National Mail reveals extent of red ink

The company announced ten days ago was getting out of the mail delivery business due to a poor result but had not made any figures available until now.

The net deficit of $7.55 million compared with a forecast loss of $5.45 million. It includes writing off development expenditure of $324,000 but doesn't reflect the cost of ceasing the mail distribution operations, which are due to end tomorrow. Total revenue for the year was $2.52 million.

National Mail says costs relating to ceasing mail its distribution operation are yet to be finalised, but include redundancy payments, the cost of meeting contractual obligations, any loss on realisation of fixed assets and the cost of managing the mail distribution closure process.

Shareholders will be told the total of trading losses subsequent to balance date at the company's AGM in February.

The company says in spite of the high fixed cost of maintaining the mail distribution network it did manage to offset the decline in revenue against that forecast through cost reductions. However, these were not significant enough to contain the deficit to that forecast.

"The result was also impacted by the decision of the Directors to write off the development expenditure. The Directors are disappointed with the outcome for the business and are taking all steps possible to preserve shareholder funds," the company said in a statement.

The company floated earlier this year, raising $12.7 million, but was unable to compete effectively against market leader NZ Post.

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