Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

UK Mail Group (UKM)

  Print      Mail a friend       Annual reports

Thursday 18 November, 2010

UK Mail Group

Half Yearly Report

RNS Number : 3680W
UK Mail Group PLC
18 November 2010
 



 

 

18 November 2010

 

UK MAIL GROUP plc

 

INTERIM RESULTS

For the 6 months ended 30 September 2010

 

INCREASED REVENUE AND PROFITS, NEW PRODUCTS GAINING TRACTION

 

Highlights

 

·     Group revenues up 1.3% to £190.7m (2009: £188.2m)

Mail revenues up 1.5% to £85.9m (2009: £84.6m)

Parcels revenues up 1.3% to £81.0m (2009: £80.0m)

 

·     Group profit before tax up 4.8% to £7.4m (2009: £7.0m)

 

·     Strong balance sheet, net cash at period end of £8.5m (2009: £3.6m)

 

·     Interim dividend of 6.4p per share (2009: 6.4p)

 

·     Retail Logistics launched during the period and making good progress

 

·     New Packets product winning major customers

 

 

Guy Buswell, Chief Executive Officer of UK Mail, said:-

 

"The Group has delivered a satisfactory performance in the first half, with continued revenue and profit growth and our new products and services making good progress.

 

In Mail, we are targeting revenue growth progression in the second half, as the impact of new customer wins and growth in Packets, together with additional volumes from existing customers, more than offset the ongoing overall decline in the UK transactional mail market. In Parcels, the continued progress of our Retail Logistics service should provide further growth opportunities in the second half and there are some signs that the general pricing environment is improving.  As always, market conditions for the balance of the year remain hard to predict and the final three months of the calendar year represent the key trading period for our business.

 

Overall the Group is in a good position, being well financed, with a strong presence in all our chosen markets, with increasing efficiency being achieved in our network, and new products and services starting to gain traction." 

 

For further information, please contact:

 

UK Mail Group plc


  Guy Buswell, Chief Executive Officer

0121 335 1111

  Steven Glew, Group Finance Director

 

01753 706 070

MHP Communications


  John Olsen

Ian Payne

Giles Robinson

020 7357 9477



 

Introduction

 

The Group delivered a satisfactory performance in the first half, with continued revenue and profit growth.

 

Our Mail business increased its revenues, although profit was reduced compared to the prior year as the continued competitive pricing environment led to a reduction in the operating margin.  We saw good progress from our new product areas of imail and packets and we anticipate that these will have a beneficial impact on operating margins going forward.

 

Parcels revenues and profits have grown compared to the prior year.  Our continued focus on customer service and operational efficiency, combined with the successful launch of our Retail Logistics service, were the key factors in this performance.

 

In our Courier business, previous contract wins helped deliver good revenue growth.  The operating margin has reduced however, partly reflecting the very strong performance in the same period last year, leading to a reduction in operating profit in this division.

 

Our Pallets business has the most exposure to wider economic conditions and has consequently seen its revenues decline.  Strong operational management has, however, led to an increase in operating profits.

 

Overall, Group revenues at £190.7m were up 1.3% compared to the prior year and Group profit before tax at £7.4m was up 4.8%.

 

Our financial position remains strong, with net cash at the period end of £8.5m, compared to £3.6m as at 30 September 2009.

 

 



 

Results

 

The results can be summarised as follows:

Six months ending 30 September

2010

£m


2009

£m


Inc %






190.7


188.2

1.3%





7.5


7.1

4.3%

(0.1)


(0.1)

-

7.4


7.0

4.8%

(2.1)


(2.0)

(4.3)%

5.3


5.0

4.9%





9.6p


9.2p

4.3%

 

Revenue and operating profit are analysed as follows:

 

Revenue


Operating Profit

   2010

     £m


  2009

   £m


     Inc/

    (Dec)

      %


2010          £m


 2009

£m


   Inc/

  (Dec)

     %












85.9


84.6


1.5%


5.6


5.9


(5.6)%

81.0


80.0


1.3%


6.5


6.3


1.7%

9.5


8.7


9.3%


1.0


1.2


(17.5)%

14.3


14.9


(4.2)%


0.9


0.8


8.5%

190.7


188.2


1.3%


14.0


14.2


(2.5)%

















(6.5)


(7.1)


9.3%

Operating profit


7.5


7.1


4.3%

 

 

Mail

 

Mail showed further growth in revenues.  As expected, the rate of growth has moderated from the high levels previously achieved, but the business enjoyed continued success in attracting good levels of new business as well as retaining and generating further mail growth from existing customers.  As a result, revenues rose 1.5% to £85.9m (2009: £84.6m).

