Member Info for Talk2Much

I've spoken with Halifax. They said dividend payments will be within 10 working days, even though share payment was received on the day.

Equiniti paid the dividend on the day, no share funds yet though.

I'm not familiar with these forms, but note that Syquant are in at 3.71% based on a late one today... happy to be corrected if I'm reading things wrong

We know that MS have been increasing their holdings - and it's a fairly significant chunk that will affect DKs chance to get over the line. I'm only speculating (don't we all), but perhaps they've been increasing their position to leverage a higher bid. 10% is huge in the bigger picture...and they've been continuing to purchase even as the SP approaches the bid price. Either they are content with a penny or two profit per share or they have grander plans...

SM - I've just trawled through the offer document for confirmation:

"If the Offer becomes or is declared Unconditional, Bidco will keep the Offer open for acceptances for at least 14 days following the Unconditional Date."

In light of that I'm tempted to say no and see where the IIs go with it

In RM's own Q&A for staff with shares, it states that if the 75% is reached, people will get a further 14 days to decide to sell their shares. I'd like to think their answers are accurate, so if you've said "No" initially, you won't automatically be left with shares in a delisted company should the sale go ahead. Hope this helps.

There has been so much to read here and I'll post my thoughts without referring directly to posters because I can't remember who said what.

1) Where did they suddenly find £300 million for USO reform... They didn't suddenly find it - USO reform was always going to be worth a fortune to Royal Mail. What they have done is find a way to approach USO reform that doesn't need to involve any government intervention. For some reason Ofcom have decided that they don't want to intervene even though any government can distance itself from any changes and this is infuriating because it's one of the things holding the share price down and helping DK by IDS on the cheap.

2) Ofcom decisions aren't base solely on data provided by managers etc - RFID is used through the RMG network to identify what is and isn't moving and whether things are getting where they should be. Nobody can fudge that data. Also, if managers were providing false data, it's fair to say that it's one of the quickest ways to lose a job in RMG. Spot checks are done on offices and the state of the office is compared to what the manager has claimed, so any manager would be foolish to suggest their performance is better than the facts would show.

3) IA - are you seriously kidding me? Not in a lifetime after what every postie had to deal with through the last bout of IA... lost shed loads of money, got an ok deal for themselves but Ts&Cs changed for all new entrants, sick pay changes for all staff... only the truly militant would consider IA and they are in isolated pockets so the suggestion of IA is, imho, nonsense.

4) It would take far too long to cover off how people suggest that Ofcom believe the USO could be profitable. What they say is that at a given profit level the USO is sustainable - not that is it inherently profitable. They don't suggest how we could make it profitable, but given that the largest cost element is people who are spending more time moving and less time actually delivering, perhaps they think we should pay them less or make them work harder. Efficiency is a huge focus in offices, and whilst there are many things that people can flag up as ludicrously inefficient or a waste of money, those areas of wastage wouldn't help a great deal if they were removed entirely because of the huge overheads involved in letter delivery which is very difficult to make cost effective when you are frequently walking or driving past at least half of the properties you could deliver to.

I stand by what I've said before. With USO reform and the current leadership I see nothing but upside in IDS, which is why DK is so eager to get hold of us now. I'm not a fan of conspiracy theories, but if Ofcom won't make a decision on USO thus keeping the share price low, IDS goes to DK and the Government starts using external ownership as an excuse for any shortcomings.

An interesting article from the guardian for sure. You can read a lot in to how they are phrasing things but, as a cynic, I'd have to suggest that Ofcom saying they can't look at USO reform actually holds the perceived value of the shares lower and for longer, therefore making DKs bid look more reasonable to many investors.

As I've said before, I'm a long time holder and in no hurry to sell, but if I'm forced to sell I want it to be at a good price and I'm not convinced 370p is it.

I wish I knew what Ofcoms game is. RM have given them an option that distances the government from any decision, so why worry about a GE? Quoting purdah in the article sounds like clutching at straws for a reason not to take action when we don't know the timing of the GE. Ofcom need to grow a pair, take action and help IDS reveal its true long term value to the nation and the shareholders.

