19 May 2016 07:00
19 May 2016
Royal Mail plc
Results for the full year ended 27 March 2016 |
To view the full Financial Report for the full year ended 27 March 2016 please click here:
http://www.rns-pdf.londonstockexchange.com/rns/6682Y_-2016-5-18.pdf
Royal Mail plc (RMG.L) today announced its results for the full year ended 27 March 2016.
Moya Greene, Chief Executive Officer, commenting on the results said: "We have delivered a resilient performance in challenging markets. Group revenue was up one per cent and our strategic focus on costs resulted in a one per cent decline in our UK underlying costs. We continue to invest in our transformation and initiatives to support growth.
"Our UK parcel revenue and volumes grew by one per cent and three per cent, respectively. Our addressed letter volumes declined by three per cent; total letter revenue by two per cent. GLS, our European parcel business, continued to perform strongly, supporting the overall Group revenue performance.
"We are introducing new and improved products and services and responding quickly to changing customer needs. These measures, alongside our emphasis on customer focus and delivering a value for money service, have helped us to maintain our pre-eminent position in UK letters and parcels and driven growth in GLS."
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Group financial highlights
Adjusted1 results (£m) | 52 weeks ended 27 March 2016 | 52 weeks ended 29 March 2015 | Underlyingchange2 |
Revenue | 9,251 | 9,328 | 1% |
Operating profit before transformation costs | 742 | 740 | 5% |
Operating profit after transformation costs | 551 | 595 | (2%) |
Margin | 6.0% | 6.4% | (10 bps) |
Profit before tax | 538 | 569 | |
Earnings per share (pence) | 41.3p | 42.8p | |
Reported3 results (£m) | |||
Operating profit before transformation costs | 485 | 611 | |
Operating profit after transformation costs | 294 | 466 | |
Profit before tax | 267 | 400 | |
Earnings per share (pence) | 21.5p | 32.5p | |
In-year trading cash flow | 254 | 315 | |
Net debt | (224) | (275) | |
Full year proposed dividend per share (pence) | 22.1p | 21.0p | 5% |
Business units
Revenue | Adjusted operating profit beforetransformation costs | ||||
(£m) | 52 weeks ended 27 March 2016 | 52 weeks ended 29 March 2015 | Underlyingchange | 52 weeks ended27 March 2016 | 52 weeks ended 29 March 2015 |
UKPIL | 7,666 | 7,757 | (1%) | 608 | 615 |
GLS | 1,580 | 1,557 | 9% | 117 | 115 |
Other | 5 | 14 | n/m | 17 | 10 |
Group | 9,251 | 9,328 | 1% | 742 | 740 |
Group financial performance
• | Revenue was up one per cent, with growth in GLS offsetting the decline in UKPIL revenue. |
• | Adjusted operating profit before transformation costs was £742 million, up five per cent. |
• | Adjusted operating profit margin after transformation costs declined by 10 basis points as a result of increased transformation costs due to our cost avoidance and efficiency programme. |
• | In-year trading cash flow of £254 million reflects increased investment in growth capital expenditure. |
• | Our strategic focus on costs resulted in a one per cent reduction in underlying UKPIL operating costs before transformation costs. |
• | Net debt reduced to £224 million due to free cash flow, offset by dividend payments. |
• | The Board is recommending a final dividend of 15.1 pence per ordinary share giving a total dividend of 22.1 pence per share for 2015-16, up five per cent. |
Business performance
• | UKPIL revenue was down one per cent. A one per cent increase in parcel revenue was offset by a two per cent decline in total letter revenue. |
• | UKPIL parcel volumes were up three per cent, driven by continued growth in import parcels, new contract wins in account parcels and a strong performance in Parcelforce Worldwide. However, revenue reflected a weaker mix due to declines in high average unit revenue (AUR) parcels. |
• | Addressed letter volumes4 declined by three per cent, better than our forecast range, largely due to the return of direct delivery volumes. |
• | UKPIL collections, processing and delivery productivity improved by 2.4 per cent, within our target range of a 2.0-3.0 per cent improvement per annum. |
• | We have seen a net reduction in the number of UKPIL employees of around 3,500 this year. |
• | We narrowly missed the 93.0 per cent regulatory First Class mail target, with 92.5 per cent of this mail delivered the next working day. We exceeded our regulatory Quality of Service target of 98.5 per cent for Second Class mail. |
• | GLS continued to perform strongly. Volumes were up 10 per cent. Revenue was up nine per cent, with growth in almost all markets. |
Outlook
• | Outlook for UK letter and parcel market trends remains unchanged. |
• | UKPIL cost avoidance programme on track and we expect to avoid a similar level of costs in 2016-17 as the prior year. |
• | We continue to seek opportunities to drive efficiency, with transformation costs currently expected to be around £160 million in 2016-17. |
• | Rate of revenue growth in GLS expected to slow in 2016-17. |
• | We expect total net investment spend to be within £550-600 million per annum in the medium-term. |
• | We remain focused on in-year trading cash flow, which underpins our commitment to a progressive dividend policy. |
1 | All adjusted results are a non-International Financial Reporting Standards (IFRS) measure and exclude specific items. The commentary in this report, unless specified otherwise, focuses on the operating results on an adjusted basis. This is consistent with the way that financial performance is measured by Management and reported to the Board and assists in providing a meaningful analysis of the results of the Group |
2 | All movements are on an underlying basis unless otherwise stated. Underlying change is calculated after adjusting for movements in foreign exchange in GLS, working days in UKPIL and other one-off items that distort the Group's underlying performance. For volumes, underlying movements are adjusted for working days in UKPIL and exclude elections in letter volumes |
3 | Prepared in accordance with IFRS |
4 | Excluding election mailings |
For further information, please contact: Investor Relations: Catherine Nash Phone: 020 7449 8183 Email: investorrelations@royalmail.com Media Relations: Beth Longcroft Phone: 07435 768549 Email: beth.longcroft@royalmail.com Registered Office: Royal Mail plc 100 Victoria Embankment London EC4Y 0HQ Registered in England and Wales Company number 08680755 | |
A trading update covering the three months ending 26 June 2016 is expected to be issued on 19 July 2016. Results presentation A results presentation for analysts and institutional investors will be held in London at 9:30am on 19 May 2016 and a simultaneous webcast will be available at www.royalmailgroup.com/results Disclaimer This document contains certain forward-looking statements concerning the Group's business, financial condition, results of operations and certain of the Group's plans, objectives, assumptions, projections, expectations or beliefs with respect to these items. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'targets', 'goal' or 'estimates'. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Group's actual financial condition, performance and results to differ materially from the plans, goals, objectives and expectations set out in the forward-looking statements included in this document. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements relate to events and depend on circumstances that will occur in the future and are inherently unpredictable. Such forward-looking statements should, therefore, be considered in light of various important factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, among other things: changes in the economies and markets in which the Group operates; changes in the regulatory regime within which the Group operates; changes in interest and exchange rates; the impact of competitive products and pricing; the occurrence of major operational problems; the loss of major customers; undertakings and guarantees relating to pension funds; contingent liabilities; the impact of legal or other proceedings against, or which otherwise affect, the Group; and risks associated with the Group's overseas operations. All written or verbal forward-looking statements, made in this document or made subsequently, which are attributable to the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurance can be given that the forward-looking statements in this document will be realised; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Subject to compliance with applicable law and regulation, the Company does not intend to update the forward-looking statements in this document to reflect events or circumstances after the date of this document, and does not undertake any obligation to do so.
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