 

Within the overall UK mail market there has been a decline in transactional volumes of some 4% per annum in recent years. An important factor in the continued progress of our Mail business is therefore product innovation, to open up new segments of the mail market and extend our reach. We expect that this, together with further volumes from new and existing customers and an increase in marketing mail as the UK economy slowly recovers, should more than offset the overall market decline in transactional mail. As previously indicated, we expect revenue growth in our Mail business to be weighted towards the second half of this financial year.

 

Mail operating profits in the first half were down 5.6% to £5.6m (2009:  £5.9m) and the operating margin was 6.5% (2009: 7.0%).  Pricing in the transactional mail market is very competitive.  In the past, we have been able to offset pricing pressures through the increased economies of scale that came from exponential volume growth, but as the market matures, this naturally becomes more difficult to achieve.  However, we have two major new products that are now gaining traction, which we expect to have a beneficial impact on operating margins going forward.

 

Our Packets product, launched this year, enables us to offer customers a price competitive service in a sector that was previously difficult for us to access.  The packets market is the fastest growing segment of the postal market, mainly due to the growth in internet based shopping.  We currently handle up to 15,000 packets per night and have recently added three major new customers to this service, confirming our views on the growth potential for this product and establishing us as a serious player in the c£1.5bn p.a. UK packets market. The next phase for us is to widen the service offering for smaller customers.

 

'imail', our web-to-print postal service, now includes appointment cards, 'economy' black and white printing and mailing list production, and is continually being developed to support its market leadership.  'imail' is now achieving daily volumes of up to 40,000 items, compared to up to 15,000 a year ago.  This is a new concept in the UK mail market which is taking time to gain traction. We have now created a very strong platform with a good pipeline of opportunities and would expect to continue to grow revenues and profits.

 

The Government has recently introduced the Bill for the privatisation of Royal Mail.  We believe that the UK postal market needs a successful, commercially focused and efficient Royal Mail operating within a regulated framework where competition benefits the customer and allows the overall mail industry to flourish.  If privatisation achieves this, then UK Mail supports the proposal. 

 

Postcomm's recently announced review of Royal Mail's pricing will unfortunately result in an increase in prices to all customers.  We understand Royal Mail will set both wholesale and retail prices in February/March 2011 for implementation in May 2011.  We currently expect the underlying impact on our mail margins to be minimal.

 

Parcels

 

Revenues in Parcels, which comprises the Group's business-to-business, business-to-consumer and international parcel delivery service, were up 1.3% for the period to £81.0m (2009: £80.0m).  Operating profit increased by 1.7% to £6.5m (2009: £6.3m) with the operating margin at 7.9% (2009: 7.9%).

 

Whilst the pricing environment remains competitive, which has placed pressure on Parcels operating margins, this has been offset by our continued efforts towards improving the efficiency and effectiveness of our Parcels operation.  Parcels volumes increased during the period by 4.3% over the previous year.  We continue to be successful in winning new Parcels customers as a result of our high service levels, low cost network and strong brand in the market.

 

We have actions underway to reduce our cost base still further.  A key element of these plans is further investment in our I.T. infrastructure to drive increased efficiencies, which will be implemented over the next year.  This will involve a completely new internet platform to support business growth and to drive down costs, and the launch of new technologies to provide industry-leading customer service.

 

In May 2010 we launched a new range of Retail Logistics services tailored to the specific needs of retailers and targeted at the extensive list of retail customers we have access to through our parcels, mail and courier businesses.  This product is making good progress and we now have a number of major retailers trading with us. We estimate this market to be worth £1.2bn, supporting our view that this represents a significant growth opportunity for the business.

 

Courier

 

Revenues in our Courier business, which provides same-day delivery services, increased 9.3% to £9.5m (2009: £8.7m).  Operating margins however reduced to 10.5% (2009: 13.9%) leading to a reduction in operating profit to £1.0m (2009: £1.2m).  The decline in operating margin reflects, in part, the strong performance in the same period last year and, in part, the costs of establishing new capability within the wider Group.

 

We have developed a highly efficient nationwide courier network which has a proven ability to support national contracts, which adds to our ability to offer a fully integrated proposition and supports product development across the Group. 

 

Pallets

 

Revenues in our Pallets business, which provides a nationwide palletised goods delivery service were down 4.2% for the period to £14.3m (2009: £14.9m).  This business is the most exposed of our operations to economic conditions.  We have however improved the efficiency of our operations and reduced costs, leading to an improvement in the operating margin to 6.3% (2009: 5.5%).  This improved margin has more than offset the revenue decline, enabling us to increase operating profit for the period by 8.5% to £0.9m (2009:  £0.8m).

 

We see growth opportunities for this business as the economy recovers, driven by further focus on sectors of the distribution market which can benefit from this highly efficient method of palletised goods distribution.

 

Finance costs

 

Net interest payable remained at £0.1m (2009: £0.1m).

