Interim Management Statement

12 January 2011

UK MAIL GROUP PLC

INTERIM MANAGEMENT STATEMENT

UK Mail Group plc today issues the following Interim Management Statement covering the period 1 October 2010 to date.

As the third quarter developed, underlying volume growth was generally lower than expected across our parcels, courier and pallets businesses, with the traditional December pick-up not materialising. This was compounded by the snow in December causing disruption to our customers and operations.

Whilst we were able to manage our operations such that over 99% of our Christmas parcel deliveries were delivered before Christmas, the weather meant that we incurred additional cost in our network to hold and deliver consignments.

Overall, our parcels business increased its revenues marginally in the quarter, with revenue growth in the initial weeks of the quarter offset by the reduction in December.

Our mail business saw good revenue growth throughout the quarter, as we continued to gain additional mail volume from existing customers, together with new business wins.

The result of these factors is that, whilst overall Group revenues for the quarter have increased by approximately 4% year on year, we now expect Group profit for the full year to be below previous expectations and broadly in line with last year.

We remain cautious about the economic conditions. However, the adverse factors experienced during the quarter were largely one-off in nature and our business remains strong relative to our competitors and well positioned in its various markets. 

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All financial information in this announcement is sourced from UK Mail's unaudited management accounts. Statements made in this announcement that look forward in time or that express UK Mail's management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect management's current expectations concerning future events and actual results may differ materially from current expectations or historical results.