Royal Mail Group Interim Results – half-year to 23 September

[TrueBlueTerrier]

Letter to Branches







To: All Branches with Postal Members


Dear Colleague

Royal Mail Group Interim Results – half-year to 23 September 2012

The Royal Mail Group announced yesterday its interim results for the first six months of the 2012/13 financial year. These are the first financial results since the new regulatory settlement was introduced in April 2012. They are also the first set of financial results to exclude Post Office Ltd following its separation from the Royal Mail Group.

The results show an improvement in revenue and profitability in the core UK Parcels, International and Letters business. This is driven by the recent significant price rises and by growth in parcels and packets. However, the results report that letters volumes continue to fall and costs have risen slightly. The business also acknowledges the difficult nature of the modernisation programme, describing it as involving “painful, difficult change”.

It also reported that despite continuing to make profit, GLS the overseas parcels business, is facing more challenging trading conditions which have affected its revenues.

These are the first set of results for many years that confirm the company has been able to significantly improve its financial position, without this being down to one off exceptions, such as the sale of property assets.

The results are a further demonstration that it is entirely possible for the Royal Mail Group to be successful in the public sector and this will strengthen the Union’s campaign against privatisation.

It is also important that CWU Branches, representatives and members are aware that around 47% of the overall revenue increase has come directly from the growth in parcels and packets and this growth is set to continue.

Branches should also be aware that the company now refers to packets as parcels and that the most significant area of growth is in the core business. At the same time Parcelforce has continued to show strong results as a result of growth.


There has been a lot of press coverage on the overall volumes of advertising mail. The financial results show that around 40% of all mail now delivered is down to advertising mail. However, the results show this does not represent a significant amount of profit for the company and is in reality only offsetting the decline in traditional stamped mail.

We have attached to this LTB a summary of the financial results that have been prepared by our Research Department. We have also attached the Union’s press release that was issued yesterday.

Any enquiries on the above LTB should be addressed to the DGS (P) Dept.

Yours sincerely


Dave Ward
Deputy General Secretary (P)

A Summary of The Royal Mail Group Financial Results

Group revenue increased by 3.3% to £4,355m in the first half of 2012/13, up from £4,216m in the same period last year.

Group profits after transformation costs were £144m, up from £12m in the same period last year.

Group overall operating profit margin after transformation was 3.3%, up from 0.3% in the same period last year.

The Group had a positive cash inflow of £218m, down from £237m in the same period last year. However, last year the company benefitted from a number of one-off cash inflows last year from the disposal of assets. This is not the case this year.

UK Parcels, International and Letters (UKPIL)

Royal Mail reports the former Letters section and Parcelforce as one business unit.

UKPIL revenue grew 6.1% to £3,635m, up from £3,426m in the same period last year.

UKPIL profits after transformation costs stood at £99m, up from a loss of £41m in the same period last year.

UKPIL operating profit margin after transformation has risen to 2.7% from a negative of 1.2% in the same period last year.

Growth in revenue and profit has been driven by the recent price increases which followed the new regulatory settlement.

Core letters volumes fell by 9%. However, Royal Mail claim that last year’s mail volumes were boosted by a number of one-off factors such as election mailings. Stripping these out, letters volume decline was closer to 6% to 7%, in line with expectations.

Revenue derived from letters increased by 2%. The increase in letters revenue has offset the decline in revenue caused by letter volume decline.

Parcels volumes increased by 6%. Revenue derived from parcels increased by 13%, through the combination of price rises and volume increases.

UKPIL net costs are up 2%.

UKPIL people costs were up 3%. There was a 2.2% reduction in the number of FTEs, this was lower than expected and the cost reduction was offset by the impact of this year’s pay award.

GLS

GLS revenue fell by 8.5% to £712m, down from £778m in the same period last year. Much of this was a result of changing interest rates (the pound is stronger against the euro than it was last year). Excluding the impact of the exchange rate, there was a 0.2% increase in revenue.

GLS profits fell by 22.4% to £45m, down from £58m in the same period last year. Stripping out the effect of the exchange rate, profits fell by 16.2%.

GLS saw difficult trading conditions in Germany which affected profitability.

Other
Revenues in Royal Mail’s Groups ‘other’ businesses fell to £8m from £12m in the same period last year.

No overall profit was made from ‘other’ businesses, an improvement on the £5m loss in the same period last year.

Royal Mail’s statement of its financial results and full report and accounts will be available on the Royal Mail website later today.


13th November 2012

Embargo: 12 noon 13th November 2012


Royal Mail results show successful modernisation in public sector, says CWU

Reacting to Royal Mail’s half-year financial results today (Tuesday) which show revenues, profits and profit margins all up, the Communication Workers Union says this is proof that modernisation can be successful within the public sector. The union, which represents postal workers throughout Royal Mail Group, also says the results are masking some of the problems in the industry and calls on the regulator to step in to protect the universal service.

This is the first set of financial results since the price rises came into force, and since the Post Office and pension deficit were removed from Royal Mail Group.

Dave Ward, CWU deputy general secretary, said: “These results are proof that positive change and modernisation can be made in the public sector. There is no need for privatisation as a solution to business transformation. Change is being successfully delivered by postal workers daily throughout the company. Postal workers are Royal Mail’s greatest asset and should be recognised as such.

“Royal Mail is doing its bit to change, but the regulator must now step in to protect the universal service. Competition from private companies is undermining Royal Mail’s ability to provide an affordable service to every part of the UK.

“We want a fair day’s work for a fair day’s pay bringing quality postal services to everyone. That’s being undermined by the way competition destabilises the universal service – companies being allowed to cherry-pick profitable contracts while paying low wages for example. There’s also a problem with pressure that Royal Mail managers are putting on delivery workers to make unrealistic cost savings. This is causing mayhem in many offices with staff being pressured to work unpaid overtime when really the managers have got the workloads wrong. It’s all linked back to the way competition is being mis-managed.

“There’s a bright future for the mail industry as Royal Mail’s results and the growth in packets and parcels show, but it will only work if the universal service and postal workers are put at the heart of change. Ofcom’s decisions have the potential to make or break this industry.

“We don’t want competition at any cost. Closures, bullying, cost cutting and privatisation will destroy the industry. We’ll stand up to protect it.”

-ends-

[fishtank]

The full accounts.

http://www.royalmailgroup.com/sites/def ... 2-13_0.pdf" onclick="window.open(this.href);return false;

We have started discussions with CWU to reach an agreement to build on the Business Transformation Agreement 2010.

Be afraid...be very afraid.

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[Lounge Lizard]

So that's about £50,000 a year revenue for each of us.