The Investment Column: Business Post delivers the goods

Business Post has been an unlikely success story since it floated at 120p nearly four years ago. The company is still a minnow in the fiercely competitive UK market for express delivered parcels and packets.

Its 3 per cent market share, built up using a unique franchise and regional hub system, puts it at number eight or nine, behind giants such as the Post Office's Parcelforce operation, Securicor and TNT. But the shares' 128 per cent outperformance since launch speaks for itself, even if they were down 5p at 478p on a bad day for the market yesterday.

Even though profits growth has steadily slowed over the past few years, a 24 per cent increase to pounds 16.1m in the latest 12 months to March is still highly respectable, given the increasing size of the group. Earnings per share expanded by 21 per cent to 21p.

The company is demonstrating its confidence in its own financial strength by using close to half its pounds 9.8m cash pile to pay a special dividend of 9.1p a share. Together with the second interim of 6.9p, this will be paid on 1 July to beat any move by the Chancellor, Gordon Brown, to scrap or reduce advance corporation tax.

The group denies any pressure to pay from founding brothers Peter and Michael Kane, both of whom have relinquished executive duties at the group over the past 18 months, but the special payment means the exiled pair will scoop a pounds 7m windfall from dividends this year.

Certainly, there seems little reason to doubt the management's claim that the group can pay the dividend and meet its capital expenditure requirements over the next few years. All of last year's tripled capital expenditure at pounds 7.5m was easily covered by operating cash flow of pounds 14.5m, which augurs well for the current year's budget of pounds 7.8m.

The new regional hub in London's Docklands will allow Business Post to attack the big but fragmented City of London market, while "super regional" hubs in Runcorn later this year and in north London by 1999 will complete its network. But the real boost should come from the pounds 7.1m national hub due on-stream in Birmingham, which will cut costs and increase capacity by between 100 and 400 per cent.

Profits of pounds 19.3m this year would put the shares on a forward p/e of 19, making them a firm hold.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks