UKM.L Regulatory News (UKM)

25 September 2014

uk mail Group plc

PRE-CLOSE TRADING UPDATE

UK Mail Group plc today issues the following pre-close trading update for the half year ending 30 September 2014.

Overall the Group had a satisfactory six months, and the financial performance for the half year is expected to be broadly in line with our previous expectations.

Reported Group revenues for the first half are expected to decline by some 1% compared with the same period in the previous year although, adjusting for there being one less working day in the period, underlying revenues are expected to be in line with the previous year.

Whilst the first quarter showed good revenue performance, the second quarter has been more challenging with parcels volumes below expectations, particularly in the latter weeks of the period. It is too early to assess whether this represents a more persistent trend and therefore the extent of any possible impact on the full year outcome.

In our Parcels business, average daily volumes for the first half are expected to increase by some 6% compared to the same period last year. This volume growth has been driven partly by an increase in home deliveries related to online shopping, with a continuation of the mix change towards B2C. As previously indicated the level of parcels volume growth has continued to moderate as we annualise the higher volume growth achieved during the last financial year.

In our Mail business revenues are expected to be down by some 6%, due to mix changes, with our average daily mail volumes some 2% ahead of the same period last year. We have experienced a mix change in the second quarter towards the lower revenue per item Customer Direct Access mail. This is due to new customer account wins which utilise this service.

Our Courier business is expected to show a satisfactory revenue increase on the same period last year.

Our Pallets business is expected to report underlying revenues broadly in line with last year. This business however has suffered from increasing network costs which have resulted in the overall performance being below expectations. Action is currently being taken to address this.

The Group remains in a sound financial position.

Our strategic investments are progressing to plan. Our new automated hub remains on track to be operational from May 2015, providing a significant step forward in how we operate; creating extra capacity and reducing operating costs. Our focus over the period until May 2015 is to manage the transition of our business to the new location and changed working practices whilst maintaining the underlying momentum in our business.

With the strength of our market position, a well invested, integrated and automated network, and a growing suite of innovations and industry-leading products and services, we remain excited about the medium term growth prospects for UK Mail.

The Group will report its interim results for the half year ended 30 September 2014 on 18 November 2014.

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All financial information in this announcement is sourced from UK Mail's unaudited management accounts. Statements made in this announcement that look forward in time or that express UK Mail's management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect management's current expectations concerning future events and actual results may differ materially from current expectations or historical results.

Notes to Editors:

The UK Mail Group is the largest independent parcels, mail and logistics services company within the UK, offering innovative delivery solutions both locally and worldwide. The Group has a national network of 50 sites and 2500 vehicles enabling it to offer business customers a unique integrated service with a full range of time-sensitive and secure delivery options for parcels, letters and pallets.

Forward-looking statements

All financial information in this announcement is sourced from UK Mail's unaudited management accounts. These are before taking account of any exceptional items, impairments, or other non-recurring items which would only be decided upon at the time of the formal review of the interim results. Statements made in this announcement that look forward in time or that express UK Mail's management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect management's current expectations concerning future events and actual results may differ materially from current expectations or historical results.