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Business Post Group (UKM)

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Tuesday 21 May, 2002

Business Post Group

Final Results

Business Post Group PLC
21 May 2002



               BUSINESS POST GROUP PLC - PRELIMINARY ANNOUNCEMENT

• Business Post, one of the UK's leading express delivery companies,
announces an 18.9% increase in pre-tax profit to £15.1 m for the year ended 31
March 2002.


                                                      2002                  2001              Increase

Turnover (£m)                                        131.7                 123.7                  6.5%
Operating profit (£m)                                 14.6                  12.3                 18.7%
Pre-tax profit (£m)                                   15.1                  12.7                 18.9%
EPS (p)                                               20.0                  16.9                 18.3%
DPS (p)                                               16.0                  15.1                  6.0%




• In a subdued economic environment, the increase in operating profit
margins to 11.1% from 9.9% was a particularly pleasing result.


• The Group's operating highlights were:

     - the successful implementation of its five year agreement with FedEx
       to act as its Global Service Participant in the UK;

     - a strong improvement in the proportion of on-time deliveries, to the
       highest in the Group's history;

     - the launch of UK Today, the Group's nationwide same-day courier
       service; and

     - the granting of an interim licence to UK Mail, the Group's business
       mail subsidiary.


• UK Mail has been unable to reach agreement with Consignia over charges
for access to Royal Mail's local delivery network and has therefore referred the
matter to Postcomm, the independent industry regulator, for a determination of
tariffs.  Whilst the process of determination means that commencement of UK
Mail's service will be delayed, the UK business mail market remains an exciting
opportunity.


• Peter Kane, Chairman, stated 'The Board believes that the year under
review was one of good achievement for Business Post and that the Group has
entered the current year in a strong market position.'


'The current year is the first of a three year strategic plan during which we
expect to make substantial progress.  It will be a year of investment for the
future, notably in the franchise network and the Group's newer and smaller
businesses.  Notwithstanding these cost increases, further progress can be
expected in the current year.  The Board remains very confident about the
Group's long-term potential.'


Enquiries:
 Business Post Group plc
   Paul Carvell (Chief Executive)                until 2.00 p.m. - 020-7444 4166
                                                     from 22 May - 0121-335 1111
   Peter Fitzwilliam (Finance Director)          until 2.00 p.m. - 020-7444 4166
                                                     from 22 May  - 01753-706070
 Bankside Consultants Limited
   Charles Ponsonby                                                020-7444 4166



Presentation to brokers' analysts:

An analyst presentation will be held from 9.30 a.m. to 10.30 a.m. today at the
London Capital Club, 15 Abchurch Lane, London EC4.





                              CHAIRMAN'S STATEMENT

In the year ended 31 March 2002, Business Post, which is one of the UK's leading
express delivery companies, increased its pre-tax profit by 18.9% to £15.1m and
made substantial operational progress.

The Group significantly increased its international presence by becoming FedEx's
UK Global Service Participant; raised the proportion of on-time deliveries to
the highest in the Group's history whilst also improving the efficiency of its
core UK business-to-business parcels operations; and commenced the substantial
development of four other related businesses.  These are HomeServe (UK express
business-to-consumer parcels), International (international express
business-to-business parcels), UK Today (UK same day couriers), and UK Mail (UK
business mail).



FINANCIAL REVIEW

Turnover increased by 6.5% to £131.7m (2001: £123.7m), while improvements in
operational efficiency resulted in an increase in gross profit margins to 24.0%
(2001: 23.2%).  With overheads increasing by only 4.2% to £17.0m, operating
profit increased strongly to £14.6m  (2001: £12.3m).  In the subdued economic
conditions throughout the financial year, the increase in operating profit
margins to 11.1% (2001: 9.9%) was a particularly pleasing result.  Basic
earnings per share were 18.3% better at 20.0p (2001: 16.9p).

The balance sheet remains strong, with net cash of £6.7m (2001: £6.2m).  Cash
flow benefited from a seven day reduction in debtor days to 57 days and from a
£0.9m decrease in capital expenditure to £3.7m, in the absence of significant
property projects and major IT investments.



DIVIDENDS

A final dividend per share of 10.7p (2001: 10.1p), up 5.9%, is proposed, payable
on 25 July 2002 to shareholders on the register at the close of business on 28
June 2002.

Together with the interim dividend per share of 5.3p (2001: 5.0p), paid on 7
January 2002, dividends per share are 6.0% higher at 16.0p (2001: 15.1p),
covered 1.25 x (2001:  1.12 x) by EPS.



BUSINESS OVERVIEW

Business Post provides high quality services for time sensitive deliveries,
offering excellent delivery performance supported by information systems which
are at the forefront of the industry.

