Successful Integration Lifts Advantage Q1 profit

E-commerce Reinforced as WebMasters Acquisition Completed

Auckland – 4 November 1999 – Advantage Group Limited (NZSE: ADV) today announced a first quarter profit of $1.4 million on revenues of $15.6 million, a result up 9.3% on forecast. This compares with a profit of $232,000 on revenues of $4.76 million for the first quarter last year.
Condensed statement of financial performance (unaudited)

First quarter ended September
(millions)

2000 1999
Total Revenues $15.6 $ 4.7
Net Profit * $ 1.4 $0.23
* after tax and before amortisation of goodwill.
Condensed statement of financial position (unaudited)

As at 30 September 1999
(millions)

Shareholders Funds $26.3
Liabilities $29.3
Total $55.6
Total Assets $55.6

“This result reflects substantially improved company performance over the last year and that is due to three main factors,” says CEO Greg Cross. “Firstly, the strategic growth strategy the company has implemented means that Advantage has achieved size and credibility in a rapidly growing market. Secondly, strong trading in each of the company’s business-to-business e-commerce, retail solutions and POS equipment divisions. Thirdly, the management team’s successful integration of acquisitions Computer Enhancements, PEC Retail and Glazier Systems.
“This is strengthened by the completion of our recent acquisition of leading web development company WebMasters. The WebMasters acquisition fulfils a major part of our plan to become Australasia’s leading partner in delivering integrated end-to-end e-commerce solutions, from development through to transaction processing.
“The positive result confirms our ability to leverage Advantage’s position as one of the largest e-commerce companies in Australasia,” says Cross. “We derive income from designing, developing and implementing Internet software and business-to-business e-commerce applications. According to Business 2.0, business-to-business e-commerce revenues in Asia Pacific alone are expected to exceed US $1 billion by 2001 and are growing at a compound annual growth rate of 75%. We are also focused on achieving significant capital appreciation by taking cornerstone shareholdings in strategic e-commerce ventures. We have taken two such strategic positions to date, in investment company Strathmore and business-to-consumer e-commerce venture FlyingPig.co.nz, and we are looking at other opportunities.
“Joint ventures like this are a superb way for traditional bricks and mortar companies to establish an online presence.
“As new e-commerce standards roll out over the next six to twelve months, we anticipate an acceleration in the trend of traditional businesses looking for technology-savvy businesses to partner with in joint ventures. Rather than trying to create an online business from scratch, a joint venture allows them to quickly leverage their own brand, intellectual property and market strengths alongside Advantage’s e-commerce capabilities. And Advantage knows more about business and smart ways to use complex technology than any other prospective partner.”

Earnings Per Share
As at 30 September 1999

1999 1998
Base EPS 3.28 cents 0.66 cents
Cash EPS 3.69 cents 0.91 cents

ENDS
Company Background
Advantage Group Limited, an NZSE listed company, is a leading supplier of e-commerce and transaction processing solutions in New Zealand, Australia and throughout the Southern Hemisphere. The company has three business units: business-to-business e-commerce, retail solutions and point-of-sale equipment. It provides web development capabilities, software development, transaction processing and funds transfer capabilities to enable end-to-end e-commerce solutions. For more information, please visit www.advantagegroup.co.nz.

FOOTNOTE:
Base EPS is net profit after depreciation, amortisation of intellectual property and taxation and, in this instance, before amortisation of goodwill.
Cash EPS is net profit before depreciation, amortisation of intellectual property and goodwill but after taxation.

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