Wynyard slumps to $44m loss amid capital raising process

UPDATED February 25 2016: This will be the last time, says Wynyard CEO

UPDATED February 24 2016: Wynyard announces rights issue

Cash-strapped Wynyard Group [NZX: WYN] has revealed a $44 million loss while its shares remain in a trading halt pending details of an emergency capital raise.

The software company, which had earlier disclosed a “material dependency” on raising further capital by the end of March, followed up with its unaudited preliminary result for the December financial year.

This showed a net loss of double the previous year’s $22.2 million on the back of contract revenue not materialising on time and heavy investment in new staff.

Wynyard reported total income of $26.3 million for the year to December 31; well short of its guidance of $40 to $45 million signalled last May.

A large part of the lower revenue was because the company was unable to recognise $14.3 million of license sales due to conditions of a new contract not being met. These related to specific commercial agreements with the customer.

Wynyard says its partner had advised that it was unable to confirm these conditions had been satisfied.

The company now expects the $14.3 million will be recognised in the 2016 financial year, subject to the conditions being met. It also says it expects 2016 revenue to be in the middle of analysts’ forecast range of $54-65 million plus the license revenue from the unfulfilled contract.

“Wynyard has previously highlighted the increased revenue recognition and contract execution timing risk as it expands into new regions and targets larger deals,” the company said in a statement.

Wynyard had raised $42.6 million in capital in 2015, which was used to increase staff, invest in product development and support an increase in working capital.

At balance date, cash on hand was just $14.9 million.

The company has been trying to raise more capital and said today it is considering a rights issue to all shareholders to meet its working capital needs.

In the meantime, it has raised a $10 million loan facility with its shareholder Skipton Building Society.

Wynyard chief executive Craig Richardson said the company continues its strategy of targeting larger contracts that will deliver sustainable revenue growth and higher margins.

“We’ve built a strong sales pipeline for 2016, which gives us confidence in our strategy going forward and our pathway to profitability.”

Recurring licence revenue remained high at 55% of total income, up 2% on last year and more than half of revenue came from Asian customers.

Earlier, the company said directors had a "reasonable expectation" a capital raise would succeed although "material uncertainty" remained.

Wynyard's shares last traded at $1.54.

See also: Wynyard shareholder demands review

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