2015 was £4.8 million, with £5.3 million drawn under the Company's available debt facilities, giving a net debt position of £0.5 million. The Company expects to remain in a gross cash, but net debt position, as at 31 December 2015. Management is in regular dialogue with its principal lender, HSBC, who remain supportive and in constructive discussion to support the Company's on-going requirements. The Board is determined to ensure that the Company's cash outflow situation is rectified though improved cash conversion in 2016, coupled with the benefits of the recent and current cost alignment initiatives.
Peter Harverson, Chairman designate, commented:
"The second half of the period has been challenging for the business, driven by macro events outside of our control. Whilst disappointing to announce a reduced revenue number, the recent signing of a new automotive OEM in Spain through Atlas Copco and other strategic wins support the Board's view that the strategy in place means the Group is well positioned moving forward.
In the short-term, we have made some necessary decisions to right size the cost base of the business and are focused on refining our sales strategy, in particular our partner channel development, to drive revenue growth through expanded scale and reach."
Contact
Ubisense Group plc Tel: + 44 (0) 1223 535170
Richard Green
Tim Gingell
Numis Securities Limited Tel: + 44 (0) 207 2601000
Simon Willis, Jamie Lillywhite (Corporate Finance)
Rupert Krefting (Corporate Broking)
Redleaf Communications Tel: +44 (0) 20 7382 4730
Rebecca Sanders-Hewett, Richard Gotla,
David Ison, Harriet Lynch