The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
If you look at what EP Group does and consider how the acquisition of IDS might fit it’s easy to see why Kretinsky is interested and why he doesn’t need to divest Royal Mail to make it successful, the opposite would be the case.
Dowsie, I know he did but if you have a calculator on your phone you can divide the share price into the market capitalisation figure in the table I shared to work out have many shares IDS has issued and then you can find out what share price you need to get to 90th place in the list which guarantees FTSE 100 entry on decision day.
I assumed you had made a similar calculation to come up with your value which wasn’t far off the relevant number.
JMC66 here’s the latest index rating. IDS currently at 129th and would have to achieve a market capitalisation just over £4,225m to get automatic entry to the ftse 100
https://www.stockchallenge.co.uk/ftse.php
JB thanks for flagging up that RNS, it is good to see such an up beat announcement with forward looking information that looks far more credible and balanced than the stuff that was being published under Thompson and Back. The proposals about the 2 days to deliver DSA traffic looks a very sensible one, just have to hope that Ofcom don’t impose conditions on it (in price control or scope terms) that undermine it. There is also the risk that it will remove all the barriers to entry to end to end letter and encourage competitors to start cherry picking at scale again.
Tygra
The Post Office isn’t majority owned by the Bank of Ireland it is 100% owed by the U.K. Government it works with the Bank of Ireland to provide banking services and forex the combined value of which represent less than 1/3rd of its turn over.
@damofarl there are clear synergies between what IDS does and the portfolio of business activities EP Group is involved in. Property is just one area where joining the businesses would make sense. Perhaps IDS could counter by putting a bid in to acquire EP Group, the market values appear fairly similar ;-)
Beet, IIRC it was about £100-£150m per annum and most it is handled on behalf of third parties who have the customer contract. Not sure Darbo understands the difference between advertising mail and door drop media but both are pretty important to the viability of RM’s business not least because they would otherwise form the core income of competitors who would take significant chunks of letter, large letter and small parcel traffic away from RM.
Darbo, effective direct marketing using direct mail is very specifically not about sending advertising material to every household in the Uk in an untargeted way. It is almost the complete opposite. The reason why it is still used heavily despite the increasing cost and the growth in cheaper marketing media is because it works for the posting customer in ROI terms. It is also valued by a lot of consumers.
I would guarantee that 90%+ of people on this forum have a piece of direct mail that they are keeping somewhere in their home for current or future use, and most of us will have responded to a mail shot at some point in the last 12 months.
SimX thanks for the clarification, I don’t disagree in any material way. My earlier response was to the false suggestion that the current system is designed to handle 20 billion letters a year when it is anything like the system that was in place when those volumes were involved. For instance the number of walks may still be too high for current volumes but arenowhere near the 90,000 plus walks that were in place at the time letter volumes peak.
Redceo said “What a daft statement "There isn’t another medium which can be used to communicate in a way that can impact on every sense of the recipient, or can you feel, taste and smell your WhatsApp messages ?"
Why is it daft ? I can send you a letter which contains the means to easily find and view online content, at the same time as giving you something to taste, smell, read, feel and hear. If there is another media that allows you to do all of these things what is it ? Answers on a postcard within in built AR please :-)
SimX I don’t think it is inevitable that letter volumes have to keep declining at a rapid rate of knots and that there isn’t an ongoing need for a media that allows people to send things as well as communications in letter format. The people who constantly bang on about letters not being a viable business area and being in terminal decline are the ones who have an appalling outlook on RMs future (I suggest you look in the mirror).
As for giving RM some ideas about how it could sustain letter volumes or at least curtail the rate of decline I would suggest they simply copy some of the excellent things that peer group operators like USPS and Deutsche Post have done in this area and stop ignoring the research they did when direct marketing expertise was valued in the business. Mail as part of the media mix can be a very powerful marketing tool. Try sending a paint or scent sample using a Facebook ad !
Darbo, yes it’s so silly that people still use it 7.3 billion times a year. There isn’t another medium which can be used to communicate in a way that can impact on every sense of the recipient, or can you feel, taste and smell your WhatsApp messages ?
SimX the system that was designed to handle 20bn letters a year no longer exists, it has been heavily dismantled since the introduction of upstream competition imposed by regulation and privatisation. As is abundantly evident from the terrible QofS performance in recent years the current system can’t cope with 7billion. The forecast of 4bn is presumably contingent on them continuing to apply excessive price increases to a lower quality spec which is regularly failed.
Ironically if they get approval to deliver 2c letters within 3 days instead of 2 it is reverting to the situation that existed when the network was designed to cope with 20 billion items. It would make sense providing regulatory controls were extended to first class letters.
The irony
I wouldn’t be surprised if packet volumes take a dive as a result of recent chunky increases in large letter prices eroding the RM’s competitive position in the small parcels segment. RM have historically held small parcels contracts at higher prices than customers could get from Evri because of the cost and inconvenience of using multiples carriers and large letter rates being very attractive.
That said the nose dive in the share price must be mostly about GLS facing tougher trading conditions than they have in the past.
Dowsie and Cherry and White don’t get too excited about all those 10ps. Most of the 7.3bn letters Royal Mail handles are access letters posted via Royal Mail wholesale. An economy advertising mail letter can still be posted for less than 20p even after the latest price rise.
Ofcom applies a safeguard cap on 2c letters to ensure “they remain affordable for all”. I believe the current cap limits increases on 2c stamps to a maximum of annual CPI above the price in place at June 2023 up until 2029.
At the risk of being cynical perhaps if instead of delivering 7bn letters they had delivered the 7.3bn letters that were posted things might look a bit healthier !
Aren’t Paypoint collection points branded Collect+ ?
Isle details of STIP and LTIP schemes are given in the remuneration committee report
https://www.internationaldistributionsservices.com/media/12105/remco-chair-intro-and-policy-2023.pdf
Oli their core business model is based on using spare space or back fill capacity on existing vans, so when you get a quote like this it is basically the full cost of a manman and van.