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Interim Results Presentation November 2010

Interim Results Presentation November 2010. 1. Agenda. Introduction Guy Buswell Financials Steven Glew Business Review Guy Buswell Current Trading and Outlook Guy Buswell Questions. Introduction. Solid progress in H1, with increased revenue and profits

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Interim Results Presentation November 2010

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  1. Interim Results Presentation November 2010 1

  2. Agenda • Introduction Guy Buswell • Financials Steven Glew • Business Review Guy Buswell • Current Trading and Outlook Guy Buswell • Questions

  3. Introduction • Solid progress in H1, with increased revenue and profits • Mail business continued to grow • Encouraging Parcels performance • Revenue growth in Courier • Balance sheet remains strong

  4. Steven GlewGroup Finance Director

  5. Summarised Income Statement

  6. Divisional Summary Six months to 30 September

  7. Mail Six months to 30 September Competitive pricing environment

  8. Parcels Six months to 30 September Volumes up 4.3%; different mix Increasing operating efficiencies

  9. Courier Six months to 30 September 9 Margin impacted by set-up of Retail Logistics

  10. Pallets Six months to 30 September 10 Good operational control offsets impact of revenue decline

  11. Cash Flow Lower working capital outflow expected for full year

  12. Capital Expenditure Continued investment in Network and I.T.

  13. Balance Sheet Net Cash: 8.5 3.6 15.7

  14. Dividend Progressive dividend policy

  15. Guy BuswellChief Executive Officer

  16. Strategy bearing fruit • A major player in our chosen markets • Expanding those markets through new products and services • Brand now a key strategic benefit • Underpinned by a low-cost integrated network Strong platform for future profit growth

  17. Mail • New customer wins and further volumes from existing relationships • Competitive pricing environment • Overall market volume decline less than expected • Product innovation expanding our available market • Mail market evolving

  18. c£1.5bn potential market • Fastest growing sector of the postal market driven by online shopping • New major customer wins • Now handling up to 15,000 packets per night • Next phase to widen service offering for smaller customers

  19. Now running at up to 40,000 items daily • 2,500 active customers • Targeted to achieve profit contribution this year • Key platform for new product development • Good pipeline of opportunities

  20. Royal Mail privatisation • Bill content • Postcomm / Ofcom Approximate timeline: Oct 2010 Publication of Postal Services Bill Jan/Feb 2011 Bill passes through House of Lords ? Sale of Royal Mail Jun 2011 Royal Assent, Postcomm becomes Ofcom

  21. Postcomm pricing review • Price increases to all mail users • Access headroom reduced • Possible slight impact on margins • We will remain highly competitive • Price changes effective May 2011

  22. Parcels • Trading well - outperforming in the market • Pricing remains competitive, but some recent improvement • Strong service levels leading to new customer wins • Further cost reduction measures & investment in IT infrastructure • H2 is the key trading period

  23. Parcels: Retail Logistics • c.£1.2bn* market - a key growth opportunity • Significant retailers now trading with us • Further good prospects • Added management resource and focus * UK Mail estimate

  24. Courier • Continued growth in revenues • Focus on national contracts and high service levels • Costs incurred in H1 due to establishment of Retail Logistics network

  25. Pallets • Performance linked to economic trends • Increased operating profit through continued focus on efficiency and margin enhancement • Growth opportunities as economy recovers

  26. Current trading & outlook

  27. Summary • Strong presence in all of our chosen markets • Unrivalled efficiency within our integrated low-cost network • Product innovation – increasing available markets and supporting margin growth • Strong balance sheet and cash generation • Progressive dividend policy • Clear strategy for profitable growth

  28. Disclaimer statement • This interim presentation 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 presentation 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.

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