royal mail plc
royal mail plc
annual report and financial statements  
201314
royal mail plc annual report and financial statements 201314 to find out more 
wwwroyalmailgroupcom information key
case studies
this icon is used throughout 
the document to indicate 
reporting against a key 
performance indicator kpi
strategic report
who we are 02
financial and business performance highlights 04
chairman’s statement 06
chief executive officer’s review 08
market overview 13
our business model 14
our strategy 16
key performance indicators 18
uk parcels international  letters ukpil 20
general logistics systems gls 22
financial review 23
business risks 29
corporate responsibility 32
governance
our board of directors 38
chief executive’s committee 41
directors’ report 44
corporate governance report 47
directors remuneration report 58
financial statements
consolidated income statement 71
consolidated statement of comprehensive income 72
consolidated statement of cash flows 73
consolidated balance sheet 74
consolidated statement of changes in equity 75
notes to the consolidated financial statements 77
significant accounting policies 119
group five year summary unaudited 126
statement of directors’ responsibilities in respect of 
the group financial statements
127
independent auditor’s report to the members of 
royal mail plc
128
royal mail plc – parent company financial statements 131
other information
shareholder information 136
forward looking statements 137
01
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information royal mail is the uk’s designated universal postal 
service provider supporting customers businesses 
and communities across the country we are the only 
company that has the capability to deliver a ‘one
pricegoesanywhere’ sixdaysaweek service on a 
range of letters and parcels to more than 29 million 
addresses across the uk general logistics systems 
gls our european parcels business operates one 
of the largest groundbased deferred parcel delivery 
networks in europe
in october 2013 royal mail successfully 
floated on the london stock exchange and 
was subsequently admitted into the 
ftse 100 more than 700000 members of 
the public bought shares in royal mail these 
investors were joined by the overwhelming 
majority of our people in the uk who in total 
received free a ten per cent stake in our 
company in addition to our employees’ free 
shares approximately 15000 royal mail 
employees chose to purchase shares in the 
company through the employee priority offer 
through this alignment has been created 
between the interests of shareholders 
and employees
our employees
we employ more than 162000
1
 people 
across our group uk parcels international  
letters ukpil employs approximately 
148000 people across the uk gls employs 
approximately 14000 people in a range of 
frontline operational and support roles
our transformation
royal mail is undertaking one of the biggest 
industrial transformations in the uk in recent 
history the uk like many other countries 
is experiencing an ongoing decline in letter 
volumes we are focused on leveraging 
an increasing number of parcels which in 
turn is driven by the rise of eretailing 
the parcels market is very competitive 
we need to be more flexible and efficient to 
meet the needs of our customers we are 
employing our strong brand and are well 
placed to introduce new products 
and services in order to sustain the 
universal service
our performance
five year group revenue £m
reported
2
52 weeks
2014
adjusted  
52 weeks  
2013
3 
 
adjusted  
52 weeks  
2012
4 
 
adjusted  
52 weeks  
2011
4 
 
adjusted  
52 weeks  
2010
4 
 
9456 9146 8764 8415 8547
five year group operating profit after transformation costs £m
reported
2
52 weeks
2014
adjusted  
52 weeks  
2013
3 
 
adjusted  
52 weeks  
2012
4 
 
adjusted  
52 weeks  
2011
4 
 
adjusted  
52 weeks  
2010
4 
 
430 403 152 18 147
five year group free cash inflowoutflow £m
reported
2
52 weeks
2014
adjusted  
52 weeks  
2013
3 
 
adjusted  
52 weeks  
2012
4 
 
adjusted  
52 weeks  
2011
4 
 
adjusted  
52 weeks  
2010
4 
 
398 334 154 246 390
revenue by business and market £m 
reported 52 weeks 2014
business 
segment
market parcels
letters 
 other 
mail
marketing 
mail total
ukpil 3162 3514 1111 7787
gls 1651 – – 1651
other – 18 – 18
group 4813 3532 1111 9456
percentage of group revenue by  
market reported 52 weeks 2014
parcels 51
letters  other mail 37
marketing mail 12
group 100
under the postal services act 2011 the ‘act’ 
ofcom is the regulator for postal services in 
the uk ofcom’s primary regulatory duty for 
postal services is to secure the provision of 
the universal postal service ofcom has 
designated royal mail as the universal postal 
service provider subject to the special 
administration regime and as set out in 
the act this designation is not timelimited
1 
excluding uk partially owned subsidiaries 
2 
reported – prepared in accordance with international financial reporting standards ifrss
3 
adjusted – reported 201213 results adjusted to exclude the consolidation of post office limited pol up to 1 april 2012 and the 53rd week’s additional revenue and costs in 
addition £32 million pol separation costs taken directly to equity in the reported basis were taken through the income statement in the adjusted basis see note 1 ‘basis of 
preparation’ for further details
4 
adjusted – royal mail group results prepared under ifrss excluding pol
who we are
02
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 ukpil
ukpil comprises royal mail’s core uk and 
international parcels and letter delivery 
businesses under the ‘royal mail’ and 
‘parcelforce worldwide’ brands royal mail’s 
network is unparalleled in the uk in its scale 
and scope it supports the provision of services 
for the collection sorting and delivery of 
parcels and letters by royal mail this includes 
those services royal mail provides as the uk’s 
designated universal postal service provider 
parcelforce worldwide is a leading provider of 
express parcel services
see page 20 for further details of ukpil’s 
performance
gls
gls is the group’s european parcels business 
it operates one of the largest groundbased 
deferred
6
 parcel delivery networks in europe 
across europe the gls network covers 
37 countries and nation states through a 
combination of whollyowned and partner 
companies as our gateway to europe gls 
is a strategically important part of 
royal mail group
see page 22 for further details of gls’ 
performance
our operations and networks
the group operates through uk parcels 
international  letters and general  
logistics systems
ukpil 
c148000  
employees
8  
regional distribution centres
40  
mail centres
c1400  
delivery offices
c45000  
vehicles
53  
parcelforce worldwide 
depots
gls 
c14000  
employees
39  
european hubs
c700
5
  
depots
c18000  
subcontractor  
vehicles
5 
 gls and partners 
6 
 the least timesensitive type of delivery
key
ukpil
gls
gls network partners
03
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information 1 
 throughout this document growthdecline rates and margins are stated on a likeforlike basis unless otherwise indicated likeforlike changes in revenue and costs and 
likeforlike margins are calculated after adjusting for movements in foreign exchange in gls’ revenue and costs and working days in ukpil revenue for volumes likeforlike 
movements are adjusted for working days in ukpil 
£m movement compared with prior year relating to
foreign exchange working days total
revenue 52 36 88
costs 48 na 48
the cumulative average translation rates for the full year ended 30 march 2014 were £1  €1185 compared with £1  €1226 for the year ended 31 march 2013
financial and business  
performance highlights
financial highlights
group
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013 change
revenue £m
1
9456 9146 2
operating profit before transformation costs £m 671 598
transformation costs £m 241 195
operating profit after transformation costs £m 430 403
operating profit margin after transformation costs 
– likeforlike 42 44 20bps
– reported 45 44
profit before taxation £m
– excluding specific items 363 304
– reported 1666 283
notional earnings per share pence
– excluding specific items 263 210
– reported 1277 525
ebitda before transformation costs £m 942 915
free cash flow £m 398 334 £64m
net debt £m 555 906 £351m
recommended final dividend per share pence 133
business unit
revenue 
operating profit after 
transformation costs
£m
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
likeforlike 
change
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
uk parcels international  letters 
ukpil
7787 7633 2 309 294
general logistics systems gls
1651 1498 7 108 101
other businesses
18 15 nm 13 8
group
9456 9146 2 430 403
revenue and volume
• group revenue increased by two per cent 
due to parcel revenue growth in both ukpil 
and gls parcels are the largest contributor 
to group revenue accounting for 
51 per cent
• ukpil revenue was £7787 million up two 
per cent ukpil parcel revenue increased 
by seven per cent as expected parcel 
volumes 1068 million items were flat 
compared with 201213
• ukpil letter revenue including marketing 
mail declined to £4625 million a two per 
cent reduction the four per cent decline in 
addressed letter volumes for the full year 
was at the better end of our forecast range 
of four to six per cent per annum marketing 
mail revenue part of letter revenue was 
£1111 million
• gls revenue was £1651 million up seven 
per cent volumes increased six per cent 
with growth in both domestic and 
international volumes
profit and margins 
• group operating profit before transformation 
costs grew to £671 million
• transformation costs of £241 million for 
the year include a provision of £104 million 
in relation to the management reorganisation 
programme announced on 25 march 2014 
which will be implemented in 201415
• group operating profit after transformation 
costs increased to £430 million the 
operating profit margin reduced from 
44 per cent to 42 per cent as a result  
of the provision for the management 
reorganisation programme
• ukpil generated operating profit after 
transformation costs of £309 million the 
operating profit margin decreased from 
39 per cent to 35 per cent again as a 
result of the provision for the management 
reorganisation programme
• gls operating profit was £108 million 
the operating profit margin decreased 
from 67 per cent to 65 per cent due to 
the full year effect of further increases 
in subcontractor rates in germany 
04
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 2 
 as the universal service provider royal mail is required to provide access at inward mail centres for final mile deliveries
3 
 the reported business is a subset of ukpil including network access and excluding parcelforce worldwide and the royal mail property unit the reported business as defined by 
ofcom is the entity which provides the universal service and takes account of all the costs of both the regulated and unregulated products that depend on the core universal 
service activities
• profit before taxation excluding specific 
items of £363 million reflects the trading 
performance of the group accounting 
standards require us to include a onetime 
noncash benefit of £1350 million as a 
result of the pensions reform in reported 
profit before taxation and reported notional 
earnings per share
notional earnings per share eps
• notional eps excluding specific items was 
263 pence
cash flow and balance sheet
• ebitda before transformation costs 
grew to £942 million due to improved 
trading performance 
• net cash investment of £581 million 
represents £617 million investment after 
cash from asset disposals of £36 million 
• free cash flow increased to £398 million 
this has driven a reduction in net debt to 
£555 million 
dividends
• as previously indicated the board has 
recommended a final dividend of 133 pence 
per share subject to shareholder approval at 
the annual general meeting to be held on 
24 july 2014 
transformation and cost control
collections processing and delivery 
productivity improved by 17 per cent 2013 
17 per cent as we reduced the number of 
frontline hours at a faster rate than the 
reduction in the level of workload 
 see kpis pages 18 to 19
• eight mail centres closed this financial year 
taking the total number of mail centres 
remaining to 40 we have completed or 
commenced modernisation in 94 per cent 
of our delivery offices
• tight cost control meant nonpeople costs 
in ukpil reduced by three per cent
regulation
• the ofcom investigation into changes 
to access
2
 pricing puts this commercial 
response to changing market conditions 
on hold
• based on our estimates of the impact of 
tnt post uk’s publiclystated plans direct 
delivery could reduce royal mail revenue by 
over £200 million in 201718 see pages 9 
to 11 for more information
• with our proposed access price changes 
suspended and unfettered direct delivery 
rollout there is a reasonable prospect that 
ofcom’s indicative ebit margin range of 
between five and ten per cent for royal 
mail’s reported business
3
 may never 
sustainably be achieved
• we are preparing a regulatory submission 
calling on ofcom to take action now and 
carry out a full review of direct delivery 
summary outlook 
• we are facing increasing challenges in the 
parcels and letters markets in the uk 
however our key value drivers of single 
digit revenue growth margin expansion and 
underlying free cash flow growth remain 
the objectives for the group for 201415
• the board’s intention remains to pursue a 
progressive dividend policy having regard 
to the normalised earnings progression of 
the group
05
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information chairman’s statement
last year was a year of major achievement for  
royal mail with a good financial and operational 
performance agreement in principle on a new  
industrial relations framework with the cwu and  
a successful flotation on the london stock exchange
an important year
more than 700000 members of the public 
bought shares in royal mail the largest single 
extension of private share ownership in the 
uk for some time i would like to welcome all 
of our new shareholders i am delighted to say 
they were joined by the overwhelming 
majority of our employees in the uk who in 
total received free a ten per cent stake in our 
company approximately 15000 employees 
also chose to buy shares through the 
employee priority offer we are pleased our 
shares are so widely held and that alignment 
has been created between the interests of 
shareholders and employees 
transforming our business
our strategy is delivering as outlined by our 
ceo in her review on page 8 the initial phase 
of royal mail’s comprehensive transformation 
programme across our uk operations is 
largely complete the vast majority of letters 
are now sorted and sequenced automatically 
we have introduced new more flexible 
delivery methods we have increased 
efficiency and can handle an increasing 
number of parcels we continue to have a 
strong operational link to post office limited 
and they are our retail partner gls’ track 
record of expertise and innovation provides a 
framework for best practice behaviours across 
the group
we have agreed a new industrial relations 
framework with the communication workers’ 
union cwu it will provide a new way of 
working together helping to provide industrial 
stability as we seek to transform our business 
royal mail is changing expansion in 
eretailing in the uk and across europe is 
continuing apace while addressed letter 
volumes in the uk continue to decline we are 
increasingly a parcels delivery company i am 
confident that we will succeed in the 
continuing transformation of our company
our contribution to uk life
we are proud to be the designated provider of 
the universal service our contribution to the 
uk is significant for the 201314 financial 
year the centre for economics and business 
research estimated we made the seventh 
largest contribution to the uk economy of all 
uk corporations we had a total economic 
impact of more than £105 billion made up of 
direct and indirect contributions to the wider 
economy this equates to about 079 per cent 
of uk gdp 
royal mail’s employees make a substantial 
contribution to charitable organisations 
royal mail holds the guinness world record 
for the number of charities supported through 
payroll giving – over 975 charities royal mail 
employees have given an incredible 
£50 million through the scheme since 1989 
they should be very proud
we continue to support the british postal 
museum and archive bpma in its 
programme to upgrade and expand its role as 
the curator and exhibitor of the uk’s postal 
heritage i previously reported on the support 
we have provided to this programme through 
funding and gifting its new exhibition centre 
calthorpe house due to open in 2016 
through its fundraising campaign for  
a new postal museum and mail rail project 
the bpma has already secured £217 million 
from a wide range of supporters who  
have provided a firm foundation to this 
exciting project
donald brydon cbe
chairman
we are reporting a 
good financial and 
operational 
performance
06
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 safety
the safety of our employees is always our first 
priority the board has overseen a continued 
reduction in lost time accidents we continue 
to focus on initiatives to improve safety on the 
road as outlined in our corporate 
responsibility section the antisocial 
behaviour crime and policing act 2014 was 
passed on 13 march 2014 it is a significant 
change to the law in relation to dangerous 
dogs introducing tougher sentences and 
making dog owners liable for attacks on 
private property in england and wales for 
our part if there is a risk from a dog or any 
other animal we will suspend delivery until we 
can deliver the mail safely we will also be 
seeking to ensure prosecution of the owners 
of dogs in the most serious cases
our shareholders
we previously communicated our intention to 
pay a dividend of £133 million in july 2014 
this amount is approximately twothirds of 
the notional fullyear dividend of £200 million 
that the directors believe they would have 
proposed if the company had been listed 
throughout this financial year on the basis 
of our performance the board and i are 
delighted to announce that the board has 
recommended the payment of a final dividend 
of 133 pence per share on 31 july 2014 
subject to approval by our shareholders at our 
annual general meeting agm on 24 july 
2014 
board evaluation process
the board and i recognise the importance of 
reviewing board practices and performance 
on a regular basis a performance evaluation 
of the board its committees and individual 
directors takes place on an annual basis with 
the support of the company secretary this 
year’s evaluation was completed during may 
2013 and objectives were set for the board 
based on the outcomes of the evaluation 
following privatisation a more detailed 
evaluation of the board involving the use of 
an external board evaluator will take place 
during 2014 a performance evaluation of the 
audit  risk committee was conducted by the 
chairman of the committee the committees 
have also undertaken a review of their terms 
of reference and updates have been made to 
comply with best practice more information 
can be found in the corporate governance 
section pages 47 to 57
thank you
we announced in january 2014 that 
mark higson has decided to stand down 
as managing director operations and 
modernisation at this year’s agm i would 
like to take this opportunity to thank mark 
for his huge contribution to the initial phase 
of our transformation programme
in april 2014 after the reporting period we 
confirmed jan babiak’s resignation from the 
board jan has made a very valuable 
contribution to royal mail during an important 
time for our company the board and i would 
like to thank her for her support and counsel
the flotation of royal mail was never a 
foregone conclusion it took much hard work 
inside and outside royal mail to put the 
company in a position to access external 
capital and ready itself for plc status the 
continued success of royal mail including  
the recent privatisation is testament to the 
significant contribution of moya greene  
and her team
i would like to thank all those involved 
in facilitating our flotation most importantly 
i would like to thank all of our people for 
contributing to royal mail’s success this year
donald brydon cbe
chairman 
6 june 2014
07
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information moya greene
chief executive officer
our vision is to be 
recognised as the 
best delivery 
company in the uk 
and across europe
chief executive officer’s review
i am pleased to report another good performance  
we have built a foundation for sustained steady 
performance against a backdrop of significant  
structural and operational change
the group’s operating profit after 
transformation costs increased to £430 
million from £403 million this was due to 
parcel revenue growth more than offsetting 
letter volume declines operating profit 
margin declined from 44 to 42 per cent  
due to the provision for our management 
reorganisation programme profit before 
taxation excluding specific items increased  
to £363 million and our notional earnings  
per share was 263 pence free cash flow 
increased to £398 million primarily due to an 
improved trading performance and reduced 
investment spend
ukpil revenue was up two per cent at £7787 
million parcel revenue increased by seven per 
cent to £3162 million while volumes were 
flat mainly due to the impact of sizebased 
pricing on consumers and small and medium
sized enterprises smes and the industrial 
relations environment at the end of 2013 the 
operating profit margin before transformation 
costs increased as costs grew at a slower rate 
than revenue however the provision for the 
management reorganisation programme 
reduced the operating profit margin after 
transformation costs to 35 per cent
gls delivered revenue growth across all its 
markets total revenue was £1651 million 
and operating profits were £108 million the 
operating profit margin was slightly lower 
than last year at 65 per cent despite 
increasing revenue in germany significant 
competitor investment in capacity and 
increasing subcontractor rates put pressure 
on margins revenue growth was driven by  
a strong performance in italy due to our 
network of owned and franchised operations 
we are making progress with our turnaround 
programme in france 
our vision
our vision is to be recognised as the best 
delivery company in the uk and across 
europe 
we are the leading provider of postal and 
delivery services in the uk gls operates one 
of the largest groundbased deferred parcel 
delivery networks in europe 
a clear strategy
our strategy is based on three priorities
1 being a successful parcels business
2 managing the decline in letters
3 being customer focused
we are focused on delivering efficiency and 
productivity improvements as our mail mix 
changes we must increase the pace at which 
we deliver change – whether large or small –  
if we are to succeed our strategy is also 
underpinned by a focus on managing our 
business successfully which includes people 
customer and financial measures see pages 
16 to 17 for more information
parcels
our parcels strategy key points
• getting the basics right improving our 
first time delivery rates through 
initiatives like delivery to neighbour
• getting the technology right including 
making it easier for our customers to 
access our networks and rolling out 
flexdelivery in gls
• expanding and automating our networks 
detailed planning for parcels systems 
upgrades and automation in the core 
royal mail network expanding the 
geographic footprint of gls through 
organic growth and selective acquisitions
ukpil collects and delivers parcels and letters 
predominantly through the royal mail core 
network and parcelforce worldwide we offer 
deferred express and courier services across 
a number of segments over recent years 
eretailing has driven parcel volume increases 
in the uk competition is intense and capacity 
is increasing we are focused on maintaining 
our leading position by becoming increasingly 
flexible and efficient and offering additional 
service features and options while our 
volumes are driven largely by growth in 
ecommerce we do not benefit from growth 
in all areas of eretailing for example we do 
not operate in all online segments and are 
underrepresented in some areas such as 
returns for clothing and shoes we are now 
focusing on faster growing market segments 
08
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 we are increasing the proportion of items we 
can carry costeffectively on foot enabled 
by trolleys 
our parcel customer base is large and diverse 
around a quarter of our domestic parcel 
revenue excluding parcelforce worldwide 
is generated by large and mediumsized 
companies whilst approximately three 
quarters is generated by consumers 
microsmes and smes our single largest 
parcel customer accounts for approximately 
six per cent of ukpil parcel revenue changes 
to its minimum order for free delivery and the 
expansion of its own delivery capabilities are 
expected to reduce available volume however 
we believe the breadth of our customer base 
and our strategy of supporting smes to grow 
through ecommerce means we are not as 
exposed to the actions of our largest 
customers as some of our competitors
in april 2013 we introduced sizebased 
pricing for consumers and smes to ensure 
that parcels are delivered through the most 
appropriate uk network this approach has 
driven significant growth in revenue while 
parcel volumes were flat declines in 
consumer volumes were greater than 
expected we recognised this quickly and  
took action to fix it – expanding small parcels 
dimensions in october 2013
we are also making it easier for customers to 
receive and return parcels royal mail is to 
pilot sunday afternoon opening at around 100 
of its delivery offices across the uk later this 
summer we will also trial sunday parcel 
deliveries later this summer to addresses 
within the m25 motorway parcelforce 
worldwide will also launch a sunday delivery 
service in june for online shoppers through 
participating eretailers 
we have added tracking to all contract returns 
services so customers can check whether 
items have gone back to the seller and the 
seller can see when an item is coming 
working with the post office royal mail has 
launched local collect – the uk’s largest click 
and collect network receiving a parcel at 
home is still the uk consumer’s preferred 
method of delivery if this is not convenient 
customers can choose one of around 10500 
participating post offices as a parcel collection 
point we have completed the expansion of 
the capacity of parcelforce worldwide with a 
domestic hub opened in chorley in 2013 and 
eleven depots newly opened or upgraded 
across the uk in the financial year
delivery companies are increasingly 
technology companies as they seek to provide 
improved tracking and delivery solutions  
in 2011 ukpil began a five year it 
transformation programme one objective  
of which was to support the delivery of our 
parcels strategy we completed the issue of 
more than 74000 handheld scanners to our 
postmen and women in time for christmas 
2013 looking forward key areas of 
investment will provide additional tracking 
systems including expanding barcoding and 
sms messaging
gls is a strategically important part of royal 
mail group it provides geographical 
diversification of our earnings its experience 
and focus on parcel delivery means it is a core 
component of royal mail’s vision of being 
recognised as the best delivery company  
in the uk and across europe
businesstobusiness b2b parcel customers 
form gls’ core market representing more 
than 70 per cent of all parcel volumes it 
delivered in the year it is mainly active in the 
deferred parcels segment – the least time
sensitive type of delivery 94 per cent of gls’ 
revenue came from deferred parcels
gls continued its introduction and 
enhancement of flexdelivery this is a 
monitoring and tracking service that allows 
customers to change the delivery time and 
location of parcels flexdelivery is currently 
available in ten markets with plans to roll it 
out to more countries it is also available for 
crossborder traffic in selected markets 
gls operates through whollyowned and 
partner companies in 37 countries and  
nation states across europe with strategies 
developed based on the dynamics of each local 
market however every business focuses  
on reliable quality with a strong customer 
emphasis optimising the use of technology  
to provide the services and flexibility 
customers expect
letters
our letters strategy key points
• managing the structural decline in the 
letters market by adding value to 
customer mailings rolling out mailmark™ 
barcoding technology and promoting the 
value of marketing mail 
• calling on ofcom to address the potential 
threat to the economics of the universal 
service created by the uncertainty 
caused by its competition act 
investigation access pricing policy review 
and the unfettered growth of direct 
delivery competition 
• leveraging the benefits of our 
investments in letter automation by 
increasing the number of letters sorted 
into delivery order and optimising mail 
handling techniques
our letters performance was at the better end 
of our expectations revenue was down two 
per cent addressed letter volumes declined by 
four per cent during the year the decline in 
addressed letter volumes moderated in the 
second half this was due to strengthening 
economic conditions alongside oneoff 
impacts such as energy companies writing to 
customers about price rises in october 2013 
and an increase in stamped mail volumes in 
december 2013 including christmas cards 
in march 2014 we began the rollout of 
mailmark™ which provides barcode 
technology and online reporting for machine
readable business advertising and publishing 
mail mailmark™ will deliver a number of 
additional benefits for customers including 
timely reporting on performance and 
predicted delivery times and more accurate 
and transparent billing 
marketing mail revenue was £1111 million 
research has demonstrated that using 
marketing mail in combination with other 
media significantly increases communications 
effectiveness our marketreach business aims 
to prove and promote the commercial value of 
mail and enables customers to realise that 
value within their own businesses these 
additional services complement the extensive 
uk delivery network which royal mail uses for 
the distribution of customers’ marketing mail
as we seek to win business we are flexing our 
services to provide what customers want 
during march 2014 we were awarded a 
significant contract to collect and deliver  
mail for 14 councils across london this 
collaborative agreement where mail services 
have been procured centrally in order to gain 
efficiencies is the first of its kind for royal 
mail and the councils 
regulation
we are proud to deliver the universal service 
but the sustainability of the universal service 
depends on royal mail being able to use 
revenue from easytoserve urban areas  
to cover the cost of a nationwide network 
capable of serving all addresses at a 
uniform price
on 10 january 2014 we announced a 
number of changes to royal mail’s access 
contracts the changes were intended to help 
secure the provision of the universal service 
against the backdrop of a continuing decline in 
letter volumes following a complaint by tnt 
post uk ofcom opened an investigation into 
some of the access contract changes on 
21 february 2014 the price changes subject 
to ofcom’s investigation are suspended 
until the outcome of this investigation on 
9 april 2014 ofcom confirmed that it would 
09
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information chief executive officer’s review continued
use its powers under the competition act 
1998 to investigate the complaint 
the planned changes to access contracts are 
an important part of our commercial response 
to changing market conditions including the 
expansion of direct delivery
1
 competition we 
believe tnt post uk’s complaint is unfounded 
we believe the changes are fair reasonable 
and fully within the guidance provided by 
ofcom
2
 we are cooperating fully with ofcom 
to ensure the investigation is completed as 
quickly as possible so that our planned 
changes can be put into effect 
on 9 april 2014 following the end of the 
reporting period ofcom also announced a 
policy review of the access conditions imposed 
on royal mail in march 2012 and ofcom’s 
guidance on those conditions ofcom has  
said it will complete this by the end of 2014 
we are proactively engaging with ofcom on 
this review 
tnt post uk now has direct delivery 
operations in much of london and in 
manchester and in liverpool it has stated its 
intention to take its own direct delivery 
service to a number of other cities with the 
aim of covering around 42 per cent of 
addresses by 2017 tnt post uk can 
cherrypick easytoserve urban areas 
delivering easytohandle post to homes less 
frequently than royal mail and to no defined 
quality standard royal mail is required to 
deliver sixdaysaweek overnight 
throughout the whole country to stringent 
quality standards and at a uniform affordable 
tariff moreover we are also required to 
deliver any items tnt post uk does not 
consider economic to deliver itself if tnt 
post uk is successful in delivering its stated 
objectives this could threaten the 
fundamental economics of the universal 
service based on our estimates of the impact 
of tnt post uk’s publiclystated plans this 
could reduce royal mail revenue by over 
£200 million in 201718
3
 at the same time 
our ability to reduce costs to offset this would 
be limited by our obligations to deliver the 
universal service
our analysis is that without timely 
intervention from the regulator direct delivery 
competition will have a serious impact on the 
sustainability of the universal service ofcom 
has stated that an ebit margin range of 
between five and ten per cent for royal mail’s 
reported business is appropriate and 
consistent with the need for royal mail to earn 
a reasonable commercial rate of return
4
 with 
our proposed access price changes remaining 
suspended and unfettered direct delivery 
rollout there is a reasonable prospect that 
this level of margin may never sustainably  
be achieved 
we do not believe the current situation serves 
the best interests of consumers ofcom has 
acknowledged in a recent guidance document 
its duty powers and willingness to act to 
protect the universal service if required
5
 
however effective regulatory action could 
take some time to implement meanwhile the 
competition act investigation and ofcom’s 
access policy review may create a significant 
period of uncertainty in the uk postal market 
this uncertainty combined with our universal 
service commitments means our ability to 
respond commercially is constrained at the 
same time direct delivery operators are 
continuing to expand their operations this is 
why we are preparing a regulatory submission 
calling on ofcom to take action now and carry 
out a full review of direct delivery such a 
review would be in line with ofcom’s primary 
duty to secure the provision of the universal 
service it would also allow for full 
1 
direct delivery refers to a situation where other postal operators convey mail from customer to recipient entirely using their own delivery network and not royal mail 
2
 ofcom ‘endtoend competition in the postal sector final guidance on ofcom’s approach to assessing the impact on the universal postal service ’ of 27 march 2013 and ‘securing 
the universal postal service decision on the new regulatory framework’  ofcom statement of 27 march 2012
3 
based on tnt post uk’s stated ambition of 423 per cent delivery point coverage in 2017 expected addressed inland letter market volumes of approximately 11 billion items in 
201718 using royal mail’s forecast range of a 46 per cent per annum decline in addressed letter market volumes our estimate that tnt post uk achieves a 20 per cent local market 
share in areas where it operates in 201718 and an annual rpi increase in our average unit revenue per downstream access item
4 
‘securing the universal postal service decision on the new regulatory framework’ ofcom statement of 27 march 2012 paragraph 547
5 
‘final guidance on ofcom’s approach to assessing endtoend competition’ ofcom statement of 27 march 2013
a year of achievement
royal mail and post office announce 
launch of local collect the uk’s 
largest click and collect network  
may 2013
july 2013 
andy murray’s historic wimbledon win  
celebrated with special stamps 
£70 million
initiative announced to improve the value 
of business mail through mailmark™ 
barcode technology 
july 2013
pensions reform confirmed following 
consultation with plan members 
september 2013
april 2013 may 2013 june 2013 july 2013 august 2013 september 2013
10
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 6 
not adjusted for force majeure
7 
this is not adjusted for force majeure in 201213 the adjusted for force majeure result was 925 per cent including external events such as snow volcanic ash clouds and the 2012 
london olympics
8 
an internal measure for all retail parcel products in the royal mail core network
9 
this has been restated from 486400 due to the addition of door to door complaints these were previously tracked separately and have been integrated to improve oversight of 
complaints across the business 
consideration of what regulatory interventions 
may be necessary at the same time we are 
raising the issue with hm government and are 
seeking a legislative amendment that would 
require a review of direct delivery if ofcom 
does not initiate one in a timely manner
customers
we have a trusted brand our most recent 
corporate image report conducted by ipsos 
mori in november 2013 indicated that 71 per 
cent of customers believe royal mail’s services 
are good value for money 
our own research indicates that our mean 
business customer satisfaction score is 75 
this is an increase on 74 last year and 70 in 
201112
 see kpis pages 18 to 19
it is strategically important that we maintain 
this customer loyalty
our regulated quality of service specifications 
are amongst the highest of any major 
european country 
i am delighted to report that we exceeded our 
regulatory targets for both first and second 
class mail in 201314 932
6
 per cent of first 
class mail was delivered the following day 
2013 917
7
 per cent and 989 per cent of 
second class mail was delivered within three 
days of posting 
 see kpis pages 18 to 19
we have delivered a significant improvement 
on prior years against our internal composite 
parcels measure
8
 we achieved a performance 
of 951 per cent meeting our target 
 see kpis pages 18 to 19
overall complaints were down six per cent on 
last year 2013 489900
9
 2014 458700  
improving our performance in this important 
area is a key strategic focus 
 see kpis pages 18 to 19
four issues account for the majority of 
complaints redirection misdeliveries 
redeliveries and ‘something for you’ cards 
our performance has improved for three of 
these complaints the exception being 
‘something for you’ cards our delivery to 
neighbour initiative is a key focus as we seek 
to improve the effectiveness of our delivery 
operations and reduce redeliveries recent 
ofcom research found that 94 per cent of 
customers were satisfied with this service 
transformation and cost control
royal mail is continuing to transform as we 
seek to mitigate falling letter volumes and 
manage increasing parcel volumes in an 
increasingly competitive parcels market as a 
matter of course we look to organise similar 
tasks into single areas to avoid unnecessary 
duplication since 2003 more than 50000 
people have left the uk business with 12000 
leaving in the last four years on 25 march 
2014 we launched a consultation with our 
unions on a proposal to achieve a net 
reduction of 1300 roles mainly within our 
managerial population we recognise that this 
change is tough on our people but we must 
continuously improve our efficiency this is a 
key way to sustain the universal service and 
secure good quality jobs for our people 
as we have said before the initial phase of our 
transformation is largely complete almost all 
of our delivery offices have now commenced 
or completed modernisation we continue to 
drive improvements in the network to be 
admission to trading on the london stock  
exchange £490 million of free shares in  
royal mail allocated to approximately  
150000 employees  
october 2013
december 2013 
winning designs from  
children’s competition feature  
on christmas stamps 
£2 million
fundraising target met including matched 
giving for our charity of the year prostate 
cancer uk 
march 2014
new industrial relations framework 
approved by cwu members  
february 2014
october 2013 november 2013 december 2013 january 2014 february 2014 march 2014
11
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information more productive and effective we are now 
focusing on standardising processes and 
embedding examples of best practice 
relatively small changes implemented across 
our business can deliver significant efficiency 
benefits we will be launching a nationwide 
campaign to ensure delivery to neighbour is 
deployed consistently where appropriate 
improving our rate of first time delivery is a 
key strategic focus across our operations 
our expansion programme in parcelforce 
worldwide is now complete we are continuing 
to plan for automation in the royal mail 
core network 
the productivity improvement of 17 per cent 
was disappointing whilst we reduced collections 
processing and delivery hours by 29 per cent 
the industrial relations environment meant  
we were unable to extract more hours to 
compensate for the impact on workload 
associated with flat parcel volumes most of royal 
mail’s nonpeople costs are subject to inflationary 
pressures this year we were particularly 
successful in addressing this nonpeople costs 
were down by three per cent in ukpil
our people
following our recent flotation the 
overwhelming majority of our uk employees 
are also shareholders in our company free 
shares gave our people a direct stake in the 
company and its future success each eligible 
fulltime employee who participated in the 
free shares offer now has 729 shares  
they along with all shareholders will receive 
a final dividend in july 2014 subject to 
shareholder approval 
in december 2013 we announced an 
agreement in principle with the 
communication workers’ union cwu 
this was approved by its members in 
february 2014 the agreement is wide 
ranging in its coverage and focused in its 
support of the business it represents a joint 
commitment to radically improve industrial 
relations and create a cando culture in the 
interests of customers employees and the 
company we are focused on bedding down 
this agreement to ensure that we provide a 
stable and unique platform for problem
solving and for jointly moving the business 
forward at a faster pace
outlook
our key value drivers of single digit revenue 
growth margin expansion and underlying  
free cash flow growth remain the objectives 
for the group for the 201415 financial year 
however while we are satisfied with our 
progress in 201314 we are facing increasing 
challenges in the parcels and letters markets 
in the uk 
we intend to pursue a progressive dividend 
policy having regard to the normalised 
earnings progression of the group as the 
regulatory position on direct delivery becomes 
clearer the board would expect to provide 
more clarity on our dividend policy 
royal mail in the private sector
we must continue to deliver change at an 
increasing pace to meet the challenges of the 
changing mix of mail the liberalised uk postal 
market intense parcel competition and a 
need to become more productive and efficient 
royal mail’s transformation is being delivered 
whilst maintaining our high quality of service 
levels i would like to thank all my colleagues 
for the fortitude and conscientiousness with 
which they have embraced these changes 
i am confident that with their continued 
diligence and support we will be able to make 
ongoing progress in delivering our strategy
moya greene
chief executive officer 
6 june 2014
chief executive officer’s review continued
12
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 uk parcels market
eretail continues to drive growth in the uk 
parcels market 
parcels sent from businesstobusiness b2b 
have long been a significant element of the 
uk parcels industry b2b currently 
represents just over a third of overall uk 
parcel volume
1
 we expect b2b volume 
growth in the uk to be slightly above gdp 
growth in 201415
the engine for parcel volume growth is 
businesstoconsumer b2c through eretail 
the uk has one of the most developed eretail 
markets in the world with around ten per cent 
of all retail sales conducted online this is 
estimated to rise to 13 per cent by 2017
2
  
