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PSB, Qixel and Advantage Partner Joint Venture

PSB, Qixel and Advantage Partner in Electronic Business Procurement Joint Venture Enabling $3 Billion Marketplace

Auckland – 10 May 2000 – Professional Supply Brokers (PSB, the owners of GSB Supplycorp Ltd), Qixel Capital Group and Advantage Group Limited (NZSE: ADV) today announced that they have entered into a joint venture agreement to build and operate SupplyNet, a Business-to-Business electronic procurement portal.

The first large-scale electronic marketplace in New Zealand, SupplyNet will be 50% owned by GSB, 30% by Qixel and 20% by Advantage.

SupplyNet will initially target the estimated $3 billion spent annually on procurement in New Zealand by the public sector, aiming to substantially reduce transaction costs by building a virtual marketplace based on GSB’s brokerage model of procurement outsourcing. Formerly the New Zealand Government Stores Board, GSB is the largest purchasing and supply organisation in New Zealand.

SupplyNet will compile, present and manage the online catalogues of suppliers, making the information available to government departments, ministries, agencies, institutes and councils - national and local. SupplyNet will also offer a complete outsourced service to provide buying communities and verticals with the infrastructure and technology needed to create their own unique and branded portals, leveraging the suppliers, catalogues and business services on offer.

By streamlining transactions electronically, SupplyNet will drive down the cost of procurement, automating manual processes, eliminating unwieldy catalogues and providing a rich range of standardised comparable product information. This, coupled with aggregated purchasing volumes, will provide even better pricing to New Zealand’s public sector.

After a lengthy analysis of options, SupplyNet has chosen as its technology platform partner California based Commerce One, the global leader in e-commerce business solutions. Commerce One’s software will provide purchasers with the most comprehensive e-procurement solution in the market, streamlining procurement operations. It will assist suppliers to streamline selling and order entry processes at the same time enabling access to the buying power of the trading community on the Global Trading Web™.

Speaking at the launch of the venture, Advantage and Qixel CEO Greg Cross said, “This is a venture that starts in the public sector and grows from there. Public sector procurement is an area in which New Zealand can be at the global forefront of e-commerce: this is one of the first portals in the world to address the needs of public sector procurement. The public sector in New Zealand, as in every country, is responding to the urgent need to adopt electronic procurement models and participate in electronic marketplaces in order to cut costs and save taxpayer funds, particularly for maintenance, repair and operational expenses.”

“But that is only part of the appeal of this venture,” he continued. “It is the ability to extend its reach based on that initial scale that will unlock the real downstream value. Driving the cost out of procurement without incurring additional expense is compelling, but that alone does not guarantee success.

The principal requirement for any B2B e-marketplace is scale, and nowhere more so than in an economy the size of New Zealand’s. From the outset SupplyNet will have the requisite scale, and that means we’ll be able to add value to the site, extend its reach and enhance its usefulness for all those who trade on it.

“From GSB SupplyNet will have access to an understanding of the procurement process, outsourcing expertise and established contractual relationships”, said Eric Watson, Chairman, Cullen Investments. Through Qixel it will gain international relationships, access to capital, experience in building a clicks-and-mortar business and access to international markets. And Advantage will provide the web skills and end-to-end development capabilities to turn that core business into an extensible on-line venture.

“Our intent is to extend SupplyNet horizontally, into the private sector and vertically, into complementary e-markets. We then aim to expand internationally, scaling it and replicating its success in other markets throughout Asia Pacific.”

PSB Chairman Charles St Clair Brown said, “Before undertaking this step we reviewed a number of possible partners and went with Advantage because they understood e-commerce, were substantially committed to the project and had the resources needed to complete it.”

“A relationship with Advantage and Qixel will help us to deliver and rapidly deploy a sophisticated system allowing us to gain first mover advantage in the B-to-B market,” he added. “It’s a local solution using proven technology from a global leader. And it will assist us to grow extremely rapidly into a substantial entity, quickly add new services, drive cost out and enable government to purchase at lower prices. That’s good for us, good for our customers and ultimately good for all New Zealand.”

“Not only will SupplyNet save the public sector money by providing a platform for e-commerce, it will also materially assist in a broad array of other e-commerce initiatives, from business solutions to broader and more interactive services markets. That’s the basis on which we have launched this venture.”
“The model, once established, can be readily extended to the private sector,” he added. “SupplyNet will have achieved a critical mass of buyers and sellers and will be able to offer its capabilities and the products and services of its suppliers to large and small companies looking to achieve similar cost savings.”

