Proposed flotation

Customers large businesses

Royal Mail needs to be able to move more swiftly to innovate and invest where and when it needs to in order to remain competitive and seize opportunities when they arise.

Many of our competitors are successful privately-owned global players, which have the flexibility to invest quickly to take advantage of changes in the market. On-going access to the equity and debt markets will allow Royal Mail to do this too.

The UK Government has made clear it doesn’t have the capital itself to invest in Royal Mail given the competing funding needs of schools, hospitals and other public services. Royal Mail cannot borrow money from capital markets under its existing ownership structure; it can only borrow from the Government and all current borrowings contribute to UK national debt.

  • Government announcement on sale of Royal Mail

    The Government has announced that it intends to proceed with an Initial Public Offering of Royal Mail, and to dispose of the majority of the existing shares in Royal Mail.. The Initial Public Offering is expected to take place in the coming weeks. An exact date for the sale of shares in Royal Mail has yet to be announced. There is no guarantee a Initial Public Offering will go ahead. The Government will retain flexibility around the size of stake to be sold via the Initial Public Offering. The decision will be influenced by market conditions at the time of a transaction, investor demand and the Government’s overall objective to get value for money for the taxpayer.

    To find out more about the Share Offer read the full HM Government's intention to float announcement on the HM Government's Share Offer Website at www.gov.uk/royalmailshares

    Many previously Government-owned companies – Rolls Royce, BA, BP etc – have flourished under private ownership. The Government has said it is not a good owner of large businesses. Private ownership will enable Royal Mail to become more flexible and fleet of foot in the fiercely competitive markets in which we operate. Our competitors are successful, privately-owned global players such as Deutsche Post/DHL and Fed Ex, which invest when they need to. Like them, we need to access to capital from time to time. Government has made clear it doesn’t have the money to allocate to Royal Mail ahead of schools and hospitals. Access to the capital markets will allow us to be more nimble to seize the opportunities available to us.

     

  • Employee Share Offers

    Under the Employee Share Offers, eligible employees of Royal Mail Group Limited can receive shares in two ways:

    • An automatic award of shares through the Free Shares Offer
    • Buying extra shares through the Employee Priority Offer

    The Employee Share Offers will only apply if the flotation takes place. If the flotation takes place but is delayed the Government may decide to make new arrangements for the offers. The Government is responsible for deciding whether or not to go ahead with the flotation. If the flotation does not take place, eligible employees will not receive any shares under the Employee Share Offers.

    Free shares

    Government will make 10 per cent of shares in Royal Mail available to eligible employees (who have not opted out), automatically and for free, at the time of flotation, under the Free Shares Offer. More employees will be able to take part in the Free Shares Offer than in any other UK privatisation for almost 30 years. Approximately 150,000 employees are eligible for Free Shares. It is the largest free stake of any major UK privatisation.

    Eligible full-time employees will receive the same number of shares, regardless of their grade, with a pro-rata allocation for part-time employees based on their paid hours.

    The overwhelming majority of Royal Mail Group Limited’s employees in the UK, including employees working in Parcelforce Worldwide, will be eligible for Free Shares if they meet certain criteria. Employees of GLS, and other subsidiaries and joint ventures (including Romec and Quadrant) are not eligible to receive Free Shares.

    Employee Priority Offer

    Eligible Royal Mail employees will have the option to apply to buy Royal Mail shares through the Employee Priority Offer, at the same price as members of the general public. They will be given priority over members of the public when shares are allocated (up to £10,000).

    Royal Mail has communicated the details of the Employee Share Offers to its 150,000 employees.

  • Retail offer

    The Government also confirmed a retail offer, which will mean that individuals located in the UK and with a UK address will be able to apply for shares through participating intermediaries or by direct online or postal applications to HM Government.

    Royal Mail connects millions of customers, companies and communities. We’re pleased the people we serve can own a stake in Royal Mail, should they choose to.

    To find out more about the Share Offer read the full HM Government's Intention to float announcement on the HM Government's Share Offer Website at www.gov.uk/royalmailshares

  • What privatisation means for companies, customers and communities

    Our customer service will be an advantage for us in the private sector. It is underpinned by the clear and unambiguous legal commitments around the six-day-a-week, one-price-goes-anywhere Universal service. It is protected by law – enshrined in the Postal Services Act 2011. Any change would have to be passed through an affirmative vote in both Houses of Parliament.

    Quality of Service is one of the key drivers of our success. The Quality of Service regime that applies to Royal Mail under public ownership will continue to apply under private ownership. Ofcom has already specified the minimum standards under current regulation.

    Privatisation of postal services elsewhere in Europe has seen private postal operators maintain high quality of service levels. Deutsche Post and Austria Post both deliver more than 95% of letters the day after posting.

    Royal Mail offers good value for money. That will not change. UK stamp prices are among the best value in the EU. In five of the six weight steps for First Class and Second Class mail, the cost of UK stamps are ranked in the bottom half of prices when compared with other European countries.

  • Post Office

    Royal Mail and the Post Office Limited were formally separated in 2012. For the past year the two companies have operated independently of each other, strengthening their relationship and allowing each organisation to focus on its own priorities. Post Office Ltd will remain in public hands, and under the Coalition Agreement the Government has committed that there will be no closure programme of post offices.

This is an advertisement and is not a prospectus for the purposes of EU Directive 2003/71/EC or Part VI of the Financial Services and Markets Act 2000 (as amended).

Investors should not subscribe for or purchase any securities referred to in this advertisement except on the basis of information contained in the prospectus in its final form to be published by Royal Mail Limited (to be renamed Royal Mail plc) in due course. Copies of the prospectus will, following publication, be available online at www.gov.uk/royalmailshares

This advertisement does not constitute an offer or recommendation concerning the securities referred to in this advertisement. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. Information in this advertisement cannot be relied upon as a guide to future performance. Before purchasing any securities referred to in this advertisement, persons viewing this advertisement should make sure that they fully understand and accept the risks which are set out in the prospectus referred to above. Potential investors should consult an independent professional advisor as to the suitability of the securities referred to in this advertisement for the person concerned.