RMCtv : Angela 'low' Noon : 'Debunking the Financials'

[POSTMAN]

Debunking the Financials

AS PROMISED Q1 HISTORY AND YOUR COMMENTS ANSWERED

The £400m dividends paid contributes to the £1m a day loss”
The £92m operating loss for Q1 does not include dividend payments. Under accounting rules, dividend payments are paid for out of historically achieved profits after tax, and do not form part of trading profits or losses.

“Senior exec bonuses have contributed to the £1m a day loss”
Under accounting rules, bonuses are accounted for in the year they relate to e.g. bonus’ relating to 2021-22 will be in the 2021-22 financial statements. The bonus is accrued in that FY so was accounted for in the year just closed. It has nothing to do with our current trading position.

“The £70m voluntary redundancy programme in Operations has contributed to the £1m a day loss”
The charge for the redundancy programme was recognised within people costs in 2021-22, following accounting rules where programmes of this nature must be recognised as soon as the affected population are aware a programme is underway, which was during the 2021-22 financial year.

“The £50m Ofcom fine will have contributed to the £1m a day loss”
The Ofcom fine charge does not impact the businesses operating profit. Under accounting definitions, this a is classed as an exceptional item (so does not form part of ordinary trading). The cost of this was included in the 2019-20 financial statements.

“Is the £1m loss a day a true loss, or a year on year comparison? Or reflection of lost revenues? Or a statement on forecasted earnings?”
The £1m a day loss references Royal Mails actual adjusted operating loss (revenues less operating costs) of £92m for the Q1 2022-23 period, meaning costs outweighed revenues for the financial period 28thMarch 2022 to 26th June 2022.

“Can we compare this to previous Q1 trading periods to see if this is a normal trend?”
We have only provided the market with revenues and volumes trends for Q1 in the past, the businesses operating profit is ordinarily only shared with the market for our half yearly and full year results announcements.
The graph below at the end of the post is indicative of the Q1 trends from the last 10 years or so. The only time we have seen £1m losses in recent years were for the first 2 months of trading in 2020-21, when the pandemic first hit the UK.

What does this mean for the full year numbers? Does this mean a £365m loss based on losing a £1m a day? Don’t we make all our profit around Christmas, so profits might be the same compare to 2021-22?
Q3 historically does tend to be our strongest quarter for revenue in the run up to Christmas. As per the guidance within our Q1 trading update, we have indicated to the market that the UK business will be around breakeven for 2022-23, meaning we currently expect to be profitable in the rest of the year, but this does not include the potential impact of any industrial action.

“The business managed to turn around a £600m loss to a £758m profit, why can’t this happen again?”
The guidance we gave in 2020-21 that indicated an operating loss of £600m for the UK was our best estimate at a moment in time, as we were unsure how Covid would affect our trading. In the early days of the first national lockdown, businesses hadn’t adapted and we saw revenues decline rapidly and our cost base rose, due to sickness. The actual adjusted operating profit for the UK for 2020-21 was £344m, driven by the unforeseen spike in volumes of parcels and test kits, which were not anticipated when we went to the market with the initial guidance.

The £758m relates to the following financial year of 2021-22, which is comprised of adjusted operating profits for the UK of £416m and GLS of £342m, with the UK again benefitting from high volumes of parcels and test kits (which were free to members of the public up to 31stMarch 2022).

As announced in the market update, revenues for the UK for Q1 were £1.9bn (total Group revenues were £3bn, which also includes GLS revenues of £1.1bn). We do not disclose our people costs figure for Q1, but our financial results for 2021-22 showed our total UK people costs equating to approximately 70% of our total operating costs.

Any investment in parcel sort machines, hubs, building upgrades, electric vehicles etc. are included within our capital expenditure (capex) totals, not our operating profit/(loss). The way large capital investments (which create assets) are accounted for means that these costs are spread over their anticipated life within operating costs.
It is correct that this spend could lead to savings later in the year, which would be factored into any of our guidance figures.

“The numbers are made up to fit the narrative of the business having no money to pay out inflation matching pay awards”
Our financial systems and procedures are always adhered to. We have strict internal controls and governance around all our financial reporting.

Given the business releases information to the stock market, the results have to be true and fair at all times, and are audited by our external independent auditors, KPMG LLP, on a regular (an almost ongoing) basis, around the half yearly and full year results.

“How have we gone from making £2m a day to losing a £1m a day?”
Taking snippets from our Q1 trading update:
· Reduced test kit volumes
· End of lockdowns meaning reductions in parcel volumes
· Retail impacts due to the cost of living, squeezing discretionary spending
· International volumes still down post Brexit
· We were unable to reduce costs quickly enough in line with lower parcel and letter volumes
· Productivity challenges, with no progress on planned annual revisions in the operation and ways of working, to deliver additional benefits this year.
These are comparisons versus Q1 2021-22. We are unable to make comparisons to the full year profit number for 2021-22 due to the seasonal nature of trading.

