Trading Update

For immediate release

28 March 2011

UK Mail Group plc

Pre-Close Trading Update

UK Mail Group plc today issues the following pre-close trading update for the financial year ending 31 March 2011.

As reported on 12 January 2011, underlying volume growth in the third quarter had been generally lower than expected, compounded by the snow in December causing disruption to our customers and operations. 

Since then, fourth quarter volumes in our parcels business have been subdued and the important month of March is not expected to deliver its normal seasonal uplift in volumes. We currently expect revenue growth for the fourth quarter to be some 3% and total revenue growth for the financial year ending 31 March 2011 to be some 2.5%.

Underlying economic conditions are affecting our parcels business. Combined with the impact of costs associated with the disruption in December continuing into January, this is expected to result in our parcels business profits being below expectations. These issues have also impacted our Mail business, but to a lesser extent. We thus now expect Group profit before tax for the financial year ending 31 March 2011 to be in the region of £16 million.

Despite these challenges, we remain very competitive in our markets and continue to win substantial contracts in both our parcels and mail businesses. Our balance sheet remains strong with a good cash balance. Barring exceptional circumstances, the Board intends to recommend an unchanged final dividend of 11.8 pence per share in respect of the financial year ending 31 March 2011.

The current economic conditions may continue to hinder our growth in the forthcoming financial year. We remain focussed on continuing to drive down our cost base, and we believe that our strong competitive position should enable us to continue to outperform our competitors.

UK Mail Group will report its final results for the year ended 31 March 2011 on 18 May 2011.

- Ends -

Notes to editors:

All 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.