Provenco achieves strong and consistent growth
15 February, 2006
For immediate release
Provenco achieves strong and consistent growth
Provenco Group Limited (NZX: PVO), supplier of smart technology for business, today reported strong growth in its operating revenue and profit for the six months ended 31 December 2005 and a fully imputed interim dividend of 1.3 cents per share.
Operating revenue for the period, when compared to the six months ending 31 December 2004, was up 46% to $78.9 million.
This is the fifth consecutive period where Provenco has achieved an increase in operating EBITDA (earnings before interest, tax, depreciation and amortisation). Growth was delivered across all of Provenco's business divisions.
Summary of unaudited results for the six months ended 31 December 2005
Six months ended 31 December 2004 ($millions)
Six months ended 30 June 2005 ($millions)
Six months ended 31 December 2005 ($millions)
Total operating revenue
Operating profit before taxation and unusual items
Net surplus attributable to shareholders*
*The latest result reflects the company moving to a full tax charge.
Chairman David Wolfenden says the company's continuing strong performance can be linked to its solid reputation, both in New Zealand and overseas, as a provider of innovative technology for a wide-range of business customers.
"Internationally, Provenco is increasingly recognised as a provider of world‑leading retail forecourt solutions for the oil industry."
"In New Zealand, Provenco is the market leader in payment and retail technology and has experienced significant growth over the last six months."
Continuing growth in the international retail oil sector, and a strengthening foothold in Australasian markets, have contributed to an operating profit (after goodwill amortisation and before taxation and unusual items) of $4.9 million, up 18.4% on the same period last year.
The net surplus attributable to shareholders for the period is $2.7 million. This result reflects a full tax charge when compared to earlier periods. The unusual items of $0.4 million relates mainly to the settlement and litigation costs of the Securities Commission claim.
Positive operating cash flows of more than $2.0 million was recorded for the six month period.
Mr Wolfenden says he was pleased to announce a fully-imputed interim dividend of 1.3 cents per share for shareholders (representing 1.95 cents per share gross). The dividend, which uses accumulated imputation credits, will be paid on 28 April 2006. The record date for the dividend will be 12 April 2006.
The declaration of a dividend follows the company's announcement that it intends to pay shareholders two dividends a year. The announcement signals the confidence the board and management have in the future performance of the group.
Capital notes rollover
Mr Wolfenden also advised that Provenco capital note holders (NZX:PVO010) on the register on 17 February 2006 would be notified shortly that the company will offer new conditions, comprising an interest rate of 9.25% per annum for the three years commencing 15 April 2006, with interest payable quarterly on 15 July, 15 October, 15 January and 15 April until 15 April 2009 (the next election date).
He also advised that to the extent that note holders choose not to accept the new conditions by Friday 17 March 2006 (or such later date the company may allow), the company will not allow a conversion to shares and the relevant notes will be purchased by the company, or one of its subsidiaries, on 15 April 2006.
Chief executive officer David Ritchie says he was delighted with the group's performance in the six months to 31 December 2005.
"It is particularly pleasing to witness strong growth across all areas of the business. This reflects the consolidation and performance of the distribution businesses under the Vantex brand, the strength of the EMV rollout in New Zealand for Eftpos terminals and solutions and our growing presence internationally in the retail oil industry."
Provenco Retail Automation
Mr Ritchie says Provenco's petroleum and convenience store technology for the retail oil industry continues to be an outstanding success internationally.
The group's focus on customer requirements and service continues to reap rewards. The retail service station arm of Petronas in Malaysia has extended the group's forecourt maintenance contract for a further two years.
"Furthermore, an existing contract for approximately $13.2 million with the Royal Dutch/Shell group for EMV-compliant outdoor payment terminals for their Asia-Pacific service station network has been extended with additional orders for pay@pump solutions," says Mr Ritchie.
"Ongoing investment in India has secured new international orders for Provenco's forecourt solutions (including point of sale, outdoor payment terminals and other software technologies) for a large state-owned oil company."
