G3

G3 assists businesses, including a growing international customer base, to manage their data, documents and customer communications, deploying new technologies for maximum reliability and efficiency.

Minimum investment: $2,000.00

$299,508
Unsuccessful
Min target: $1,000,000 (2.38% equity) Max target: $3,000,000 (6.82% equity)
Ended Fri, 14 October 2016 9:00pm (NZST)
0 Number of investments
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$299,508 Unsuccessful
$1,000,000 Min target (2.38% equity)
$3,000,000 Max target (6.82% equity)
$0 Still available for investment
Offer closed Fri, 14 October 2016 9:00pm

An offer of shares in G3 Group Limited (G3)

Letter from the chair, Rob Campbell

Dear shareholders and investors,

I have pleasure in presenting this current investment opportunity to you.

G3 assists businesses, including a growing international customer base, to manage their data, documents and customer communications, deploying new technologies for maximum reliability and efficiency.

G3 began life 12 years ago as a small domestic provider of business mail services under the New Zealand Mail brand. Through a series of acquisitions, including Pete’s Post and Fastway Post, it now commands annual sales of over $40m and has a presence in the United Kingdom, Australia and the Pacific Islands.

The various G3 brands initially operated under separate corporate structures, but came together in early 2015 as “G3” with a single vision for the future – to offer businesses multi-channel delivery options for their customer communications and document workflow requirements.

G3 operates three core business divisions.

  • Document and data management products in New Zealand and Australia;
  • Tourism collateral in the United Kingdom, including personalised postal stamps for international tourists; and
  • Business mail services in New Zealand.


The figures below are from the audited FY16 financial statements.

Note: “Documents Australia” sales are derived from the acquisition of the Formfile business, made during Q4 of the FY16 financial year.

G3 met its growth targets for FY16, and expects to do so again for FY17.

Since listing on the NXT market in June 2015, G3 has continued to expand in its core document and data management, tourism collateral and business mail markets.

We have done what we said we would do – grow our traditional businesses, expand via acquisition into document and data management and move into Australia. Through the experience, energy, engagement and expertise of our G3 team, we will continue to deliver on these strategies.


Selected Financial Information1

We have now recorded eight years of earnings history, delivering year-on-year growth and developing a group of market-leading business services brands in New Zealand, Australia and the United Kingdom.

Further financial information, including year to date performance and commentary is contained in the Financial section.

In New Zealand, growth in the business mail industry is static, and overall volumes are declining. However, the largest player is constrained by a legacy business model, and this is providing G3 with opportunities to grow its revenue share of the market. Growth opportunities exist through acquisition and by providing a strong product offering to transition customers from traditional mail to digital solutions. The New Zealand business mail market makes up about one third of G3’s profit in FY16. Further financial information, including year to date results and commentary, is contained in the Financial section.

G3 has specific strategies to:

  • grow its existing business operations by increasing market share and profit margins;
  • acquire businesses which complement its existing operations; and
  • acquire technology businesses which focus on data management.

We have completed eight acquisitions in the past four years. These have allowed us to move into the large and fast growing data management markets of New Zealand and Australia and to extend our offering to include digital data services for small to medium sized businesses. Our management team is actively looking at a number of new acquisition opportunities. This capital raise will help facilitate these acquisitions.

G3 is well suited to acquiring small volume but high margin businesses where the company has a demonstrated ability to:

  • leverage its existing customer base;
  • cross-sell an extended product range;
  • improve margins through a greater spread of services across a vertically integrated supply chain; and
  • fund or partially fund acquisitions through share issues or relatively cheap access to finance.

Management are seeing plenty of these types of acquisition opportunities in our target markets at attractive multiples which provide a natural arbitrage between private and public sector valuations.

It is against this background of proven performance and growth activity that I invite you to consider an investment in G3.

The offer is for between $1m and $3 million by way of new ordinary shares at $0.75 per share which will rank equally with those currently listed on the NXT market2. This represents a 6.25% discount to the last traded market price. The new shares will represent 2.4% to 6.8% of the shares on issue. I’m an existing shareholder holding 2.5% and plan to invest a further $100,000 in this offer via my investment company3. My fellow shareholder and director Steve Phillips holds 0.6% and plans to invest a further $50,000.

The capital raised will be leveraged with bank debt (as appropriate) to fund future acquisition targets that will increase G3’s overall earnings and expand on its service base.

Over the past 18 months we have built a solid platform for future growth in our chosen markets of New Zealand, Australia and the United Kingdom. We now have the confidence to accelerate this strategy. We are forecasting continued strong growth across our businesses.

Thank you for taking the time to consider this offer. We look forward to welcoming you as fellow shareholders in G3.

Yours sincerely

Rob Campbell
Chair - G3 Group Limited

1 See the Financial section for a reconciliation of G3’s EBITDA to profit before tax.

2 G3 is making the offer in reliance upon the exclusion in clause 19 of Schedule 1 to the Financial Markets Conduct Act 2013.

