Cross stepping down as ADV profit drops

By Phil Boeyen, ShareChat Business News Editor

Thursday 1st March 2001

Tech company Advantage (NZSE: ADV) has announced a major management restructure after reporting a sharp drop in both interim operating and bottom-line profit.

For the six months ended December Advantage made a profit of $386,000, down from $2.157 million the previous year.

Income grew from $28.8 million to $42.8 million, but operating profit almost halved to $2.3 million.

Although the company says three of its four businesses - Retail Automation, Payment Solutions and Portable Technology - peformed well, the e-Services division lost $1.6 million during the period.

"After a period of strong revenue growth, Advantage's e-Services business, like most companies in the technology sector, was affected by the global downturn in IT spend and a flat local economy," says CEO Greg Cross.

Mr Cross says the board is predicting the third quarter will remain soft for e-Services, but is forecasting a recovery in the fourth quarter as it continues to consolidate the business, reduce costs and benefit from a recovering market.

During the first half of the financial year Advantage booked profits of more than $3 million on its Strathmore (NZSE: SMR) investment which it sold in January, but took a $1.8 million loss on its foray into online retailer FlyingPig.

Advantage has also announced it will be reorganising its four business divisions to create four stand-alone businesses with their own CEOs, reporting to a Group Managing Director.

Greg Cross will be stepping down from the top job, although will remain a director and stay as CEO while he leads the recruitment for the new Group MD.

Chairman Evan Christian says the company accepts Mr Cross' assessment that there is a need for a different leadership style in this period, which is more suited to a process-driven business.

"Greg has played a key role in the success of Advantage over the last three years, growing a quiet $20 million EFTPOS-related company into one of Australasia's leading technology companies with significant international revenues. We are pleased that after this transition period he will continue to contribute to the growth of the Group."

The company has also announced a new director to the board, former Countrywide Bank MD David Wolfenden.

Although no interim dividend has been recommended the board says it will review the situation at the end of the current financial year.

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