Gentrack Group Limited (NZX/ASX: GTK), a leading provider of software solutions for utilities and airports, today released its interim financial results to 31 March 2018.
• Revenue $52m – up 80% on H1 FY17
• EBITDA1 $15.9m – up 80% on H1 FY17
• NPAT $8.4m – up 50% on H1 FY17
• Interim Dividend of 5.0cps declared
We are pleased to report continued profitable growth for the half year ended 31 March 2018 (‘H1 FY18’). First half revenues of $52.0m and EBITDA of $15.9m were both up 80% on the same period last year. Net profit after tax of $8.4m was up 50%.
The acquisitions completed in April and May of 2017 (Junifer, Blip, CA+) have contributed to the result and we have made good progress with the integration of these businesses into the Group.
As the acquisitions did not contribute to the prior comparative period H1 FY17, our commentary also includes comparisons to H2 FY17 which is a more relevant benchmark for the Group’s H1 FY18 performance.
Comparing the first half performance to the second half of last year, revenues increased by 12%, EBITDA increased by 6%, and net profit after tax increased by 34%.
New projects with utilities and airports in the UK and Europe contributed to organic growth in the period. Growth in the UK has continued with revenue from the region up 314% on the same period last year, while projects in regions outside of the UK, Australia and New Zealand delivered revenues up 61% on H1 FY17. A comparison to H2 FY17 showed an increase of 60% for the UK, and a decrease of 41% for regions outside of the UK, Australia and New Zealand.
Recurring revenues from annual fees and support services continued an upwards trend recording an 89% increase on H1 FY17, while revenues from licences and project services were up 349% and 35% respectively. Contractually recurring annual fees have increased as a percentage of total revenue to 33% compared to 28% six months ago.
To support new projects and the ongoing product transformation activities across the business, people numbers have steadily increased, up 14% during the half year, and up 70% on the same period last year.
Utilities revenues and EBITDA climbed 65% and 67% respectively for the half year, driven by significant contributions from the UK operations and ongoing smart meter related projects in Australia. A comparison to H2 FY17, showed revenue and EBITDA increases of 11% and 3% respectively from Gentrack’s global utilities business.
First half revenues from Veovo, Gentrack’s global airport solutions division, also recorded increases, up 192% on the same period last year and 17% on H2 FY17. EBITDA was increased by 178% compared to the same period last year, and by 19% from H2 FY17. New projects that commenced at Belfast International Airport and Ports of Jersey, along with ongoing solution implementations in Greenland, Brisbane and Schiphol Airports, all contributed to a strong first half result.
We are investing in the development of pre-configured Market Ready Solutions for our key utility growth markets (UK, Australia, NZ and Singapore). This enables us to deliver Software as a Service projects quicker with lower risk and increases our mix of recurring revenue. We have capitalised development costs of $1.6m in the period; increased from $0.9m in H2 FY17, reflecting the long-term returns expected from this initiative.
Priorities for the second half of FY18 include progressing market growth opportunities in the UK/European, Australasian and South East Asian markets, further innovation through our services and solutions which allows our customers to provide the lowest cost to serve models and best customer experience, and transforming our business operations to ensure we always anticipate and deliver to the needs of our customers.
The board is pleased to declare an interim dividend of 5.0cps, representing an increase of 19% to interim dividend for the same period last year.
We expect second half EBITDA performance to be broadly in line with the first half, noting that the timing of key contract wins and project milestones are subject to uncertainty. We have a strong pipeline of opportunities in all markets and current performance trends are in line with our long term 15% CAGR EBITDA growth objective.
All figures are presented in NZ$.