Telit warns on profits after ‘unique challenges’ that included chief’s sacking
Telit was forced to formally dismiss its chief executive Oozi Cats in mid-August.
Telit Communications has warned on annual profits after a raft of “unique challenges” over the past year that included the sacking of its chief executive Oozi Cats amid questions over his identity.
The company confirmed on Tuesday that it was slashing its adjusted underlying earnings expectations to between between 20 million to 23 million US dollars (£14.4 million – £16.6 million) for the 12 months to December 31.
That is compared to guidance put forward in September which forecast earnings of between 44 million to 48 million US dollars (£31.7 million – £34.6 million), with the revisions coming just weeks before the release of its annual results in April.
Revenues have also been knocked lower from previous forecasts of 390 million to 400 million US dollars (£280.8 million – £287.9 million) to between 374 million to 376 million US dollars (£269 million – £270.6 million).
The group said it reflected a “conservative approach” in the preparation of its results, reflecting higher spending on research and development, “a prudent level of provisions and other adjustments” and component shortage issues which affected sales in the final weeks of 2017.
The group clearly faced a number of unique challenges during the course of 2017 which have unquestionably affected our financial performance in the short term Telit Communications chairman Richard Kilsby
The profit downgrade also comes in the wake of a difficult year for the company, with Telit being forced to formally dismiss its chief executive Oozi Cats in mid-August amid allegations he was the same man as American fugitive Uzi Katz.
Uzi Katz and his wife Ruth V Katz were accused of wire fraud in connection with a string of property deals across Boston in the 1990s.
Telit Communications hired international law firm CMS to investigate the allegations.
An independent review had uncovered evidence showing that an indictment was issued against Oozi Cats in the US, which had been knowingly withheld from advisers.
The board initially agreed that Mr Cats take a leave of absence before he formally resigned on August 14.
Chairman Richard Kilsby said: “The group clearly faced a number of unique challenges during the course of 2017 which have unquestionably affected our financial performance in the short term.
“We are resolved to ensure that the business is placed on a sustainable footing for the longer term and the Group’s financials are recalibrated on a prudent and conservative basis.
“We are pleased with the outcome so far.”
Mr Kilsby said the company had also secured new covenants with its leading bank and confirmed that trading in 2018 was off to a good start, with trading ahead of the board’s expectations.
“This underpins our confidence that we will deliver significant revenue growth as well as stabilising gross margins and improving cash generation in the current financial year.”