Provenco's Asian purchase will help drive double-digit growth

Retail technology provider Provenco says the purchase of Asia-based Identics will help drive double-digit revenue growth in its distribution division.

The company also signalled more acquisitions were to come.

Provenco confirmed yesterday it will pay up to US$7 million ($10.5 million) for Malaysian and Singapore-based technology supplier Identics which will become part of Provenco's Vantex technology distribution business.

Vantex distributes retail technology including tills, screen and scanners and generated revenue of about $75 million - about half the group's total - in the financial year ending June.

Provenco chief executive David Ritchie said Identics would be immediately profitable and "both organically and through this acquisition we will see some very strong [revenue] growth [for Vantex]".

"It's going to be well into the double figures."

Asia Pacific was seen as a region of strong growth in Vantex's market.

"As we did in Australia 18 months ago, we'll consolidate this and make sure it gets embedded into the way we operate before we go beyond, but we do see growth as being both acquisitive as well as organic," Ritchie said.

The company was not specifically targeting any other acquisitions at the moment, he added.

Provenco's Vantex distribution division was formed by the purchase of Auckland-based Transtech Distributors in 2003 and Australian firms Javelin Systems and Vantex last year.

As with the expansion strategy into Australia the previous owners of Identics would be retained, Ritchie said. "It worked in Australia and I think it'll work in Asia to have the people that are on the ground [and] know the customers, building the business with us."

The unconditional acquisition of Identics follows the recent signing by Provenco of a $3.3 million contract with The Warehouse to supply point of sale and Eftpos payment technology to 85 stores.

The Warehouse deal followed two others within that field during the last six months with Farmers and Foodstuffs South Island, Ritchie said.

"It's really shown that we are becoming a major force with regard to that retail technology space."

Provenco's retail automation division was hit by some delayed earnings during the previous financial year.

Operating profit for Provenco Group had been downgraded from $9 million during the year - eventually coming in at $7.25 million - partly because of timing changes with some offshore contracts.

Ritchie reconfirmed yesterday that the delayed earnings from offshore contracts had not been lost. "There's more opportunity out there when we look at the three to five year horizon than there probably ever has been in this [petrol station] area," Ritchie said. "It's just a matter of when it lands."

Provenco shares closed unchanged at 90c yesterday.