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International Distribution Services

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"Royal Mail Limited" and "Royal Mail plc" redirect here. For the postal service, see Royal Mail.

International Distribution Services plc
Formerly
  • Royal Mail Limited (6–19 September 2013)
  • Royal Mail plc (19 September 2013 – 3 October 2022)
  • International Distributions Services plc (3 October 2022 – 10 May 2024)[1]
Company typePublic limited company
LSE: IDS
Industry
Founded2013
HeadquartersLondon, England
Key people
RevenueIncrease £12,679 million(2024)[2]
Increase £26 million (2024)[2]
Increase £54 million (2024)[2]
Number of employees
152,792 (2023)[3]
Divisions
Websiteinternationaldistributionservices.com

International Distribution Services plc (formerly Royal Mail Limited, Royal Mail plc and International Distributions Services plc) is a British company providing postal and courier services. The UK government initially retained a 30% stake in the company,[4] but sold its remaining shares in 2015.[5] It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.[6]

History

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Privatisation

[edit]

Following the 2010 general election, the new Business Secretary in the coalition government, Vince Cable, asked Richard Hooper CBE, the former deputy chairman of Ofcom, to expand on his previous report, to account for EU Directive 2008/6/EC which called for the postal sector to be fully open to competition by 31 December 2012.[7][8] Based on the Hooper Review Update, the government passed the Postal Services Act 2011. The act allowed for up to 90% of Royal Mail to be privatised, with at least 10% of shares to be held by Royal Mail employees.[9]

As part of the 2011 act, Postcomm was merged into the communications regulator Ofcom on 1 October 2011, with Ofcom introducing a new simplified set of regulations for postal services on 27 March 2012.[10] On 31 March 2012, the government took over the historic assets and liabilities of the Royal Mail pension scheme, relieving Royal Mail of its huge pensions deficit. On 1 April 2012, Post Office Limited became independent of Royal Mail Group, and was reorganised to become a subsidiary of Royal Mail Holdings,[11] with a separate management and board of directors.[12] A 10-year inter-business agreement was signed between the two companies to allow Post Offices to continue issuing stamps and handling letters and parcels for Royal Mail.[13] The act also contained the option for Post Office Ltd to become a mutual organisation in the future.[14]

In July 2013, Cable announced that Royal Mail was to be floated on the London Stock Exchange, and confirmed that postal staff would be entitled to free shares. Cable explained his position before the House of Commons:

The government's decision on the sale is practical, it is logical, it is a commercial decision designed to put Royal Mail's future on a long-term sustainable business. It is consistent with developments elsewhere in Europe where privatised operators in Austria, Germany and Belgium produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.[15]

Royal Mail's chief executive Moya Greene publicly supported Cable, stating that the sale would provide staff with "a meaningful stake in the company", while the public would be able to "invest in a great British institution".[15] On 12 September 2013, a six-week plan for the sale of at least half of the business was released to the public; the Communication Workers Union (CWU), representing over 100,000 Royal Mail employees, said that 96% of Royal Mail staff opposed the sell-off. A postal staff ballot in relation to a nationwide strike action was expected to take place in late September 2013.[16]

A new holding company, Royal Mail Limited, was established in September 2013, in anticipation of its initial public offering on the London Stock Exchange.[17]

Applications for members of the public to buy shares opened on 27 September 2013,[18] ahead of the company's listing on the London Stock Exchange on 15 October 2013. The government was expected to retain between a 37.8% and 49.9% holding in the company.[19] A report on 10 October 2013 revealed that around 700,000 applications for shares had been received by HM Government, more than seven times the amount that were available to the public. Cable stated: "The aim is to place the shares with long-term investors, we are absolutely confident that will happen." At the time of the report, Royal Mail staff continued to ballot regarding potential strike action.[20]

The initial public offering (IPO) price was set at 330p, and conditional trading in shares began on 11 October 2013, ahead of the full listing on 15 October 2013.[21] Following the IPO, 52.2% of Royal Mail had been sold to investors, with 10% given to employees for free. Due to the high demand for shares, an additional 7.8% was sold via an over-allotment arrangement on 8 November 2013. This left the government with a 30% stake in Royal Mail and £1.98bn raised from the sale of shares.[22]

