Business Post (BPG)
The bad news is that Business Posts planned assault on the UK business mail market has hit delays. Postcomm, the industry regulator, had been expected to finally resolve an argument over handling charges between Business Post and Consignia by December. It now looks like that wont happen until early next year. Consignia wanted to charge Business Post too much to deliver its mail the last mile to the home/office.
The good news is that Business Post and Consignia have reached an initial agreement over pricing. Paul Carvell, Business Posts chief executive, says the price isnt perfect, but falls within the range he was prepared to pay. He expects to offer mail services before March, and still thinks Business Post could have 3 per cent of the mail market by 2006, meaning profits would double.
Not that the rest of the business is struggling. Buoyed by new contract wins and gaining market share, revenues grew 15.7 per cent in the first half, and are up 15 per cent so far in the second half. As expected, profits have grown a more pedestrian 4.6 per cent as Business Post invests in its franchisees. Profit growth should eventually accelerate. Seymour Pierce expects EPS of 21.1p this year, and 24p next year.
Ord price: 369p Market value: GBP196m
Touch: 365-373p 12-month High: 449p Low: 328p
Dividend yield: 4.4% PE ratio: 18
Net asset value: 86p Net cash: GBP1.1m
Half-year Turnover Pre-tax Stated earnings Net div per
to 30 Sep (GBPm) profit (GBPm) per share (p) share (p)
2001 63.0 6.7 8.8 5.3
2002 72.9 7.1 9.3 5.6
% change +16 +6 +6 +6
Last IC view: 20 Sep 2002, page 27 xd: 11 Dec pd: 6 Jan