 

Cash Flow and Balance Sheet

 

The Group has a strong balance sheet with net cash at the end of the period of £8.5m (2009: £3.6m). 

 

Net cash inflow from operating activities totalled £3.2m (2009: £5.1m). Net cash outflow for the period was £8.6m (2009: £7.3m) which included £6.2m (2009: £3.1m) of cash consumed in working capital, reflecting the normal first half trend in our business. We expect a substantially smaller outflow for the year as a whole.

 

Capital expenditure for the period was £4.1m (2009: £4.4m).  The capital expenditure for the period includes £1.4m on IT, as we continue to develop our systems infrastructure, and £1.7m on our network.

 

Earnings per share

 

Basic earnings per share increased 4.3% to 9.6p (2009: 9.2p).

 

Dividend

 

The Board has declared an unchanged Interim Dividend of 6.4p (2009: 6.4p), to be paid on 14 January 2011 to shareholders registered on 3 December 2010. The Board will consider the full year dividend at the year end, and intends to pursue a progressive dividend policy.

 

CURRENT TRADING & OUTLOOK

 

Market conditions for the balance of the year remain hard to predict and, as always, the final three months of the calendar year represent the key trading period for our business.

 

In Mail, whilst the pricing environment is likely to remain competitive, we expect revenue growth to progress in the second half of the financial year as the impact of new customer wins and growth in Packets, together with additional volumes from existing customers, more than offset the overall decline in transactional volumes in the UK mail market.

 

In Parcels, there are signs that the pricing environment is improving which should help us achieve profitable growth.  The continued progress of our Retail Logistics service will provide further growth opportunities.

 

Overall the Group is in a good position, being well financed, with a strong presence in all our chosen markets, with increasing efficiency being achieved in our network, and new products and services starting to gain traction. 

 

Guy Buswell

Chief Executive Officer

 

 

 

 

 

 

ADDITIONAL DISCLOSURES

Principal risks and uncertainties facing the business

 

UK Mail's business and share price may be affected by a number of risks, not all of which are within our control. The process UK Mail has in place for identifying, assessing and managing risks is set out in the Corporate Governance Report on page 21 of the 2010 Annual Report and Accounts. The specific principal risks and uncertainties that may affect the Group's performance, together with relevant mitigating factors as identified by the Group's risk management process were discussed on pages 69 and 70 of the Group's Annual Report and Accounts for the 2010 financial year. These included market, credit, regulatory, price, liquidity, capital and foreign exchange risk. It is considered that these still remain the most likely areas of potential risk and uncertainty, with the position unchanged from that set out in the 2010 Annual Report and Accounts.

 

Cautionary statement

 

This interim announcement contains certain forward-looking statements, which have been made by the directors in good faith based on the information available to them up to the time of the approval of this report and such information should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

Going concern

As stated in note 2 to the condensed consolidated interim financial statements, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements. 

 

 



 

 

Consolidated Statement of Comprehensive Income





for the six months ended 30 September 2010





































Unaudited



Unaudited



Audited








Six  months to



Six months to



Year to








30 September



30 September



31 March








2010



2009



2010







Note

£m



£m



£m












Continuing operations









Revenue


5

190.7


188.2


385.2


Cost of sales



(166.8)


(161.6)


(333.5)


Gross profit



23.9


26.6


51.7


Administrative expenses



(16.4)


(19.5)


(33.8)


Operating profit


5

7.5


7.1


17.9


Finance costs



(0.1)


(0.2)


(0.2)


Finance income



-


0.1


0.1


Profit before taxation



7.4


7.0


17.8


Taxation


11

(2.1)


(2.0)


(5.1)


Profit for the period



5.3


5.0


12.7













Total comprehensive income for the period


5.3


5.0


12.7













Total comprehensive income attributable to:








Equity holders of the company



5.3


5.0


12.7













Basic earnings per share


12

9.6p


9.2p


23.4p


Diluted earnings per share


12

9.3p


9.0p


23.0p













The notes on the following pages form an integral part of these condensed consolidated interim financial statements

 












 



 

Consolidated Balance Sheet





at 30 September 2010














Unaudited



Unaudited



Audited








30 September



30 September



31 March








2010



2009



2010







Note

£m



£m



£m



Assets









Non-current assets









Goodwill


6

9.5


9.5


9.5


Intangible assets


6

2.8


1.9


2.0


Investment properties


6

1.0


1.0


1.0


Property, plant and equipment


6

37.6


39.3


38.1


Deferred tax assets



0.5


0.4


0.6





51.4


52.1


51.2


Current assets









Inventories



0.2


0.2


0.2


Trade and other receivables



54.1


52.0


51.8


Cash and cash equivalents


9

13.9


10.7


22.5





68.2


62.9


74.5


Liabilities









Current liabilities









Borrowings


9

(1.8)


