PRINTING brothers Philip and Henry Norcross have secured all but 5% of e-business company Evolution, after power company Contact Energy sold its 30% stake to them for an undisclosed sum.
But the sale works out at an after tax loss of $300,000 for Contact, which paid $2.5 million for its share in September 2000.
Before the sale, the Norcrosses owned 65% of Evolution through their company Dynamic Commerce. The pair has investments in the design, printing and stationery business through the Norcross group of companies.
Contact Energy says it sold its share because the company did not fit its business model. “Since acquisition, the results of Evolution have not been material,” it told the New Zealand Stock Exchange on May 12.
This is in contrast to the Evolution website, which says Contact was “so impressed they bought a large percentage of our company”.
And a Contact statement at the time of purchase said the 30% acquisition was “a strategic investment that will form a cornerstone of Contact Energy’s plans” to sell electricity and gas to 500,000 customers.
Henry Norcross says Evolution turns over about $2 million a year; a lot less than the $10 million that Contact expected it would. But this does not mean Dynamic Commerce’s investment is a bad one, he says.
“For us, making half-a-million a year is good but for them it’s not. We get the control to move in the direction we want. [Evolution] is profitable.”
Evolution was formed in 1999 and lists New Zealand Dairy Foods, Farmers and BJ Ball Papers as customers, as well as Contact Energy, which secured perpetual rights to use Evolution’s products. The company hit the business news pages in October 2002 when it bought 52% of local accounting software outfit Maxiom. But Norcross says Maxiom “probably” won’t be trading in the near future because it has taken too much money and time to turn it into a sellable product. Former Maxiom and Evolution managing director James Dale and some staff hold the remaining 5% of Evolution.
Dale works for vodka maker 42 Below in New York.