Pre-close trading update
Business Post Group plc, the leading parcel and mail delivery group, provides the following pre-close update for the six months to 30 September 2006.
Trading in the first half of the current financial year has been satisfactory with Group revenue up 15% to GBP153m. Progress continues to be made with the performance improvement initiatives previously announced.
Revenues in Parcel Services, (comprising the Group’s overnight business-to-business, business-to-consumer, and cross-border parcel delivery activities) were down 3.4% to GBP94m. We continue to make progress with our initiatives to strengthen this business, with a focus on further improving our customer service and improving our operational efficiency. Parcels volumes are now showing growth and our customer service levels we believe remain amongst the highest in our industry.
We have made further progress in improving the performance of the franchise network. Eight franchises have been brought back into corporate ownership in the period, bringing the total transferred since the beginning of the calendar year to 14. Overall these operations make a significant trading loss. Our plan is to reduce the run-rate of these losses such that they are eliminated by the start of the new financial year. However, as previously advised, these losses will impact our operating profit by some GBP3m for the current financial year, weighted toward the first half. In addition we have incurred some GBP1m of costs on the transfer of franchisees to corporate ownership. These costs will be included within the operating profit.
During the year ended 31 March 2006 a provision was made against outstanding franchise debt. Recoverability of the amounts due from franchises has been less than anticipated resulting in the need to provide a further GBP1.5m against the franchise debt. This amount will be provided in the half year as an exceptional item. Separately, we have identified a number of specific one-off charges amounting to some GBP1.5m, relating to prior years. This amount will be adjusted for in the interim results.
UK Mail, the leading competitor to Royal Mail in mail delivery services, continues to deliver very strong growth, with revenue up 156% to GBP37m. We have won a number of significant new contracts, particularly in the financial services industry. Our flexible business model, leading product innovation and strong customer focus have been major factors in this success. Since inception of our mail business in May 2004 we have processed over one billion mail items and in September alone handled some 85 million mail items.
Overall revenues in Specialist Services, (comprising the Group’s nationwide palletised goods delivery service and same-day courier activities) were up 3.5% to GBP21m. In both businesses we are taking action to establish a stronger platform for sustained growth. We have strengthened the management teams and invested in their operational infrastructure.
The Board continues to expect progress in the underlying results in the current year, albeit weighted to the second half as previously advised.
Business Post will announce interim results for the six months ending 30 September 2006 on 14 November 2006.
There will be a conference call for investors and analysts at 8.15am today, 5 October 2006. For dial in details please call Hogarth Partnership (contact details below).
For further information, please contact:
Business Post Group plc
Guy Buswell (Group Chief Executive) 0121 335 1111
Steven Glew (Group Finance Director) 01753 706 070
Hogarth Partnership
John Olsen 020 7357 9477
Fiona Noblet
Sarah Richardson
