- Strategy & performance
In this section we give an overview of our performance in 2010, plus objectives and our outlook for 2011.
- Business review
Find out about how each of our businesses have performed this year, plus our outlook for each in 2011.
Business overview
For an at a glance overview of the performance of each of our businesses.
- Governance
Find out about how we govern the company, our remuneration policies, the director’s report and a statement of their responsibilities.
- Financials
Including consolidated statements, the auditor’s report, notes to the accounts and a five year summary.
- Shareholder
information
For useful share management and investor information, including key dates for the diary and contact information.
Annual General Meeting
Will be held on Wednesday 11 May 2011 at 11.00 am
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Page contents
Market conditions
Despite the bouts of severe weather experienced in 2010 the domestic parcel market grew by some 3%, albeit still remaining some 3% below its 2007 peak. However total parcel revenue remained broadly flat as excess capacity in the industry continued to keep prices competitive.
| Fourth quarter | Full year | ||||||
|---|---|---|---|---|---|---|---|
| £m | 2010 | 2009 | Change | 2010 | 2009 | Change | |
|
At 2009 constant exchange rates: |
|||||||
| Revenue | 87.6 | 100.9 | (13.2%) | 335.5 | 353.1 | (5.0%) | |
| Adjusted operating profit (before amortisation and impairment of intangible assets1 and one-off items) | (3.6) | 2.7 | (233.3%) | (9.6) | (5.6) | (71.4%) | |
| At actual exchange rates: | |||||||
| Adjusted operating profit (before amortisation and impairment of intangible assets1 and one-off items) | (3.6) | 2.7 | (233.3%) | (9.6) | (5.6) | (71.4%) | |
1 Excluding computer software
City Link’s operating loss of £9.6m is £4.0m worse than the corresponding loss in 2009 on a £17.6m (5.0%) reduction in reported revenue. The operation was severely impacted at the beginning and end of the year by heavy snow fall resulting in lower levels of productivity and higher delivery costs, with an estimated in year impact of £4m.
The UK Parcels industry continued to be extremely competitive during 2010 with price cutting a continuing market dynamic.
However, pricing pressure softened slightly on 2009, with revenue per consignment declining by 3.3% (2009: 4.5%). Parcel volumes were down 1.8% on 2009.
Service levels throughout 2010 were generally above 98.5%. However, service levels were severely impacted during the period of heavy snow in the run up to Christmas and temporarily during the closure of the Wednesbury Hub in July.
Though good progress was made during 2010 in improving City Link’s hub and depot structure and IT capability, its overall performance was particularly disappointing. The principal issue was that operational management of the business was poor, evidenced by high usage of subcontractors, inadequate contingency planning to deal with extreme conditions and poor engagement of front-line colleagues. Significant management change has taken place and a detailed operating plan is now being pursued which should deliver substantial operational improvement prior to the 2011 Christmas seasonal peak.
2011 preview
Whilst there have been some signs of recovery in the market in 2010, early signs for 2011 indicate that this recovery may be slower to develop. Excess capacity in the industry is also likely to ensure that the market remains very competitive, thereby limiting the ability to pass on real cost increases.