the uk has the highest eretail expenditure 
per capita in the world
3

b2c and c2x consumer to all parties 
currently accounts for nearly twothirds of uk 
parcel volume
1
 we expect aggregated parcel 
volumes within the b2c and c2x segments will 
grow at approximately 45 to  
55 per cent for 201415
customers and competition
we operate in a highly competitive market 
customers increasingly demand a choice of 
reliable and convenient delivery options 
with tracking information and easy returns 
there are many parcel carrier competitors 
and they are getting stronger with improved 
service performance greater convenience 
increased geographic coverage and leading 
edge technology 
parcel carriers who historically focused on b2b 
parcels are increasingly focusing on b2c while 
home delivery remains the most attractive 
fulfilment option collection from a pick up point 
is also growing in popularity – whether directly 
from a retailer’s store instore click and collect 
or from a third party location such as a parcel 
shop or locker bank pick updrop off or pudo 
points various market research studies 
suggest that both forms of click and collect are 
growing fast albeit from a low base we too 
expect it to continue to grow 96 per cent of 
retailers that offer instore click and collect do 
not charge for the service but delivery to pudo 
points often incurs an extra fee
4
 disclosure 
about the retail sales directly attributed to click 
and collect is more limited however royal mail 
has teamed up with post office limited pol to 
enable online purchases to be delivered to 
around 10500 post offices nationwide the 
largest pudo network in the uk
uk letters market 
market volume breakdown 201314
type volume bn
nonaccess eg uso  retail 56
access 71
addressed inland 127
international 06
total addressed 133
unaddressed 31
demand for letters has historically been 
closely linked to gdp growth this link still 
exists but is now offset by a structural 
decline caused by the growth of email and the 
internet as a form of communication 
different types of letter are experiencing 
different rates of decline we continue to 
expect a decline in addressed letter volumes of 
four to six per cent per annum
5

business letters are declining due to relatively 
mature technologies such as online banking 
businesses perceive cost savings from mail 
reduction however a significant proportion 
of the population would like a choice as to 
how they receive household bills and 
statements without a penalty royal mail is a 
funding partner of the keep me posted 
campaign a coalition of over 56 charities 
trade unions consumer groups and business 
organisations which aims to protect the 
consumer’s right to choose without penalty 
how they receive important financial 
information and statements from their 
service providers
direct mail in the uk is worth £21 billion 
with direct mail itself accounting for 
approximately 12 per cent of uk advertising 
spend
6
 this reflects the value that it delivers 
for businesses 
following market liberalisation in 2004 
access mail competition for upstream
7
 letter 
collection and processing is now mature 
the number of upstream letters handled by 
competitors has been relatively stable since 
201011 
european parcels market
the european parcels market is growing 
driven by the same eretail trends as the  
uk this growth is uneven across the eu  
in particular due to different economic 
performance and takeup of internet 
shopping in different countries
competition
there are three key types of parcel carriers 
operating in europe while historically they 
may have focused on different market 
segments the dividing line between b2b and 
b2c and between express and deferred has 
become blurred in recent years
• national posts these carriers generally 
offer strong domestic b2c and c2x parcel 
offerings in their home countries some 
also have a wider presence across europe
8

• integrators there are several wellfunded 
multinational companies with varying 
degrees of presence in each country these 
companies were historically focused on 
providing premium b2b services 
• local carriers a number of these operators 
are part of alliances which allow them to 
offer a range of services across europe
the gradual trend towards consolidation  
in the market has continued with major 
network operators acquiring smaller 
businesses which fill geographic or service 
gaps this acquisition activity has recently 
focused on targets specialising in eretail  
or consumer collections
market overview
the parcel and letter markets are highly competitive in parcels royal mail faces 
significant competition in both the uk and europe from companies with established 
delivery capabilities and new entrants in letters the current suspension of access 
price changes and unfettered direct delivery are a threat to the fundamental 
economics of the universal service
1 
royal mail market estimates based on triangle management services research
2 
euromonitor passport data 2013 retail values exclude sales tax current prices
3 
bcg eintensity index 2013
4 
micros
®
 multichannel retail delivery report 2014
5 
excluding election mail
6 
warc 2013 including production costs
7 
upstream refers to the collection of letters from a customer or collection point and 
initial sortation after this sorted mail is delivered to royal mail ‘inward’ mail centres 
for final mile delivery
8 
opinium research 2013 
13
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information    
at the heart of our business model is a  
focus on leveraging our core strengths  
they include 
• our leading position in uk letters and 
parcels 
• the royal mail brand 
• our high quality of service and 
• the geographical and earnings 
diversification provided by gls
no business model is without its challenges 
in our case 49 per cent of our revenue – 
letters – comes from a market that is in 
structural decline in the uk the combination 
of unfettered direct delivery mandated access 
and the continued structural decline in letters 
is a threat to the fundamental economics of 
the universal service in parcels more 
competition more capacity and the 
esubstitution of smaller items are an 
ongoing reality 
we focus on tight cost control including 
people and nonpeople costs we seek to 
optimise our uk and international networks 
including the coverage provided by the post 
office leveraging the benefits of our uk 
modernisation is about driving up our 
productivity standardisation pace and 
flexibility transforming our it architecture to 
address legacy systems issues and partnering 
with customers to provide more flexible 
solutions for them is key to our model so too 
are postmen and women delivering first time 
consistently to the door
our business model
our business model aims to deliver shareholder value and support a 
sustainable universal service it demonstrates how we create value 
from revenue generation through to initiatives aligned with our 
customer people and financial kpis our model provides growth 
potential sustained profitability and cash generation
networks and customers
ukpil
key products and services
royal mail core network
parcelforce worldwide
gls
key products and services
domestic and international 
express parcels
  
domestic and international 
deferred parcels 
key products and services
deferred parcels
 
express parcels
customer points
115000 
pillar boxes
1400 
delivery offices
over 11500 
branches 
partnership with post offices
60000 
delivery routes 
customer points
53 
depots 
over 11500 
branches 
partnership with post offices
customer points
700
1
 
depots
uso letters and parcels 
 stamped and meter mail
 airmail
 redirections
 special delivery 
non uso letters and parcels 
 royal mail tracked
 royal mail 2448
 business and advertising mail
  international business tracked 
and signed
 network access mail
1 
gls and partners
14
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 customer
•  providing high quality service 
everywhere in the uk and europe
•  flexing our propositions – 
products and services – to meet 
the needs of the rapidly changing 
eretailing market
•  adding value to letters through 
initiatives like mailmark™ and to 
parcels by barcoding more items
see our customer kpis pages 18 to 19
financial
•  leveraging our ongoing transformation being 
more productive and efficient in everything we do 
•  tightly managing our people and nonpeople costs
•  investing to continue to transform the business 
particularly in it and automation
see our financial kpis page 19
people
•  working with our people and 
unions to deliver a collaborative 
cando culture as we transform 
our business
•  becoming an even more  
customer focused company in 
the highly competitive markets in 
which we operate
see our people kpis page 18
investing  
in our 
business
be recognised as the 
best delivery 
company in the uk 
and across europe
customer
financial
people
revenue
revenue
generating 
sustainable  
shareholder 
value
15
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information our strategy
we have a clear vision to be recognised as the best delivery company in the uk and 
across europe our threepart strategy aims to deliver our vision by
• sustaining the continued provision of the universal service in the uk and
• generating sustainable shareholder value
key challenges 
the markets – by category and geography – in 
which we operate are changing quickly eretail is 
driving growth in parcels royal mail parcelforce 
worldwide and gls are well positioned to benefit 
from domestic and crossborder growth
there is growing competition in parcels delivery 
in the uk where royal mail is a market leader 
our competitors are improving their service 
levels some eretailers are providing their own 
delivery solutions market capacity has increased 
there is growing price pressure too consumers 
and smes now have many choices including 
alternatives to the post office our retail partner 
disruptive technologies long a feature of our 
markets are on the increase items traditionally 
delivered physically as parcels such as books 
cds and dvds are in competition with 
downloads and streaming in letters 
esubstitution is a major structural factor 
underpinning continued volume decline 
combined with unfettered direct delivery and 
mandated access this threatens the fundamental 
economics of the universal service in the uk
key priorities
our strategy aims to maintain our market leading 
positions and target new segments and channels 
where we can grow we also focus on being a 
more efficient and flexible company our ongoing 
transformation programme – one of the largest 
of its kind in the uk – continues standardisation 
consistency in execution and tight cost control are 
key so too is a greater focus on anticipating our 
customers’ needs and responding flexibly to 
them underpinning that focus is a major 
emphasis on technology – renewing or replacing 
legacy systems and investing in new it 
architecture providing barcoding and tracking 
for parcels and greater connectivity with 
our customers
our key strategic priorities are underpinned by a 
focus on managing our business successfully 
through both financial and nonfinancial 
initiatives we aim to keep a tight grip on costs 
and become more efficient embedding a more 
collaborative culture will support the rollout of 
standardised processes and consistent execution 
across our operations further investment in our 
people lays the foundation for even better 
customer service and culture change 
transforming our technology provides the 
tracking capability to compete in an even more 
competitive marketplace
strategic priorities
parcels
strategic priority 1
being a successful parcels business in the uk we will continue to grow 
account parcels and to maintain our strong position in the consumer micro 
sme and sme market segment deliver significant it upgrades introduce 
new products and maximise the proportion of uk traffic we can handle 
profitably in europe gls will continue to expand and grow and improve 
its offering for example by increasing the number of b2c delivery options
• adding barcodes to uk parcels to improve customer information and 
operational efficiencies
• investing in technology from making it easier for customers to access our 
networks through to tracking and management information
• detailed planning for parcels systems upgrades and automation in the core 
royal mail network 
• rolling out flexdelivery to more european markets offering customers more 
choice about how and when their parcels are delivered 
• upgrading the core gls operating system to ensure continued marketleading 
it capabilities and
• expanding the geographic footprint – depth and range – of gls through 
organic growth and selective acquisitions
letters
strategic priority 2
managing the decline in letters we have launched mailmark™ which 
provides business customers with tracking information and significant 
operational benefits for us marketreach promotes the value that physical 
mail brings to advertising campaigns and maintains our marketing mail 
volumes in the face of competition from digital channels unfettered direct 
delivery competition is a threat to the universal service we are asking 
ofcom to undertake a full review of direct delivery now
• adding value to customer mailings through the rollout of initiatives like 
mailmark™ 
• promoting the value of advertising mail in customer retention and acquisition 
– on its own and in combination with other media
• calling on ofcom to address the potential threat to the economics of the 
universal service created by uncertainty caused by its competition act 
investigation access pricing policy review and the unfettered growth of direct 
delivery competition and
• leveraging benefits of our investments in letter automation by increasing  
the number of letters sorted into delivery order and optimising mail  
handling techniques
customer
strategic priority 3
being customerfocused customers have more and more choices our 
strong brand means we are well positioned in our core markets the 
rollout of new delivery methods is now almost complete coupled with the 
full deployment of handheld scanners it is transforming how we deliver 
parcels our focus on first time delivery gives our customers what they 
want and drives greater operational efficiency important initiatives in this 
respect include the launch of local collect our click and collect solution 
with the post office and longer opening hours
• improving our first time delivery rates increasing use of delivery  
to neighbour and local collect
• refreshing our enquiry offices and training our customerfacing colleagues  
to improve customers’ experiences when collecting their parcels
• reengineering our key customer journeys to remove sources of 
dissatisfaction reducing the time between account set up and first posting 
for businesses and
• driving down customer complaints with a focus on first time resolution  
of issues
16
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 strategic priorities
parcels
strategic priority 1
being a successful parcels business in the uk we will continue to grow 
account parcels and to maintain our strong position in the consumer micro 
sme and sme market segment deliver significant it upgrades introduce 
new products and maximise the proportion of uk traffic we can handle 
profitably in europe gls will continue to expand and grow and improve 
its offering for example by increasing the number of b2c delivery options
• adding barcodes to uk parcels to improve customer information and 
operational efficiencies
• investing in technology from making it easier for customers to access our 
networks through to tracking and management information
• detailed planning for parcels systems upgrades and automation in the core 
royal mail network 
• rolling out flexdelivery to more european markets offering customers more 
choice about how and when their parcels are delivered 
• upgrading the core gls operating system to ensure continued marketleading 
it capabilities and
• expanding the geographic footprint – depth and range – of gls through 
organic growth and selective acquisitions
letters
strategic priority 2
managing the decline in letters we have launched mailmark™ which 
provides business customers with tracking information and significant 
operational benefits for us marketreach promotes the value that physical 
mail brings to advertising campaigns and maintains our marketing mail 
volumes in the face of competition from digital channels unfettered direct 
delivery competition is a threat to the universal service we are asking 
ofcom to undertake a full review of direct delivery now
• adding value to customer mailings through the rollout of initiatives like 
mailmark™ 
• promoting the value of advertising mail in customer retention and acquisition 
– on its own and in combination with other media
• calling on ofcom to address the potential threat to the economics of the 
universal service created by uncertainty caused by its competition act 
investigation access pricing policy review and the unfettered growth of direct 
delivery competition and
• leveraging benefits of our investments in letter automation by increasing  
the number of letters sorted into delivery order and optimising mail  
handling techniques
customer
strategic priority 3
being customerfocused customers have more and more choices our 
strong brand means we are well positioned in our core markets the 
rollout of new delivery methods is now almost complete coupled with the 
full deployment of handheld scanners it is transforming how we deliver 
parcels our focus on first time delivery gives our customers what they 
want and drives greater operational efficiency important initiatives in this 
respect include the launch of local collect our click and collect solution 
with the post office and longer opening hours
• improving our first time delivery rates increasing use of delivery  
to neighbour and local collect
• refreshing our enquiry offices and training our customerfacing colleagues  
to improve customers’ experiences when collecting their parcels
• reengineering our key customer journeys to remove sources of 
dissatisfaction reducing the time between account set up and first posting 
for businesses and
• driving down customer complaints with a focus on first time resolution  
of issues
see pages 29 to 31 for more information about the links 
between our strategic objectives and key business risks
key initiatives
17
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information key performance indicators
our kpis are divided into people customer and financial segments as represented in our business model and our corporate balanced scorecard 
further details relating to the link between our kpis and executive remuneration can be found in the directors’ remuneration report on page 65 
to reflect the significant changes that took place during 201314 we have revised our kpis we have removed second class quality of service 
we have replaced delivery office modernisation and delivery hours reduction with a broader kpi on collection processing and delivery 
productivity finally we have added a composite parcels quality of service measure to reflect the increasing importance of parcels to our business
kpi and strategic links measured by key activities in the year
people
safety
more information
see corporate responsibility 
page 35
lost time accident frequency 
rate the number of workrelated 
accidents resulting in an absence 
on the next day or shift per 
100000 hours worked
we have delivered a very good safety performance in the year further reducing the 
amount of time lost to accidents and making royal mail a safer place to work we 
have established assessments for 93 per cent of delivery routes we are continuing 
to increase the identification and risk mitigation of significant risks on those routes 
so we take action where appropriate improving road safety is a key priority a head 
of health and safety has been appointed in parcelforce worldwide to develop a 
safety leadership culture we also ran our annual road safety week campaign in 
november 2013 raising safety awareness through videos posters rmtv and 
manager’s briefings topics ranged from seatbelts and stationary objects to driver 
distractions and winter driving
employee engagement
more information 
see corporate responsibility 
page 33
an annual survey by ipsos mori 
measuring involvement alignment 
and loyalty of colleagues through 
a number of questions including 
what our people think about royal 
mail their understanding of our 
strategy and their place in 
achieving our strategic objectives 
approximately 150000 eligible uk employees were awarded free shares as part of 
the privatisation approximately 15000 employees bought shares in the company at 
the same time we have agreed a new industrial relations framework with the cwu 
and are developing and embedding a more collaborative cando culture as part of our 
‘town hall’ programme members of our senior management team have addressed 
thousands of colleagues at almost 60 meetings an ongoing facetoface 
communications programme will ensure colleagues understand our strategy and their 
role in delivering it 
customer focus
more information 
see corporate responsibility 
page 33
an annual survey by ipsos mori 
measuring how focused our 
people are on delivering 
improvements in customer 
service 
christmas is a key trading period for us planning began early to ensure we delivered 
a high quality service for our customers – we did we recruited 21000 seasonal 
workers to support our postmen and women ten parcel sort centres were opened to 
manage increasing volumes over the period we offered extended opening hours and 
sunday deliveries to improve our customers’ delivery and collection options we are 
completing our ‘customer and you’ training for approximately 2000 employees and 
are deploying a new programme to refurbish enquiry offices
customer
first class quality of service
more information 
see ceo’s review page 11
an independent audited measure 
of quality of service for first 
class retail products which may 
be adjusted for force majeure
1

our regulatory quality of service targets are amongst the highest of any major 
european country we delivered a strong performance at both the national and local 
level this included meeting or exceeding the minimum target of 915 per cent for 
first class delivery in 114 out of 118 post code areas this improved performance 
was achieved against a backdrop of one of the largest industrial transformation 
programmes undertaken in the uk in recent history our programme to standardise 
best practice and drive up first time delivery will support continued high quality of 
service delivery 
customer satisfaction
more information 
see ceo’s review page 11
average business customer 
satisfaction scores on a number 
of issues including price service 
quality and customer experience
we maintained very good levels of customer satisfaction amongst our business 
customers a customer satisfaction questionnaire is completed by a sample of 
business customers every month during the year we established a programme to 
redesign key customer journeys to improve the experience from posting to issue 
resolution we increased our emphasis in customer service centres to focus on the 
first time resolution of issues for customers
this icon is used throughout 
this document to indicate 
reporting against a kpi
1 
this accounts for the impact of factors which are beyond royal mail’s control such as weather strategic links key
being a successful parcels business
managing the decline in letters
being customerfocused
18
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 kpi and strategic links measured by key activities in the year
customer continued
composite parcels quality 
of service
more information 
see ceo’s review page 11
an internal measure for all retail 
parcel products in the royal mail 
core network results are 
presented as a proportion of items 
which are delivered by their service 
specification and combined into a 
composite metric
our composite parcels kpi looks at delivery performance for regulated and 
nonregulated products across our entire portfolio we saw very significant progress 
in our performance this year we provided handheld scanners for all delivery rounds 
providing significantly more management information and better customer service 
we are now seeking to improve first time delivery rates through standardisation of 
best practice especially for key initiatives like delivery to neighbour 
customer complaints
more information 
see ceo’s review page 11
number of complaints captured 
by our customer service team
we achieved significant improvements in the level of customer complaints over the 
year we saw reductions in all major categories except ‘something for you’ cards we 
completed the rollout of a new complaint resolution tool to enable delivery offices to 
access complaints and are reengineering how we handle undelivered parcels in 
enquiry offices we are establishing a major programme in operations to identify 
areas of best practice and standardise them across the network
financial
group revenue
more information 
see financial review page 23
group revenue overall revenue growth was driven by increases in parcel revenue in both gls and 
ukpil offset by an expected decline in addressed letter volumes driven by 
esubstitution ukpil parcel revenue growth was driven by sizebased pricing and 
growth in account parcel volumes and parcelforce worldwide gls also saw strong 
revenue growth driven by increased volumes 
productivity for collection 
processing and delivery
more information 
see financial and business 
performance highlights 
page 5
percentage change yearonyear 
in the number of weighted items 
per gross hour paid in delivery 
units and mail centre units 
delivery and processing including 
regional logistics and collections
this measure demonstrates whether the business is getting more or less productive 
in collecting processing and delivering letters and parcels across the ukpil 
network it takes into account the change in volume and mix of letters and parcels 
with the latter having a materially different workload productivity has improved 
continued progress includes the mail centre rationalisation and implementation of 
new delivery methods our priority is standardisation continued tight cost control 
and leveraging the efficiency benefits offered by our ongoing transformation 
programme 
total uk costs
more information 
see financial review page 23
total costs for uk businesses 
before transformation costs
total uk costs before transformation costs increased by one per cent people costs 
increased by four per cent mainly due to the three per cent pay award higher pension 
charges and the move to a shorter working week nonpeople costs reduced by three 
per cent largely due to cost management and procurement savings programmes
group operating profit
more information 
see financial review page 24
group operating profit before 
transformation costs
overall revenue growth for both ukpil and gls resulted in an increase in group 
operating profit before transformation costs
free cash flow
more information 
see financial review page 26
free cash flow free cash flow has increased due to improved trading performance and lower 
investment spend 
19
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information uk parcels international 
 letters ukpil
trading results
£m
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
likeforlike 
change
revenue
1
7787 7633 2
– letters  other mail 3514 3582 2
– marketing mail 1111 1118 1
– total letters 4625 4700 2
– parcels 3162 2933 7
operating profit after transformation costs 309 294
operating profit margin after transformation costs 35 39 40bps
volumes m
royal mail core network parcels 991 994 1
parcelforce worldwide 77 70 8
total parcels 1068 1064 flat
addressed letters including international 13342 13869 4
unaddressed letters 3143 3258 4
about ukpil
ukpil is the uk’s designated provider of the 
universal service its network is unrivalled in 
the uk in terms of size coverage and 
geographical reach ukpil comprises the core 
uk and international parcel and letter delivery 
businesses operated through the royal mail 
core network and parcelforce worldwide it 
has a leading position in the overall uk parcel 
market with an estimated 38
2
 per cent 
revenue share
ukpil also carries out a number of letter
related business activities including marketing 
mail consulting services it is responsible  
for the design and production of the uk’s 
stamps and philatelic products it also 
processes international mail under  
reciprocal arrangements with other  
overseas postal administrations
36
38
royal mail uk parcels market share revenue
3
2013
2012
2011
35
trading performance
ukpil revenue increased by two per cent to 
£7787 million parcel revenue increased by 
seven per cent ukpil parcel volumes were 
flat mainly as a result of the impact of 
sizebased pricing in the consumer and sme 
segments over the year we saw growth in 
account parcel volumes despite some 
customer reaction to the threat of industrial 
action in the run up to christmas parcelforce 
worldwide volumes grew strongly parcels 
accounted for 41 per cent of ukpil revenue 
2013 38 per cent 
total letter revenue decreased by two per cent 
addressed letter volume decline of four per 
cent was at the better end of our forecast 
range benefiting from strengthening economic 
conditions energy company customer mailings 
at the end of 2013 and increased stamped 
mail volumes in december 2013 including 
christmas cards marketing mail revenue 
including unaddressed letters was 
£1111 million down one per cent mainly due 
to additional marketing activity in the build up 
to london 2012 and the diamond jubilee in 
the prior year
we did not increase stamp prices in 2013 
however there were changes to other 
products such as access mail in march 2014 
we announced tariff changes across the 
portfolio of products including first and 
second class stamps we thought carefully 
about the impact of all our tariff increases on 
our customers and our own business our 
stamp prices remain among the best value in 
europe first and second class stamp prices 
for letters up to 100 grams remain well below 
the european average
4

operating costs
operating costs before transformation costs 
increased by one per cent below the rate of 
revenue growth to £7237 million a four per 
cent increase in people costs was substantially 
mitigated by a three per cent decline in 
nonpeople costs
oneoff benefits in the first half of £42 million 
in relation to a vat credit and lower 
depreciation and amortisation charge were 
offset by a £44 million higher pension charge 
mainly due to the ias 19 pension service 
charge rate increasing from 182 per cent  
to 203 per cent of pensionable pay 
people costs increased by four per cent mainly 
due to the three per cent pay award higher 
pension charge and the move to a shorter 
working week collections processing and 
delivery operations delivered a productivity 
improvement of 17 per cent below our two  
to three per cent target whilst gross hours 
reduced by 29 per cent this was not sufficient 
to compensate for the reduced workload 
resulting from flat parcel volumes 
nonpeople costs were down three per cent 
there continue to be increases in terminal dues 
with overseas postal administrations 
distribution and conveyance costs and it 
infrastructure costs however our cost 
management and procurement programmes 
were particularly successful 
1 
stamped metered and other prepaid revenue channels are subject to statistical sampling surveys to derive the revenue relating to parcels marketing mail and letters these 
surveys are subject to continuous refinement which may over time reallocate revenue between the products above and which may occasionally lead to a consequent change to this 
estimate 
2 
triangle estimates at december 2013 based on latest competitor data and market insight and royal mail 201314 financial year end revenue excludes international traffic
3 
triangle management services estimates at december 2013 based on competitor financial reports market insight and royal mail financial year end results
4 
european average is 63 pence for inland stamp prices up to 100 grams first and second class combined
20
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 transformation costs
transformation costs increased to 
£241 million due to a provision for the 
management reorganisation programme  
of £104 million mainly relating to voluntary 
redundancy costs the programme is  
expected to generate annual cost savings  
of approximately £50 million of which 
approximately £25 million is expected to  
be realised in 201415
other voluntary redundancy costs were lower 
than the prior year due to the timing of 
announcements with respect to mail centre 
closures the majority of which were provided 
for in 201213 
project and property costs mainly relate  
to mail centre closures and delivery  
office revisions
the £17 million business transformation 
payments relate to the business 
transformation 2010 agreement under which 
colleagues receive payments of up to £1000 
based on specific milestones and specific 
bonuses with respect to transforming the 
network remaining payments of around 
£10 million are expected to be made in 
201415 as the delivery office modernisation 
process is completed
operating profit after transformation costs
operating profit after transformation costs 
was £309 million up £15 million on an 
adjusted basis including the increased 
transformation costs as a result of the 
management reorganisation programme 
operating profit margin after transformation 
costs reduced to 35 per cent 2013 39  
per cent 
operating costs
£m
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
likeforlike 
change
people costs 4818 4641 4
distribution and conveyance costs 855 850 1
infrastructure costs 946 951 1
other operating costs 618 702 12
operating costs before transformation costs 7237 7144 1
transformation costs 241 195
operating costs after transformation costs 7478 7339 2
transformation costs
£m
reported 
 52 weeks
2014
adjusted
5
 
52 weeks
2013
voluntary redundancy – management reorganisation programme 102 –
voluntary redundancy – other 14 78
project and property costs including £2m of management 
reorganisation programme costs 108 95
business transformation payments 17 22
total 241 195
case study
christmas stamp competition
in christmas 2013 for the first time in many 
years we gave children across the uk the 
opportunity to design a christmas stamp we 
received more than 240000 entries the two 
winners – molly robson aged seven and rosie 
hargreaves aged ten – were chosen by a panel 
of judges led by his royal highness the prince 
of wales their stamps went on sale on 
5 november 2013
we were delighted to see enthusiasm for our 
christmas stamps translate into higher volumes 
of stamped mail in the christmas period 
the christmas stamps competition was also 
linked to an educational programme helping 
students and teachers meet requirements of 
the national curriculum we ran five educational 
stamps programmes linked to our special 
stamps in 201314 delivering 13450 packs  
to schools across the uk almost 55000 
resources were downloaded online 98 per cent 
of schools who have taken part this year have 
requested future programme packs a great 
result for pupils and the company
5 
transformation costs are the same on both a reported and an adjusted basis
21
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information general logistics systems  
gls
trading results
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
likeforlike 
change
revenue £m 1651 1498
operating profit £m 108 101
revenue €m 1957 1837 7
operating profit €m 128 123 4
operating profit margin  65 67 20bps
volumes m 404 380 6
operating costs
£m
reported 
 52 weeks
2014
adjusted 
 52 weeks
2013
likeforlike 
change
people costs 367 337 5
distribution and conveyance costs 1015 920 7
infrastructure costs 108 100 4
other operating costs 53 40 29
total operating costs 1543 1397 7
about gls
gls is one of the largest groundbased 
deferred parcel delivery companies in europe 
its reach across europe spans 37 countries 
and nation states through a combination  
of whollyowned and partner companies 
germany france and italy gls’ main markets 
accounted for around 70 per cent of gls’ 
revenue approximately 94 per cent of gls’ 
revenue came from deferred parcels the 
remainder was split between logistics four  
per cent and express parcels two per cent
trading performance
gls’ revenue was £1651 million with all 
countries delivering yearonyear revenue 
growth excluding the positive impact of 
foreign exchange of £52 million revenue 
increased by seven per cent parcel volumes 
increased by six per cent with growth in both 
domestic and international volumes
operating costs rose by seven per cent driven 
by the increase in distribution and conveyance 
costs as a result of higher volumes and a full 
year impact of increased subcontractor rates 
in germany infrastructure costs increased 
largely due to a higher depreciation charge 
other operating costs were higher due to a 
nonrecurring indirect taxation charge higher 
it costs and restructuring costs in france
operating profit increased to £108 million 
representing a margin of 65 per cent 2013 
67 per cent 
germany
the competitive environment coupled with  
a challenging labour market has had a 
continued impact on the gls germany 
business gls germany saw revenue growth 
of three per cent and remains the largest 
market for gls by revenue the initiative  
to consolidate subcontractors to address 
increasing costs was not sufficient to offset 
further increases in costs caused by low 
unemployment rates and high demand for 
drivers associated with increased competitor 
capacity as a result margins remain  
under pressure 
france
the turnaround programme in gls france is 
making progress while lossmaking overall 
performance for the year was slightly ahead of 
the restructuring plan with operating losses 
reducing by €3 million to €27 million the cost 
reduction element of the turnaround has 
progressed well during the year over the past 
few years gls france has undertaken an 
operational overhaul changing from an 
‘express’ delivery service provider to a 
deferred delivery service provider this 
included the sale of its ‘in night’ business  
an overnight courier service in 201112  
gls france will focus on improving quality 
achieving greater operational efficiency  
and growing volumes from new and  
existing customers
italy
despite an unfavourable economic 
environment gls italy achieved strong 
organic growth which has led to a 
strengthening of its market position 
performance was further enhanced by the 
acquisition of three franchise areas as well as 
competitor disruption leading to an overall 
increase in revenue of 16 per cent the gls 
network in italy is partially whollyowned 
with the rest of the operations covered by 
franchisees the franchise system remains 
stable and represents a good platform for 
future growth 
other developed european markets 
includes austria belgium netherlands 
denmark ireland spain and portugal
revenue increased across other developed 
european markets which represent 21 per 
cent 2013 21 per cent of total gls revenue 
whilst all countries saw revenue growth the 
strongest was seen in spain and portugal
developingemerging european markets 
includes hungary slovenia slovakia 
czech republic romania poland  
and croatia
performance throughout the rest of europe 
has been strong with a good increase in 
revenue from developingemerging european 
markets the largest growth was in slovakia 
and czech republic in addition to the new 
business launched in croatia in august 2013 
where we have been pleased with the progress
22
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 financial review
matthew lester
chief finance officer
revenue 
£m
reported
52 weeks
2014
adjusted
52 weeks
2013
likeforlike 
 change
ukpil
– letters 4625 4700 2
– parcels 3162 2933 7
gls 1651 1498 7
other 18 15 nm
group 9456 9146 2
group revenue increased by two per cent due to parcel revenue growth in ukpil and in gls 
 see kpis pages 18 to 19
parcel revenue accounted for 51 per cent of group revenue 2013 48 per cent
group operating costs
£m 
reported
52 weeks 
2014
adjusted
52 weeks 
2013
likeforlike 
 change
people costs 5282 5077 4
distribution and conveyance costs 1869 1771 4
infrastructure costs 1051 1047 flat
other operating costs 583 653 11
operating costs before transformation costs 8785 8548 2
transformation costs 241 195
group operating costs after transformation costs 9026 8743 3
the total uk costs before transformation costs increased by one per cent to £7242 million 2013 £7151 million
 see kpis pages 18 to 19
operating costs before transformation costs increased by two per cent the business continues to exercise tight cost control which particularly 
benefited other operating costs operating costs also benefited from a oneoff vat credit of £35 million and lower yearonyear depreciation and 
amortisation of £7 million due to a different mix in depreciable assets the vat credit arose as a result of a change in regulation which increased 
the scope of products attracting vat from april 2012 leading to an increased recovery rate the oneoff benefits were offset by a £45 million 
higher pension charge mainly due to the ias 19 service charge rate increasing from 182 per cent to 203 per cent of pensionable pay
23
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information people costs increased by four per cent driven by an increase in ukpil people costs tight cost control in nonpeople costs in ukpil which 
reduced by three per cent mitigated the impact of increased volumes in gls and higher subcontractor rates in gls germany in distribution  
and conveyance costs infrastructure costs were flat with lower property and depreciation and amortisation costs being offset by higher it costs 
other operating costs decreased by 11 per cent due to tight cost control predominantly in ukpil
operating profit before transformation costs
all the business segments generated increased operating profit before transformation costs resulting in a group operating profit before 
transformation costs of £671 million 2013 £598 million with the margin increasing by 20 basis points 
 see kpis pages 18 to 19
operating profit after transformation costs
transformation costs were £241 million 2013 £195 million and are described in the uk parcels international  letters ukpil section of this report 
£m
reported
52 weeks
2014
adjusted
52 weeks
2013
ukpil 309 294
gls 108 101
other 13 8
group operating profit after transformation costs 430 403
the group reported operating profit after transformation costs of £430 million 2013 £403 million with ukpil contributing around 72 per cent 
2013 73 per cent to the group total the operating profit margin after transformation costs declined to 42 per cent 2013 44 per cent due to 
the recognition of a £104 million provision relating to the management reorganisation programme which impacted margins by approximately one 
percentage point 
specific items 
£m
reported
52 weeks 
2014
adjusted
1
52 weeks 
2013
operating specific items
royal mail pension plan amendment noncash 1350 –
transaction–related costs 28 10
employee free shares costs noncash
2
94 –
businessrelated costs 15 67
total operating specific items 1213 77
nonoperating specific items
profit on disposal of property plant and equipment 19 4
profit on disposal of associate undertaking 2 –
release of gains held in equity on disposal of pension escrow gilts – 22
net pension interest noncash 69 30
total specific items 1303 21
there were a number of specific items recognised during the year the accounting impact of the pensions reform was to increase the accounting 
pension surplus significantly resulting in a onetime noncash credit of £1350 million specific items also arose in relation to transactionrelated 
costs of £28 million 2013 £10 million and the charge associated with the employee free shares offer of £94 million the employee free shares 
offer charge represents the charge to the income statement relating to the issuing of free shares which is calculated from the start of the period 
when employees become eligible for the shares and is based on the midmarket closing price on the day of admission to the london stock 
exchange in 201415 the charge is expected to be around £170 million
businessrelated costs of £15 million 2013 £67 million largely comprise £15 million historical employment costs a £7 million release 
2013 £28 million charge of the industrial diseases claims provision and £5 million of pol separation costs 2013 £20 million relating to 
facilities management the prior year also included £20 million of asset impairments mainly property
1 
the ‘businessrelated costs’ and ‘profit on disposal of property plant and equipment’ specific items on an adjusted basis are different than on a reported basis due to the treatment 
of the costs of pol separation see basis of preparation note in financial statements for further details
2 
includes £3 million provision for national insurance which will be cash settled
financial review continued
24
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 nonoperating specific items comprise property disposal gains of £19 million 2013 £4 million and £2 million from the sale of the group’s 
associate investment in g3 worldwide mail nv spring and net pension interest 
net pension interest is noncash and is calculated by applying the discount rate at the beginning of the year for the schemes’ liabilities to the  
net pension surplus due to the substantial change in the rmpp surplus resulting from the pensions reform the net pension interest was 
recalculated to £69 million 2013 £30 million for the full year the net pension interest for 201415 based on the discount rate for the schemes’ 
liabilities and net pension surplus is expected to be around £75 million 
net finance costs excluding specific items 
the net finance costs of £67 million 2013 £99 million comprise finance costs of £71 million 2013 £104 million offset by finance income of 
£4 million 2013 £5 million 201415 will see the full year benefit of refinancing our hm government funding in 201314
on 12 september 2013 the group entered into new syndicated bank loan facilities on 15 october 2013 the date of the company’s admission to 
the london stock exchange drawdowns of £600 million were made against these new facilities and used along with £418 million of surplus cash 
to repay all existing hm government debt and accrued interest and related costs of obtaining loan finance
the net finance costs include £47 million 2013 £82 million of interest relating to average loans and borrowings on hm government facilities  
of £973 million up to the date of the repayment of these facilities 2013 £972 million at an average interest rate of 88 per cent 2013 
84 per cent a further £3 million 2013 £nil was payable on the new syndicated bank loan facilities on an average borrowing volume of 
£536 million since the company’s listing at an average interest rate of 14 per cent the total blended interest rate on the new syndicated bank 
loan facilities is estimated to be 35 per cent after including the effects of interest rate hedging commitment and arrangement fees and allowing 
for market expectation of rate rises over the life of the facilities the other main elements of net finance costs comprise £10 million 2013 
£13 million finance lease interest and commitment and arrangement fees of £8 million 2013 £8 million
the table below provides details of the new syndicated bank loan facilities
syndicated bank loan facilities
average 
balance since 
flotation 
2014 
£m
 
