Wynyard doubles loss to $44M, rights offer details due

Tuesday 23rd February 2016

Wynyard Group, the crime-fighting and security software developer, doubled its loss to $44.1 million in 2015 on static revenue while reshaping its business plan to try and achieve cash break-even more quickly.

Trading in the company’s shares was halted last Wednesday at its own request while it considered capital raising options after cancelling a planned share placement. The Auckland-based company said in a statement today it had extended that trading halt until tomorrow as it finalises details of a rights offer to shareholders.

The company needs extra funds to meet its working capital requirements by the end of March.

Wynyard has already raised $42.6 million in capital during the 2015 financial year ending Dec. 31 and at balance date had cash in hand of $14.9 million. Net cash outflow was $32.7 million during 2015, driven by an increased investment in product development and sales and marketing.

Total operating costs for the year were $57.1 million of which around 60 percent were people-related. Staff numbers are currently 310 and would stay at that level this year, said chief executive Craig Richardson. No redundancies are expected under the new business plan.

Revenue for the year was $26.3 million, almost the same as the $26 million achieved in 2014. The company had entered a contract this month with a partner to provide software and services for a government national security bureau, which was worth $27 million over the life of the contract, including $14.3 million in software licences. But the contract's conditions haven’t yet been met and it couldn’t be included in this year’s results.

The company expects 2016 revenue in the middle of analysts' current forecast range of $54 million to $65 million, plus the licence revenue from the latest deal.

Richardson said volatile capital markets had forced the company to reconsider its capital raising. Reshaping the business to achieve profitability earlier rather than chasing growth would have happened anyway, given the company was now well-established in its key market. But it also reflected the need to rely more on revenue rather than new external funding from capital markets, he said.

Recurring licence revenue remained high at 55 percent of total income, up 2 percent on last year and more than half of revenue came from Asian customers.

In its earlier statement, the company said directors had a "reasonable expectation" the capital raise would succeed although "material uncertainty" remained.

An interim $10 million credit facility has been arranged with major shareholder, Skipton Building Society, for capital it may need ahead of the capital raise. The loan is secured over the assets of the company, and the board must be confident the company can raise sufficient capital before drawing down on the facility, it said.

Wynyard's shares last traded at $1.54 and have shed 16 percent so far this year.

BusinessDesk.co.nz

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