MINNOW: Ubisense could yet be a successful turnaround story

Reaching under the bonnet of this stock is hard graft.

An outsider looking in would think Ubisense has all the qualities of an AIM darling, with a list of blue-chip clients which include BMW, Jaguar Land Rover, BAE Systems and Daimler — not to mention some top technology to boot.

But closer inspection shows a business which, despite its promise, has failed to reach its full potential.

Spun out of Cambridge University in the early Noughties, Ubisense makes sensor equipment and software for manufacturers. The sensors feed data from the factory to managers who can then slow down or speed up production so that all stages are synchronised. It is particularly useful for car manufacturers who need to fulfil specific customised orders — colour, upholstery, wheels.

Ubisense attracted much attention when it first listed on AIM back in June 2011 as analysts predicted it was only a matter of time before it became a £1 billion company.

But the reality is that in 2011 Ubisense turned over £23.8 million and a profit of £141,000, and last year revenue came in at £27.3 million with a loss of £3.1 million. Hardly an impressive advance for the company.

Yet according to brokers this could still be a successful turnaround story.

In 2016, the firm hired chief executive Richard Petti, a man who believes he can shake the company up. Petti says some analysts in the City questioned why he took on the job, to which he replies that the firm’s technology has always been top drawer but it has been let down by its sales and marketing strategy.

Last October he went to the market and raised £5.5 million — money that was spent on shoring up the balance sheet and hiring salespeople.

He says it takes months to for a salesperson to be productive in this industry: “I can’t just bring a whole load of people and tell them to get on with it. They need to develop a pipeline to get into.”

Analysts agree with Petti on the tech front and are willing to give him some time to turn around a sales strategy that has been disjointed.

Petti admits that one of the problems selling into big manufacturers such as Daimler is that decisions are not all taken by one central office.

For instance Daimler has 45 factories worldwide but each is autonomous and will make its own decision about what technology to bring in. As a result Ubisense is only serving 60% of the plants at the moment.