PROFIT MORE LIKE 1 billion WHEN PRIVATISED?

[royalmailsajoke]

Now the company doesn't have to pay off the pension deficit (something like £700 million p.a was used in previous years) what has Royal Mail done with this money in the previous six months accounts?
Page 22 of RM's interim report for the 6 months to 23 Sept 2012 states that £600m of loans were repaid to HM government (transformation loan repayment)
When, or if, we are privatised the remainder of this loan will have been repayed allowing the company to increase its profits (the £600 million was from operating income not asset sales - see page 11 of the interim report))
Assuming the transformation is completed £200 + million wil not have to be used each year for " tranformation costs-operational exceptional items " (page 15 of the 6 month interim report)
This £800 million could then be used to boost annual profits making the private company look brilliant and see shares rocket.
Major shareholders and Private Equity firm owners will be quids in, as well as any employees who didn't sell theirs in the first year.

Interim report found at http://www.royalmailgroup.com/interim-report-2012-13" onclick="window.open(this.href);return false;

[teesdale]

Very interesting. Ive been thinking along the same lines. Are our shares ones we will not be able to sell to anyone outside royal mail though. Are you talking about selling back to royal mail in the first year. I was interested in why you thought the shares ( available to investers/the public ) would be worth more in year two, no boom in year one.

[royalmailsajoke]

The privatisation the government want is an initial public offering (IPO) so that the public (who already own RM?) feel we are all in it together.
However there won't be enough public money to buy it all (price will be 2 to 4 billion pounds)
The Liberals have made sure that employees will get 10% of the company.
Realistically only private equity firms etc will have the available funds to make a complete sale possible.
Private equity etc will want control of the company, so I think the sale will be - 10% to employees (as normal shares), 39% to the public & 51% to a single buyer (private equity etc)
Over a period of several years the share price should rocket due to the reasons I stated and the public/employee shares will be sold and then bought by the single buyer.
If the government loan is incorporated in the sale price or the loan is made payable over a long time-frame that £600 billion could boost the first years profits. However the new owners might want a couple of years to boost profits so that it looks credible when they say that THEY have turned the company around.
I read a while back that RM would cap the shares senior RM managers could buy (all in it together)
Private Equity is where very wealthy people (senior RM managers?) form investment clubs to buy companies and turn them around.

[teesdale]

Thanks for more ideas. I missed the British Gas/Telecom etc sales. These companies are too big to fail. Whats to say they dont cull lots of the old managers and it becomes an amazon or ebay but delivers same day, or becomes part owned by dubai or the chinese selling us everything from our food to cars.

[britwrit]

I, for one, welcome our new UAE overlords.

[fishtank]

Are our shares ones we will not be able to sell to anyone outside royal mail though. Are you talking about selling back to royal mail in the first year.

Our shares are unlikely to be able to be sold at all.
The idea is that the "employees" hold a percentage of the equity in perpetuity which would be impossible if we were able to sell them.
Our share of the company will most likely be held by an employee trust,possibly involving the CWU and while an employee you will receive a dividend like any other shareholder.
You will personally own or be able to sell....nothing.

[britwrit]

Honestly? I'd be reluctant to give the CWU direct control over the 10%. In the wrong hands (i.e. five or ten or fifteen years down the road, when an entirely new batch of faces enter the picture), it could push the union over the line from labor into mangement. I can see questions like Shouldn't the union get an administration fee for managing the shares? And from there, onto Shouldn't the heads of the CWU get bonuses for managing these shares so darn well?

An employees' trust raises another bunch of problems but I'd prefer that, if the heads were elected.

[fishtank]

Honestly? I'd be reluctant to give the CWU direct control over the 10%..

In my opinion it's a direct conflict of interests.
Industrial action will obviously negatively affect the share price of a company.
How can an organisation on one hand be charged with protecting the value of the employee shareholding and on the other hand be directly responsible for reducing that value?
And how would a non-member "shareholder" feel about that?
It could either open the union up to accusations of playing company stooge or legal action from disgruntled shareholders.
It's a lose/lose scenario and to be honest i'm baffled by the stupidity of those at HQ who want to get involved unless it's more about sitting on boards pretending to be senior managers than protecting our terms and conditions.

[royalmailsajoke]

Why would a privatised company want to get involved in an employees trust?
They want maximum shares in the company and they know most employees will sell when their shares have gone up, as will most public shareholders.
They will then attempt to de-recognise the CWU, as is happening at Virgin, as most new starters don't seem very active in CWU matters.
This is a smash and grab raid on the company and the CWU know it , if they tow the line maybe they will be spared.
Ms Greene is a very hard buisness-woman with no interest in any union control of a new Royal Mail.

[fishtank]

Why would a privatised company want to get involved in an employees trust?

Because there is no better way to castrate a union than to give it's employees the belief that they have a real stake in the company,that any job cuts and reduction in terms and conditions are for the greater good of all "shareholders",that we are all in this together.

Look at Virgin,where the threat of de-recognition has led to an upsurge in union membership and talk of some real militancy for the first time in years.

Look at John Lewis where they all gather around pathetically waiting to see what their dividend might be while their real terms and conditions are under attack constantly and cleaning services are outsourced to minimum wage third parties.

You can catch more flies with honey than with vinegar.

[royalmailsajoke]

We are looking at Private Equity taking the majority of shares and they like to operate with complete control. They don't do employee trusts etc.
Why conrol with honey when they can exploit the fact that RM is filling up with part-time rolling contract workers who aren't going to get militant because they need their contracts renewed.
With regard to delivery offices I think the control will be via team leader postmen/women who get paid extra, the money coming from dismissed line managers. Line managers get a bit tense when you point that one out to them.