Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Oligarch your memory is good. To raise funds Royal Mail issued 2 bonds worth 500m and 550m euros and obtained an unsyndicated bank loan over £900m. The combined value is £1.86bn. One of the bonds and the bank loan is due to be repaid in 2024, the other bond in 2026. That said In the 2020 reports it said that most of the bank loan hadn’t been drawn down and the business could rely on £1.9bn worth of liquidity.
JB I had some involvement in winning quite a few of these contracts a while ago. Margins tend to be quite small but it is better to have the volume than not.
The Post Office one with BFPO is for use of their point of sale system and doesnt cover any of the Royal Mail work on forces Mail and parcels.
Most of those contracts are just re-awards of contracts that have had to be re-tendered under public procurement rules.
One that stands out is the DWP internal courier service award. This had been held for years by TNT and is one of biggest public sector courier contracts going.
I hope they are making a reasonable margin from it.
Clearly the Horizon contract with BFPO has nothing to do with Royal Mail because it is a Post Office offering.
They are still offering their under 1kg postable parcel service on their website. £2.22 before VAT.
Guessing he’s asking whether existing shareholders think the share is a good buy irrespective of the upcoming dividend. If the Broker Ratings are anything to go by It would a pretty good buy at £5 per share. Only Berenburg ( a big outlier) have announced a lower target since the start of the year. There are also lots of positive things happening around the company at the moment. But also a couple of sizeable potential negatives (particularly how B2C parcel volumes, prices and margins will be impacted by the return of high street retail to more normal operations).
On balance I would say it is probably a good buy with potential to get a decent way above the current price but he like everyone else needs to do his own research.
Shaun, the entire process is built around Royal Mail tracked products and the convenience of the posting back network (priority boxes, Post Offices, Callers Offices etc) so its difficult to see how any other carrier can be involved.
Royal Mail 24 Letter Boxable Tracked is probably charged very close to standard RM 24 without signature with perhaps a few pence discount for the lower costs involved because far fewer P739s have to be left. I suspect a fairly significant discount for volume would be involved but the over all contract will be very profitable for RM.
I’m not sure announcing a dividend payment out of profits that are probably inflated by the conditions of the Covid pandemic was a smart move, especially at the same time as announcing how competitive the parcel market is with a 72p temporary price cut on parcel collections from home.
If you use Hermes to collect a parcel up to 2kg instead of posting it one of their parcel shops it costs you 72p more.
Hermes are RM’s biggest competitor in the U.K. C2X parcels market.
You could read this as a positive or a negative.
On the positive side it is good to see RM taking a flexible approach to pricing to try to recover market share.
On the negative side, Royal Mail is waiving a 72p per item charge on this service and it shows how fierce the competition in the U.K. Parcels market is. This is likely to intensify when non essential retail resumes trading, online volumes drop off, and competitors In the carrier market start chasing business to try to fill the extra capacity that has been put in place to deal with pandemic volumes.
I hope they retain the profits and invest in growing the business. A dividend payment will take things in the wrong direction. It will be the equivalent of having a blow out following a wind fall which isn’t going to be sustained.
Really good news that Ofcom have ruled that VAT won’t be payable on the use of the new Economy Mailmark D+5 service.
This will help RM promote use of the new service to two of the biggest market sectors (Financial Services and Charities) who normally can’t recover VAT on direct mail expenditure.
Big efficiency savings are available on letters delivery if they can use the kit to defer delivery of second class items and DSA items so that they are only delivered every other day.
Mike the previous policy was to give an increasing level of dividend each year (I.e progressive), this took money out of the company which could have been invested in growth and productivity which would have improved the value of the business and hence the share price. Instead investment slowed, tensions with the work force expanded, profits declined, significant borrowing followed and the value of the company and the shares dropped significantly.
Clearly that wasn’t all down to the dividend policy, but it did play a part.
I would much prefer that they invested in securing growth in the business than giving out dividends. Growth is driving the increase in the share price, the previous progressive dividend policy just contributed to the share price falling like a rock.
Good to see that the increase in forecast operating profit is driven by an increase in expected Level of growth. Let’s hope the growth is sustainable.
"Within Royal Mail trading over the third quarter and into January was stronger than anticipated, primarily driven by the reintroduction of nationwide Covid-19 restrictions which was not built into our Scenario from November, and more robust letter volumes. We now believe that Royal Mail revenue growth for the full year 2020-21 will be significantly beyond the top end of the scenario presented in November of GBP380 million to GBP580 million."
I suspect the CWU and Royal Mail can make it work. CWU members have been providing a Call and Check service in Jersey for some time
https://www.callandcheck.com/news/uk-posties-to-call-and-check-on-vulnerable-and-isolated-brits/
To get into the FTSE100 the share price on the review date has to give a market capitalisation higher than the company in the FTSE which has the 90th largest market capitalisation.
The next review date is Tuesday 9th March and if all the existing FTS100 member’s shares were trading at today’s prices RMG would needed to be priced above £5 to get in.
Interesting an positive appointment. Simpson was a cost cutter/efficiency type, this buy seems to be more about product development and growth. The company needs to diversify at scale so hopefully this signals intent in that direction.
I’m pretty sure RM’s marginal cost for delivering packets from China is covered by what it is paid by China Post but it probably doesn’t make much of a margin.
As I said earlier the situation changes in a January 2021 because under new UPU rules RM will be able to charge 70% of its domestic tariff for delivering China Parcels if it wants to.
Given that RM won’t have many upstream costs this should be profitable but It will probably push a lot of work into the hands of companies that specialise in posting packages from China in the U.K. using bulk contracts.
To achieve a 1p per item delivery cost each package would have to weigh less than 5grammes. How many feathers with an address label on do you think are coming in from China ?