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Wynyard hikes 2013 capital spending by up to 63 percent, on track to meet IPO sales forecast

Tuesday 19th November 2013

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Wynyard Group, the intelligence software developer spun out of Jade Software in July, faces a wider annual loss as it ramps up investment to chase sales growth, and says it's on track to meet its 2013 revenue forecast.

The Auckland-based company will bring forward recruitment of new sales and services staff to manage next year's growth pipeline, adding between $1 million and $1.5 million to the forecast operating expenditure of $25 million for the 2013 calendar year. The extra money will go on top its $1.1 million tagged for marketing in its initial public offering prospectus, which was to support entry into new markets and product development.

Wynyard affirmed its August guidance that the company was on track to meet its 2013 sales forecast of $21.5 million. The company reported first-half sales of $10.3 million, including the period before it was spun out of Jade.

The increased spending and unchanged sales means Wynyard faces a loss before interest, tax, depreciation and amortisation of between $4.5 million and $5 million in calendar 2013, up from $3.5 million in the prospectus. The company is targeting positive earnings before interest, tax, depreciation and amortisation of $1.2 million in 2014.

"Sales opportunities the company expected to close this year have either been executed or are in the late stages of contracting," managing director Craig Richardson said in a statement. "While there remains potential for short timing differences at the year end, we are confident these contracts will be executed and hence we are bringing forward investment in next year's growth programme."

Like other growth-focused software firms, Wynyard is forgoing short-term profits in the hope of big capital gains by chasing revenue in large markets such as the US.

Wynyard's shares rose 1.7 percent to $1.20 yesterday, valuing the company at $123.1 million. The shares have gained 4.3 percent from its $1.15 sale price in a July float which raised $65 million. Of the money raised, Wynyard kept $26 million to fund its growth ambitions, with the remainder paying out Jade for the intellectual property and covering outstanding debt.

The company said it has retained Maryland-based Government Sales Specialists to manage early stage opportunities in the US, and has increased its investment in software-as-a-service delivery infrastructure in the UK and the Middle East to meet growing demand from its financial services clients.

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