Finzsoft in profit warning, strikes deal with First Credit Union

Finzsoft Solutions [NZX: FIN], the listed Auckland-based software provider to banks and financial services companies, has warned investors profits will be "materially lower" when it publishes its full-year results for the year to the end of March.

The company is  in the process of adjusting its financial year reporting to June 30 to align itself with its majority shareholder, Silverlake Axis Group, which took control last year. It agreed with the NZX to publish interim results to March 31 by the end of May.

Managing director Andrew Holliday said the company expects a profitable outcome for the 15 month period to the end of June 2016.

Finzsoft's $2.7 million net profit in 2015 was a significant jump on the year earlier's $754,549 profit. In its 2015 annual report the company said the strong profit growth reflected a "robust order book" and "our focused efforts in Australia paying off."

In his note to investors today, Mr Holliday said the decline was due to a number of contractual and market factors. "These factors include contracts that have been delayed, longer than expected timeframes to access the new business opportunities in the Asian markets, increased investment in subsidiary Sush Mobile. Market factors include the changing nature of customer demand and spending patterns with an increased proportion of customer budgets being applied away from core enterprise technologies to disruptive digital ecosystems."

Mr Holliday said the company's cost base is being "proactively managed" due to these changes. Between 2014 and 2015 the cost of salaries and wages at Finzsoft soared from $4.7 million to $8.8 million, according to its annual report. Finzsoft bought Sush Mobile on September 13, 2014.

Finzsoft has also announced an agreement with New Zealand's largest credit union, First Credit Union, as its preferred partner to run its software and technology for its 62,000 members. Mr Holliday said First Credit Union will be a strategic customer for Finzsoft because of its "size and scale."

Shares in Finzsoft were unchanged at $2.25. The value of the shares has fallen 30% in the past year.

(BusinessDesk)

BusinessDesk receives funding to help cover the commercialisation of innovation from Callaghan Innovation.