not on facebook
ANNOUNCEMENT : ALL OF ROYAL MAIL'S EMPLOYMENT POLICIES (AGREEMENTS) AT A GLANCE (UPDATED 2017)... HERE




INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

13 Oct 2018, 14:30

https://www.dailymail.co.uk/money/inves ... paign=1490

On Monday, about 150,000 Royal Mail workers who were given shares in the company in 2013 will be able to sell them for the first time without having to pay income tax.

Since they own around 8 per cent of the company, that's pretty big news. The question in many posties' minds will be: 'Should I stick, or should I sell?'

It's been a tricky few months for the once state-owned service. A profit warning this month, when it said it wouldn't be able to make the cost savings it hoped to, wiped 18 per cent off the share price in a day.

Image
Royal Mail issued s profit warning this month, when it said it wouldn't be able to make the cost savings it hoped to, wiped 18 per cent off the share price in a day.

For a full-time Royal Mail worker, who was awarded 913 shares in 2013, this slashed their value by £782 in a matter of hours.

David Jones, chief market strategist at online trading platform Capital, says: 'If you're a postie, it's a simple choice between buy or sell, although you may well regret you didn't have the option to sell five months ago when the shares were worth 80 per cent more.'

Posties won't be the only ones wondering what to do.

Jones, who himself owns shares in Royal Mail, says that unless shareholders urgently need the cash they might be well-advised to hold on to them for a while.

They pay a decent dividend – a worker with the full 913 shares will have received more than £850 since the float – and their price may yet recover after the shock of this month's warning.

'There are two risks here: the price continues to slide, and they decide to cut or even not pay the dividend in future,' Jones says.

In the profit warning, the company did say it was committed to a 'progressive' dividend policy, implying it wouldn't entirely axe the payouts.

Nick Hyett, an equity analyst at Hargreaves Lansdown, says that though there may be pressures on earnings and cash reserves making it harder to pay dividends, 'the group is effectively debt-free and it's still got a lot of property assets it could sell'.

The problem of Royal Mail's sliding share price, however, could be trickier to resolve. The stock is worth 340.6p, just above the float price of 330p, meaning anyone who bought shares when it floated is still in the money, but way off the peak price of 631p in May this year.

There are a number of problems facing the British postal stalwart, Hyett explains. First is the decline in letters. Though this was always expected, as communication moves online, it has come faster than Royal Mail expected.

Second is the parcels problem. In 2013 Royal Mail made a big deal out of their major role delivering UK parcels – the number of packages sent is expected to increase as online shopping takes off.

But Royal Mail wasn't the only company to see the opportunity. A number of other players, including online giant Amazon, have muscled in, putting pressure on pricing and margins.

The company also needs to invest. 'Look at Amazon and Ocado during the Christmas rush,' Hyett says. 'They have hugely efficient warehouses. At Royal Mail, you have a massive pile of parcels with people employed on very short-term contracts to deal with that rush.'

Which links to the third issue with Royal Mail – that it will be hard to create the cost savings it planned when it still has a heavily unionised workforce.


Management had argued that because Royal Mail had spent so much time in public ownership, there was fat to be cut. But when they began to implement plans last Christmas, workers threatened to strike over worries about their jobs, pay and pensions.

Broker Berenberg says Royal Mail should trade at around 300p, as the profit squeeze may not be a short-term phenomenon.

But despite the obvious problems, there are reasons to stay in. The dividend is attractive, and it may yet be that Royal Mail retains its competitive advantage and becomes a winner for the future.

Posties, Hyett adds, effectively benefited from a windfall. He says: 'It's reasonable to think you were given a delayed bonus several years ago, and think you want to realise the cash and buy a new car.

Equally, it would be reasonable to think this is a one-off bonus and you want to keep it invested.'

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

13 Oct 2018, 21:03

Can't they get facts correct. We could sell earlier in the year, albeit with tax penalties, which at today's sp, would have been a fortuitous decision if you'd sold at £6+ and also it isn't 913 shares either.

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

13 Oct 2018, 22:00

we can only sell 613 tax free , but I will be holding mine and take the dividends .

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

14 Oct 2018, 11:46

Nowhere near 150k employees able to sell either.

Less than that in the business today and some will have already sold. Considering turnover of staff in the five years since the shares were gifted I'd be surprised if there were even 120k able to sell

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

14 Oct 2018, 12:25

Does anybody else think it's a remarkable coincidence the price drops so drastically mere days before we're able to sell tax-free?

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

14 Oct 2018, 16:33

skyline wrote:Does anybody else think it's a remarkable coincidence the price drops so drastically mere days before we're able to sell tax-free?

I understand what you mean, however, the facts are the facts, if they think they are gonna be short on profit they are legally obliged to report this to market. It would have been reported in November anyway, with a similar effect on the SP. At least royal mail gave the choice to those who pre elected to sell ( which was a bad idea anyway), the chance to withdraw their instruction.

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

15 Oct 2018, 11:07

all part of royal mails game to run the company down to then get permission to rescind our contracts and offer new ones at a lower wage so in 2019 when our conditions come up to be discussed with the union we get shafted seen this coming 5 years ago :cuppa

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

15 Oct 2018, 12:01

Those people who claim to ‘know’ that the share price would drop just as we reached the fifth anniversary all sold their shares at 600p or greater, then? Even after tax, that would’ve still been the equivalent of of 400p/share in net proceeds.
Oh, wait. You DIDN’T sell, despite your cynicism?

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

15 Oct 2018, 20:57

slinder123 wrote:all part of royal mails game to run the company down to then get permission to rescind our contracts and offer new ones at a lower wage so in 2019 when our conditions come up to be discussed with the union we get shafted seen this coming 5 years ago :cuppa


Wow, someone's dialed up the conspiracy theory to 11... There would need to be a total collapse of the Union, and possibly a flock of flying pigs, before this would happen.

INVESTMENT EXTRA: On Monday Royal Mail postmen can cash in shares handed to them in 2013... so should they?

16 Oct 2018, 11:52

it has nothing to do with the union if they start to lose money which is happening now through letters and cant pay the wage bill or struggling to the writing is on the wall dial code 11 lol :cuppa

Previous page Next page


Page 1 of 1