Gentrack first-half profit rises; full year flagged

See also: Gentrack shareholders not impressed with another profit warning

Gentrack [NZX: GTK], which develops utilities and airports software, says first-half profit rose by a third, but warns full-year earnings may miss its prospectus forecasts because of delays in inking contracts.

Net profit rose to $3.2 million in the six months ended March 31, from $2.4 million in the year earlier period, the Auckland-based company says. Revenue increased 3.4 percent to $18.5 million.

Earnings in the first six months of the year improved following the acquisition of new customers in the UK, Australia, and New Zealand, including Queenstown Airport. However, the company says annual earnings might not rise as much as expected as two major contracts that were expected to be signed by now in the UK and Australia are still under final negotiation.

"This delay introduces some risk that Gentrack may not achieve its prospectus forecast for the 2015 full year of $44.7 million revenue and $15.5 million Ebitda (earnings before interest, tax, depreciation and amortisation)," chairman John Clifford says.

He says the company will update the market when it has more certainty but if the additional revenue associated with the two projects under negotiation can't be recognised, Gentrack is likely to produce a similar result to the $13 million in underlying earnings it made in the 2014 financial year.

Gentrack, which raised $36 million of new capital in an IPO last year, got itself into hot water after releasing a significant profit downgrade just five weeks after its sharemarket listing. The Financial Markets Authority took no action but says the company could have been clearer when flagging certain risks. The profit downgrade followed a dispute between the company and a major customer over extra payment.

Gentrack says it has a record number of opportunities at the tender and proposal stage and remains confident about its market position and growth in new utility customers in the UK and Australia over the next two to three years.

It will pay a first-half dividend of 4.1 cents per share on June 18, in line with the prospectus, as it had a strong cash position of $5.4 million at the end of March.

Gentrack shares fell 4.5 percent to $2.35, below the IPO price of $2.40.

(BusinessDesk)