RNS Number:2885L
Business Post Group PLC
20 May 2003






               BUSINESS POST GROUP PLC - PRELIMINARY ANNOUNCEMENT


                "Further good progress expected in current year"


   *Business Post, one of the UK's leading express delivery companies,
    announces a successful first year's implementation of the three year plan
    which was set out in November 2001.


   *Peter Kane, Chairman, stated that "The principal features of the year
    have been the creation of a new business unit structure; significant levels
    of investment in the franchise network, training and customer service; and
    the acquisition of BXT, a specialist technical courier. Despite unhelpful
    economic conditions, the results of these actions have been gains in market
    share in each of the sectors in which we operate, and further improvements
    in turnover, profit and dividends."

                                        2003           2002           Increase
Turnover (#m)                          156.3          131.7               18.7%
Operating profit (#m)                   15.6           14.6                6.8%
Pre-tax profit (#m)                     16.1           15.1                6.6%
Earnings per share (p)                  21.2           20.0                6.0%
Dividends per share (p)                 16.9           16.0                5.6%


   *Express, the Group's core UK business-to-business parcel service,
    increased its turnover by 14% to #123.8m in a market estimated to have
    increased only marginally. As a result, the directors believe that Express
    has improved its market share to 7%.


   *The Group's newer and smaller operating business units, International,
    HomeServe (UK business-to-consumer parcels) and UK Today (UK nationwide
    same-day courier) all made good progress, but UK Mail (the Group's proposed
    UK business mail service) did not trade.


   *Referring to current trading and prospects, Peter Kane said "Trading in
    the first seven weeks of the new financial year has been encouraging, with
    both volumes and yields ahead of the equivalent period last year. With
    additional market share gains anticipated as a result of continued high
    quality delivery performance and a targeted sales approach, the Board
    expects further good progress in the current year. The Board remains very
    confident about the Group's long-term potential."

Enquiries:
Business Post Group plc
Paul Carvell (Chief Executive)                                   0121-335 1111
Peter Fitzwilliam (Finance Director)                             01753-706 070

Bankside Consultants Limited
Charles Ponsonby                                                 020 - 7444 4166





                              CHAIRMAN'S STATEMENT


I am pleased to report a successful first year's implementation of the three
year plan that we set out in November 2001.


The principal features of the year have been the creation of a new business unit
structure; significant levels of investment in the franchise network, training
and customer service; and the acquisition of BXT, a specialist technical
courier.


Despite unhelpful economic conditions, the results of these actions have been
gains in market share in each of the sectors in which we operate, and further
improvements in turnover, profit and dividends. The Board remains very confident
about the Group's long-term potential.


FINANCIAL OVERVIEW


The financial results for the year ended 31 March 2003 reflect the investment
phase of our three year plan. Turnover increased by 18.7% to #156.3m (2002:
#131.7m), with increases in all four operational business units whilst, as
expected, the gross profit margin declined, to 21.9% (2002: 24.0%). Operating
profit advanced by 6.8% to #15.6m (2002: #14.6m), representing an operating
margin of 10.0% (2002: 11.1%). After unchanged net interest receivable of #0.5m,
pre-tax profit was 6.6% better at #16.1m (2002: #15.1m), with earnings per share
6.0% higher at 21.2p (2002: 20.0p).


Cash flow before dividends amounted to #3.5m (2002: #8.7m) after the acquisition
of BXT (#1.9m), capital expenditure of #4.3m (2002: #3.6m) and working capital
outflows to support the expansion of the business of #4.7m (2002: #2.3m).
Year-end debtor days again reduced, from 51 to 48, and the balance sheet remains
strong, with net cash of #1.6m (2002: #6.7m).


DIVIDENDS


A final dividend per share of 11.3p (2002: 10.7p), up 5.6%, is proposed, payable
on 24 July 2003 to shareholders on the register at close of business on 27 June
2003. The ex-dividend date is 25 June 2003.


Together with the interim dividend per share of 5.6p (2002: 5.3p), dividends per
share are 5.6% higher at 16.9p (2002: 16.0p), covered 1.25x (2002: 1.25x) by
EPS.