The CWU confirmed on 13 October 2013 that strike action would occur in response to the privatisation of Royal Mail, with a possible start date of 23 October 2013.[23] A union source stated: "It is likely to be an all-out strike first, then rolling strikes in the run up to Christmas", while the CWU had dismissed the offer of an 8.6% rise over three years as "misleading and unacceptable".[24] Prior to the announcement of the strike ballot results on the afternoon of 16 October 2013, employees were offered £300 to cross the picket line if a nationwide postal strike occurred.[25] The CWU called off strike action on 30 October 2013, while negotiations progressed with Royal Mail's management.[26] The talks were extended on 13 November 2013, with the aim that an agreement be reached by both sides by 20 November 2013.[27] Royal Mail confirmed that both sides had reached a proposed settlement on 4 December,[28] and the CWU confirmed on 9 December 2013 that it would recommend the deal to its members.[29] On 6 February 2014, the CWU confirmed that Royal Mail staff had voted to accept the settlement.[30]

Post-privatisation

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Share prices rose by 38% on the first day of conditional trading, leading to accusations that the company had been undervalued.[21] Six months later, the market price was 58% more than the sale price, and peaked as high as 87%. Business Secretary Vince Cable defended the low sale price that was finalised, saying that the threat of strike action around the time of the sale meant it was a fair price in the circumstances,[31] following questioning from the House of Commons Business Committee in late April 2014. On behalf of both himself and Business Minister Michael Fallon, Cable stated before the committee: "We don't apologise for it and we don't regret it."[31]

Cable was required to respond to the sale price issue again on 11 July 2014 after a report was published on that date by the Business, Innovation and Skills (BIS) Committee. Chaired by MP Adrian Bailey, the report concluded:

It is clear that the Government met its objectives in terms of delivering a privatised Royal Mail with an employee share scheme. However, it is not clear whether value for money was achieved and whether Ministers obtained the appropriate return to the taxpayer. We agree with the National Audit Office that the Government met its primary objective. On the basis of the performance of the share price to date, it appears that the taxpayer has missed out on significant value.[32]

The report also concluded that the "Government over-emphasised the risk" in regard to the industrial relations between the government and the CWU, with the BIS Committee referring to the Royal Mail share price before, during and after the finalisation of the pay deal with the union.[32] During the presentation of the report, Bailey referred to the underpinning factors of "fear of failure and poor quality advice", and warned that British taxpayers could sustain further losses in the future due to the inclusion of Royal Mail's 'surplus' assets as part of "the most significant privatisation in years". The BIS Committee called on the UK government to publish a list of the preferred investors involved in the sale, including the details of those investors who sold their shareholding.[33] Billy Hayes, general secretary of the CWU, also responded to the BIS report: "The BIS select committee's damning report published today shows the extent of the government's incompetence in the privatisation of Royal Mail."[34]

In 2014, the London Assembly voted to call for the renationalisation of Royal Mail.[35][36]

On 4 June 2015, the Chancellor of the Exchequer, George Osborne, announced that the government would sell its remaining 30% stake.[37] A 15% stake was subsequently sold to investors on 11 June 2015, raising £750m, with a further 1% passed to the company's employees.[38] The government completed the disposal of its shareholding on 12 October 2015, when a 13% stake was sold for £591m and another 1% was given to employees. In total the government raised £3.3bn from the full privatisation of Royal Mail.[5]

As of 13 January 2020, Royal Mail shares are trading below the issue price, as they did throughout all of 2019.[39]

On 1 June 2022, it was announced that the company would be demoted from the FTSE 100, and became a constituent of the FTSE 250 Index on 20 June.[40]

In July 2022, it was announced that the holding company responsible for both Royal Mail and GLS would change its name to International Distributions Services. The name change was filed with Companies House on 28 September 2022 and registered on 3 October.[41]

On 31 October 2022, the Secretary of State for Business, Kwasi Kwarteng, approved a proposal from a Czech billionaire, Daniel Křetínský, to increase the shareholding of Vesa Equity Investment Sarl (a company which Křetínský controls) in International Distributions Services to more than 25%.[42]

In 2024, International Distributions Services entered into a multi-year agreement with PayPoint PLC whereby IDS customers will be able to receive parcels to 5,000 Collect+ shops in various locations across the UK, as well as accessing a range of services through PayPoint's retail partners.[43]

In April 2024, EP Group (another company controlled by Daniel Křetínský) offered to buy the 72.5% shareholding in the company that Vesa Equity Investment Sarl does not already own.[44]

On 10 May 2024, the company changed its name from International Distributions Services to International Distribution Services.[1] On 28 May 2024, the board of International Distribution Services agreed to a £5bn takeover offer from Daniel Křetínský. The offer included commitments to retain the Royal Mail name, brand, UK headquarters, and employee benefits, while being subject to scrutiny under the National Security and Investment Act. The deal will be voted on by shareholders at IDS's annual general meeting in September, with potential government intervention due to national security concerns.[45]

Operations

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The main business segments are: UK Parcels, International, and Letters (UKPIL), General Logistics Systems (GLS) and Group. UKPIL includes the parcel and letter delivery divisions (Royal Mail and Parcelforce Worldwide brands) in the UK and overseas, while GLS operates a ground parcel delivery network in Europe, the western US and Canada.[46]

References

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  1. ^ a b "International Distribution Services PLC overview - Find and update company information - GOV.UK". Companies House. 6 September 2013. Retrieved 14 January 2024.
  2. ^ a b c "Annual Results 2023/24" (PDF). International Distribution Services. Retrieved 25 May 2024.
  3. ^ "Annual Report 2022/23" (PDF). International Distributions Services. Retrieved 13 February 2024.
  4. ^ "Royal Mail Rise 'As Expected', Say Ministers". Sky News. 25 November 2013. Retrieved 11 February 2014.
  5. ^ a b "Royal Mail: Final stake sale raises £591m". BBC News. 13 October 2015. Retrieved 15 October 2015.
  6. ^ "FTSE UK Index Series Annual Review June 2023 – Amendment". FTSE Russell. 6 June 2023. Retrieved 16 June 2023.
  7. ^ "The Establishment of an Internal Postal Market". Europa (web portal). 7 February 1994. Retrieved 7 June 2015.
  8. ^ "TNT Post UK Limited: Response to Consultation End-to-end competition in the postal sector: Draft guidance on Ofcom's approach" (PDF). Ofcom. 8 January 2013. Archived from the original (PDF) on 24 February 2015. Retrieved 7 June 2015.
  9. ^ "Postal Services Act 2011". Legislation.gov.uk. 13 June 2011. Retrieved 23 June 2011.
  10. ^ "Securing the Universal Postal Service – Decision on the new regulatory framework". Ofcom. 27 March 2012. Archived from the original on 6 April 2012. Retrieved 4 April 2012.
  11. ^ "Ensuring the future of the universal postal service and Post Office network services". Gov.uk. 10 July 2012. Retrieved 26 August 2013.
  12. ^ Post Office Limited Archived 21 August 2012 at the Wayback Machine Department of Business, Innovation and Skills. Retrieved 8 December 2012
  13. ^ Hope, Christopher (24 January 2012). "Fear of mass post office closures averted as Royal Mail agrees 10-year lifeline". The Daily Telegraph. London.
  14. ^ "Royal Mail privatisation bill unveiled by Vince Cable". BBC News Online. British Broadcasting Corporation. 13 October 2010. Archived from the original on 16 February 2019. Retrieved 25 May 2011.
  15. ^ a b Jennifer Rankin (10 July 2013). "Royal Mail privatisation will not affect postal delivery – Vince Cable". The Guardian. Retrieved 11 July 2013.
  16. ^ Neate, Rupert (12 September 2013). "Royal Mail staff set to strike after ministers unveil plans for £3bn sell-off". The Guardian. Retrieved 13 September 2013.
