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Britain’s Post Office Ltd said on Friday that it was making further progress toward “commercial sustainability”, despite a fall in revenue and profits in the first half of the year.
The state-owned operator of the network of more than 11,500 post offices across the UK issued an interim financial statement showing that turnover fell 1.7% year-on-year in the six months up to 29 September, down to £475m.
The company said its operating profit fell 56.6% compared to last year’s first half, to £23m, while pre-tax profit before financing costs slumped 89% to £20m.
The cut in profits included a £20m reduction in the subsidy provided by the UK government, Post Office Ltd said.
Overall turnover was hit by 9% year-on-year declines in government services revenue (to £75m) and telecoms revenue (to £65m), which spoiled the 5.7% growth achieved in the £147m financial services revenue. The mails and retail business saw its revenue slip 0.5% year-on-year to £183m.
Post Office Ltd said it had been a “challenging” six months, but insisted it had made “great strides”, with its major branch modernisation programme continuing.
Paula Vennells, the Post Office Ltd Chief Executive Officer, said: “In what has been increasingly volatile and competitive market conditions we have further reduced our reliance on taxpayers’ money. We are delivering the biggest modernisation programme in UK retail history, transforming around 10 branches a day. As we move through the year we must continue to drive forward our transformation plans. Ensuring we both reduce our costs and at the same time meet our customers’ needs for convenience, simplicity and speed of service.”
Post Office Ltd said it was continuing to develop its mail services through the new Click and Collect offering with Royal Mail, and the Drop and Go service which speeds up parcel shipping.
“We are working hard to increase revenue. It’s pleasing to see the great progress made in financial services where in the first half of the year we have seen growth of 11% year on year in Personal Financial Services,” said Vennells.
“We have cemented our position as the infrastructure for community banking with 95% of UK current account customers able to access their accounts in our branches. We are also working with Royal Mail to develop market leading products and services for both small businesses and consumers.”
Post Office Ltd is facing possible strike action this Christmas, according to a warning by the Communication Workers Union. The union said last week that its admin and supply chain members had voted 76% in favour of industrial action over complaints about pay.
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Post Office Ltd revenue, profit down in 'challenging' first
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TrueBlueTerrier
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Post Office Ltd revenue, profit down in 'challenging' first
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obiwanknobe
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Re: Post Office Ltd revenue, profit down in 'challenging' fi
Despite a fall in profits it all seems rosy in POL land....
But is it?
In 2010 the Government outlined its proposal to provide POL with £1.34billion of funding to 'Secure the Post Office in the Digital Age'.
In late 2014, POL has spent every penny and them some of the £1.34b yet their discredited computer system for branches, Horizon, still runs on antiquated PCs and uses Windows NT as its operating system. An operating system, Microsoft abandoned in 2004..... Secure? I doubt it ....
But where has the money gone ?
This is what the Government intended the £1.335b to be used for
37. The funding will enable Post Office Ltd to do much more than simply
maintain the status quo. By the end of this Parliament, we have asked Post
Office Ltd to have:
• About 4,000 Main Post Offices in town and city centres across the country
– this alone is a larger network than that of Tesco;
• Converted about 2,000 sub post offices to the new ‘Post Office Local’
model, ensuring the longer opening hours demanded by mail and bill
payment customers;
• Expanded online and introduced a range of IT improvements to make
transactions quicker and simpler; and
• Eradicated the losses made by its directly managed Crown post
office network.
On the first of April of the following years POL received these payments from the Government totalling £1,335 Million
2011 £180m
2012 £410m
2013 £415m
2014 £330m
The money was split between Business as Usual State Aid for delivery of SGEIs and funding of the NT Project.
