Shares plunge at Royal Mail wipes GPB 100 million off postmen's profits

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Royal Mail posties are sitting on paper losses of more than £100 million, days before a lock-up period on selling their shares tax free expires.

Shares in the postal giant have fallen by a quarter since Monday’s shock profit warning due to fears the FTSE 100 group will have to cut or freeze hikes to its prized dividend.

The shares were down 8% in Tuesday’s trading at 359.7p.

From October 15, Royal Mail employee shareholders will be able to sell their shares without paying national insurance and income tax, coinciding with the fifth anniversary of the company’s 2013 float.

Staff, handed 10% of the company for free when it floated, have been able to sell shares since 2016 but paid taxes.

If shareholders sold on Tuesday they would get around 131p less than yesterday morning, when shares traded at 491p. That equates to £103 million in aggregate losses for the firm’s 140,000 employee shareholders

The shares hit a record high of 630p in May. They were floated at 330p, prompted accusations the company was sold on the cheap. Labour leader Jeremy Corbyn has promised to renationalise the business.

Employees make up the company’s biggest shareholder base with an 8% stake ahead of funds giant BlackRock.

Royal Mail stunned investors yesterday after lowering operating profits estimates by up to £150 million for the year ending March 2019 to as low as £500 million.

A botched bid to cut £230 million in costs was behind the downgrade.

The share price fall is the latest possible flashpoint for management and workers, who averted strikes this year after coming to agreement on pension changes.

New chief executive Rico Black, who replaced long-serving chief Moya Greene in September, will be under pressure to boost flagging productivity gains after they rose just 0.1% versus a target of up to 3%.

The legacy of Greene’s tenure is also likely to be called into question given the headaches faced by the group.

Jefferies analyst David Kerstens said a promise to increase the dividend every year was at risk despite assurances from the company yesterday that it would continue.

One Royal Mail shareholder, UBS Asset Management’s Steve Magill, said many of the problems were only temporary and the dividend was well supported.

[Celgar]

I don't think many of RMs problems are temporary. The EUs GDPR regulations are certainly here to stay unless leaving the EU allows us to release ourselves from their stranglehold.

[El-Bandito]

Why did RMG buy Canada Parcels?,

[postareale]

https://www.ft.com/content/0958f9aa-c66 ... 390057b8c9


Royal Mail staff face paper losses of up to £2,500 on shares

Michael Pooler in London OCTOBER 2, 2018

Group’s stock loses two-fifths of its value since hitting a high of 632p in May

For employees who received the maximum allocation of 913 shares, the value of their holding has dropped to less than £3,300 compared with £4,500 before the profit warning

Postal workers who were given shares in Royal Mail when it floated in 2013 face paper losses of up to £2,500, after the price crashed just days before many were preparing to sell.

Next week, on the fifth anniversary of Royal Mail’s listing, employees can sell stock for the first time without paying income tax. But a profit warning has sent the shares diving by a quarter, delivering a nasty surprise to many of Royal Mail’s 140,000-strong workforce who were given free shares in several batches following the privatisation.

Shares in Royal Mail closed down at 358.6p on Tuesday. The IPO price was 330p. While the stock has been volatile over the past year, it has lost two-fifths of its value since hitting a high of 632p in May.

Edinburgh postman Neill Turner, 34, reckoned he was set to lose up to £1,100 due to having pre-elected to sell his first batch of 543 shares last week.

“I’ve almost been spending this money in my head before I got it. I bet there are a lot of us in that boat,” he said. “These are the only shares I hold. I don’t earn a great deal of money, and this was a beacon on the horizon.”

For employees who received the maximum allocation of 913 shares, the value of their holding has dropped to less than £3,300 compared with £4,500 before the profit warning and from about £5,775 at the peak.

Under the company’s share incentive plan, employees can sell stock three years after the date of award, but they must hold on to the shares for a further two years to avoid paying income tax and national insurance on the proceeds of any sale.

Royal Mail said that an employee with the full allocation of shares would have received £850 in dividends since privatisation.

Royal Mail on Monday said its annual earnings would be as much as £150m lower than forecast because of larger than expected falls in the number of letters being sent, missed productivity and cost-savings targets and rising overheads at its international parcels business.

One of the reasons for Royal Mail’s profit warning was disappointment on productivity goals, which were a pillar of a wide-ranging agreement with trade unions earlier this year that averted nationwide strikes.

As a result, the company expects adjusted operating profit before transformation costs — which strips out expenses from a long-running modernisation programme — to come in between £500m and £550m in 2018-19, compared with £694m the year before.

The shadow chancellor John McDonnell reiterated Labour’s intention to nationalise Royal Mail. “These figures show the need for real investment in this vital public service, which is not happening under its current management,” he said.

Royal Mail said £1.8bn had been invested in the business since privatisation. It declined to say how much of its equity was owned by staff.

Additional reporting by Jim Pickard