Jersey Post Annual Report and Accounts | 2012 - States Assembly

Jersey Post Annual Report and Accounts | 2012
Chairman’s Statement
This year’s performance across all aspects of Jersey Post’s
business gives confidence in its capacity to withstand external
shocks and adapt to radical change. The sudden withdrawal of
Low Value Consignment Relief (LVCR) by the UK government
during the year had a dramatic impact, decimating the Island’s
Fulfilment industry and causing widespread job losses across
the sector. Jersey Post lost one-third of its total revenues, but fortuitously its
resilience against this potentially catastrophic loss of business had been
achieved just in time, albeit under a different but equally threatening imperative.
Anticipating radical market liberalisation, particularly in the bulk mail market,
the Board three years ago initiated an unprecedented cost-cutting program to
ensure fitness to respond to new entrants’ potentially aggressive pricing tactics.
In the event the threat of major new competitors evaporated with the withdrawal
of LVCR and the collapse of its associated bulk mail market, but by that time
Jersey Post had reduced its overhead cost base by 25% or almost £4 million
per year. Not only has this enabled us to limit the impact on our customers of
continuing price rises in the UK mail market, but it avoided an otherwise
certain plunge into loss-making. Our profit before tax in 2012 was a respectable
£1.3 million despite turnover having plummeted by £20 million.
The transformation of Jersey Post’s business model
prompted by these external events has not been without
casualties. Savings of almost £3 million from the annual
pay bill made since 2008 have necessitated large scale job
losses and pay cuts which affected one quarter of our staff
across the entire organisation – not least at the very top and
middle of the company. It is a great credit to our staff who
remain, and our new management team, that the negative
impacts of traumatic change on morale and customer
service have been tackled so effectively during the year.
Stabilising the business after radical cost-cutting has
been the first priority of the new executive team headed
by Chief Executive Kevin Keen, and with that objective
now largely achieved, attention is being focussed on
finding growth opportunities following the demise of LVCR.
There is evidence that online shopping is growing more
rapidly in Jersey than elsewhere in the British Isles and
our packets and parcels volumes were up 28% compared
with the previous year. This trend, along with the early
success we are having in finding new logistics solutions
for those remaining fulfilment companies breaking into
new mainland European markets, should help mitigate
the negative impacts of on-going decline in our traditional
letters business. However, we continue to search for
more transformational business activities to support
the deteriorating economics of our Universal Service
Obligation.
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