g3 group industrials mail and beyond price* nz$0.75 … ou… · · 2015-06-17nxt company...

16 June 2015

G3 Group coverage is provided through the NXT Research Scheme

NXT company spotlight

Mail and beyond

G3 Group operates three businesses: a New Zealand-based business mail

operation; a unique UK tourist mail business (Universal Mail UK); and

document management in New Zealand. The compliance listing on the New

Zealand NXT market does not include the raising of any capital and will

provide a platform for organic and acquisition-fuelled growth.

Business aggregation

Since 2005, G3 Group’s corporate mail business has grown organically and

through acquisitions, which include Pete’s Post (2012) and Fastway Post (2013).

The UK Mail business began in London in 2009 and the acquisitions made in 2014

(Filecorp and Eureka) have given G3 a presence in the filing and document

management business. Several of these businesses were acquired from parties

who became the three major shareholders of G3. The acquisition strategy rationale

includes combining infrastructure and expertise and building the scale required to

undertake further industry consolidation in New Zealand and in Australia and to

enter the electronic data management space.

Past performance

The disclosure document reveals that there has been organic growth in each of the

last 11 years; however, it does not disclose the contribution from acquisitions. Since

2005, revenue has increased from NZ$1m to NZ$41m in FY15. The EBITDA

margin for FY15 fell to 9.3% from 10% in FY14 due to a higher proportion of

earnings from the lower-margin NZ Mail business.

Growth options

G3 sees its existing high-growth options as the UK tourist mail business and

document management in New Zealand and Australia. It believes that there are

near-term industry consolidation opportunities in the physical filing, document

management and possibly in the mail house space in Australia. However, the most

significant growth opportunity remains the yet to be explored digital space. The

traditional mail business is expected to continue to slow with some upside from cost

out and business aggregation.

Valuation: Peer comparison

The last share price used for an acquisition and for the issue of shares to the

independent directors and certain key employees was NZ$0.75. This implies a

market capitalisation of NZ$40.4m, which implies a FY15 EBITDA multiple of 11.3x

and a FY15 P/E of 15.0x compared with a peer group FY15 P/E of 22.2x and the

NZ All Index FY15 P/E of 19.4x.

G3 Group Industrials

Price* NZ$0.75

Market cap* $40.4m

*Share issue price used in ESOP

Share details

Code GGL

Listing NXT

Shares on issue 53.8m

Business description

G3 Group is undertaking a compliance listing on

NXT. The last acquisition transaction and the issue of

shares to the non-executive directors and senior

executives was struck at NZ$0.75 per share implying

a market capitalisation of ~NZ$40m.

Bull

Experienced board and management.

Profitable operations.

Successful acquisition and integration track record.

Bear

Dependent on access agreements in New Zealand and UK.

No IP limits margins (EBITDA ~10%).

No presence in electronic data management.

Analysts

Moira Daw 61 2 9280 1161

Finola Burke 61 2 9280 1161

[email protected]

Historic financials

Year end

Revenue (NZ$m)

NPAT (NZ$m)

EPS (c)

DPS (c)

P/E (x)

Yield (%)

03/12 19.3 (0.5) N/A 0.0 N/A N/A

03/13 25.6 1.2 N/A 0.0 N/A N/A

03/14 32.3 1.4 3.0 0.0 25.0 N/A

03/15 40.5 1.9 5.0 0.0 15.0 N/A

Source: G3 disclosure document. Note: P/E based on NZ$0.75/sh (most recent issue price).

mailto:[email protected]

G3 Group | 16 June 2015 2

Company description: Mail and more

G3 Group is an amalgamation of several businesses that were previously owned and operated by

the three major shareholders. The terms of this transaction have not been disclosed. These

amalgamated businesses have achieved consistent year-on-year revenue growth for 11 years and

since 2010 have shown steady growth in EBITDA. The amount of growth attributable to acquisitions,

which include four between 2012 and 2014, has not been disclosed. G3 plans to build on its

expertise in physical mail and workflow to expand into the digital world of data creation,

management, distribution and storage through making acquisitions.

Business segments

The current business of G3 comprises:

business mail in New Zealand (NZ Mail, Pete’s Post, Fastway Post and SEND);

tourism mail in UK; and

filing and document management in New Zealand.

