Provenco's Growth Strategy Pays Dividends
24 August 2005
Provenco's Growth Strategy Pays Dividends
Provenco's (NZX:PVO) strong growth in the international retail oil sector, and a strengthening foothold in Australasian markets, has contributed to an operating profit (after goodwill amortisation and before taxation and unusual items) of $7.6 million - 50 percent higher than the previous year.
Provenco's revenue grew by 58 percent and net profit after tax was up 104 percent at $8.6 million. A fully imputed dividend payment of 3 cents per share has been confirmed.
Summary of audited results for the year ended 30 June 2005
Year ended 30 June 2005 Audited $ 000's
Year ended 30 June 2004 Audited $ 000's
Net profit after tax
Operating Cash flow
Earnings per share
Dividend per share*
* Fully imputed dividend payable on 17 October
Chairman David Wolfenden said the success was the result of Provenco's strengthening market leadership and reputation both in New Zealand and overseas markets.
"This has been driven through the supply of smart technologies for business including forecourt solutions for the oil industry, payment technology (including EFTPOS), and retail technology including mobile and wireless offerings," said Mr Wolfenden.
Audited operating profit of $7.6 million surpasses directors' previous estimations that operating profit would be in the region of $7.2 million. The operating cash flow for the year was solid at $3.8 million, which was an outstanding result given the growth of the group.
The net profit after tax for the year is $8.6 million, after the recognition of taxation losses from prior years amounting to $2.6 million. The board has decided to recognise these tax losses in the current year in compliance with current accounting standards.
The Provenco Board confirmed a fully imputed dividend of three cents per share. The dividend will be paid on 17 October 2005 with eligibility for a dividend payment being 3 October 2005. This is the first dividend that the group has paid since 1997 and signals the confidence the board and management has in the sustainability of the group going forward.
Commenting on the results, Chief Executive David Ritchie said Provenco's year-on-year comparisons are very pleasing.
"It was a very satisfactory year for both our domestic and international businesses and we are extremely well positioned in the markets in which we operate. With valuable resources in place to build and expand the business, world-class products and market leadership, a sound platform is now well established for future growth," said Mr Ritchie.
A number of significant events have contributed to Provenco's success during the year.
"The acquisition of Sydney-based Javelin was completed early in the second half of the year. This was followed shortly thereafter with the acquisition of the Vantex distribution businesses in Melbourne and Christchurch. All three new businesses have been added to our Auckland-based Transtech operation (acquired during the 2004 financial year) to form the largest Australasian technology distribution group, recently rebranded Vantex.
"This has proved to be a very successful move, providing Provenco with a solid stable base of operating profits going forward, coupled with significant growth opportunities," said Mr Ritchie.
Meanwhile, the international business, which operates in the retail oil industry sector, has experienced continued steady growth during the year. The group's outdoor payment terminal, designed and developed in New Zealand for international retail oil markets, has received early recognition as the market leader for its robustness and technical capabilities.
"Over the past year we completed a successful rollout of our outdoor payment terminals across Malaysia," said Mr Ritchie. "Recent developments in China, coupled with a contract win in the Middle East, support the future for this technology."
The worldwide move to new forms of electronic payment security (known as EMV) has positioned the group well for the future.
"Provenco has market leadership position in payment and other retail technologies in New Zealand and we have seen very significant growth in the sale of EFTPOS terminals as the mandated change to new hardware continues," said Mr Ritchie. "This growth in EFTPOS will continue to deliver business opportunities in the future, in turn delivering long term confidence about the strength of our NZ business."
"All businesses across the group are enjoying good growth, are profitable and without exception, all are in very positive market positions, providing exciting opportunities for 2006 and beyond. At this early stage of the year we anticipate that the group operating profit will exceed $9 million for the 2006 year," said Mr Wolfenden.