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Zintel Group Meets $5m Profit Forecast


Zintel Group Meets $5m Profit Forecast

Auckland 23 May 2005: Zintel Group Ltd (NZAX: ZIN) today announced pre-tax profit of $5.037m for the year ended 31 March 2005 and a final dividend of 1.74 cents per share fully imputed (2.597 cps gross).

The resulting net profit after tax of $3.385m compares with $4.097m for the prior year to March 2004. Managing Director, Nick Gordon, says “As we have previously advised the market, the reduction in profit is primarily due to start up costs of the Ericsson business in Australia and to timing delays in relation to a small number of large customer orders in the Ericsson business in New Zealand.”

“While it has been a disappointing year for shareholders, internally we are pleased with the progress Zintel Group Ltd is making with its long term strategy. Furthermore; results to date for Zintel Enterprise Pty Ltd are most encouraging and we are now securing customer orders each month; Ericsson Enterprise Systems (NZ) Ltd is in the final stage of contract negotiations for a significant order which was delayed from last year; Zintel Communications Pty Ltd’s profitability grew satisfactorily last year; and, Zintel Communication Ltd is now enjoying revenue growth after a relatively flat period.”

“As previously announced Zintel was appointed an Australian authorised partner for Ericsson’s enterprise products in July 2004 and has now established Zintel Enterprise Pty Ltd, based in Sydney. While this start up requires investment which negatively affects Group operating profit, the business is gaining traction and should begin to trade profitably on a month by month basis in the second half of this financial year.”

Gordon goes on to say “Consolidated revenue is expected to increase strongly this financial year compared to $35.463m to 31 March 2005. While we anticipate top line growth in revenue and gross profit, the Directors support increased investment in all facets of the business, which we believe will result in significant bottom line growth in the following financial year ending March 2007.”

“The Board remains confident of the long term growth prospects of the Group. Although it is too early in the financial year for us to forecast the profit to March 2006, we intend to keep the market fully informed and provide further updates as the year progresses.”

Group cash flow continues to remain strong with cash on hand of $3.992m at balance date, with no debt or long term liabilities. The Directors are pleased to declare a final dividend of 1.74 cps net, matching the half year dividend and representing 52% of net profit compared with the Company’s policy of paying a minimum of 40%. The final dividend is fully imputed, thus the gross amount is 2.597 cps, bringing the total dividend for the year to 5.194 cps. This equates to a 5.77% gross dividend yield based on a share price of 90 cents. Record date for the final dividend is June 17, with payment on July 01 2005.

ENDS

Notes to the editor:

Zintel Group Limited is a provider and an integrator of a broad range of telecommunications products, value added technology services and professional services to business within New Zealand and Australia and comprises: Zintel Communications Ltd; Zintel Communications Pty Ltd; Ericsson Enterprise Systems (NZ) Ltd; Zintel Enterprise Pty Ltd; and, Zintel Leasing Ltd. Visit www.zintelgroup.com for more information or free call 0800 ZINTEL (946 835).

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