21 Jun 2018

Gentrack expands utility solutions offering with acquisition of Evolve Analytics

Gentrack Group Limited (NZX/ASX: GTK) is pleased to announce that it has entered into an unconditional agreement to acquire 100% of the shares of Evolve Parent Limited and Evolve Analytics Limited (“Evolve”), a market leading provider of energy data analysis software and services provider in the UK, for an enterprise value of £23.0m (NZ$44.2m).

Evolve specialises in the identification and correction of settlement and billing errors as well as the accuracy of standing data. Customers include three of the “Big 6” energy suppliers in the UK, as well as a number of independent challenger utilities, with Evolve capturing data for over 17 million meter points. The software, analytical systems and methodologies developed by Evolve deliver significant financial and operational performance benefits for clients. Evolve offers their extensive Intellectual Property on a Software as a Service (SaaS) basis delivering a high proportion of recurring revenue (FY19 forecast 58%) and margins in excess of 50%.

The acquisition of Evolve further strengthens Gentrack’s position as an industry leader in the UK for utility billing and customer information systems by providing highly complementary software services, intellectual property and customer relationships.

John Clifford, Gentrack Chairman said, “We are delighted that Evolve is joining the Gentrack group. The combined UK business is well positioned to provide highly innovative, value enhancing solutions to UK energy and water utilities and provides a strong base for expansion into new markets.”

Ian Black, Gentrack CEO said, “The acquisition of Evolve extends Gentrack’s offering into data settlement and billing reconciliation solutions. Following the acquisition, Gentrack will have 53 utilities customers in the UK with an increased exposure to the “Big 6″ energy suppliers. We expect the Evolve solutions to be highly valuable to our existing UK customer base, and there is an opportunity to extend this new offering to the Australian and New Zealand markets.”

The senior management of Evolve will remain with the business to drive its ongoing success.

Settlement of the Evolve acquisition is expected to occur on 29 June 2018.

The acquisition is to be 100% funded through an extension of Gentrack’s debt facilities with ASB.1 Gentrack currently has debt facilities of NZ$50.5m which will increase by NZ$47m under the new term facility.

Evolve is forecast to achieve revenue of £3.1m and EBITDA2 of £1.8m in the year to 30 April 2019. On the basis that the acquisition is debt funded, Gentrack expects the acquisition to be low single digit earnings per share accretive in the first full year (FY2019) and to drive increased growth in future earnings.

Gentrack is intending to undertake a fully underwritten pro-rata renounceable entitlement offer to reduce its debt, which will provide flexibility to support future acquisition and growth opportunities. Gentrack has appointed Deutsche Craigs Limited and UBS New Zealand Limited to manage any offer.

View investor update here.

Listen to the audio version of the investor update here.

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