Post Office Annual Report 2012/13

The Post Office has delivered its first set of results operating as an independent business. In a challenging economic climate, the Post Office has reported good progress during the 2012-13 financial year, with strong growth in Financial Services, Mails and Telecoms.

Revenues & Profits

  • Revenue increased by £74m (6.4%) to £1.234bn (including an increase of £30m in Network Subsidy Payment from Government.
  • Revenue (excluding Network Subsidy Payment) increased by £44m (4.5%) to £1.024bn.
  • Financial Services revenue increased by 6.4%, Telecoms by 7.5% and Mails and Retail by 4.3%.
  • Operating profit increased from £61 million to £94 million before exceptional items.
  • Operating loss in the Crown network reduced from £46 million to £37 million.

The Report and Accounts show that the Post Office has started to turn the business around while also making progress to reduce the reliance on Government Network subsidy. This includes commencing a major transformation programme to modernise its branch network, with 500 branches converting to new, more customer-friendly formats.

Commenting on the 2012-13 Annual Report and Accounts Post Office Chief Executive, Paula Vennells said: “It is heartening to be able to report good progress during the 2012-13 financial year. We have started to turn the business around – remaining at the heart of communities while becoming increasingly commercial and entrepreneurial.

“We have no illusions about the hard work ahead, but our determination to deliver the business transformation of the decade remains undimmed.”

Revenue (excluding Network Subsidy Payment) increased by 4.5% - £44m to £1.024bn. The Post Office segments revenue into four pillars: Mails and Retail, Financial Services, Government Services and Telecoms.

Growth has been seen in three out of four product pillars; Mails and Retail revenue has grown by 4.3%, Financial Services by 6.4%, and Telecoms by 7.5%. Government Services revenue remained flat in a very tight fiscal and competitive environment.

Mails and Retail revenue of £409 million represented a year-on-year increase of £17 million (2012: £392 million). Of this, revenue related to Royal Mail increased by £13 million, driven primarily by strong parcels and premium product volumes and the impact of the stamp price increase. The rollout of 1,850 additional terminals contributed to an increase of £2 million in income from sales of lottery tickets.

Financial Services revenue increased by £17 million to £281 million (2012: £264 million).

Revenue from Post Office’s own range of Financial Services products increased by £24 million driven by strong growth in savings products, particularly Growth Bonds, savings, reward saver and the introduction of new mortgage products.

Traditional financial services products, including bill payment services and Postal Orders, declined. This was due to the increasing provision of electronic alternatives to paper based products and the increasing use of alternative payment methods.

Overall Telecoms revenue increased by £9 million to £129 million (2012: £120 million). Income from HomePhone and Broadband rose by £10 million, primarily due to increased customer numbers following the introduction in May 2012 of more competitive service packages.

Income from Mobile Top-up business was £1 million below the previous year. Post Office is still a significant provider in the top-up market and its share of the retail market has been maintained at 5%.

Government Services revenue remained flat at £164 million (2012: £164 million), though income from the Passport Check & Send service increased by £3 million.

Operating profit increased by £33 million to £94 million. This includes £210 million received from the government in 2012-13 as subsidy to support the branch network (2012: £180 million), therefore the underlying loss, excluding the subsidy reduced from £119m in 2011/12 to £116m this year. The subsidy payment constituted 17%.

The Post Office’s Crown network of directly managed branches remains fundamental to the future of the Post Office. During 2012-13, real progress has been made in reducing the losses for this network of around 370 branches from £46m to £37m. The on-going Crown Transformation programme continues to builds on this progress and is based on increasing revenue, improving customer experience and controlling costs.