(1.7)


(1.8)


Trade and other payables



(50.5)


(48.5)


(54.3)


Current tax liabilities



(2.1)


(2.0)


(1.9)


Provisions


10

(0.2)


(0.3)


(0.1)





(54.6)


(52.5)


(58.1)











Net current assets



13.6


10.4


16.4











Non-current liabilities









Borrowings


9

(3.6)


(5.4)


(5.0)


Deferred tax liabilities



(3.1)


(3.0)


(3.6)


Provisions


10

(0.4)


(0.4)


(0.5)





(7.1)


(8.8)


(9.1)











Net assets



57.9


53.7


58.5











Shareholders' equity









Ordinary shares


7

5.5


5.5


5.5


Share premium


7

16.6


16.6


16.6


Retained earnings



35.8


31.6


36.4


Total shareholders' equity



57.9


53.7


58.5











 



 

Consolidated Statement of Cash Flows



for the six months ended 30 September 2010




















Unaudited



Unaudited



Audited





Six  months to



Six months to



Year to





30 September



30 September



31 March





2010



2009



2010




Note

£m



£m



£m



Continuing operations








Operating activities







Cash generated from operations

8

5.5


7.8


28.7


Finance income received

-


0.1


0.1


Finance costs paid

(0.1)


(0.2)


(0.2)


Taxation paid

(2.2)


(2.6)


(5.3)


Net cash inflow from operating activities

3.2


5.1


23.3










Investing activities







Proceeds from disposal of property, plant and equipment

6

0.1


-


-


Purchase of property, plant and equipment

6

(2.9)


(4.0)


(6.0)


Purchase of intangible assets

6

(1.2)


(0.4)


(1.0)


Net cash outflow from investing activities

(4.0)


(4.4)


(7.0)










Financing activities







Dividends paid to shareholders

13

(6.4)


(5.9)


(9.3)


Repayment of finance lease liabilities

9

(0.4)


(0.4)


(0.8)


Purchase of UK Mail shares by the ESOT

7

-


(0.7)


(0.7)


Repayment of borrowings

9

(1.0)


(1.0)


(1.0)


Net cash outflow from financing activities

(7.8)


(8.0)


(11.8)










Net (decrease)/increase in cash and cash equivalents

9

(8.6)


(7.3)


4.5


Cash and cash equivalents at the start of the period

9

22.5


18.0


18.0


Cash and cash equivalents at the end of period

9

13.9


10.7


22.5










 



 

Consolidated Statement of Changes in Shareholders' Equity (unaudited)

 

for the six months ended 30 September 2010

 










 



Attributable to equity holders of the company



Ordinary



Share



Retained



Total




shares



premium



earnings



equity



Note

£m



£m



£m



£m











Balance as at 1 April 2010


5.5


16.6


36.4


58.5

Dividends paid to shareholders

13

-


-


(6.4)


(6.4)

Employees' share option scheme:









- value of employee services


-


-


0.4


0.4

- tax on employee share options


-


-


0.1


0.1

Profit for the period


-


-


5.3


5.3

Balance as at 30 September 2010


5.5


16.6


35.8


57.9










Balance as at 1 April 2009


5.5


16.6


32.8


54.9

Dividends paid to shareholders

13

-


-


(5.9)


(5.9)

Purchase of UK Mail shares by the ESOT


-


-


(0.7)


(0.7)

Employees' share option scheme:









- value of employee services


-


-


0.4


0.4

Profit for the period


-


-


5.0


5.0

Balance as at 30 September 2009


5.5


16.6


31.6


53.7










Balance as at 1 April 2009


5.5


16.6


32.8


54.9

Dividends paid to shareholders

13

-


-


(9.3)


(9.3)

Purchase of UK Mail shares by the ESOT


-


-


(0.7)


(0.7)

Employees' share option scheme:









- value of employee services


-


-


0.9


0.9

Profit for the period


-


-


12.7


12.7

Balance as at 31 March 2010


5.5


16.6


36.4


58.5











 



 


Notes to condensed consolidated interim financial statements





1

General information








UK Mail Group plc ('the Company') and its subsidiaries (together 'the Group') are engaged in the provision of express collection and delivery services for parcels, mail and palletised goods.








The Company (Registered No. 02800218) is a public limited liability company incorporated and domiciled in England. The address of its registered office is 464 Berkshire Avenue, Slough, Berkshire, SL1 4PL. The Company is listed on the London Stock Exchange (LSE:UKM).








The condensed consolidated interim financial statements were approved for issue on 17 November 2010.











The condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Within the notes to these financial statements the half year periods to 30 September 2010 and 2009 are unaudited. Statutory accounts for the year ended 31 March 2010 were approved by the Board of directors on 18 May 2010 and delivered to the Registrar of Companies.  The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006.








