UK Mail, the first private company to break the Royal Mail's 400-year monopoly on postal deliveries, has nudged its way into profit, parent group Business Post said.
The operation, which centres on Business Post's Birmingham hub, hit a turnover of £ 10.2 million between start-up in May 2004 and the end of the group's financial year on 31 March. UK Mail, which handled an annualised volume of 250 million items or nearly one per cent of the market, was in the black by October and returned "a small profit" for the year as a whole.
It collects post from big corporate customers such as Royal Bank of Scotland and distributes them via Business Post's hubs and depots to the Royal Mail for "final mile" delivery to households.
The operation is set to generate sales of £40 million to £50 million this year and up to £100 million, or three per cent of the market, further down the line, Business Post chief executive Paul Carvell said.
Group pretax profit for the year to 31 March rose by seven per cent to £20.5 million before goodwill amortisation of £500,000 on turnover 21 per cent up at £233.3 million.
Earnings per share rose by nine per cent to 26.6p and Business Post proposes treating shareholders to a total payout of 19.2p, up seven per cent on the previous year.
Since 2001 the group has grown sales by 89 per cent, adjusted pretax profits by 61 per cent and EPS by 57 per cent. Express, Business Post's core business-to-business parcels service, grew turnover by
5.4 per cent to £131.3 million or by seven per cent on the basis of three fewer working days during the period.
International grew sales by by 17 per cent to £28.1 million, while Homeserve, which delivers mail order goods to customers' homes, ended the year 54 per cent ahead at £26.8 million.
According to Mr Carvell, Homeserve's growth reflected a trend that is seeing consumer sales in some areas shift from the high street to mail order.
The growth trend has continued into the early months of this year with chairman Peter Kane reporting: "Trading since the year end has been encouraging, with revenues well ahead of last year, and up in all business units."
Business Post shares, which have recently outperformed their sector by 18 per cent, put on a spurt in early trading but fell back to 576p, 1/2p below Monday's closing price.
House broker Artbuthnot has pencilled in a target price of 700p, which would value the company at £378 million.
Mr Carvell was happy yesterday with the financial turnaround at Royal Mail, whose poor performance a few years ago led to the then regulator, PostComm, speeding up deregulation of the mail market.
"It is good news for us because we use the Royal Mail for last mile deliveries," Mr Carvell said.