News and press releases

  • Royal Mail Group
    17 May 2018
    Royal Mail plc Full Year Results 2017-18

Royal Mail plc (RMG.L) today announced its results for the full year ended 25 March 2018.

Moya Greene, Chief Executive Officer, said:

“It has been another successful year, despite the challenging environment. Group revenue is now over £10 billion, a significant milestone, thanks to our geographical diversification and focus on growth.

GLS had another strong year. Its revenue grew organically and through targeted acquisitions in higher growth markets. Parcel volume growth in UKPIL was our best for four years. We delivered a resilient letters performance.

We continue to focus on cost avoidance and parcel revenue growth in the UK and through GLS. The good cash generation characteristics of our business will support our progressive dividend policy.”

Group financial summary1

Reported results (£m)

52 weeks ended
25 March 2018 

52 weeks ended
26 March 2017 

Underlying2
 change 

Revenue

10,172

9,776

2%

Operating profit before transformation costs

236

490

 

Operating profit after transformation costs

123

353

 

Profit before tax

212

335

 

Basic earnings per share – continuing operations (pence)

25.9p

27.5p

 

Proposed full year dividend per share (pence)

24.0p

23.0p

4%

Adjusted Results (£m)

 

 

 

Revenue

10,172

9,776

2%

Operating profit before transformation costs

694

712

1%

Operating profit after transformation costs

581

575

6%

Margin

5.7%

5.9%

20bps

Profit before tax

565

559

 

Basic earnings per share (pence)

45.5p

44.1p

 

 In-year trading cash flow

545 420  

Net cash / (debt)

14 (338)  

 

 

Business units

 

Revenue

Adjusted operating profit before
transformation costs 

(£m)

52 weeks ended 25 March 2018

52 weeks ended
26 March 2017

Underlying
change2

 

52 weeks ended 25 March 2018

52 weeks ended
26 March 2017

UKPIL

7,615

7,658

flat

 

503

548

GLS

2,557

2,118

10%

 

191

164

Group

10,172

9,776

2%

 

694

712

 

 

Group performance1,2

Revenue up two per cent on an underlying basis, to £10.2 billion, driven by UKPIL and GLS parcels growth.

On a reported basis, operating profit before transformation costs was £236 million.

Adjusted operating profit before transformation costs was £694 million, up one per cent on an underlying basis. 

Adjusted operating profit margin after transformation costs of 5.7 per cent increased by 20 basis points on an underlying basis. 

Total net cash investment was £445 million, down from £492 million in 2016-17. In-year trading cash flow increased to £545 million.

The Group had a net cash position of £14 million at 25 March 2018. This benefitted by around £100 million from the timing of the 2017-18 frontline pay award. 

The Royal Mail Pension Plan closed to future accrual in its Defined Benefit form on 31 March 2018. A new Defined Benefit Cash Balance Scheme was put in place from 1 April 2018. The overall ongoing annual cash cost of pensions will continue to be around £400 million. 

The Board is recommending a final dividend of 16.3 pence per ordinary share, giving a total dividend of 24.0 pence per share for 2017‑18, up four per cent.

 

Business performance1,2

UKPIL revenue was unchanged. Parcel revenue grew four per cent. Total letter revenue declined by four per cent.

UKPIL parcel volumes up five per cent. Addressed letter volumes declined by five per cent, in line with expectations. 

Underlying UKPIL operating costs before transformation costs unchanged. Exceeded our cost avoidance target, avoiding £642 million over the last three financial years. Transformation costs were £113 million.

UKPIL collections, processing and delivery productivity improved by one per cent, outside our target range (two to three per cent). 

Our regulatory First Class Quality of Service performance was 91.6 per cent (target: 93 per cent). Second Class performance was within the target range when allowing for sampling margin of error. We are talking to Ofcom about exceptional events3. If taken into account, we estimate we would have achieved our First Class target and exceeded the Second Class one.

GLS performed strongly. Revenue was up 15 per cent, including the impact of acquisitions on a constant currency basis. 

On an underlying basis, GLS revenue grew 10 per cent. Volumes were up nine per cent. 

 

 

2018-19 outlook

UKPIL parcel volume and revenue growth rates anticipated to be at least the same as 2017-18. 

Maintain outlook for addressed letter volume declines of four to six per cent per annum (excluding election mailings) over medium‑term. Expect decline to be at higher end of range for 2018-19 due to GDPR and, or, if business uncertainty persists; may fall outside range in a period. 

Targeting to avoid around £230 million of UKPIL costs. Productivity improvements expected to be towards the upper end of targeted two to three per cent range. Transformation costs expected to be at upper end of forecast £130-150 million range. 

Expect continued good performance in GLS. Margins may be impacted by continuing labour market pressures. 

Total net cash investment expected to be around £500 million. 

Remain committed to progressive dividend policy going forwards.

 

 

1

Reported results are prepared in accordance with International Financing Reporting Standards (IFRS). Adjusted results exclude the pension charge to cash difference and specific items, consistent with the way that financial performance is measured by Management and reported to the Board.

2

Movements are presented on an underlying basis. For further details of reported results, adjusted and underlying reconciliations to the closest IFRS measures where appropriate, see section entitled 'Presentation of Results and Alternative Performance Measures (APMs)'.

3

These factors included a challenging industrial relations environment, some very severe weather, Cyber Week and Australian flu. It will be for Ofcom to decide.

 

 

For further information, please contact:

 

Investor Relations:

Catherine Nash

Phone: 020 74498183

Email: investorrelations@royalmail.com

 

Media:

Beth Longcroft

Phone: 07435 768 549

Email: beth.longcroft@royalmail.com

 

Peter Tilley

Phone: 020 7449 8247

Email: peter.tilley@royalmail.com

 

Company Secretary:

Kulbinder Dosanjh

Phone: 020 7449 8133

Email: cosec@royalmail.com

 

Results presentation:

A results presentation for analysts and institutional investors will be held in London at 9:30am on 17 May 2018 and a simultaneous webcast will be available at www.royalmailgroup.com/results.

A trading update covering the three months ending 24 June 2018 is expected to be issued on 17 July 2018.

 

Registered Office:

Royal Mail plc

100 Victoria Embankment

London EC4Y 0HQ

Registered in England and Wales

Company number 08680755

Revenue

Adjusted operating profit before
transformation costs 

(£m)

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

Underlying
change

 

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

UKPIL

7,658

7,671

(2%)

 

548

625

GLS

2,118

1,580

9%

 

164

117

Group

9,776

9,251

1%

 

712

742

 

Revenue

Adjusted operating profit before
transformation costs 

(£m)

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

Underlying
change

 

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

UKPIL

7,658

7,671

(2%)

 

548

625

GLS

2,118

1,580

9%

 

164

117

Group

9,776

9,251

1%

 

712

742

 

Revenue

Adjusted operating profit before
transformation costs 

(£m)

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

Underlying
change

 

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

UKPIL

7,658

7,671

(2%)

 

548

625

GLS

2,118

1,580

9%

 

164

117

Group

9,776

9,251

1%

 

712

742

 

Revenue

Adjusted operating profit before
transformation costs 

(£m)

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

Underlying
change

 

52 weeks ended 26 March 2017

52 weeks ended
27 March 2016

UKPIL

7,658

7,671

(2%)

 

548

625

GLS

2,118

1,580

9%

 

164

117

Group

9,776

9,251

1%

 

712

742