Sharechat Logo

Gentrack downgrades profit guidance again

Monday 30th September 2019

Text too small?

Gentrack has downgraded its expected operating earnings yet again.

The utilities software provider now says earnings before interest, tax, depreciation and amortisation for the year ending today will be between $25-26 million.

It was only late July when Gentrack said it wouldn't achieve its previous target of ebitda slightly exceeding the $31 million it reported for its 2018 financial year, telling investors to expect a fall in ebitda to $27-28 million.

The company says the latest downgrade is "due to increased bad and doubtful debt provisions in relation to the UK utilities market which has seen further deterioration over the last quarter.

"Uncertainly in the UK utilities market increased with the regulatory imposition of price capping for retailers in January 2019, a key factor in the failure of nine retailers and continuing market restructuring."

In July, Gentrack was blaming that downgrade primarily on delays in customer projects which it said "do not indicate that the projects concerned are at risk," although it did also mention rising bad debts.

In May, Gentrack reported a 19 percent decline to $12.8 million in first-half ebitda, even as revenue increased 5 percent to $54.4 million. At the time, the company said revenue growth was slowing as it generated more software-as-a-service sales, and as some customer projects were deferred.

The company reported a first-half loss of $8.7 million after writing off the carrying value of airport software developer CA Plus, which it bought in 2017.

As at March 31, Gentrack reported $32.1 million of receivables, of which $18.3 million was from trade debtors and $11.9 million from contract assets. At the time, it provided for $679,000 of impairments and $137,000 for warranty claims.

Gentrack didn't provide a bottom-line profit forecast. It has a history of missing its own forecasts – its first downgrade came just five weeks after its initial public offer in 2014.

The shares fell 25 cents, or 4.3 percent, to $5.50 in early trading and are down about 18 percent from a year ago.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Scott Technology Trading Update; Rising to the COVID Challenge
New non-binding indicative offer received from apvg, shareholder meeting deferred
U.S. Added 4.8 Million Jobs in June as Reopened Businesses Rehired
Auditors have a duty to be alert to fraud
Strong sales recovery but uncertainty remains over economic outlook and potential second wave of COVID-19
Auditors keep falling into the same trap
The great interruption continues
Update on Clutha Upper Waitaki Lines Project
Napier Port Welcomes Inland Port Funding
Auckland Airport provides details of Other Significant Items expected to impact 2020 financial results and an update on further organisational change

IRG See IRG research reports