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Communications watchdog Ofcom launched an investigation into the Royal Mail’s failure to meet its delivery targets after the company’s owner published its delayed annual results.
International Distributions Services filed its annual figures after the stock market had closed. They had been due at 7am on Thursday but it blamed KPMG’s demand for further time in pulling the accounts together.
The figures revealed that Royal Mail had made a £348 million operating loss for the year to the end of March, with the company blaming “challenging macroeconomic conditions”.
The loss was partially offset by a £320m operating profit at GLS, its European and American courier company, although that was 8% worse than the previous year.
There was a group loss before tax of £75m, though the company is paying a 2p a dividend for the year, which it said it was entitled to do because of the profits at GLS.
Delay in publishing the results on Thursday prompted speculation that it was linked with the £3.5 billion, 370p-a-share takeover offer by Daniel Kretinsky, the Czech energy tycoon.
Some have called for government intervention but the process has now been caught up in the general election campaign. Even so, there have been indications from both main political parties that they would not stop the takeover.
IDS did mot provide an update on the potential deal alongside the results, saying only that no firm offer had yet been made. It reiterated that it was “minded” to accept a proposed bid worth about £3.5 billion that was tabled on 15 May.
Ofcom said that against a target for the company to deliver at least 93% of first-class post the next day, in the financial year to the end of March Royal Mail delivered only 74.5%. The target to deliver 98.5% of second-class mail within three working days also fell short, with a figure of 92.4%.
It said: “We will consider if there were any exceptional events — beyond the company’s control — that may have explained why it missed its [delivery] targets. If it does not provide a satisfactory explanation and we determine that Royal Mail has failed to comply with its obligations, we will consider whether to impose a financial penalty.”
Martin Seidenberg, chief executive of International Distributions Services, said: “We have improved quality, won back customers lost during industrial action, controlled costs and delivered Christmas for our customers. Positive momentum is building, although there is hard work in front of us to get back to profitability.”