average 
interest 
rate
2014 

basis of 
interest  
rate at  
30 march 
2014 – libor 
plus 

facility
end date
total facility
£m
drawn
balance at
30 march
2014
£m
average loan
maturity
date
term loan a 162 15 100 2018 300 300 2018
term loan b 300 14 090 2016 300 300 2016
revolving loan facility c 74 13 085 2018 800 – –
total 536 14 1400 600
taxation
the effective tax rate on the reported profit before taxation was 23 per cent comprising the current tax charge of £37 million 2013 £38 million 
mainly in respect of gls and a deferred tax charge of £349 million 2013 £284 million credit principally in relation to the pensions reform the 
uk current tax charge is minimal primarily as a result of the statutory treatment of the hmrcapproved employee free shares offer as well as 
utilisation of some brought forward tax reliefs including losses and capital allowances gls’ current tax rate was 34 per cent reflecting higher 
european corporation tax rates on profits and losses primarily in france for which no deferred taxation credit has been recognised the deferred 
tax charge is principally due to the effect of the pensions reform the deferred tax credit in the prior year arose as a result of the recognition of  
a deferred tax asset in respect of carried forward tax reliefs in the uk including losses and capital allowances
excluding specific items the group tax charge was £97 million representing an effective tax rate of 27 per cent
notional earnings per share eps
notional eps excluding specific items was 263 pence reported 1277 pence the notional eps is calculated using the profit from continuing 
operations attributable to equity holders of the parent both reported and excluding specific items and assumes that the one billion ordinary 
shares in issue at the date of the company’s flotation had been in existence throughout the current reporting year going forward eps will be 
calculated using the weighted average number of shares in issue over the relevant period
dividends
the board is recommending a final dividend of 133 pence per share payable on 31 july 2014 to shareholders whose names appear on the 
register of members on 4 july 2014 subject to shareholder approval at the agm on 24 july 2014 
25
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information summary free cash flow
£m
reported
52 weeks 
2014
nongaap
53 weeks
2013
ebitda before transformation costs 942 915
trading working capital movements 57 60
difference between pension costs charged in operating profit and pension cash flows 58 3
total investment 617 665
other – taxation net finance costs dividend from associate undertaking 69 81
underlying cash flow 257 106
oneoff working capital movements 140 202
cash cost of operating specific items 35 26
proceeds from disposal of assets and associate undertaking nonoperating specific items 36 52
free cash flow 398 334
free cash flow increased to £398 million 2013 £334 million primarily due to trading performance and reduced investment spend 
 see kpis pages 18 to 19
ebitda before transformation costs of £942 million 2013 £915 million increased due to the improved trading performance explained above 
trading working capital movements generated an outflow of £57 million 2013 £60 million outflow due to a number of factors including the level 
of vat payments both years benefited from oneoff working capital items in 201314 there was a oneoff benefit of £150 million in respect of 
the march 2012 pension prepayment and £20 million relating to the buy forward of stamps partially offset by a £30 million unwinding of the prior 
year buy forward in 201213 working capital benefited from the buy forward of stamps of £87 million an increase in the vat creditor of 
£75 million due to an increase in the number of products that have become subject to the standard rate of vat since april 2012 and the 
unwinding of the pension prepayment of £40 million in 201415 there will be a oneoff benefit to working capital of approximately £45 million 
due to the timing of payroll payments in respect of monthly paid staff
payments in respect of transformation operating expenditure of £201 million 2013 £230 million comprised £111 million 2013 £100 million 
project and property costs £71 million 2013 £75 million voluntary redundancy payments and £19 million 2013 £55 million business 
transformation payments transformation capital expenditure was £83 million 2013 £177 million nontransformation capital expenditure  
was £333 million 2013 £258 million primarily in respect of gls parcelforce worldwide expansion and mailmark™ 
the level of investment in the year is the amount of cash ebitda that needs to be reinvested back into the business to sustain its operations  
and enable future growth it comprises both operating expenditure including voluntary redundancy payments and capital expenditure which is 
currently running well ahead of depreciation this investment is needed to transform the operations of the uk business to meet the changing mix 
of traffic and to drive efficiencies in people costs net investment totalled £581 million in 201314 reflecting total investment of £617 million 
offset by the reinvestment of operating property and business disposals of £36 million
taxation and interest cash costs of £71 million 2013 £81 million comprise £33 million 2013 £44 million relating to net interest paid and 
£38 million 2013 £37 million relating to current taxation payments 
cash inflows associated with operating property and business disposals were £36 million 2013 £52 million 
net debt
net debt decreased by £351 million to £555 million for the year ended 30 march 2014 mainly due to cash flow generated offset by £45 million 
of 201314 finance costs settled on early repayment of hm government loans and the costs associated with obtaining new loan facilities at the 
date of listing all principal and interest on hm government loans were repaid and £600 million of syndicated bank loans were drawndown
property
the group’s property portfolio can be divided into two classes surplus or soontobesurplus sites with the potential for development 
‘development properties’ and ‘operational properties’ used for the group’s daytoday operations the vast majority of the group’s properties 
are operational properties
as set out in the prospectus
4
 the group has identified three potential development sites in london nine elms mount pleasant and paddington 
the ‘london development portfolio’ depending on future changes to the configuration of the operational network some other sites may have 
the potential to become development properties but none would be of similar scale to the london development portfolio 
additionally each year there will be lower value disposals arising from localised changes to the network the proceeds from these disposals will be 
reinvested to fund partially the modernisation of the royal mail delivery office network with new external facilities now in place we can seek to 
3
3 
cash flows are the same on both a reported and adjusted basis this nongaap presentation excludes the £820 million cash flows relating to pol on its transfer to royal mail 
holdings plc on 1 april 2012 
4 
prospectus in relation to the initial public offering dated 27 september 2013
financial review continued
26
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 optimise the realisable value of any development properties as they become surplus but we will adopt a flexible approach as to the manner in 
which this is achieved
pensions reform
on 26 september 2013 the company agreed with the royal mail pension plan trustee to implement the pensions reform with effect from 
1 april 2014 under this agreement members’ pensionable pay will increase by rpi up to a maximum of five per cent regardless of whether 
actual basic pay increases by more or less than this amount this change is considered to be a ‘plan amendment’ which meets the ias 19 definition 
of a past service cost and accordingly a noncash £1350 million credit specific item has been recognised in the group income statement
pension balance sheet amounts 
the ias 19 pension position at 30 march 2014 was a surplus of £1723 million compared with a surplus of £825 million at 31 march 2013 
the increased surplus reflects the impact of the pensions reform of £1350 million partially offset by the impact on liabilities of a lower discount 
rate this discount rate is driven by the estimated real rate of return available on aa corporate bonds of similar duration to the schemes’ liabilities 
28 years
financial risks and related hedging 
the group is exposed to currency and commodity price risk the group operates hedging policies which are described in the notes to the financial 
statements the exposures are set out below together with the impact on 201415 operating profit as a result of the changes in fuel costs
exchange rates up to 30 march 2014 after the impact of the respective hedging programmes
impact on 201415 operating profit
5 increase in price 
weakening of 
sterling before 
hedging  
£m loss
no further change in 
priceexchange rate 
versus 201314 
after hedging  
£m gain
diesel and jet fuel 4 1
us 3 2
euro 10 
the currency exposure arises mainly from the group’s trading with overseas postal operators gls profits and intercompany loans with gls 
there is a significant degree of offset between these exposures and hedge programmes in place which will reduce the impact on 201415 
operating profit the residual unhedged exposure for 201415 is estimated to be £5 million in respect of euro and £30 million us dollars
it is anticipated that there will be a £1 million favourable impact on profits arising from the change in effective after hedging impact diesel costs 
from 502 pence per litre in 201314 to an anticipated 497 pence per litre in 201415 without hedging this variance would be £7 million 
favourable based upon closing fuel prices at 30 march 2014
the group’s exposure to fuel prices is shown below together with the coverage provided by the hedges in place the exposure represents the cost 
of the underlying commodity and excludes fuel duty approximately £100 million per annum diesel and jet fuel costs including duty for 201415 
are expected to be £185 million 2013 £196 million
201415 exposure
underlying 
product incl 
irrecoverable 
vat  
£m
fuel duty
£m
total 
cost
£m
underlying 
product 
hedged 
diesel 76 96 172 94
jet 13  13 86
total 89 96 185
the group manages its interest rate risk through a combination of fixed rate loans fixed via interest rate swaps fixed rate leasing floating rate 
loans and floating rate financial investments at 30 march 2014 £492 million 89 per cent of net debt of £555 million was at a long term ie 
more than one year fixed rate to maturity an increase of 100 basis points in interest rates during the year would have resulted in an increase to 
profit of £1 million 
counterparty risk is managed by limiting aggregate exposure to any individual counterparty based on their financial strength
letters of credit
in 2000 royal mail entered into a lease arrangement whereby certain automation equipment was leased and the lease rentals concurrently 
prepaid by royal mail into an investment fund following the general fall in credit ratings in the market a letter of credit has been required to 
provide on behalf of royal mail additional support to the lessor in the event of default by the investment fund holder the current value of the 
letter of credit is £37 million and it is currently not collateralised
27
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information as a result of changes to insurance arrangements during the year the group is now required to provide letters of credit against the economically 
selfinsured elements of its insurance programme as at 30 march 2014 £75 million of letters of credit were required and had been put in place 
and are not currently collateralised
the probability of any of the letters of credit being called upon is considered to be remote and therefore no disclosures have been made in 
relation to these letters of credit in the group financial statements
outlook for 201415
we continue to expect to see overall volume growth in the uk parcel market in 201415 with the b2cc2x segment growing at around 45 per 
cent to 55 per cent and the b2b segment growing at slightly above gdp however we expect that the increased competitive activity in the market 
will put pressure on pricing
we continue to expect uk addressed letter market volumes to decline by four to six per cent per annum
5
 for 201415 we expect to be at the 
better end of this range the impact of upcoming european and local elections in may 2014 and forecast improvement in gdp will more than 
offset the expected impact from the increased rollout of direct delivery competition in 201415 
gls experienced good revenue growth in 201314 in part helped by competitor disruption in italy that is not expected to be repeated in 
201415 therefore the rate of gls revenue growth in 201415 is expected to be slightly lower than in 201314 the profit improvement 
resulting from the continued turnaround in france is expected to be offset by increased it investment across the network
we continue to focus on cost control the management reorganisation programme announced in march 2014 is expected to deliver annualised 
cost savings of £50 million of which approximately £25 million will be realised in 201415 however there is expected to be an increase in the 
pension charge of £7080 million mainly driven by the increase in the ias 19 pension service charge rate from 203 per cent to 236 per cent  
as a result of market conditions the expected increase is based on the current pensionable payroll and the final charge will be dependent on  
the level and mix of pensionable pay in 201415 in addition 201415 will not benefit from the oneoff vat credit of £35 million in 201314 
depreciation and amortisation is expected to increase by around £20 million reflecting continuing investment these items will have an impact  
on the yearonyear movements in operating costs particularly in the first half of the year
excluding the oneoff vat credit and expected increase in the pension charge we are targeting around a 50 basis point expansion in group 
operating profit margin before transformation costs for the full year 
transformation costs are expected to be in the range of £120140 million largely depending on the level of voluntary redundancies 
we expect the cumulative net cash investment over 201314 and 201415 to remain at around £12 billion as the reduced costs of 
implementing certain projects in 201314 will help offset the cash costs of the management reorganisation programme in 201415 
matthew lester 
chief finance officer 
6 june 2014
financial review continued
5 
excluding election mail
28
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 business risks
the corporate governance section describes in detail how the group manages its risk from the group board level its respective subcommittees 
and through the organisation further details can be found on pages 53 to 54
the table below details the principal business risks their current status and how the group mitigates these risks
principal risk status mitigation
link to  
strategy
changes in customer preferences
the letter and parcel markets are becoming 
more competitive customer behaviours are 
constantly evolving and our competitors are 
responding quickly to these changing demands 
customer behaviour and royal mail’s 
responsiveness to market changes in 
customer behaviour and changes to the 
markets in which the group sells its products 
and services could result in reduced demand 
for the group’s products and services and 
impact our forecast rates of decline and growth 
of letter and parcel volumes respectively 
there is a risk that our product offerings and 
the customer experience we provide may not 
adequately meet evolving customer needs or 
that we are unable to innovate or adapt our 
commercial and operational activities fast 
enough to respond to changes in the market
 
 
 
no change – as 
volumes are 
broadly consistent 
with expectations
 
 
 
• we are piloting sunday afternoon opening at around 100 
delivery offices later this summer when we will also trial 
sunday parcel deliveries to home addresses within the m25
• parcelforce worldwide will also launch a sunday delivery 
service in june 2014 for online shoppers
• we launched mailmark™ barcode technology for our large 
business mail customers this increases our ability to track 
addressed letters through our network for these customers
• we continue to focus on our advertising mail offering both  
on its own and in combination with other media to ensure 
sustainable revenue streams through customer retention  
and acquisition 
• we are working with the keep me posted campaign to 
protect the rights of consumers to choose without penalty 
to receive communications such as bills and statements 
by post
• we continue to focus on meeting or exceeding our quality 
of service targets and internal performance targets such 
as composite parcel delivery performance 
• through our continued transformation programme we are 
seeking to improve first time delivery rates this includes 
an emphasis on consistency and standardisation of key 
initiatives like delivery to neighbour across our operations
• we continue to invest in technology to improve our service 
in april 2013 we introduced our tracked returns service 
we have also introduced enhanced delivery information for 
our special delivery and tracked offerings and we have 
introduced local collect our own click and collect service 
in post offices and
• we have extended our network operating hours for parcels 
processing for some of our business customers
managing the 
decline in letters
being a successful 
parcels business
being customer 
focused
managing the 
business 
successfully
economic environment historically there has 
been a correlation between economic 
conditions in the uk and europe and the level of 
letter and parcel volumes there is a risk that 
flat or adverse economic conditions could 
impact our ability to stay profitable either by 
reducing letter and parcel volumes or by 
encouraging customers to adopt cheaper 
service options for sending letters and parcels 
no change – the 
economic 
environment is 
improving in line 
with expectations
• we have robust econometric models in place to provide 
early warnings of changes to overall volumes and the 
profile of letter and parcel volumes we continually review 
and upgrade these models to better anticipate the impact 
of price rises and reflect the increasingly deregulated 
market and
• we continually review our cost base to ensure we are as 
efficient as possible
29
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information business risks continued
principal risk status mitigation
link to  
strategy
cost management and business transformation
royal mail must continuously become more 
efficient and flexible in order to compete 
effectively in the letter and parcel markets 
cost management the success of the 
business strategy relies on effective control of 
costs and the delivery of efficiency and other 
benefits from our transformation programme 
whilst maintaining quality of service safety 
and employee engagement
employee awareness and engagement  
lack of employee engagement in relation to 
transformation and understanding of the need 
for change could mean that we or cwu are 
unable to execute the efficiency changes 
enabled by the pay deal
retaining and attracting senior 
management any failure by the group to 
retain or attract directors and highly skilled 
personnel could have a material adverse effect 
on its ability to manage its costs and transform 
the business 
it transformation our current it estate 
requires significant investment and the it 
transformation programme is complex  
and will take several years to complete
failure to improve our it systems or 
successfully implement the it transformation 
programme would increase the risk of security 
breaches and attacks a material adverse effect 
on the group’s operations and the risk that the 
it systems might not be able to support the 
business plan
 
 
no change – due to 
effective 
management of 
nonpeople costs 
people costs 
growth mitigated 
by productivity 
improvements
nonpeople costs 
reduced due to 
tight cost control
reduced risk – due 
to the award of 
free shares and 
the new cwu 
agreement  
risk remains in 
place 
 
 
 
 
no change – as the 
programme is 
progressing as 
expected
 
 
• the initial phase of our transformation programme which 
included the modernisation of all of our delivery offices the 
automation of letters sorting and a revision of all delivery 
walks is now largely complete and
• we track progress and outcomes of all transformational 
revisions to operational practice on a weekly basis to 
ensure completion to time and the sharing of good practice 
and lessons learned quality of service is a fundamental 
consideration prior to any change 
 
• our recent agreement with the cwu includes an agenda 
for growth to deliver change at the right pace and to ensure 
we are working together towards agreed goals 
 
 
• the directors’ remuneration report sets out the group’s 
overarching approach to remuneration in its policy pages 
59 to 63 the policy sets out that the overall remuneration 
package should be sufficiently competitive to attract retain 
and motivate executives with the commercial experience to 
run a large complex business in a highly challenging 
context there is a risk if it is not 
• we are actively progressing and monitoring the it 
transformation programme this remains high risk due to 
the significant scale and complexity of change and the 
ongoing requirement for effective management of the 
transition
managing the 
business 
successfully
regulatory and legislative environment including direct delivery
the business operates in a regulated 
environment changes in legal and regulatory 
requirements could impact our ability to meet 
our targets and goals
direct delivery and the universal service 
in our liberalised postal market other operators 
are able to offer direct delivery services by 
cherry picking easytoserve urban areas 
without having to adhere to the same high 
delivery requirements and quality standards as 
royal mail 
the combination of mandated access 
unfettered rollout of direct delivery and 
structural decline in letters poses a serious risk 
to the economics of the uso in the uk
 
 
 
increased risk 
– due to unfettered 
rollout of direct 
delivery 
competition and 
ofcom not bringing 
forward a review 
of the impact of 
direct delivery on 
the uso 
 
 
 
• we have proposed changes to our access contracts to help 
secure the provision of the universal service certain of 
these proposed changes are subject to a competition act 
investigation by ofcom under the terms of royal mail’s 
access contracts the price changes subject to the 
investigation are suspended pending the outcome of that 
investigation and
• we are preparing a regulatory submission calling for ofcom 
to bring forward its full review of direct delivery 
competition in the uk and how it will protect the universal 
service from the serious risk this presents
managing the 
decline in letters
30
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 principal risk status mitigation
link to  
strategy
any failure or delay by ofcom in undertaking a 
review of direct delivery in the future or any 
failure or delay in introducing appropriate 
regulatory safeguards to protect the universal 
postal service would be likely to undermine the 
group’s future ability to earn revenue 
necessary to ensure the sustainable provision 
of the uso 
vat exemption mandated network access 
services provided by royal mail are currently 
exempt from value added tax vat this vat 
exemption is currently the subject of judicial 
review proceedings there is a risk that the vat 
exemption on access services could be lost as a 
result of these proceedings thus increasing the 
cost to those customers who cannot reclaim vat 
in this case endusers that use such network 
access services for distribution of their letters 
may accelerate their adoption of esubstitution 
or alternative means of communicating with 
their customers or switch to competing third 
party direct delivery services
employment legislation changes to laws and 
regulations relating to employment including 
the interpretation and enforcement of those 
laws and regulations could directly or 
indirectly increase the group’s labour costs 
which given the size of the group’s workforce 
could have an adverse effect on the group 
there is emerging european case law which 
may provide new guidance in relation to the 
interpretation of the working time directive 
which subsequently would need to be 
considered by the english courts in relation to 
the implementation of that directive through 
the working time regulations 1998 and uk 
employers’ compliance with it
 
 
 
no change – 
outcome of judicial 
review 
proceedings 
pending
increased risk 
– due to evolution 
of case law 
 
 
 
 
 
• we consider that hm revenue  customs hmrc has 
correctly implemented vat legislation in compliance with 
european law and we are continuing to support hmrc in 
defending the claim
 
 
 
 
 
• we have processes and controls to ensure that we pay all 
of our people correctly if the law is changed or elements 
relevant to the particular circumstances of royal mail are 
reinterpreted by english courts then we will need to adapt 
to these as appropriate
managing the 
business 
successfully
industrial relations
there is extensive trade union recognition in 
respect of our workforce in the uk
industrial action there is a risk that one or 
more material disagreements or disputes 
between the group and its trade unions could 
result in widespread localised or national 
industrial action
widespread localised or national industrial 
action would cause material disruption to our 
business in the uk and would be likely to result 
in an immediate and potentially ongoing 
significant loss of revenue for the group
widespread localised or national industrial 
action may cause royal mail to fail to meet the 
quality of service targets prescribed by ofcom 
leading to enforcement action and fines
 
reduced risk – due 
to the new cwu 
agreement
 
• we have reached an agreement with the cwu on an 
agenda for growth including a new legally binding 
agreement to promote industrial stability and provide 
employee protections the agreement represents a joint 
aspiration to radically improve industrial relations and 
create a cando culture in the interests of customers 
employees and the company and
• we continue to engage with both unite and the cwu at all 
levels across the business and there is constant visibility of 
issues action taken and potential risks
managing the 
business 
successfully
31
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information corporate responsibility
responsibility leader
silver
distinction in the robecosam 
sustainability yearbook  
ranking us amongst global  
dow jones sustainability  
index leaders
top 10
in bitc’s corporate responsibility 
index – the uk’s leading 
benchmark for corporate 
responsibility
our performance
times top 50
employer for women
85 per cent
of people in the uk think 
royal mail is an important part 
of local communities
1
£50 million
donated to over 975 charities  
since our payroll giving scheme 
was launched in 1989
35 per cent
reduction in uk carbon emissions 
compared with 201213
1 
ipsos mori corporate image survey 2013
32
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 2 
we also provide a detailed annual disclosure on customer complaints to our regulator which is publicly available
the links between our corporate responsibility aims and our core strategic priorities are shown 
in the table below
corporate responsibility objective
being a 
successful 
parcels 
business
managing  
the decline  
in letters
being 
customer 
focused
delivering economic and social benefit  
to the communities we serve 3 3 3
driving colleague advocacy of the group  
and its community role 3 3
managing the environmental impacts of  
our business and operations 3 3
delivering our transformation responsibly 3 3 3
communicating our management of corporate 
responsibilities openly and transparently 3 3
we report progress against our corporate 
responsibility objectives under the areas of 
customer people community suppliers 
and environment 
measuring our progress
we aim to be independently rated as one of 
the most responsible companies in the uk 
business in the community’s corporate 
responsibility index is one good way of 
measuring our performance in the 2014 
index royal mail was ranked one of the top 
ten most responsible companies in the uk 
we achieved a silver distinction in the  
2013 robecosam corporate sustainability 
yearbook the assessment that forms  
the foundation of the dow jones  
sustainability index djsi we rank  
amongst the top four companies globally  
in our industry transportation and 
transportation infrastructure
our customers
being customer focused is one of our strategic 
objectives see page 16 every person and 
business in the uk is a potential customer as 
the uk’s universal service provider royal mail 
can deliver to more than 29 million addresses 
across the uk sixdaysaweek for a 
uniform affordable price
in gls we are aiming to expand our customer 
base in europe as we seek to build our 
presence in the growing b2c segment 
we have continued to progress in 201314 – 
exceeding our regulatory quality of service 
targets for first class and second class mail 
and achieving a six per cent reduction in 
customer complaints
2
 maintaining this 
performance and our customers’ trust  
is a key strategic priority
we seek feedback from both business and 
consumer customers to help us to continually 
improve our performance our business 
customer satisfaction score and quality of 
service standards are detailed in the ceo 
review on page 11 as well as improved 
performance in these areas in our second full 
year of gathering consumer customer 
satisfaction scores we have also seen a steady 
increase from 68 in 201213 to 70 in 201314 
we measure our employees’ views on how 
customer focused our products and services 
really are we use our annual employee 
survey to gauge what they think about key 
aspects of the customer experience this year 
we achieved a customer focus score of 69 
compared with 65 last year
 see kpis pages 18 to 19
our people
employee engagement is one of the key 
drivers in our business success our 
employee survey helps us identify the areas 
where we are doing well and those we need 
to improve this year we achieved an 
employee engagement score of 54 up from 
50 in 201213
 see kpis pages 18 to 19
as noted in our kpi table on page 18 we take 
action to ensure we are continuously 
improving employee engagement by
• keeping people informed of our business 
strategy and their role in delivering it 
during the year we conducted almost 
60 town hall meetings two group forums 
conferences for our most senior managers 
and our operations and modernisation 
forum for approximately 4000 operations 
managers
• supporting managers in the creation and 
implementation of local action plans based 
on feedback from the annual employee 
survey and
• updating our employees through the royal 
mail inhouse newspaper ‘courier’ royal 
mail tv rmtv and our other digital and 
printed communication channels this 
includes regular updates on our financial 
results business developments and 
competitor activity
gls also undertakes targeted engagement 
activities for example in gls belgium the 
management team visits each depot at least 
once a year to engage with employees while 
in gls poland 360degree feedback has 
been used to inform development plans and 
training requirements 
in december 2013 we agreed in principle a 
groundbreaking new agreement on an 
agenda for growth with our main union the 
cwu it is about improving industrial relations 
creating a cando culture and a joint 
commitment to delivering business success 
royal mail makes a major contribution to the uk’s social and economic infrastructure 
as the designated provider of the universal service we play a vital role in connecting 
millions of customers businesses organisations and communities – including those in 
the most remote rural areas 
our corporate responsibility strategy is an integral part of realising our core strategic 
priorities the objectives at the heart of our business and corporate responsibility 
strategies are the same – to ensure a sound and sustainable universal service and  
to generate sustainable shareholder value 
33
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information 3 
race colour ethnic or national origin nationality disability marital or civil partner status sexual orientation pregnancy or maternity age religion or belief including political opinion 
in northern ireland sex and gender reassignment
4 
jan babiak resigned from the board with immediate effect on 29 april 2014 this statistic is inclusive of her being a director during the year ended 30 march 2014 
5 
the female ftse board report 2013 cranfield university school of management
6 
labour market status by ethnic group ons january 2014
7 
includes heritage trustees not included in the people numbers on page 96 total difference of 44 people
corporate responsibility continued
the agreement includes legallybinding terms 
covering employee pay protections and 
industrial stability as well as a programme  
of work to help deliver change at pace in 
operations the industrial stability framework 
sets out a new approach to resolving 
workplace issues 
in february 2014 over 94 per cent of cwu 
members voted in favour of the proposed 
agenda for growth 57 per cent of eligible 
members voted in the ballot
training and career development
ensuring our people have the skills they  
need to do the job is also fundamental to  
the success of the business 
we make a significant investment in our 
learning and development programmes in 
201314 almost 50000 colleagues attended 
instructorled training in the uk with 90000 
colleagues attending webbased training 
sessions topics covered include improving 
the customer experience safety compliance 
and management and leadership
examples from across gls include the gls italy 
academy where tailored training curricula were 
developed in 201314 for different functions 
and responsibilities gls germany offers a 
threeyear bachelor degree programme in 
logistics or information management
promoting diversity
royal mail employs a diverse mix of people 
who reflect the communities in which we 
work and the customers we serve we are 
committed to being an equal opportunities 
employer and we proactively seek to recruit 
people from socially excluded groups it is our 
policy to provide opportunities for our 
employees based on an individual’s 
performance and skills with no discrimination 
against protected characteristics
3
 
we are a signatory to the government’s 
think act report initiative we work with 
business in the community’s bitc 
opportunity now and race for opportunity 
programmes which promote best practice  
in equal opportunities 
in late 2013 we established a diversity 
council to progress and monitor our diversity 
performance chaired by the company 
secretary it includes the chief operating 
officer group hr director frontline 
employees and representatives from the 
cwu and unite the council met for the  
first time in march 2014 its progress  
will be regularly reviewed by the chief 
executive’s committee
our existing gender diversity steering group 
will continue to support our gender strategy 
it will report to the diversity council since its 
inception in 2010 the steering group has 
developed policies and initiatives to attract 
new talent and support female colleagues’ 
career progression through this work we 
have achieved external recognition 
in 2013 we were named as one of bitc’s top 
10 private sector organisations for gender in 
the uk we also achieved a place in the times 
top 50 employers for women in 2014 
at our board and senior management grades 
we have relatively high gender diversity see 
table below at board level 36 per cent of 
members are female
4
 on average ftse 100 
companies have 173 per cent female 
representation on their boards
5
 
