Gentrack full year results to 30 September 2020

Gentrack Group Limited (NZX/ASX: GTK), a leading provider of software solutions for utilities and airports, today released its results for the year to 30 September 2020.

Results Summary

  • Revenue: $100.5m – down 10% on FY19
  • Committed Monthly Recurring Revenue: $56.7m – up 18% on FY19
  • EBITDA (1): $12.1m – down 51% on FY19
  • Statutory NPAT: ($31.7m) – driven by non-cash write-downs
  • Adjusted NPAT (2: $2.4m
  • Net cash: $16.8m up $12.2m on FY19
  • No Final Dividend payable

The results for the year show underlying EBITDA of $12.1m, down 51% on FY19, off the back of lower FY20 revenues coming in at $100.5m, a 10% decrease on FY19. Despite the decline, Annual Recurring and Committed Monthly Recurring Revenues for the year have increased by 4.9% and 18% respectively reflecting new utilities business in Australia and the UK, and net growth in the meter points for existing customers in these regions. It also reflects new airports business won in the year in Australia, North America and Europe.

Net Cash at 30 September 2020 has increased by $12.2m over the same period last year, marking a strong year in cash generation. Costs were down by $3.2m in H2’20 (vs H1’20) reflecting the impact of the cost-out programme in March 2020, COVID-19 cost reductions and other savings measures.

The Group has recorded a Statutory NPAT loss of $31.7m for the full year including an impairment charge of $34.5m primarily related to goodwill impairments in both the Blip and Utilities businesses, reflecting uncertainty in the outlook.

In light of the NPAT loss, the Board has taken the decision not to pay a final dividend.

CEO Gary Miles said, “The results reflect a tough year for our utilities and airports customers. Pleasingly the revenue mix and shift in annual recurring revenues is positive. We see opportunities in our markets and our strong net cash position sets us up to accelerate our technology investment and lead the industry as it transforms to the cloud and clean technologies. This year we’ve also played a key role in enabling our customers to adapt to COVID, keeping their mission critical systems operational and ready to support customer hardship at this time.”

“Coming into the business in October, I’m energised by the strong management team, including recent hires, and the passion and experience of our people. We’re in a good position to bring innovative cloud solutions as a key advantage for energy, water and airports customers.”

As stated at the half year, COVID-19 had no operational impact on the business in H1. The full year results however have been impacted by global economic events with some delays in utilities projects and more significant delays in airports programmes.

The Utilities business achieved a 4.3% increase in Annual Recurring Revenue, with overall revenue of $81.8m for the year declining by 7.3% due to the completion of prior projects and customer losses, driven by supplier insolvencies, consolidations and competitive activity in the UK. In Australia, key billing and customer management projects were started and put live contributing to the increase in Annual Recurring Revenues and a subsequent decline in non-recurring revenues.

Veovo has recorded revenues of $18.8m, down 20% on FY19, capping off a tough year for the airports industry globally with revenue for many airports being reduced by over 80% as COVID-19 travel restrictions were implemented. Airport operation systems are an essential service to the aviation industry which has enabled Veovo to remain profitable. Numerous projects were completed throughout the year in Europe, North America and Australia.

As per the outlook given in September, Gentrack continues to see market opportunities and has plans for ongoing investment in new cloud technology and the skills required to compete. It is expected that the full year EBITDA1 run rate for FY21 will be well below that of the H2 FY20 run rate, however, this may reduce FY21 profitability closer to break-even depending on the levels of future product investment and other factors.

A further update will be provided at the Annual Meeting in February.

All figures are presented in NZ$.

(1) EBITDA: Earnings before depreciation, amortisation, impairments and non-operating expenses related to acquisitions.
(2) Adjusted NPAT – Underlying NPAT adjusted for the impairment of Goodwill and intangible assets

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