Despite posting a 3 per cent contraction in revenue, UK Mail (UKM) was not judged nearly so harshly as competitor Royal Mail (RMG) this week, despite releasing half-year results on the same day. That should come as little surprise in the context of UK Mail's imminent takeover by Deutsche Post DHL. But there are good reasons to believe that these numbers would have cheered the market, even if the share price weren't effectively capped at 440p.
The uptick in post-tax earnings was primarily due to lower exceptional costs, although operating margins in the parcels division crept up by 90 basis points thanks to greater efficiency at the relocated sorting hub. Consequently, operating profit increased 11 per cent to £8.8m. And while revenue in the mail business reduced by 5 per cent, the group is doggedly hanging on to volumes in a shrinking market, by adding new customers and retaining old clients.
You'd be forgiven for thinking that the group could have found its feet without DHL's premium offer. But chairman Peter Kane - whose family is set to land around half of the £243m all-cash takeover - said the board believes that UK Mail "will be better positioned to continue to develop [the] parcels and mail businesses" with DHL's larger financial and operational firepower.
UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 444p | MARKET VALUE: | £245m | |
| TOUCH: | 442-444p | 12-MONTH HIGH: | 445p | LOW: 245p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 119p* | NET DEBT: | 9% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 238 | 2.20 | 3.1 | 5.5 |
| 2016 | 230 | 5.80 | 7.6 | 5.5 |
| % change | -3 | +164 | +145 | - |
Ex-div: 24 Nov Payment: 2 Dec *Includes intangible assets of £11.3m, or 20p a share | ||||