Without the benefit of this capital the Net Income of POL over the period in question (up to and including recent Interim Report) is:
2011/12 (£119m) Loss
2012/13 (£116m) Loss
2013/14 (£93m) Loss
2014 6 Months (£57m) Loss
A Total Loss of £385m
Leaving the Network Subsidy aside, POL require at any given time a Working Capital Facility to fund the cash and value stock in the network at any given time. This can amount to up to £1b. Up until the last EU State Aid submission this facility was funded under EU State Subsidy rules by the Government on a non commercial basis i.e. lower interest rates than they could expect under normal market conditions.
In the last EU State subsidy application, the EU decided that as long as this WCF was provided to POL by the Government at market rates then it would not be classed as State Aid. The importance of this point is that otherwise it would be unfair to competitors who could not tender for contracts from a level playing field and would fall under the EU Competition Rules.
In 2011 POL reported in their annual report that they had borrowed £375m under this WCF, in 2012 £377m, 2013 £291m, 2014 £0m, 2015 Interim £38m
Again leaving the network subsidy and NT payment to one side at the moment, without these, POL operating under normal commercial conditions, having suffered a cumulative £385m loss would not have the funds available to reduce the requirement for the WCF.
An FOI request on the Whatdotheyknow website solicited a reply from POL saying they had reduced the amount of the WCF by applying available funds within the company to do so. The only available funds they had were those from the NT Subsidy Payment plus the 'Profit' after the Network Subsidy Payment. These funds have been provided on a non repayable basis to POL effectively on a Zero Interest basis and therefore not at a Commercial Rate.
Following the Money
It is impossible to follow the use of the NT Subsidy payment through POLs set of accounts. In 2014 Annual accounts for instance they recorded an incredible spend of £374m on NT against a Subsidy of £317m (the difference in subsidy payment is made up of annual payment plus £98m carried forward). In this period they converted only 1500 offices.
The total State Subsidy plus NT Grant is paid as one combined sum on the first day of the financial year. The annual reports detail balances as at the last day of the financial year. Taking the WCF loan then on 31/3/2013 it stood at £291m and on 31/3/2014 it stood at £0m. Where did the money come from to pay off this debt?
Bonus Targets
They have only converted 3478 offices to date. Hardly anybody wanted to change so they increased the pay off from 18 months salary to 26 months salary .. of the best of the last 4 years ... which with falling income means that SPMRs are picking up a compensation package equivalent to about 33 months of their last annual salary. STill they can't get the numbers so they are now resorting to compulsory transfers.
No doubt the targets have been changed and incentives increased to ensure that management receive their annual bonus this year for abject failure. Trouble is there is no-one out there scrutinising their progress and the escalating costs of a failed project.
NFSP
Of course the NFSP are providing full support for this and so they should. POL are paid them £500k in December and no doubt have added to that in the meantime. Without that they would be loss making and incapable of paying their General Secretary travel expenses from Tranent to Brighton every week let alone his salary of £80k plus.
May the money be with you
Obi
But is it?
In 2010 the Government outlined its proposal to provide POL with £1.34billion of funding to 'Secure the Post Office in the Digital Age'.
In late 2014, POL has spent every penny and them some of the £1.34b yet their discredited computer system for branches, Horizon, still runs on antiquated PCs and uses Windows NT as its operating system. An operating system, Microsoft abandoned in 2004..... Secure? I doubt it ....
But where has the money gone ?
This is what the Government intended the £1.335b to be used for
37. The funding will enable Post Office Ltd to do much more than simply
maintain the status quo. By the end of this Parliament, we have asked Post
Office Ltd to have:
• About 4,000 Main Post Offices in town and city centres across the country
– this alone is a larger network than that of Tesco;
• Converted about 2,000 sub post offices to the new ‘Post Office Local’
model, ensuring the longer opening hours demanded by mail and bill
payment customers;
• Expanded online and introduced a range of IT improvements to make
transactions quicker and simpler; and
• Eradicated the losses made by its directly managed Crown post
office network.
On the first of April of the following years POL received these payments from the Government totalling £1,335 Million
2011 £180m
2012 £410m
2013 £415m
2014 £330m
The money was split between Business as Usual State Aid for delivery of SGEIs and funding of the NT Project.
