Advantage takes goodwill thumping

By Phil Boeyen, ShareChat Business News Editor

Friday 17th August 2001

Revenue is up and cashflow is neutral but Advantage (NZSE: ADV) is bleeding red ink to the tune of $65.9 million after writing off goodwill assets.

The loss for the year ended June compares with a $3 million profit last year.

Sales rose to $75 million from $63.5 million previously but revenue in the second half of the year at $32.4 million was down by around 25% on first half sales of $42.6 million.

Advantage is blaming the result on the impact of weak global markets and the group's subsequent requirement to meet changing market conditions.

The $60 million goodwill write off comes after a detailed review of the business, with the board saying there is no certainty of the carrying value of the assets.

"This write off together with other unusual items results in a loss of $65.9 million for the year ended 30 June 2001," says MD Tony Bradley.

"Notwithstanding the downturn of the information technology sector, Advantage's operating performance this year is cash flow neutral after restructuring costs."

Mr Bradley says technology stocks worldwide have been re-rated, with billion dollar losses posted recently by Lucent, Cisco and Nortel reflecting the difficulties in the technology sector globally.

"The market has changed and so has the environment in which we operate over the past year. Advantage has not been immune to these changes and we have responded."

Despite what he calls a challenging year, Mr Bradley is promising things are looking up.

"I am pleased to announce the board has approved the group's new business plan and I am confident that we will deliver positive results for 2002."

Advantage says it has put in place a framework to meet the new market conditions through its four operating companies - Payment Solutions, Retail Automation, Portable Technology & Enterprise Solutions - and has now divested non-core business units.

Tony Bradley, who has considerable management experience in the IT industry, was appointed to the top job in June after former CEO Greg Cross finished up at the company in April.

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