2014 Report details for project: Royal Mail Sale of Shares

Project name: Royal Mail Sale of Shares - there is only one report for this project
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Organisation: BIS (D3) - see all reports for this organisation
Report year: 2014 (data is from Sept 2013)
Category: Transformation - see all reports for this category
Description: To sustain the universal postal service for the benefit of all users by securing Royal Mail’s future through the introduction of private sector capital and associated commercial disciplines. This will be achieved through: i) delivering a sale of shares of Royal Mail within this Parliament; ii) creating an employee share scheme that, as decided by Parliament, will lead to at least 10% of the company in employee ownership to drive strengthened employee engagement; iii) delivering a financial outcome for the taxpayer, which when considered in the context of the overarching policy objective, represents overall value for money.
DCA (RAG): Amber
DCA text: The Amber status reflects the view that the project was being managed effectively but significant external risks threatened successful completion - namely market conditions and industrial relations. Extensive monitoring and contingency planning were undertaken to manage potential risk materialisation, and a plan was put in place for decision-making and auditing of key decisions in the run-up to the sale of shares. Post-IPO the department has defined the division of responsibilities between the policy and shareholder teams and added measurement of benefits to the ongoing role of the policy team. The project closed in October 2013 and a lessons learned document has been developed which will include consideration of how the skills developed by the project team could be deployed on similar projects elsewhere within Shareholder Executive and more widely across Government.
Start date: 2012-04-01
End date: 2013-10-17
Schedule text: The Project start date is given as June 2011, which is when the Postal Services Act 2011 received Royal Assent. However, the sale of shares project was not launched until FY 12/13, following successful implementation of the other parts of the Act.
Baseline: £380.00m
Forecast: £350.00m
Variance: -7.89%
Variance text: Forecast costs of £350m include estimated cost of the employee free shares scheme (£300m) and execution costs (£50m). The final cost of the employee free shares scheme was £330m, with the variance due to HMG achieving a higher IPO share price than was originally estimated in the GMPP return. The final figure for IPO execution costs was £27.1m.
Whole Life Cost: £31.20m
WLCost text: Only the non-Government spend is classified as 'budgeted whole-life costs'. These are costs met by Royal Mail in relation to their own advisory work to prepare for the sale of shares, and also BIS adviser fees that were recovered from the company by the Department. The Government recovered £4.8m from Royal Mail to cover transaction-related adviser fees incurred in 2012/13 and 2013/14 (this is separate to the fees associated with execution of the IPO itself which are described above and were borne by the Department).
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Sourcefile: IPA_2014.csv

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Acknowledgement: GMPP data has been re-used under the Open Government Licence.