UKM.L Regulatory News (UKM)

9 April 2015

UK Mail Group plc

PRE-CLOSE TRADING UPDATE

UK Mail Group plc (the "Group") today issues the following pre-close trading update for the financial year ended 31 March 2015.

Reported Group revenues for the quarter (excluding Pallets) are expected to show an increase of some 5% compared to the same period in the previous year, giving total reported revenue growth for the financial year (excluding Pallets) of some 1%.

Our Parcels business continued to deliver a good performance, with volumes for the quarter increasing by around 12% compared to the same period last year, partly driven by new account wins as a result of the collapse of City Link.

This increase in volume experienced during the final quarter has taken our parcel volumes temporarily above our current effective operational capacity, resulting in above normal operating costs being incurred in the fourth quarter of the financial year. We expect this will continue into the first half of the new financial year, however the increased volume should be absorbed effectively once the move to the new hub is completed.

Our Mail business also achieved good volume and revenue growth in the quarter. Mail volumes for the quarter increased by some 5% compared to the same period last year. This growth continues to be driven by strong customer retention and new business wins, which have further increased our share of the Down Stream Access market.

Our Courier business saw a decline in revenues in the fourth quarter, although it has achieved revenue growth for the full year.

As a result of the above, overall performance for the fourth quarter and the full year is expected to be around the lower end of the current range of expectations.

Our Pallets business has now ceased operating, following our plans to close the business, announced in January 2015. The wind down was handled without disruption to our customers and with closure costs in line with our expectations.

Our new hub and head office at Ryton, near Coventry, have been completed, on budget and on schedule. The move of our head office staff to the new office is largely completed, while the move to the new automated hub commences on 1 May 2015 and is planned to be complete by the end of July 2015.

The commission and testing phase of the new hub's automation equipment is progressing well, and is approaching completion. Following the hub move the scale of automation of our parcels sortation operation is planned to increase from the current level of some 20% of volume to some 80% of volume by September 2015.

Guy Buswell, Chief Executive of UK Mail, said:

"UK Mail is undergoing a period of significant investment and transition to make us one of the leading players in our markets, with continued product and service innovation and a new fully automated hub, which will create extra capacity and reduce operating costs across our network.

"To date this transition is proceeding according to plan, although we have much to do in the first half of the new financial year to complete this key process.

"We continue to see new opportunities to increase our share of the UK parcels market as a result of the improved competitive environment.

"The medium and long term outlook for the Group therefore remains very positive."

UK Mail Group will report its final results for the year ended 31 March 2015 on 20 May 2015.

- Ends -

Notes to editors:

About UK Mail Group plc

UK Mail Group plc is one of the leading independent parcels, mail and logistics services company within the UK and one of the main alternatives to Royal Mail for business mail requirements.

Forward-looking statements

This announcement contains certain forward looking statements with respect to the financial condition, results of operations and businesses of UK Mail Group plc. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.

The information in this announcement is based on unaudited management accounts and is before any exceptional items.