2

Basis of preparation









The condensed consolidated interim financial statements for the half year ended 30 September 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. They do not include all of the information and disclosures required for full annual financial statements, and should be read in conjunction with the consolidated annual financial statements of the Group as at and for the year ended 31 March 2010, which were prepared in accordance with IFRSs as adopted by the European Union.









The consolidated financial statements of the Group as at and for the year ended 31 March 2010 are available upon request from the Company's registered office at 464 Berkshire Avenue Slough, SL1 4PL or at www.ukmail.com.









The interim financial statements are presented in Sterling and all values are rounded to the nearest million (£m), except when otherwise indicated.










After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The Group meets its day to day working capital requirements through operating cash flows, with borrowings in place to fund acquisitions and capital expenditure. Movements in the Group's overall net debt position are shown in note 9. The Group also has £12m of undrawn committed facilities, which are in place until 30 June 2011. Accordingly they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.









3

Accounting policies










Except as described below, the accounting policies applied by the Group in these condensed consolidated interim financial statements are consistent with those applied by the Group in its consolidated annual financial statements as at and for the year ended 31 March 2010.




During the period the Group has adopted the following new standards, amendments to standards or interpretations, which are mandatory for the first time for the financial year beginning 1 April 2010.

The adoption of these standards and interpretations had no material impact on the Group.










■ 

IAS 1 (amendment), 'Presentation of financial statements', effective for annual periods beginning on or after 1 January 2010











■ 

IAS 7 (amendment), 'Statement of cash flows', effective for annual periods beginning on or after 1 January 2010











IAS 17 (amendment), 'Leases', effective for annual periods beginning on or after 1 January 2010











■ 

IAS 18 (amendment to Appendix), 'Revenue', effective for annual periods beginning on or after 1 July 2009











■ 

IAS 27 (amendment), 'Consolidated and separate financial statements', effective for annual periods beginning on or after 1 July 2009











■ 

IAS 32 (amendment), 'Financial instruments: presentation', effective for annual periods beginning on or after 1 February 2010











■ 

IAS 36 (amendment), 'Impairment of assets', effective for annual periods beginning on or after 1 January 2010











■ 

IAS 38 (amendment), 'Intangible assets', effective for annual periods beginning on or after 1 July 2009











■ 

IAS 39 (amendments), 'Recognition and measurement', effective for annual periods beginning on or after 1 July 2009 and 1 January 2010










■ 

IFRIC 16 (amendment), 'Hedges of a net investment in a foreign operation', effective for annual periods beginning on or after 1 July 2009










■ 

IFRIC 17, 'Distribution of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009










■ 

IFRIC 18, 'Transfers of assets from customers', effective for annual periods beginning on or after 1 July 2009










■ 

IFRS 2 (amendment), 'Group cash-settled share-based payment transactions', effective for annual periods beginning on or after 1 January 2010










■ 

IFRS 3 (revised), 'Business combinations', effective for annual periods beginning on or after 1 July 2009










■ 

IFRS 5 (amendment), 'Non-current assets held-for-sale and discontinued items', effective for annual periods beginning on or after 1 July 2009










■ 

IFRS 8 (amendment), 'Operating segments', effective for annual periods beginning on or after 1 January 2010










The following new standards, interpretations and amendments have been issued, but are not effective for the financial year beginning 1 April 2010 and have not been early adopted:









■ 

IAS 1 (amendment), 'Presentation of financial statements', effective for annual periods beginning on or after 1 January 2011





■ 

IAS 24 (revised), 'Related party disclosures', effective for annual periods beginning on or after 1 January 2011





■ 

IAS 27 (amendment), 'Consolidated and separate financial statements', effective for annual periods beginning on or after 1 July 2010





■ 

IAS 34 (amendment), 'Interim financial reporting', effective for annual periods beginning on or after 1 January 2011





■ 

IFRIC 19, 'Extinguishing financial liabilities with equity instruments', effective for annual periods beginning on or after 1 July 2010





■ 

IFRS 3 (amendment), 'Business combinations', effective for annual periods beginning on or after 1 July 2010









■ 

IFRS 7 (amendment), 'Financial instruments: disclosures', effective for annual periods beginning on or after 1 January 2011









IFRS 9, 'Financial instruments', effective for annual periods beginning on or after 1 January 2013

 

4

Changes in accounting estimates









The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.









In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 March 2010.









There have been no material changes in contingent liabilities during the current interim period.

 

5

Segmental information

 








 


Management has determined the operating segments based on reports that are reviewed by the Board for making strategic decisions. These reports reflect the Group's defined management structure, whereby distinct managers are accountable to the Board for the results and activities of their identified segments and the different markets in which they operate. The Board considers that the Group has four reportable operating segments.

