Australian provider of ICT solutions to the financial services industry GBST has downgraded its earnings ahead of its full-year financial results, expected soon.
It said that EBITDA (earnings before interest, tax, depreciation and amortisation) for the past financial year would be about $13.5 million, down 17 percent on the previous corresponding period while money in the bank has slipped from $10 million to $7.8 million.
GBST said lead times for sales, the heavy investment required to secure them, project delays and poor retail volumes were to blame for the weaker result.
But it said sales contracts signed in the past year would deliver benefits over coming years, as would its investment in research and development and new markets in Asia and Europe.
GBST chief executive officer Stephen Lake said new projects in Australia, Asia and Britain over the past year would contribute $7 million to its bottom line for the next financial year, adding a further $3 million the year after.
“As the new licences have terms between five and 10 years, these contracts are worth a total of more than $70 million in revenue over the life of the licences and make it GBST's strongest ever year for sales,” Lake said.
GBST was rolling out improvements to its broker-transaction processing engine Syn, following the release of version 2.0 earlier this month. And it recently launched its client-management system for brokers, Front Office, to make client information easy to see and use, which the company expected would be taken up by all of its customers within a year.
Another source of growth was hosting services as it met demand for private clouds and other solutions. Emu, the web design company it bought in 2008, realised stronger demand.
Lake said GBST's wealth management division would see strong growth over the next year, which he hoped would arise out of enthusiasm for its ComposerWeb web front end and its Unison society membership management tools.
The removal of commissions and other changes affecting the distribution of financial products in Australia and Britain would also create opportunities for its wealth-management business including the creation of more direct sales channels.
"We're also seeing trends in the corporate superannuation market to provide more investment options, web based solutions and simple online advice aimed at improving member engagement,” Lake said.
GBST said it expected a “strong uplift” in earnings over the next year based on the number of contracts to go live during the period as well as from sales of new and upgraded products.
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