The Royal Mail’s pre-tax profits have more than doubled, jumping to £233m in the last six months, up from £94m for the same period last year.
It’s good news for the delivery service’s new shareholders, but could prove to be a headache for Vince Cable, who is set to face MPs on the Business, Innovations and Skills committee today to answer why the organisation was sold for so little.
Royal Mail was floated on the stock market in October with a value of £3.3bn, and since trading began, the shares have steadily risen, and the value of the business is now at around the £5.3bn mark.
Cable will have to answer why the valuation wasn’t higher, why the sale wasn’t delayed until the market was in better condition, and whether the bankers consulted on the valuation and sale, UBS and Goldman Sachs should receive £4m in outstanding fees.
Royal Mail CEO Moya Greene was understandably pleased with the latest figures, though concerned about union strike threats.
She said: “Our first half financial performance was in line with our expectations of delivering low single digit revenue growth and margin expansion.
“The combination of increasing EBITDA [earnings before interest, tax, depreciation and amortisation]and moderating investment spend underpins value creation for our shareholders.”
But added: “The threat of a strike in any business is a very big concern, and in our business it’s horrible. We are the distribution arm for much of online retail in the UK.”
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