Almost 90% of Business Post's activity is represented by express parcel and mail
delivery in the UK, with international parcels and UK courier services making up
the balance.  The Group's share of the UK market has risen to approximately 6%,
making Business Post the equal fourth largest player.   Over 90% of its UK
parcel business is for next day delivery and almost 95% is business-to-business.

As reported in the Interim Statement, a strategic review which was completed in
November 2001 concluded  that:


     • UK express business parcels (Express) should remain the Group's core
       activity;

     • five existing or new businesses in related areas - UK Pallet Express,
       HomeServe, International, UK Today and UK Mail - should be developed 
       alongside the core activity, each led by an expert in that area;

     • strategic acquisitions should be selectively considered, either to
       achieve critical mass in a particular activity or to add a complementary 
       service to the range of time-definite deliveries;

     • in all its businesses, Business Post should remain a premium rather
       than a volume player; and

     • the franchise network, which Business Post regards as a competitive
       advantage, should be increased in number and strength.



TRADING REVIEW


General

The economic environment throughout the year was subdued, with the high-tech
sector in particular showing considerable weakness.  This ultimately led, in
January 2002, to Tiny Computers, which during 2001 represented approximately 3%
of Group turnover, being placed into administration.  Against this background,
the Group did well to increase its turnover by 6.5%.

On 3 September 2001, Business Post commenced its five year agreement with FedEx
to act as its Global Service Participant in the UK. Under this contract,
Business Post is responsible for collecting and delivering parcels for FedEx
customers in those areas of the UK not served directly by FedEx (all but Greater
London, Greater Birmingham, Greater Manchester and the Central Belt of Scotland)
and marketing FedEx's services to existing and prospective customers of Business
Post.   As a result of a major project management effort, the significant
increase in volumes was quickly absorbed within the normal day-to-day
operations.  Currently, FedEx accounts for some 10% of Group turnover.

Following the creation of separate customer-facing businesses, all shared
activity has been grouped under Network Services, an internal unit responsible
for providing high quality collection and delivery services at an economic cost.
Significant improvements in on-time delivery performance were achieved over
the course of the year, and recent levels of over 98% have been the highest in
the Group's history.   During the year, an independent survey by Triangle
Management Services of users of parcel delivery services rated Business Post
first for making both collections and deliveries on time.  A consequent benefit
has been a progressive improvement in customer retention. These service levels
are a tribute to the efforts of the strengthened operations team.

Network Services also improved the overall efficiency of the network, with
profit margins benefiting from unit cost improvements, in particular from lower
use of agency and third party labour and reductions in insurance claims for lost
parcels as a result of increased levels of bar code scanning.



Express

Express is the Group's core UK business-to-business parcels network, currently
representing some 85% of Group turnover.  It specialises in next-day deliveries
for those customers who need a highly reliable service backed up by
sophisticated information systems, thereby differentiating itself from the high
volume/low price operators.  Reinforcing further its position as a premium
quality service provider, Express announced in March 2002 that its 72 hour
service would be phased out.  Instead, Express will offer customers 'Parcel 
Post', an upgraded 48 hour product.

In addition, Express launched a priority pallet delivery service, UK Pallet
Express, in December 2001.  This service extends the benefits of a premium
parcel network (late cut-off times, early morning deliveries, full track and
trace) to shippers of pallet-based consignments such as manufacturers and
retailers.  UK Pallet Express is making pleasing progress and further expansion
in this area is proposed over the coming year.



HomeServe

HomeServe, the Group's UK business-to-consumer parcels business, provides a high
quality next day service to residential addresses, with full proof of delivery
and track and trace facilities.

HomeServe is well placed to benefit from the expected growth in electronic
shopping over the coming years.  A salesforce specialising in home deliveries is
being established and is already generating some good prospects.  Alternative
delivery options for busy consumers will also be explored and, to this end,
commercial arrangements have been established with Collectpoint Plc, which has
developed a nationwide network of over 3,000 collection and drop-off points,
primarily in convenience stores.



International

International is responsible for all shipments coming into and leaving the UK
and Eire.  In addition to its relationship with FedEx, International handles
road-based shipments within Europe, working with partners in each of the EU
countries.

With a view to growing International's business in future years, existing
products have been re-vamped, the sales force is being strengthened and new
products have been identified to add to the current range.



UK Today

UK Today is the Group's nationwide same-day courier service.  It operates out of
both owned and franchised depots, uses separately liveried vehicles, and has
access to 1,500 National Express coach movements each day linking 1,200
locations.  As with the Group's other parcel delivery businesses, UK Today
benefits from market leading IT systems.

Following its launch in August 2001, UK Today was operating out of six depots at
the year end, with 26 forecast for the current year end and full roll out
scheduled by 31 March 2004.



