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Royal Mail has posted an announcement on its website stating that a number of products and services, including all bulk products, will become liable to VAT from 2 April 2012.
The DMA is concerned about the impact this could have on members, and we are in discussions with Ofcom and Royal Mail to understand the background to this announcement and clarify the position. We will keep you up to date with developments. In the meantime, you can find out which products are affected on the DMA website.
Postal Technology International Awards 2011
Service Provider of the Year: Swiss Post
Service Provider of the Year winner Swiss Post has seen a rise in earnings, increase in customer deposits in PostFinance, optimisation measures and higher parcel volumes. In these difficult economic times, growth is an indicator of success.
Head of PostMail and deputy CEO of Swiss Post, Ulrich Hurni, says, “Swiss Post is moving with the times. In recent years it has recognised the signs of the times and systematically aligned itself with changing market requirements, further increased its competitiveness, and at the same time has provided a high-quality basic service. Flexibility and innovation will ensure that Swiss Post makes use of technological and social change in order to move forward successfully. We aim to continue inspiring our customers with an outstanding service mentality. This will be possible thanks to the huge effort made by all our employees in Switzerland and around the world.”
In recent years Swiss Post has provided a top-quality service, and this is the key to the company’s success, according to Hurni. In 2010, the company generated a group profit of CHF910 million (US$1.2 billion) – a growth of about 25 percent over the previous year. “Our service levels are extremely high,” says Hurni. “For example last year we delivered between 97.2 percent and 98.5 percent of all letters and parcels to their recipients on time. By international standards this puts Swiss Post in a leading position. And our customers are very satisfied with us too. In last year’s survey of 15,000 people, our postal carriers scored 92 out of a possible 100 points.”
This commitment to service quality is why Swiss Post has won this prestigious award, says Hurni. At the beginning of September, Swiss Post improved the collection times for frequently used postboxes – 93 percent of all letters are collected after 5 pm.
Technology, of course, is imperative to Swiss Post’s success: “We are investing CHF10 million [US$13 million] in the latest technology and staff training to increase our high reliability levels for letter processing and delivery even further,” says Hurni. “Thanks to its innovative strength, Swiss Post is continuously pressing ahead with linking the physical and electronic worlds. For this reason, investing in new technology is also very important for us.
“I believe that our innovations, together with our keen customer focus and service-orientated mindset have contributed to our winning this award,” Hurni comments. “This award is a particular honour for us. First and foremost, it is recognition for our 60,000 or so employees, who work day in day out for our customers. But this prize is also confirmation that Swiss Post is an innovative and progressive company and is moving in the right direction.”
Swiss Post International generated sales of EUR 303 million in the first half of 2011 and increased its operating result to EUR 22 million. After deducting extraordinary writedowns, the reported EBIT came to EUR 19 million. The communications service provider expects sales and the result for 2011 as a whole to be better than in the previous year.
In the first half of 2011, Swiss Post International lifted sales by EUR 3 million over the previous year, generating a total of EUR 303 million. The Company, which issues its reports in Swiss francs, adjusted its previous year’s results to the latest euro exchange rates for the purpose of comparison. In exchange-rate adjusted terms, growth has been generated primarily by international subsidiaries and the acquisition of new firms. Sales are still declining slightly in Switzerland. As was the case with sales, the operating result also edged up to EUR 22 million. The operating margin rose to 7.3% (compared to 7.1% the previous year). Nevertheless, as a result of extraordinary goodwill writedowns, the reported EBIT of EUR 19 million as of 30 June 2011 is below the previous year’s figure of EUR 21 million.
“Owing to the strong economic activity in the first half of 2011 and thanks to the consistent implementation of our global sales strategy, we can expect sales and results for fiscal 2011 to be up somewhat on the previous year”, says Daniel Bättig, Head of International Mail. Swiss Post International is focusing on steadily expanding its industry solutions and increasing its presence in regional markets. “Our growth is based on our offerings as an innovative and international communications service provider. We partner our business customers and enable them to optimise the value add of their services and goods.”