BUSINESS REVIEW


Express


Express, which accounted for 79% (2002: 82%) of Group turnover, is the Group's
core UK business-to-business parcel service. It specialises in next-day
deliveries for those customers who need a consistent and reliable service backed
up by sophisticated information systems, thereby differentiating itself from
high volume/low price operators.


In the year, Express increased its turnover by 14%, to #123.8m from #108.4m, in
a market estimated to have increased only marginally. As a result, the directors
believe that Express has improved its market share from 6% to 7%.


The strong revenue growth reflects the improved quality of delivery performance
which has assisted new business wins and further reduced customer churn. The
improving level of customer demand across the year allowed Express to implement
a number of pricing initiatives which have progressively improved yield, and an
objective for the current year is to improve further the quality of revenue.
This will be achieved through targeted sales and marketing initiatives aimed at
customers who are higher users of premium services, and a review of less
profitable accounts.


International


International, which accounted for 12% (2002: 9%) of Group turnover, is
responsible for all shipments coming into and leaving the UK and the Republic of
Ireland and is primarily a business-to-business service. A high proportion of
its activity derives from Business Post's agreement with FedEx, the world's
largest express transportation company, as its Global Service Participant in the
UK. Under this contract, which commenced in September 2001, Business Post is
responsible for collecting and delivering parcels for FedEx customers in those
areas of the UK not directly served by FedEx. Additionally, International
handles road-based shipments within Europe, working with a number of partners in
the EU countries, and offers a full outbound Air Express service utilising the
worldwide FedEx delivery network.


Much of the turnover increase, to #18.2m from #12.1m, results from the full year
contribution from the FedEx relationship, which continues to work well, with
very high delivery performance. In addition, the International product offerings
were overhauled, tariffs simplified and new products introduced. In particular,
International Mail was launched in July 2002, offering business customers an
alternative to Royal Mail for their overseas postal requirements, and this has
developed satisfactorily during the year. In the current year, a European single
pack network is being developed to complement the existing road services for
heavier weight consignments, and this should be operational in the summer of
2003.


With the market estimated to be worth approximately #1 billion, International
has considerable scope for growth.


HomeServe


HomeServe, which accounted for 5% (2002: 6%) of Group turnover, is the Group's
UK business-to-consumer parcel service, providing a high quality next day
service to residential addresses, with full proof of delivery and
track-and-trace facilities.


Trading comparisons with the prior year are affected by the loss through
administration in January 2002 of HomeServe's previous biggest customer, Tiny
Computers. Turnover growth of 10%, from #6.9m to #7.6m, reflects an underlying
growth of 130% if Tiny is excluded.


This excellent performance reflects a growing market and a targeted sales
approach, concentrating on the upper end of the market (estimated to be worth
some #200m) which is both suitable for caged transportation and requires a high
quality delivery performance, including IT solutions.


In order to provide customers and the ultimate recipients of delivery more
choice and greater flexibility, a range of new products is being introduced.
These allow items to be left in a designated safe location, an alternative
address, or one of 3,200 secure drop-off points, principally retail garages and
convenience stores.


UK Today


UK Today, which accounted for 3% (2002: 1%) of Group turnover, is the Group's UK
nationwide same-day courier service. It operates out of both corporate and
franchised depots, uses separate delivery vehicles, and has access to the
National Express coach network linking 1,200 locations each day.


In the year, UK Today extended its operations from six to 24 Group depots and
increased its turnover by 165% from #1.7m to #4.5m. A further five sites are
planned for the current year and, with national coverage, allows UK Today to
target national contracts in a market estimated at #300m where there are few
national operators.


UK Today is proving to be a good source of referral work for the Group's other
services and several new business wins have been achieved in Express and
HomeServe from customers impressed by UK Today's performance.


To complement UK Today's services for ad hoc business customers, BXT Limited was
acquired at the end of February 2003 - Business Post's first acquisition since
flotation in 1993. BXT is a Birmingham-based technical courier with a focused
customer base for whom services are supplied under contract. In the year ended
31 July 2002, BXT achieved turnover of #4.3m and pre-tax profits of #0.3m. The
consideration was #1.9m, net of cash acquired. BXT is settling in well. Plans
for the coming year include leveraging the customer bases to develop
cross-selling opportunities, and winning more contracts in its existing
technical, medical and utility sectors.


