Press release -
Results for six months ending September 2014
Interim results show Post Office making further progress towards its ambition of commercial sustainability
Network Modernisation Programme continues at pace – around 10 branches a day transformed
Personal Financial Services revenue increases by 11 per cent year on year
The Post Office has today published interim results for the six months of the financial year up until 28 September 2014. The results show that the business has made further progress towards its ambition of achieving commercial sustainability, despite challenging market conditions.
The Post Office is undertaking the biggest transformation programme in UK retail history, modernising 8,000 branches. This programme has gathered pace during the first half of 2014/15 with around 10 branches a day being transformed into new modern retail outlets, with many offering longer opening hours including Sunday opening. At the same time the Post Office is also investing in over 3000 community branches which are often the only or last shop in the area.
Paula Vennells, Chief Executive Officer said “Over the first six months of the year, supported by the energy and commitment of our people, we have made further progress in building a strong and stable future for the business.
“In what has been increasingly volatile and competitive market conditions we have further reduced our reliance on taxpayers’ money. We are delivering the biggest modernisation programme in UK retail history, transforming around 10 branches a day. As we move through the year we must continue to drive forward our transformation plans. Ensuring we both reduce our costs and at the same time meet our customers’ needs for convenience, simplicity and speed of service.”
Ms Vennells continued: “We are working hard to increase revenue. It’s pleasing to see the great progress made in financial services where in the first half of the year we have seen growth of 11 per cent year on year in Personal Financial Services. We have cemented our position as the infrastructure for community banking with 95% of UK current account customers able to access their accounts in our branches. We are also working with Royal Mail to develop market leading products and services for both small businesses and consumers.”
Key Performance figures – six month ended 29 September 2014
Summary Group Profit and Loss Account
| 2014 | 2013 | Variance | Variance | |
| £m | £m | £m | % | |
| Turnover | 475 | 483 | (8) | (1.7) |
| Network Subsidy payment | 80 | 100 | (20) | (20.0) |
| Revenue | 555 | 583 | (28) | (4.8) |
| People costs | (125) | (131) | 6 | 4.6 |
| Other operating costs | (431) | (422) | (9) | (2.1) |
| Total costs | (556) | (553) | (3) | (0.5) |
| Share of profit from joint ventures and associates | 24 | 23 | 1 | 4.3 |
| Operating profit before exceptional items | 23 | 53 | (30) | (56.6) |
| Operating exceptional items | (3) | 132 | ||
| Profit on disposal of property, plant and equipment | - | 2 | ||
| Profit before financing and taxation | 20 | 187 |
Financial Performance:
Turnover decreased by £8 million from £483 million in the first 6 months of the prior year, to £475 million this year with growth in the Financial Services business more than offset by decline in the Government Services and Telecoms businesses. The Mails and Retail business remained almost flat with £1m (0.5%) decline.
The operating profit before exceptional items reduced to £23 million from £53 million in the first six months of the previous year. This included a decrease of £20 million in the Network Subsidy Payment from the previous year from £100 million to £80 million in line with the Government Funding Agreement.
The Mails and Retail pillar includes all services provided for Royal Mail and Parcelforce as well as Lottery and retail services. Mails and Retail revenue of £183 million decreased by £1 million (2013: £184 million).
Financial Services revenue in the first half of the year increased by £8 million to £147 million (2013: £139 million). Personal Financial Services revenue rose by 11%, driven by growth in insurance, savings, international money transfer and mortgage products.
Government Services revenue of £68 million declined by £7 million (2013: £75 million) mainly due to a reduction in the number of active Post Office Card Account (POCA) accounts.
Telecoms revenue of £59 million decreased by £6 million (2013: £65 million). Revenue from HomePhone and Broadband decreased driven by a reduction in customer numbers and in the average revenue per user (ARPU). Revenue from our Mobile top-up business was lower than the previous half year.
Overview and the future
Although it has been a challenging six month the Post Office has continued to make great strides, especially in transforming its branch network.
It has continued to develop its mail services such as Click and Collect and Drop and Go and has also introduced around 150 new drop off points to meet the needs of online shoppers and encourage more people to return items across its network.
Through its strong relationship with Royal Mail, it has introduced new pricing formats and special offers to give better value to customers visiting its 11,500 branches this Christmas.
The first half of the year has demonstrated genuine progress but also underlines the challenges to be faced in the next two to three years to secure a positive future. We are confident this can be done and we remain resolute in our determination to build a strong and stable business for the future.
Ends
Notes to Editors:
Basis of preparation
The information shown in this publication is unaudited and does not constitute statutory financial statements. These interim condensed consolidated financial statements for the half year ended 29 September 2014 have been prepared in accordance with IAS 34, ‘Interim Financial Reporting’ as adopted by the European Union. This report should be read in conjunction with the Group’s Annual Report and Financial Statements 2013-14, which have been prepared in accordance with IFRSs as adopted by the European Union.
Cautionary statement
Where this trading update contains forward looking statements, these are made by the Director in good faith based on the information available to them at the time of their approval of this report. This statement should be treated with appropriate caution due to the inherent uncertainties underlying any such forward looking information.
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Post Office Limited, 148 Old Street, London, EC1V 9HQ. Registered No: 2154540
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About the Post Office
The Post Office (Post Office Limited) has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of communities in Northern Ireland, Scotland, Wales and England. The Post Office has made a commitment to maintaining its network of branches at its current size and reach. It provides around 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.
The Post Office serves over 17 million customers a week and a third of small businesses. Some 99.7% of the total population live within three miles of a post office and over 97% live with one mile of a post office. For many rural communities, the post office is the only retail outlet. Post Offices branches remain highly valued and trusted, and are the focal point of many communities. For more information, visit http://www.postoffice.co.uk/.
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If you have an enquiry regarding any Post Office product or service please visit postoffice.co.uk or call 0845Local call rates apply. Call costs may vary depending on your service provider. Calls may be monitored or recorded for training and compliance purposes. 611 2970.