The table below uses data from G3 Group’s FY15 audited accounts adjusted to include revenue

and EBITDA from acquisitions made during FY15 (see Exhibit 7 for detail)

Exhibit 1: G3 Group – segment revenue and EBITDA

(NZ$000) Revenue EBITDA EBITDA margin

NZ Mail operations 35,078 1,766 5.0%

UK Mail operations 5,449 1,983 36.4%

Filing and document management 1,978 374 18.9%

Total 42,505 4,123 9.7%

Source: G3 Group disclosure document

NZ Mail

The 650 million items per year mail market1 in New Zealand was deregulated in 1998 but is still

dominated by the government owned NZ Post (~60%) of the market by volume. There are 25

private postal operators, the largest of which are G3 and DX Mail (owned and operated by

Freightways, FRE.NZX) with a market share of approximately 10% each. Freightways aggregates

its Business Mail division with the courier services and freight support businesses, which means

that it is not possible to draw meaningful comparisons of operating metrics or the value of the

Business Mail division. Freightways’ Express Package and Business Mail division reported FY14

revenue of NZ$332m and EBITDA of NZ$60m.

G3 expects to grow its market share of the NZ mail business via acquisitions sourced from the long

tail of small operators and from market share gains from government owned incumbent NZ Post.

This should fuel increased revenue and improved EBITDA margins in spite of an estimated overall

market decline in mail volumes of 6-7% per year.

G3’s four mail businesses offer a differentiated service including:

prepaid personalised products and postage stamps, which are sold either directly or via product

distribution channels. The items are distributed either through NZ Post or delivered within the

DX Mail network (the SEND brand); and

outsourced postal services including the collection and despatch of mail and courier items.

Customers are charged a monthly management fee as well as a fee per item.

G3 has an access agreement with NZ Post whereby it pays a wholesale fee for access and charges

its customers retail rates. The access arrangements for mail delivery are determined by the Postal

Network Access Committee and are therefore subject to change. G3’s NZ Mail business has a

1 Estimated by G3 Group – G3 Group disclosure document.


commercial relationship with Freightways for an alternative mail delivery and service channel via

DX Mail.

UK tourism mail

The G3 start-up business Universal Mail UK (UMUK) entered the UK personalised tourism stamp

market in 2009 following the liberalisation of the UK postal market in 2006. There are only two

providers of international postcard stamps – the incumbent Royal Mail and UMUK. UMUK designs

bespoke tourist stamps, commissions the printing and then distributes them to re-sellers, tour

operators and other retailers so that tourists can affix the specialised stamps to postcards. Tourism

at 9% of GDP is a significant industry in the UK and in spite of a plethora of instant digital

communication operations the ‘old fashioned’ postcard, (which made its first appearance in 1840),

is still a favoured form of holiday communication.

G3 has an access agreement with Royal Mail, which means that any postcard with a UMUK stamp

can be mailed in a Royal Mail red post box or at a post office located in England, Wales, Scotland

and Northern Ireland. Royal Mail charges a fee to cover the aggregation and extraction of UMUK

stamped items, which are then forwarded to an international mail distribution partner who bears the

responsibility for delivery of the mail item to the designated recipient. The access agreement with

Royal Mail is subject to change and, although management considers this unlikely, the access

agreement could, in theory, be cancelled.

We expect demand to grow in line with general tourism growth and from an extension of G3’s

distribution network in the UK. There may be opportunities in markets outside the UK; however,

there are no imminent plans to enter new markets.

Document management (New Zealand)

In 2014, G3 entered the document management market via acquisition and focuses on large

vertical markets such as legal, health, accounting, finance and government. Services and products

offered include document filing systems, consultancy services, cabinetry and software solutions to

assist in the storage and management of physical in-house documents and records. The branded

products are Filecorp, where G3 has only one competitor and Eureka Filing Systems. All products

are sold through telemarketing, direct mail or through major office product retailers.

Strengths, weaknesses, opportunities and threats

Exhibit 2: G3 Group – SWOT analysis

Strengths Weaknesses

Experience in the mail/records business. Growth dependent on acquisitions.

Well credentialed management and board. No track record in electronic data management.

One of two key non-government players in NZ mail market. Margin limited by access agreement.

Successful record of acquisition integration. No intellectual property, which limits EBITDA margins (~10%).

Profitable operations.

In-depth understanding of business communications.

Conservative balance sheet.

Opportunities Threats

Consolidation in the NZ mail sector. Termination of extraction agreement with Royal Mail.

Expansion in physical document management (Australia/NZ). Termination of NZ Post access agreement.

Acquisitions of digital data storage and management businesses. Access price increases that cannot be passed on to customers.

Leverage fixed-cost base. Declining volumes of physical mail.

