- Interim results show continuing progress in the journey towards commercial sustainability
- Modernisation of the network continues at pace as the Post Office improves its operating efficiency
- Major milestone achieved of over 3000 branches open seven days a week
The Post Office has today published interim results for the six months of the financial year up until 27 September 2015.
The results show further progress in the Post Office’s journey towards commercial sustainability, reporting a £23m operating loss over the six months (before taking account of the Network Subsidy Payment). This is a £34m improvement compared with the first six months in 2014.
Operating efficiency improved with turnover stable in highly competitive market conditions and costs being reduced by 5.8%. The network subsidy payment from Government was also reduced by £15m over the period as planned.
The Post Office is undertaking the biggest transformation programme in retail history. During the half year a further 740 branches were modernized with many offering longer opening hours. It reached a major milestone in August of over 3000 branches open seven days a week, taking it closer to its aim of being the UK’s largest retail network open on Sundays.
Paula Vennells, Chief Executive Officer said “We are confident we can build a Post Office that is both commercially viable and fulfills a vital social purpose across the UK – simpler to run, better for customers and a great place to work.
“The half year results show that continued progress is being made towards our goal of commercial sustainability. The reduction in loss before subsidy is significant. Investment to modernise Post Office branches continued at pace and our customers are increasingly seeing the benefits through more modern surroundings and longer opening hours, with 3000 branches open seven days a week. Our personal financial service business is growing strongly, especially online, as we continue to develop the Post Office Money brand.
“We are realistic about the work yet to do. To carry forward these improvements in very competitive markets we must continue our drive for efficiency in all our operations and continue our focus on customer service to secure and build on our financial performance.”
Key Performance figures – six month ended 27 September 2015
Turnover increased by £2 million from £475 million in the first 6 months of the prior year, to £477 million this year with growth in the Financial Services and Telecoms businesses more than offsetting small declines in the Government Services and Retail businesses.
The operating profit before exceptional items has increased by £19 million to £42 million (2014: £23 million) driven by cost savings offset by the reduction in the Network Subsidy Payment of £15 million to £65 million.
The Mails and Retail pillar includes all services provided for Royal Mail and Parcelforce, as well as Lottery and retail services such as sales of collectibles as well as packaging and stationery. Mails and Retail turnover of £182 million decreased by £1 million (2014: £183 million). Mails was stable with the reduction being in turnover from Lottery and Retail services.
The Financial Services pillar includes Post Office Money products, ATMs and Travel products as well as more traditional services such as bill payment and over-the-counter banking transactions.
Financial Services, turnover increased by £3 million to £150 million (2014: £147 million), a rise of 2.0%. Personal Financial Services turnover increased by £7 million (10.6%) driven by strong growth in international money transfers and increased turnover from new travel insurance intermediation activities undertaken by the Post Office Management Services Limited subsidiary. Turnover from traditional Financial Services products, including bill payment services, business banking services, National Savings and Investments (NS&I) premium bonds and Postal Orders declined by £4 million. NS&I premium bonds revenue remained flat but ceased to be available from Post Offices from 1 August 2015.
- Government Services turnover of £67 million declined by £1m (2014: £68 million). DVLA revenue decreased by £5 million as customers increasingly use the online channel for motor vehicle licence payments, a trend which has accelerated since the paper disc was withdrawn in October 2014. Home Office revenue has increased by £2 million, driven by passport check & send services and biometric enrolment services. Other Government Services turnover has also increased by £3 million largely for identity related services, including Cabinet Office’s new Verify online identity service.
- Telecoms turnover of £62 million increased by £3 million (2014: £59 million). Revenue from HomePhone and Broadband increased driven primarily by higher average revenue per user (ARPU) following the price rise in January 2015.
Overview and the future
Significant continued progress has been made in the first half of 2015/16. The Network Subsidy Payment will reduce by a further £15 million in the second half of the year while we are under pressure to reduce costs and improve customer service to compete in strongly contested markets.
The Post Office is realistic about the work still to do and is determined to continue to reduce the subsidy and to build a stronger commercial business, driving towards financial breakeven and a strong and stable business for the future.
Notes to editors:
A full copy of the Post Office’s Interim results up to 27 September 2015 can be found here.
In 2012 we announced an investment of £1.34bn for the Post Office network to undertake a transformation programme across 6000 branches. In November 2013 the Government announced a further £640m investment in the Post Office network: as well as allowing us to modernise a further 2000 branches this funding also allows us to invest £20 million in around 3400 community branches, which are often the last shop in the village.
With over 11,500 branches, the Post Office network is the biggest retail network in the UK, with more branches than all the banks and building societies combined.
97% of Post Office branches are run with retail partners on an agency or franchise basis. The Post Office provides services central to peoples’ everyday lives; 99.7% of the population lives within 3 miles of a Post Office - 17m customers visit a Post Office branch each week, including a third of the UK’s small businesses.
We offer the UK’s largest fee free cash withdrawal network through our 11,500 branches and an additional 2,500 cash machines and 99 per cent of UK bank customers can access their accounts at the Post Office.
We sell 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.
About the Post Office
The Post Office (Post Office Limited) has an unrivalled national network of over 11,500 branches across the UK, more than all the high street banks combined, and sits at the heart of communities in Northern Ireland, Scotland, Wales and England. The Post Office has made a commitment to maintaining its network of branches at its current size and reach. It provides around 170 different products and services spanning financial services including savings, insurance, loans, mortgages and credit cards; Government services; telephony; foreign currency; travel insurance and mail services.
The Post Office serves over 17 million customers a week and a third of small businesses. Some 99.7% of the total population live within three miles of a post office and over 97% live with one mile of a post office. For many rural communities, the post office is the only retail outlet. Post Offices branches remain highly valued and trusted, and are the focal point of many communities. For more information, visit http://www.postoffice.co.uk/.
Please note the Press Office team can only deal with enquiries from the media. Unfortunately they do not have access to customer information so can not help with customer enquiries.
If you have an enquiry regarding any Post Office product or service please visit postoffice.co.uk or call 0845 611 2970 Local call rates apply. Call costs may vary depending on your service provider. Calls may be monitored or recorded for training and compliance purposes.