Software supplier Gentrack has defended its profit downgrade
last week, which triggered a share slump, saying contractual
issues arose only after its recent listing on the NZX.
There has been criticism of Gentrack downgrading its profit,
from an expected $3.7 million to a range of $2.5 million to
$2.8 million, so soon after listing on the NZX on June 25.
Its shares were issued in the initial public offering (IPO)
at $2.40, but plunged 13% to close at $2.24 following
Friday's downgrade announcement.
They were trading down 8c at $2.11 yesterday.
Gentrack said on Friday there had been a delay to a major
project, and disputed payment and also delay in signing a
separate upgrade contract.
Gentrack chairman John Clifford said in an update on the
downgrade yesterday that he ''deeply regrets'' the downgrade
so shortly after listing; the business remained ''highly
profitable'' and retained a wide customer base.
''The facts and circumstances that led the board to conclude
that the full year 2014 forecasts should be revised down have
arisen recently, after Gentrack was listed on the NZX and
He described both delays as being with large utility
customers, of long standing, and with whom Gentrack expected
to do ''significant'' further work in future.
Before Gentrack's update yesterday, The New Zealand Herald
reported the Financial Markets Authority had contacted
Gentrack to ''seek an explanation'' on the company's shock
profit downgrade last week.
A spokesman for the regulator said: ''We are now considering
the responses received from Gentrack and continuing to engage
We have emphasised to Gentrack's management and its advisers
the importance of keeping the market fully informed.''
He said the regulator had not received any complaints on the
Gentrack's IPO raised $36 million of new capital, which was
to be used to cover listing costs and pay off debt.
Existing shareholders, including chairman Mr Clifford and
chief executive James Docking, sold $63 million of shares and
continue to hold a 43% stake in the company.