Advantage Group has lowered its revenue expectations for next year by up to $20 million.
Advantage chief executive Greg Cross told shareholders at the company’s general meeting last Friday that he was expecting revenues for the full year to be in the range of $90 to $100 million rather than the $110 million originally forecasted. This was the result of the change in market climate and the economic downturn, he said, with the next quarter not looking as strong as the one just ended.
Cross reported a surplus before tax and goodwill of $3.81 million for the quarter just ended, which included a hefty profit of $2 million from the sale of shares in telecomms software company CommSoft.
But shareholders were warned the company will take a hit from the sale of Flying Pig, to be included in the next quarter. Advantage invested $1.9 million in Flying Pig and at one stage had up to 12 Advantage programmers working full time for it. While Advantage says it earned $1.8 million in revenues last year, it will write down the investment this year.
“We’ll take the pain this year,” chairman Evan Christian said. He says the exact writedown figure is subject to a confidentiality agreement. But chief financial officer Stewart McKenzie confirmed a net position of a $2.24 million loss when the three investments in Strathmore Group, Flying Pig and SupplyNet are grouped together and both writedowns from Flying Pig and SupplyNet and the $2 million Commsoft profit are taken into account.
Christian says Advantage “plans to retain an interest” in investment company Strathmore and e-procurement site SupplyNet.
Cross says the result includes costs involved in repositioning the business from the small and medium-sized enterprise market to the “higher end of the market”.
Former Oracle and ASB executive Mike Stobbs was bought in five months ago to head up the e-services division. Stobbs says he has attempted to strengthen the project management and legacy systems integration areas.
Cross says growth this year will come from its Australian operations and the retail automation business in Latin America, Africa and Asia.