https://www.ft.com/content/0958f9aa-c662-11e8-ba8f-ee390057b8c9Royal Mail staff face paper losses of up to £2,500 on sharesMichael Pooler in London OCTOBER 2, 2018Group’s stock loses two-fifths of its value since hitting a high of 632p in MayFor 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