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Royal Mail (RMG) to deliver £400m shareholder payout

By Jenni Reid

10:55, 18 November 2021

A Royal Mail van parked on a street
Royal Mail has reported higher profits in the first half as domestic parcel volumes have rise – Photo: Holmes Garden Photos/Alamy Stock Photo

The UK’s Royal Mail has announced a major payday for shareholders through a £200m ($270) share buyback and £200m special dividend. 

It came as the postal service reported half-year results to 26 September, which showed its operating profit swinging from a £20m loss in the same period the year before to a £311m profit. 

Revenue was up 7.1% year on year to £6.07bn amid a sharp rise in domestic parcel volumes on both 2020 and pre-pandemic levels, which was enough to offset a decline in international parcel volumes and in letters. 

Parcel volumes and revenue were also up at its subsidiary General Logistics Systems (GLS), a European ground parcel delivery firm. 

Basic earnings per share rose from 1.4p to 27p. 

Stock rise

Royal Mail said the £200m ordinary share buyback would begin immediately, and that a £200m special dividend would be paid alongside an interim dividend of 6.7p per share. 

Royal Mail non-executive chair Keith Williams commented: “We now have more visibility on the strategic progress and performance of both [Royal Mail and GLS], and while there is more to do, the board has decided that we should re-examine our retained cash balance. 

“We believe it is appropriate now progressively to move towards a net nil cash position pre-IFRS 16. As a first step, we will return £400m of cash to shareholders, partly through a share buyback and partly from a special dividend.”


0.61 Price
-0.830% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.01168


37,726.00 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

Oil - Crude

79.49 Price
+1.570% 1D Chg, %
Long position overnight fee -0.0163%
Short position overnight fee -0.0056%
Overnight fee time 22:00 (UTC)
Spread 0.040


15,964.10 Price
+0.060% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8

The company, which was privatised in 2013, was the top riser on the FTSE 100 at 11:00 UTC, with its stock up more than 5% to 461.00p.

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Profit decline? 

The initial months of the pandemic proved costly for Royal Mail as it battled increased costs, a decline in letter sending and acute staff shortages. 

Like many businesses, it has reported continued hiring difficulties and labour shortages. 

However, it did feel the benefits of increased parcel volumes in the latter half of 2020, and full-year adjusted operating profit was £702m. 

It today said it expected that figure to be in the region of £500m for the full year 2021-2022.

“Whilst we are seeing upward pressure on costs in all of our markets, we maintain our outlook for the full year of low single-digit percentage revenue growth and around 8% operating profit margin,” said Williams.

Read more: Royal Mail share price forecast

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International Distributions Services PLC
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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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