  17. ^ Peston, Robert (27 September 2013). "Royal Mail sold today". BBC News. Retrieved 1 October 2013.
  18. ^ Peston, Robert (27 September 2013). "Royal Mail sold today". BBC News. Retrieved 1 October 2013.
  19. ^ "Royal Mail shares to be sold before possible strikes". BBC News. 27 October 2013. Retrieved 1 October 2013.
  20. ^ Rupert Neate (10 October 2013). "Royal Mail sale: 700,000 apply for shares". The Guardian. Retrieved 10 October 2013.
  21. ^ a b "Royal Mail shares jump sharply on market debut". BBC News. 11 October 2013. Retrieved 11 October 2013.
  22. ^ "Privatisation of Royal Mail plc" (PDF). Retrieved 11 February 2014.
  23. ^ "Royal Mail to deliver IPO in 2013". Financial Times. 25 March 2012. Archived from the original on 10 December 2022. Retrieved 4 April 2012.
  24. ^ Neate, Rupert (13 October 2013). "Postal workers push ahead with strike plans over pay and conditions". The Guardian. Retrieved 14 October 2013.
  25. ^ Rupert Neate (15 October 2013). "Royal Mail offers £300 to postal workers to cross picket lines". The Guardian. Retrieved 16 October 2013.
  26. ^ Topham, Gwyn (30 October 2013). "Royal Mail workers call off one-day strike after talks progress". The Guardian. Retrieved 18 November 2013.
  27. ^ Maidment, Neil (13 November 2013). "Royal Mail and CWU extend deadline for pay agreement". Reuters. Archived from the original on 17 August 2016. Retrieved 18 November 2013.
  28. ^ "Royal Mail and Communication Workers Union 'reach deal'". BBC News. 4 December 2013. Retrieved 16 December 2013.
  29. ^ "Royal Mail workers' union backs a 'landmark' deal". BBC News. 9 December 2013. Retrieved 16 December 2013.
  30. ^ "Royal Mail staff accept 'ground-breaking' pay deal". BBC News. 6 February 2014.
  31. ^ a b "Vince Cable defends Royal Mail sale price to MPs". BBC News. 29 April 2014. Retrieved 13 July 2014.
  32. ^ a b "Royal Mail Privatisation – Business, Innovation and Skills Committee Contents". Parliament of the United Kingdom. 11 July 2014. Retrieved 13 July 2014.
  33. ^ "Taxpayers lost out on Royal Mail sale, says BIS Committee". Parliament of the United Kingdom. 11 July 2014. Retrieved 13 July 2014.
  34. ^ Sean Farrell (11 July 2014). "Royal Mail sale underpriced by £1bn, says scathing select committee report". The Guardian. Retrieved 13 July 2014.
  35. ^ "Postal Services Across London". London.gov.uk. 16 July 2014. Archived from the original on 3 July 2015. Retrieved 7 June 2015.
  36. ^ Conrad Landin (18 July 2014). "London Assembly calls for Royal Mail renationalisation". Morning Star. Retrieved 7 June 2015.
  37. ^ "George Osborne announces Royal Mail stake sale". BBC News. Retrieved 6 June 2015.
  38. ^ "Government sells 15% of Royal Mail at £5 a share". Guardian. 11 June 2015. Retrieved 15 October 2015.
  39. ^ "ROYAL MAIL PLC ORD 1P (RMG.L) Stock Price, Quote, History & News". finance.yahoo.com.
  40. ^ Wearden, Graeme (2 June 2022). "ITV and Royal Mail to drop out of FTSE 100 in reshuffle". The Guardian. Retrieved 2 June 2022.
  41. ^ "NM04 notice for Royal Mail plc". 3 October 2022. Retrieved 25 October 2022.
  42. ^ "UK will not take action over Czech mogul's plan to raise Royal Mail stake". Devdiscourse. 16 September 2020. Retrieved 31 October 2022.
  43. ^ "PayPoint signs multi-year partnership with Royal Mail". Interactive Investors. Archived from the original on 14 March 2024. Retrieved 13 March 2024.
  44. ^ "Royal Mail owner International Distribution Services rejects Daniel Kretinsky takeover but another bid is being explored". Sky News. 17 April 2024. Retrieved 26 April 2024.
  45. ^ "Royal Mail: Owners agree to £5bn takeover offer by billionaire". BBC News. 28 May 2024. Retrieved 30 May 2024.
  46. ^ "International Distributions Services". Forbes. Archived from the original on 14 March 2024. Retrieved 13 March 2024.
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