For the UK, acquisitions and opportunities in new markets have led to growth:
“The acquistion of MCM Direct Limited in early 2010 gave us a range of new specialist services and products to present to our retail customers both in the UK and internationally. Our move into retail has been a great success and now in the next phase of growth we’re strengthening that presence and increasing our penetration of the market through quality partnerships,” said Paul Taylor, Chief Executive, Swiss Post International (UK).
Most Swiss Post subsidiaries achieved tangible sales increases compared with the previous year. With 30 subsidiaries and sales agents, the Company is represented across the globe. Swiss Post International is continuing to penetrate its foreign markets. Partner companies are marketing services to business customers in decentralized regions of Germany, the UK, Ireland, Sweden, Italy and Spain.
With a range of services aimed specifically at industry customers from the financial sector, distance selling, media/publishers and tourism, Swiss Post International is focusing on international growth markets.
Swiss Post International continues to hold a leading position within the globally operating national postal organization. It remains in third position in the global, cross-border letter market, preceded only by Deutsche Post and French company La Poste. The wholly owned subsidiary of Swiss Post currently employs 1,250 people in twelve European countries, five major cities in Asia and in the USA.
Since 31st January 2011, standard rate VAT (Value Added Tax) has been applicable to some postal services. Further to this, from 1st August 2011, additional Royal Mail services will be subject to VAT. As a result, where items exceed 1kg*, for the services listed below, they will be subject to VAT at the standard rate from 1st August. This criteria will apply to all sales orders, whether based upon average or actual weight.
After the 1st August, please process your sales orders in exactly the same way as you do now. Any VAT charged will be automatically applied by Royal Mail and shown on your sales invoice.
Further Information
Many business customers can reclaim VAT. If your business is registered for VAT, and sells taxable goods or services, then as a general rule, you will be able to recover the VAT in the normal way on your VAT return.
For further information please visit call us on 01489 796611. To understand what VAT means for your business, please consult your finance department, accountant or tax advisor.
* For services which are priced by actual weight, items above 1kg, will be subject to VAT, items that are under, or exactly 1kg, will not be subject to VAT. For average weight services where the average weight exceeds 1kg, all items, irrespective of individual weight will be subject to VAT. For average weight services where the average weight is below 1kg, all items, irrespective of individual weight, will not be subject to VAT.
** Please note Mailsort 1 & 2 1400 are not part of the recent change to licence and therefore not subject to VAT
In the 2010 reporting period Swiss Post International kept operating profit (EBIT) on a par with the previous year at EUR 35 million and increased its return on sales to 6.1 percent. Operating income amounted to EUR 571 million. In financial year 2011 it anticipates sales growth of 6 to 7 percent.
Operating in the international mail, parcel and express business, Swiss Post International achieved its fifteenth straight profit in 2010. Despite the challenging economic environment, the company generated an operating profit on a par with the previous year at EUR 35 million. Its return on sales rose to 6.1 percent, compared with 4.7 percent a year earlier. Operating income declined to EUR 571 million. Due to a change in the accounting under IFRSs, operating income for 2009 was restated at EUR 745 million. The sharp decline of EUR 174 million was due mainly to the change from gross to net presentation in the 2010 reporting period.
“Swiss Post International expects sales growth of 6 to 7 percent in financial year 2011,” said Daniel Bättig, head of International Mail at Swiss Post International. Following a period of cost optimisation, the company is now focusing more on profitable sales growth. This is to be achieved on the back of improvements in logistics and IT as well as through the development of the offering, which has been systematically structured to reflect the requirements of the relevant sectors, including mail order, tourism, press and publishing.
Value-added solutions
In 2010 Swiss Post International developed an innovative returns solution for the international mail order business, which enables end customers in 18 countries to return goods to the retailer free of charge.
