Business Post delays delivery of rival service

A private postal company has been forced to delay for six months the introduction of a service to compete with Consignia after failing to reach agreement with the state-owned firm over the cost of doorstep deliveries.
Now Business Post has asked the independent industry regulator, Postcomm, to intervene and impose a tarrif on the two parties. Shares in Business Post fell 5% to 428p despite the company yesterday announcing a 19% surge in pretax profits to £15.1m for the year to March 31.

UK Mail, a subsidiary of Business Post, was given a one year licence in November under the Postal Services Act to provide deliveries of business letters under 350 grammes in London, Birmingham and other cities.

Under this first "downstream" licence, UK Mail was to have been responsible for collecting, sorting and transporting post to Royal Mail offices throughout the UK for the latter to undertake the local sort and final delivery.

The licence was seen as a pilot scheme ahead of Postcomm's decision on the final shape of industry liberalisation, which is expected to be announced next week.

Paul Carvell, the chief executive of Business Post, shrugged off the setback. "Demand is enormous," he said. "We have never seen such a groundswell of support and people are prepared to wait."

He remained hopeful of launching the UK Mail operation in September or October, anticipating an early decision by Postcomm over the price of "final mile" delivery.

Consignia denied dragging its feet in negotiations. It supported the concept of more delivery competition. "We fully accept it will happen and we await the outcome of Postcomm's review with interest," a spokesman said.

The former Post Office is expected to publish annual results next week with some forecaster suggesting that losses could reach £1bn.

Business Post turnover rose 6.5% to £131.7m, with operating margins growing from 9.9% to 11.1% on the back of new services launched despite the subdued economic environment.

Almost 90% of Business Post activity is generated by express parcel and mail delivery in Britain with the rest coming from international operations. In September last year it signed a five-year agreement with Federal Express to distribute that company's British mail.

BIRMINGHAM POST (UK) 22nd May 2002
BUSINESS POST NOW AIMING TO DELIVER BY OCTOBER
Business Post, the Birmingham-based parcel delivery group that intends to break Royal Mail's monopoly on residential post, believes it will be delivering to homes by October at the latest.

Chief executive Paul Carvell said yesterday the group's negotiations with Postcomm, the industry regulator, would take about three months and then his group would launch its new twoday delivery service aimed at the business to consumer market.

The group, which has its national hub by Fort Dunlop, had hoped to begin delivering mail last month but failed to agree a price with the Royal Mail for using its postmen and so appealed to Postcomm to mediate.

Mr Carvell described the pounds 150 million market as 'a very exciting opportunity'.

'The fact that we have lost a few months is irritating but it is not catastrophic,' he said.

His group yesterday issued its full year results, which showed an 18.9 per cent increase in pre-tax profit to 15.1 million on pounds 131.7 million of sales, up 6.5 per cent.

The improvement came despite a decline in business parcel volumes last year in line with the general downturn.

Business Post was particularly badly hit by the fall in demand for electrical goods like computers.

In January it issued a profits warning as Tiny Computers – which represented four per cent of group sales – collapsed.

Mr Carvell said trading appeared to be picking up since the end of March, with current sales up 11 per cent on the same period last year – although this figure is flattered by Business Post's new contract to act as FedEx's agent in the UK.

Mr Carvell said 2001 had been 'a tactical year', focusing on improving service levels – 98.3 per cent of all parcels are now delivered on time at to the right location – and relaunching existing businesses.

These have included UK Today, a same day premium courier service, and a new business called UK Pallet, which Mr Carvell said is the only place pallet customers can go to have their goods delivered within a day.

A final dividend of 10.7p, up 5.9 per cent, is paid taking the total to the year to 16p, up six per cent, covered just 1.25 times by earnings. At yesterday's closing price of 429p, down 19 1 /2p, the shares yield 3.7 per cent.