TIDMRMG
RNS Number : 7706Z
Royal Mail PLC
22 May 2019
Royal Mail plc
(Incorporated in England and Wales)
Company Number: 8680755
LSE Share Code: RMG
ISIN: GB00BDVZYZ77
LEI: 213800TCZZU84G8Z2M70
22 May 2019
ROYAL MAIL plc
CHANGES IN DISCLOSURES AND METRICS USED IN EXTERNAL
REPORTING
Royal Mail plc (RMG.L) is setting out details of changes to its
financial and non-financial disclosures and metrics used in
external reporting. The aim of the changes is to improve
transparency, accuracy, and understanding, and to eliminate
'underlying' movements. We will report our financial and
non-financial performance on this basis for the 2019-20 financial
year onwards.
Financial and non-financial disclosures and metrics for the full
year 2018-19 on an adjusted 52-week basis have been re-presented
with reconciliations provided where necessary.
1. UK letters and parcels revenue and volumes
Historically, we have used statistical sampling surveys of
stamped, metered and other prepaid revenue channels to allocate
revenue relating to letters and parcels. We are moving to a new
methodology which reduces our reliance on sampling by using Post
Office traffic data which has been tested for accuracy.
This change only impacts the allocation of revenue between
stamped letters and parcels, and some international export
products. Advertising and business letters (including metered
products), account parcels, and Parcelforce Worldwide revenues and
volumes are not affected by this change. Total UKPIL revenue
remains unchanged, but the allocation between letters and parcels
revenue and volumes changes as a result of using Post Office
traffic data rather than an estimate based on sampling.
The following table shows the impact on parcels and letters
volumes and revenue under the previous and new methodologies for
the 52 weeks ended March 2019. As a result of using Post Office
traffic data, GBP154 million of parcel revenue has been identified
as being letter revenue. Given the difference in average unit
revenue, this equates to a larger movement in letter volumes than
parcel volumes.
52 weeks to March 2019 As reported Movement New methodology
------------------------ ------------ --------- ----------------
UKPIL volumes (m)
Parcels
Royal Mail 1,224 (36) 1,188
Parcelforce 99 - 99
------------ --------- ----------------
Total parcel volume 1,323 (36) 1,287
------------------------ ------------ --------- ----------------
Letters
Addressed 10,266 230 10,496
Unaddressed 2,880 - 2,880
------------ --------- ----------------
Total letter volume 13,146 230 13,376
------------------------ ------------ --------- ----------------
UKPIL revenues (GBPm)
Total parcel revenue 3,692 (154) 3,538
Total letter revenue 3,903 154 4,057
------------ --------- ----------------
Total UKPIL revenue 7,595 - 7,595
------------------------ ------------ --------- ----------------
2. Definition of marketing mail revenue
The current definition of marketing mail includes specific
advertising mail products and an allocation of revenue from
stamped, metered and other prepaid revenue channels derived by
statistical sampling surveys. The inclusion of survey data can
create volatility and inaccuracies. In addition, the current
definition of marketing mail revenue includes non-volume related
revenue from data and redirections and the Address Management Unit
which are not linked to advertising activity.
In order to improve consistency, the definition of marketing
mail will be restricted to include only mail products which are
specifically designated as advertising, both addressed and
unaddressed. This has the impact of reducing the total amount of
revenue defined as marketing mail revenue as set out below:
52 weeks ended March 2016 2017 2018 2019
------------------------- ------ ------ ------ ------
As previously reported:
Revenue (GBPm) 1,176 1,087 1,101 994
Underlying movement Flat (8%) 1% (10%)
-------------------------
Revised definition:
Revenue (GBPm) 832 796 761 692
Underlying movement Flat (5%) (4%) (9%)
------------------------- ------ ------ ------ ------
3. Underlying change
In order to aid comparison with a prior period, we currently
present movements in revenue, costs, profits and margins on an
underlying basis. Underlying movements take into account:
differences in working days in UKPIL; movements in foreign
exchange; acquisitions, and other non-recurring or distorting
items. For volumes, underlying movements are adjusted for working
days in UKPIL, the impact of acquisitions and exclude political
parties' election mailings in letter volumes. All adjustments are
made to the prior period.