at senior management level 26 per cent of 
employees are female compared to 15 per 
cent in operational functions we are 
committed to improving the gender balance 
across all areas of the business 
royal mail’s ethnic profile is representative of 
the uk workforce
6
 around ten per cent of our 
employees declare themselves to be from 
ethnic minority backgrounds however we 
recognise we need to improve representation 
of ethnic minorities amongst our 
management population our newly
established diversity council will seek to 
address this
as a disability ‘two ticks’ employer royal 
mail welcomes job applications from 
candidates with a disability or health 
condition we have reviewed our recruitment 
processes to ensure a fair approach for 
people with disabilities and we interview all 
disabled applicants who meet the minimum 
criteria for a role additionally the case study 
on page 37 provides insight into our 
partnership with disability charity remploy
we make reasonable adjustments to the 
workplace to support employees who become 
disabled we also provide training as 
required for example in assistive technology 
and software 
we introduced deaf awareness training 
workshops for hearing impaired employees 
their colleagues and managers we also focus 
on ensuring those with disabilities are not 
discriminated against through the provision of 
ukpil
7
gls
gender distribution number of people female male female male
royal mail plc board
4
4 7
senior management 694 1789 36 243
management 1715 6950
2739 2354
administrative 1700 1341
operational 19011 115274 1924 6515
34
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 8 
percentage of employees identifying themselves as having a disability in the 2014 employee survey 
9
 the number of ukpil employee work related accidents resulting in an absence on a subsequent day or shift per 100000 hours worked 
10 
includes our mandated commitments to articles for the blind and bpma totalling £61 million
antidiscrimination workshops approximately 
six per cent of our employees have a disability
8

safety
the safety and wellbeing of our workforce is 
an enduring priority for us our safety goal is 
to reduce the number of accidents to zero a 
commitment driven throughout the business 
by a specific safety kpi in our corporate 
balanced scorecard
077
117
147
179
2014 2013 2012 2011  
lost time accidents per 
100000 work hours
we continue to make progress driving down 
accident rates we achieved a lost time 
accident frequency rate
9
 of 077 in 201314 
compared with 117 in 201213
 see kpis pages 18 to 19
we strive to improve our safety performance 
in everything we do it is with great regret 
that we report four people died in connection 
with our activities in the uk in the past year 
all fatalities were associated with road traffic 
accidents with our vehicles we liaise closely 
with the relevant authorities and undertake 
our own detailed investigations to establish 
the root cause of each accident and where 
possible to determine what lessons can be 
learned findings are discussed at board level 
and communicated across the group
we continue to take actions to improve safety 
we have appointed a head of health and 
safety at parcelforce worldwide to develop  
a safety leadership culture we also ran our 
annual road safety week campaign in 
november 2013 raising safety awareness 
through videos posters rmtv and managers’ 
briefings topics ranged from seatbelts and 
stationary objects to driver distractions and 
winter driving
our communities
our economic impact as a major employer 
and purchaser of goods and services is 
significant the centre for economics and 
business research ltd cebr commissioned 
by royal mail has carried out a complete 
economic impact assessment of ukpil cebr 
found that we made the seventh largest 
contribution to the uk economy of all uk 
corporations for the 201314 financial year 
our impact totalled £105 billion in terms of 
value added made up of direct and indirect 
contributions to the wider uk economy  
this includes our contribution through 
employment procurement and taxation  
our approach to tax is published on page 36 
cebr research commissioned in 2013 also 
found that we make a significant contribution 
to social inclusion through the employment 
and earnings we bring to some of the uk’s 
poorer regions we offer jobs where there are 
generally fewer job opportunities on average 
across the uk one in every 200 employees 
works for royal mail 
supporting good causes
in 201314 royal mail contributed 
£98 million
10
 directly to charities good 
causes and schemes for disadvantaged 
groups we also supported £33 million of 
colleague fundraising for charities and good 
causes across the uk 
in early 2014 we celebrated reaching 
25 years and £50 million in charitable 
donations through our payroll giving scheme 
the generosity of our people has been 
recognised by two national payroll giving 
excellence awards and a platinum payroll 
giving quality mark award 
we also met our target to raise £2 million  
for our charity of the year prostate cancer 
uk royal mail matched money raised by 
colleagues pennyforpenny this will fund  
at least 34 specialist prostate cancer nurses  
in areas of need across the uk during the 
year royal mail also provided £136000 in 
matched giving and grants schemes to 
support employees’ fundraising for all other 
charities and good causes
gls uses its services to support areas of 
need across europe this has included 
delivering organic breakfast boxes to pupils in 
frankfurt collecting christmas presents for 
refugee children in austria and collecting and 
delivering aid supplies in sassari italy 
following the devastation of cyclone cleopatra 
in november 2013
our suppliers
in the uk we contribute around £25 billion 
annually procuring goods and services from 
over 6300 suppliers
we are committed to ensuring that our 
suppliers maintain high standards of social 
ethical and environmental conduct we expect 
suppliers to adhere to our responsible 
procurement code of conduct our code  
is based on the un global compact’s ten 
principles around good human rights labour 
and environmental practice and anti
corruption in addition we encourage them to 
set objectives to improve their performance in 
social environmental and ethical issues in 
2013 we became the first company globally 
to be awarded the chartered institute of 
purchasing  supply’s platinum standard for 
procurement and supply chain management
35
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information 11 
carbon dioxide equivalent emissions co
2
e have been calculated in accordance with the uk government’s environmental reporting guidance 2013 version data has been 
consolidated according to the ‘financial control’ approach we have reported all material scope 1 and scope 2 emissions for which we consider ourselves responsible and exclude 
immaterial sources such as fugitive emissions from air conditioning in owned vehicles
12 
co
2
e emissions for 201213 have been restated from 746500 tonnes in accordance with revised defra emission factors
13 
co
2
e emissions have been assured by ey
our taxation principles
royal mail makes a significant tax 
contribution to public finances and we take 
a fair and reasonable approach to tax
• royal mail’s head office is in the uk 
and our parent company is and will 
remain a uk tax resident company 
• royal mail will comply with applicable 
tax rules regulations and disclosure 
requirements in all territories in which 
we operate we will not engage in 
abusive tax arrangements
• royal mail will where it is responsible 
and appropriate to do so take steps to 
reduce our tax liabilities within the 
laws of the countries in which group 
companies operate we will claim 
properly available allowances 
deductions reliefs incentives 
exemptions and credits where it is 
beneficial to do so 
our environment
we aim to minimise the environmental impact 
of our business operations managing and 
reducing our impact in a responsible manner 
will help us save costs compete more 
effectively and deliver a good service to 
our customers
during the year the chief executive’s 
committee reviewed our environment 
strategy we reconfirmed our targets for 
carbon emissions and waste we also 
reconfirmed our main environmental focus 
areas namely climate waste water 
biodiversity and customers and suppliers
we published a new groupwide environment 
policy to strengthen our approach our policy 
statement adjacent sets out our approach to 
environmental issues in our operations a full 
version of the policy can be accessed online at 
wwwroyalmailgroupcomresponsibilitypolicies
the table below sets out our group scope 1 
and scope 2 carbon dioxide equivalent c0
2
e 
emissions for 201314
our target is to achieve a 20 per cent reduction 
in our ukpil emissions including scopes 1 2 
and 3 by 202021 compared to a 2004–05 
baseline we achieved a 35 per cent reduction 
in our uk carbon footprint in 201314 
generating around 705200 tonnes compared 
with 730800 tonnes in 201213
12
 we are on 
track to achieve our longterm target 
we diverted 71 per cent of waste from landfill 
last year achieving our 201415 target of 
70 per cent one year ahead of schedule we 
did this by raising awareness amongst our 
employees of the importance of separating 
waste and by making recycling easy we also 
recorded a reduction of 65 per cent in our use 
of water during the year we have completed 
water footprint assessments at our top 
50 water consuming sites and will use the 
resulting recommendations to further develop 
our strategy and drive efficiencies
in gls environmental management and 
performance is driven through the thinkgreen 
initiative – an overview is provided in the case 
study on page 37
our environment policy statement
we commit to 
• comply with all relevant legislation 
regulations and other voluntary 
commitments 
• prevent pollution incidents and 
manage our environmental impacts 
through an environmental 
management system which aligns with 
iso14001 
• seek ways to continue to improve our 
environmental performance through 
clear measurement and management 
of our impacts investment in 
technology and employee engagement 
this will be delivered in partnership 
with world class mail royal mail 
group’s comprehensive programme for 
continual improvement 
• ensure our employees are fully 
engaged with our programme of 
activity and act in a responsible 
manner and 
• work with government industry 
partners environmental organisations 
and others to learn share and promote 
environmental best practice and 
innovation
201314 c0
2
e emissions by scope ‘000 tonnes
1113
total ukpil gls
scope 1 4731 4576 155
scope 2 1497 1326 171
total 6228 5902 326
tonnes co
2
e per £1 million revenue 659
corporate responsibility continued
36
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 case study
remploy and the first shot 
programme
we have been a national partner of disability charity remploy since 
2008 working together to provide jobs and placements for people 
with disabilities during 201314 around 300 people with 
disabilities started working at royal mail as a result of this 
partnership we are pleased to report that in april 2014 just after 
year end we reached a significant milestone royal mail has now 
provided employment to 2000 people through the partnership we 
are one of only three organisations to have supported this number 
of remploy people into work 
our group hr director is on the board of trustees of the business 
disability forum through this we became aware of and took the 
opportunity to extend our remploy partnership by committing to 
support at least 40 people made redundant by the closure of 
remploy factories across the country we have developed a 
programme of placements providing participants with the 
opportunity to learn new skills in order to support them into new 
roles by the end of april 2014 more than 40 people had applied  
to be a part of the scheme 
case study
gls thinkgreen
in 2008 gls launched its thinkgreen environmental initiative to 
coordinate and actively promote environmental activities the 
programme has three key aims to use resources responsibly 
reduce emissions and optimise waste management key initiatives 
to help gls achieve these objectives include modernising the fleet 
and buildings optimising transport planning and implementing local 
green measures initiatives range from tree planting in hungary  
to a carbon neutral shipping service in germany
a network of 25 environmental representatives helps integrate the 
thinkgreen vision and promote best practice across the company 
they have supported the implementation of the iso14001 
environmental management system ems across 17 countries 
thinkgreen is also the driving force behind the rollout of gls 
ecodepots constructed using recyclable materials and making use 
of heat pumps rainwater harvesting and photovoltaic cells the 
ecodepots have reduced energy and water consumption meaning  
a reduced environmental impact as well as reduced business costs 
gls opened three new ecodepots during 201314 at habay and 
nivelles in belgium and steinabrückl in austria this brings the total 
number of ecodepots in gls to 15
human rights
we are committed to upholding human rights 
both internally and externally to the business 
we commit to obeying the laws rules and 
regulations of every country in which we 
operate in addition we respect and support 
the united nations universal declaration of 
human rights and the international labour 
organization fundamental conventions 
covering freedom of association the abolition 
of forced labour equality and the elimination 
of child labour our commitments and 
expectations – both for ourselves and for our 
suppliers – are set out in our corporate 
responsibility policy and our responsible 
procurement code of conduct  
wwwroyalmailgroupcomresponsibility
policies
this strategic report was approved by the 
board on 6 june 2014
emily pang
company secretary 
 
 
 
 
 
37
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information nonexecutive directors
64
executive directors
27
chairman
9
board composition 
public utilities including 
stateowned mail 
delivery service 15
finance 24
logistics 15
accounting 23
retail and marketing 23
experience
male
64
female
36
gender balance
 
jan babiak resigned from the board with immediate 
effect on 29 april 2014 the above statistical analysis is 
inclusive of her being a director during the year ended 
30 march 2014
donald brydon cbe
chairman
moya greene
chief executive officer
orna nichionna
senior independent 
nonexecutive director
matthew lester
chief finance officer
mark higson
managing director  
operations and modernisation
john allan
nonexecutive director
jan babiak
nonexecutive director
nick horler
nonexecutive director
details of membership of the 
various board committees  
can be found in the corporate 
governance section
cath keers
nonexecutive director
paul murray
nonexecutive director
les owen
nonexecutive director
our board of directors
38
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 donald brydon cbe chairman age 69
appointed to the board
1
 6 september 2013
skills and experience donald had a 20year 
career with barclays group during which time 
he was chairman and chief executive of 
bzw investment management and acting 
chief executive of bzw followed by 15 years 
with the axa group including holding the 
posts of chairman and chief executive of 
axa investment managers and chairman 
of axa framlington he has since chaired 
several ftse 100 companies in addition to 
his experience of a wide range of domestic 
and international industries
external appointments current and 
former currently chairman of the sage 
group plc he is chair of the medical research 
council and patron of the british postal 
museum and archive and was previously 
chairman of smiths group retired 
november 2013 the london metal exchange 
amersham plc taylor nelson sofres plc the 
ifs school of finance and everychild an 
international children’s charity he is a former 
director of allied domecq plc scottish power 
plc and axa uk plc
committee membership chairman of the 
nomination committee and a member of the 
remuneration committee
moya greene chief executive officer age 60 
appointed to the board
1
 6 september 2013
skills and experience moya started her 
career in public service in 1979 and held 
various posts in a variety of departments 
culminating in the position of assistant deputy 
minister for transport canada her experience 
in the financial sector includes managing 
director infrastructure finance at td 
securities inc and senior vice president and 
chief administration officer retail products 
at canadian imperial bank of commerce 
her operating experience includes senior 
vice president for operational effectiveness 
at bombardier moya became president 
and chief executive officer of canada post 
corporation in 2005 she has been chief 
executive officer of royal mail since 2010
external appointments current and 
former currently director of tim hortons in 
canada member of both audit committee and 
human resources and compensation 
committees at tim hortons inc chairman of 
the remuneration committee at purolator inc 
formerly she was vicechairman of purolator 
courier ltd a canadian express parcel 
company 
committee membership chair of the  
chief executive’s committee cec
orna nichionna nonexecutive director 
age 58
appointed to the board 20 september 2013
skills and experience orna is a former 
partner at mckinsey  company where 
she specialised in serving retail and 
consumer clients
external appointments current and 
former currently chair of the advisory 
board at eden mccallum llp a non
executive director of saga plc and a trustee 
of the national trust formerly senior 
independent director of hmv plc northern 
foods plc and bupa and a nonexecutive 
director of bank of ireland uk holdings plc 
and bristol  west plc
committee membership chair of the 
remuneration committee member of 
the audit  risk committee and the 
nomination committee
matthew lester chief finance officer age 50
appointed to the board
1
 6 september 2013
skills and experience matthew was 
previously group finance director of icap plc 
for five years and has held a number of senior 
finance roles at diageo plc including group 
financial controller and group treasurer
external appointments current and 
former matthew is a nonexecutive director 
of man group plc and a main committee 
member of the 100 group of finance 
directors where he is chairman of its 
investor relations and markets committee
committee membership member of the cec 
and the pensions committee
mark higson managing director operations 
and modernisation age 58
appointed to the board 20 september 
2013 mark will resign from the board 
following the 2014 annual general meeting
skills and experience mark was previously 
divisional chief executive and group 
operations director of bpb plc he has 
also held senior positions at courtaulds plc 
hj heinz and british aerospace
external appointments current and 
former currently president of the world 
class manufacturing association wcma 
and a member of the ipa advisory council
committee membership member of 
the cec
john allan nonexecutive director age 65
appointed to the board 20 september 2013
skills and experience john is currently 
chairman of dixons retail plc and ship midco 
limited trading as worldpay limited he is to 
become a nonexecutive director and 
chairman designate of barratt developments 
plc from 1 august 2014 and will become 
chairman following barratt developments plc’s 
agm on 12 november 2014
external appointments current and 
former john is chairman of the board of 
trustees of the dhl uk foundation and a 
senior adviser to alix partners he is a former 
senior executive and corporate board 
member of deutsche post world net 
previously amongst other senior executive 
roles john was a cfo and corporate board 
member of deutsche post dhl he was ceo 
of exel plc a supply chain logistics company 
john was also previously chairman of care 
uk health  social care holdings limited and 
a nonexecutive director of the home office 
supervisory board he has also been a 
nonexecutive director at phs group plc iss 
as national grid plc wolseley plc hamleys 
plc 3i plc and connell plc his early career 
was with lever brothers bristolmyers 
company ltd and fine fare ltd
committee membership member of the 
audit  risk committee
1 
the director was appointed on 6 september 2013 to the board of royal mail limited which changed its name to royal mail plc on 19 september 2013
39
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information jan babiak nonexecutive director age 56
appointed to the board 20 september 
2013 jan resigned from the board with 
immediate effect on 29 april 2014
skills and experience jan previously held 
managing partner and executive board level 
roles at ey
external appointments current and 
former currently on the board of walgreens 
and is chair of its audit committee and a 
member of its finance committee she is also 
a board member of the bank of montreal 
a member of its audit and conduct review 
committee and of the risk committee she 
has also been an independent board member 
and audit committee chair for logica plc 
in addition jan is a council member on the 
governing body of the institute of chartered 
accountants in england and wales
committee membership member of the 
nomination committee the pensions 
committee and the remuneration committee
nick horler nonexecutive director age 55
appointed to the board 20 september 2013
skills and experience nick was previously 
chief executive officer of scottish power 
and has held senior strategic roles in major 
companies both in the uk and abroad 
including being managing director retail 
and board member of eon uk plc and 
md powergen energy trading limited
external appointments current and 
former currently a nonexecutive director 
of the goahead group plc member of audit 
remuneration and nomination committees 
and a nonexecutive director of thames 
water utilities limited nick is also chairman 
of alderney renewable energy ltd and 
chairman of meter provida ltd
committee membership member of 
the audit  risk committee and the 
nomination committee
cath keers nonexecutive director age 49
appointed to the board 20 september 2013
skills and experience cath was previously 
customer director and marketing director 
of 0
2
 uk and has held various marketing 
strategy and business development roles 
at next sky tv avon and thorn emi
external appointments current and 
former currently a nonexecutive director 
of telefónica europe home retail group plc 
and the insurance group liverpool victoria 
friendly society limited lv cath has 
chaired the remuneration and nomination 
committee at lv since may 2011 and has 
chaired the remuneration committee at 
home retail group since july 2012
committee membership member of 
the audit  risk committee and the 
nomination committee
paul murray nonexecutive director age 52
appointed to the board 20 september 2013
skills and experience paul has been 
chairman of the audit  risk committee 
since august 2009 and is audit committee 
chairman at qinetiq plc he was group 
finance director of carlton communications 
plc and of lasmo plc
external appointments current and 
former currently nonexecutive director 
of independent oil and gas plc naked energy 
ltd qinetiq group plc and ventive ltd 
in addition paul is a treasurer of pilotlight 
formerly senior independent director of 
taylor nelson sofres plc and nonexecutive 
director of thomson sa and of tangent 
communications plc 
committee membership chairman of 
the audit  risk committee member 
of the pensions committee and the 
remuneration committee
les owen nonexecutive director age 65
appointed to the board 20 september 2013
skills and experience les is a qualified 
actuary with 35 years’ experience in the 
financial services industry from 2000 to 2006 
he was the group chief executive officer of 
axa asia pacific holdings limited he was also 
ceo of axa sun life plc a member of the 
global axa group executive board and 
responsible for axa’s asian life insurance 
and wealth management operations
external appointments current and 
former currently nonexecutive chairman 
of jelf group plc and nonexecutive director 
of computershare cpp group plc just 
retirement group plc and of discovery 
holdings a south african listed health and life 
insurer he was previously a nonexecutive 
director of post office limited
committee membership chairman 
of the pensions committee member 
of the audit  risk committee and the 
remuneration committee
directors who left during the year
during the year no directors have left the 
royal mail plc board or the royal mail group 
limited board except those directors 
appointed to the royal mail plc board on 
20 september 2013 who left the royal mail 
group limited board on the same day
directors’ original appointment dates to 
the board of a royal mail parent company
the table below shows the dates that the 
directors were appointed to the board of 
royal mail holdings plc the parent company 
until 1 april 2012 and the board of royal mail 
group limited the parent company until 
12 september 2013
our board of directors continued
director royal mail holdings plc royal mail group limited
donald brydon cbe 27 january 2009
1
1 april 2012
moya greene 15 july 2010 1 april 2012
orna nichionna 1 june 2010
2
1 april 2012
matthew lester 24 november 2010 1 april 2012
mark higson 5 november 2007 1 april 2012
john allan – 14 january 2013
jan babiak – 1 march 2013
nick horler 1 april 2010 1 april 2012
cath keers 1 june 2010 1 april 2012
paul murray 1 august 2009 1 april 2012
les owen 27 january 2010 1 april 2012
1 
appointed chairman on 26 march 2009
2 
appointed senior independent director on 1 april 2011
40
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 chief executive’s committee 
moya greene
chief executive officer
stephen agar
managing director  
consumer and network access
rico back
gls chief executive officer
catherine doran
chief information officer
neil harnby
general counsel
mark higson
managing director 
operations and modernisation
matthew lester
chief finance officer
jon millidge
group hr director
mike newnham
chief customer officer
shane o’riordain
managing director 
communications strategy 
regulation and pricing
emily pang
company secretary
stuart simpson
deputy chief operations officer
sue whalley
chief operations officer
41
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information chief executive’s committee continued
moya greene chief executive officer
see ‘our board of directors’ on page 39
stephen agar managing director consumer 
and network access
current role stephen was appointed 
managing director consumer  network 
access commencing october 2011 as such 
stephen is responsible for the regulated 
letters business both uso and access
previous work history stephen is a barrister 
who started his career in the government 
legal service before moving to racal 
electronics plc he joined royal mail in 1991 
and previous roles with royal mail include 
business strategy director regulatory affairs 
director and md royal mail wholesale
rico back chief executive officer gls 
current role rico was appointed chief 
executive officer of gls in october 1999
previous work history rico was founding 
manager of german parcel in 1989 which 
was acquired by the group in 1999 he is a 
member of the cec and a member of the 
supervisory board of raben group a 
haulage contractor
catherine doran chief information officer
current role catherine joined royal mail in 
september 2011 as chief information officer 
she is a nonexecutive director for defra and 
bqf she is also a member of the cio board 
for eskills uk 
previous work history catherine joined 
royal mail from network rail where she  
led the companywide transformation 
programme aimed at achieving multibillion 
pound savings through technology and 
process changes throughout her career 
she has held progressively responsible it 
leadership roles in a number of blue chip 
companies – bt natwest capital one 
logica and altergo
neil harnby general counsel 
current role neil was appointed general 
counsel in january 2012
previous work history previously neil was 
general counsel for the european and middle 
eastern division of ge capital the financial 
services unit of the general electric company 
before joining ge neil was a partner at 
linklaters llp neil has a ba honours degree 
in history and is a qualified solicitor after 
leaving university neil spent five years as 
a commissioned officer in the british army
mark higson managing director operations 
and modernisation 
see ‘our board of directors’ on page 39
matthew lester chief finance officer
see ‘our board of directors’ on page 39
jon millidge group hr director 
current role jon was appointed group hr 
director in february 2014 he is also 
chairman of national design consultancy ltd 
and a pension scheme trustee of the royal 
mail defined contribution plan
previous work history jon joined royal mail 
in 1985 as a graduate and has worked across 
all of the businesses of the group notably as 
hr director in royal mail letters 2003 – 
2004 parcelforce worldwide 2000 – 2003 
and subscription services 1997 – 1998 and 
as general manager in the post office 1999 
– 2000 he was previously company 
secretary from may 2010 to february 2014 
and prior to that was the acting group hr 
director jon is a fellow of the chartered 
institute of management accountants  
and of the chartered institute of  
personnel development
mike newnham chief customer officer 
current role mike was appointed chief 
customer officer in march 2012 
previous work history previously mike led 
the consumer division of orange in the uk for 
two years prior to that mike held a number 
of executive board positions at orange 
including running the consumer sales and 
service operations and leading orange’s b2b 
business mike joined orange as the uk cfo 
before joining orange mike was a director at 
pricewaterhousecoopers in the telecoms 
media and technology practice mike has a ba 
honours degree in management science and 
is a qualified chartered accountant
the group has a focused and committed management team which has driven the return of the group to profitability and the successful 
implementation of the transformation programme working closely with key stakeholders including hm government ofcom trade unions and 
colleagues the management team has successfully addressed a number of significant challenges faced by the group including enabling the 
company to gain access to external capital
42
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 shane o’riordain managing director 
communications strategy regulation and 
pricing 
current role shane was appointed managing 
director communications in november 2010 
joining from lloyds banking group he has 
subsequently assumed responsibility for 
strategy regulation and pricing
previous work history shane was previously 
group corporate affairs director at a number 
of ftse 10 companies lloyds banking group 
and hbos as well as at halifax and flemings 
in these roles his responsibilities spanned 
customer businesstobusiness and city pr 
issues management internal communications 
sponsorship community investment and 
government relations at both uk and eu 
levels previously shane was a diplomat in  
the irish diplomatic service with postings  
in dublin belfast and washington dc  
shane has a degree in public administration 
masters’ degrees in business administration 
and organisational behaviour and is an 
associate of the chartered insurance institute
emily pang company secretary
current role emily was appointed as 
company secretary in february 2014 in 
addition to her current responsibilities she 
joined the group as chief of staff for royal 
mail group in april 2011
previous work history prior to joining royal 
mail emily was at canada post where she 
was executive chief of staff office of the 
president and ceo and the interim lead 
executive for human resources prior to that 
she worked at cibc a major canadian bank 
her experience there spanned executive 
director business management in the 
wholesale business senior director 
investor and financial communications 
communications and public affairs as well  
as positions in finance and taxation emily is  
a chartered accountant and holds a bachelor 
of commerce and an executive mba from the 
joint york universitynorthwestern university 
kelloggschulich program
stuart simpson deputy chief operations 
officer
current role stuart was appointed deputy 
chief operating officer in january 2014 prior 
to this he was running operations for the 
west region of the uk and was the finance 
director for uk operations
previous work history before joining the 
royal mail in 2009 stuart worked in the 
automotive industry for 15 years with senior 
roles in finance and strategy the last ten  
of which were based outside the uk roles 
included the fd of saab ab and latterly the 
fd for general motors global family car 
division stuart qualified as a chartered 
accountant with arthur andersen
sue whalley chief operations officer
current role sue joined royal mail in 2006 
and was appointed chief operations officer in 
january 2014 she is responsible for leading 
the next phase of the transformation in 
operations with specific focus on further 
development of culture safety quality and 
efficiency
previous work history before joining royal 
mail in september 2006 sue worked at 
mckinsey and company for 17 years the last 
six of which were as a partner in their london 
office she was also coleader of mckinsey’s 
european marketing and retail practices she 
has an ma from cambridge university and an 
mba from harvard business school
43
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ report
the directors present their report together 
with audited financial statements for the year 
ended 30 march 2014
strategic report
to enable the assessment of how the 
directors have performed their duty to 
promote the success of the company the 
companies act 2006 requires the directors to 
set out in this report a fair review of the 
business of the group during the year the 
position of the group at the end of the year 
and a description of the principal risks and 
uncertainties facing the group
information fulfilling these requirements  
can be found in the following sections of  
the strategic report and are incorporated  
by reference
index page
business model 1415
strategy for delivering objectives 1617
results 0405
financial assets and liabilities 104106
business risks 2931
corporate responsibility 3237
greenhouse gas emissions 36
disabled employees 34
our people 3335
going concern 78
disclosure and transparency rules 
the strategic report and the directors’ report 
together include the management report 
required by the disclosure and transparency 
rules dtr41 of the uk financial conduct 
authority disclosure and transparency rules 
the directors having consulted with the 
management on such matters
corporate governance statement
the disclosure and transparency rules 
require certain information to be included 
in a corporate governance statement in the 
directors’ report information that fulfils the 
requirements of the corporate governance 
statement can be found in the corporate 
governance report on pages 47 to 57 and 
is incorporated into this directors’ report 
by reference
disclaimer
the purpose of this annual report and 
financial statements is to provide information 
to the members of the company the annual 
report and financial statements have been 
prepared for and only for the members of the 
company as a body and no other persons 
the company its directors and employees 
agents or advisers do not accept or assume 
responsibility to any other person to whom 
this document is shown or into whose hands 
it may come and any such responsibility or 
liability is expressly disclaimed
the annual report and financial statements 
contain certain forwardlooking statements 
with respect to the operations performance 
and financial condition of the group by their 
nature these statements involve uncertainty 
since future events and circumstances can 
cause results and developments to differ 
materially from those anticipated the 
forwardlooking statements reflect knowledge 
and information available at the date of 
preparation of this annual report and 
financial statements and the company 
undertakes no obligation to update these 
forwardlooking statements nothing in this 
annual report and financial statements 
should be construed as a profit forecast
dividends
the directors recommend a final dividend  
of 133 pence per ordinary share payable  
on 31 july 2014 to shareholders whose 
names appear on the register of members  
on 4 july 2014 this will amount to the total 
dividend for the year
political donations
no political donations were made during the 
year and the company intends to continue 
its policy of not making such donations for 
the foreseeable future
future developments
possible future developments are described in 
our strategy on pages 16 to 17 and business 
risks on pages 29 to 31 of the strategic report
share capital
as at 30 march 2014 the company’s issued 
share capital comprised 1000000000 
ordinary shares of one penny each as set 
out in note 27 to the accounts on page 116
rights and obligations attaching 
to shares
voting
subject to the provisions of the company’s 
articles of association the ‘articles’ and to  
any special rights or restrictions as to voting 
attached to any class of shares in the company 
of which there are none members will be 
entitled to vote at a general meeting as follows
• on a show of hands every member present 
in person has one vote and every proxy 
present who has been duly appointed by 
one or more members will have one vote 
except that a proxy has one vote for and 
one vote against if the proxy has been duly 
appointed by more than one member and 
the proxy has been instructed by one or 
more members to vote for and by one or 
more other members to vote against 
for this purpose the articles provide that 
where a proxy is given discretion as to how 
to vote on a show of hands this will be 
treated as an instruction by the relevant 
member to vote in the way that the proxy 
decides to exercise that discretion and
• on a poll every member has one vote per 
share held by him her or it and he she or 
it may vote in person or by one or more 
proxies where he she or it appoints more 
than one proxy the proxies appointed by 
him her or it taken together shall not have 
more extensive voting rights than the 
member could exercise in person
in the case of joint holders of a share the vote 
of the senior who tenders a vote whether in 
person or by proxy shall be accepted to the 
exclusion of the votes of the other joint holders 
and for this purpose seniority shall be 
determined by the order in which the names 
stand in the register in respect of the 
joint holding
no member shall be entitled to vote at any 
general meeting or class meeting in respect of 
any share held by him her or it if any call or 
other sum then payable by him her or it in 
respect of that share remains unpaid or if a 
member has been served with a restriction 
notice as defined in the articles after failure 
to provide the company with information 
concerning interests in those shares required 
to be provided under the companies act 
2006 currently all issued shares are 
fully paid
voting instructions may be submitted 
electronically at wwwsharevotecouk by 
following the online instructions
employees allocated free shares under the 
employee free shares offer which are held in 
trust by the trustee of the royal mail share 
incentive plan are entitled to exercise any 
voting rights in respect of such free shares 
by instructing the trustee how to vote on 
their behalf
deadline for voting rights
full details of the deadlines for exercising 
voting rights in respect of the resolutions to be 
considered at the annual general meeting to 
be held on 24 july 2014 will be set out in the 
notice of annual general meeting agm
special rights
there are no persons holding securities that 
carry special rights with regard to the control 
of the group
44
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 dividends and distribution
the company may by ordinary resolution 
from time to time declare dividends not 
exceeding the amount recommended by the 
board subject to the companies act 2006 
the board may pay interim dividends and also 
any fixed rate dividend whenever the financial 
position of the company in the opinion of the 
board justifies its payment if the board acts 
in good faith it is not liable to holders of 
shares with preferred or pari passu rights 
for losses arising from the payment of 
interim or fixed dividends on other shares 
all dividends shall be apportioned and paid 
pro rata according to the amounts paid up 
on the shares
dividend waivers
the trustee of the royal mail share incentive 
plan will not receive any dividends other than 
any special dividend declared by the board on 
free shares which it has not been possible to 
award to or which have been forfeited by 
participants in the plan
transfer of shares
subject to the articles any member may 
transfer all or any of his or her certificated 
shares by an instrument of transfer in any 
usual form or in any other form which the 
board may approve the instrument of 
transfer must be signed by or on behalf of the 
transferor and in the case of a partlypaid 
share the transferee
the transferor of a share is deemed to remain 
the holder until the transferee’s name is 
entered in the register
the board can decline to register any transfer 
of any share which is not a fully paid share 
the board may also decline to register a 
transfer of a certificated share unless the 
instrument of transfer
i is duly stamped or certified or otherwise 
shown to the satisfaction of the board to 
be exempt from stamp duty and is 
accompanied by the relevant share 
certificate and such other evidence of the 
right to transfer as the board may 
reasonably require
ii is in respect of only one class of share and
iii if to joint transferees is in favour of not 
more than four such transferees
registration of a transfer of an uncertificated 
share may be refused in the circumstances set 
out in the uncertificated securities rules as 
defined in the articles and where in the case 
of a transfer to joint holders the number of 
joint holders to whom the uncertificated share 
is to be transferred exceeds four
authority of the directors to allot shares
by resolutions passed by the selling shareholder 
on 25 september 2013 in preparation for the 
initial public offering the ipo the board was 
authorised subject to certain limitations to 
allot shares in the company and to grant 
rights to subscribe for or to convert any 
security into shares i up to an aggregate 
nominal amount of £3333333 less the 
amount of any allotment made under ii below 
and ii up to an aggregate nominal amount of 
£6666666 in connection with an offer by 
way of a rights issue less the amount of any 
allotments made under i above such 
authorities apply until the end of the first 
annual general meeting of the company or 
the close of business on 31 december 2014 if 
earlier the ‘expiry date’ the directors will be 
seeking a new authority for the directors to 
allot shares and to grant subscription and 
conversion rights to ensure that the directors 
continue to have the flexibility to act in the 
best interests of shareholders when 
opportunities arise by issuing new shares or 
granting such rights there are no current 
plans to issue new shares except in connection 
with employee share plans the board was 
also given authority to allot equity securities 
for cash or to sell ordinary shares as treasury 
shares for cash subject to certain limitations 
such authority to apply until the expiry date
purchase of own shares by the company
by a resolution passed by the selling 
shareholder on 25 september 2013 the 
board was authorised to purchase up to a 
maximum number of 100000000 of its 
ordinary shares pursuant to certain 
limitations such power to apply until the 
expiry date the company did not repurchase 
any of its ordinary shares during the year 
ended 30 march 2014
the directors require express authorisation 
from shareholders to purchase our own 
shares accordingly at the 2014 agm the 
directors will seek authority to make market 
purchases of up to a maximum of ten per cent 
of issued share capital at the present time the 
group has no plans to exercise this authority
treasury shares and employee benefit 
trust
as at 30 march 2014 the company did not 
hold shares in treasury and there has been 
no change to the number of shares held in 
treasury during the period under review 
in addition the company does not have 
an employee benefit trust in place
substantial shareholdings
as at 30 march 2014 the company had been 
notified in accordance with the disclosure and 
transparency rules of the following interests 
in the company’s ordinary share capital
shareholder number of shares
 of voting 
rights
postal 
services 
holding 
company 299840000 2998
equiniti 
share plan 
trustees 
limited 84437195 844
gic private 
limited 41022465 410
the position has not changed as of  
30 may 2014
amendment to the company’s articles 
of association
any amendments to the company’s articles 
may be made in accordance with the 
provisions of the companies act 2006 by  
way of special resolution
indemnity of directors
to the extent permitted by the companies 
acts the company may indemnify any 
director or former director of the company or 
any associated company against any liability 
and may purchase and maintain for any 
director or former director of the company  
or any associated company insurance against 
any liability
appointment and replacement 
of directors
unless otherwise determined by ordinary 
resolution of the company the directors shall 
be no fewer than two and no more than 15 in 
number as the uk government was the 
company’s sole shareholder prior to 
privatisation the secretary of state for 
business innovation and skills appointed  
the chairman all other directors were 
appointed by the company with the  
secretary of state’s consent
following privatisation directors may be 
appointed by the company by ordinary 
resolution or by the board
there is also an agreement in place with 
postal services holding company limited 
psh which grants psh the right to nominate 
one nonexecutive director for appointment 
to the board for so long as psh together  
with its associates is entitled to exercise or  
to control the exercise of ten per cent or more  
45
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ report continued
of the voting rights exercisable at a general 
meeting of the company
in accordance with the code all directors of 
the company with the exception of mark 
higson are subject to election at this year’s 
agm and will be subject to annual reelection 
going forward mark higson will resign  
from the board following this year’s agm
a director appointed by the board or psh 
holds office only until the next agm and is 
then eligible for election by the shareholders 
the company’s articles provide that at each 
agm all those directors who have been in 
office at the time of the two preceding agms 
and who did not retire at either of them or 
who have held office with the company other 
than employment or executive office for a 
continuous period of nine years or more at the 
date of the agm shall retire from office and 
may offer themselves for reappointment  
by shareholders the board has however 
decided to follow the code as referred to 
above so that all directors are subject to 
annual reelection
in addition to any power of removal conferred 
by the companies act the company may by 
special resolution remove any director before 
the expiration of his or her period of office
directors and their interests
the directors of the company during the year 
are given on pages 38 to 40 details of the 
interest of the directors and where applicable 
their connected persons in the ordinary 
shares of the company and of long term 
incentive plan awards over ordinary shares 
of the company are set out in the directors’ 
remuneration report on pages 58 to 69
there are procedures in place to deal with  
any conflicts of interest and these have 
operated effectively 
powers of the directors
the business of the company will be managed 
by the board who may exercise all the powers 
of the company subject to the provisions of 
the company’s articles of association the 
companies act 2006 and any ordinary 
resolution of the company
financial risk management
the group’s financial risk management 
objectives and policies and the main risks 
arising from the group’s financial assets and 
liabilities are summarised in note 14 to the 
accounts on page 99 see the financial risks 
and related hedging contained on page 27 of 
the financial review in the strategic report
change of control
the following agreements contain provisions 
permitting exercise of termination or other 
rights in the event of a change of control
the mails distribution agreement with post 
office limited provides for the supply of 
certain services to the group and allows for 
a request for renegotiation of terms in the 
event of a change of control of either party 
where such change of control is likely to have 
a material adverse effect on the party not 
undergoing the change of control
the outsourcing agreement with csc 
computer sciences limited covers the 
provision of a wide range of it goods and 
services and allows for termination of the 
agreement by either party on a change of 
control of the other in certain circumstances
the agreement with capgemini uk plc covers 
services for the group’s ebusiness web 
platform and allows the group to terminate 
the agreement on change of control  
of capgemini
the services agreement with british 
telecommunications plc bt allows  
bt to terminate the agreement on a  
change of control of royal mail to one of  
bt’s competitors
the new facilities agreement with various 
financial institutions provides the group with 
two term loan facilities and a revolving credit 
facility for general corporate and working 
capital purposes and repayment of previous 
debt the agreement contains provision on a 
change of control of the group for negotiation 
of the continuation of the agreement or 
cancellation by a lender
branches
as a global group our interests and activities 
are held or operated through subsidiaries 
branches joint arrangements or associates 
which are established in and subject  
to the laws and regulations of many  
different jurisdictions
going concern
these consolidated financial statements have 
been prepared on a going concern basis the 
financial performance and position of the 
group its cash flows and its approach to 
capital management are set out in the 
financial review on pages 23 to 28 the 
board has reviewed the group’s projections 
for the next 12 months and the directors have 
a reasonable expectation that the group has 
adequate resources to continue in operational 
existence for at least 12 months
audit information
the directors confirm that so far as they are 
aware there is no relevant audit information 
as defined in section 418 of the companies 
act 2006 of which the auditor is unaware and 
that each director has taken all reasonable 
steps to make themselves aware of any 
relevant audit information and to establish 
that the auditor is aware of that information
this confirmation is given and should be 
interpreted in accordance with the provisions 
of section 418 of the companies act 2006
by order of the board
emily pang 
company secretary 
6 june 2014
royal mail plc 
100 victoria embankment 
london 
ec4y ohq
company number 08680755
46
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 corporate governance report
good corporate governance involves ensuring that an 
effective internal framework of systems and controls 
is put in place which clearly defines authority and 
accountability and promotes success whilst permitting 
the management of risk to appropriate levels
index page
chairman’s introduction 47
audit  risk committee report 51
nomination committee report 55
pensions committee report 56
directors’ remuneration report 58
chairman’s introduction
the following statement is intended to explain 
our governance arrangements in the light  
of the principles and provisions of the uk 
corporate governance code the ‘code’ as 
published by the financial reporting council  
in september 2012 the listing rules and 
disclosure and transparency rules and to 
provide insight into how the royal mail plc 
board the ‘board’ and its management run 
the business for the benefit of shareholders
the board of the company is committed to 
ensuring that it provides effective leadership 
and promotes uncompromising ethical 
standards one of the ways in which the  
board achieves this is by requiring that good 
governance principles and practices are 
adhered to throughout the company the 
board determined that the following is a 
helpful summary of its role
good corporate governance is about helping 
to run the company well
it involves ensuring that an effective internal 
framework of systems and controls is put in 
place which clearly defines authority and 
accountability and promotes success whilst 
permitting the management of risk to 
appropriate levels it involves the exercise  
of judgement as to the definitions of success 
the appropriateness of risk and the levels of 
delegation to the executive the exercise of 
this judgement is the responsibility of the 
board and involves consideration of processes 
and assumptions as well as outcomes
it also involves the creation of a sensitive 
interface for the views of shareholders and 
other stakeholders to be given appropriate 
consideration when reaching these judgements
the executive team is required to provide 
such information to the board as the board 
needs to enable it to exercise its judgement 
over these matters
there is a very fine distinction between the 
approval of processes and their definition 
wherever possible it is the role of the board 
to approve process rather than initiate or 
define it only exceptionally would the board 
intervene to initiate or define
the board also sets the tone for the company 
the way in which it conducts itself its attitude 
to ethical matters its definitions of success 
and the assessment of appropriate risk all 
define the atmosphere within which the 
executive team works
good corporate governance is not about 
adhering to codes of practice although 
adherence may constitute a part of the evidence 
of good governance but rather about the 
exercise of a mindset to do what is right
one of the challenges facing any board is the 
way in which the nonexecutive and the 
executive directors interact it is clear that 
they each have the same legal responsibility 
but it is generally unrealistic to expect 
executive directors to speak individually with 
the same freedom as the nonexecutive 
directors equally executive directors who 
just ‘toe the executive line’ in contradiction  
of their own views may not be effectively 
contributing to good governance a well
functioning board needs to find the right 
balance between hearing the collective 
executive view and being aware of the natural 
internal tensions in an executive team
notwithstanding the tensions created by many 
external expectations which may be wholly or 
in part unrealistic a successful board should 
ideally be composed of a group of respected 
experienced likeminded but diverse people 
who coalesce around a common purpose of 
promoting the longterm success of the 
company provide a unified vision of the 
definitions of success and appropriate risk 
endeavour to support management ie those 
who honestly criticise at times but encourage 
all the time and who create confidence in all 
stakeholders in the integrity of the business
a board meeting should feel like a meeting  
at which everyone is participating to solve 
problems together above all all participants 
should be able to say after a board meeting 
that value has been added as a result of the 
meeting taking place this added value will 
come in many forms challenge advice clarity 
imagination support sharing of problems  
or creating strategic intent the list is 
not exhaustive
donald brydon cbe
chairman
47
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information corporate governance  
continued
board membership is for 365 days of the year 
board responsibilities do not start and end 
with formal meetings board members on the 
company’s and their own initiative should 
endeavour to engage outside meetings to 
bring their experience to the assistance of  
the executive team wherever possible
above all there should be a sense of value 
added from the engagement of the board 
members in all their interaction with the 
company formal or otherwise
to enhance its performance and effectiveness 
the board sets itself explicit objectives which 
are separate from objectives set for the 
company and for the chief executive officer 
following the outcome of the board appraisal 
process for the prior year in relation to the 
objectives for the year ended 30 march 2014 
the board has regularly monitored its 
performance against these and has found this 
process adds value
prior to privatisation the royal mail group 
limited board complied with the code in so 
far as it was appropriate to royal mail group 
as a company with a single shareholder and 
many of the corporate governance practices 
and principles expected of a listed company 
were already wellestablished within the 
group on privatisation the board conducted 
a full and comprehensive review of its 
corporate governance arrangements to 
ensure they were fit for purpose our 
company will no doubt face many challenges 
as we begin a new chapter in its long history 
but the above governance framework will  
be an essential foundation for future  
business success
donald brydon cbe 
chairman
change in the structure of the group  
and preparation for plc status
royal mail plc is the holding company of the 
royal mail group this follows the internal 
group reorganisation to facilitate the initial 
public offering the ipo which took place in 
september 2013 by this reorganisation a 
new company royal mail limited was 
incorporated on 6 september 2013 with 
royal mail holdings plc as its immediate and 
ultimate parent company royal mail holdings 
plc changed its name to postal services 
holding company plc on 11 september 2013 
the special share in royal mail group limited 
held by hm government was redeemed on 
12 september 2013 subsequently on 
12 september 2013 the entire issued share 
capital of royal mail group limited was 
transferred from postal services holding 
company plc to royal mail limited the effect 
of this reorganisation was to insert royal mail 
limited as the new immediate parent 
company between postal services holding 
company plc and royal mail group limited 
royal mail limited was subsequently 
reregistered as royal mail plc on 
19 september 2013 the resulting structure 
is shown in the chart below
royal mail plc
royal mail 
investments 
limited
royal mail  
estates limited
romec
1
 
