Business Post Group plc

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Business Post Group plc

Express House, 464 Berkshire Avenue
Slough, Berkshire SL1 4PL
United Kingdom
Telephone: (+44) 1753–819-918
Fax: (+44) 1753–819-022
Web site: http://www.business-post.com

Public Company
Incorporated: 1971
Employees: 1,452
Sales: £123.71 million ($175.2 million)(2001)
Stock Exchanges: London
Ticker Symbol: BPG
NAIC: 492210 Local Messengers and Local Delivery

Business Post Group plc is one of the fastest-growing parcel delivery companies in the United Kingdom. Based in Slough, Berkshire, the company has claimed more than five percent of the U.K. market for express mail delivery, with over 90 percent of its revenue derived from next-day delivery service. The company’s network of 60 depots—both company-owned and franchised—and a fleet of 1,200 vehicles give it national coverage and allow it to offer an extensive range of delivery services, including early-morning, evening, and weekend delivery. Business Post’s 20 company-owned depots act as regional hubs for its 40 franchised locations. Franchising enabled the company to quickly extend its reach throughout the United Kingdom; the company believes that the franchise system has also helped create a network of highly motivated, quality-conscious personnel. Through partnerships—previously with Air Express International, but since September 2001 with Federal Express—the company can also offer international delivery services. The company developed a similar partnership with Germany’s Eurodis to cover road-based deliveries on the European continent. The United Kingdom remains the company’s single largest market, however, generating 90 percent of its nearly £124 million in sales. Business Post has also targeted the growing e-commerce market for growth, launching subsidiary http://www.Homeserve.net to offer home delivery services to Internet-based businesses. The company has also gained the home delivery contract with the United Kingdom’s leading personal computer manufacturer, Tiny Computers. By making significant investments in updating its information technology infrastructure since the late 1990s, Business Post has expanded its services to include in-cab bar coding systems, web-based POD (proof of delivery) and tracking services, as well as web-based dispatching facilities. Business Post’s shares are listed on the London stock exchange. Founder Peter Kane and family own 51 percent of the company’s shares; brother and co-founder Michael Kane holds 13 percent of the company’s shares. Both Kanes have retired from active management of the company, although Peter Kane has taken on the role of non-executive chairman since July 2001. Day to day operations are led by CEO Paul Carvel.

Postal Strike Opportunities in the 1970s

Peter Kane originally started out as a cab driver, forming his own company to serve his hometown of Harrow, near London. A strike by the British postal service in 1971 offered Kane a new opportunity—that of delivering parcels instead of people. Kane, then just 23 years old, formed Business Post Group in 1971 and focused on serving the Harrow-area business community, offering parcel and overnight mail delivery services. Kane was soon joined by his younger brother Michael Kane. Together the brothers built Business Post into a nationally operating company.

Business Post’s growth started in earnest in the second half of the 1980s. From 1987, the company, which moved its headquarters to nearby Slough, began to expand regionally and then nationally, opening transport hubs in Reading, then heading north to Birmingham. The still-small company, unable to finance a rapid expansion with its own funds, chose instead to develop its network of depots through a system of franchises. By the beginning of the 1990s, the Kane brothers had built Business Post into a steadily growing national parcel delivery service. The company’s chief target market remained the business sector, its infrastructure revolving around 20 company-owned regional hubs, which in turn served its growing network of franchised depots that typically targeted local markets. By the end of the decade the company’s franchise network had grown to 40 depots. In 1990 the company began to extend its range of services, particularly by entering into a partnership agreement with Airborne Express that enabled the company to offer its customers international delivery services.

Fast Growth in the 21st Century

The Kane brothers sought further expansion for the company in the mid-1990s. In order to fuel its growth, Business Post went public in 1993. While the Kane brothers reduced their shares by about 20 percent, Peter Kane himself maintained a stake of some 60 percent in the company. The successful floatation valued the company at £60 million, as the company’s sales were nearer the £40 million mark.

The public listing of Business Post enabled it to continue its growth: the company opened new depots and expanded existing hubs to serve a steadily increasing clientele. Going public also gave Peter and Michael Kane the opportunity to step back from active management, as the brothers took on non-executive positions with the company. Neil Benson now took over as chairman, seconded by Michael Jones as managing director. In 1995, Peter Kane sold off 4.5 percent of his holdings in the company, reducing his stake to 56 percent. The company meanwhile continued to make steady sales gains, reaching £65.5 million by 1996.