Intangible asset write-down if profitability declines.

Source: Edison Investment Research


Acquisition opportunities – mail houses Australia

As well as opportunities to acquire some of the 23 independent mail operators in NZ who have 1%2

or less market share, there are also opportunities for industry consolidation within the Australian

bulk mail house markets and associated data management markets. This is evidenced by the 52

independent mail operators who have been awarded Bulk Mail Partner (BMP) status by Australia

Post.

Exhibit 3: G3 Group – approved BMP Australia

NSW Vic/Tas Qld WA SA/NT

Abnote Australiasia x

Action Mail Australia x

Adelaide Business Bureaux x

Adsone x

Bing Mail x x x x

Blue Star MD x x

Canprint Communications x

Chandler CK Communications x

Chequemates x x

CMR Direct x

COJO x

Colemans Printing x

Complete Mailing x x

Computershare Comm x x x x

D&D Mailing x x

Data Direct Australia x

Data Transfer Shares x

Direct Mail ontime x

Direct Response x

Docmaster x

Fergies print & Mail x

Forms Express x

Fuji Xerox x x x x

GJI Pty Ltd x

Hardline x

IBM Output x

Integrated Mailing x

IQ Mail Soltuions x

Lane Print Group x

Lasermail x

Mail Marketing Works x

Mailezy x

Mailforce Document Solutions x

Mailing Today x

McPhersons Printing x

Median Technologies x

Melbourne Mailing x

Merge Print Mail x

Mulitpack x

National Mailing x

Offset Alpine x x x

OTG Mastermail x

Print Mail Logistics x

Quickmail x

Racing Pigeon x

SEMA x x

Smartcomm x

The Camerons Group x

The Faimly Mail House x

The Mailing House x

Universal Approach x

Zipform x

Source: www.australiapost.com

There are also acquisition opportunities in the physical data management space as well as in the

evolving digital data management environment.

2 G3 disclosure document.


Data management and the digital world

G3 intends to progress from physical document and file management to automated digital workflows

and data storage. Businesses are looking for solutions that will enable them to securely and

accurately manage complex information environments to minimise risk, achieve greater cost

effectiveness and discover better processes to use both digital and physical assets profitably. The

global physical and digital information management services market is estimated to be at least

A$20bn per year3 and includes the following:

collection, indexing and storage of physical and digital information assets;

secure destruction of records and other information;

protection and backup of computer data and other media; and

broader technology-enabled information management solutions.

The largest player in this market in Australia and NZ is Recall (REC.ASX), which was demerged

from Brambles (BXB.ASX) in October 2013 and is currently under a take-over offer from Iron

Mountain (IRM:NYSE). At the time of the demerger Recall’s principal business was still physical

document management, secure document destruction and data protection.

There are also a number of niche IT platform service providers in New Zealand and Australia that

automate complex inbound and outbound data flows. Such solution based operators often work

within industry verticals such as finance, health and government. G3 may look to leverage its larger

customer, geography and service base across a number of these niche operators.

Revenue model

G3 generates revenue from the sale of goods and services. It has a track record of year-on-year

revenue growth for 11 years; however, part of the strong growth in the FY13 to FY15 period has

come from acquisitions. The segment data in the audited financial statements for G3 Group show

that total revenue in FY15 grew by 32.8% with the lower margin NZ Mail business growing at 35.4%

(5.7% segment contribution margin) and the Tourism mail business in UK growing by 18% (36.3%

segment contribution margin.

Exhibit 4: G3 Group revenue – 2005-15

Source: G3 disclosure document

Profitability

The gross margin on products is dependent on the volume of product sold and the following factors:

NZ Mail Business – the terms of the access agreement with NZ Post, the proportion of mail

delivered using DX Mail and the value of the mail out-sourcing contracts;

UK Tourist Mail – the terms of the access agreement with Royal Mail; and

filing and document management – costs of manufacture of the filing systems.

3 G3 disclosure document.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

NZ

$'00

0


The group’s EBITDA performance over the past 11 years is shown below.

Exhibit 5: G3 Group EBITDA – 2005-15


Key operating milestones

In the disclosure document G3 has defined its key operating milestones (KOMs) as:

gross margin – group revenue less cost of goods sold;

operating margin – revenue less gross margin plus the direct variable costs of production;

days sales of inventory – the number of days sales it will take to clear the inventory; and

number of units processed – encompasses all product units sold including stamps, postage

permits, envelopes and filing products.