limited
general logistics 
systems bv
royal mail  
group limited
in preparation for the ipo it was recognised 
that although the company’s internal 
governance processes were sound additional 
work was required to prepare the company 
for plc status as a result several work 
programmes were put in place to ensure  
that royal mail should be able to operate 
effectively and compliantly as a listed company 
immediately following the public offering and 
subsequent trading work included putting  
in place the necessary policies procedures 
and structures to meet the various  
compliance requirements
board focus
the boards of royal mail group limited and 
royal mail plc together the ‘board’ have 
focused on the following matters during 
the year
• the privatisation and initial public offering 
ipo
• industrial relations
• safety
• pensions reform
• parcels strategy
• operations and modernisation
• general logistics systems gls – cost 
restructuring and future markets and
• progress and future plans for improving 
it security
expected board focus for the next year 
the board has developed objectives as a 
framework for its work in addition to business 
as usual activities for the next 18 months and 
expects that it will focus on increasing its 
understanding of
• revenue growth
• continued productivity and efficiency 
drivers
• use of new technologies in the company’s 
business
• views of key stakeholders including 
shareholders the regulator and major 
channel partners and
• the senior management talent pool
governance framework
the board considers that the company 
complied with the full provisions of the code 
during the year the code is publicly available 
at the website of the financial reporting 
council wwwfrcorguk this report explains 
the key features of the governance framework 
and how the board applies the principles of 
the code the location within the annual 
report and financial statements of each of 
the disclosures required in the directors’ 
report is either disclosed separately or  
indexed in the directors’ report and is 
therefore incorporated by reference
the role of the board
the board is responsible for setting the 
objectives and strategy for the group and 
for monitoring its performance and risk 
management the board has adopted terms of 
reference setting out its duties and obligations
the board has defined those matters that are 
reserved exclusively for its consideration 
these include the approval of strategic plans 
financial statements acquisitions and 
disposals major contracts projects and 
capital expenditure as noted above it also 
has developed objectives as a framework for 
its work for the next 18 months and progress 
1 
51 per cent owned subsidiary
48
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 in achieving these objectives is reviewed at 
each board meeting
board committees
certain responsibilities are delegated by the 
board to the committees shown in the 
diagram below the details of these board 
committees are outlined later in this report 
the chairman of each of the board 
committees reports to the board on matters 
discussed at committee meetings and 
highlights any significant issues requiring the 
board’s attention reports on the work of the 
audit  risk committee nomination 
committee and pensions committee during 
the year are given on pages 51 to 57 the 
work of the remuneration committee can be 
found in the directors’ remuneration report on 
pages 58 to 69 full terms of reference for 
these board committees can be found on the 
company’s website wwwroyalmailgroupcom
audit   
risk  
committee
remuner 
ation  
committee
nomination  
committee
pensions  
committee
chief  
executive’s  
committee
board
board meetings
the royal mail group limited board met  
on four occasions during the period from  
1 april 2013 to 19 september 2013 during 
the period from 20 september 2013 to  
30 march 2014 the royal mail plc board met 
on six occasions for each scheduled meeting 
the company secretary on behalf of the 
chairman collates and circulates the papers 
during the week prior to the meeting to allow 
sufficient time for the directors to review the 
information provided
in addition to these meetings the board 
transaction committee formed to facilitate 
preparations for the ipo met on seven occasions
board information
the board receives business and financial 
performance reports at each board meeting 
as well as standing reports on safety and 
from the company secretary in addition 
directors have access to a board information 
archive containing background and supporting 
documents for reference in performance of 
their duties the directors receive regular 
updates on developments in matters such as 
corporate governance this is how the 
company complies with the provisions of the 
code requiring the timely provision of 
information to directors 
the composition of the board
at the end of the year the board of royal mail 
plc comprised a chairman three executive 
directors and seven nonexecutive directors 
prior to their appointment as directors of the 
company each of the directors had been a 
director of royal mail group limited the 
biographies of each of the directors setting 
out their current roles commitments and 
previous experience are on pages 38 to 40 
the composition of the board was 
strengthened in anticipation of the ipo and no 
further appointments were made in the past 
year or external search agencies used
the board is confident that all its members 
have the knowledge talent and experience to 
perform the functions required of a director 
of the business executive directors have 
rolling 12month contracts and non
executive directors are generally appointed 
for threeyear terms there is also a clear 
division of responsibilities between the 
chairman and the chief executive officer
the chairman
the chairman’s responsibilities include
• chairing meetings of the board and general 
meetings of the company
• setting the board’s agenda and ensuring 
that adequate time is available for 
discussion of all agenda items in particular 
strategic issues
• setting clear expectations concerning the 
company’s culture values and behaviours
• ensuring the board determines the nature 
and extent of significant risks that the 
company is willing to embrace in 
implementing its strategy
• ensuring the board has effective decision
making processes and applies sufficient 
challenge to major proposals
• encouraging all board members to engage 
in board and committee meetings by 
drawing on their skills experience 
knowledge and where appropriate 
independence
• developing productive working relationships 
with the chief executive officer and 
executive directors and constructive 
relations between executive directors and 
nonexecutive directors
• ensuring effective communication with 
shareholders and other stakeholders and 
that directors are made aware of their 
views and
• ensuring the performance of the board 
its committees and individual directors is 
evaluated at least once a year and to act 
on the results of such evaluations
the chairman is donald brydon who was 
originally appointed as the chairman of royal 
mail holdings plc on 26 march 2009 he was 
then appointed as the chairman of royal mail 
group limited on 1 april 2012 and as the 
chairman of royal mail plc in september 2013 
while the chairman was appointed by the 
secretary of state for business innovation and 
skills the directors consider that he was 
independent at the time of his appointment the 
chairman retired from his role as the chairman 
of smiths group in november 2013 details of 
the chairman’s other commitments are shown 
on page 39
nonexecutive directors
the board considers that each of the 
nonexecutive directors is independent 
this means that in the view of the board they 
have no links to the executive directors and 
other managers and no business or other 
relationship with the company that could 
interfere with their judgement the board 
reviewed and authorised the schedule of 
directors interests including any potential 
conflicts in february 2014 and does so at 
least annually each nonexecutive director 
plays an instrumental role in the decisions that 
are made by the board and its committees 
they challenge management regarding the 
performance of the company with regard to 
the company’s goals and objectives they also 
monitor financial controls and the systems 
of risk management
the terms of appointment for the non
executive directors require the nonexecutive 
directors to devote a minimum of two days a 
month to working for the company however 
during the year ending 30 march 2014 the 
time commitments were much greater as  
the nonexecutive directors contributed to 
the decision making process regarding  
the privatisation
the nonexecutive directors and the 
chairman met on a number of occasions 
during this period without the executive 
directors being present these meetings are 
an important way to develop the working 
relationships between the nonexecutive 
directors and to assess the performance 
of management
in accordance with the requirements of the 
code the terms of appointment for the 
nonexecutive directors are available for 
inspection at the company’s registered office 
during normal office hours and they will be 
made available at the annual general meeting 
for a period of 15 minutes prior to the 
commencement of the meeting and also 
during the meeting
49
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information the nonexecutive directors were required to 
declare their other significant commitments 
prior to their appointment and the board is 
informed of any subsequent changes the 
company has announced to the london stock 
exchange any changes to their directorships 
on the boards of other publicly quoted 
companies since the company’s privatisation
the senior independent director
the code recommends that the board should 
appoint one of its independent nonexecutive 
directors to be the senior independent 
director the ‘senior independent director’ 
the senior independent director is available 
to meet with shareholders if they have 
concerns that the normal channels of 
chairman chief executive officer or other 
executive directors have failed to resolve or 
for which such channels of communication  
are inappropriate the senior independent 
director is orna nichionna she has met with 
the nonexecutive directors and executive 
directors during the year to assess the 
performance of the chairman
director induction and training
on appointment all the directors take part 
in an induction programme in which they 
receive information about the group the role 
of the board and matters reserved for its 
decision the role of the principal board 
committees the group’s corporate 
governance arrangements and the latest 
financial information about the group this  
is supplemented by visits to key business 
locations and following privatisation a newly 
appointed director will be given the 
opportunity to meet major shareholders
directors also receive training in preparation 
for privatisation training sessions were held 
for the board to ensure that each director 
was aware of the requirements and additional 
obligations for a director of a company with a 
premium listing on the london stock exchange
directors’ support and the role of the 
company secretary
directors may take independent professional 
advice in the furtherance of their duties at the 
group’s expense all directors have access to 
the advice and services of the company 
secretary the appointment and removal of 
whom is a matter for the board as a whole 
the company secretary ensures board 
procedures are followed and regularly 
reviewed and is a source of advice to the 
chairman and the board on implementation 
of the code
outside appointments
the board believes that there are significant 
benefits to both the group and the individual 
from executive directors accepting non
executive directorships of companies outside 
the group the board’s approach is normally to 
limit executive directors to one nonexecutive 
directorship for which the director may retain 
the fees see the directors’ remuneration 
report on pages 58 to 69 for details
performance evaluation of the board
performance evaluation of the board its 
committees and individual directors takes 
place on an annual basis with the support of 
the company secretary this year’s evaluation 
was conducted by the chairman via 
questionnaires with an opportunity to discuss 
any issues arising among the matters 
considered were adequacy of reporting focus 
on the right issues performance of the 
committees and communication with the then 
sole shareholder the secretary of state for 
business innovation and skills it was 
completed during may 2013 and objectives 
were set for the board based on the outcomes 
of the evaluation the agenda of each board 
meeting is reviewed against the objectives and 
this has driven the focus of the board’s 
discussion as a result of the previous board 
review two new directors were recruited to 
bring extra dimensions to the board a more 
detailed evaluation of the board involving the 
use of an external board evaluator will take 
place next year a performance evaluation of 
the audit  risk committee and of the 
remuneration committee was conducted in 
each case by the chair of the committee 
terms of reference for each of the board 
audit  risk committee remuneration 
committee nomination committee and 
pension committee were amended and 
adopted by the board in september 2013
relations with shareholders
prior to privatisation the group engaged in 
twoway communication with the sole 
shareholder to discuss the group’s strategy 
performance and policies the board received 
feedback from the directors who attended the 
shareholder meetings in addition the 
chairman and senior independent director 
had ongoing contact with the shareholder 
regarding preparation for privatisation  
and remuneration
in preparation for privatisation the chief 
executive officer and chief finance officer 
held extensive meetings with potential 
investors since privatisation the chairman 
and senior independent director have met 
with major investors to gain their views on 
company policies including the remuneration 
policy outlined in the directors’ remuneration 
report on pages 58 to 69
internal control
the board is responsible for maintaining a risk 
management and internal control system and 
for managing significant risks faced by the 
group this is described in more detail in the 
audit  risk committee report on pages 
51 to 54
environmental social and 
governance risks
the board annually reviews the company’s 
corporate responsibility report which is 
published in order to demonstrate sustainability 
to socially responsible investors the report is 
prepared in alignment with the reporting 
framework of the global reporting initiative and 
the company’s performance is assessed against 
international sustainability indices the 
company reports progress against corporate 
responsibility objectives under five areas 
customer people community suppliers and 
environment further details can be found in 
the corporate responsibility report on pages 32 
to 37 the board identifies and assesses 
significant risks including those relating to 
environmental social and governance ‘esg’ 
matters through the maintenance and review 
of the group risk profile which contains 
significant current risks including esg risks 
which are identified at an early stage of 
becoming known as part of the longterm 
business perspective emerging risk 
identification is conducted by experts in the 
business and risk management is owned and 
managed at the operational level supported 
centrally an independent effectiveness review 
by an independent external auditor confirmed 
good links between the strategy of the company 
and currently identified risks and that 
appropriate importance is placed on risk 
management by executives within the group 
the company maintains a range of policies and 
procedures for managing business risks which 
include esgrelated matters
chief executive’s committee and 
board committees
the following committees deal with specific 
aspects of the group’s governance the details 
of committee membership shown are as at 
30 march 2014
chief executive’s committee cec
chair moya greene
membership see pages 41 to 43
role the committee is responsible 
for all the key areas of 
commercial activity within the 
group the cec meets twice 
a month the role of the cec 
is to manage the overall 
framework of financial risk 
and business controls to 
meet regulatory and legal 
requirements the committee 
also assigns key accountabilities 
for business performance
 