"A contract with China's state-owned oil company, Sinopec, for their Hong Kong network is currently in the rollout phase, and provides us with significant opportunities for the future."
The group is also focusing its attention on the US market where we have undertaken detailed market and customer research over the last six months.
"Whilst this is an exciting growth sector of Provenco's business, it is characterised by long lead times for research and development and an earnings profile which may fall across different accounting periods," Mr Ritchie says.
Provenco's ability to meet the latest EMV standards across its entire range of solutions has significantly contributed to its success in the market. Mr Ritchie says over the past six months the domestic businesses, built around Eftpos and retail and supply chain technology solutions, have experienced strong growth.
"The lead-up to the mandated dates set in New Zealand for the changeover of all Eftpos terminals to the new smart card and EMV-compliant terminals has resulted in the volumes of terminals delivered and installed substantially increasing."
Mr Ritchie says the group had been successful in winning a number of Eftpos terminal replacement projects with large corporate customers. Recent examples include - Vehicle Testing New Zealand, AMI Insurance, Ministry of Justice, South Pacific Tyres and Pharmacybrands (which owns the Amcal, Dispensary First, Unichem and Smart Pharmacy brands).
Provenco's strength in retail has continued beyond Eftpos. The technology division has been a catalyst for organic business growth expanding to deliver all aspects of retail store technology including mobile computing and wireless infrastructure solutions. A major win was a contract with Farmers to manage, design and supply all retail technology for its 1,000-plus lane point of sale replacement project.
The acquisition of several distribution companies over the past year had proven invaluable, Mr Ritchie says.
"The development of what we now refer to as our Vantex Technology Distribution business, with the consolidation of acquisitions made in 2003 and last year, has been an outstanding success. Vantex is now Australasia's largest point of sale and mobile and wireless technology distribution group with well established distribution centers in Auckland, Melbourne and Sydney."
The enlarged Auckland distribution centre has secured strong growth in services revenues, and offers value-added services to its customers. As an example, the staging facility allows Vantex to preload and pre-configure point of sale and mobile computing devices before they are shipped to customers.
Demonstrating Provenco's smart technology
In an innovative move, Provenco has opened a life-size convenience store in its Auckland head office. The futuristic store is the first of its kind in New Zealand and provides visitors with a real-life shopping experience, showcasing the growing and ever-changing range of retail technology. Mr Ritchie says the initiative shows Provenco is not only leading the way in technology, but in customer service too.
"This initiative allows our customers to keep up with trends in the market and, more importantly, to understand the direction in which certain trends are developing and why."
Staff numbers in the group have increased by over 20% since June 2005, due to organic business developments. Mr Ritchie says a highlight of growth in the international business was the recent appointment of Glen McLatchie, who will head Provenco's Retail Automation division.
"Glen brings more than 12 years of energy industry experience from BP Oil International. More recently he was based in London, where he held high-level strategic roles within the international supply and trading segment of BP."
Mr Wolfenden says Provenco's previously announced guidance on anticipated full-year operating profit of more than $9.0 million after goodwill amortisation and before unusual items and taxation, remains the company's expectation.
"This would be 18.4% growth on last year's operating profit of $7.6 million," he says.
Provenco is a New Zealand-founded technology company operating globally with customers in 23 countries. Listed on the New Zealand stock exchange (NZX: PVO), the company has a number of international offices including those in Beijing, Kuala Lumpur, Melbourne and Sydney.
After more than 30 years on the technology scene, Provenco has evolved into a sound and diverse company. With a heritage in Eftpos and payment solutions, Provenco's business now extends across a range of technology applications for the retail environment.
The company's growing diversity is reflected in each of the key areas of its operations today - providing forecourt solutions for the international retail oil industry; payment technology and Eftpos in the domestic New Zealand market; and retail technology including mobile and wireless technology for the Australasian market.
Provenco's tailored solutions for retail business environments use a combination of internally-developed software and hardware, as well as top international brands.
For more information, visit www.provenco.com