G3’s disclosure document provides selected financial information and key operating milestones for

the three years from FY15 to FY17. We have used this information to undertake some sensitivity

analysis using a range of revenue growth assumptions to show the expected increase in earnings

per share. The key operating milestones are based on the existing company structure and do not

assume any further acquisitions, although these are likely to play a role in future growth. G3 has

stated that it expects to undertake further acquisitions to consolidate the mail market in New

Zealand, to enter the Australian bulk mail market and to diversify its earnings streams in New

Zealand and other markets, in particular the digital document management market.

Exhibit 6: Key operating milestones FY15a-17e

2015e 2016e 2017e

Gross margin 19.1% 21.9% 22.0%

Operating margin 17.6% 20.1% 20.2%

Days sales in inventory (days) 19 22 22

No of processed units (m) 60.32 70.54 75.31

Source: G3 Group disclosure document. Note: The 21.5% increase in processed units is a result of the full-year impact of acquisitions made during FY15.

Selected financial information

The table below combines the data from G3 Group’s disclosure document and from the group’s

audited financial statements.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EB

ITD

A m

argin %

NZ

$'00

0


Exhibit 7: G3 Group select financial information FY12-15

(NZ$'000) Actual Actual Actual Reported Inc acq Pro forma

FY12 FY13 FY14 FY15 FY15 FY15

NZ Mail 27,643 35,078 35,078 35,078

UK Mail 4,617 5,449 5,449 5,449

Filing and document management 1,978 3,500

Total Revenue 19,289 25,605 32,260 40,527 42,505 44,027

EBITDA 2,199 2,868 3,215 3,749 4,123 4,294

EBIT 513 2,781 3,050 3,593 N/A N/A

NPAT -545 1,176 1,363 1,909 N/A N/A

Dividends 196 4

Total Assets 21,075 23,290 24,328 27,999

Cash and cash equivalents 2,460 2,339 2,455 815

Total Liabilities 19,964 21,076 20,717 18,060

Total Debt 12,395 16,132 14,266 9,148

Net cash flow from operations 1,431 -389 4,182 3,365

EBITDA margin 11.4% 11.2% 10.0% 9.3%

EBIT margin 2.7% 10.9% 9.5% 8.9%

NPAT margin N/A 4.6% 4.2% 4.7%

Net debt 9,935 13,793 11,811 8,333

Equity 1,111 2,214 3,611 9,940

Average net debt 11,864 12,802 10,072

Average equity 1,663 2,913 6,776

ROCE 20.6% 19.4% 21.3%

ROE 70.7% 46.8% 28.2%

Source: G3 Group disclosure document, G3 Group financial statements

Return on funds

As is expected for a services business the return on capital shows a healthy margin over the

weighted average cost of capital.4

Intangible assets

The audited financial statements of G3 Group show intangible assets of NZ$19.4m of which

NZ$17m is goodwill. The UK Mail business goodwill of NZ$12.8m was reduced by an impairment of

NZ$1.8m made in FY12. There have been no further goodwill impairments since FY12.

Management expects revenue growth of 9% in FY16 and 8% per year thereafter with operating

costs forecast to be between 17-19% of revenue.

Exhibit 8: G3 Group – intangible assets

(NZ$'000) FY14 FY15

Goodwill

NZ Mail 1,969 1,969

UK Mail 12,753 12,753

Filing and document management 2,277

Total goodwill 14,722 16,999

Other intangibles 740 2,515

Total intangibles 15,462 19,514

Source: G3 Group financial statements

Cash flow from operations

The relationship between cash flow from operations and NPAT adjusted for non-cash items is set

out in the table below.

4 G3 Group’s FY15 financial statements (Note 12) uses post tax discount rates of 14.6% for UK Mail and 16.1%

for NZ Mail in order to test for goodwill impairment.


Exhibit 9: G3 Group – cash vs profit (FY12-15)

Actual Actual Actual Actual

(NZ$'000) FY12 FY13 FY14 FY15

EBIT 513 2,781 3,050 3,593

Cash flow from operations (pre interest and tax) 1,431 -389 4,182 3,365

Adjustment for tax 200 852

EBIT (adjusted) 1,431 -389 4,382 4,217

Cash flow % of adjusted NPAT 279% -14% 144% 117%

Source: G3 Group disclosure document, G3 Group financial statements

G3 Group needs to fund working capital in particular, inventory for the mail and international tourist

stamp businesses. The KOMs include a focus on inventory turns.

