Advantage lowers full year forecast

First quarter profit for the three months ended September was $3.81 million before tax and goodwill, but the figure included a $2 million profit on sale of CommSoft shares and does not take into account write-downs from the sale of the troubled FlyingPig e-tail venture.

The FlyingPig write-downs occurred in the second quarter and will be included in the interim result. FlyingPig was sold earlier this month to the online division of IT Media.

Although ADV revenues for the first quarter were up 37% to $21.49 million on the previous year, CEO Greg Cross told shareholders this morning that the expenses for the quarter had been impacted by significant investment in market development, training and the integration of two new acquisitions.

"As a result of the continuing change in market climate and the softening in the NZ economy the outlook for Q2 is not as strong, and we are revising our revenue forecast for the full year."

"Originally we indicated that we expected to achieve revenues of $110 million. We now expect those to be in the range $90 million to $100 million, still over 40% up on last year. An increasing percentage of this growth will come from our expanding operations in Australia and the export successes of our Retail Automation business."

Operating profits of $1.771 million for the first quarter were only marginally above last year's result of $1.715 million.

Chairman Evan Christian told shareholders that the company would be cash flow positive for the year.

"We have no need for further cash and do not envisage any further issue of shares to fund our growth."

Mr Christian also confirmed his continuing commitment to the company, in response to recent market volatility following an announcement by Qixel Capital Group earlier this week:

"I remain a substantial shareholder and Eric Watson, Nick Gordon and I are committed to retaining our investments in Advantage and supporting its growth plans. We're in for the long haul."

Earlier this week the NZSE questioned ADV about its falling share price, which occurred after the announcement that Qixel Capital had cancelled a proposed Nasdaq listing and was transferring assets back to principal shareholders.

The announcement appeared to spook investors already jumpy about tech stocks, with ADV shares falling to 18-month lows below $1.30, although they have recovered slightly since then.

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