UK Mail

UK Mail, a wholly-owned subsidiary of Business Post, is at the vanguard of the
introduction of competition into the UK business mail market, which has an
estimated annual value of some £5 billion.

On 16 November  2001, UK Mail was granted a one year interim licence under the
Postal Services Act by the independent industry regulator, Postcomm, for '
downstream' access to Royal Mail's local delivery network from certain strategic
UK locations - Birmingham, Bristol, Edinburgh, Leeds, Leicester, Liverpool,
London, Manchester and the Thames Valley.   Under the licence, which is the
first full downstream licence to be granted, UK Mail is responsible for
collecting, sorting and transporting mail to Royal Mail offices throughout the
UK, for Royal Mail to undertake the local sort and final delivery.

On 31 January 2002, a report issued by Postcomm indicated that UK Mail would be
able to secure a long term licence for collection by all its depots rather than
being limited to certain strategic locations.

On 12 March 2002, it was announced that UK Mail would collaborate with Pitney
Bowes, the world's leading provider of mail management solutions, on the
automation of mail management and payment solutions for its service.

Although discussions between UK Mail and Consignia to agree a tariff for access
to Royal Mail's local delivery network had been taking place since November
2001, UK Mail has been unable to reach a negotiated agreement with Consignia.
Accordingly, on 11 April 2002, UK Mail asked Postcomm, under the provisions of
the Postal Services Act, to determine a tariff.  The process of determination
means that the service is now unlikely to commence before the last quarter of
this calendar year.   Whilst this is later than expected, the UK business mail
market remains an exciting opportunity for the Group.



FRANCHISE NETWORK

An integral part of Network Services are Business Post's franchised depots,
which provide a high quality local service and entrepreneurial spirit.  Business
Post is committed to developing its franchise network and, across the year,
there was a net  gain of five franchised depots to 43 out of an overall network
of 63 sites.   A further increase in the number of franchised depots is
anticipated in the current year.

A much closer partnership approach with franchisees has been introduced over the
last 12 months.  A Franchise Board of Management was established in January 2002
to consult on issues facing the network and to assist in recruiting and vetting
prospective franchisees.  Significant financial support has been introduced,
partly through interest-bearing loans to assist franchisees to finance the
growth in their businesses, and partly through higher payments which have been
introduced with effect from 1 April 2002.  In addition, subject to shareholder
approval at an Extraordinary General Meeting to be held immediately after this
year's AGM, a share option plan will be introduced to align more closely the
interests of the Group's franchisees and shareholders.  This is thought to be
the first time franchisees of a UK publicly quoted company will be able to
participate in such a scheme.



MANAGEMENT

Much of the credit for this year's good performance in a difficult economic
environment is due to the executive team under the leadership of Paul Carvell,
who became Chief Executive in February 2001.

The Board has been further strengthened by the appointment, with effect from 1
April 2002, of Bill Cockburn, former Managing Director of Royal Mail and Chief
Executive of The Post Office from 1992 to 1995.  Bill will act as non-executive
Deputy Chairman as well as playing a leading role in developing UK Mail.

Below Board level, Managing Directors, who are experts in their individual
sectors, are now in place for all the Group's businesses.

Finally, I would like to thank Neil Benson, who retired after the AGM in July
2001, for his valuable contribution as a non-executive Director since Business
Post listed on the London Stock Exchange in 1993 and as non-executive Chairman
since 1995.  Following Neil's retirement, I have resumed the Chairmanship that I
held from 1971 to 1995.



PROSPECTS

The Board believes that the year under review was one of good achievement for
Business Post and that the Group has entered the current year in a strong market
position.  In the seven weeks to 18 May 2002, turnover (including the benefit of
the FedEx contract) was 11% higher than the corresponding period of the previous
year.

The current year is the first of a three year strategic plan during which we
expect to make substantial progress.  It will be a year of investment for the
future, notably in the franchise network and the Group's newer and smaller
businesses.  Notwithstanding these cost increases, further progress can be
expected in the current year.  The Board remains very confident about the
Group's long-term potential.


