I am interested to hear any opinions about the proposed Royal Mail floatation. Will it remain a croc and sink or will it open at a premium and fly?

Stan.

Sometimes I think you are referring to his breakfast!


9-)

Let's stop this.

I want see how Martini gets on, before Manuel rubs it in.

ALEX BRUMMER: Poorly executed and wrongly priced...The betrayal of the Royal Mail flotation

By Alex Brummer

PUBLISHED:22:19, 24 October 2013| UPDATED:22:19, 24 October 2013

With the exception of the most recidivist of trades unions no one could dispute that it was right to free Royal Mail from its sheltered life in state ownership.


What is indisputable is that this was a flotation that has been poorly executed, wrongly priced and has done nothing to encourage wider or longer-term ownership of shares in Britain as recommended by the 2012 Kay Review.


Much of the blame for this farrago is aimed at Vince Cable, who as Secretary of State is ultimately responsible. But much of the early preparations, including meetings with advisers, was done by Tory Michael Fallon who was charged with bringing some private sector skills into the Business department.


The taxpayer has received a terrible deal. Shares floated at £3.30 each have now leapt two pounds to £5.29p. The Government had fair warning of this from some of the investment banks, with JPMorgan valuing the company at up to £9.95billion, Citibank placing a £7.3billion value on the enterprise and Deutsche up to £6.9billion.


Clearly, the Government didn’t want a flop on its hands and allowed the offer to be ‘priced to go’. But the misjudgement was huge.


Several fundamental errors have been made. First, the retail offer was not meant to be a national lottery-style get-rich-quick scheme, but to encourage broader share ownership. This it has failed to do, with punters immediately cashing in.


Second, it should have been aimed at long-term British-based funds. It was not beyond the brainpower of the global bookrunners to have devised a system that gave these holders preference.
Instead, the big winners have turned out to be aggressive hedge funds, including TCI with an eye-catching 5.8 per cent stake.


Finally, ahead of the float Cable, Fallon and others insisted there was no need for a ‘golden share’ that ensured the Royal Mail remained British because it would be hanging on to a minority stake currently 38 per cent. This, it was argued, would act as a bulwark against overseas owners. But for how long given that the Government is committed to running down its stake?

The consequences of allowing strategic assets, from oil refineries at Grangemouth to nuclear engineer Westinghouse and British Energy to be sold abroad, has been seen in its full glory this week. It leaves government on the outside with little leverage over essential services.


It may be too late to impose a golden share on Royal Mail that could prevent the European parcels service GLS from being carved out of the enterprise by TCI and others.


But Cable should make clear that if that is attempted the matter will be referred immediately to the Office of Fair Trading/Competition Commission for a thorough study of its strategic and economic impact.

£5.50 or thereabouts as I type.

Oodafortit?

Sold out all my shares at 564. It will probably surge on to to £6 now but happy with the profit. More of these please Vince.

Martini.

Lend us a bob or two.

Difficult to call.

Barclays Capital Equal weight 538.50 - 466.00 Initiates/Starts

UBS has told clients to 'sell' their shares in Royal Mail, saying the postal service is now over-valued.

The investment bank, which was one of the lead bookrunners on the £3.3bn privatisation of Royal Mail last month, said the market was far too optimistic about the company’s prospects.

Nomura Neutral 538.50 - 400.00 Initiates/Starts

Half Yearly Report

Key points
· Revenue growth of two per cent was driven by strong growth in parcel revenue in UKPIL and GLS, which offset letter revenue decline. Parcel revenue now accounts for 51 per cent of Group revenue.
· Operating costs after transformation costs were flat, due to tight cost control and lower transformation costs. Transformation costs were lower than expected, in part due to delays in transformation expenditure related to the industrial relations situation. Transformation costs are now expected to be approximately £160 million for the full year.
· Operating profit after transformation costs of £283 million benefitted from a one-off VAT credit of £35 million, lower depreciation and amortisation of £10 million, as well as £50 million lower transformation costs.
· While the improved Group operating profit margin after transformation costs reflects continued tight cost control, the VAT credit and lower depreciation and amortisation benefitted margins by approximately one percentage point.
· Profit before taxation of £233 million and notional earnings per share of 16.8 pence (both excluding specific items) reflect the operating performance of the Group. Pension accounting standards require us to include a one-time, non-cash benefit of £1,350 million4 as a result of the Pensions Reform in reported profit before taxation and reported notional earnings per share.
· EBITDA before transformation costs increased to £483 million.
· Net debt of £723 million was £183 million lower than at 31 March 2013. On 15 October 2013, Royal Mail refinanced and replaced all loans previously provided by HM Government. These loans5 and existing finance leases are currently forecast to have a blended interest rate of approximately 3.5 per cent per annum over the life of the facilities.

The market seems to like the new numbers !!

goldmansachs said float 6bn short making s/p @ £ 9

28 Mar 2014 Royal Mail Plc RMG RBC Capital Markets Outperform 596.50 564.00 625.00 650.00 Upgrades

UPGRADES to SP TARGET of 650p

From City Wire 27/03/2014.......

Royal Mail still a buy after redundancy news
News of 1,300 redundancies has not dampened Shore Capital’s enthusiasm for Royal Mail (RMG.L) as it maintained its ‘buy’ recommendation.

Robin Speakman said the redundancies, which fall under the group’s efficiency programme, will not make a significant change to his forecasts.

‘An addition of around £100 million cost is to be taken in the current year to March 2014, resulting in total transformation costs this year of approximately £230 million; annual cost savings are put at around £50 million post full year 2015, with approximately £25 million achievable next year,’ he said. ‘This goes some way to ameliorating additional pension costs of around £75 million per annum from next year.’

He added that the staff leaving were ‘mid-tier management and back office support’ rather than front line staff.

‘We believe that the context of these additional redundancies should be noted, being amongst a total UK core network of some 140,000 staff and against a competitive background, and a long term pay agreement with the Communications Workers Union. We do not expect to make any significant changes to our forecast from this news and retain a “buy” stance.’

Photo 2 of 6

Royal Mail upgraded by RBC Capital
28th March 2014, 08:34

Equity research analysts at RBC Capital Markets have upgraded their recommendation on Royal Mail Group [LON:RMG] to ‘outperform’ from ‘sector perform’ but stated that investors need to be selective in terms of timing.

The broker pointed out that the shares currently trade at a 25 per cent discount, on a PER basis, to sector peers and has increased its price target to 650 pence per share (previously 625 pence), suggesting around 18 per cent potential upside at current levels.

The broker said: “We see RMG shares becalmed by short-term adverse EPS momentum and investor concern about the overhang from the 29.8% UK Government stake that potentially comes out of lockup in April.

“Following placing discounts for Lloyds (UK Government sale in March, 2014), and discounted offerings in the sector that have offered entry opportunities (bpost, TNT Express in H2-2013), we see investors now waiting to exploit this potential.”

04 Apr 2014 Royal Mail Plc RMG Deutsche Bank Hold 552.00 550.50 - 587.00 Initiates/Starts

SP TARGET 587p

Berenberg Buy 560.00 560.00 - 700.00 Initiates/Starts

Royal Mail to pilot Sunday service for parcel deliveries

Royal Mail to pilot Sunday service for parcel deliveries

Final results tomorrow - Thursday 22nd.