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‘Investors may be in for short term gain when it comes to Royal Mail’

Wednesday 4th June 2014

At the end of last month, the recently-privatised Royal Mail announced its first financial results since its IPO in October 2013.
The highlights of the results included profit before tax jumping by 83 per cent, to £1.6bn, while net debt was down a hefty 39 per cent on the previous years’ figures.
Overall, revenue rose two per cent, to £9.5bn - in line with its expectations - and reported earnings per share were reported at 127p, from 21p a year earlier.
Commenting on the outcome for investors, Stuart Welch, CEO of TD Direct Investing, said: “There has been a shift in Royal Mail shares activity from TD customers over recent months. Our data shows that in April 2014, 53% of all our Royal Mail trading was sells, whilst 47% related to investors buying the stock. This is a real contrast with the initial frenzied activity last October, when 82% of Royal Mail trades were sales of shares, with just 18% being buys.”
“TD customers selling Royal Mail stock at TD has generally declined since the IPO, apart from a small spike in January 2014. Clearly the issue is still in the news; the debate around CEO salary as well as the National Audit Office claiming that £750m of taxpayers money was lost as a result of the under valuation of the deal means it remains front of mind for retail consumers and investors.”
“One of the more interesting questions initially being asked around the Royal Mail issue is whether initial investors were in it for short or long-term gain. It seems the former may be true.  Given the initial selling ratios we saw from our retail customers, and the fact that three months in, by January 2014, just 12% of Royal Mail's shares were held by the "priority investors" chosen by the Government it’s fair to assume many opted for early gains.”

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Editorial Contact Details - Conor Shilling
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