1) "Daniel Kretinsky – known as the Czech Sphinx – has until 5pm today to walk away or make a bid for Royal Mail’s parent company International Distributions Services (IDS)." From MSN.

So today's fairly significant dip towards the end suggests it may be all over, but surely it could just as easily be a swathe of profit taking. I have to confess I have been tempted to sell a chunk to buy back in if they went down on no announcement, but I'm not that much of a speculator.

Either way, I don't see anyone who's holding shares now being worse off in the long run whether DK is in or not. Far too many positives for RMG, and GLS looks to be getting ever stronger.

Thank you all for your replies... that's potentially quite comforting :)

With regards to the takeover, I have so much optimism about the business going forward (as a whole) that I'm not exactly sure what I'd prefer. Sure, being forced to take the cash for something that I view as along term hold with a view to supporting my retirement plan means I know exactly where I stand. But I believe DK is here because he also know the upside to IDS and is well aware that if he doesn't get in now, it will be much more expensive at the next attempt.

The business itself feels much more dynamic and progressive with the current leadership, and the thought put into the USO submission itself underlines how they WILL find a way forward.

If IDS board have positive financial results to post they'd do well to post them before the closing date for any further bid. The fact that nobody knows what they are likely to post is the only reason I can see for the share staying so far below an already bid price.

So if we could just stop the mud slinging that would be great. If you ignore each other's nonsense instead of rising to playground torment I'm sure that the useful input into this forum would be much easier to find.

What I am curious about, as Broch mentioned the shares brought through the tax saving scheme, is how these get dealt with under a takeover. Presumably, since they are conditional for 5 years and therefore subject to tax and national insurance, the benefits of buying them from gross pay would be almost entirely wiped out as I don't think the scheme is much more than 5 years old. I may have a personal interest in the answer to this query ;)

@IsleworthSpy @OliGarch

I appreciate I threw those number together pretty quickly and no doubt generalised, and I'm talking with knowledgeable people so I'm not going to pretend otherwise.

The 22k number was based around assumptions and because it would still be on 6 day week for 1c it could reduce that. We're not talking about that many job losses in any case because of vacancies, etc. but either way we all agree that there are definitely significant savings from the USO proposal. The genius of RMGs proposal to dodge the requirement of any Government intervention does tend to suggest that Ofcom might lean towards it as the path of least resistance.

@IsleworthSpy

Depending on your duty structure, it's usually 6 covering 5 so the reduction isn't so significant. The 1-in-4 (Saturdays off) duty structures which force part time jobs would drop the part-time cover, so a higher proportion of full-time roles may support staff retention which has been a major issue lately. If I have 42 duties on a 1-in-6 then I'm down to 35, a reduction of 7, and this is now equal to the number of deliveries I have. My call rate example suggested 1 extra route for every 5 based on the increase, so we're back to 42 deliveries but only every other day, so on any given day 21 deliveries. That clearly won't be a reduction of another 14 heads because, as you rightly point out, there needs to be a solution for small parcels and first class on the deliveries that aren't going out each day. I think the theory suggest that 4-6 walks could be covered by one person in this instance, so we could add 7 duties back in. 21 deliveries, 7 1c/parcels could mean a reduction of 14 roles in this example, or 33% of duties in delivery. There's a lot of duties that are less likely to be affected - parcel jobs, indoor jobs, collections, etc. so that 33% isn't going to be replicated across the business. However, if we assumed everywhere is on 1-in-6 across approximately 55k deliveries, you'd be potentially looking at circa 22k delivery jobs going just for starters.

There would be a lot of work involved in the transition and it would take time, but I'm sure our CEO and his team have considered plenty of options, given how well thought out the proposal was in the first place.

@IsleworthSpy "I posted on here a while back that RM said that delivery size would reduce because of the increase in call rate. Thereby increasing the number of routes. Not so, it would seem."