UK Mail


UK Mail proposes to offer a business mail service in the UK under its licence
from Postcomm, the independent postal industry regulator. This allows it to
collect mail from business customers and undertake the initial sorting and
trunking before delivery to the relevant Royal Mail delivery location, for local
sorting and final delivery.


UK Mail did not trade in the year. After extensive negotiations with Royal Mail
failed to reach an agreement, in April 2002 UK Mail asked Postcomm to determine
a tariff for access to Royal Mail's delivery network. That proposed
determination has only recently been received and will be followed by a period
of public consultation. The progress towards commencing the service has been
frustratingly slow, for reasons outside the Group's control. However, costs
(#0.4m) have been kept to a minimum.


With the UK market for business mail estimated to be worth some #5bn, this
continues to represent a substantial and exciting opportunity. However, no
contribution to profit should be assumed for the current financial year.


Network Services


Network Services is responsible for providing high quality collection and
delivery services to the Group's business units at a low unit cost. Across the
year, a tight control over costs was maintained, with particular focus on
reducing the use of third party labour and the level of insurance claims. In
addition, the first phase of a change in overnight linehaul arrangements was
implemented, to reduce the number of vehicle movements and improve operational
efficiencies. The principal element of this project is the introduction of
double-decked trailers, and capital expenditure of #0.9m was incurred during the
year as part of this process. A further #1.3m will be spent in the current year
as the next stages of the project are implemented.


An integral part of Network Services is represented by Business Post's
franchised depots, which provide a high quality local service and
entrepreneurial spirit. As indicated previously, further investment has been
made in the franchise network during the year through increased payments and
loans introduced from 1 April 2002. This investment, to finance expansion and
generate improved sales growth and stability within the franchise network, is
already bearing fruit.


Relationships with franchisees have been strengthened through the creation of a
Franchise Board of Management, involved in the selection of new franchisees and
discussing issues of common interest. In addition, a share option scheme was
introduced in the summer of 2002 to enable franchisees to share in the broader
success of Business Post and to align more closely their interests to those of
Business Post's shareholders.


In addition to providing collection and delivery services to the Group's
business units, Network Services is also responsible for customer service.
During the year, a new customer relationship management system, Discovery, was
introduced and the level of staff training was significantly increased. These
investments are already evident in the improving level of customer demand and
further investments will be made in the current year.


PERSONNEL


The achievements of the year reflect considerable credit on the senior
management team, under the leadership of Paul Carvell, and demonstrate the
initial success of the Group's Three Year Plan announced in November 2001. In
particular, the strong growth reflects the greater focus resulting from having
separate business units, each with its own dedicated team led by a specialist
managing director.


To all the Group's staff and associates who are involved in the owned and
franchised depots, I extend my thanks on behalf of all shareholders.


CURRENT TRADING AND PROSPECTS


Trading in the first seven weeks of the new financial year has been encouraging,
with both volumes and yields ahead of the equivalent period last year. With
additional market share gains anticipated as a result of continued high quality
delivery performance and a targeted sales approach, the Board expects further
good progress in the current year.


The Board remains very confident about the Group's long-term potential.



Peter Kane

Chairman

                                                                     20 May 2003

                      CONSOLIDATED PROFIT AND LOSS ACCOUNT
                        for the year ended 31 March 2003

                                                       Unaudited       Audited
                                                            2003          2002
                                                              #m            #m

Turnover                                                   156.3         131.7

Cost of sales                                             (122.1)       (100.1)
                                                           _____         _____
Gross profit                                                34.2          31.6

Administrative expenses                                    (18.6)        (17.0)
                                                           _____         _____
Operating profit                                            15.6          14.6

Interest receivable                                          0.5           0.5
                                                           _____         _____
Profit on ordinary activities before taxation               16.1          15.1

Taxation                                                    (4.9)         (4.5)
                                                           _____         _____
Profit for the financial year                               11.2          10.6

Dividends                                                   (9.0)         (8.5)
                                                           _____         _____
Retained profit transferred to reserves                      2.2           2.1
                                                           
                                                           =======       =======
Earnings per share - basic                                  21.2p         20.0p
                                                            _____         _____
- diluted                                                   21.2p         20.0p
                                                           _____         _____
Dividends per share                                         16.9p         16.0p
                                                           _____         _____

The profit for the financial year is derived from continuing activities and
includes all recognised gains and losses for the year.



