Newly NXT-listed G3 reports 29% first-half profit fall

Monday 30th November 2015

G3 Group, the mail operations and document management company that listed on the NXT platform in June, reported a 29 percent decline in first-half profit as it bore one-off costs from listing on the NXT market and restructuring its business, and as sales fell from a year-earlier boom when customers got in ahead of a postage price hike.

The first company to list on the platform, intended for mid-cap growth stocks, G3 described the result as "strong" on an operating earnings basis. The company uses gross margin as a percentage of revenue as a key operating measure. It is targeting a 21.9 percent margin for the full 2015/16 year and the half-year result gave a margin of 24.4 percent.

Net profit fell to $1.15 million in the 6 months ended Sept. 30, from $1.62 million, a year earlier, the company said in a statement. Revenue fell 7 percent to $21.8 million, though the year earlier sales were bolstered by some $2.9 million when G3's customers got in ahead of a planned postage hike by New Zealand Post on July 1, 2014. Stripping out the one-off costs and the 2014 bump in sales, underlying profit rose 11 percent to $1.2 million, while revenue was up 5.9 percent. It expects annual sales to be "well up on the previous year."

G3 is made up of New Zealand Mail, Send, Pete's Post and Fastway Post, which provide business mail services, and Universal Mail, a UK-based tourist stamp operation. The company entered document management agreements with brands Filecorp and Eureka in October last year.

"We are actively looking for opportunities including a number of new acquisition targets that are focused on the deployment of document and data management," chief executive Mark Brightwell said. The company has completed five acquisitions in the past three years.

In October, the company cut its annual mail and document processing target by 12 percent, due to a delay in rolling out a new business. In the three months ended Sept. 30, it processed 14.7 million units, compared to 13.3 million units in the June quarter.

G3, which is listed on the new small-cap NXT market, was the first to join the market on June 18. It listed its 53.8 million shares at 75 cents apiece, giving it an implied market value of $40.4 million, and its shares last traded on Sep. 1 at 83 cents.

BusinessDesk.co.nz

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