corporate governance  
continued
50
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 audit  risk committee report
introduction from the chairman
dear shareholder
the committee has two main areas of 
responsibility the first is to review and 
recommend to the board all financial 
statements and disclosures the second is to 
satisfy itself that internal controls and risk 
management processes are working 
effectively the committee gets independent 
assurance from the group’s internal audit  
risk management function as well as the 
external auditor ey across a wide range of 
issues in support of its oversight 
responsibilities alongside myself the 
members of the committee are all 
independent nonexecutive directors – orna 
nichionna john allan nick horler 
cath keers and les owen
this year the committee has continued to 
work on improving its oversight of internal 
controls and risk management processes and 
systems the group invests significant 
resource in internal audit capability and 
management acts quickly on relevant findings 
we reviewed 201314 interim and full year 
results as well as all financial and risk aspects 
of documentation associated with the 
privatisation of royal mail
the committee provided a challenging review 
and approval process to the audit of the first 
quarter results for 201314 which were 
disclosed in the ipo prospectus alongside the 
full year results for 201213 201112 and 
201011 as part of this process we also 
assessed the results of the working capital 
review and other private reports produced by 
the reporting accountant ey
in january 2014 the committee announced 
that it would initiate a competitive audit tender 
process in light of emerging best practice new 
requirements with respect to audit tenure and 
the fact that the existing auditor ey had been 
the incumbent since 1986 and we have not 
undertaken a competitive tender process since 
that date the current external audit 
engagement partner is richard wilson who 
was appointed to lead the audit in 2011 the 
committee nominated a ‘tender working 
team’ comprising the chairman of the audit  
risk committee john allan jan babiak
2
 and 
relevant experts from within the business 
the successful bidder will be informed during 
2014 and be proposed for appointment at the 
2015 agm 
paul murray
chairman audit  risk committee
committee membership
chairman paul murray
membership nonexecutive directors 
orna nichionna john allan 
nick horler cath keers and 
les owen
meetings of the committee were also attended 
where relevant by the chairman of the board 
jan babiak the only nonexecutive director  
who was not a member of the committee the 
chief executive officer the chief finance officer 
other members of senior management and 
representatives from the external auditor ey  
the board considers that a number of the 
members of the committee have recent and 
relevant financial experience
audit committee terms of reference
the full terms of reference for the committee 
can be found on our website 
wwwroyalmailgroupcomaboutus
managementcommitteesauditandrisk
committee
meeting cycle and agenda items
the committee uses a meeting tracker 
approved once a year which provides a 
framework for each meeting agenda
during 201314 the committee met nine 
times
• two meetings specifically related to 
the privatisation
• one meeting related to the audit 
retender and
• one meeting related to a specific internal  
audit report 
of the five regular meetings
• two meetings mainly focused on the 
interim financial statements and yearend 
financial results and 
• three meetings mainly focused on internal  
audit and risk management 
however all regular meetings do contain 
elements of both financial reporting and 
internal audit and risk management with 
reports from the group financial controller 
and the director of internal audit  risk 
management being standing items on 
all agendas
reliance on external and 
inhouse experts
the group’s actuary towers watson limited 
provides expert opinion and longterm 
assumption advice with respect to pension 
accounting and the assessment of other 
longterm liabilities the committee has 
concluded that towers watson limited has  
the necessary expertise and resources 
the committee also relies on
1  advice and information provided by the 
general counsel with respect to specific 
provisions and other contingent liabilities and 
2  an independent survey of households to 
statistically calculate a distribution using a  
95 per cent confidence limit which is used to 
estimate the numbervalue of stamps that  
have been bought but not used 
the external auditor had full access to these 
experts and using their own actuarial and 
statistical experts was able to provide further 
assurance to the committee on these matters 
the committee is satisfied that the general 
counsel has or has access to the relevant 
necessary expertise and resources and that  
the company conducting the statistical  
surveys also has the relevant necessary  
expertise and resources
2 
replaced by les owen with effect from 29 april 2014
51
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information key activity and sources of estimation uncertainty and critical accounting judgements
the main areas of focus for the committee during the year were
matter considered what the committee did
advance customer payments 
£322 million see note 26 on page 116
the group estimates the amounts of stamp and meter credits that 
have been sold but not used prior to the year end 
although the relevant survey and extrapolation is conducted by an 
independent company the level at which a stamp holding is considered 
to be abnormal and therefore excluded from the estimate is a 
judgement made by management this judgement impacts revenue 
profit and net assets
the committee reviews and challenges the methodology and outcomes 
from the statistical survey at the interim and year end and the 
judgement made by management and compares these to the deferred 
income recognised by management at each reporting period to ensure 
a consistent application 
separately the auditor uses its own experts to review the statistical 
processes and challenge the judgemental assumption
royal mail defined benefit pension surplus 
£1723 million see balance sheet and note 8 on page 88
the valuation of the pension liabilities relies on the estimation of 
longterm assumptions such as rpicpifuture salary growth and 
mortality small movements in these assumptions can lead to material 
impacts on the balance sheet
the committee relies on the benchmarking of the key longterm 
assumptions and the calculations provided by the group’s actuary 
towers watson limited all of these assumptions are disclosed in 
note 8 to the financial statements the committee also relies on the 
work and recommendations of the board pensions committee see 
report on page 56
the auditor uses its own independent actuarial experts to confirm that 
these assumptions are reasonable and appropriate 
royal mail pension plan amendment credit 
£1350 million see income statement and note 4 on page 81
this credit to the income statement in 201314 arose when the 
trustee agreed to cap future salary growth to rpi meaning that the 
longterm salary growth assumption reduced from rpi1 to rpi 
the committee reviewed the pension benefit reform proposed by the 
trustee and its subsequent disclosure in both the prospectus and the 
interim financial report
the committee also received confirmation from both towers watson 
limited and the auditor that the new assumption was appropriate 
based on the pensions reform agreed with the trustee
industrial diseases claims provision 
£62 million see note 20 on page 111
the group is liable for claims brought by employees past and current 
and by individuals who were employed in the general post office 
telecommunications division and whose employment ceased prior to 
october 1981 the provision covers the estimate of claims that could 
be received over the next 2540 years changes to the provision will 
also impact the income statement
the committee receives estimates of the gross provision total 
expected cash outflow undiscounted calculated by the group’s 
actuary towers watson limited and compares this to the provision 
recorded at previous reporting dates and to recent cash settlements 
confirmed by the general counsel
the discount factor used by management is validated against 
applicable bond rates
contingent liabilities not recognised in the balance sheet
the group has a number of contingent liabilities which it considers 
‘remote’ or ‘possible’ and which are therefore not provided for the 
likelihood of these liabilities materialising is a matter of judgement and 
if it was considered ‘more likely than not’ that they would crystallise in 
the future then a provision would be raised which would impact the 
income statement and balance sheet
the committee receives a paper at the november and may meetings 
on each unprovided contingent liability with an assessment from 
management of the probability of it crystallising in the future
the committee reviews each of these papers by comparing their status 
to prior reporting periods and by receiving an overview from 
management at the committee
the auditor is also asked to provide comments on the assessment  
of probability and the appropriateness of the accounting
the committee concluded that all of these contingent liabilities should 
remain unprovided based on the risk assessment provided by 
management
corporate governance  
continued
52
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 matter considered what the committee did
specific items – disclosure  
see note 4 on page 81
the income statement follows a columnar approach and in 201314 
the company has introduced a classification for certain items of income 
and expenditure termed ‘specific items’ which replaces the previous 
‘exceptional items’ classification as further highlighted on page 77
the chairman of the committee discussed this disclosure with the 
external auditor and management in advance of the interim close  
and this matter was fully covered at the november meeting with 
management providing an explanation as to why each item has been 
disclosed as ‘specific’ the committee concurred with management’s 
view that the column ‘excluding specific items’ better presents the 
trading results of the group and recognised the need to disclose this 
given royal mail is now listed 
privatisation
the privatisation of royal mail required the company to produce a  
full set of financial statements for the quarter ending 30 june 2013  
these financial statements required a full audit and were included  
in the prospectus along with historical financial information from 
201011 onwards
the first quarter results for 201314 were reviewed and approved by 
the committee following presentations from management and the 
auditor the same degree of challenge and scrutiny was applied as for 
the year end audited results
the committee also received and reviewed a number of private 
reports from ey the reporting accountant including a working 
capital report a financial position and prospects report and a long 
form report 
the prospectus risk factors were also presented by the general 
counsel to the committee for review and approval and the committee 
ensured these factors were complete by receiving a specific report 
from the director of internal audit  risk management 
audit committee effectiveness
the committee has a framework to assess 
both audit committee and external auditor 
effectiveness using a combination of surveys 
of members private meetings with the 
auditor specific reports from the auditor  
and executive management and relevant 
external benchmarking to conclude that the 
committee and the external audit process 
remains effective
external auditor effectiveness
during the year the committee has reviewed 
the planning methodology and proposed audit 
approach presented by the external auditor 
and the chairman of the committee attended 
an audit planning event furthermore the 
committee reviewed and approved the 
respective engagement letters for the 
statutory and regulatory audits 
at the end of the first quarter first half and 
year end statutory audits the committee 
receives a report from ey which covers 
significant issues identified and discussed 
during the audit visits this report is compared 
to the matters that management have 
identified to ensure consistency 
the committee has carried out an 
assessment of the auditor using surveys and 
direct feedback from committee members 
and management and private meetings with 
the auditor
after taking all of the above into consideration 
the committee concluded that the audit team 
and ey as a firm had demonstrated that they 
had the appropriate qualifications resources 
and expertise and that the audit process 
was effective
nonaudit work provided by the auditor 
and independence
the committee agrees fees in respect of 
nonaudit services provided by the external 
auditor to ensure that the provision of 
nonaudit services does not impair the 
external auditor’s independence and 
objectivity generally nonaudit work is only 
granted to the auditor if there is a genuine 
efficiency in doing so and for 201314 the 
total fees for nonaudit services excluding the 
reporting accountant work with respect to 
the privatisation were £04 million
a further £40 million fees were paid relating 
to ey’s role as reporting accountant with 
respect to the privatisation the committee 
received a special report and presentation 
from ey which provided specific assurance 
that the audit remained independent with 
respect to the reporting accountant role
risk management and internal control 
overview
the board believes that effective risk 
management and a sound control 
environment are fundamental to the group 
the uk corporate governance code requires 
the board to maintain sound risk 
management and internal control systems 
and to review their effectiveness at least 
annually and to report on this review to 
shareholders a sound system of internal 
control depends on a thorough and regular 
evaluation of the nature and extent to which 
the group is exposed to risk
the group’s risk management and internal 
control system is designed to manage rather 
than eliminate the risk of failure as taking on 
risk is inherent in undertaking the commercial 
activities of the group 
there is an ongoing process for identifying 
evaluating and managing the significant risks 
faced by the group in accordance with the 
guidance detailed by the uk corporate 
governance code including financial 
operational and compliance risks and risks to 
reputation the process has been in place 
throughout the year and up to the date of 
approval of these financial statements
53
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information risk management and internal control 
framework 
the groupwide risk management framework 
includes risk governance risk identification 
measurement and management and risk 
reporting and sets out the ‘topdown’ and 
‘bottomup’ approach to risk identification for 
the group during the year the business has
• reviewed and refreshed its risk 
management framework risk 
management policy and risk management 
guide cascaded the risk management 
mandatory standards to business units  
and functions received selfassessment 
validations from the prioritised units and 
functions on compliance with the standards 
and provided independent assurance on 
these submissions
• conducted sensitivity analysis and financial 
stresstesting on group risks using a 
model developed by independent economic 
consultants
• further enhanced our emerging risk 
identification process through regular 
structured dialogue with subject matter 
experts across the business and
• for a sample of risks on the group risk 
profile arranged for executives to attend 
the committee to explain their respective 
risk and how it is being managed
the group’s approach to control is based on 
the underlying principle of line management 
accountability for internal control and for  
risk management 
the group recognises and uses the principle 
of the ‘three lines of defence’
first line comprises primary controls  
over the risks to the business located  
in the daytoday operation and includes 
established management organisation  
policies and documentation budgets  
and performance management
second line comprises internal monitoring 
and oversight including regular reviews 
selfassessments and annual signoffs  
by finance directors 
third line comprises independent 
assessments by the internal audit  risk 
management ia  rm function and others 
including external audit
assessing the effectiveness of the system 
of risk management and internal control
in addition to the specific constitution 
meetings reliance on experts and focus areas 
highlighted above the committee uses a 
number of mechanisms to help it to arrive  
at its conclusion on the effectiveness of the 
system of risk management and internal 
control in the business these include
1 risk governance
the board has delegated responsibility for 
specific review of risk and control processes  
to the committee and the committee in turn 
is supported by the risk management 
committee rmc to help discharge its duties 
the rmc meets to promote and support the 
establishment communication and embedding 
of risk management throughout the group 
and to ensure that risks that are significant  
at group level are being effectively managed 
2 assurance from internal audit
ia  rm provides independent assurance to 
executive management and the board on the 
effectiveness of the internal control system 
and elements of the risk management 
process including compliance with the risk 
management mandatory standards and 
validation of mitigation plans for group risks 
ia  rm establishes and agrees with the 
committee an annual plan of assignments and 
activities based on discussions with the board 
and management and also taking into 
account known issues in the business areas  
of known importance to the delivery of the 
business plan areas subject to strong or 
emerging regulation or legislation and known 
issues in the industry
the internal audit work programme focused 
towards the key business priorities for 
201314 included
• a review of the transaction programme 
including plc readiness
• business transformation reviews including 
parcels strategy and delivery 
modernisation
• major business process reviews including 
fuel management order to cash and 
christmas planning
• continued rolling programme of review of 
the basic business controls and validation 
reviews related to the management of 
individual risks on the group risk profile 
and
• conformance of key unitsfunctions to 
defined risk management mandatory 
standards
3 effectiveness of internal audit
the chartered institute of internal auditors 
international standards and general good 
practice requires an external assessment  
of internal audit activity to be conducted  
at least once every five years by a qualified 
independent reviewer from outside the 
organisation during the year the committee 
engaged deloitte to provide an assessment of 
the effectiveness of ia  rm in line with these 
standards deloitte were also engaged to 
provide an assessment of risk management 
against current accepted practice the review 
concluded that the internal audit activity and 
risk management framework were fit for 
purpose and of high quality
4 external audit activity
external audits and reviews take place during 
the year to provide management the board 
and the regulator with assurance on specific 
matters activity includes
• the external auditor performs a statutory 
year end audit
• the external auditor performs an audit of 
the regulatory accounts as part of universal 
service provider usp accounting 
requirements
• the externally measured endtoend 
quality of service is audited by an 
independent accounting firm appointed by 
ofcom as part of royal mail’s designated 
universal service provider condition 
requirements and
• the universal service obligation uso daily 
collections and deliveries performance 
reporting and methodology is assured by an 
independent accounting firm appointed by 
royal mail as part of royal mail’s 
designated universal service
whistleblowing
arrangements are in place to enable 
employees to raise concerns in confidence and 
to ensure independent investigation of such 
matters during the year ia  rm reported to 
the committee on the number of notifications 
and the usual time taken to process them 
through the employee disclosure committee 
edc ia  rm provides the edc with 
learnings and clarifications as a result  
of processing such cases
corporate governance  
continued
54
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 nomination committee report
introduction from the chairman
dear shareholder
although the 201314 financial year saw a 
significant change in the ownership of the 
company it has been a stable year for board 
membership with no changes to the executive 
directors and nonexecutive directors following 
the annual general meeting on 24 july 2014 
mark higson will resign from the board jan 
babiak resigned from the board in april 2014
the committee has continued to evaluate the 
balance of skills knowledge and experience of 
the board and its diversity and is committed to 
the progressive renewal of board membership 
through orderly succession succession plans for 
the nonexecutive directors and executive 
directors were kept under review during the 
year the committee also approved the changes 
to the membership of the cec
the following report outlines the membership of 
the committee its role the key areas of focus 
during the year and the committee’s policy on 
board diversity
donald brydon
chairman of the nomination committee
committee membership
chair donald brydon
membership nonexecutive directors 
jan babiak
1
 nick horler cath 
keers and orna nichionna
meetings of the committee were also attended 
where relevant by the company secretary and 
chief of staff
role of the committee
a summary of the responsibilities of the 
committee in connection with appointments to 
the royal mail plc board and senior management 
positions is shown below
• to regularly review the structure size and 
composition of the board and to evaluate the 
balance of skills knowledge experience and 
diversity on the board to inform the capabilities 
required for a particular appointment
• to give full consideration to succession planning 
for directors and senior management
1 
resigned 29 april 2014
• to identify and nominate for the approval of 
the board candidates to fill board vacancies 
as and when they arise
• to evaluate before any appointment is made 
by the board the balance of skills knowledge 
experience and diversity on the board and in 
the light of this evaluation consider where 
appropriate preparing a description of the 
role and capabilities required for a particular 
appointment in identifying suitable 
candidates the committee may use open 
advertising or the services of external advisers 
to facilitate the search
• for the appointment of a chairman to 
prepare a job description including the time 
commitment expected a proposed chairman’s 
other significant commitments should be 
disclosed to the board before appointment 
and any changes to the chairman’s 
commitments should be reported to the 
board  as they arise
• to review annually the time required from 
nonexecutive directors to fulfil their duties
• to make recommendations to the board on
 – formulating succession plans for both 
executive directors and nonexecutive 
directors and in particular for the key roles 
of the chairman and chief executive officer
 – suitable candidates for the role of senior 
independent director
 – membership of the board committees in 
consultation with the chairs of those 
committees
 – the reappointment of any nonexecutive 
director at the conclusion of their specified 
term of office having given due regard to 
their performance and ability to continue 
to contribute to the board and
 – the reelection of directors by shareholders 
under the reelection provisions of the code 
or the retirement by rotation provisions in 
the company’s articles of association having 
due regard to their performance and ability to 
continue to contribute to the board and the 
need for progressive refreshing of the board
• to review the succession management 
process within the company for the top 
120 senior management positions
the full terms of reference for the 
committee can be found on our website 
wwwroyalmailgroupcom
key areas of focus during the year
matters the committee considered during the 
year include
• accepting the resignation of mark higson from 
the board which will be effective from the 
closing of the annual general meeting
• assessing the composition of the board 
following the resignation of mark higson
• approving changes to the roles of certain 
members of senior management including 
recommending for approval the change of 
company secretary and the appointment  
of a new member of the cec
• considering future experience skills and 
capabilities required on the board and
• reviewing the board’s policy on diversity 
as outlined below
board diversity policy
diversity including professional international 
and ethnic diversity is a key factor when 
assessing the board’s composition to ensure that 
there is the correct balance of skills experience 
and expertise amongst nonexecutive directors 
in order to lead decisionmaking and assess the 
performance and strategy of the company 
the board has adopted a board diversity policy 
to ensure transparency and diversity in making 
appointments to the board on the 
recommendation of the committee this policy 
expresses the commitment to principles of 
nondiscrimination on grounds of race colour 
or ethnic origin disability sex age religion or 
belief and to promotion of fair participation and 
equality of opportunity for all the board 
assesses whether it is compliant with that 
policy through its board effectiveness review 
the board has also adopted within such policy 
a process for board appointments including 
procedures for appointing a new chairman 
where an appointment becomes necessary 
following a resignation or additional 
characteristics are identified as necessary 
during the board effectiveness review
the gender balance of the board is also taken 
into consideration when recruiting a new 
nonexecutive director this is reflected by  
the current composition of the board we are 
one of the few companies in the ftse 100 that 
has a female chief executive officer and at  
30 march 2014 three of the eight nonexecutive 
directors 375 per cent including the senior 
independent director and also jan babiak were 
also female the committee does not feel that it 
is appropriate to set a quota regarding the 
number of women on the board but will look to 
maintain a strong representation of women on 
the board
directors’ reelection
the committee considers the performance of 
each individual director and whether he or she 
continues to be effective and can demonstrate 
commitment to the role and whether they should 
be proposed for election at the annual general 
meeting biographical details of each of the 
directors together with details of their skills and 
experience may be found on pages 39 to 40 
following a performance evaluation of each 
director and the board as a whole all directors 
are considered by the board to be fully effective
55
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information pensions committee report
introduction from the chairman
dear shareholder
this is the first report of the reconstituted 
pensions committee following the change in 
membership in september 2013 from a blend 
of board directors and senior management  
to a membership solely made up of board 
directors the majority of whom are non
executive directors this reconstitution was 
in preparation for privatisation and to fully 
comply with the code
the responsibilities delegated to the 
committee by the board include the review 
and approval of objectives in relation to the 
royal mail pension schemes monitoring 
performance of these schemes considering 
recommendations and reports from 
management in relation to policy and strategy 
concerning pensions and investment matters 
that are significant to the group and where 
appropriate making recommendations to the 
audit  risk committee and the group board
it reports and makes recommendations to the 
board and to royal mail group limited as 
principal employer of the group’s pensions 
schemes on
• matters which it reasonably considers are 
of strategic importance to the group
• matters involving a financial impact of over 
£100 million 
• strategic changes to benefits that require 
rule changes or changes to the pension 
scheme trust deeds other than those 
required for changes in legislation and
• material matters in relation to the accounting 
for the group’s pensions obligations
further details of the committee’s role its 
membership and the key areas of focus during 
the year are set out below
the committee is supported by the pensions 
policy committee whose members are the 
chief finance officer the company secretary 
the group hr director and representatives 
from the communications workers union and 
unitecma
les owen
chairman of the pensions committee
committee membership
chair les owen
membership nonexecutive directors 
jan babiak
1
 and paul murray 
executive director 
matthew lester
the meetings of the committee have also 
been attended on invitation by the chairman 
of the board the company secretary the 
deputy group chief finance officer the head 
of pensions strategy and representatives 
from the company’s pensions advisers 
towers watson limited and the auditor ey
role of the committee
further to the responsibilities outlined in the 
committee chairman’s statement the role of 
the committee also includes
• reviewing annual reports from 
management on the royal mail pension 
schemes’ goals and objectives financial 
position investment performance and 
economic conditions
• reviewing recommendations from the 
pensions policy committee and approving 
assumptions relating to valuations and the 
statement of investment principles
• approving in accordance with the pension 
schemes’ rules the appointment 
reappointment removal period of 
appointment and remuneration of the chair 
of trustees this approval will be given on 
behalf of the board following consultation 
with the chair and on the recommendation 
of management and
• reviewing major policy regulatory 
legislative accounting reporting industrial 
relations and governmental issues 
impacting the pension schemes as from 
time to time is necessary at the request  
of the board management or any member 
of the pensions committee and making 
decisions recommendations or reporting  
to the board accordingly
the full terms of reference for the 
committee can be found on our website 
wwwroyalmailgroupcom
key areas of focus during the year
matters the committee considered during the 
year include
• scheme funding
• investment strategy and risk management
• recommendations for scheme reform and
• pensions accounting and treatment of 
reform
1 
resigned 29 april 2014
corporate governance  
continued
56
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 remuneration committee
committee membership
chair orna nichionna
membership chairman 
donald brydon 
nonexecutive directors 
jan babiak
1
 paul murray 
and les owen
meetings of the committee were also 
attended where relevant by the chief 
executive officer group hr director 
company secretary other members of senior 
management and representatives from the 
executive remuneration consultants new 
bridge street
no individual was present when matters 
regarding their own remuneration  
were discussed
1 
resigned 29 april 2014
role of the committee
• to determine and recommend for the 
board’s approval the framework for the 
remuneration of the senior executives  
of the group
• to determine the individual remuneration 
arrangements for the chair the executive 
directors and the company secretary and
• to agree the targets for any performance
related incentive schemes applicable to 
senior executives
the full terms of reference for the  
committee can be found on our website  
wwwroyalmailgroupcom
key areas of focus during the year
details of the work carried out by the 
remuneration committee and the decisions 
made are outlined in the directors’ 
remuneration report on pages 58 to 69
orna nichionna
chair of the remuneration committee
other committees
risk management committee
the risk management committee supports 
the audit  risk committee and meets to 
promote and support the establishment 
communication and embedding of risk 
management throughout the business
disclosure committee
the role of the disclosure committee is to 
assist the executive directors in fulfilling their 
responsibility for oversight of the accuracy and 
timeliness of the disclosures made by the 
company in relation to its financial and other 
reporting the committee meets on a regular 
basis during the reporting process and is 
chaired by the chief executive officer
board and committee attendances
during the year the directors attended the following number of meetings of the board and its 
main committees
board audit  risk nomination pensions remuneration
total number of meetings 10 9 2 2 6
chairman
donald brydon 1010  22  66
executive directors
moya greene 1010    
mark higson 1010    
matthew lester 1010   22 
nonexecutive directors
john allan
4
910 79   
jan babiak 1010  22 22 66
nick horler 1010 99 22  
cath keers
5
910 89 22  
paul murray 1010 99  22 66
orna nichionna 1010 99 22  66
les owen
6
1010 59  22 56
2 
includes board meetings of royal mail group limited and royal mail plc
3 
from 10 september 2013
4 
john allan was unable to attend the board meeting on 18 april 2013 and the audit  risk committee meetings on 
17 may and 23 july 2013 due to prior engagements
5 
cath keers was unable to attend the board meeting on 18 april 2013 and the audit  risk committee meeting on 
14 august 2014 due to prior engagements
6 
les owen was unable to attend the audit  risk committee meetings on 14 august 6 september 
12 november 2013 and 17 january 2014 and the remuneration committee meeting on 17 january 2014 due to  
prior engagements
3 2
57
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report
this context of a good performance our 
continued transformation and the transition 
from public to private ownership set the 
agenda for much of the remuneration 
committee’s work during the year
remuneration for 201314
our company’s continued good performance 
resulted in pay outs on both our annual  
bonus and our long term incentive plan 
ltip in accordance with our remuneration 
policy this policy aims to reward strong 
performance which generates sustainable 
returns for our shareholders
annual bonus 
our performance in 201314 resulted in the 
achievement of a high score against the 
financial people and customer targets in our 
corporate balanced scorecard which make  
up 80 per cent of the potential annual bonus 
performance against personal objectives  
which are set by the committee and represent 
20 per cent of the potential bonus was 
also high 
this resulted in a bonus of 77 per cent of 
salary for our ceo moya greene 77 per cent 
of salary for our cfo matthew lester and 
57 per cent of salary for our managing 
director operations and modernisation  
mark higson more details about the annual 
bonus targets and performance against 
specific kpis are given on page 65 
ltip
during 201314 the company exceeded the 
challenging performance targets that were set 
in 2011 for operating profits and return on 
total assets as part of the ltip as a result 
the ltip that was awarded in 2011 vested in 
full for each of the three executive directors 
the committee had no reason to use its 
discretion to reduce it more details of the 
ltip payout can be found on page 66 
remuneration policy for 201415
following our flotation and in line with the 
vast majority of other listed companies we 
are now able to pay our executive directors 
partially in shares aligning their interests 
more closely with shareholders at the time  
of our flotation the 2013 ltip grant was 
converted into a sharebased award 
subsequent ltip grants will also be share
based we will also require our senior 
management to retain a proportion of their 
sharebased incentives so they build up an 
appropriate individual stake in our company
as we have set out elsewhere in this report 
our business faces many significant 
challenges the impact of the structural 
decline in letters is being exacerbated by a 
number of regulatory issues including the 
unfettered rollout of direct delivery 
competition in the uk competition in the  
uk parcels market is growing rapidly with 
capacity increases in addition to a potential 
reduction in our addressable market due to 
increasing esubstitution and alternative 
fulfilment options this will put pressure  
on pricing
responding to these challenges requires the 
continued transformation of almost 
everything the company does the roles of 
our senior executives are demanding and 
complex as a result of these significant 
challenges our move to being a listed 
company has also added complexity to some 
aspects of their roles
despite this the committee decided after 
much deliberation not to make any changes to 
the remuneration policy which was approved 
by hm government when i became chair of 
the remuneration committee in 2011 we 
also decided to make no change of any sort  
to the potential remuneration of our chief 
executive moya greene in making that 
decision we took account of her views and 
wishes this means that her salary has 
remained the same each year since she joined 
our company in july 2010 and her annual 
bonus and ltip potential have remained the 
same since the current policy was introduced 
in 2011 
our shareholders
until october 2013 royal mail was wholly 
owned by hm government the major 
elements of executive remuneration including 
the annual bonus and ltip structure and 
opportunity were subject to approval from  
orna nichionna
chair remuneration committee
dear shareholder
201314 was a banner year for royal mail we delivered 
revenue and operating profit growth across all of  
our businesses and generated strong free cash flow  
we continued to reshape our business to drive 
operational efficiencies so we can compete effectively  
in the rapidly changing parcel and letter marketplaces 
and we began life as a listed company
58
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 the secretary of state for business innovation 
and skills
this changed with our listing on the london 
stock exchange approximately 150000 of 
our uk employees were given 10 per cent of 
their company through hm government’s 
free shares offer as at the time of writing 
hm government had a stake of approximately  
30 per cent in our company the remaining 
60 per cent of our company is owned by a 
wide range of institutional investors and 
hundreds of thousands of retail investors
private ownership has created the opportunity 
and need for dialogue with a broader range of 
shareholders this dialogue is only just 
beginning and conversations to date have 
been constructive the committee’s challenge 
in the coming years is to reflect the diverging 
views of all our shareholders in a coherent and 
appropriatelypitched remuneration policy 
the committee recognises that executive 
remuneration remains a sensitive issue in our 
society however it is also aware that our 
executive directors’ potential remuneration is 
significantly lower than that of the leaders of 
comparable large and complex companies in 
the uk 
as royal mail changes over the next few 
years so too will our remuneration policies 
and practices we will continue to work hard 
in consultation with our shareholders to find 
an appropriate formula that takes into account 
the company’s unique situation and 
appropriately rewards the creation of 
sustainable shareholder value
directors’ remuneration report 201314
the remainder of this remuneration report 
has been written in accordance with the new 
regulations that came into force earlier this 
year it consists of our policy report which 
describes our guiding principles and 
philosophy and our annual report on 
remuneration which describes how the policy 
was implemented over the past year 
i hope that you will feel able to support both 
the policy report and the annual report on 
remuneration i look forward to continued 
dialogue with you over the coming years
orna nichionna
chair of the remuneration committee
policy report 
this policy report pages 59 to 63 will be put 
to a binding shareholder vote at the agm on 
24 july 2014 it will take effect from that date 
subject to approval by shareholders
summary of our policy and what it aims 
to achieve 
the remuneration committee determines on 
behalf of the board the company’s policy on 
the remuneration of senior executives and the 
executive directors
the company’s policy on executive directors’ 
remuneration is that
•  there is no reward for failure
•  a significant proportion of the remuneration 
package should be dependent on the 
achievement of demanding performance 
targets – both short and long term
•  incentives should be designed so that they 
align the interests of senior executives 
customers and shareholders 
•  variable reward should be structured so as 
to achieve a balance between short term 
and long term incentive programmes 
•  the overall remuneration package should be 
sufficiently competitive to attract retain and 
motivate executives with the commercial 
experience to run a large complex business 
in a highly challenging context and
•  we pay attention to the social sensitivities 
around executive remuneration
components of current pay for executive 
directors 
the executive directors receive two elements 
of pay – fixed and variable fixed pay 
comprises salary benefits and pension 
contributions or cash in lieu of pension 
variable pay comprises an annual bonus 
also known as the short term incentive plan 
or ‘stip’ which pays out only if challenging 
short term objectives are achieved and an 
award made under the ltip which vests 
pays out only if three year performance 
targets are achieved
variable pay is designed to pay out only if the 
performance targets are achieved or 
exceeded the committee sets these targets 
in advance and aims to ensure that they are 
only achievable if the company performs 
strongly variable pay is also subject to 
clawback in certain circumstances 
see pages 60 to 61
the chart below shows the potential pay that 
could be received at different levels of 
performance based on the policy as it will be 
applied in 201415 
fixed pay comprises base salary  benefits  pension annual bonus relates to the bonus that could be earned in relation 
to performance in 201415 the ltip relates to the awards that could be received based on performance over the three 
years to 201617 strong performance assumes an annual bonus of 60 per cent of salary and an ltip award of 
70 per cent of salary exceptional performance assumes an annual bonus award of 100 per cent of salary and an ltip 
award of 98 per cent of salary the ltip award is payable in shares no assumptions have been made as to future share 
price movements
29 £1241
£1550
£651
£1713
£1374
£727
100 53 42 52 42 100
 fixed pay strong exceptional fixed pay strong exceptional
£000
2000
1750
1500
1250
1000
750
500
250
0
22
29
29
22
29
25
26
chief executive ofﬁcer moya greene chief finance ofﬁcer matthew lester
        fixed pay only         annual bonus stip long term incentive plan ltip
59
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report 
continued
policy table description of elements of our policy
this table sets out the key elements of the remuneration policy for the executive directors 
element of 
remuneration
purpose and link 
to strategy operation maximum opportunity
performance  
measures supporting information
salary recruit and retain 
executives with the skills 
and experience to run a 
large complex company in 
a challenging context 
salaries are paid 
monthly
the salary levels for the 
executive directors are 
normally reviewed annually 
when considering salary levels 
and whether any increase 
should be offered the 
committee takes into account a 
variety of factors such as the 
performance of the company 
the performance and 
experience of the individual any 
changes in role or responsibility 
assessment against relevant 
comparator groups internal 
relativities and the level of 
increase being offered to our 
frontline employees 
the committee will consider 
the factors outlined above to 
determine the maximum 
amount that would be paid in 
base salary for an executive 
director 
none no change in policy from the 
prior year
moya greene’s current salary  
is £498000 and remains 
unchanged since her 
appointment to the company 
in 2010 
matthew lester’s salary will 
increase by six per cent to 
£454065 from 1 april 2014 
this increase is consistent with 
the salary increase given to our 
frontline employees for 2013 
and 2014 prior to this 
increase matthew lester’s 
salary had not changed since 
his appointment to the 
company in november 2010 
over this period our frontline 
employees have received an 
average increase of 
11 per cent
benefits to provide an appropriate 
and cost effective benefits 
package 
benefits provided are 
the provision of a 
company car and health 
insurance or the cash 
equivalent of any 
benefits not taken 
under her contract 
moya greene is entitled 
to two return flights to 
canada each year 
financial advice and use 
of a driver for 
businessrelated travel 
the type and level of 
benefits provided may 
be subject to minor 
amendment from time 
to time as appropriate  
the cost of the benefit provision 
varies from yeartoyear and 
there is no prescribed 
maximum limit the committee 
monitors annually the overall 
cost of the benefits provided to 
ensure that it remains 
appropriate 
none no change in policy from  
prior year
pension to provide appropriate 
levels of retirement 
benefit
company contribution 
to a defined contribution 
pension scheme andor 
a cash supplement in 
lieu of pension
£200000 per annum cash 
allowance for the ceo and a  
40 per cent of salary cash 
allowance for the cfo 
none no change in policy from  
prior year
annual bonus reward annual 
performance against a 
corporate balanced 
scorecard which is aligned 
to the strategy of the 
group through the 
achievement of financial 
and nonfinancial targets 
the same scorecard 
determines annual bonus 
awards for all royal mail 
managers 
payable annually in 
cash subject to the 
achievement of 
stretching performance 
targets 
a clawback mechanism 
applies to the annual 
bonus within three 
years of the award 
being made and in the 
event of financial 
misstatement an error 
in calculation or gross 
misconduct on the part 
of the executive
the award level payable for 
strong performance is 60 per 
cent of salary if the minimum 
performance hurdles are not 
achieved then no bonus is 
payable 
the maximum award level 
payable for exceptional 
performance is 100 per cent 
of salary
80 per cent of the bonus 
opportunity is based on 
financial people and 
customer targets as set 
out in the corporate 
balanced scorecard and 
reviewed annually 
20 per cent of the 
opportunity is based on the 
achievement of challenging 
personal objectives
a minimum level of 
operating profit must be 
achieved before any 
executive director becomes 
eligible for any payment
the performance targets 
are measured over 
12 months
no change in policy from  
prior year
  this column does not form part of the binding policy it has been included to provide additional contextual information for the reader
60
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 element of 
remuneration
purpose and link 
to strategy operation maximum opportunity
performance  
measures supporting information
long term 
incentive plan
reward the delivery of 
sustained long term 
financial and operational 
performance 
align the structure of 
awards received by 
executive directors with 
the drivers of shareholder 
returns
awards granted in 
shares and released 
after three years 
subject to performance 
measured in the third 
year of a three year 
period and continued 
employment
the value of dividends 
paid on long term 
incentive awards will be 
rolled up and paid on 
vesting
a clawback mechanism 
applies within three 
years of vesting in the 
event of financial 
misstatement an error 
in calculating the level 
of vesting or gross 
misconduct on the part 
of the executive
the award level payable for 
strong performance is 70 per 
cent of salary
the maximum award level for 
exceptional performance is  
98 per cent of salary
for the awards to be 
granted in 2014 the 
measures will be
 earnings per share 
50 per cent
 growth in operating  
profit margin before 
transformation costs  
35 per cent 
 relative total shareholder 
return tsr 15 per cent 
the performance targets 
are measured over three 
years 
further details on the 
performance targets for the 
2014 awards are set out on 
page 69
different performance 
measures andor 
weightings may be used for 
future awards as 
appropriate to reflect the 
business strategy at 
that time
as announced in the  
prospectus in september 2013 
the cash ltip is replaced  
with sharebased awards  
and we have changed the 
performance conditions used 
for future awards no change  
to award levels
any significant change in the 
weighting or choice of 
performance metrics for future 
awards would be subject to 
prior consultation with our 
major shareholders
all employee 
share plans
to increase alignment 
between the interests of 
executive directors and 
shareholders
participation in the 
company’s all employee 
share plans hmrc 
approved share plans 
the executive directors 
are eligible to 
participate on the same 
terms as other eligible 
employees
subject to hmrc approved 
limits 
none introduced on ipo
  this column does not form part of the binding policy it has been included to provide additional contextual information for the reader
unvested incentive arrangements 
the executive directors have outstanding unvested ltip awards relating to grants made in 2012 and 2013 as set out in the prospectus the 
2013 awards were converted into shares shortly after the ipo they were converted using a share price of 52914 pence which resulted in a 
smaller number of shares than would have been achieved had the ipo price of 330 pence been used the 2012 award is cash based no further 
awards will be made under this plan but the outstanding awards may pay out subject to meeting the performance targets the 2012 award 
vests based on performance to 31 march 2015 and the 2013 award based on performance to 31 march 2016 details of the performance 
conditions applying to the 2012 and 2013 ltip awards are set out on page 66 
61
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report 
continued
questions and answers influences on our policy and how it works in specific situations 
how are shareholder views taken  
into account when deciding  
remuneration policy
the committee chair met and corresponded 
with several of the company’s major 
shareholders over the past few months to 
understand their views on executive pay and 
on the policy currently in place at royal mail 
the remuneration policy is being put to all 
shareholders for approval at the agm the 
committee will listen carefully to the views  
of shareholders expressed at the agm and at 
other times during the year 
do you take the pay of other employees 
into account when deciding the 
remuneration policy
we do we try to maintain a consistent 
approach throughout the group with  
pay appropriately set for different levels  
of employee
• the proposed increase to the cfo’s salary 
reflects the basic salary increase received 
by frontline employees from 2013 to 2014 
prior to this increase the cfo’s salary had 
not changed since it was set on his 
appointment in 2010 over the same 
period the average salary received by 
frontline employees increased by 
11 per cent
• the corporate balanced scorecard 
determines annual bonus awards for all 
employees at manager grade and above
•  all royal mail’s senior managers participate 
in the ltip and 
• the executive directors have a greater 
proportion of their remuneration package 
based on variable performance related 
pay than other employees 
discussions about the group’s overall 
approach to remuneration take place with 
union representatives as part of the annual 
pay review to date there has been no formal 
consultation with employees in determining 
the policy however over 96 per cent of  
our employees are shareholders in the 
company having received shares on ipo  
and are able to vote on this policy along with 
other shareholders 
are the executive directors required  
to hold shares in the company
executive directors are expected to build up  
a shareholding equivalent to 100 per cent of 
their salary they are expected to keep any 
shares they already own and 50 per cent of 
any shares released under the ltip after 
selling sufficient shares to meet any 
associated tax obligation until this is achieved 
we recognise that this may take some time 
what changes can the remuneration 
committee make to the annual bonus  
and ltip
the committee will operate the annual bonus 
and ltip according to the plan rules once the 
remuneration policy is approved by our 
shareholders our ability to make changes is 
limited the maximum award levels cannot be 
increased without prior shareholder approval 
however the committee can make certain 
changes such as the timing of grant and pay 
out the treatment of leavers the structure  
of awards under the ltip retrospective 
adjustment of share award grants eg for  
a rights issue a corporate restructuring or  
for special dividends and in exceptional 
circumstances the discretion to adjust 
previously set targets this would only happen 
if we believe that changing circumstances 
mean that the awards as agreed are unable 
to meet their original purpose 
what would happen if a new executive 
director was appointed
if we appointed a new executive director to 
royal mail 
• we would set the remuneration package  
in line with the approved policy at the time 
of appointment
• in setting the salary level for a new 
executive director the committee would 
take into account the skills and experience 
of the individual his or her current 
remuneration package the market rate for 
the role and the importance of securing the 
best candidate 
• the annual bonus opportunity would not 
exceed 100 per cent of salary and the ltip 
opportunity would not exceed 98 per cent 
of salary participation in the annual bonus 
would normally be prorated for the year of 
joining ie reduced to reflect the proportion 
of the performance period worked and
• the committee may also make additional 
awards to take account of deferred pay or 
benefit arrangements forfeited on leaving  
a previous employer we would take into 
account whether forfeited awards were to 
be paid in cash or shares when they would 
have been received and the likelihood of 
meeting any existing performance 
conditions other payments may be made  
in relation to relocation expenses and other 
incidental expenses as appropriate
in the case of an internal appointment  
any outstanding ltip or annual bonus  
awards would be allowed to pay out  
according to the terms under which they  
were originally granted
what are the executive directors’ terms 
of employment
the executive directors are employed under 
service contracts the dates of these 
contracts are
date of 
contract
unexpired 
term 
months
moya 
greene
15 july 2010 12
matthew 
lester
24 november 
2010
12
mark higson 5 november 
2007
 na
 
the contracts have an indefinite term that 
may be terminated by either party on written 
notice for new hires this notice period would 
be set at 12 months or less copies of the 
executive directors’ service contracts are 
available for inspection at the company’s agm 
what happens if their conduct is 
inappropriate
the executive directors can be dismissed 
immediately without notice if they are deemed 
to be guilty of gross misconduct or for any 
other material breach of the obligations under 
their employment contract in other cases the 
company may dismiss the executive directors 
with a payment in lieu of notice suspend the 
executive director or put them on a period of 
garden leave during which they will be entitled 
to salary benefits and pension 
what payments will an executive director 
receive when they leave the group 
like any other company we would make the 
payments necessary to meet any contractual 
or other legal obligations 
moya greene’s contract dates from her 
appointment to the company in 2010 as 
disclosed in the prospectus her contract may 
be terminated immediately by the company 
unless the company terminates the contract 
due to gross misconduct or a material breach 
of the obligations under the service contract 
it would be required to make a payment 
equalling 12 months’ base salary and an 
annual bonus referable to the 12 month 
period in which the termination occurs  
the assessment of the annual bonus award 
would be made in line with normal practice for 
determining bonuses 
under matthew lester’s service contract and 
the policy for future hires the company may 
terminate the contract by making a payment 
in lieu of any unexpired notice period  
62
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 purpose and link to 
strategy operation maximum opportunity performance targets
to enable the group to 
attract and retain a 
chairman and 
nonexecutive directors 
with appropriate skills and 
experience 
the chairman and 
nonexecutive directors 
receive a fixed fee fees 
are set taking into account 
the time commitment and 
responsibilities of the role 
and to reflect the 
experience and expertise 
required 
the fees for the chairman 
are set by the 
remuneration committee 
with the chairman 
excluded from the 
process the fees for the 
nonexecutive directors 
are set by the executive 
directors in consultation 
with the chairman
fees are subject to 
maximum aggregate 
limits as set out in the 
company’s articles of 
association currently 
£1 million
details of the current fees 
for the chairman and 
nonexecutive directors 
are set out in the annual 
report on remuneration 
on page 69
the fees are reviewed 
periodically and may be 
increased as appropriate 
to take into account 
changes in time 
commitment and general 
market rates
not applicable
the payment in lieu of notice is limited to  
a maximum of 12 months’ base salary 
payment in lieu of accrued holiday incidental 
expenses and outplacement services may be 
paidprovided for as appropriate outstanding 
awards under any all employee share plan 
would vest in accordance of the rules of the 
plan as approved by hmrc any statutory 
entitlements or sums to settle or compromise 
claims in connection with a termination 
including at the discretion of the committee 
reimbursement for legal advice would be paid 
as the committee considers necessary
the company has an explicit policy on 
mitigation future service contracts will 
include express provisions for the use of 
monthly phased payments a requirement  
for the departing executive to seek to mitigate 
any loss and a reduction in amounts paid  
if the executive obtains alternative  
paid employment
what happens to annual bonus and ltip 
awards when an executive director leaves 
outstanding incentive awards usually lapse 
when an employee leaves the company 
however in certain circumstances including 
death illhealth disability and termination of 
employment other than for gross misconduct 
or material breach of the obligations under an 
employment contract awards could pay out 
on the normal date if performance conditions 
have been met the size of the award would 
be prorated the committee may decide on 
an earlier pay out in exceptional 
circumstances it can also decide not to apply 
prorating for ltip awards if it considers  
it appropriate 
what happens if there is a change in the 
control of the company
the treatment of share awards on a change of 
control under the annual bonus and new ltip 
is the same as that set out in the previous 
paragraph except that the performance
testing period will automatically end on the 
date of the change in control under the old 
ltip awards granted more than 12 months 
prior to a change in control would not be 
prorated awards granted less than 
12 months prior to a change in control would 
typically be prorated unless the committee 
decides otherwise 
are the executive directors allowed  
to hold external appointments
the board may allow executive directors  
to accept external appointments eg a 
nonexecutive director position in another 
company provided the time and commitment 
are not excessive the directors are permitted 
to retain any fees that they receive from  
such appointments 
our policy for nonexecutive directors and the chairman
we aim to set fee levels to attract and retain a chairman and nonexecutive directors with the 
right skills and experience
what is the fee policy for the chairman and nonexecutive directors
1 
all the nonexecutive directors including the chairman were appointed in 2013 for an initial term commencing on 20 september 2013 until the conclusion of the 2016 agm 
approximately three years later 
 date of contract
 unexpired term
 months
1
donald brydon 20 september 2013 36
john allan 20 september 2013 36
jan babiak 20 september 2013 resigned 29 april 2014
nick horler 20 september 2013 36
cath keers 20 september 2013 36
paul murray 20 september 2013 36
orna nichionna 20 september 2013 36
les owen 20 september 2013 36
what are the terms of appointment for 
the chairman and nonexecutive 
directors
the nonexecutive directors including the 
chairman are appointed by rolling letters of 
appointment each of the nonexecutive 
directors is entitled to receive a fee from  
the company paid monthly this fee covers 
their role as a nonexecutive director or 
chairman and all other board duties including 
committee memberships and chairs  
in addition the chairman and nonexecutive 
directors are entitled to be reimbursed for  
all reasonable travelling hotel and other 
expenses incurred in the performance of the 
nonexecutive director’s duties 
the nonexecutive directors are appointed 
for up to three years subject to annual review 
and reelection one month’s notice is 
required by either party four months’ notice 
in the case of the chairman however the 
appointment of a nonexecutive director will 
end immediately if they commit a material 
breach of their obligations under the 
appointment letter or fail to be reelected at 
the agm in which case they will be paid 
accrued fees and expenses only
the dates of the chairman’s and non
executive directors’ letters of appointment 
are set out in the table below 
what would happen if a new non
executive director joined royal mail
fees for a new chairman or nonexecutive 
director would be set in accordance with the 
existing fee policy
63
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report 
continued
£’000 salaryfees benefits
2
pension
3
short term 
incentive plan
long term 
incentive plan
4
other
5
total
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
chairman
donald brydon 200 200 – – – – – – – – – – 200 200
executive directors
moya greene
mark higson
matthew lester
498
428
428
498
428
428
29
15
15
377
15
15
200
171
171
200
171
171
385
245
328
399
245
344
488
420
419
488
420
419
250