                           CONSOLIDATED BALANCE SHEET
                                at 31 March 2003

                                                    Unaudited          Audited
                                                         2003             2002
                                                           #m               #m

Fixed assets

Intangible assets                                         1.7                -

Tangible assets                                          30.4             29.5

Investments                                               0.1              0.1
                                                        _____            _____
                                                         32.2             29.6
                                                        _____            _____

Current assets


Debtors                                                  34.9             25.9


Cash                                                      1.6              6.7
                                                        _____            _____

                                                         36.5             32.6


Creditors


Amounts falling due within one year                     (21.9)           (17.8)
                                                        _____            _____

Net current assets                                       14.6             14.8
                                                        _____            _____

Total assets less current liabilities                    46.8             44.4


Provisions for liabilities and charges                   (1.0)            (1.0)
                                                        _____            _____

Net assets                                               45.8             43.4
                                                        _____            _____


Capital and reserves

Called up share capital                                   5.3              5.3

Share premium account                                     9.9              9.7

Profit and loss account                                  30.6             28.4
                                                        _____            _____

Equity shareholders' funds                               45.8             43.4
                                                        _____            _____







                        CONSOLIDATED CASH FLOW STATEMENT
                        for the year ended 31 March 2003

                                                  Unaudited            Audited
                                                       2003               2002
                                             #m          #m      #m         #m

Operating profit                                       15.6               14.6

Depreciation/loss on sale of fixed                      3.3                3.6
assets

Increase in amounts due from                           (0.5)              (3.4)
franchisees

Increase in other debtors                              (5.5)              (2.2)

Increase/(decrease) in other creditors
and provisions
                                                        0.8               (0.1)
                                                       ____               ____

Net cash inflow from operating                         13.7               15.9
activities

Return on investments

Interest received                                       0.5                0.4

Tax paid                                               (4.9)              (4.3)


Capital expenditure and financial
investment


Purchase of fixed assets                   (4.3)               (3.6)


Proceeds from sale of fixed assets          0.2                 0.3


Acquisition of subsidiary                  (1.9)                  -
                                           ____                ____

                                                       (6.0)              (3.3)


Equity dividends paid                                  (8.6)              (8.2)
                                                       ____               ____

Net cash (outflow)/ inflow before
financing

                                                       (5.3)               0.5


Financing


Issue of ordinary share capital                         0.2                  -
                                                       ____               ____

(Decrease)/increase in cash                            (5.1)               0.5
                                                       
                                                      ======            ======



NOTES


1.      The financial information set out above does not constitute the
Company's statutory accounts within the meaning of Section 240 of the Companies
Act 1985. The statutory accounts of the Company for the year ended 31 March 2002
have been delivered to the Registrar of Companies. The auditors' report on those
accounts was unqualified and did not contain any statements under Section 237(2)
or (3) of the Companies Act 1985.

The financial information for the year ended 31 March 2003 is unaudited. This
information has been prepared using the same accounting policies as in the 31
March 2002 statutory accounts and, once finalised, the accounts will be
delivered to the Registrar of Companies following the Annual General Meeting on
10 July 2003.


2.      Basic earnings per share have been calculated by dividing the profit for
the financial year by the weighted average number of ordinary shares in issue
for the year ended 31 March 2003 of 53,048,564 (2002: 53,012,798). Diluted
earnings per share have been calculated by adjusting the weighted average number
of ordinary shares for the effect of the exercise of share options, increasing
the number of shares to 53,115,478 (2002: 53,041,201).






                      This information is provided by RNS
            The company news service from the London Stock Exchange

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