“Important corner has been turned” at Post Office Ltd, states report
The Post Office Ltd network is stronger now than it has been for years, according to the company’s first annual report issued following independence from Royal Mail Group. Despite “challenging times” for all retail businesses in the UK at the moment, Post Office Ltd said its financial results have stabilised, and new business has been secured, while thousands of branches are now being modernised.
The Post Office Network Report 2012, which has just been submitted to Parliament, said that as of the end of March 2012, its network “has a stronger and more positive platform for future stability and improvement than has been the case in recent years”.
Product revenues in the Post Office network have been declining year-on-year since 2004/05, but this year the company said “an important corner has been turned”, and revenues have started to increase.
Commenting on the report yesterday, Post Office Ltd pointed to investment and modernisation as well as the stability of the network as key success factors in turning around the organisation.
Post Office Ltd currently oversees a network of 11,818 post offices – only two branches fewer than in 2011. Staff numbers within the network have fallen only by 16, to 7,872 from 2011 to 2012.
The 2011/12 saw a 3.5% growth in the GBP 1.1bn revenue (a GBP 39m increase) but also saw an increase in the government’s network subsidy from GBP 150m to GBP 130m.
Paula Vennells, Post Office Ltd chief executive, said: “With a stable network, investment, modernisation and a drive to improve convenience and service for our customers, the Post Office is now a growth business building on its core asset of a nationwide network of branches, run by local, trusted people, together with online and direct channels.”
Services
With around 20m people visiting a post office each week in the UK, revenue from mail services, finance and telecoms products has remained “broadly the same” over the past two years.
However, revenue from providing government services, which had been declining as a proportion of the business over the past decade, is now beginning to account for more of the network’s income.
Although 2011 saw the loss of the GBP 20m-a-year “Green Giro” government benefits contract, this year has seen new public sector contracts secured from the UK Border Agency, London authorities and pilot projects with the Department of Work and Pensions.
The network now has 41.7% of revenue from mail services (including lottery sales), 28.1% from financial services, 17.4% from government services (up from 17.1% last year) and 12.8% from telephone products.
The company is in the process of modernising 6,000 post offices, creating 4,000 “Mail” post offices and 2,000 streamlined “Local” post offices, as part of a GBP 1.34bn government-funded transformation programme launched in March 2012.
Currently pilots for the new-style post offices are being run in 219 branches. Earlier this week a Committee of MPs revealed concerns about the Local post office model.
Under plans to privatise Royal Mail Group, Post Office Ltd was made an independent company from April 2012, still owned by the state. The UK government currently aims to turn it into a mutual company – owned by its employees and other key stakeholders.
Any change in ownership of Post Office Ltd would need Parliamentary approval, but ministers set up a Stakeholder Forum earlier this month to begin the process of drawing up detailed plans.
