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Business model delivers positive half-year result

International growth and successful business model deliver positive half-year result

Vending Technologies Limited (NZX: VTL) today announced a net operating surplus of $1.88 million for the six months to 31 December 2003, a considerable improvement on the operating loss of $1.8 million for the previous reporting period (being 9 months to 31 December 2002).

This half-year result, the first to include the expansion into the American market, was achieved on a total operating revenues of $13 million, up 10.4% on the corresponding period last year.

Chairman, Gary Stevens said today, “this result delivers on our earlier commitment to the market of a return to stronger growth for this financial year. If we average the 2002 results to achieve a comparative 6 month picture, then the increase in total operating revenue is more than 65%.”

“Our revenues are strong (with positive net cash flows for operating activities of $2.4 million) and our franchise business model is proven and growing. The success of VTL to date has been driven by the number of franchised operators with growing vending businesses. This is the primary indicator for growth, as the following table demonstrates:

Reporting Months Total Number Group Revenue
Period of Operators for reporting period

31 Mar 2002 12 (year end) 11 $20.6m
30 Jun 2003 15 (year end) 36 $28.4m
31 Dec 2003 6 (half-year) 50 $13.1m

“VTL is focused on achieving growth through each of its brands and intends to invest significantly into the international expansion of both 24seven and Shop24,” adds Mr Stevens.

“Our service-driven proprietary technology with category management tools and a fully integrated back-end accounting system adds significant value for franchise operators automated management processes, thereby maximising both sales and margin – and increasing revenue throughout the entire business model.

This has been significant six-month period for VTL; we have established ourselves in the US market with a Master Franchisee recruited and active, our proven business model has been implemented throughout New Zealand, Australia and now into the US Market – we expect to successfully overlay our business model into other international regions.

Topping off a busy six months was the acquisition of the assets of European company New Distribution Systems nv (“NDS”) that develops, manufacturers and distributes Shop24 – an automated convenience store system. Once the software customisation is complete we intend to rollout the Shop24 franchise programme. The purchase of Shop24 also provides an established infrastructure to launch our 24seven vending machine franchise system into the European market.”

Our finance company Nathans Finance NZ Limited continues to expand and has made a positive contribution to this half-year result.”

“Our company is focused on achieving growth through franchising, commercial activity, finance and the on-going development of our technology, which has application in other business channels. Since our listing in 2000 our company profile has changed considerably and as a result we are reviewing a name change to VTL Group Limited.

We are committing further resources to the strategic expansion of both 24seven and Shop24, together with the acquisition of complementary businesses in Europe and the United States. As a result the Board has decided that it would not be prudent to pay a dividend at this time. However the Board will continue to actively review this policy.

Our half-year results indicate that we are on track for a stronger year-end performance.”


ENDS


* Shop24 is a registered mark of Vending Technologies Limited.
** 24seven is a trademark of Vending Technologies Limited.

About VTL

Vending Technologies Limited (NZX:VTL) specialises in franchising, technology and financing, with it’s franchised businesses represented internationally including North America, Australasia and more recently Europe. The Company’s primary growth strategy is based around purchasing quality electronic vending equipment, installing proprietary control technology and, building a network of 24seven Franchised owner/operators via a Master Franchise programme.

About Shop24

Shop24 is a market-leading automated convenience store system conceptualized and manufactured in Europe. Shop24 has an 11m² format and is designed to fill the gap between manned convenience stores and traditional vending machines. Configured as either movable container shops or built-in modular shops, Shop24 stores are designed to fit into high traffic living and environments including supermarkets, fuel stations, local communities, universities, hospitals, industrial sites, metro stations, busy roads, airports, railway stations, the army, catering and amusement parks. Over 160 Shop24 stores are already installed in seven European countries. Existing customers include retail chains such as Sainsbury’s (UK), Billa (Austria), Ahold, Sperwer and C1000 (the Netherlands), Spar, Carrefour-GB, Delhaize, Q8 (Belgium), Casino and YatooPartoo (France) and Eroski (Spain).

A typical Shop24 offers 200 different cooled and non-cooled products of varying size and shape with fast product delivery and multiple payment options. Top sales within different product groups include soft drinks, bread, sandwich fillings, prepared meals, phone cards, dairy, hygiene, snacks, chips and sweets.

VTL acquired Shop24 in December 2003.

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