For companies in the tourism sector it created the holiday brochure platform www.holiday-infoshop.com , where providers can target their offerings at different target groups and holiday interests.
For French-language newspaper publishers, Swiss Post International opened up additional market potential outside their home markets by acquiring Swiss press specialist EDIGROUP, which markets publishing products from French-speaking areas and dispatches press publications worldwide.
In 2010 Swiss Post International entered additional regional markets in Finland and the United Kingdom through partner companies. “The partnership programme and the move into retail continue to be essential drivers in growing our UK operations. Partners and new customers want our products, appreciate our flexibility and willingness to accommodate their needs, and like having access to our worldwide distribution network,” said Paul Taylor, CEO, Swiss Post International UK
Irish businesses mailing customers overseas are set to benefit from a partnership between one of the world’s leading postal companies and the country’s number one independent delivery firm. Swiss Post International and Nightline have today announced a partnership that will create a simpler, faster, cost-effective and more customer-focussed international mail operation than Irish companies have ever seen before.
The new venture will see Swiss Post International establishing a retail presence in Ireland for the first time. Nightline will become a Preferred Partner of Swiss Post International and will be able to offer their customers Swiss Post International’s extensive range of products and access to a global distribution network for letters and small parcels.
Swiss Post International UK CEO Paul Taylor said the new relationship was built on the strengths which were common to both companies. “Nightline is the perfect partner for us because there is such a great fit between what we both do. Our businesses are known for their quality of service, their reliability and efficiency. The combination of our global network and Nightline’s domestic capabilities promises customers an unrivalled service. We see a major opportunity here to offer to Irish businesses a viable and trusted alternative delivery service – a first for the market. More than the savings which we know we can offer, this is about providing added value and a service tailored to what customers need – be they large or small.”
The partnership caps a remarkable 10 months for Nightline. Last May, the company, which handles one in every five parcels on Irish roads, moved from being solely a domestic parcel carrier with the opening of a UK regional office. Last month, Nightline also won national Innovation and Logistics Best Practice titles at two separate prestigious awards ceremonies organised by the Chartered Institute of Logistics and Transport Ireland. In December, it set up an additional division, Eirpost, to manage a new postal service for Irish businesses following the liberalisation of the country’s domestic mail market. Eirpost will handle ongoing detailed operations with Swiss Post International now the partnership is in place.
Nightline’s Chief Executive, John Tuohy, said its customers would now be able to capitalise on Swiss Post International’s range of delivery options and a delivery network spanning Europe, Asia and the USA.
“This is a huge fillip for Nightline and our attempts to provide customers with an innovative and flexible system capable of supporting the way they need to do business. We are extremely confident that what we’re proposing will make a real and very positive improvement to the way Irish companies deal with their international clients. This constitutes a radical difference to what has previously been available and will be a service tailored to their needs.”
The UK delivery network is recovering well from the weather conditions. However, last weeks heavy snowfall and icy conditions are continuing to disrupt the movement of mail into and across Scotland. Elsewhere, particularly in the North East and South East England, services are recovering well with deliveries and collections operating as normal in all but a few locations. Contingency plans remain in place across the UK and every effort is being made to restore mail services and deliver mail as quickly as possible.
The economic downturn has presented charities with decreasing incomes and an increasing demand for their services. So how can they continue to connect with their supporters in a cost-effective way?
Direct marketing, if used with well-managed data, is a proven way for charities to encourage repeat giving from their supporters. But how can they extract maximum value from their existing data assets?
1)Take a free data health check to highlight the cost of cleaning and updating your data – which can often be as little as £100.
2)Maintain an efficient database by tracking goneaways and recovering and re-engaging with lost supporters.
3)Profiling your campaign response data and adapt the charity’s propositions in line with the changing times and life stage of prospective donors.
4)Find a reputable marketing leads agency to generate opted-in data identifying new prospects.
5)Ask supporters how they want to be contacted – mail, email, phone or SMS – to increase engagement and reduce waste.