–
–
–
1350
1279
1361
1962
1279
1377
nonexecutive directors
john allan
6
jan babiak
7
nick horler
cath keers 
paul murray
orna nichionna
les owen
40
40
40
40
50
60
40
8
3
40
40
50
60
40







–
–
–
–
–
–
–







–
–
–
–
–
–
–







–
–
–
–
–
–
–







–
–
–
–
–
–
–







–
–
–
–
–
–
–
40
40
40
40
50
60
40
8
3
40
40
50
60
40
total
8
1864 1795
9
59 407 542 542 958 988 1327 1327 250 – 4500 5059
9
annual report on remuneration
this part of the directors’ remuneration report sets out how the remuneration policy has been applied for 201314 detailed information about the 
directors’ remuneration set out below and on pages 64 66 and 67 has been audited by the company’s independent auditors ey
what did the directors earn for the 201314 financial year audited
the table below sets out the remuneration received by the directors for 201314 or for performance periods ending in 201314 in respect  
of long term incentives and for the purposes of comparison for 201213
the disclosure of remuneration for 201314 relates to the remuneration received both as directors of royal mail group ltd up until 
20 september 2013 and as directors of royal mail plc from 20 september 2013 6 september 2013 for donald brydon moya greene  
and matthew lester royal mail plc was created as a new entity for the purposes of facilitating the privatisation
2 
benefits include medical insurance and car allowance the figure for moya greene also includes return flights to canada 
3 
employer pension contributions to the royal mail defined contribution plan and allowances in lieu of employer contributions
4 
the current year figure relates to the 2011 ltip award the prior year figure relates to the 2010 ltip award which was based on performance to 31 march 2013 the 2010 ltip 
award was subject to an additional deferral period 
5 
relates to a relocation payment made to moya greene as previously disclosed moya greene voluntarily offered to return the amount she received from this assistance it was 
confirmed in royal mail’s prospectus september 2013 that royal mail has received payment for the after tax amount and an additional amount representing an independent 
professional estimate of the unrealised gain associated with the assistance received 
6 
john allan joined the board on 14 january 2013
7 
jan babiak joined the board on 1 march 2013 she stood down from the board on 29 april 2014 after the reporting period 
8 
amounts attributable directly to royal mail plc for 2014 can be calculated by time apportioning the 2014 figures from 6 or 20 september 2013 until 31 march 2014 2013 £nil
9 
this figure excludes £17000 of fees paid to david currie a former director of royal mail holdings
64
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 how was the pay in the above table linked to performance in 201314 
a annual bonus
annual bonus performance is measured over a single financial year against a range of financial and nonfinancial targets as set out in the 
corporate balanced scorecard and against personal objectives the maximum bonus opportunity for the ceo and cfo was 100 per cent of 
salary and the maximum bonus opportunity for the managing director operations and modernisation was 80 per cent of salary the table  
below contains a summary of the corporate metrics under the corporate balanced scorecard which are used to determine 80 per cent of the 
bonus award 
corporate balanced scorecard 201314
weighting target actual achievement
payable out of a 
maximum of 80
financial 45 5 total uk costs £m 7418 7242 stretch 40
10 group operating profit £m
10
696 670 above threshold 43
10 free cash flow £m 357 398 stretch 80
10 group revenue £m
11
9601 9436 above threshold 27
10
collections processing and 
delivery productivity  25 17 threshold 24
customer 30
10 first class quality of service  930 933
between target  
and stretch 67
10
mean business customer 
satisfaction 75 75 target 48
5 customer complaints ’000 5099 4587 stretch 40
5
composite parcels quality  
of service  951 951 target 24
people 25
10
safety lost time accident  
frequency rate 105 077 stretch 80
10 employee engagement 51 54 stretch 80
5 customer focus 66 69 stretch 40
total 100 594
a minimum level of operating profit before transformation costs and 
other exceptional items must be achieved before an executive director 
becomes eligible for a payment for the year in question this minimum 
profit level was £596 million actual profit achieved was £670 million
10

20 per cent of the annual bonus is based on specific personal targets 
which are set at the start of the year and are based on each executive 
director’s area of responsibility personal targets for the ceo included 
specific objectives relating to performance of gls it investor relations 
and the commercial relationship with the post office objectives for the 
other executive directors included specific targets relating to capital 
spend project rollout cost control and people measures performance 
against these objectives was reviewed by the committee and the 
resulting aggregate annual bonus awards for 201314 were as follows
• moya greene £385452 77 per cent of salary
• matthew lester £327720 77 per cent of salary
• mark higson £244616 57 per cent of salary
10 
group operating profit before transformation costs and adjusted for foreign exchange
11 
group revenue adjusted for foreign exchange
65
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report 
continued
operating profit before transformation  
costs performance assessed in the final  
year of the performance period
proportion of target award vesting
less than 70 per cent of target 0 per cent
70 per cent to 80 per cent of target 0 per cent to 80 per cent vesting  
straightline sliding scale
80 per cent to 100 per cent of target 80 per cent to 100 per cent vesting  
straightline sliding scale
100 per cent of 120 per cent of target 100 per cent to 140 per cent vesting  
straightline sliding scale
more than 120 per cent of target 140 per cent vesting  
ie maximum 98 per cent of salary
b long term incentive plan ltip
the 2011 ltip award was a cashbased 
award based on performance in the third 
year of a three year period to 31 march 2014 
it was subject to two performance conditions  
the primary measure was operating profit 
before transformation costs
year type
maximum 
value of award 
at grant 
 salary
maximum 
value of award 
at grant 
£’000
 vesting at 
minimum 
performance
final year of 
performance 
period
number of 
shares notes
moya greene
2012
2013
ltip
ltip
98
98
488
488
0
0
201415
201516
–
65880
–
a
mark higson
2012
2013
ltip
ltip
98
98
420
420
0
0
201415
201516
–
56673
b
ab
matthew lester
2012
2013
ltip
ltip
98
98
419
419
0
0
201415
201516
–
56620
–
a
a
 
as disclosed in the prospectus 2013 ltip awards were converted into conditional rights to acquire ordinary shares on 19 december 2013 the conversion was made at the 
volume weighted average price of the ordinary shares of the company traded between the eighth and fourteenth days following admission on 15 october 2013 52914p 
b
 
as detailed on page 39 mark higson will be standing down from the board on 24 july 2014 as mark is a good leaver as defined in the ltip rules his outstanding awards will not 
lapse when he leaves the company they will vest on the normal date subject to performance the award will be reduced prorata to reflect the proportion of the performance 
period when mark was in role
the 2012 and 2013 ltip awards are subject to the same performance measures and sliding scale of targets as the 2011 award the precise 
operating profit and rota figures are deemed to be commercially sensitive however full details of the targets and performance achieved against 
them will be disclosed on release of the award 
have any payments been made to past directors in the year audited
no payments have been made to past directors of royal mail plc during the year
what about payments for loss of office audited
no payments were made in respect of loss of office during the year
the secondary measure was a downwards only adjustment based on return on total assets rota targets if rota was greater than 90 per cent 
of target there was no adjustment if rota was between 75 per cent of target and 90 per cent of target there was a 50 per cent reduction in the 
level of pay out if rota was less than 75 per cent of target then there was no pay out 
the operating profit before transformation target was £528 million and the rota target was 170 per cent actual operating profit before 
transformation for 201314 was £670 million
12
 and rota was 243 per cent accordingly the total percentage of ltip awards for 201314 
vesting was 140 per cent equivalent to 98 per cent of salary
this resulted in the following cash awards to the executive directors moya greene £488040 matthew lester £419440  
mark higson £419832 
what previous ltip awards remain outstanding at the year end audited
the table below sets out details of the ltip awards that were granted during the year and remain outstanding at the year end
12 
group operating profit before transformation costs and adjusted for foreign exchange
66
royal mail plc 
annual report and financial statements for the year ended 30 march 2014  revenue people costs ebit excluding speciﬁc items recommended dividends
9000
10000
201314 201314 201213 201213 201314 201213 201314 201213
8000
7000
6000
5000
4000
3000
2000
1000

£’m
how much does royal mail spend on pay
the following table shows the group’s people 
costs relative to dividends revenue and ebit
interests  
in shares  
as  of
salary
13
interests 
in shares
14
maximum 
scheme 
interests
unvested
15
total 
potential 
interests
total 
potential 
interests as 
 of salary
chairman
donald brydon 3030 – –
executive directors
moya greene
mark higson
matthew lester
3643
3643
3643
4
5
5
65880
56673
56620
69523
60316
60263
79
79
79
nonexecutive directors
john allan
jan babiak
nick horler
cath keers 
paul murray
orna nichionna
les owen
3030
3030
3030
3030
3030
3030
3030
–
–
–
– 
–
–
–
–
–
–
– 
–
–
–
–
–
–
– 
–
–
–
–
–
–
– 
–
–
–
how does tsr compare to that of other 
similar companies
this graph shows the cumulative total 
shareholder return of the group since ipo 
relative to the ftse 100 index the ftse 
100 index has been chosen for comparison as 
the company is a constituent of the index and 
it provides a benchmark of the performance 
of other large uk listed companies
is there a shareholding guideline for 
executive directors and what are their 
current shareholdings audited
a shareholding guideline has been introduced 
for the executive directors and is set out on 
page 62 the table opposite sets out details  
of the shareholdings of the executive and 
nonexecutive directors as at 31 march 2014 
on 9 april a further 116 shares were provided 
to the executive directors in respect of the 
final distribution of shares to all qualifying 
employees as part of the flotation
13 
includes interests in ordinary shares of persons connected with the relevant director 
14 
valued using the share price on 31 march 2014 of £563 
15
 relates to the 2013 ltip award which was converted into shares on 19 december 2013
60
80
100
120
140
160
180
200
source datastream thomson reuters
10oct13 31mar14
total shareholder return rebased
royal mail plc ftse 100 index
this graph shows the value by 31 march 2014 of £100 invested in royal mail on 10 october 2013
compared with the value of £100 invested in the ftse 100 index   
67
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information directors’ remuneration report 
continued
remuneration of the  
chief executive officer moya greene
201011
17
201112 201213 201314
total remuneration £’000 778 1107 1962 1350
stip award as  maximum 41 74 80 77
ltip award as  maximum – – 100 100
what has the pay for the chief executive officer been over the last four years
the total remuneration figure for the chief executive officer over the last four years is shown in the table below the annual bonus payout and 
ltip vesting level as a percentage of the maximum opportunity is also shown
do the executive directors receive  
fees from external appointments
the executive directors are entitled to  
receive fees from external appointments 
moya greene is a director at tim hortons inc 
and received fees of £82433 sterling 
equivalent for the last reported financial year 
matthew lester is a nonexecutive director at 
man group plc and received fees of £95000 
for the last reported financial year
who were the members of the 
remuneration committee in the year
the members of the committee during the 
last financial year were orna nichionna 
chair donald brydon jan babiak 
paul murray and les owen
all of these were independent nonexecutive 
directors as defined under the uk corporate 
governance code with the exception of the 
company chairman who was independent  
on his appointment details of the number  
of meetings held during the year and the 
attendance of the members are provided  
on page 57
what advice did the committee receive
the committee takes information and advice 
from inside and outside the group internal 
support was provided by the group 
hr director supported by other members of 
the hr department as appropriate and the 
company secretary the chief executive was 
invited to attend meetings where appropriate 
no individual was present when matters 
relating to their own remuneration 
were discussed
following a competitive tender process 
new bridge street nbs was appointed by 
the committee in 2011 to act as its 
independent adviser nbs is a trading name of 
aon hewitt limited which is a subsidiary of 
aon plc fees are normally charged on a time 
spent basis with estimates provided in 
advance for particular projects the total fees 
paid to nbs in respect of its services to the 
committee during the year were £100277 
plus vat nbs also provided advice to the 
company during the year in relation to the 
implementation of the all employee share 
schemes and long term incentive plan and on 
remuneration arrangements within gls nbs 
is a signatory to the remuneration 
consultant’s code of conduct and reports 
directly to the chair of the committee  
the committee chair meets regularly with  
its advisors without management present  
and the committee is satisfied that the  
advice that it receives from nbs is objective 
and independent 
how does the change in the chief executive’s pay compare to that for royal mail employees 
the table below shows the percentage change in the chief executive’s salary benefits and annual bonus between 201213 and 201314 
compared to that for the average employee of the group
chief executive
moya greene £ average employee £
16
201314 201213  change 201314 201213  change
salary 498000 498000 0 26405 25804 23
benefits 29000 377000 77 117 115 17
stip 385000 399000 4 514 479 7
16 
average of all employees
17 
moya greene joined in july 2010
68
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 cash salary the current salary for moya greene is £498000 this is unchanged since her appointment to the 
company in july 2010 
subject to approval of the policy report at the agm matthew lester’s salary will increase by 
six per cent to £454065 this increase will take effect from the start of the financial year  
31 march 2014 this is the first increase since he joined the company in november 2010
pension and benefits as set out in the policy table
annual bonus the annual bonus opportunity for strong and exceptional performance is unchanged at 60 and 
100 per cent of salary respectively the forward looking targets are deemed to be commercially 
sensitive but they will be disclosed retrospectively in next year’s remuneration report 
ltip – long term performance share awards the first grant of awards under the 2014 ltip will be made in july 2014 subject to shareholder 
approval performance metrics will be earnings per share 50 per cent growth in operating 
profit margin 35 per cent and relative total shareholder return tsr 15 per cent 
a sliding scale of challenging adjusted eps targets will be set 125 per cent of the total award will 
vest at the threshold eps target and 50 per cent of the total award will vest at the exceptional 
eps target the eps range for the 2014 awards is still being finalised and will be released in a 
public announcement in advance of the agm  
the targets set for the operating profit margin before transformation costs performance 
condition are considered by the board to be commercially sensitive however they will be 
disclosed retrospectively at the end of the performance period a sliding scale of targets has been 
set with 875 per cent of the total award vesting at the threshold margin increasing to 35 per cent 
of the total award vesting for achievement of the exceptional margin   
the relative tsr performance target will compare the company’s tsr against other companies in 
the ftse 100 index excluding mining and financial companies if royal mail’s tsr performance 
is ranked at the middle of the group 75 per cent of the total award will vest increasing to full 
vesting 15 per cent of the total award if performance is in the top quartile of ftse 100 companies 
chairman  nonexecutive director fees the fee for the chairman and fee policy for the nonexecutive directors have been reviewed and 
the fees for 201415 are set out below
chairman  £210000
base board fee  £45000
additional fees for chairing the audit or remuneration committee  £15000
additional fees for chairing the pensions committee  £10000
additional fee for the role of senior independent director – £10000
mark higson as announced on 13 january 2014 mark higson will be standing down from the board and will 
cease employment with the company on 24 july 2014 he continues to receive salary benefits 
and pension up until the date of his departure 24 july when he will receive a payment in lieu  
of the remainder of his notice period just over eight months limited to base salary only mark  
will be eligible for a prorata bonus for 201415 which will be paid subject to performance in  
june 2015 as he is a good leaver as defined in the ltip rules outstanding ltip awards will pay 
out subject to performance and prorating on the normal dates he will be eligible to benefit 
from outplacement services paid for by the company and the company will reimburse legal costs
approved by the board on 6 june and signed by
orna nichionna
chair remuneration committee
how will the directors’ remuneration policy be applied in practice
this section sets out how the remuneration policy is currently being applied
69
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information consolidated income statement
1
 
consolidated statement of comprehensive income
2
consolidated statement of cash flows
2
consolidated balance sheet
3
consolidated statement of changes in equity
2
core notes to the consolidated financial statements 
1 basis of preparation
2 segment information
3 transformation costs
4 specific items before taxation
5 net finance costs and net debt
6 taxation 
7 cash flow 
8	 employee	benefits	−	pensions
9 notional earnings per share 
10 organisation structure and share capital changes
11 sharebased payment
other notes – income statement
12 people information 
13 operating costs
other notes – financial assets financial liabilities and hedging programmes
14	financial	assets	and	liabilities	−	summary	and	management	of	financial	risk
15 cash and cash equivalents
16 loans and borrowings
17 financial liabilities – net and gross maturity analysis
18	financial	assets	and	liabilities	−	additional	analysis
19 hedging programmes
other notes – balance sheet
20 provisions
21 property plant and equipment
22 goodwill
23 intangible assets
24 investments in associates
25 current trade and other receivables
26 current trade and other payables
27 issued share capital and reserves
28 commitments
29 related party information
significant accounting policies
group five year summary unaudited
statement of directors’ responsibilities in respect of the group financial statements
independent auditor’s report to the members of royal mail plc
1
	 for	the	52	weeks	ended	30	march	2014	52	weeks	ended	24	march	2013	and	53	weeks	ended	31	march	2013
2
	 for	the	52	weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013
3
	 at	30	march	2014	and	31	march	2013
consolidated financial statements
70
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 consolidated income statement
for	the	52	weeks	ended	30	march	2014	52	weeks	ended	24	march	2013	 
and	53	weeks	ended	31	march	2013
52 weeks ended 30 march 2014 52	weeks	ended	24	march	2013
53	weeks	
ended 
31	march	
2013
notes
reported
1
 £m
specific
 items
2
 £m
excluding 
specific 
items
£m
adjusted
3
unaudited 
£m
specific 
items
2 
unaudited 
£m
excluding 
specific 
items 
unaudited 
£m
reported
1
 £m
continuing operations
revenue 23 9456 – 9456 9146 – 9146 9279
operating costs 8785 – 8785 8548 – 8548 8644
people costs 12 5282 – 5282 5077 – 5077 5147
distribution and conveyance costs 1869 – 1869 1771 – 1771 1785
infrastructure costs 1051 – 1051 1047 – 1047 1052
other operating costs 583 – 583 653 – 653 660
operating profit before transformation costs 671 – 671 598 – 598 635
transformation costs 3 241 – 241 195 – 195 195
operating profit after transformation costs 430 – 430 403 403 440
operating specific items
royal	mail	pension	plan	amendment 4 1350 1350 – – – – –
transactionrelated costs 4 28 28 – 10 10 – 10
employee free shares costs 4 94 94 – – – – –
businessrelated costs 4 15 15 – 67 67 – 47
operating profitloss 1643 1213 430 326 77 403 383
nonoperating specific items
profit on disposal of property plant and equipment 4 19 19 – 4 4 – 16
profit	on	disposal	of	associate	undertaking 4 2 2 – – – – –
earnings before interest and taxation 1664 1234 430 330 73 403 399
finance costs 5 71 – 71 104 – 104 104
finance income 5 4 – 4 27 22 5 27
net pension interest nonoperating specific item 48c 69 69 – 30 30 – 30
profitloss from continuing operations before taxation 1666 1303 363 283 21 304 352
taxation chargecredit 6 386 289 97 246 336 90 246
profit for the period from continuing operations 1280 1014 266 529 315 214 598
discontinued operations
profit after taxation for the period from post office limited – – – – – – 2
profit for the period 1280 1014 266 529 315 214 600
profit for the period attributable to
equity holders of the parent company 1277 1014 263 525 315 210 596
noncontrolling interests 3 – 3 4 – 4 4
notional earnings per share 9
basic and diluted – continuing operations 1277p 1014p 263p 525p 315p 210p 594p
basic and diluted – total group 1277p 1014p 263p 525p 315p 210p 596p
1
	 	 reported	–	prepared	in	accordance	with	international	financial	reporting	standards	ifrss	requiring	post	office	limited	pol	to	be	consolidated	up	until	its	transfer	to	royal	
mail	holdings	plc	on	1	april	2012	
2
	 	 specific	items	–	see	note	1	‘basis	of	preparation’
3
 
