Tidy-up gives $4.4m advantage

By ADAM GIFFORD

Advantage Group has put the corporate games of the dotcom era behind it, producing a result for the year to June 30 showing a cleaner balance sheet and an after-tax profit of $4.46 million.

The result reverses the net loss of $65.9 million recorded a year earlier. No dividend was declared.

Revenue fell from $75.28 million to $62.29 million.



The result was aided by the settlement of a legal dispute with the vendors of Advantage Retail Solutions over purchase price.

The company had to pay $632,000 in settlement costs, but avoided drawn-out legal proceedings.

After tax and before abnormals the annual profit was $2.24 million - in line with company forecasts.



"We have managed to tidy up a lot of outstanding positions and investments and liabilities in our balance sheet, so today the balance sheet is a lot stronger than it was 12 months ago," managing director Tony Bradley said.

Deferred settlements for companies Advantage acquired, a controversial feature of its previous management, are now all paid out and investment positions in online retailer Flying Pig and technology investor Strathmore have been closed or sold.

The only hangover is in Australia, where Advantage is trying to get back its money from the vendors of Whitewolf, a company it bought into as a springboard for expansion across the Tasman.

"We have re-entered the Australian market more on a focused niche basis," Bradley said. "Each division has done its own marketing there direct and won bids."

Scaling Whitewolf back to where it was no longer losing money contributed more than $5 million of the $13 million drop in revenue.

The company was also unable to match the amount it earned the previous year from web development, marking the general slow- down in that part of the industry.

"We had a lot of big projects the previous year but people pulled back," Bradley said.

"We are seeing some starting up again, which plays to our strengths, because a lot of these developments are complex and need to be integrated to back end system."

Advantage's Enterprise Solutions division still has a number of blue chip customers such as Air New Zealand and Vodafone.

The other divisions are the eftpos business Payment, and Portable Technologies, which has the agency for Symbol and other wireless products.

Bradley said the group now had a strong platform for growth.

"We have a stake in five of the eight areas IDC [International Data Corporation] has identified as high growth, so we will certainly grow faster than the market as a whole."

The company recently completed a $10 million capital notes issue.

Bradley said it would be inappropriate to pay a dividend this year, as the company was still recovering.



"We remain quietly confident of continued profitability and positive cash flow."