Gentrack shares down after disclosure
Gentrack shares have slipped after chairman John Clifford admitted the company knew of a project delay that later sparked a profit downgrade before it completed its initial public offering in June.
Clifford defended the business software firm's decision not to advise prospective investors of the delay at the time, saying it didn't know until after the company listed on the NZX on June 25 that it would have any financial implications.
Gentrack's shares dropped 15 cents to $2.10 in afternoon trading after the admission.
A Financial Markets Authority spokesman said the financial markets watchdog was continuing discussions with Gentrack about its revised profit guidance and offer documents. He would not speculate how long those discussions would take or the possible outcome.
Gentrack issued a profit warning on August 1, just five weeks after it listed on the NZX, saying it was in a dispute with a customer which it expected to go to mediation.
It said the delay to the unnamed major project and a separate delay signing a new contract with an existing customer meant its profit for the year to September 30 would probably come in at between $2.5 million and $2.8m, which is $900,000 to $1.2m lower than it forecast in its June 4 prospectus.
Gentrack's shares immediately plunged 19 per cent to $2.10 on the news, but had since recovered some of that ground.
Gentrack issued a statement on Wednesday last week saying "the facts and circumstances" that led its board to conclude that its financial forecasts should be revised had "arisen recently, after Gentrack was listed on the NZX and ASX".
Clifford clarified to Fairfax Media today that it had known of the project delay before the IPO.
"The delayed go-live date was due shortly after the IPO but we knew at the time of the IPO that it would be delayed."
He did not believe Gentrack's board should have informed investors as "we didn't think it would have a revenue impact on us", he said.
"A minor delay on a project in the course of things isn't a major issue. When it became clear that it was going to have a revenue impact on us, we did make the announcement."
Clifford also defended the company's decision to hold meetings with analysts in the wake of the profit warning while not providing further information to the market, saying nothing material had been discussed.
"We just wanted to communicate the details of the release to our major shareholders, so we didn't give them any further information that wasn't released to the market," he said.
"They asked questions and we could add some colour around it, but it wasn't any more material facts than we had released," he said.