Sensitivities

Using the select financial data and key operating metrics from the disclosure document and the

FY15 financial statements we have reconstructed the income statement and have conducted a

sensitivity analysis based on a range of revenue increases. Our reconstructed income statement

assumes that the pro forma for FY15 includes acquisitions made during FY15 as if the acquisition

had taken place on 1 April 2014. The table below uses revenue and operating cost growth

assumptions and key operating metrics provided by the company for FY16 and FY17.

Exhibit 10: G3 Group – Key operating metrics, revenue and cost assumptions

FY15a FY15a FY16e FY17e

Inc acq Pro forma

Revenue growth (G3 Group Est)

NZ Mail 7.0%

UK Mail 11.0%

Filing and document management 7.0%

Total group 7.0%

Growth in costs

NZ Mail 3.0% 3.0%

UK Mail 5.0% 5.0%

Filing and document management 3.0% 3.0%

Gross margins 19.5% 19.5% 21.9% 22.0%

Operating margins 17.6% 17.6% 20.1% 20.2%

Days sales in inventory (days) 19 19 22 22

Numbers of units processed (m) 60.32 70.54 75.31

Source: G3 disclosure document


Exhibit 11: G3 Group – Income statement from FY14a to FY17e

FY14a FY15a FY15a FY15 FY16e FY17e

(NZ$'000) Data source Reported Reported Inc acq. Pro forma

Revenue

NZ Mail Co data/assumptions 35,078 35,078 37,533

UK Mail Co data/assumptions 5,449 5,449 6,048

Filing and document management Co data/assumptions 1,978 3,500 3,745

Total revenue 32,260 40,527 42,505 44,027 47,327 50,640

Gross margin Co KOM 7,903 8,585 10,365 11,141

Direct variable costs Edison extrapolation -770 -837 -925 -912

Operating margin Co KOM 7,133 7,749 9,440 10,229

Overheads Edison extrapolation -3,428 -3,338 -4,100 -4,223

EBITDA Edison extrapolation 3,213 3,705 4,123 4,411 5,340 6,006

Depreciation & amortisation Assumed no change Fy16-17e -165 -156 -231 -370 -370 -370

EBIT 3,048 3,549 3,892 4,041 4,970 5,636

Interest Assumed free cash returned to shareholders -1,227 -952 -952 -560 -560 -560

NPBT 1,821 2,597 2,940 3,481 4,410 5,076

Income tax Tax rate of 28% -458 -688 -823 -975 -1,235 -1,421

NPAT 1,363 1,909 2,117 2,506 3,175 3,655

Statistics

Gross margin 19.5% 19.5% 21.9% 22.0%

Operating margin 17.6% 17.6% 19.9% 20.2%

EBITDA margin 10.0% 9.1% 9.7% 10.0% 11.3% 11.9%

Growth in EBITDA 40.1% 21.1% 12.5%

Revenue per item ($) 0.73 0.67 0.67

Source: G3 Group disclosure document, G3 Group financial statements, Edison Investment Research. Note: The estimates for FY16 and FY17 do not include the impact of future acquisitions.

The increase in earnings per share in FY16 is driven by the company’s expected increase in gross

margin of 240bp and the improvement in operating margin of 250bp as well as some fixed cost

leverage. The expected increases in margins are as specified in the key operating metrics.

Our sensitivity analysis (Exhibit 12) uses a range of revenue increases and sets out the impact on

NPAT and earnings per share.

Exhibit 12 - G3 Group – sensitivity analysis

Additional revenue increase (NZ$'000) Base case 1% 2% 3% 4% 5%

FY16e

Annual revenue increase 7.5% 8.5% 9.5% 10.5% 11.5% 12.5%

NPAT 3,175 3,244 3,314 3,383 3,453 3,522

Increase in NPAT(EPS) 26.7% 29.5% 32.2% 35.0% 37.8% 40.5%

FY17e

Annual revenue increase 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

NPAT 3,655 3,793 3,932 4,073 4,215 4,358

Increase in NPAT (EPS) 15.1% 16.9% 18.7% 20.4% 22.1% 23.7%

Source: G3 Group disclosure document, Edison Investment Research

Directors and management

The four person board comprises non-executive directors. The only director with current listed

public company directorships is the chairman Robert Campbell who is also chairman of Summerset

Group Holdings (SUM.NZX) and chairman of Tourism Holdings (THL.NZX).

The other directors are:

Stephen Phillips who has particular expertise in lateral filing systems and office related systems

and consumables. Stephen has over 25 years’ experience as a CEO and director of office

supply and printing companies. He has also chaired the advisory boards of Brand Developers

and Hydroflow.