Swiss Post.
Information on VAT and Postal Services
The Government has announced that VAT at the standard rate will apply to certain postal services from 31st January 2011.
The majority of Royal Mail’s customers will not be affected by this change. Most services will remain exempt from VAT, in particular, First and Second Class stamped and franked mail and standard parcels. You won’t pay VAT when you buy stamps.
Royal Mail will write to account customers directly affected by these changes.
Prices
Royal Mail is not increasing the prices of any UK services on 31st January 2011; and will only apply VAT to existing prices for the services affected.
Further advice
Many businesses can recover their VAT, but some cannot. For professional advice we suggest customers contact their Finance department, Accountant or Tax Advisor. Royal Mail cannot provide tax advice.
International contract mail
From 31st January 2011 international contract services to EU countries will be liable to VAT. You won’t see the names of all these services in the lists on the website at www.royalmail.com/vat because Royal Mail is currently improving and simplifying its international contract range. More details will be available in December.
Franked mail
Franking customers will not be able to buy affected products using a standard franking machine from 31st January 2011. They will still be available on a “smart” franking machine which can handle VAT. Customers can speak to their franking supplier to find out more.
Online postage
Customers will not be able to buy affected services on SmartStamp® and Online Postage for a while. They can still buy them at Post Office® branches and on account
These are some of the services Royal Mail will charge VAT on:
Express and Tracked services
International Services (VAT will only be added to EU destinations)
Advertising, Catalogues and Magazine Services
Unaddressed Mail
Receiving and Managing Mail Services
Other Services
Contract Services
These are some of the services that remain exempt from VAT
UK Services
International Services
Austrian Post and Swiss Post are planning to consolidate their international activities in the field of addressed promotional mailings in a joint venture. This was contractually agreed by the two postal organizations on 15 October 2010. Austrian Post has a 65 percent share in the new company, with Swiss Post holding 35 percent. With this merger, the two postal organizations aim to reposition themselves in the production of direct promotional mailings in Central Europe and exploit opportunities for growth in Eastern Europe. This initiative is in response to structural changes in the sector. As part of the joint venture Swiss Post, with its Swiss Post Solutions unit, intends to grow its core business with electronic solutions at the interface between physical and digital postal services.
At the beginning of 2011 meiller direct GmbH, which is owned by Austrian Post and based in Schwandorf (Germany), plus its subsidiaries will be merged with the consolidated direct mail activities of Swiss Post Solutions in Bamberg (Germany). The new company, with subsidiaries in the Czech Republic, Poland, Russia, France and Sweden, will be owned 65% by Austrian Post and 35% by Swiss Post. This merger sees the creation of a powerful new provider in the European market.
The new company’s strategic focus will be on the consultancy, design and production of individualized addressed promotional mailings. In particular, this will include producing direct mail and envelopes, as well as lettershop activities. In future, customers will be able to obtain a comprehensive international range of services from a single source, based on the very latest technology.
The planned merger gives both postal organizations the opportunity to place their high-performing business portfolios on a new footing. It will also enable them to tap considerable synergy along the entire value chain, pushing forward with the structural changes that followed the 2009 recession and the slump in the mail-order business. The merger will enable Swiss Post increasingly to focus its Swiss Post Solutions unit on electronic solutions in the near future, therefore growing its core business at the interface of physical and digital postal services.
All the existing production locations of both companies in Germany, the Czech Republic, Poland and Russia will continue to operate. Specialization will be implemented at individual locations.
The new company will be jointly managed by its two parent companies. It is to be headed by Stephan Krauss who had been CEO of Prinovis until the end of 2008 and then director of PrinoTec. He will be joined by Chief Financial Officer Bernhard Butz (up until now CFO of Swiss Post Solutions Dialogue Solutions), Dieter Simon (Sales) and Jürgen Kremser (Technology). The transaction is expected to be completed at the end of 2010, subject to the approval of the relevant competition authorities.
