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Advantage Terminates Terminal Distributor

Auckland, New Zealand – 7 December 1999 – Advantage Group Limited (NZSE: ADV) today terminated its relationship with distributor EFTPOS New Zealand, citing substantial breaches of the distribution agreement and ongoing software piracy.

Andy Wilkinson, General Manager, Point of Sale Equipment said that notice had been served on EFTPOS New Zealand requiring it to refrain from tampering with branding on installed terminal equipment, loading Advantage’s EFTPOS software onto Hypercom terminals and on-selling it without paying a licensing fee. The company’s failure to comply resulted in the termination of its distribution contract.

“While EFTPOS New Zealand’s actions in the market are already the subject of a Commerce Commission investigation, our concern is over their continuing failure to honour their contractual agreement,” he explained. “As a result we have taken direct and immediate action to protect our own intellectual property and that of Hypercom, New Zealand’s market leading EFTPOS terminal.”

Advantage also pointed to a broadening of its distribution base as a contributing factor in its decision. “EFTPOS New Zealand has not been Advantage’s primary distribution channel for some time,” said Wilkinson.

“The percentage of terminals sold through them has consistently declined, from 70 per cent twelve months ago to less than 15 per cent today. This shift reflects the changing dynamics of the EFTPOS equipment business. Increasingly we find corporate customers want to deal directly with Advantage because of our ability to provide e-commerce as well as point of sale solutions. Also important to larger retailers are the value-added services we’ve developed for EFTPOS, such as Internet enablement, loyalty applications and electronic receipt capture on the new Hypercom ICE terminal.

“At the other end of the market, the EFTPOS Direct network of branded independent resellers, which we established earlier this year, has been highly successful in providing local support and service in smaller towns and provincial cities throughout New Zealand. These regional resellers along with other independent reseller companies have made a substantial contribution to both coverage and margins.”

Wilkinson said that the termination of distribution would not impact the service received by Hypercom customers nor the contribution by Advantage’s Point of Sale Equipment Division to the company’s profits for the current quarter.

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.
ENDS

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