Gentrack Group Ltd (ASX: GTK) has reported its annual result for the year to 30 September 2018, showing profit growth of 17%.
Gentrack provides billing and other types of software for essential service organisations such as energy businesses, water utilities and airports.
It has offices in New Zealand, Australia, the UK, Singapore, USA and Europe. It provides services for over 220 utility and airport sites in more than 30 countries. One of its main customers is Sydney Airport Holdings Ltd (ASX: SYD).
Gentrack’s 2018 annual result
Gentrack reported it grew revenue by 39% to NZ$104.5 million and EBITDA increased by 30% to NZ$31 million (click here to learn what EBITDA means), which was consistent with market guidance.
Excluding the Evolve Analytics acquisition which was acquired in June 2018, revenue grew 37% and EBITDA increased by 26%. Expansion and acquisitions means that the UK & Europe now represent over 50% of Gentrack’s revenue.
Some of Gentrack’s latest customers include Jersey Airport, Belfast International Airport and Orlando International Airport.
Net profit grew by 17% to NZ$13.9 million. Management explained that the profit growth was lower than revenue & EBITDA growth as a result of NZ$1.3 million of acquisition costs and also an impairment of goodwill.
Gentrack CEO Ian Black commented on the changing revenue streams:
“Our new utility customers are adopting our productised solutions in the cloud, driving the Group’s Annualised Committed Recurring Revenue (ACRR) up by 103% year on year from $25.5 million to $51.8 million.
Dividend
Gentrack declared a final dividend of 8.7 NZ cents per share, taking the full year dividend to 13.7 NZ cents per share, which was an increase of 7.9% compared to the prior year. This represents a payout of 70% of underlying net profit.
Outlook
Gentrack continues to aim for a long-term organic EBITDA growth target of 15% per year, although this is dependent on timing of projects and contracts.
UK energy retailers face particular uncertainty due to government intervention and price regulation, compounded by Brexit concerns. Customers are being cautious about adopting new projects.
Australian energy price volatility and government reviews are also introducing investment uncertainty.
The Gentrack share price is up 5.5% over the past year according to Google Finance.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