There's more than one thing in play here. Yes, we can expect call rates to increase, but only on delivery days for each route. If each route gets delivered only every other day then the call rate will increase, but only by between 20% to 40% (I've quickly put some numbers together to clarify my thinking further down). Unless the number of deliveries increases significantly, because each delivery only goes out only 3 days a week instead of six, the suggestion of " a net reduction in daily delivery routes of 7,000-9,000." does not seem unreasonable. I am certain that the people building the proposal did far more detailed modelling than I've done.

Call rate variation - if on Monday and Tuesday you hit 40% of your addresses then, theoretically in a worst case scenario where every Tuesday address didn't get a letter Monday, you'd have an 80% call rate, increased by 40%. Many addresses receive mail regularly and many addresses receive very little, so I'd probably expect an increase of around 25%. On your busy days you start at a higher call rate (could be 60%-70%), which also makes it more likely that letters on day 2 will be addressed to houses that already have mail waiting.

If an average delivery has 600 addresses and takes around 5 hours at a 65% call rate, an increase to 80% is only an extra 90 addresses. These are addresses that the postie would have walked or driven past on any given day, so it's only a driveway and letterbox. If half of these extra calls required a door knock, you're adding maybe an hour maximum. It gets more complicated at lower/higher call rates where the impact would be more/less significant respectively. Either way, this would very loosely suggest that for every 5 deliveries you'd need to add one, but only half of the resulting total are delivered to on any given day.

There would be an increase in parcel deliveries because they'd still need to find a way to deliver any first class for the deliveries that are not going out on any given day, but those volumes are relatively small so not a huge impact.

Now I remember why I called myself Talk2Much :)

And at this point my knowledge of Royal Mail is of no use and my lack of knowledge of the markets brings questions...

I remember reading from you guys on this very forum that if DK hits 30% he has to put a bid at his lowest price paid in the last 12 months, which would be easy wouldn't it?

Please forgive my ignorance. Is this the difference between a purchase and a hostile takeover?

The impact of any change to the USO will be very significant in terms of resource required.

Currently, because we deliver over 6 days but staff only work 5, we need to employ 6 people to cover 5 deliveries on some rotations, 4 people to cover 3 deliveries in others. These additional duties (day off covers) won't be needed if USO drops to a 5 day week. If it went to every other day (very unlikely indeed imho) you could probably expect a 40% reduction in resource requirement.

So, for every 1,000 full time deliveries we currently use 1,200 full time staff... 200 of these would effectively become surplus if the USO goes to 5 days. Sure, some of these may be vacancies so it won't be 200 redundancies, but it will be a reduction in overtime costs of people covering those vacancies.

Put simply, a USO reduction would be worth a fortune to RMG.

Are you sure this isn't just the road shows that all managers are attending region by region to understand the business strategy going forward? Already been to mine , no suggestion of redundancies there.

@Isle The maximum was 5% of salary so the highest paid COMs may have got a reasonable sum, but when the STIP (that can pay up to 12.5%) was zero this year it's more of a gesture from the business to appease a lot of managers who went through a lot last year. Imho.

@Isle - the bonuses I'm aware of are around 3% of salary, so less than a third of the usual bonus potential in June when no bonus was paid. I wouldn't honestly call them generous. More money for everyone next month too though, from the "extra funds"...

@OliGarch

So if the price of a 1C stamp needs to increase to £2 and 2C to £1.50 then that's what it is?

We're dealing with a very elastic product - price increases can significantly impact demand so the income doesn't improve as much as you would hope. Your best bet is reducing the overheads by perhaps relaxing the USO!

There are more and more products from RM that don't relate to the USO, which helps RM isolate the costs specific to it. The point has already been made that staff can only cover so much ground in a certain period if time. If you're covering the ground with one letter per household or five, the overheads are similar. Even when you don't have a letter for a household, you're still covering most of the ground except the trip to the letterbox. This is part of the reason RM struggle to reduce costs even when volumes fall. The people costs are a huge proportion of RM outgoings.