Newly-listed Gentrack issues profit warning

Last updated 15:44 01/08/2014

Relevant offers


Weight Watchers campaign joins list of PR blunders Skills shortage results in firms looking internally to fill roles, recruitment firm says Pumpkin Patch in trading halt - too much debt, not enough capital British American Tobacco offers to buy Reynolds in US$47 billion deal Backlog of defective buildings and shoddy workmanship sparks calls for building warranties Ikea NZ Facebook page set up: Is it finally coming to NZ? Auckland Council and contractors ordered to pay $120,000 to the family of killed rubbish truck worker 71yo asked to stand on hot water cylinder to plug in phone after bizarre UFB install Tuanz welcomes Vodafone offer to keep internet users connected Travel companies adapting to 'luxury' demands of young travellers

Gentrack chairman John Clifford and chief executive James Docking have been unavailable for comment today after issuing a shock profit warning.

Shares in the business software firm opened 19 per cent lower at $2.10 on the NZX this morning after the Auckland software firm downgraded its profit forecast and revealed it was in dispute with a customer.

Spokesman Aaron Baker said Docking, and he understood Clifford, had been locked in discussions with adviser UBS for much of the day and had not been available to the media.

Gentrack said it expected its profit for the year to September 30 would be $2.5 million to $2.8m, which is $900,000 to $1.2m lower than forecast in its May 26 prospectus.

Revenues would likely be between $38.1m and $38.5m, which would be between 5.2 per cent and 6.2 per cent lower than it originally forecast.

The downgrade prompted strong criticism.

Trade Me founder Sam Morgan tweeted it was "baffling how directors can sign a prospectus and take a company public only to miss forecasts two months later".

Brian Gaynor, executive director of Milford Asset Management, said the downgrade was "not good and very disappointing" and could have fallout for other technology stocks.

Gentrack's downgrade came just five weeks after the company listed on the NZX on June 25.

The company said trading to date had been in line with expectations, but a dispute had arisen between the company and an unnamed customer over the delayed completion of a project. Baker declined to name the customer.

There was also a delay signing a substantial contract with an existing customer, which it still expected to sign by the end of this financial year, it said.

Gentrack said it foresaw no change to its forecast $2.6m annual dividend, which it expected to pay in December or its forecast for the 2014-15 financial year.

Clifford said in June that the biggest potential risk investors faced was that the company might botch an implementation for a major client and suffer reputational damage.

"Some projects are more difficult than others but we haven't had any implementation failures," he said then.

Gentrack shares had recovered slightly to $2.35 at noon, but then resumed a downward slide and were trading down 13 per cent at $2.24 in midafternoon trading, 16c down on their original $2.40 listing price.

Ad Feedback

- Stuff

Special offers

Featured Promotions

Sponsored Content