News and press releases

  • Royal Mail Group
    Royal Mail Cruciform logo
    10 July 2013
    Royal Mail welcomes Government’s plans for IPO and free shares for employees

Royal Mail welcomes the Government’s announcement today that it intends to relinquish overall control and achieve minority ownership in Royal Mail. The Government intends to dispose of a majority stake in Royal Mail this financial year. The Company also welcomes the Government’s intention to give 10 per cent of all the shares in the business free to eligible Royal Mail employees in the UK at the time of Initial Public Offering (IPO).

  • This is the largest free stake of any major UK privatisation. More Royal Mail employees will be able to participate in the Free Share scheme than in any other major UK privatisation for almost 30 years.
  • The Government has also announced that, alongside an offer to institutional investors, there will be a retail offer. This will allow people we serve to own a stake in Royal Mail, should they to choose to. Our objective is to attract high-quality investors including pension funds, mutual funds, insurance companies and private individuals.
  • The Government will retain flexibility around the size of a stake to be sold via the IPO. An exact date for the proposed flotation of Royal Mail has yet to be announced and there is no guarantee a transaction will go ahead.

Moya Greene, Chief Executive Officer, Royal Mail Group commented: “Royal Mail aims to combine the best of the public and private sectors. Our employees will have a meaningful stake in the company and its future success. The public will have the opportunity to invest in a great British institution.

“As we move into the private sector, the current legal position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis. To provide further reassurance, we will create a legally-binding and enforceable contract with the CWU. Pay and protections could not be changed for the period of the contract without CWU agreement.”

Many previously Government-owned companies – Rolls Royce, 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. Some of our competitors are successful, privately-owned global players - which invest when they need to. Like them, we need to access to capital from time to time, but the 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.

What private ownership of Royal Mail means for our employees, our customers and the communities we serve is as follows:

Free Shares for employees

  • This is the largest free stake of any major UK privatisation. More Royal Mail employees will be able to participate in the Free Share scheme than in any other major UK privatisation for almost 30 years. 
  • The provision of Free Shares is dependent on the company being floated on the London Stock Exchange. If this transaction does not take place, employees will not receive any shares in the company.
  • The overwhelming majority of Royal Mail Group Limited’s 150,000 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 are not eligible to receive Free Shares.
  • The Government intends to award the Free Shares under a tax-advantaged Share Incentive Plan. Royal Mail will be communicating more details to its employees in the coming months.
  • Eligible employees will automatically receive an equal number of shares, irrespective of their grade. There will be a pro-rata allocation for part-time employees. They will have the option to opt out of the scheme if they wish.
  • Eligible employees will also have the option to buy extra shares through the retail offer and will be given priority when shares are allocated.

Terms and Conditions for Our People in Private Ownership

  • The current position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis, were the company to be sold.
  • To provide further reassurance, we will create a legally-binding and enforceable contract with the CWU. Pay and protections could not be changed for the period of the contract without CWU agreement.
  • The Company will continue to have a predominantly full-time workforce on an overall national basis, as per our current agreements with the CWU.
  • Our existing enhanced voluntary redundancy terms and excess travel terms have been extended for the life of the modernisation revisions. Our commitment to managing change without recourse to compulsory redundancy will remain in place.

What It 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 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 is ranked in the bottom half of prices when compared with other European countries.

For more information visit the Privatisation section on this website.

ENDS

Contacts: 
Mish Tullar on 07423 524154
Candice Macdonald on 07436 267324
Beth Longcroft on 07435 768549
Shane O’Riordain on 07770 544585

Notes to editors:

Royal Mail Free Shares scheme

The Free Shares scheme will have the following terms to promote its longevity, ensure that employees can own shares in the most tax advantaged manner possible and to align employee engagement with that of Royal Mail:

• in accordance with HMRC Share Incentive Plan rules, employees will be required to hold the shares for at least three years through a specially appointed trustee. Full tax benefits are only available if the shares are held for at least five years or for ‘good leavers’;
• shares will be forfeited if the employee leaves Royal Mail within three years of their award. This will not apply to ‘good leavers’ whose shares will vest tax-free upon departure;
• shares will be allocated to full time employees equally, regardless of grade or pay levels. The allocation will be pro-rated for part time employees based on an employee’s paid hours to differentiate between full and part time workers; and
• to be entitled to shares, employees must have been employed by Royal Mail for a qualifying period prior to listing.

Royal Mail Group Ltd financial performance 2012/13

• Group revenue was £9,279 million, up five per cent (1).
• Group operating profit increased to £403 million(1). The operating profit margin(2) increased from 1.7 per cent to 4.4 per cent.
• Free cash inflow of £334 million was generated, mainly due to our improved trading performance. As a result, net debt decreased by £280 million to £906 million.
• Group parcel revenue increased to £4,477 million, with growth of nine per cent (1).
• UKPIL, which includes the core Royal Mail business in the UK and Parcelforce Worldwide, generated a revenue was £7,766 million, up six per cent(1) and operating profit of £331 million. Its operating profit margin increased from 0.5 per cent to 3.9 per cent (1).
• UKPIL parcel revenue increased by 13 per cent and volumes increased five per cent (1).
• Within UKPIL, reported letter revenue grew to £4,787 million (including marketing mail), an increase of three per cent (1).

Notes:

(1) Numbers on an adjusted 52 week basis due to a 53 week year in 2012-13
(2) After modernisation costs, before other exceptional items
 

About Royal Mail

Royal Mail is the Designated Universal Service Provider in the UK. It delivers an affordable six-day-a-week, one-price-goes-anywhere, postal service to more than 29 million UK addresses. Royal Mail is regulated by Ofcom. Royal Mail Holdings plc is directly owned by HM Government and is the ultimate parent company of Royal Mail Group Limited. The Group operates within the United Kingdom, including a number of subsidiaries, associates and a joint venture. These include Royal Mail, which delivers more than 99 per cent of letters in the UK and has a leading position in the UK parcels sector, and Parcelforce Worldwide, its express parcels business.  The Group also has a presence in most European countries, mainly through General Logistics Systems, one of the largest ground-based parcel delivery networks in Europe.

On 1 April 2012, Post Office Limited was transferred from under the ownership of Royal Mail Group Limited to become a direct subsidiary of Royal Mail Holdings plc.

 

This document is directed at employees of Royal Mail Group Limited only. The information contained in this document does not constitute an offer for sale of securities in the United States, Canada, Australia or Japan or any other jurisdiction and is not for distribution in the United States, Canada, Australia, or Japan or any other jurisdiction where such distribution would be unlawful.

The securities referred to in this document have not been registered, and will not be registered, under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold in the United States unless they are registered under the U.S. Securities Act or pursuant to an exemption from, or in a transaction not subject to the registration requirements of the U.S. Securities Act. There will be no public offering of securities in the United States.

This document is an advertisement and not a prospectus. Any purchase of securities in any proposed offering should be made solely on the basis of the information contained in the prospectus to be issued by Royal Mail in connection with any such offering which will be published in electronic form and made available to persons resident in the United Kingdom on Royal Mail’s website.

Please note that the value of shares can go down as well as up. There is no guarantee that Royal Mail will float and no one should base any financial decisions on the Government’s flotation plans for Royal Mail at this stage.