Provenco Issues Profit Downgrade Guidance

17 May 2006

Provenco Issues Profit Downgrade Guidance

Provenco Group Limited (NZX:PVO) has advised that it has downgraded its profit guidance for the year ending 30 June from $9.0 million to between $7.0 and $7.3 million after goodwill amortisation and before unusual items and taxation. The company attributes this downgrade to developments in both the domestic and international markets that have just become apparent following management’s regular review of the business.

Provenco Payments, a provider of EFTPOS technologies to the New Zealand market and representing approximately 20% of the group’s revenue, having achieved a strong result in the first half is experiencing a larger decline in revenue for EMV-compliance work, than was expected. Provenco now anticipates lower levels of activity in this area until the 2007 calendar year.

“We remain the market leader and are working closely with retailers and banks to ensure payment terminals are upgraded as required before the next compliance deadline of 31 December 2007,” said David Wolfenden, Chairman of Provenco.

Provenco Retail Automation, a global supplier of technology solutions to the retail oil industry has experienced some timing movements with offshore contracts, which has resulted in a shortfall in expected earnings for the current financial year. These earnings will now occur in the next financial year.

“There has been no loss of revenue or associated earnings with these contracts, but the movement in the timing are in many situations, controlled by our customers,” said David Wolfenden.

“The international opportunities for the retail automation business continue to grow and Provenco remains a market leader for pay@pump and forecourt automation solutions for the retail oil industry. We are actively exploring an increasing number of opportunities in many markets and we have two significant contracts under negotiation. We will continue to keep the market informed.”

“The Directors remain positive about the medium and long term prospects for the group. It is pleasing that our most recent acquisitions in Australia, Vantex technology distribution, have performed well and to expectations. It is important to note that, as previously stated, lumpy earnings are a feature of key parts of Provenco’s business,” said David Wolfenden.

ENDS

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