Read the link above, it's a full transcript of an investor call held by RMG Senior Management with financial analysts held on November 21st.
Other RMG execs on the call included,
* Stephen Agar
Royal Mail plc - MD of Consumer & Network Access
* Stuart Simpson
Royal Mail plc - Chief Finance & Operating Officer
The attached exchange at the very end of the transcript is very interesting (n.b.: Rico Back: "So if the CWU doesn't come down, if the word if wouldn't be there, we would be all millionaires." .
Note the companies that were represented by the investors' representatives on the call:
- JP Morgan Chase & Co
Crédit Suisse AG
Deutsche Bank AG
RBC Capital Markets
Jefferies LLC
Barclays Bank PLC
Who in that lot isn't already a millionaire?
Especially the CEO with his £6M Golden Hello!
Unbelievable arrogance!
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Alex Paterson, [37]
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It's Alex Paterson from Peel Hunt. Three questions, please. Firstly, could you just clarify, has there been any impact on parcel volume since the CWU vote to strike? Secondly, if the CWU doesn't change its position and adopt the changes that you want, then what? What levers can you pull? Do you rein back on the investment to save cash? And thirdly, Ofcom, obviously ruled against you and you've recognized that provision now, the CAT categorically and comprehensively ruled against you. [Saying whistles case is] without merit, seems like a little bit of a strong statement on that. What do you think they would have to demonstrate above those rulings, if anything, for them to have a strong case.
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Rico Back, Royal Mail plc - Group CEO & Director [38]
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Any strike announcement is making parcel clients nervous. So they will try to find alternative routes. You can see it also in history, [overall in Royal Mail] now whenever you had a strike announced and people try to find alternatives or set up something different. So clearly, that is not very good. On the other hand, we have a good sales force, we told that we invest into contingency, we told that we just maintain important things. I think our first priority was the election and our second priority is to [put] Christmas. We have put extra, like I said, 26,000 people in place just to make sure that the election is working. Christmas is working. And in case of a problem with the unions, we have a contingency arrangement there. And our clients are trusting us. So yes, we see some effects. It's not without it. But -- and the grand scheme of things, our growth is still there. And we are right now coming into a period where growth is in all the parcel markets. So I think our clients were pleased that we just could find time to pause our debate with the unions, and we're going to look at this next 6 to 8 weeks, which we are having to find a solution starting on Thursday, Sally and Achim. So we are there. Yes, it's damaging. But our contingency arrangements, our investments into it, probably should have hit, partly our productivity number for the second half, but it helps the quality for and the sustainability for our clients, sort of that's what we have done, the first thing.
So if the CWU doesn't come down, if the word if wouldn't be there, we would be all millionaires. So we are targeting to have a sustainable business model. We are targeting to have extra resources in order to maintain a good service quality. We're targeting to have a peaceful relationship with the Union, so to come out of it. I can't rule out that we won't make it. That's what I said. So if there would be, let's say, industrial relations activities, I think our first target is to have contingency arrangement there as much as we can. In order to protect the service for the U.K. public for our clients, that's the first target, which we are having. And at the end, Royal Mail always has found a way to find a settlement with the unions. We know that the unions are part of our company. And like I said before, the good thing, which joins us up is that we want to grow. And to harm a business not to be able to grow harms it at the end of the company to be able to pay the good wages, which we are paying. So I think there's a mutual interest to come to a solution at the end. Like I said, maybe I say it always, it will be a noisy period now, and we are noisy. Good for Christmas and election. Let's see where we end up, hopefully, at the right spot.
On the Ofcom, we were -- we are very disappointed with the results. We are in the process to review all our legal options and activities. And after that, we'll decide what to do. So I can't say more on that one. It's an ongoing legal evaluation.
Next question? No more questions. That's good because we are completely in line with sort of our target timing. I thank everybody very much for coming. It's been a great pleasure from us having you here. Again, I was pleased to confirm the half-year performance in line with what we have said. And we're more pleased to confirm that we will deliver what we have promised for the full year. That is for Stuart and me, I think credibility is everything. And this is why we told you there are risks for the second year. According to our plans, we have some mitigation activities in place. We are, again, committing to the 3- and 5-year promises, which we have made as our vision. There might be a delay in the third year, depending on it, we are very, very sure the 5-year guidance is there, the 15p per share and dividend policies underpinned by cumulative inflow cash flow. So thank you very much for staying with us. Thank you for the questions. Have a good day today. Thank you.
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