Gentrack signs up UK water utility firm, affirms earnings guidance

Thursday 16th July 2015

Gentrack Group, which develops utilities and airports software, completed one of two negotiations weighing on its forecasts with a UK water utility firm entering into a contract, and affirmed annual guidance provided in May.

Chairman John Clifford said the board still expects annual earnings before interest, tax, depreciation and amortisation of between $13 million and $15.5 million in the year ending Sept. 30, despite signing the deal with the water utility, which is expected to be implemented in 2017. When announcing its first half result in May, the two contracts under negotiation were seen as a risk to Gentrack meeting its prospectus forecast for the 2015 full year of $44.7 million revenue and $15.5 million Ebitda.

"This contract is one of the two deals mentioned in our half year guidance which we had expected to secure earlier in the year," Clifford said in a statement. "We are not yet in a position to refine our profit guidance of Ebitda between $13 million and $15.5 million for the year to 30 September 2015, which is dependent on signing the remaining contract and other license transactions under negotiation."

Gentrack, which raised $36 million of new capital in an initial public offering last year, got itself into hot water after releasing a significant profit downgrade just five weeks after its listing. The Financial Markets Authority took no action but said 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.

The company today said its research and development was working on new software to support water retailers in the UK.

Gentrack's negotiations with an Australian energy company are still underway.

The shares last traded at $2.10, and have declined 2.3 percent this year.

BusinessDesk.co.nz

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