Business Post entered the Eurodis alliance in 1995, giving it access to that group’s European road-based delivery service infrastructure. Back home, the company strengthened its position as a national parcel delivery provider with the opening of a new national hub in Heartlands, Birmingham, in 1997. Construction of the facility cost more than £7 million.

The company continued to enjoy rising revenues, topping £80 million for the year 1997. Yet the following year proved a difficult one for Business Post. In July 1998, the company issued a profit forecast of some 18 percent growth. By August 1998, however, the company, which until then had seen an unbroken rise in both sales and profits, was forced to issue its first profits warning, crushing its share valuation. This move was followed by the ouster of Jones, together with its finance director, who had sold off his entire stake in the company shortly before the collapse in the company’s share price, netting him more than £4.5 million.

Peter and Michael Kane returned to active leadership of the company, working to restore not only its performance but its reputation among the shareholder community by embarking on a vast modernization program as it implemented a new cutting-edge information technology and aligning itself with the growing potential of the e-commerce community, culminating with the launch of a new subsidiary, http://www.Homeserve.net Ltd., specifically directed to servicing the delivery needs of Internet-based retailers.

http://www.Homeserve.net received a quick boost soon after its launch in January 2000, when it was picked by the United Kingdom’s largest computer manufacturer, Tiny Computers, as its principal carrier for the country. The contract helped boost Homeserve.net’s portion of group sales to 10 percent, reflecting the rising proportion of residential deliveries made by the company. As Peter Kane declared, “This is an exciting development for Business Post and establishes http://www.Homeserve.net as a major player in the fast-developing home delivery market.”

In 2000, Kane stepped down again from active management of the company he had founded in 1971, appointing Paul Carvell in his place. Kane nonetheless remained an active participant in the company’s affairs, not only as its single largest shareholder, but also, following chairman Neil Benson’s decision to step down in July 2001, as non-executive chairman. At the same time Michael Kane also returned to a non-executive position.

Business Post’s revenues continued to make steady gains at the turn of the century, rising to £114.3 million in 1999 and then topping £123 million in 2000. Nonetheless, the weakness in the high-technology market spelled difficulty for the company, as its major customers, including Tiny Computers, began to see a drop off in computer and related sales. Business Post found a temporary means to bridge that gap in the first half of 2001 when, in response to a new strike by the Royal Mail service, the company began delivering its customers’ first-class mail. This pointed the way to a potential new market as the British government made plans to deregulate mail service in the United Kingdom.

Company Perspectives:

It is our intention to continue to grow faster than the industry overall and to increase our market share by providing outstanding customer service. In particular, we see a number of growth opportunities from the rise in both e-commerce in general and home delivery in particular. Our specialist home delivery subsidiary, http://www.Homeserve.net, is designed to meet the needs of this growing market. We will aim to continue our record as one of the most profitable carriers in the industry.

Key Dates:

1971:: Peter Kane establishes Business Post Ltd. in response to a mail strike at the British postal service.
1987:: Business Post launches national growth strategy, opening hubs in Reading and Birmingham and starting franchise operations.
1990:: The company reaches an agreement with Airborne Express to provide international delivery services.
1993:: Business Post goes public on London Stock Exchange and is valued at more than £60 million.
1995:: The company joins Eurodis road transport partnership, based in Germany, for road-based delivery on European continent.
1998:: The company begins implementation of new information technology infrastructure.
2001:: Business Post signs a cooperation agreement with Federal Express.

Business Post received a fresh boost in May 2001 when it signed an agreement with Federal Express that called for the world-leading parcel delivery company to handle Business Post international deliveries, while Business Post agreed to take over deliveries for those places in the United Kingdom not served by Federal Express. The agreement was expected to add another 10 percent to the company’s sales. As the company completed the implementation of its new information technology infrastructure, it also continued to build its satellite facilities, including the opening of a new hub in Ilford, London, the expansion of its Swansea regional hub, and the construction of a new 38,000-square-foot facility in Leicester, opened in summer 2001. Having grown to claim more than five percent of the United Kingdom’s parcel delivery market by the beginning of new century, Business Post plans to remain one of the U.K. market’s major players in the years to come.

Principal Subsidiaries

Business Post Ltd.; Homeserve.net Ltd.

Principal Competitors

FedEx Corporation; United Parcel Service Inc.; Deutsche Post AG; DHL Worldwide Express, Inc.; Consignia plc; Exel plc; Air Express International plc; TNT Post Group N.V.