Gentrack Group Limited (NZX/ASX: GTK), a leading provider of software solutions for utilities and airports, today released its results for the half-year to 31 March 2019.
• Revenue $54.4m – up 5% on H1 FY18
• Recurring Revenue $37.7m – up 26% on H1 FY18
• EBITDA1 $12.8m – down 19% on H1 FY18
• NPAT ($8.7m) after impairment of CA Plus of $14.6m – adjusted NPAT $4.6m
• Interim Dividend of 5.0cps declared
In line with guidance, the results for the half-year show an increase in revenue of 5% to $54.4m and a fall in EBITDA of 19% to $12.8m over the same period last year. Lower than historic revenue growth reflects the impact of the shift to SaaS sales and some deferred customer projects. Increased costs reflect the investment in productised SaaS solutions.
Recurring revenue for the half-year was $37.7m, up 26% on H1 FY18, marking the continued growth in SaaS revenue. On an annualised basis, March 2019 recurring revenue (excluding Evolve which was acquired in June 2018) was $74m, 33% up on March 2018.
Notwithstanding UK Brexit and electricity price regulation introduced in January 2019, Gentrack recorded a 7% increase in revenue on H1 FY18 in the UK. There was a 27% drop in Australia revenue with no large projects in the half. Our Rest of World revenues increased significantly to $7.5m, reflecting ongoing airports projects in the US and Europe.
We have added four new utilities on a SaaS basis in H1 including Castle Water, Enigys, MoneyPlus and Northumbrian Energy. We completed deliveries at nPower, Mojo Power, MA Energy, Maxen Power and Goto Energy. Utilities revenues were flat at $42.3m with EBITDA down 24% to $10.1m
Veovo has won one new customer, Perth Airport and is continuing significant projects at Ports of Jersey, Wellington, Orlando, Melbourne, London City, Auckland and Newark Liberty airports. Veovo first half revenues were up 25% to $12.1m while EBITDA remained unchanged on the same period last year.
We have fully written down the value of the CA Plus business by $14.6m reflecting the disappointing performance of this business. It was acquired in May 2017 as an early stage business delivering retail and concessionaire management solutions for airports.
In September 2018, when it became clear that the deferred consideration based on results would not be payable, we revalued the deferred consideration and impaired Goodwill with a net $0.1m impact. During the 6 months to 31 March 2019, expected sales growth has not been delivered and we are taking the decision to write the investment off. 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.
We have over 550 staff and have continued to invest in strengthening the capabilities needed to enable our global strategy. This includes specialist skills needed to drive our SaaS product development and delivery as well as managing our global customer success operations.
We have seen a shift in the utilities sector to cloud based solutions, reflected in our growth in recurring revenues and adoption of our new SaaS offerings. In the first half we have completed the investment in our market compliant solutions for energy and water sectors covering the UK, Australia and Singapore.
Our priority for the second half of FY19 is to expand our presence in many of our large customers in the UK and Australia as they adopt our broader solution offering and they bring more of their customers onto our platforms. We will be growing our managed services business to support customers who increasingly want us to perform data processing and analytics functions on their behalf. We are also bringing the Evolve solution to market and expanding sales of the Junifer solution in Australia.
The board has declared an interim dividend at 5.0cps for the half-year in line with the interim dividend last year.
Ongoing, we are revising the dividend policy set at the time of IPO 5 years ago. The Board now intends to pay a dividend of at least 70% of underlying NPAT, subject to outlook, capital and liquidity requirements.
In line with our guidance at the Annual Meeting in February 2019, we expect to deliver a strong second half, and a full year FY19 EBITDA result marginally ahead of FY18, noting the usual dependency on the timing of key contracts and project milestones. We have a strong pipeline of opportunities in our utilities and airports markets which support our long term 15% CAGR EBITDA growth objective.
All figures are presented in NZ$.
Interim Financial Statements and the Investor Presentation for H1 2019 can be viewed in Gentrack’s Investor Centre.