Provenco net profit halved as tax bites

Provenco Group today reported its June year net profit more than halved to $3.8 million thanks largely to paying $4.3m more tax than the prior year.

After last year paying its first dividend since 1997, the former tech wreck cut this year's distribution to 1.3c per share via a non-taxable share issue from 3cps last year.

Shareholders can receive cash in lieu of the bonus issue.

The company, which mainly supplies hardware and software for eftpos systems and other retail technologies, said it was now in a full tax paying position for the 2006 year. A taxation credit in 2005 reflected accumulated losses from prior years.

Revenue grew by 33 per cent to $153.9m.

Chief executive David Ritchie said timing changes with offshore contracts had caused the shortfall in expected earnings for the current financial year.

"These earnings will now occur in subsequent financial years. We will always experience fluctuating revenues and profits around significant contracts in this business, as the work-flow is often outside our control," Mr Ritchie said.

The result did not reflect an investment of $7m in intellectual property associated with Provenco's retail automation division, he said.

The company reported an operating surplus of $7.25m, at the higher end of its $7.0m-$7.3m guidance in May, but down from the $7.6m in 2005.

Chairman David Wolfenden said operating earnings before interest, tax, depreciation and amortisation (ebitda) rose 6 per cent to $14.6m.

"All four divisions in the group are positioned well for the future, with expanding market opportunities," he said.

The balance sheet strengthened during the year with assets up 19 per cent to $105.6m.

Mr Wolfenden said Vantex Distribution performed strongly and was now Australasia's largest distributor of retail point of sale, barcoding, and mobile and wireless technology. Vantex managing director Lyn Warren will not re-stand for his board seat at the October shareholder meeting but will continue in his role with Vantex.

An increase in shareholders equity included the recent placement of 5 million shares each to interests associated with Navman founder Peter Maire and The Warehouse founder Stephen Tindall, at 85c per share.

After balance date, the company raised a further $6.9 million via a share purchase plan.

Provenco shares closed down 2c at 90c yesterday. They were at 97 a year ago and have dropped form $5.25 in March 2000 at the height of the dot.com bubble.

- NZPA