NZ Post Result

EMBARGOED UNTIL 11AM WEDNESDAY 23 JUNE 1999

New Zealand Post profit up in first year of a competitive letters market

New Zealand Post today reported a tax-paid profit of $23.0 million for the year to 31 March 1999, up 27.8% on the previous year (1998: $18.0 million).

Chairman Dr Ross Armstrong said New Zealand Post had performed well in its first year of competition with good letter volume growth of 3.9% over the same period last year.

"Over the past few years we have invested time and resources into preparing for deregulation of the letters market. The 1998/99 result reflects the company's excellent progress in ensuring it maintains a thriving business in a fully competitive market," says Dr Armstrong.

Operating revenue was up 11.7% at $789.5 million (1998: $707.1 million), a strong result in a slow economy. Expenditure was up 15.7% to $736.1 million (1998: $636.2 million), reflecting increased volumes and investment in marketing and service initiatives including extended opening hours in Post Shops, and increased rural delivery services.

Payments to the Crown included $13.8 million in dividends and $14.7 million in income tax.

New Zealand Post Chief Executive, Elmar Toime said that competition had begun to emerge over the past year, and the company had continued its fundamental strategy of pursuing efficiency and low prices. The success of this strategy for consumers was reflected in international benchmarking on prices.

"For example, if we look at postage rates relative to labour costs there has been a 22% reduction in the relative cost of the standard letter since 1994, ranking New Zealand Post's 40 cent standard letter rate the cheapest in the world for a developed economy."

Strategies undertaken by the company to support growth over the past year include: innovative mail media initiatives in both the unaddressed and addressed markets, including The Browser, an advertising package for businesses; and added-value services such as a secure mail collection service, called Post Connect, for small to medium-sized businesses.

The company has also progressed electronic communications opportunities such as a billing service called e-bill on the Internet with CheckFree Corporation, the largest US provider of electronic presentment services; and an integrated electronic commerce capability for CourierPost customers.

On the international front, New Zealand Post International Limited, a subsidiary of New Zealand Post, is rapidly building its consultancy profile broadening its range and reach of services in this growing market. It has won significant new business including Trinidad & Tobago, and has developed global alliances with key multi-national companies such as Lockheed Martin USA, British Post Consultancy Services and Deloitte Touche Tohmatsu Global Consultancy.

REVIEW OF OPERATIONS
YEAR ENDED 31 MARCH 1999

- Completed first full year of competition in the letters market
- Tax paid profit of $23 million, compared with $18.0 million in 1998.
- Total mail volume 1.53 billion items - letter volume growth of 3.9%.
- Datamail and CourierPost achieve excellent growth in revenue:
- over 25% for Datamail, the company's mail house subsidiary, and 18% for CourierPost.
- Public favourability improves - 93% of New Zealanders believe New Zealand Post provides a "good to excellent" service.
- New Zealand Post wins Best Corporate Strategy Award (Management Top 200 Awards 1998) for its deregulation strategy.
- New Zealand Post International Ltd (NZPIL) wins a five year management contract for Trinidad and Tobago Post.

Financial Performance

1999 ($m) 1998 ($m)
Operating revenue $789.5 - up 11.7% $707.1
Operating expenditure $736.1 - up 15.7% $636.2
Net earnings $23.0 - up 27.8% $18.0
Dividend $13.8 - down 8.0% $15.0
- cents per share 11.5 cents 12.5 cents
Issued and paid-up capital $120.0 $120.0
Shareholders' funds $188.6 - up 1.7% $185.4

ENDS

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