 








 


The Group's operating segments consist of Parcels, Mail, Pallets, and Courier Services. Central costs comprises of network costs and central support costs.

 








 


The Group manages its business segments on a national basis, with all its operations in the UK, as are nearly all of the customers.

 

 


Inter-company transactions, balances and unrealised gains on transactions between segments are eliminated. Unrealised losses are also eliminated.

 








 


No individual customer accounted for more than 5% of revenue in the periods included in these condensed consolidated interim financial statements.

 








 


Six months ended 30 September 2010 (unaudited)

 





 




Parcels

Mail

Pallets

Courier



Group


 




£m

£m

£m

£m



£m


 


Segmental revenue

81.0

85.9

14.3

9.9



191.1

 


Inter-segment revenue

-

-

-

(0.4)


(0.4)

 


Revenue (from external customers)

81.0

85.9

14.3

9.5


190.7

 









 


Operating profit before central costs

6.5

5.6

0.9

1.0


14.0

 


Central costs





(6.5)

 


Operating profit





7.5

 


Finance costs





(0.1)

 


Finance income





-

 


Profit before taxation





7.4

 


Taxation





(2.1)

 


Profit for the period





5.3

 



 


Assets

 




 


Segment assets

65.2

46.4

6.1

0.4



118.1

 


Eliminations

(3.5)

(23.5)

(1.2)

-



(28.2)

 


Net segment assets

61.7

22.9

4.9

0.4



89.9

 


Central assets







29.7

 


Group assets per balance sheet







119.6

 













 


Six months ended 30 September 2009 (unaudited)


 













 





Parcels

Mail

Pallets

Courier



Group


 





£m

£m

£m

£m



     £m


 


Revenue

80.0

84.6

14.9

9.2



188.7

 


Inter-segment revenue

-

-

-

(0.5)



(0.5)

 


Revenue (from external customers)

80.0

84.6

14.9

8.7



188.2

 










 


Operating profit before central costs

6.3

5.9

0.8

1.2



14.2

 


Central costs

(7.1)

 


Operating profit

7.1

 


Finance costs

(0.2)

 


Finance income

0.1

 


Profit before taxation

7.0

 


Taxation

(2.0)

 


Profit for the period

5.0

 










 


 

 

Assets








 












Segment assets

61.0

54.9

10.9

0.4



127.2

 


Eliminations

-

(30.5)

(5.9)

-



(36.4)

 


Net segment assets

61.0

24.4

5.0

0.4



90.8

 


Central assets







24.2

 


Total assets per balance sheet







115.0

 










 





 


Year ended 31 March 2010 (audited)

 




 




Parcels

Mail

Pallets

Courier



Group


 




£m

£m

£m

£m



£m


 


Revenue

164.7

173.5

29.1

18.9


386.2

 


Inter-segment revenue

-

-

-

(1.0)


(1.0)

 


Revenue (from external customers)

164.7

173.5

29.1

17.9


385.2

 









 


Operating profit before central costs

14.8

12.2

1.7

2.4


31.1

 


Central costs






(13.2)

 


Operating profit


17.9

 


Finance costs


(0.2)

 


Finance income


0.1

 


Profit before taxation


17.8

 


Taxation


(5.1)

 


Profit for the period


12.7

 

 


Assets

















Segment assets

58.9

58.0

5.5

0.7


123.1


Eliminations

(7.1)

(35.1)

(0.5)

-


(42.7)


Net segment assets

51.8

22.9

5.0

0.7


80.4


Central assets






45.3


Total assets per balance sheet






125.7




 




 


 




 




30  September



30  September


31 March





2010



2009


2010



Total segment capital expenditure

2.7


3.4

4.9


Central capital expenditure

1.4


1.0

2.1


Total capital expenditure

4.1


4.4

7.0




 


Total segment depreciation and amortisation

2.9


2.5

5.3

 


Central depreciation and amortisation

0.9


0.8

1.7

 


Total depreciation and amortisation

3.8


3.3

7.0

 



 

6

Property, plant and equipment and intangible assets

 



 



 


Six months ended 30 September 2010 (unaudited)

£m








Opening net book value at 1 April 2010



50.6


Additions



4.1


Disposals



-


Depreciation and amortisation



(3.8)


Closing net book value at 30 September 2010



50.9


 


 


 


 


Six months ended 30 September 2009 (unaudited)

£m








Opening net book value at 1 April 2009



50.7


Additions



4.4


Disposals



(0.1)


Depreciation and amortisation



(3.3)


Closing net book value at 30 September 2009



51.7

 


Year ended 31 March 2010 (audited)




£m









Opening net book value at 1 April 2009




50.7


Additions




7.0


Disposals




(0.1)


Depreciation and amortisation




(7.0)


