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Vending Tech Maiden Result Exceeds Forecasts

Vending Technologies Maiden Result Exceeds Forecast
Operating Surplus Up 277%

AUCKLAND, 30 May 2001 – Smart vending machine operator, Vending Technologies Ltd (NZSE:VTL), today announced a full year result 29 percent ahead of the forecast in its listing prospectus.

For the twelve months ended 31 March 2001 the company reported an audited operating surplus before tax of $4.2 million, up 277 percent on an operating surplus before tax of $1.1 million for the previous year. The net surplus after tax result of 4.0 million is 29% ahead of the $3.1 million forecast in the prospectus. The favourable after-tax result reflects benefits from utilising available grouping provisions to partly offset the tax expense forecast in the prospectus.

The result was achieved on revenues of $16.3 million, up 217 percent on last year’s revenues of $5.1 million.

Condensed statement of financial performance
(audited)

Twelve months ended 31 March 2001
(millions)

2001 2000
Operating Revenues $16.3 $5.1
Operating Surplus Before Tax $4.2 $1.1
Operating Surplus After Tax $4.0 $0.8
EPS* 24.1* 31.9¢*

* Based on weighted average of shares issued.

“Exceeding the first profit forecast is a very pleasing result indeed for Vending Technologies Limited,” said Chairman Dr Richard Janes. “It clearly demonstrates the Company’s ability to achieve rapid and profitable growth, while the underlying commercial models established since listing make that growth sustainable.
Highlights
Dr Janes outlined the highlights for the twelve month period, including the initial public placement of shares in November, which raised $7.5 million.

“Commercial milestones include a substantial marketing alliance with leading confectioner Cadburys under our FMCG partnership programme,” he said. “This was the template for a subsequent agreement with beverage company Rio in New Zealand, and we are now able to transplant it into other markets.

“VTL also launched its VendSmart licensing programme, which provides a model for growing the business in future. The programme is a world first in vended distribution and has transformed the rate at which the company can grow.

“During the year VTL also began to contest the larger Australian market, winning major contracts in Victoria and Queensland. The company secured a contract, worth an estimated A$6.5 million over 3 years, as preferred supplier to the Australian Construction, Forestry, Mining and Energy Union (CFMEU) to provide snack and beverage vending services for 350 CFMEU construction sites throughout the State of Victoria. The company also won two additional Australian preferred supplier contracts, worth a total of A$1.6 million over three years, supplying vending machines to Queensland-based organisations.

“These are significant opportunities in revenues, relationships and margins. As a result the Australian market, where vending is a growing category in a larger and higher margin market, has become the primary focus of the Company’s growth plans. Our smart systems, growing base of successful large sites and our extensive range of leading consumer brands mean we can compete effectively against traditional single-brand vending systems.”

Dr Janes noted that, in addition to opening up these new markets, the company had also worked on enhancing internal systems, strengthening its management team and continuing to invest in research and development.

“In January 2001 we released version 4.2 of our SmartVend software, which provides greater security and more detailed and flexible reporting options improving operators’ ability to track sales and manage machines remotely. We have also trialled cellphone vending in partnership with Vodafone.”
Future Growth from Acquisitions and Trans-Tasman Expansion

Dr Janes gave an overview of the Company’s plans for continuing growth.

“We have reached our current position organically, growing on the back of strong demand in New Zealand and Australia, and refining our business models and proving our ongoing revenue streams. Next-stage growth will come from the acquisition, primarily in Australia, of earning enhancing vending businesses capable of making an immediate positive contribution to cashflow. We will fit the machines we acquire with our electronics then convert the established territories to operate under our VendSmart programme.” said Dr Janes.

“Our business strategy is based on the premise that consumers want choice and convenience in vended products, and our technologies and systems support that. VTL’s vending machines are already fully computerised and send sales information to operators on a daily basis. This data is analysed to access sales volume, revenue and overall profit contribution. As a result we can monitor sales as real time data and record all historical sales information, which allows us to track trends and patterns in consumer demand and purchasing habits. Complementary systems include the VendSmart licensing programme, an FMCG partnership programme and licensee recruitment and training systems.

“Australia is a growth vending market where we are achieving sales increases and meeting our planned business objectives. To support that continuing growth we have opened offices and established sales teams in Melbourne and Brisbane.

“The company has a strong balance sheet, positive cashflows and proven ongoing revenue streams. The Directors expect to achieve a further lift in both revenues and earnings over the next twelve months as the established base and accompanying revenue streams continue to expand. That gives the Directors confidence that the company will meet its current earnings forecasts for the full year ending 31 March 2002.”

About Vending Technologies Limited
Vending Technologies Limited supplies and operates electronically enhanced food and beverage vending machines throughout Australasia. Established in 1997, the company manufactures, sells, maintains and services vending machines.
The company has developed a proprietary computerised management system to enable tracking of all transactions, with complete revenue accountability and the ability to monitor the performance of each machine from remote locations.
Vending Technologies’ independence means it has a network of long-term alliances with leading suppliers of major branded convenience food and beverages.

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