Hansen Technologies Limited plunges heavily on FY18 Trading Update

It seems to have been a bad day for Hansen Technologies Limited (ASX: HSN), that plunged over 25.6% on June 22, 2018 as the group updated the market about its expected full year FY18 earnings and a soft preliminary outlook for FY19.

The group’s FY18 operating revenue of about $230 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $58 million has been indicated. Full year EBITDA margin is expected to be around 25%, which is below the market expectations and the guidance provided earlier for the EBITDA margin to be about mid-point of target range of 25%-30%. Primarily, the margin is seemingly impacted by contraction in licence fee while the same will now be, in fact, recognised as revenue next year instead of FY18. There also has been a restructuring charge of about $0.8 million within the Enoro operation along with the termination of the challenged call centre contract within the Solutions business. On the other hand, and when compared to FY17, the FY18 operating revenue is still at a 32% growth while EBITDA represents a 26% increase.

HSN for FY19 expects to report lower total revenue, which will be even below FY18 (loss of about $1.8 million against FY18) because of the call centre contract that stands terminated now and normalisation of project revenue post the higher levels seen in 1H FY18. Nonetheless, the expense base will stay as it is in line with FY18 levels despite the group eying for future growth.

This update has not gone well with the shareholders and led to a significant wipe-out in market capitalisation of the group.


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