Guernsey Post remains in profit despite a difficult year

Guernsey Post has delivered a profit for the people of the Bailiwick and met customer service and regulatory targets despite a challenging year.

In the year to 31 March 2010, turnover rose to £45.4m following strong growth in priority services and UK and International bulk mail volumes. Underlying profit was £1.2m but this was reduced to £0.162m by exceptional items. However, the company will make a dividend payment to the States of Guernsey based on profit before exceptional items are taken into account.

Guernsey Post continued to successfully drive down costs and improve efficiency after savings of £1m the previous year. The introduction of Pricing in Proportion in April this year has been managed extremely well, with the minimum of disruption to the company's high standard of service. The business has strengthened its account management and introduced downstream
access products, offering very large customers the option of lower costs with a slower service by introducing mail further down the Royal Mail distribution chain.

Chief Executive Gordon Steele highlighted that the company has faced one of the most challenging years in its history: "In the last year, we have had to address some very significant issues including a year-on-year 16 per cent decline in traditional mail volumes, large Royal Mail price increases, the frustration of our efforts to diversify into financial services and the ongoing and costly dispute with the Office of Utility Regulation."

"Despite this, I'm pleased to report that thanks to the efforts and dedication of our people and the continued good relationships with our main union, the CWU, we have met all of our service and regulatory targets for a second year in succession and delivered a profit for the people of the Bailiwick. Everyone in the business should be congratulated and I wish to thank all of our people and customers for their support in helping us overcome the issues faced."

Chairman of the Board Dudley Jehan said: "Guernsey Post has continued to perform well under particularly difficult circumstances and we are proud of the year we've had. We are addressing current issues through increased efficiencies, cost reductions and the continued pursuit of alternative revenue streams from non-regulated postal products and diversification into new,
profitable markets where we have the relevant reputation and expertise".

Diversification into financial services is a key part of the company's strategy but world financial events have raised regulatory concerns and the development has been put on hold: "Over the next year we shall continue to see if we can find a solution that will enable us to launch a range of savings products that meet a clear demand from the people of the Bailiwick," added
Mr Jehan.

Mr Steele noted: "Issues that arose this year will impact us even more in the next 12 months and actions are being taken now to execute and drive the required efficiency improvements and cost reductions to protect the future viability of the business. I'm confident we have the right strategy and the full commitment of our people and stakeholders to continue providing a valued
service to the people of the Bailiwick."

The exceptional items for the financial year were higher pension provisions and the product write-off of £860,000 of savings bank development costs.

A copy of the Guernsey Post 2010 Annual Report is available to view online or download.