Dividend Reinvestment Plan

[POSTMAN]

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Employees who have Royal Mail shares they own in their own right can use their dividend payment to buy more shares, if they wish

Subject to shareholder approval at our Annual General Meeting (AGM – see jargon buster) on 24 July 2014, employees will receive a dividend (see jargon buster) on their Royal Mail shares. Employees who own Royal Mail shares, other than Free Shares, will be invited to take part in a Dividend Reinvestment Plan (DRIP). Employees will not be able to use dividends received on their Free Shares to take part in the DRIP. This is because employees’ Free Shares are being held in a trust - the Share Incentive Plan (SIP) - and due to SIP scheme rules, DRIPs are not available on shares held in this way.

How the Royal Mail DRIP works

The DRIP gives employees the opportunity to buy Royal Mail shares using the dividend payment made on the shares they already own.

Taking part in the DRIP enables those employees to increase their shareholding in Royal Mail.

If you choose to use the dividend received on the shares you have paid for to take part in the DRIP, our registrar, Equiniti, will use the cash dividend from those shares to buy additional shares on your behalf, at favourable commission rates. Equiniti will buy the shares at the market value as soon as practicable after dividends are paid on 31 July 2014.

Any shares bought under the DRIP will be ‘ordinary’ shares. As with the shares you have already bought, you will be able to sell these shares at any time*, and you will not lose them if you leave Royal Mail employment.

Employees will receive the maximum whole number of shares which can be bought on their behalf. Any cash dividend left over will be rolled over to the next dividend for the process to start again.

Dividends reinvested under the DRIP will be taxed in the same way as dividends that are paid as cash. To find out more about tax on dividends, click here.

Completely optional

Taking part in the DRIP is completely optional. Employees who own shares they have paid for can instead choose to have their dividend paid to them as cash. If you want to do this, then you need take no further action.

If you do decide to take part in the DRIP, then you will have to use your full dividend, paid on the shares you have bought, in this way, ie you cannot choose to use 50% of your dividend to take part in the DRIP, and take 50% as cash.

How to apply

Eligible employees will receive a DRIP invitation at their home address from 9 June 2014. To join the DRIP, they will need to complete the application form and return it in the pre-paid envelope provided so that Equiniti receives it by 10 July 2014.

Full details of the DRIP including the terms and conditions can be found at http://www.shareview.com/drip" onclick="window.open(this.href);return false;

Important note: The DRIP is optional, and this information does not constitute advice to join the DRIP. If you are unsure about joining, we recommend you seek independent financial advice. If you take no action you will receive a cash dividend.

*You will have been told if there are any restrictions on when you can sell your shares.

[TrueBlueTerrier]

So how many DRIPS out there then.

[5plusbonusball]

D.R.I.P.'S / S.I.P.'S all giving me the pip! Let's see a B.O.N.U.S.

[RobertT]

There are pros and cons to reinvesting share dividends both from a general point of view and in terms of the health of the individual company, in this case Royal Mail. But as we're not being given that option with the free shares, I will be reinvesting the dividends from the shares I bought myself just to see where it takes me.

[heapsy]

There are pros and cons to reinvesting share dividends both from a general point of view and in terms of the health of the individual company, in this case Royal Mail. But as we're not being given that option with the free shares, I will be reinvesting the dividends from the shares I bought myself just to see where it takes me.

Doing this myself. I've set up a share account and have been buying share in companies I have researched. All part of the pension pot I am hoping to draw on at 60.