Peter Kane
Chairman                                                          21  May 2002




                       CONSOLIDATED PROFIT & LOSS ACCOUNT
                        for the year ended 31 March 2002


                                                                      2002                      2001
                                                                        £m                        £m

Turnover                                                             131.7                     123.7
Cost of sales                                                      (100.1)                    (95.1)
                                                                   _______                    ______
Gross profit                                                          31.6                      28.6
Administrative expenses                                             (17.0)                    (16.3)
                                                                   _______                    ______
Operating profit                                                      14.6                      12.3
Interest receivable                                                    0.5                       0.4
                                                                   _______                   _______


Profit on ordinary activities before taxation                         15.1                      12.7
Taxation                                                             (4.5)                     (3.8)
                                                                   _______                   _______
Profit on ordinary activities after taxation                          10.6                       8.9
Dividends                                                            (8.5)                     (8.0)
                                                                   _______                   _______
Retained profit transferred to reserves                                2.1                       0.9
                                                                   _______                   _______

Earnings per share       - basic                                     20.0p                     16.9p

                                                                   _______                   _______
                         - diluted                                   20.0p                     16.9p
                                                                   _______                   _______
Dividends per share                                                  16.0p                     15.1p
                                                                   _______                   _______



The profit for the financial year is derived from continuing activities and
includes all recognised gains and losses for the year.




                           CONSOLIDATED BALANCE SHEET
                                at 31 March 2002

                                                                           2002                     2001
                                                                             £m                       £m

Fixed assets
Tangible assets                                                            29.5                     29.6
Investments                                                                 0.1                      0.1
                                                                        _______                  _______
                                                                           29.6                     29.7

Current assets
Debtors                                                                    25.9                     23.7
Investments - cash deposits                                                 5.5                      5.4
Cash                                                                        1.2                      0.8
                                                                        _______                  _______
                                                                           32.6                     29.9
                                                                        _______                  _______

Creditors
Amounts falling due within one year
Creditors and accruals                                                    (9.9)                    (9.9)
Corporation Tax                                                           (2.2)                    (2.0)
Proposed dividend                                                         (5.7)                    (5.4)
                                                                        _______                  _______
                                                                         (17.8)                   (17.3)
                                                                        _______                  _______
Net current assets                                                         14.8                     12.6

                                                                        _______                  _______

Total assets less current liabilities                                      44.4                     42.3


Creditors
Provisions for liabilities and  charges                                   (1.0)                    (1.0)
                                                                        _______                  _______

Net assets                                                                 43.4                     41.3
                                                                        _______                  _______


Capital and reserves
Called up share capital                                                     5.3                      5.3

Share premium account                                                       9.7                      9.7

Profit and loss account                                                    28.4                     26.3
                                                                        _______                  _______

Equity shareholders' funds                                                 43.4                     41.3
                                                                        _______                  _______




                         CONSOLIDATED CASH FLOW SUMMARY
                        for the year ended 31 March 2002

                                                                             2002                      2001
                                                                  £m           £m           £m           £m

Operating profit                                                             14.6                      12.3
Depreciation/loss on sale of fixed assets                                     3.6                       3.5
(Increase)/decrease in debtors                                              (2.2)                       2.6
Decrease in creditors and provisions                                        (0.1)                     (1.0)
                                                                          _______                   _______
Net cash inflow from operating activities                                    15.9                      17.4


Returns on investment
Interest received                                                             0.4                       0.4

Tax paid                                                                    (4.3)                     (5.0)

Capital expenditure and financial investment
Purchase of fixed assets                                       (3.6)                     (4.6)
Proceeds from sale of fixed assets                               0.3                       0.5
                                                             _______        (3.3)      _______        (4.1)


Equity dividends paid                                                       (8.2)                     (8.0)
                                                                          _______                   _______

Net cash inflow before management of liquid resources
and financing                                                                 0.5                       0.7

Management of liquid resources
Cash invested on deposit                                                    (0.1)                     (1.6)
                                                                          _______                   _______

Increase/(decrease) in cash                                                   0.4                     (0.9)
                                                                          _______                   _______



NOTES

1. The financial information set out above does not constitute the Company's 
   statutory accounts within the meaning of Section 240 of the Companies
   Act 1985.  The statutory accounts of the Company for the year ended 31 March
   2001 have been delivered to the Registrar of Companies.  The auditors' report 
   on those accounts was unqualified and did not contain any statements under 
   Section 237(2) or (3) of the Companies Act 1985.

   The auditors have given an unqualified opinion on the accounts for the year
   ended 31 March 2002.  These accounts have been prepared using the same
   accounting policies as in the 31 March 2001 statutory accounts, and will be
   delivered to the Registrar of Companies following the Annual General Meeting 
   on 11 July 2002.

2. The final dividend of 10.7p per share will be paid on 25 July 2002 to
   shareholders on the register on 28 June 2002.  The ex-dividend date will be 
   26 June 2002.

3. Basic earnings per share have been calculated by dividing the profit for the 
   financial year by the weighted average number of ordinary shares in issue for 
   the year ended 31 March 2002 of 53,012,798 (2001:53,007,905). Diluted 
   earnings per share have been calculated by adjusting the weighted average 
   number of ordinary shares for the effect of the exercise of share
   options, increasing the number of shares to 53,041,201 (2001:53,027,619).



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