Closing net book value at 31 March 2010




50.6

 

 

7

Share Capital















Number of


Ordinary


Share


Unaudited







ordinary


shares


premium


Total


Capital




shares


£m


£m


£m















At 1 April 2010 and 30 September 2010

54,675,241


5.5


16.6


22.1















At 1 April 2009 and 30 September 2009

54,674,237


5.5


16.6


22.1













The Company's Employee Share Ownership Trust ('ESOT') holds shares in the Company for subsequent transfer to employees under its incentive scheme awards.  At 31 March 2010 the ESOT held a total of 342,198 shares (31 March 2009: 624,817 shares). During June and July 2010, 233,697 shares were issued to directors and employees, following the successful vesting of awards under the 2007 LTIP and Share Matching plans, and as a result the ESOT held 108,501 shares as at 30 September 2010 (30 September 2009: 350,276 shares). The weighted average market share price of these transactions was 341p per share.




During the six months to 30 September 2010 no share options were exercised (2009: nil).









8

Reconciliation of profit to net cash flow generated from operations













Unaudited



Unaudited



Audited








Six months to



Six months to



Year to








30 September



30 September



31 March








2010



2009



2010








£m



£m



£m



Profit for the period

5.3


5.0


12.7


Taxation

2.1


2.0


5.1


Finance costs payable

0.1


0.2


0.2


Finance income receivable

-


(0.1)


(0.1)


Depreciation and amortisation

3.8


3.3


7.0


(Profit)/loss on disposal of property, plant and equipment

(0.1)


0.1


-


Share-based payments

0.5


0.4


1.1


(Increase)/decrease in trade and other receivables

(2.3)


1.6


1.7


(Decrease)/increase in trade and other payables

(3.8)


(4.3)


1.5


(Decrease)/increase in provisions

(0.1)


(0.4)


(0.5)


Net cash inflow generated from operations

5.5


7.8


28.7

 

9

Analysis of net cash/(debt)













Audited







Unaudited







At 1 April







At  30 September







2010



Cash flow


Other


2010







£m



£m


£m


£m















Cash at bank and in hand

22.5


(8.6)


-


13.9


Net cash and cash equivalents

22.5


(8.6)


-


13.9











Debt due within one year

(1.0)


1.0


(1.0)


(1.0)


Finance leases due within one year

(0.8)


0.4


(0.4)


(0.8)


Debt due after one year

(3.0)


-


1.0


(2.0)


Finance leases due after one year

(2.0)


-


0.4


(1.6)


Net debt

(6.8)


1.4


-


(5.4)











Net cash/(debt)

15.7


(7.2)


-


8.5
















Audited







Unaudited






At 1 April







At 30 September






2009



Cash flow


Other


2009






£m



£m


£m


£m














Cash at bank and in hand

18.0


(7.3)


-


10.7


Net cash and cash equivalents

18.0


(7.3)


-


10.7











Debt due within one year

(1.0)


1.0


(1.0)


(1.0)


Finance leases due within one year

(0.7)


0.4


(0.4)


(0.7)


Debt due after one year

(4.0)


-


1.0


(3.0)


Finance leases due after one year

(2.8)


-


0.4


(2.4)


Net debt

(8.5)


1.4


-


(7.1)












Net cash/(debt)

9.5


(5.9)


-


3.6

 

 

 




Audited     
At 1 April     
2009     
£m     




Cash flow
£m


 
Other
£m



Audited
At 31 March
2010
£m

 


 

 

Cash at bank and in hand

18.0


4.5


-


22.5

 


Net cash and cash equivalents

18.0


4.5


-


22.5

 









 


Debt due within one year

(1.0)


1.0


(1.0)


(1.0)

 


Finance leases due within one year

(0.7)


0.7


(0.8)


(0.8)

 


Debt due after one year

(4.0)


-


1.0


(3.0)

 


Finance leases due after one year

(2.8)


-


0.8


(2.0)

 


Net debt

(8.5)


1.7


-


(6.8)

 











 


Net cash/(debt)

9.5


6.2


-


15.7

 














 

10

Provision for liabilities and charges

 










Unaudited


 












Total


 


Six months ended 30 September 2010






£m


 











 


At 1 April 2010



0.6

 


Utilised during the period 



-

 


At 30 September 2010



0.6

 










 










 









Unaudited


 










Total


 


Six months ended 30 September 2009





£m


 










 


At 1 April 2009



1.1

 


Utilised during the period 



(0.4)

 


At 30 September 2009



0.7

 








 







Audited 


 


                                                                                                                                                             

Total


 


Year ended 31 March 2010

£m


 




 


At 1 April 2009

1.1

 


Utilised during the year

(0.5)

 


At 31 March 2010

0.6

 


 

 

 


Properties

 



 


The provision for property leases relates to dilapidations on properties under leases expiring within 1 year and up to 15 years. The properties have been inspected by the Group Property Manager, and estimates made for the anticipated dilapidation expenditure to be incurred prior to sub-letting, or reversion of the lease.

