First-half profit fall for newly NXT-listed G3

Mail operations and document management company G3 Group [NXT: GGL], which listed on the NXT platform in June, reported a 29% drop in first-half profit.

This came from one-off NXT listing costs, restructuring the business and sales falling 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% margin for the full 2015/16 year and the half-year result gave a margin of 24.4%.

Net profit fell to $1.15 million in the 6 months ended September 30, from $1.62 million, a year earlier, the company says.

Revenue fell 7% 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% to $1.2 million, while revenue was up 5.9%. G3 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 says. 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%, due to a delay in rolling out a new business. In the three months ended September 30, it processed 14.7 million units, compared to 13.3 million units in the June quarter.

G3 was the first to join the NXT market. It listed its 53.8 million shares at 75c apiece, giving it an implied market value of $40.4 million, and its shares last traded at 83c.

(BusinessDesk)