Friday 24th May 2019
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Utilities software specialist Gentrack Group has reported an $8.7 million first-half loss after writing off the value of airport software developer CA Plus it acquired in 2017.
The company, which provides billing and customer management software for power companies, airports and water providers, says CA Plus was acquired as an early-stage developer of airport retail and concessionaire systems for retailers.
But it has not performed and Gentrack has written off its $14.6 million carrying value. Goodwill and deferred consideration had been revalued in September with a net $100,000 impact at the time, but sales growth expected in the six months to March 31 has also not been delivered.
“Expected sales growth has not been delivered and we are taking the decision to write the investment off,” Auckland-based Gentrack said in a statement to NZX.
“Notwithstanding this, there is clear demand for a solution to manage concessionaire revenues in the global airports sector. We are integrating the business into the Airport 20/20 portfolio and still see value to be recovered from our investment.”
Excluding the write-down, Gentrack said its adjusted net profit of $4.6 million for the six months ended March 31 was 45 percent lower than the same period the year before.
Revenue increased 5 percent to $54.4 million, but earnings before interest, tax, depreciation and amortisation were down 19 percent at $12.8 million. Gentrack said that was consistent with its earlier guidance.
Gentrack provides software to more than 220 utilities and airports in 30 countries. It gets just over half its revenue in the UK.
It says the slower revenue growth than previous years reflects the firm’s shift toward more software as a service sales and some deferred customer projects. Costs were also higher due to investment in SaaS solutions.
Gentrack said, notwithstanding Brexit-related disruption in the UK and electricity price regulation introduced there in January, revenue there increased 7 percent.
Revenue in Australia, the company’s second-largest market, fell 27 percent due to no large projects being completed in the half.
Revenue was up 7 percent in New Zealand at $6.1 million, and more than doubled to $7.5 million in other markets – largely due to ongoing airports projects in the US and Europe.
Across utilities, revenue was little changed at $42.3 million, but earnings were down 23 percent at $10.1 million. Revenue at the firm’s Veovo airports business climbed 25 percent to $12.1 million, while earnings there lifted to $2.7 million.
Gentrack says it expects a strong second-half with full-year operating earnings expected to be “marginally” ahead of last year.
That said, investment behaviour remains cautious in the UK, due to Brexit and power regulation, and fewer new players are entering the energy sector.
Regulation in Australia and the introduction of default market rates there has created investment uncertainty there, Gentrack says.
The company will pay a 5 cent dividend, unchanged from a year ago, on June 14 to investors registered one week earlier.
The shares fell 2 percent to $5.47, and are up 8.5 percent so far this year.
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