Evan Christian co-founded G3 and holds 41.15% of the issued shares. Evan is not currently a

director of any publicly listed company. His past director roles have included Zintel Group

(ZIN.NZX), Abano Healthcare Group (ABA.NZX) and Provenco Group.

Jason Butler co-founded G3 with Evan Christian and holds 41.15% of the issued shares. He

has spent 15 years at senior levels in mail operations including a period in UK overseeing the

UMUK business.

G3 Group | 16 June 2015 10

The senior members of the management team are:

Mark Brightwell, CEO with expertise in supply chain solutions for customers. Mark was

previously GM of DX Mail, DataPrint and Online Security Services at Freightways (FRE.NZX).

Rob Alker, as COO, has been with G3 for six years. He has been instrumental in the successful

integration of four acquisitions made between 2012 and 2014.

Eric Skilling, financial controller, has had 20 years’ experience as a financial controller. He

joined G3 after a recent period of contracting. He was previously financial controller of Digital

Equipment Corporation (NZ).

Shareholders

Under the NXT market rules as a way of increasing liquidity in the market place, the co-founders

Evan Christian and Jason Butler have agreed to lend 100,000 shares each to the market maker.

The co-founders control 82.3% of the shares and management and the board hold a further 13.4%.

Exhibit 13: G3 Group – shareholders

Evan Christian Director 39.06%

Jason Butler Director 38.88%

Mark Brightwell CEO 6.97%

Rob Campbell Chairman 2.47%

Rob Alker COO 2.47%

Stephen Phillips Director 0.62%

Other shareholders 9.53%

Total 100.00%


G3 Group | 16 June 2015 11

Employee share ownership plan

G3 has issued 6,133,333 shares to allow certain directors and key employees to purchase shares

at a price of NZ$0.75/share. This therefore constitutes the most recent share issue price. The

shares vest in three separate tranches with vesting dates of 13 May 2017, 13 May 2019 and 13

May 2021. The directors and employees taking up shares have been issued with loan facilities,

which are to be repaid by the loan repayment date. Other terms relating to the loans issued under

the employee share ownership plan have not been disclosed.

Exhibit 14: G3 Group – loans to directors and management

Shares (‘000) Loans (NZ$’000)

Rob Campbell 1,333 1,000

Stephen Phillips 333 250

Mark Brightwell 1,333 1,000

Rod Alker 1,333 1,000

Others 1,801 1,350

Total 6,133 4,600


Valuation

Peer group valuation

There are no relevant directly comparable listed companies. We think that the best comparative

company is Salmat (SLM.ASX) because its business includes aspects of the mail business and

digital data management. It does have other businesses including its letterbox delivery business

(junk mail including catalogues). Freightways has a directly comparable business however it is a

small part of the overall business, which is in the main a freight/courier business. Both Iron

Mountain and Recall are only partially relevant because of their size and the emphasis on

document management rather than mail.

Exhibit 15 Comparative company analysis

Ticker CCY Price ($)

Market cap ($m)

FY15e P/E (x)

FY16e P/E (x)

FY15e EV/EBITDA

(x)

FY16e EV/EBITDA

(x)

FY15e EV/EBIT

(x)

FY16e EV/EBIT

(x)

FY15e yield

(%)

FY16e yield

(%)

Recall Holdings REC.ASX A$ 7.14 2,189 22.8 20.3 10.8 9.9 14.9 13.3 3.0 3.3

Salmat SLM.ASX A$ 0.76 121 N/A 16.8 9.4 4.6 N/A 10.7 5.3 4.0

Iron Mountain IRM.NYSE US$ 31.95 6,727 25.7 24.0 12.2 11.7 19.1 17.0 6.0 5.9

Freightways FRE.NZX NZ$ 6.12 946 18.2 16.5 11.4 10.5 13.4 12.3 3.9 4.2

Peer group average 22.2 19.4 11.0 9.2 15.8 13.3 4.6 4.4

Source: Bloomberg. Note: Priced at 10 June 2015.

The implied EV/EBITDA multiple for G3 Group for FY15 is 11.3x, which is a small premium to the

above peer group. The implied FY15 P/E for G3 Group is 15.0x compared with 22.2x for the peer

group, excluding Salmat, which is expected to be loss making in FY15 due to a A$64.6m goodwill

impairment. At an implied market capitalisation of NZ$40.4m G3 Group is trading at a FY15 P/E

discount of 32% to the above peer group.

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