Royal Mail share price: Company sale could lead to Post Office closures

Staff at privatised Royal Mail have to wait until next year for full share allocation

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Royal Mail share price: Company sale could lead to Post Office closures

iNVEZZ.com, Friday, November 8: The controversial privatisation of Royal Mail plc (LON:RMG) could lead to the closure of hundreds of Post Offices ‘by stealth’, a new report by the Fabian Society has warned.

According to the left-leaning British think-tank, there is an increased likelihood that the Royal Mail will want to renegotiate its contracts with the Post Office following the privatisation of the postal service last month, heraldscotland.com has reported this week.

The Post Office, which oversees the 12,000 post office branches across the country, was officially separated from Royal Mail last year, but the two companies remain closely intertwined. The business accounts for a third of the Post Office's revenue, but if mail revenues decline, that could be cut by over a fifth, the report said.

Natan Doron, senior researcher at the Fabian Society, said that the Post Office relies heavily on its contract with Royal Mail and any “renegotiation puts the network of post offices that people rely on in serious jeopardy.” He opined that the UK government must keep its stake in Royal Mail to provide future administrations the opportunity to buy back enough shares to regain control. "The Government must retain its remaining stake its Failure to do so could result in hundreds of local post office closures by stealth,” the researcher added.

Royal Mail employees have to wait until April 2014 for full allocation of shares

Royal Mail staff will not receive their full free share allocation until April next year because of the surge in the Royal Mail share price, employeebenefits.co.uk has reported.

Under calculations based on the listing price of 330p per share, the 150,000 eligible full-time staff at Royal Mail were due to receive some 725 free shares immediately. Part-time workers were eligible for a smaller allocation of shares.

Business secretary Vince Cable had confirmed that staff would be given 10 percent of the company’s shares after its flotation on October 11, but the surge in the Royal Mail share price since that date meant that the 10 percent share offer had to be amended.

This is because staff participating in a tax-approved share incentive plan, the scheme the postal workers are using as a home for free shares, are only allowed a maximum annual investment of £3,000 worth of free shares. The steep rise in the Royal Mail share price has put the value of the employees’ free shares above that annual limit by around £1,000. Thus, Royal Mail employees will receive 613 shares in the current tax year, instead of the allocated 725, with the remaining 112 shares to be received after April next year.

Cut-price share dealing scheme offered by Equiniti ends

A cut-price share dealing service for Royal Mail shareholders offered by Equiniti, the government’s stockbroker, ends today. So far, shareholders who bought Royal Mail shares through the official government website, could sell their shares for a special price of 0.75 percent of the value of the shares, subject to a £7.50 minimum, using an automated telephone dealing system available until 1pm today or by sending dealing instructions via post by the close of business yesterday.

After these service are withdrawn, shareholders will still be able to deal online and over the phone. Online dealing charges are 1 percent with a £17.50 minimum for holders of electronic or "nominee" accounts and 1.5 percent with a £45 minimum for those with a share certificate. Telephone dealing charges are 1pc with a minimum of £25 for nominee account holders and 1.5 percent with a £50 minimum for certificate holders.

As of 13:16 UTC buy Royal Mail shares at 557.00p

As of 13:16 UTC sell Royal Mail shares at 554.50p

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