From the 2019-20 financial year onwards, no underlying
adjustments will be made to the prior period. Any factors having a
material impact on period on period comparisons will instead be
highlighted in the narrative to the results.
4. Treatment and presentation of transformation costs
From the 2019-20 financial year onwards, transformation costs,
comprising project costs and voluntary redundancy costs, will be
included within their relevant operating cost categories. Depending
on their nature, project costs will be allocated across people
costs and non-people costs, with the costs of voluntary redundancy
will be separately disclosed within people costs.
As a result, operating profit before transformation costs will
no longer be shown. Profit after transformation costs will be
replaced with operating profit. The impact of the presentational
changes for 2018-19 is shown below based on transformation costs of
GBP133 million, comprising GBP87 million of project costs and GBP46
million of voluntary redundancy costs. GLS results are unaffected
by this change.
52 weeks ended March 2019
UKPIL (GBPm) As reported Movement Represented
------------------------------ ------------ --------- ------------
Revenue
------------------------------ ------------ --------- ------------
Revenue 7,595 - 7,595
Costs
------------------------------ ------------ --------- ------------
People costs (4,975) (92) (5,067)
------------ --------- ------------
People costs (4,975) (46) (5,021)
Voluntary redundancy costs (46) (46)
------------------------------- --------- ------------
Non-people costs (2,288) (41) (2,329)
------------ ---------
Distribution & conveyance
costs (827) - (827)
Infrastructure costs (819) - (819)
Other operating costs (642) (41) (683)
------------------------------- --------- ------------
Total operating costs (7,263) (133) (7,396)
------------------------------- ------------ --------- ------------
Adjusted operating profit
before transformation costs 332 (133)
------------------------------- ------------ ---------
Transformation costs (133) 133
Adjusted operating profit 199 - 199
------------------------------- ------------ --------- ------------
Group (GBPm) As reported Movement Represented
------------------------------ ------------ --------- ------------
Revenue 10,444 - 10,444
Costs
------------------------------ ------------ --------- ------------
People costs (5,642) (92) (5,734)
------------ --------- ------------
People costs (5,642) (46) (5,688)
Voluntary redundancy costs (46) (46)
------------------------------- --------- ------------
Non-people costs (4,293) (41) (4,334)
------------ ---------
Distribution & conveyance
costs (2,591) - (2,591)
Infrastructure costs (988) - (988)
Other operating costs (714) (41) (755)
------------------------------- --------- ------------
Total operating costs (9,935) (133) (10,068)
------------------------------- ------------ --------- ------------
Adjusted operating profit
before transformation costs 509 (133)
------------------------------- ------------ ---------
Transformation costs (133) 133
Adjusted operating profit 376 - 376
------------------------------- ------------ --------- ------------
-S -
Enquiries:
Investor Relations
Catherine Nash
Investor Relations contact number: 020 7449 8183
Email: investorrelations@royalmail.com
Media Relations
Beth Longcroft
Phone: 07435 768 549
Email: beth.longcroft@royalmail.com
Royal Mail press office out of hours: 020 7449 8246
Company Secretary
Mark Amsden
Phone: 020 7449 8289
Email: cosec@royalmail.com
About Royal Mail plc
Royal Mail plc is the parent company of Royal Mail Group
Limited, the leading provider of postal and delivery services in
the UK and the UK's designated universal postal service provider.
UK Parcels, International & Letters (UKPIL) comprises the
company's UK and international parcels and letters delivery
businesses operating under the "Royal Mail" and "Parcelforce
Worldwide" brands. Through the Royal Mail Core Network, the company
delivers a one-price-goes-anywhere service on a range of parcels
and letters products. Royal Mail has the capability to deliver to
more than 30 million addresses in the UK, six days a week
(excluding UK public holidays). Parcelforce Worldwide operates a
separate UK network which collects and delivers express parcels.
Royal Mail also owns General Logistics Systems (GLS) which operates
one of the largest ground-based, deferred parcel delivery networks
in Europe.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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