“We’re delighted to have been selected as the technology partner for SupplyNet,” said Mark Biestman, Senior Vice President Worldwide Sales, Commerce One. “We believe that this unique initiative will not only reduce procurement costs, but will create an e-commerce platform for further enhancing public sector performance by adding future enterprise capabilities. We anticipate that the model established here and based on proven outsourcing methodologies will be readily adopted by governments in other international markets.”

Advantage will also work with public sector customers to help them integrate SupplyNet with their legacy systems or to build and integrate entire Internet-based enterprise procurement systems.

“Advantage’s ability to participate in this venture is a direct result of the substantial backing that Qixel can provide and of the investments Advantage has made in developing resources,” said Cross. “Our strategy has been to quickly grow and take equity positions in major initiatives within our core competency. To that end Advantage has invested heavily in acquiring new skills and expanding its intellectual capital base, developing additional resources and services.

“As a result of our ongoing programme of enhancing our enterprise web development capabilities, Advantage is now able to deliver on both this project and to support it with end-to-end e-commerce solutions across larger government departments. This represents the first step on the next-phase of Advantage’s growth. It’s a new venture with an established player combining the best of online and offline capabilities.”

The SupplyNet venture is a natural extension of Advantage’s agreement with Microsoft New Zealand to create, deliver and operate e-commerce services for both enterprise level and SME customers. Advantage was the first company in New Zealand committed to deploying comprehensive business-to-business e-commerce solutions built on a platform of Microsoft technology.

“As a natural extension of Microsoft’s GovTalk initiative to simplify and catalyse the adoption of electronic government, this industry joint venture will help accelerate the availability of more integrated electronic services for New Zealand government organisations,” said Geoff Lawrie, Managing Director, Microsoft New Zealand. “We also see our involvement as a natural extension of our other relationships with Government, with Advantage and with GSB. Advantage’s commitment to Microsoft-based procurement technologies will ensure that the public sector has a more seamless and effective platform for building local and international e-commerce offerings.”

Background

About GSB Supply Corp

Formerly the New Zealand Government Supply Stores Board, GSB Supply Corp was privatised in 1992. With 80 years public sector procurement experience, GSB is the largest purchasing and supply organisation in New Zealand bringing together over 2,000 buying organisations, 1,000 suppliers and 900 period supply contracts. It offers customers a mature and fully integrated contract management system, CEPS™. GSB has an intimate understanding of government procurement processes and operates its business strictly in accordance with government public policy purchasing guidelines. For more information, please visit www.gsb.co.nz.

About Qixel Capital Group

Qixel Capital Group, Inc. is an Internet holding company that cultivates companies focused on the development of business-to-business e-commerce in Asia/Pacific. Qixel’s specialised services enhance Internet infrastructure in Southern Hemisphere and Pacific-rim countries by partnering with local companies to build efficiencies, speed learning curves and deploy proven Internet solutions in new markets. Through its existing network of e-commerce-focused companies, Qixel provides a variety of resources to enable end-to-end e-commerce solutions for nascent market entrants. For more information, please visit www.qixel.com.

About Advantage Group

Advantage Group Limited, an NZSE listed company, is a leading supplier of e-commerce and transaction processing solutions in New Zealand, Australia and throughout the Southern Hemisphere. The company has three business units: business-to-business e-commerce, retail solutions and point-of-sale equipment. It provides web development capabilities, software development, transaction processing and funds transfer capabilities to enable end-to-end e-commerce solutions. For more information, please visit www.advantagegroup.co.nz.
About Commerce One

Commerce One (NASDAQ: CMRC) is the leader in global e-commerce solutions for business. Through its products, portals, and services, Commerce One creates access to worldwide markets, allowing anyone to buy from anyone, anytime, anywhere. The Commerce One Global Trading Web™ is the world's largest business-to-business trading community. Comprised of many open e-marketplaces, the Global Trading Web provides unprecedented economies of scale for buying organisations, suppliers, and service providers worldwide. Cable and Wireless Optus is Commerce One’s Regional Market Site Partner in Australia and New Zealand. Commerce One is located in Pleasanton, Calif., and can be reached by phone at +1 925 520 6000 or via the Internet at http://www.commerceone.com.

ENDS

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