UK Mail expansion to coincide with development of new £9m Coventry hub
LOGISTICS group UK Mail has said the expansion of the business will begin in earnest once its new West Midland distribution hub near Coventry is up and running.
The company has been forced to relocate from its current base in Birmingham after the Government opted to compulsorily purchase the site because it lies in the path of the proposed £50bn HS2 high speed rail line.
In its annual results statement, the company reveals for the first time the compensation package it has agreed with the Department for Transport and HS2 Ltd for the Bromford site.
The payout is £9.5m; £8.6m of which was received by UK Mail in December 2013 to enable it to begin work on the new development.
It has opted to move into its new headquarters to Ryton – now part of Solihull-based ‘big shed’ developer Prologis’s Prologis Park Ryton scheme. The agreement is for a 231,000 sq ft office and mail sorting facility that will include a 36,330 sq ft head office building.
UK Mail is understood to have preferred to have stayed in Birmingham because of its better access to the UK motorway network. However, it quit the city because it could find no other site suitable for its purpose.
In its results statement, UK Mail said it expected to be in the new facility by next year, with construction of the building due for completion later this year.
The balance on the DfT settlement is payable once the company fully vacates the Bromford site.
It said it had also agreed further specific compensation payments with the DfT and HS2 Ltd. Of these, £2.9m was received in the last financial year with the balance to be received over the next two financial years.
The costs of the move to the new site, including the IT data centre move and related staff costs will be incurred over the next two financial years. UK Mail said it anticipated these costs would be compensated by the DfT and HS2 Ltd.
“Growing network capacity is vital in a market that continues to show strong growth, largely due to the rapid growth of internet shopping. We aim to achieve this capacity growth through localised expansion of capacity where needed, together with the expansion of our central hub,” it said.
“The expansion of our central hub is overdue and together with increased automation, is key to our future growth plans. We expect construction to be completed in late 2014, with the hub being fully operational from mid-2015.”
Its annual results show the firm reporting group revenues for the year to December 31, 2013 of £508.5m, up 7% on the previous year. Adjusting for there being four extra working days than in the previous year, underlying group revenues increased by 5.3%. Group pre-tax profit increased by 28.2% on the previous year to £22.8m.
Guy Buswell, CEO, UK Mail, said: “These results reflect an excellent year for UK Mail, with increased revenues and strong margin progression. We have also achieved profitable growth across all areas of the business. Such a robust performance shows that we have accomplished almost all that we set out to achieve through the programme of investment and change over recent years.
“As previously announced, we have now entered a new phase of significant investment, in a new automated hub, in additional capacity, and in further developing our range of innovative consumer-facing services. This strategic approach will position us well for the next stage of profitable growth, with the benefits expected to be seen from 2015 onwards.”
It said trading in the initial weeks of the current financial year had been as anticipated.
“We continue to see good growth in parcels volumes, albeit inevitably at a lower rate than in the second half of last year, reflecting the higher base and our current partial capacity constraints,” it said.
