G3 Group's full-year profit rises 12%   31 May 2016

G3 Group's full-year profit rises 12% on improved UK, NZ earnings

By Jonathan Underhill

May 31 (BusinessDesk) - G3 Group, the NXT-listed mail operations and document manager, reported a 12 percent gain in full-year profit on improved earnings from its Mail UK and Mail NZ units and the first contribution from its Documents operations.

Profit rose to $2.1 million in the 12 months ended March 31, from $1.9 million a year earlier, the Auckland-based company said in a statement. Sales increased 8.4 percent to $43.9 million.

G3 was the first to join the NXT market in June last year, listing its 53.8 million shares at 75 cents apiece. They last traded in February at 81 cents and are illiquid as about 95 percent of the stock is owned by directors, executives, and associates of the company.

No dividend was declared because the company is building its cash reserves for future acquisitions, it said. Cash and equivalents were about $1.1 million as at March 31, from $815,000 a year earlier.

As an NXT-listed company, G3 faces less onerous disclosure rules than companies on the NZX main board and gives quarterly updates of some key metrics. It already reported an operating margin for the fourth quarter of 19.4 percent and 20.8 percent year-to-date. The company processed 58.5 million items in the year, having previously said it wouldn't reach its annual target of 62.1 million items.

A breakdown of its full-year results shows total revenue from external customers for its Mail NZ division fell to $33.8 million from $35 million a year earlier, while segment profit rose to $1.9 million from $1.87 million. Mail UK, which encompasses the Universal Mail tourist stamp business, lifted sales to $5.8 million from $5.4 million, while profit rose to about $2.5 million from $1.97 million.

G3's New Zealand mail business operates under the Send, Pete's Post and Fastway Post brands, and the Rocket Mail data management and mailing house operation acquired just after balance date. It entered document management agreements with brands Filecorp and Eureka in October last year and completed the acquisition of Melbourne-based Formfile Records Management at the beginning of the fourth quarter, with plans to launch Formfile's Digital Office, an electronic document sharing service, in New Zealand in the 2017 financial year.

Notes to its accounts show the company is forecasting 6 percent revenue growth in the UK in 2017 and 20 percent growth for NZ mail operations.

"Rocket Mail adds a strategic and complementary service to our mail-related business as well as providing it with an additional market channel that includes the digital delivery of customer invoicing, marketing and reporting communications," the company said.

Auditor KPMG gave a qualified opinion on G3's financial performance and cash flows, saying because it was only appointed during the previous year "we were not able to attend the counting of physical inventories at the beginning of that period or satisfy ourselves concerning those inventory quantities by alternative means."

(BusinessDesk)

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