Pre-tax profit fell by almost a third at UK Mail in a year that saw the group move to a new hub and fit-it with incompatible parcel sorting technology.

For the year ended 31 March 2016, UK Mail recorded pre-tax profit of £14.4m (2015: £20.1m).

The company reported it had had “teething issues” with its new technology at its Rydon site after the six months ended 30 September saw its pre tax profit fall by 80%.

Since then, the loss has been partially offset by a compensation payment of £10.3m from HS2, as UK Mail had to leave its Birmingham site to clear space for the project.

Turnover at the group fell by 0.8% for the year, to £481m (2015: £485.1m). Turnover from its parcels operation, which accounts for 52% of the group’s total income, grew by 1.4%, while turnover from its mail operation fell by 3.1%.

Peter Kane, chairman of UK Mail, said that while the last year had been “challenging”, the group had made “good progress in implementing a detailed plan to address the issues we faced in transitioning to [its] new automated hub”.

He added that the outlook for the next financial year was good, and that the results would likely to be heavily weighted to the second half of the year, as the first half will still be affected by the group’s move.

“The strategic rationale for the investments we have made remains compelling, and sets us up well for the next stage of profitable growth,” he added.

Kane remains chairman of the group while it seeks a replacement for former chief executive Guy Buswell, who stepped down in November last year.

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