Without the benefit of this capital the Net Income of POL over the period in question (up to and including recent Interim Report) is:
2011/12 (£119m) Loss
2012/13 (£116m) Loss
2013/14 (£93m) Loss
2014 6 Months (£57m) Loss
A Total Loss of £385m
Leaving the Network Subsidy aside, POL require at any given time a Working Capital Facility to fund the cash and value stock in the network at any given time. This can amount to up to £1b. Up until the last EU State Aid submission this facility was funded under EU State Subsidy rules by the Government on a non commercial basis i.e. lower interest rates than they could expect under normal market conditions.
In the last EU State subsidy application, the EU decided that as long as this WCF was provided to POL by the Government at market rates then it would not be classed as State Aid. The importance of this point is that otherwise it would be unfair to competitors who could not tender for contracts from a level playing field and would fall under the EU Competition Rules.
In 2011 POL reported in their annual report that they had borrowed £375m under this WCF, in 2012 £377m, 2013 £291m, 2014 £0m, 2015 Interim £38m
Again leaving the network subsidy and NT payment to one side at the moment, without these, POL operating under normal commercial conditions, having suffered a cumulative £385m loss would not have the funds available to reduce the requirement for the WCF.
An FOI request on the Whatdotheyknow website solicited a reply from POL saying they had reduced the amount of the WCF by applying available funds within the company to do so. The only available funds they had were those from the NT Subsidy Payment plus the 'Profit' after the Network Subsidy Payment. These funds have been provided on a non repayable basis to POL effectively on a Zero Interest basis and therefore not at a Commercial Rate.
Following the Money
It is impossible to follow the use of the NT Subsidy payment through POLs set of accounts. In 2014 Annual accounts for instance they recorded an incredible spend of £374m on NT against a Subsidy of £317m (the difference in subsidy payment is made up of annual payment plus £98m carried forward). In this period they converted only 1500 offices.
The total State Subsidy plus NT Grant is paid as one combined sum on the first day of the financial year. The annual reports detail balances as at the last day of the financial year. Taking the WCF loan then on 31/3/2013 it stood at £291m and on 31/3/2014 it stood at £0m. Where did the money come from to pay off this debt?
Bonus Targets
They have only converted 3478 offices to date. Hardly anybody wanted to change so they increased the pay off from 18 months salary to 26 months salary .. of the best of the last 4 years ... which with falling income means that SPMRs are picking up a compensation package equivalent to about 33 months of their last annual salary. STill they can't get the numbers so they are now resorting to compulsory transfers.
No doubt the targets have been changed and incentives increased to ensure that management receive their annual bonus this year for abject failure. Trouble is there is no-one out there scrutinising their progress and the escalating costs of a failed project.
NFSP
Of course the NFSP are providing full support for this and so they should. POL are paid them £500k in December and no doubt have added to that in the meantime. Without that they would be loss making and incapable of paying their General Secretary travel expenses from Tranent to Brighton every week let alone his salary of £80k plus.
May the money be with you
Obi
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subbie
- POST OFFICE
- Posts: 418
- Joined: 03 Feb 2010, 11:41
- Gender: Male
Re: Post Office Ltd revenue, profit down in 'challenging' fi
Is there any hope?
Even Her Majesty's official opposition sit there with this open goal staring them in their faces, its a misuse of public funds that rivals the banking scandal, but nothing is done all because its the Governments Company that is abusing the tax payer, and that's allowed, so it seems.
Subbie
Even Her Majesty's official opposition sit there with this open goal staring them in their faces, its a misuse of public funds that rivals the banking scandal, but nothing is done all because its the Governments Company that is abusing the tax payer, and that's allowed, so it seems.
Subbie
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obiwanknobe
- POST OFFICE
- Posts: 58
- Joined: 10 Feb 2011, 11:05
- Gender: Male
Re: Post Office Ltd revenue, profit down in 'challenging' fi
test .. just wondering why this fell off the front page?