Parcel and mail delivery firm Business Post has revealed a 3.4 per cent fall in revenues from parcel services and said higher-than-expected debt and one-off charges from struggling franchises in the division would cost it £3 million.

The Birmingham logistics company said revenues in parcel services had dropped to £94 million in the first half, although part of the decline was due to a change in the number of trading days in the period against last time, a spokesman said.

The group, which underwent a management shake-up earlier this year, said it would have to set aside an extra £1.5 million in the first half after it recovered less debt than expected from its franchise operations during the period.

"Separately, we have identified a number of specific one-off charges amounting to some £1.5 million, relating to prior years.

"This amount will be adjusted for in the interim results," the group added in a trading statement.

Business Post, which has it national HQ near Bromford Lane, had already told analysts that losses in the franchise operation would reduce operating profits by about £3 million this year.

It said yesterday that it also had incurred some £1 million of costs in transferring franchisees to corporate ownership, which would be included in the operating profit.

Business Post has been bringing franchises in parcel services, which include the group's overnight business-to-business, business-toconsumer, and cross-border parcel delivery activities, back into corporate ownership in order to eliminate their losses by the start of the next financial year.

The group said it had brought eight franchises in-house in the period, bringing the total transferred since the beginning of the calendar year to 14.

There was better news from the group's UK Mail mail delivery division, where revenues grew 156 per cent to £37 million.

Business Post said it had won a number of significant new contracts, particularly in the financial services industry.

Revenues in specialist services, comprising the group's nationwide palletised goods delivery service and same-day courier activities, were up 3.5 per cent to £21 million.

The group said its overall trading in the first half was satisfactory, with group revenues up 15 per cent to £153 million.

Shares closed up 10p at 420p.