 

 

11

Taxation

 



 


Taxation is provided based on management's best estimate of the weighted average annual corporation tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 March 2011 is 28.8% (year to 31 March 2010: 28.9%).

 

Following the passing of the Finance (No 2) Act 2010 on 20 July 2010, the main rate of corporation tax will reduce to 27% from 28% on 1 April 2011. In accordance with accounting standards these changes, which are regarded as 'substantively enacted', have been reflected in these condensed consolidated interim financial statements.

 



 

12

Earnings per share

 



 


The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

 



 


The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.

 



 


Earnings per share attributable to equity holders of the company arises from continuing operations as follows:

 



 





Unaudited

Unaudited

Audited





Six months to 
30 September

Six months to
30 September

Year to 31 March





2010

2009

2010





£m

£m

£m


Profit after tax

5.3

5.0

12.7










No. of shares

No. of shares

No. of shares


Weighted average number of shares in issue

54,482,917

54,165,351

54,245,126


Dilutive effect of options

1,688,004

1,137,012

967,960


Diluted weighted average number of shares

56,170,921

55,302,363

55,213,086









Earnings per share - basic

9.6p

9.2p

23.4p


Earnings per share - diluted

9.3p

9.0p

23.0p








13

Dividends




The final dividend for the year ended 31 March 2010 of 11.8p per share (2009: 10.8p) was paid on 23 July 2010. The £6.4m distribution (2009: £5.9m) is reflected in the financial statements for the six months ended 30 September 2010.









In addition, the directors propose an interim dividend of 6.4p per share (2009: 6.4p per share) payable on 14 January 2011 to shareholders who are on the register at 3 December 2010.  This interim dividend, amounting to £3.5m (2009: £3.5m) has not been recognised as a liability in these condensed consolidated interim financial statements.

 

14

Commitments and contingencies









Group capital expenditure committed, for the purchase of property, software, plant and equipment, but not provided for in these financial statements amounted to £1.1m (2009: £0.8m).








15

Events occurring after the reporting period









There are no events occurring after the reporting period, other than the proposed dividend referred to in note 13.








16

Related-party transactions




P Kane, a director of the Company, and members of his close family and certain family trusts, the beneficiaries of which are persons connected with P Kane, control directly and indirectly 45.8% of the issued share capital of the Company.

 

The nature of the related party transactions of the Group has not changed from those described in the Groups' 2010 Annual Report and Accounts. There were no transactions with related parties during the six months ended 30 September 2010 which have had a material effect on the results or the financial position of the Group.

 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.







17

Risks and uncertainties








The potential risks and uncertainties that may affect the Group's performance were discussed on pages 69 and 70 of the Group's Annual Report and Accounts for the 2010 financial year. These included market, credit, regulatory, price, liquidity, capital and foreign exchange risk. It is considered that these still remain the most likely areas of potential risk and uncertainty, with the position unchanged from that set out in the 2010 Annual Report and Accounts.







18

Seasonality




Historically, the Group experiences marginally greater demand for its parcels and palletised goods collection and delivery services in the second half of the year, as consignments increase in advance of the Christmas season.  Such trends are not discernible within either the mail or courier markets.



 



 

Statement of directors' responsibilities











The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union, and that the interim management report includes a fair review of the information required by the Disclosure and Transparency Rules ('DTR') of the United Kingdom's Financial Services Authority DTR 4.2.7 and DTR 4.2.8, namely:











■ 

an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and











■ 

material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.


The directors of UK Mail Group plc are listed in the UK Mail Group Annual Report for the year ended 31 March 2010, with the exception that Michael Kane retired on 1 July 2010. A list of current directors is maintained on the UK Mail Group website: www.ukmail.com.


By order of the Board











Guy Buswell, Chief Executive




Steven Glew, Finance Director

17 November 2010





17 November 2010

 



 

Independent review report to UK Mail Group plc











Introduction


We have been engaged by the company to review the condensed consolidated interim financial statements for the six months ended 30 September 2010, which comprises the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Shareholders' Equity and related notes. We have read the other information contained in the interim management report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.


Directors' responsibilities


The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.


As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated interim financial statements included in this interim financial report has been prepared in accordance with IAS 34, 'Interim financial reporting', as adopted by the European Union.











Our responsibility


Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the interim financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.


Scope of review


We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.



 

Conclusion


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated interim financial statements in the interim financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.






PricewaterhouseCoopers LLP

Chartered Accountants

Thames Valley

17 November 2010

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR UBSVRRUAAAAA