Post Office Interim Report 2015/16
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.
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