Royal Mail’s privatisation has been lost in the post for too long to get your hopes up right now. But if Royal Mail delivers first class half-year results tomorrow, it will pave the way for an initial public offering (IPO) next year.
The state postal giant, which employs 159,000 people in the UK, has achieved a remarkable transformation. Its annual operating profit after modernisation costs was £39m at the end of March 2011; it was £211m at the same point in 2012. Revenues increased four per cent – itself an accomplishment, as they had been in decline for the two preceding years – but evidently much of the improvement came from within.
In large part, this comes down to the transfer of the group’s pension liabilities to the government. The previous year a £292m deficit payment had to be made, but not any more. In April, the arrival of £28bn in Royal Mail pension assets gave a short-term boost to George Osborne’s national accounts, at the cost of heavy future liabilities to the taxpayer. For the Royal Mail, April’s handover was all upside.
But wiping the slate clean of past errors is not the whole story. The Royal Mail can only continue as a going concern if it uses this break to reinvigorate its business, and chief executive Moya Greene seems to be achieving just that. Crucially, she is overseeing a shift of focus from the declining letters market to the booming trade in parcels. It may not be quite true that what Royal Mail has lost on emails, it can gain on Amazon parcels but at its Christmas peak last year, Amazon UK shipped 2.1m units in a single day. The decline of the high street in the face of online retail may be a gloomy trend – but it has had the unexpected benefit of helping to sustain the growth of a Royal Mail fit for the 21st century.
PATENT PEACE PENDING
Thank heavens for a partial truce in the smartphone wars. There has been more than a trace of the schoolyard of late in the behaviour of the big players. Apple complied so grudgingly with a court order to admit on its website that Samsung didn’t copy its work that it had to be told to write out a second statement, one that didn’t quote the judge saying the Galaxy Tab wasn’t as cool.
HTC and Apple seem by contrast to have behaved like grown-ups, working out a licensing agreement and ending their courtroom fights.
Unfortunately, this is unlikely to be a sign of things to come. Apple-Samsung peace in our time will have to wait.
Instead this deal is more a sign of the relative weakness of HTC, which saw its sales fall 60 per cent year on year in October. Fighting these pitched legal battles is staggeringly expensive. HTC spent $300m just on acquiring S3 Graphics in 2011 to boost the patents in its armoury.
Apple didn’t have the fight all its own way with HTC, and it has recently seen its own shares at a five-month low. But the world’s most valuable company remains a formidable opponent. With billions at stake, neither Apple nor Samsung wants to back down, but there must be a better way.