- Telit Communications downgraded its annual earnings guidance and renegotiated the terms of its loans, amid component shortages and higher R&D spending.

The Internet of Things company said it had decided to adopt a more conservative approach with respect to the capitalisation of R&D expenditure.

Component shortages had also impacted sales, while the company would also establish 'a prudent level of provisions'.

Revenue for the full year was now expected at $374m-376m and adjusted Ebitda at $20m-23m, excluding exceptional costs in relation to the restructuring of the business.

Net debt at 31 December was $30.2m, compared to $17.7m a year earlier.

The new banking covenants were more appropriate, the company said, following its rationalisation of product lines and costs.

'In particular, the covenant, which in broad terms measured the ratio of free cash flow against debt service obligations, is replaced for 2018,' it said.

Chairman Richard Kilsby said the company 'clearly faced a number of unique challenges during the course of 2017, which have unquestionably affected our financial performance in the short term'.

He added: '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. We have secured new covenants with our leading bank and trading in 2018 has started well. 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.'

At 9:53am: [LON:TCM] Telit Communications PLC share price was -6.55p at 162.65p

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