3 These subscriptions by the directors are made in accordance with NXT rule 25(c). Under that rule, allotments to directors and associated persons require shareholder approval if shareholders holding at least 5% of the votes in the company submit a request to the board for a special meeting of shareholders.



Objectives of the capital raise


The capital raised, supplemented by cash reserves and bank debt (as appropriate), will be used primarily to support targeted acquisitions in our growth markets. Our acquisition strategy is further explained in the Strategy section.

Secondary objectives of the capital raise are to:

  • increase the spread of shareholders in G3, which will improve liquidity for shareholders (and we expect will result in G3 fully complying with NXT market shareholding spread requirements from which we currently hold an exemption); and
  • develop a better awareness of the G3 business, which may have a positive impact on investor interest, recruitment, business leads and acquisition leads.

For further information on the G3 Group story and performance, please refer to the NXT website at: https://www.nxt.co.nz/companies/GGL/instrument/GGL. Please also see the Product, Strategy, Financial, Offer, Updates, and Q&A sections through the tabs at the top of this offer page.



Team

G3 currently has a team of approximately 65 staff across 3 offices in Auckland, Australia and the United Kingdom.

Photo of Rob Campbell

Rob Campbell Independent non-executive chair, B.A. (Hons. 1st), M.Phil. Economics

Rob has been a director of G3 since 1 April 2015. Rob also chairs Summerset Group Holdings Limited and Tourism Holdings Limited. He is also a non-executive director of Precinct Properties Limited and T & G Global Limited. He has over 30 years’ experience in capital markets, including governance roles in private and public companies, investment funds and private equity funds in a wide range of global markets.
Photo of Steve Phillips

Steve Phillips Independent non-executive director, NZCE

Steve is a member of the New Zealand Institute of Directors and has over 25 years’ experience as CEO, director and chair within large corporates in New Zealand and Australia, including Blue Star Group Limited, OTC Office Supplies Limited, Whitcoulls Office Products Limited, Croxley Stationery Limited and Projex Equipment Hire Limited. He has chaired several advisory boards including Brand Developers Limited and Hydroflow Limited. Steve was instrumental in launching the original lateral filing systems in the New Zealand and Australian markets and is an expert in office related systems and consumables. Steve is a professional director, strategic planning consultant, qualified international facilitator and business coach. Steve has also had significant involvement in Iwi strategic development projects and has chaired two Iwi asset holding companies - Ngai Takoto Holdings Limited and Whaingaroa Fisheries Limited. Steve has been a director of G3 since 1 April 2015.
Photo of Evan Christian

Evan Christian Non-executive director, B.Sc

Evan is a co-founder of G3. Evan has over 20 years’ experience in private and public company governance. Directorships in NZX-listed companies include: Zintel Group Limited, Abano Healthcare Group Limited (under its previous name ElderCare New Zealand Limited) and Provenco Group Limited (previously called Advantage Group Limited). He has also held directorships in United Electricity Limited and Transport Investments Limited.
Photo of Jason Butler

Jason Butler Non-executive director, NZCE

Jason is a co-founder of G3 and managed G3’s United Kingdom business operations from start up in 2009 to 2015. He has over 15 years’ experience at senior levels in mail operations, including New Zealand Mail, Universal Mail New Zealand and Universal Mail UK. Before moving to the mail industry, he was extensively involved in the construction sector in various management roles.
Photo of Mark Brightwell

Mark Brightwell CEO, B.A.

Mark has 25 years’ experience in logistics, data management and business workflow services. Mark has developed and managed successful supply chain solutions for customers of all sizes and has led business units to achieve superior bottom line results through the application of vision, innovation and technology. Mark joined G3 in April 2015 as CEO. He became involved with G3 to leverage and consolidate the individual brands into a group structure based on shared services and common expansion strategy. As CEO, Mark is responsible for developing and executing long term strategy as well as underpinning immediate earnings performance. He has managed numerous fast growth businesses both in New Zealand and Australia and delivers on targets with a performance based leadership style. Mark manages G3’s New Zealand, Australia and United Kingdom businesses with the support of Rob Alker, G3’s COO and the G3 exec team.
Photo of Rob Alker

Rob Alker COO

Rob has been with G3 for seven years and has successfully taken it through eight acquisitions. Rob has a background in senior management and company ownership in the City of London and New Zealand. Rob was the CEO of New Zealand Mail prior to the formation of G3.
Photo of Les Harvey

Les Harvey CFO, B.Com, CA

Les has extensive corporate financial, management and M&A experience gained over more than 30 years in New Zealand and Australia. He has previously held CFO positions at a range of companies and worked in professional services at national and international accountancy firms. Les joined G3 in January 2016.

Warning statement

It's crucial for you to understand the characteristics and risks of this investment opportunity. New Zealand law normally requires people who offer financial products to provide in-depth information to investors before they invest. The usual rules do not apply to offers by companies through Snowball Effect. As a result, you may not be given all the information you need to make an informed decision. Investing is risky. Some of the key risks include loss of capital, illiquidity, lack of returns, dilution, loss of key people and customers, and lack of control. You should only invest money that you can afford to lose.

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