Gentrack revenue misses prospectus forecast

Gentrack CEO James Docking with chairman John Clifford and NZX chief executive Tim Bennett during the firm's sharemarket listing event last June.

Gentrack Group, which develops utilities, airports, and water companies software, reported full-year results that were largely in line with its 2014 prospectus although revenue was below forecast.

Revenue grew 9.2 per cent for the year ended September 30 to $42.1 million, although project delays and delivery challenges meant it was $2.6 million below prospectus forecast. Net profit jumped to $9.4 million, slightly above the forecast because of foreign exchange gains and lower tax, from $3.4 million a year earlier, the Auckland-based company said in a statement.

The company will pay a fully-imputed final dividend of 7.2 cents a share on December18, in line with its forecast, bringing payments for the year to 11.3 cents. For Australian shareholders the dividend is 25 per cent imputed.

Gentrack chairman John Clifford said while the company was disappointed to have not hit the prospectus revenue forecast, it did deliver on net profit, dividend, and closing cash position as forecast. "We enter FY16 with a strong order book and numerous exciting prospects and expect to continue to deliver our long-term revenue growth of circa 10 percent per annum," he said.

The highlight of the 2015 financial year was the company's continued strong and profitable growth in the UK, where it won its second water utility project, he said.
Annual revenue from the UK now exceeds $7 million, up 44 percent on last year, while revenue in its biggest markets of Australia and New Zealand was relatively flat at $21.8 million and $10 million respectively. One single utility customer accounts for $5 million of revenue.

Gentrack has customers at 51 utility sites and 61 airports. It won five new customers during the year, upgraded six existing ones, and has gone live with eight systems, it said. Airports had a strong year, growing revenue by 15.7 per cent and exceeding $2 million in pretax earnings for the first time.

Clifford said the company needed to invest significantly in staff and systems to meet longer-term market demand which would squeeze its earnings before interest, tax, depreciation and amortisation margin in 2016. Further guidance will be provided at the annual meeting next February.

Operating expenses increased 8.3 per cent in 2015, below the revenue growth rate.
Gentrack has appointed Ian Black as chief executive to replace James Docking, who will leave early next year after running the company since 2005. Black had an international career at Oracle and SAP, including chief executive of SAP in New Zealand. Docking is to remain on the board as a non-executive director and has a 10 per cent stake in the company.

Gentrack's shares are trading at $2.04, down 1.8 per cent in the past year.