“Royal Mail profits have paid for the dividends, why couldn’t we have had this as a pay rise?”
Reported operating profits are used towards determining if a dividend can be paid. The difference between reported and adjusted profits are operating specific items.

Dividends are paid from historically achieved profits after tax. Royal Mail has been 31% of total group profits since 2019. GLS contributed 69%.

Royal Mail floated on the stock market as a way to gain investment to help the company grow, investors (shareholders) are rewarded for their investment in Royal Mail through dividends, we need to grow sustainably in the future too to meet our growth targets investors expect.

The pay award offer is the equivalent of 5.5%. Each 1% of a pay award is c£40m full year, so this would cost the company c£220m FY. With declining revenues due to the end of the pandemic boom, and other cost increases due to inflationary pressures, we will come under pressure in the future with declining profits and companies find it hard to grow and transform without generating profits and cash.

[ssdd]

6olh65.jpg

[daveyeff]

they've had enough time to ''construct'' answers to questions about their bullshit lies. nobody believes a word they say and never will. how about ''how is this £1million a day loss the EXACT same amount we were losing under crozier and leighton from 2007? B.O.L.L.O.X

[derekm]

A bit of creative accounting by the sound of it

[Schiff]

Perhaps Angela would like a few posties to send her their household financial accounts which she can examine and tell them how much of a pay rise they need from their employer in order to balance their own books.

I am really not at all interested in how Royal Mail is doing as a business. If it is badly managed and goes under then so be it. I sell my labour to Royal Mail. My costs have gone up so surely it is only fair to charge more for my labour to cover those increased costs. If RM can't afford me then they should expect me to withdraw my labour.

[worktotime]

oh right i feel sorry for them my heart bleeds , shall we have a whip round after all that bullshit , i will throw in 2% thats £9.47 for your pot , its not looking good with terrys pay talks when they are bleating this shite out , lets get out and f**k it .

[worktotime]

so lets have a look in the real world of us posties .
the massive dividend paid out to shareholders is nothing to do with the workers , ( board and ceo choice ) biggest dividend paid out .
the senior mangers bonuses has nothing to do with the workers . ( board and ceo choice ) struggling company but still paid themselves a bonus
the managers vrs has nothing to do with the workers . ( cost cutting board and ceo choice ) now there saying they need to get more mangers back
the ofcom fine has nothing to do with the workers ( board and ceo choice , ( due to piss poor revisions railroaded in )

so do i need to go on ?

[RTP]

Future politician audition .

[Clappedoutpostie]

I am really not at all interested in how Royal Mail is doing as a business. If it is badly managed and goes under then so be it. I sell my labour to Royal Mail. My costs have gone up so surely it is only fair to charge more for my labour to cover those increased costs. If RM can't afford me then they should expect me to withdraw my labour.

[aiden01]

Perhaps Angela would like a few posties to send her their household financial accounts which she can examine and tell them how much of a pay rise they need from their employer in order to balance their own books.

I am really not at all interested in how Royal Mail is doing as a business. If it is badly managed and goes under then so be it. I sell my labour to Royal Mail. My costs have gone up so surely it is only fair to charge more for my labour to cover those increased costs. If RM can't afford me then they should expect me to withdraw my labour.

So if the business goes under 130,000 people lose there jobs ffs you sell your labour i personally just appiled. for a job..

[roadrunner bill]

There full of s h I t .... I've heard this builshit for the last 20 years..

It's the same script all the time..

[number one]

So they are basically saying once they show half yearly figures (like they have in the past) they expect to show profit. So what the hell is the issue then?

[Schiff]

Perhaps Angela would like a few posties to send her their household financial accounts which she can examine and tell them how much of a pay rise they need from their employer in order to balance their own books.

I am really not at all interested in how Royal Mail is doing as a business. If it is badly managed and goes under then so be it. I sell my labour to Royal Mail. My costs have gone up so surely it is only fair to charge more for my labour to cover those increased costs. If RM can't afford me then they should expect me to withdraw my labour.

So if the business goes under 130,000 people lose there jobs ffs you sell your labour i personally just appiled. for a job..

There are plenty of other jobs out there. If RM as a company goes under, others will step in or be created to do the work done by RM and will obviously need staff to do the work. I don't have any shares in RM as I think that it is really badly run and I don't expect it to be a success in the long term.

I certainly wouldn't accept below inflation pay increases or a constant erosion of terms and conditions simply to help RM to survive as a business and to protect the shareholders and directors. If that is what is needed for RM to be successful then let the business go to the wall.

[the shadow 36]

Its strange how the £400 million is casualy mentioned as if its not a issue I mean if I was losing a pound a day and was moaning about it to everyone as to why I was so tight I think those same people would have a right to moan if they found out I gave £400 away . I think not just with royal mail but with energy companies , train companies etc their all making huge profits that are benefitting the few . It seems were waking up to it now and hopefully its a turning point, all workers want and deserve a fairer deal and hopefully we we all get one in future .

[britwrit]

Merriam Webster defines "debunk" as a verb mening "to expose the sham or falseness of."

Just saying.