 
adjusted	–	reported	201213	results	adjusted	to	exclude	the	consolidation	of	pol	up	to	1	april	2012	and	the	53rd	week’s	additional	revenue	and	costs	in	addition	£32	million	
of pol	separation	costs	taken	to	equity	in	the	reported	basis	are	taken	through	the	income	statement	in	the	adjusted	basis	see	note	1	‘basis	of	preparation’
71
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information consolidated statement of 
comprehensive income
for	the	52	weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013
notes
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
profit for the period from continuing operations 1280 598
other comprehensive expenseincome for the period
items that will not be subsequently reclassified to profit or loss
amounts relating to pensions accounting 344 439
ifric 14 adjustment relating to pension surplus 8 8 5
remeasurements	–	defined	benefit	schemes’	assetsliabilities 8c 453 246
taxation on above items 6 117 188
items that may be subsequently reclassified to profit or loss
foreign exchange translation differences 12 5
designated cash flow hedges 19 2
losses on cash flow hedges deferred into equity 24 1
losses on cash flow hedges released from equity to income 4 2
gains on cash flow hedges released from equity to the carrying amount of nonfinancial assets – 1
taxation on above items 6 1 2
release of gains held in equity on disposal of pension escrow gilts 5 – 22
total comprehensive income for the period 905 134
total comprehensive income for the period attributable to
equity holders of the parent company 902 130
noncontrolling interests 3 4
72
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 consolidated statement of cash flows
for	the	52	weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013
the	consolidated	statement	of	cash	flows	for	the	52	weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013	has	been	prepared	
on a reported basis in accordance with ifrss the comparative information for 201213 is also presented on a nongaap basis which 
excludes	the	group’s	former	pol	subsidiary	the	only	difference	between	the	reported	and	nongaap	presentation	is	the	£820	million	
cash which	belonged	to	pol	transferred	to	royal	mail	holdings	plc	subsequently	renamed	postal	services	holding	company	limited	on	
1 april 2012
notes
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
nongaap 
£m
53	weeks	
2013 
reported 
£m
cash flow from operating activities
operating profit before transformation costs 671 635 635
adjustment for
depreciation 21 241 238 238
amortisation 23 33 43 43
share of posttax profit from associates 24 3 1 1
ebitda before transformation costs 942 915 915
working	capital	movements 83 142 142
decrease in inventories 2 8 8
decrease in receivables 81 25 25
increase in payables 19 136 136
net increase in derivative assets 2 15 15
decrease in provisions 17 12 12
difference between pension costs charged in operating profit and pension cash flows 58 3 3
cash cost of transformation operating expenditure
1
201 230 230
cash cost of operating specific items 35 26 26
cash inflow from operations 847 798 798
income taxation paid 38 37 37
net cash inflow from operating activities 809 761 761
cash flows from investing activities
dividend	received	from	associate	undertaking 24 2 – –
finance income received 4 5 5
proceeds from sale of property plant and equipment nonoperating specific item 33 52 52
proceeds	from	sale	of	associate	undertaking	nonoperating	specific	item 3 – –
purchase of property plant and equipment
1
 341 388 388
transformation investment – capital expenditure 83 177 177
nontransformation investment – capital expenditure 258 211 211
acquisition of business
1
2 3 3
purchase of intangible assets software
1
69 41 41
payment	of	deferred	consideration	in	respect	of	prior	years’	acquisitions
1
4 3 3
net	outflow	from	transfer	of	post	office	limited	to	royal	mail	holdings	plc – – 820
net sale of financial assets investments noncurrent – 129 129
net sale of financial assets investments current – 30 30
net cash outflow from investing activities 374 219 1039
net cash inflowoutflow before financing activities 435 542 278
cash flows from financing activities
finance costs paid on refinancing of loan facilities 45 – –
other finance costs paid 37 49 49
payment of capital element of obligations under finance lease contracts 73 74 74
cash	received	on	sale	and	leasebacks	 109 58 58
new loans 600 – –
repayment of borrowings 973 600 600
net cash outflow from financing activities 419 665 665
net increasedecrease in cash and cash equivalents 16 123 943
effect of foreign currency exchange rates on cash and cash equivalents 1 1 1
cash and cash equivalents at the beginning of the period 351 473 1293
cash and cash equivalents at the end of the period 15 366 351 351
1
 items included in total investment – see note 7
73
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information consolidated balance sheet
at	30	march	2014	and	31	march	2013
notes
at 30 
march 
2014 
reported 
£m
at 31 
march	
2013 
reported 
£m
noncurrent assets
property plant and equipment 21 1989 1916
leasehold land payment 3 3
goodwill mainly investment in gls 22 197 196
intangible assets mainly software 23 195 139
investments in associates 24 4 3
financial	assets	−	pension	escrow	investments 1418 20 20
	 −	derivatives 1418 3 3
retirement benefit asset – net of ifric 14 adjustment 8 1723 825
other receivables 13 8
deferred taxation assets 6 9 112
4156 3225
noncurrent assets held for sale 3 2
current assets
inventories 22 24
trade and other receivables 25 926 1004
financial	assets	−	derivatives 1418 2 9
	 −	shortterm	deposits 1418 1 1
cash and cash equivalents 141518 366 351
1317 1389
total assets 5476 4616
current liabilities 
trade and other payables 26 1652 1611
financial liabilities – obligations under finance leases 141718 87 79
 – derivatives 141718 12 2
income taxation payable 14 14
provisions 20 173 119
1938 1825
noncurrent liabilities
financial	liabilities	−	interest	bearing	loans	and	borrowings 14161718 600 973
	 −	obligations	under	finance	leases 141718 255 226
	 −	derivatives 141718 5 1
provisions 20 95 127
other payables 31 36
deferred taxation liabilities 6 151 23
1137 1386
total liabilities 3075 3211
net assets 2401 1405
equity
share capital 27 10 –
retained earnings 2332 1318
other reserves 52 83
equity attributable to parent company 2394 1401
noncontrolling interests 7 4
total equity 2401 1405
the financial statements were approved and authorised for issue by the board of directors on 6 june 2014 and were signed on its behalf by
moya greene matthew lester
chief executive officer chief finance officer 
74
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 consolidated statement of changes in equity
for	the	52	weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013
75
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information
share 
premium  
£m
share 
capital  
£m
retained 
earnings  
£m
financial 
assets 
reserve  
£m
foreign 
currency 
translation 
reserve  
£m
hedging 
reserve  
£m
other 
reserves  
£m
equity 
holders of 
the parent  
£m
non
controlling 
interests  
£m
total  
equity  
£m
reported at 26 march 2012 3784 – 6442 22 78 8 47 2503 – 2503
profit for the period from  
continuing operations – – 594 – – – – 594 4 598
other comprehensive incomeexpense 
for the period – – 439 22 5 2 – 464 – 464
capital reduction 3784 3784 – – – – – – –
pension	deficit	transfer	to	hm	
government on 1 april 2012  
note 8c – – 4012 – – – – 4012 – 4012
loss on transfer of subsidiary to parent 
company discontinued operation – – 191 – – – 47 238 – 238
reported at 31 march 2013 – – 1318 – 73 10 – 1401 4 1405
profit for the period from 
continuing operations – – 1277 – – – – 1277 3 1280
other comprehensive expense for 
the period – – 344 – 12 19 – 375 – 375
share capital issue note 10 – 10 10 – – – – – – –
employee free shares  
issue
1
 note 11 – – 91 – – – – 91 – 91
reported at 30 march 2014 – 10 2332 – 61 9 – 2394 7 2401
1
 excludes £3 million national insurance charged to the income statement included in provisions on the balance sheet 
a description of the reserves in the above table is included in note 27 core notes to the consolidated financial statements
the notes in this section are considered by the board to be particularly important to a reader of the financial statements 
1 basis of preparation
2 segment information
3 transformation costs
4 specific items before taxation
5 net finance costs and net debt
6 taxation
7 cash flow
8 employee benefits – pensions
9 notional earnings per share
10 organisation structure and share capital changes
11 sharebased payment
notes to the consolidated  
financial statements
76
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 1 basis of preparation
this	note	explains	how	these	royal	mail	plc	group	‘the	group’	consolidated	financial	statements	have	been	prepared	including	details	of	the	
incorporation	of	royal	mail	plc	‘the	company’	specific	items	the	adjustment	to	the	comparative	year	relating	to	the	transfer	of	post	office	
limited	pol	to	royal	mail	holdings	plc	on	1	april	2012	and	the	adjustment	for	the	53rd	week	in	201213
authorisation of financial statements and statement of compliance with ifrss
the	consolidated	financial	statements	for	the	52	weeks	ended	30	march	2014	were	authorised	for	issue	by	the	board	on	6 june	2014	and	the	
balance	sheet	as	at	30	march	2014	was	signed	on	behalf	of	the	directors	by	moya	greene	and	matthew	lester
the consolidated financial statements have been prepared in accordance with international financial reporting standards ifrss as adopted by 
the	european	union	and	as	they	apply	to	the	financial	statements	of	the	group	for	the	52	weeks	ended	30	march	2014	2013	53 weeks	ended	
31 march	2013	
basis of preparation and accounting
the	incorporation	of	royal	mail	limited	on	6	september	2013	subsequently	reregistered	as	royal	mail	plc	‘the	company’	on	19 september	2013	
has	resulted	in	the	company	becoming	the	immediate	and	ultimate	parent	of	royal	mail	group	limited	see	note	10	for	further	details	the	
consolidated	financial	statements	are	therefore	presented	for	royal	mail	plc	and	its	subsidiaries	whereas	the	201213	annual	report	and	special	
purpose	financial	statements	annual	report	and	prospectus	in	relation	to	the	initial	public	offering	of	royal	mail	plc	dated	27 september	2013	
‘the	prospectus’	were	in	respect	of	consolidated	royal	mail	group	limited	accordingly	all	references	to	the	201213	annual	report	and	
prospectus	in	this	document	relate	to	the	consolidated	royal	mail	group	limited	entity
the company is incorporated in the united kingdom uk and the financial statements are produced in accordance with the companies act 2006 
and	applicable	ifrss	the	uk	is	the	company’s	country	of	domicile	
the group consolidated financial statements are presented in sterling as that is the currency of the primary economic environment in which the 
group operates and all values are rounded to the nearest whole million except where otherwise indicated the consolidated financial statements 
have been prepared on an historic cost basis except for pension assets and derivative financial instruments which have been measured at 
fair value
the	results	of	pol	have	been	consolidated	and	disclosed	as	a	‘discontinued	operation’	in	the	income	statement	for	the	period	26	march	2012	up	
to	1	april	2012	at	which	point	pol	was	transferred	to	royal	mail	holdings	plc	subsequently	renamed	postal	services	holding	company	limited
presentation of results
the	group’s	significant	accounting	policies	can	be	found	after	the	notes	to	these	group	financial	statements
the consolidated financial statements have been prepared in accordance with ifrss ie on a reported basis the income statement and cash 
flow statement also include nongaap adjustments in respect of the following
specific items
the	group	previously	disclosed	items	that	in	management’s	judgement	needed	to	be	shown	separately	by	virtue	of	their	nature	as	‘exceptional	
items’	there	are	however	other	items	of	incomeexpense	after	‘operating	profit	after	transformation	costs’	that	management	now	discloses	
separately	which	do	not	ordinarily	meet	the	definition	of	‘exceptional	items’	eg	finance	income	on	the	sale	of	pension	escrow	gilts	net	pension	
interest	and	elements	of	taxation	the	group	has	decided	therefore	not	to	continue	using	the	‘exceptional	items’	definition	and	instead	to	refer	
to such	items	of	incomeexpense	as	‘specific	items’	
this new definition has been introduced on the basis that the financial results excluding these specific items are consistent with how financial and 
operational	performance	is	measured	by	management	in	providing	a	meaningful	analysis	of	the	group’s	trading	results	and	cash	flows	these	
specific items may not be comparable with similarlytermed measures used by other companies
items	which	are	classified	as	specific	are	rmpp	royal	mail	rm	section	–	see	note	8	amendment	credit	transactionrelated	costs	employee	
free	shares	costs	certain	costs	not	associated	with	the	transformation	of	the	operational	network	historical	employment	costs	potential	
industrial	diseases	claims	costs	certain	property	impairments	all	profits	from	disposals	of	property	and	associate	undertakings	net	pension	
interest the gain created on the sale of pension escrow investments plus the related taxation effects of these items taxation specific items 
include the impact of the pension transfer pursuant to the postal services act 2011 and the impact of changes in taxation law
impact of 53rd week in 2013
the	201213	comparative	year	was	a	53	week	year	and	to	provide	meaningful	comparisons	of	revenues	and	costs	the	income	statement	also	
includes	comparative	results	on	an	adjusted	52	week	basis	the	adjustment	eliminates	the	53rd	week’s	revenue	and	incremental	operating	costs	
associated with that revenue
gls	reports	results	for	a	52	week	year	ending	31	march	no	adjustment	has	therefore	been	made	for	gls
transfer of post office limited pol
the	201213	comparative	reported	results	in	these	financial	statements	relate	to	the	53	week	year	ended	31	march	2013	and	include	the	 
full	consolidated	results	of	the	group	including	the	group’s	former	subsidiary	pol	for	the	period	26	march	2012	to	31	march	2012	pol	
was subsequently	transferred	to	royal	mail	holdings	plc	on	1	april	2012	
77
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
1 basis of preparation continued
the 201213 comparative adjusted results in the income statement exclude pol and are consistent with those presented in the prospectus 
with	an	adjustment	to	eliminate	the	53rd	week’s	revenue	and	costs	£37	million	profit	impact	–	see	above	and	page	f66	in	the	prospectus	in	
excluding pol from these comparative results costs incurred by the group relating to the transfer of pol £20 million it separation costs and 
£12	million	loss	on	transfer	of	properties	were	deemed	for	the	purpose	of	providing	royal	mail	group	excluding	pol	financial	information	to	be	
external	third	party	costs	and	were	taken	directly	to	the	income	statement
on a reported basis these £32 million costs of pol separation have been treated as required by ifrss as transactions with the parent at the 
time	royal	mail	holdings	plc	and	taken	directly	through	equity	included	in	‘loss	on	transfer	of	subsidiary	to	parent	company	discontinued	
operation’	in	the	consolidated	statement	of	changes	in	equity	not	through	the	income	statement	consequently	the	reported	‘profit	for	the	
period	from	continuing	operations’	is	£32	million	higher	than	that	in	the	adjusted	results	in	addition	to	the	£37	million	higher	profit	impact	of	the	
53rd	week	as	explained	above
the comparative information in the consolidated statement of cash flows also includes nongaap disclosures which exclude the cash position of 
pol	up	to	the	date	of	its	transfer	to	royal	mail	holdings	plc	the	directors	believe	that	this	presentation	provides	meaningful	comparisons	of	cash	
flows and is consistent with how the cash flow statement was presented in the 201213 annual report and the prospectus
other	than	the	‘discontinued	operation’	disclosure	in	the	income	statement	and	the	reported	cash	flows	in	the	cash	flow	statement	on	the	basis	
of materiality no other disclosures eg segment reporting in respect of pol have been made in these financial statements for the period that 
it was	still	part	of	the	group
merger transaction of royal mail plc and royal mail group limited
as	part	of	the	group	reorganisation	prior	to	the	initial	public	offering	of	shares	the	company	acquired	the	entire	share	capital	of	royal	mail	group	
limited	through	issuance	of	its	shares	to	the	then	parent	company	royal	mail	holdings	plc	subsequently	renamed	postal	services	holding	
company	limited	as	there	were	no	changes	to	the	shareholder	group	at	the	time	of	this	transaction	and	royal	mail	plc	is	not	a	business	this	
transaction	did	not	classify	as	a	business	combination	as	defined	under	ifrs	3	‘business	combinations’	the	consolidated	financial	statements	
of royal	mail	plc	have	therefore	been	prepared	as	a	continuation	of	the	existing	group	
going concern
the	group’s	business	activities	strategy	and	performance	are	outlined	on	pages	2	to	37
in	assessing	the	going	concern	status	of	the	group	the	directors	are	required	to	look	forward	by	a	minimum	of	12	months	from	the	end	of	the	
reporting	year	30	march	2014	to	ensure	that	there	is	sufficient	headroom	determined	by	available	cash	and	cash	equivalents	plus	available	
unrestricted unused committed facilities to enable the group to pay its creditors as they fall due
notes	5	and	16	of	these	financial	statements	provide	details	of	the	group’s	current	loan	structure	and	level	of	borrowings	at	30	march	2014	
the	group	also	has	finance	lease	obligations	of	£342	million	at	30	march	2014	as	shown	in	note	28	to	the	financial	statements	
letters of credit of £112 million have been provided by the group in support of certain leasing and insurance obligations however as these are 
currently uncollateralised they are not included as part of reported net debt further details are provided in the financial review on page 27
the	directors	have	undertaken	a	review	of	and	expect	to	continue	to	review	the	group’s	cash	headroom	over	a	longer	timeframe	than	the	
minimum requirement under various downside scenarios
the directors have concluded from their review that under the various downside scenarios sufficient cash headroom exists for the foreseeable 
future and accordingly the consolidated financial statements have been prepared on a going concern basis
2 segment information
the	group’s	revenue	certain	costs	and	profit	before	financing	and	taxation	are	segmented	in	this	note	aligned	with	how	the	business	is	
managed
business unit main statutory entities
uk parcels international  letters ukpil  
uk operations
royal	mail	group	limited
royal	mail	estates	limited
royal	mail	investments	limited
general logistics systems gls  
other european operations
gls germany gmbh  co ohg
gls italy spa
gls france sas
other  
uk operations
romec limited 51 owned subsidiary
ndc 2000 limited 51 owned subsidiary
quadrant catering ltd 51 owned associate
78
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 2 segment information continued
the	group	is	structured	on	a	geographic	business	unit	basis	and	these	business	units	report	into	the	chief	executive’s	committee	and	the	royal	
mail	plc	board	each	of	these	units	has	discrete	revenue	costs	profit	cash	flows	assets	and	people	therefore	full	and	complete	financial	
information is prepared and reviewed on a regular basis and compared with both historical and budgetforecast information as part of a rigorous 
performance management process
in addition to providing segmental disclosures for profit after taxation consistent with the requirements of accounting standards and how the 
group is managed the information below also includes details of free cash flow and ebitda before transformation costs
the majority of intersegment revenue relates to the provision of facilities management and catering services to ukpil trading between ukpil 
and gls is not material
transfer prices between the segments are set on a basis of charges reached through commercial negotiation with the respective business units 
that form part of the segments
reported 52 weeks ended 30 march 2014
uk operations
other 
european 
operations
continuing operations
ukpil  
£m
other  
£m
total  
£m
gls  
£m
total  
£m
external revenue 7787 18 7805 1651 9456
intersegment revenue – 176 176 –
1
176
total segment revenue 7787 194 7981 1651 9632
operating profit before transformation costs 550 13 563 108 671
transformation costs 241 – 241 – 241
operating profit after transformation costs 309 13 322 108 430
operating specific items
royal	mail	pension	plan	amendment 1350 – 1350 – 1350
transactionrelated costs 24 – 24 4 28
employee free shares costs 94 – 94 – 94
businessrelated costs 15 – 15 – 15
operating profit 1526 13 1539 104 1643
nonoperating specific items
profit on disposal of property plant and equipment 19 – 19 – 19
profit	on	disposal	of	associate	undertaking 2 – 2 – 2
earnings before interest and taxation 1547 13 1560 104 1664
net finance costs
not reported  
at this level
70 3 67
net pension interest nonoperating specific item 69 – 69
profit before taxation 1559 107 1666
taxation – specific items 289 – 289
  – other 56 41 97
profit for the period after taxation 1214 66 1280
ebitda before transformation costs 791 10 801 141 942
free cash flow
2
not reported  
at this level 338 60 398
1
 trading between gls and ukpil is not material
2
	 free	cash	flow	is	a	nongaap	measure	used	by	management
79
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
2 segment information continued
reported	53	weeks	ended	31	march	2013
uk operations
other 
european 
operations
continuing operations
ukpil  
£m
other  
£m
total  
£m
gls  
£m
total  
£m
external revenue 7766 15 7781 1498 9279
intersegment revenue – 148 148 −
1
148
total segment revenue 7766 163 7929 1498 9427
operating profit before transformation costs 526 8 534 101 635
transformation costs 195 – 195 – 195
operating profit after transformation costs 331 8 339 101 440
operating specific items
transactionrelated costs 10 – 10 – 10
businessrelated costs 47 – 47 – 47
operating profit 274 8 282 101 383
nonoperating specific items
profit on disposal of property plant and equipment 16 – 16 – 16
earnings before interest and taxation 290 8 298 101 399
net finance costs
not reported  
at this level
82 5 77
net pension interest nonoperating specific item 30 – 30
profit before taxation 246 106 352
taxation – specific items 336 – 336
  – other 57 33 90
profit for the period after taxation 525 73 598
ebitda before transformation costs 775 8 783 132 915
free cash flow
2
not reported  
at this level 309 25 334
1
 trading between gls and ukpil is not material
2
	 free	cash	flow	is	a	nongaap	measure	used	by	management
the following amounts are included within operating profit before transformation costs
reported 52 weeks ended 30 march 2014
uk operations
other 
european 
operations
ukpil 
£m
other 
£m
total  
£m
gls  
£m
total  
£m
depreciation 212 – 212 29 241
amortisation of intangible assets mainly software 29 – 29 4 33
share of posttax profit from associates – 3 3 – 3
reported	53	weeks	ended	31	march	2013
uk operations
other 
european 
operations
ukpil  
£m
other  
£m
total  
£m
gls  
£m
total  
£m
depreciation 210 1 211 27 238
amortisation of intangible assets mainly software 39 − 39 4 43
share of posttax profit from associates – 1 1 – 1
80
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 3 transformation costs
transformation costs are included within the cost base and profit that management monitors to assess financial and trading performance 
these costs relate directly to the transformation programme that has spanned several years and therefore warrant separate disclosure as 
shown below
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
voluntary redundancy – management reorganisation programme 102 –
voluntary redundancy – other 14 78
project and property costs including £2m of management reorganisation programme costs 108 95
business transformation payments 17 22
total transformation costs 241 195
the	£17	million	business	transformation	payments	represent	payments	linked	to	the	achievement	of	key	milestones	in	transforming	the	network	
as part of the business transformation agreement 2010 
4 specific items before taxation
these	are	costs	which	fall	outside	the	group’s	normal	trading	activity	and	which	in	management’s	view	need	to	be	disclosed	separately	to	
provide greater visibility of the trading results of the business this note also includes adjusted nongaap comparative information which 
includes the costs of pol separation see note 1 for further details
52 weeks 
2014 
reported 
£m
52	weeks	
2013 
adjusted 
£m
53	weeks	
2013 
reported 
£m
operating specific items
royal	mail	pension	plan	amendment 1350 – –
transactionrelated costs 28 10 10
employee free shares costs 94 – –
businessrelated costs 15 67 47
potential industrial diseases claims 7 28 28
impairments – 20 20
other 22 19 1
total operating specific items 1213 77 57
nonoperating specific items
profit on disposal of property plant and equipment 19 4 16
profit	on	disposal	of	associate	undertaking 2 – –
finance	incomerelease	of	gains	held	in	equity	on	disposal	of	rmpp	rm	section	escrow	investments – 22 22
net pension interest 69 30 30
total nonoperating specific items 90 56 68
total specific items before taxation 1303 21 11
other operating specific items of £22 million 2013 adjusted £19 million mainly comprise historical employment costs of £15 million 2013 
adjusted £nil and £5 million pol separation costs 2013 adjusted £20 million relating to facilities management
52 weeks 
2014 
reported 
£m
52	weeks	
2013 
adjusted 
£m
53	weeks	
2013 
reported 
£m
taxation effect of above items 301 7 7
taxation specific items 12 343 343
impact of change in taxation law
1
12 – –
impact of postal services act 2011
2
– 343 343
total 289 336 336
1
 a taxation credit was recognised for the remeasurement of deferred taxation balances as a result of the change in uk statutory corporation taxation rates
2
	 the	taxation	credit	shown	in	specific	items	for	201213	reflects	the	benefit	of	uk	taxation	attributes	including	prior	year	taxation	losses	and	deferred	capital	allowances	not	
previously	recognised	as	deferred	taxation	assets	deferred	taxation	assets	are	recognised	only	to	the	extent	that	the	group	is	expected	to	have	future	taxable	profits	and	
therefore	obtain	a	real	taxation	saving	from	future	taxation	deductions	following	the	postal	services	act	2011	and	the	transfer	of	almost	all	of	the	rmpp’s	historic	pension	
liabilities	and	pension	assets	expectations	of	future	profitability	increased	and	it	became	appropriate	to	recognise	a	net	deferred	taxation	asset	in	the	uk	in	addition	to	this	oneoff	
material	deferred	taxation	credit	the	group	also	reported	a	oneoff	benefit	from	the	utilisation	of	prior	year	taxation	losses	in	201213
81
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
5 net finance costs and net debt
this note provides details of 
• interest payable on loans and finance lease obligations and interest received from investments and loans this analysis excludes net pension 
interest which is a noncash item and is derived to comply with the requirements of the relevant accounting standard ias 19 and
• net	debt	−	a	nongaap	measure	which	shows	the	group’s	overall	debt	position	by	netting	the	value	of	financial	liabilities	excluding	
derivatives against its cash and other liquid assets the balance sheet shows these items gross within the different categories of assets and 
liabilities
net finance costs
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
unwinding of discount relating to industrial diseases claims provision 3 1
interest payable on financial liabilities 68 103
hm	government	facilities	
 loans and borrowings 47 82
 unused facility fees 2 5
 other facility fees 3 3
syndicated	bank	loan	facility
 loans and borrowings 3 –
 unused facility fees 1 –
 other facility fees 2 –
finance leases 10 13
finance costs 71 104
release of gains held in equity on disposal of pension escrow gilts – specific item – 22
interest receivable on other financial assets 4 5
finance income 4 27
net finance costs 67 77
net debt
balance sheet category
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported 
£m
obligations under finance leases current liabilities 87 79
interestbearing loans and borrowings noncurrent liabilities 600 973
obligations under finance leases noncurrent liabilities 255 226
942 1278
cash and cash equivalents and other financial assets
cash	at	bank	and	in	hand current assets 51 136
cash	equivalent	investments	shortterm	bank	and	local	authority	depositsmoney	market	
fund investments and other financial assets current assets 316 216
pension	escrow	investments	rmsepp noncurrent assets 20 20
total net debt 555 906
82
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 5 net finance costs and net debt continued
excluding	the	balances	relating	to	pol	transferred	to	royal	mail	holdings	plc	on	1	april	2012	net	debt	has	decreased	by	£351	million	during	the	
year	ended	30	march	2014	and	by	£280	million	during	the	year	ended	31	march	2013	as	shown	below
2014 
reported 
£m
2013 
reported 
£m
net	debt	brought	forward	at	1	april	2013	and	26	march	2012	 906 753
adjustment	for	transfer	of	pol	to	royal	mail	holdings	plc	on	1	april	2012 – 433
net debt brought forward excluding the pol subsidiary 906 1186
free cash flow 398 334
finance costs paid on refinancing of loan facilities 45 –
increase in loans and borrowings rollup interest on 120 per cent facility – 51
increase in new finance lease obligations noncash 1 4
foreign currency exchange impact on cash and cash equivalents 1 1
net debt carried forward at 30 march 2014 and 31 march 2013 555 906
at	the	date	of	the	company’s	listing	on	the	london	stock	exchange	£973	million	of	hm	government	loans	were	repaid	and	£600	million	of	
syndicated	bank	loans	were	drawn	down	below	is	a	summary	of	loans	and	borrowings	at	the	year	end	the	respective	average	interest	rates	 
and facilities available
at 31 march 2014 reported
syndicated bank loan facilities
loans and 
borrowings 
£m
further 
committed 
facility  
£m
total 
facility  
£m
average 
interest 
rate of 
loan  
drawn 
down 

basis of 
interest 
rate at  
30 march 
2014 
– libor 
plus  

average 
maturity 
date of 
loan drawn 
down  
year
average 
maturity 
date of 
loan 
facility 
year
term loan a 300 – 300 15 100 2018 2018
term loan b 300 – 300 14 090 2016 2016
revolving credit facilities – 800 800 – 085 – 2018
total 600 800 1400 14 2017 2018
the	group’s	blended	interest	rate	on	loans	and	finance	leases	over	the	next	five	years	is	forecast	to	be	as	follows
interest 
rate 
current average interest rate on drawn down loans see table above 14
cost of fixing interest rates on £150 million of term loan a 03
market	expectation	of	interest	rate	rises	over	the	next	five	years	on	remaining	loans 09
26
add arrangement and commitment fees 09
forecast blended interest rate on loans and finance leases over the next five years 35
interest rates on £150 million of term loan a have been fixed over the life of the loan facility by entering into interest rate swaps as part of the 
group’s	interest	rate	hedge	programme
as finance leases are currently at a similar interest rate to loans the impact of finance leases on the blended interest rate is not material  
under	the	previous	hm	government	facilities	the	equivalent	blended	interest	rate	was	88	per	cent	
83
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
6 taxation 
this note provides details about current taxation chargescredits on profit and deferred taxation chargescredits relating to the impact 
of past events on expected future taxation the note also provides the taxation impact of specific items
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
taxation chargedcredited in the income statement
current income taxation
current uk income taxation charge 1 11
foreign taxation 34 28
current income taxation charge 35 39
amounts underover provided in earlier years 2 1
total current income taxation charge 37 38
deferred income taxation
effect of change in taxation rates 12 –
relating to origination and reversal of temporary differences 368 284
amounts over provided in previous years 7 –
taxation chargecredit in the consolidated income statement 386 246
taxation on nongaap specific items
taxation chargecredit relating to specific items 289 336
taxation relating to items charged or credited to other comprehensive income
deferred taxation
actuarial gainslosses on defined benefit pension schemes 117 188
net gains on revaluation of cash flow hedges 1 2
total creditcharge in the consolidated statement of other comprehensive income 118 186
reconciliation of the total taxation chargecredit
reconciliations between the taxation chargecredit and the product of accounting profit multiplied by the uk rate of corporation taxation for the 
52 weeks	ended	30	march	2014	and	53	weeks	ended	31	march	2013	are	as	follows
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
profit before taxation 1666 352
at uk standard rate of corporation taxation of 23 2013 24 383 84
effect of higher taxes on overseas earnings 2 1
taxation over provided in prior years 5 1
nontaxable income – 9
nondeductible expenses 10 11
associate’s	profit	after	taxation	charge	included	in	group	pretaxation	profit 1 –
net increasedecrease in taxation charge resulting from derecognitionrecognition of deferred taxation assets 9 332
effect of change in taxation rates 12 –
taxation chargecredit in the income statement 386 246
84
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 6 taxation continued
deferred taxation
balance sheet income statement
deferred taxation by balance sheet category
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported £m
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
liabilities
accelerated capital allowances 1 – – 1
pensions temporary differences 339 222 235 34
employee free shares offer 65 – 65 –
goodwill qualifying for taxation allowances 28 23 5 6
deferred taxation liabilities 433 245
assets 
deferred capital allowances 169 244 76 244
provisions and other 30 37 8 33
losses available for offset against future taxable income 90 51 40 46
hedging derivatives temporary differences 2 2 – −
deferred taxation assets 291 334
net deferred taxation liabilityasset see below 142 89
consolidated income statement 349 284
balance sheet
deferred taxation – balance sheet presentation
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported £m
liabilities
gls group 30 23
net uk position 121 –
deferred taxation liabilities 151 23
assets
gls group 9 7
net uk position – 105
deferred taxation assets 9 112
net deferred taxation liabilityasset 142 89
effective taxation
the effective taxation rate on reported profit for the group is 23 per cent
gls	pays	taxation	in	a	number	of	territories	with	the	majority	of	its	profits	in	the	period	to	30	march	2014	earned	in	territories	where	the	
taxation rate is above the uk statutory taxation rate certain subsidiaries notably gls france are not at this stage able to recognise taxation 
credits on losses made during the period and this contributes to gls having a higher effective taxation rate for the period than the uk business
current taxation
substantially all of the current taxation due for the group for the period is in respect of gls 
uk taxable profits in 201314 are almost fully covered by a combination of brought forward losses capital allowance claims and a statutory 
deduction	in	respect	of	shares	allocated	to	employees	under	the	hm	revenue		customs	hmrcapproved	employee	free	shares	offer	
owing	to	the	above	items	and	the	rmpp	rm	section	amendment	credit	which	does	not	give	rise	to	a	current	taxation	charge	the	current	
taxation rate for the group is two per cent
85
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
6 taxation continued
deferred taxation
the uk deferred taxation liability is a net amount comprising a number of taxation assets and liabilities which will reverse in future periods the 
uk	position	has	changed	from	a	net	deferred	taxation	asset	at	31	march	2013	to	a	net	deferred	taxation	liability	at	30	march	2014	primarily	due	
to the effects of the pensions reform in the year the pension surplus created as a result of the pensions reform gives rise to a deferred taxation 
liability	that	is	expected	to	reverse	over	a	much	longer	period	than	the	other	deferred	taxation	assets	and	liabilities	the	rmpp	rm	section	
amendment credit of £1350 million included in profit before taxation generates the majority of the deferred taxation charge in the income 
statement	whilst	the	decrease	in	the	pension	surplus	due	to	actuarial	revaluation	gives	rise	to	a	deferred	taxation	credit	of	£117	million	in the	
consolidated statement of comprehensive income 
a	new	uk	deferred	taxation	liability	arises	in	201314	in	relation	to	the	hmrcapproved	employee	free	shares	offer	as	an	hmrcapproved	
share incentive plan a full taxation deduction is given for the value of the shares in the period in which they are first allocated to employees 
whereas the accounting charge accrues over the life of the scheme to the extent that the taxation deduction exceeds uk taxable profits in the 
period the taxation losses carried forward are increased 
the deferred taxation balances within gls arise in various jurisdictions with reversal at varying times and rates and so balances in different 
jurisdictions are not offset against one another 
under	the	postal	services	act	2011	uk	trading	losses	which	arose	due	to	employer’s	pension	contributions	paid	which	were	unused	at	 
31 march	2013	are	extinguished	losses	and	deferred	taxation	assets	carried	forward	are	stated	above	net	of	the	extinguished	amount
at	30	march	2014	the	group	had	unrecognised	deferred	taxation	assets	of	£63	million	2013	£66	million	comprising	£63	million	2013	£54 million	
relating to taxation losses mainly in gls that are available for offset and £nil 2013 £12 million relating to other temporary differences 
the group has capital losses carried forward the taxation effect of which is £5 million 2013 £4 million and temporary differences relating to 
capital losses of £61 million 2013 £73 million the group has rolled over capital gains of £43 million 2013 £53 million no taxation liability 
would be expected to crystallise should the assets into which the gains have been rolled be sold at their residual value as it is anticipated that 
a capital	loss	would	arise
in the 2012 autumn statement the chancellor of the exchequer announced that the main rate of corporation taxation would be 21 per cent 
for the	year	commencing	1	april	2014	and	in	the	march	2013	budget	he	announced	that	the	rate	would	be	further	reduced	to	20	per	cent	with	
effect from 1 april 2015 both of these rate changes were included in the finance act 2013 which was substantively enacted on 2 july 2013 in 
accordance with accounting standards the effect of these rate reductions on deferred tax balances has been reflected in these accounts a net 
uk deferred	taxation	liability	is	recognised	and	measured	at	the	future	rates	dependent	on	when	temporary	differences	are	expected	to	reverse
nongaap analysis of taxation chargecredit unaudited
below	we	present	current	and	deferred	taxation	between	the	reported	specific	and	excluding	specific	items	columns	on	a	52	week	basis	only	
the break	out	of	taxation	between	current	and	deferred	taxation	between	the	specific	and	excluding	specific	items	columns	requires	estimation	
and	assumptions	and	is	nongaap	information	management	believes	that	this	provides	additional	information	on	movements	relating	to	oneoff	
items and the movements relating to the trading results which the excluding specific items column represents
52 weeks 2014 52	weeks	2013
reported
£m
specific 
items 
£m
excluding 
specific items 
£m
adjusted
unaudited 
£m
specific
items 
unaudited
£m
excluding 
specific items 
unaudited 
£m
profit before taxation 1666 1303 363 283 21 304
current taxation 37 12 49 38  38
deferred taxation 349 301 48 284 336 52
profit for the period 1280 1014 266 529 315 214
the taxation credit shown in the specific items column for 201213 reflects the benefit of uk taxation attributes including prior year taxation 
losses and deferred capital allowances not previously recognised as deferred taxation assets deferred taxation assets are recognised only to the 
extent that the group is expected to have future taxable profits and therefore obtain a real taxation saving from future taxation deductions 
following the postal services act 2011 and the transfer of the historic pension deficit expectations of future profitability increased and it became 
appropriate to recognise a net deferred taxation asset in the uk in addition to this oneoff material deferred taxation credit the group also 
reported a oneoff benefit from the utilisation of prior year taxation losses in 201213
in 201314 the current and deferred taxation amounts shown in the excluding specific items column are based on an assumption of what the 
taxation charge and allocation would have been excluding the taxation impact of specific items for example excluding the taxation consequences 
of the specific items in 201314 we would have utilised brought forward losses against taxable profits arising to the extent available
86
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 7 cash flow 
the company uses free cash flow to monitor and manage its cash performance this measure eliminates inflowsoutflows between net debt 
items	see	note	5	and	includes	finance	cash	costs	paid	this	note	provides	a	reconciliation	of	‘net	cash	inflowoutflow	before	financing	
activities’	in	the	consolidated	statement	of	cash	flows	to	‘free	cash	inflowoutflow’	which	is	a	nongaap	measure
this note also includes nongaap information for the 201213 comparative year the only difference between this and the reported 
information	being	the	exclusion	of	the	£820	million	pol	cash	balance	on	its	transfer	to	royal	mail	holdings	plc	–	see	note	1	basis	of	preparation	
for further details and nongaap information relating to specific items
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
nongaap 
£m
53	weeks	
2013 
reported 
£m
ebitda before transformation costs see consolidated statement of cash flows 942 915 915
trading	working	capital	movements 57 60 60
difference between pension costs charged in operating profit and pension cash flows 58 3 3
total group ongoing pension costs in the income statement 479 434 434
total group cash flows relating to ongoing pension costs 411 409 409
deficit correction payments 10 28 28
total investment
1
617 665 665
business transformation payments 19 55 55
voluntary redundancy 71 75 75
oneoff project and property costs 111 100 100
transformation investment – operating expenditure 201 230 230
transformation investment – capital expenditure 83 177 177
total transformation investment 284 407 407
nontransformation investment – capital expenditure 333 258 258
taxation paid 38 37 37
net finance costs paid excluding finance costs paid on refinancing of loan facilities 33 44 44
dividend	received	from	associate	undertaking 2 – –
underlying cash inflow 257 106 106
transfer	of	pol	discontinued	operation	to	royal	mail	holdings	plc – – 820
oneoff	working	capital	movements 140 202 202
cash cost of operating specific items 35 26 26
proceeds	from	disposal	of	property	plant	and	equipment	and	associate	undertaking	nonoperating	specific	items 36 52 52
free cash inflowoutflow 398 334 486
1
	 	 total	investment	is	represented	by	several	different	line	items	in	the	consolidated	statement	of	cash	flows
 
87
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
7 cash flow continued
working capital movements
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
nongaap 
£m
53	weeks	
2013 
reported 
£m
oneoff	working	capital	movements
buy forward of stamps 20 87 87
unwinding of prior year buy forward of stamps 30 – –
impact of applying vat to postal products in 201213 – 75 75
unwinding	of	pension	prepayment	made	in	march	2012 150 40 40
total	oneoff	working	capital	movements 140 202 202
trading	working	capital	movements 57 60 60
total working capital movements 83 142 142
free cash flow reconciliation
the	following	analysis	provides	a	reconciliation	of	‘net	cash	inflowoutflow	before	financing	activities’	in	the	consolidated	statement	of	cash	flows	
and free cash inflowoutflow
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
nongaap 
£m
53	weeks	
2013 
reported 
£m
net cash inflowoutflow before financing activities 435 542 278
net sale of gilts and treasury bills financial asset investments – noncurrent – 129 129
net	sale	of	bank	deposits	financial	asset	investments	–	current – 30 30
other finance costs paid 37 49 49
free cash inflowoutflow 398 334 486
8 employee benefits – pensions 
at	30 march	2014	a	pension	asset	of	£1723	million	has	been	recognised	compared	with	£825	million	at	31 march	2013	this	increase	
mainly reflects the impact of the pensions reform as explained further in this note 
summary pension information 
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
pension costs
ongoing
uk defined benefit scheme income statement rates
1
 203 182 448 412
uk defined contribution scheme 25 17
total uk ongoing pension costs 473 429
total gls defined contribution type scheme costs 6 5
total group ongoing pension costs 479 434
difference between ongoing income statement charge and cash flows cash flow rates
2
 171 for both years 68 25
total group pension cash outflows relating to ongoing pension costs 411 409
at 30 march 
2014 
’000 
at	31 march	
2013 
’000
uk pension schemes – active membership
uk defined benefit scheme 106 112
uk defined contribution scheme 36 33
total 142 145
1
	 	 this	service	cost	is	charged	to	the	income	statement	it	represents	the	cost	as	a	percentage	of	pensionable	payroll	of	the	increase	over	the	year	in	the	defined	benefit	obligation	
due	to	members	earning	one	more	year	of	pension	benefits	it	is	calculated	in	accordance	with	ias	19	and	is	based	on	market	yields	high	quality	corporate	bonds	and	inflation	at	
the	beginning	of	the	company’s	reporting	year
2
	 	 this	is	the	employer	contribution	rate	which	forms	part	of	the	payroll	expense	and	is	paid	into	the	royal	mail	pension	plan	rmpp	rm	section	the	contribution	rate	is	set	
following each actuarial funding valuation usually every three years these actuarial valuations are required to be carried out on assumptions determined by the trustee and 
agreed	by	royal	mail
88
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 8 employee benefits – pensions continued
uk defined contribution scheme
the	group	operates	the	royal	mail	defined	contribution	plan	which	was	launched	in	april	2009	and	is	open	to	employees	who	joined	the	
company	from	31 march	2008	following	closure	of	the	royal	mail	pension	plan	rmpp	to	new	members
uk defined benefit schemes
royal	mail	group	limited	had	one	of	the	largest	defined	benefit	pension	schemes	in	the	uk	based	on	membership	and	assets	called	the	rmpp	
on	1 april	2012	one	week	into	the	201213	reporting	year	–	after	the	granting	of	state	aid	approval	by	the	european	commission	to	hm	
government	on	21 march	2012	–	almost	all	of	the	historic	pension	liabilities	and	pension	assets	of	rmpp	built	up	until	31 march	2012	were	
transferred	to	a	new	hm	government	pension	scheme	the	royal	mail	statutory	pension	scheme	rmsps	
on	this	date	rmpp	was	also	sectionalised	with	royal	mail	group	limited	and	pol	each	responsible	for	their	own	sections	from	 
1 april	2012	onwards	
the	transfer	left	the	royal	mail	section	of	the	rmpp	rm	section	fully	funded	on	an	actuarial	basis	this	means	that	using	longterm	actuarial	
assumptions	agreed	at	that	date	it	was	predicted	the	company	would	have	to	make	no	further	cash	deficit	correction	payments
royal mail pension plan rmpp
the	rmpp	rm	section	is	funded	by	the	payment	of	contributions	to	separate	trustee	administered	funds	rmpp	rm	section	includes	sections	a	
b and c each with different terms and conditions
section	a	is	for	members	or	beneficiaries	of	members	who	joined	before	1 december	1971	
section	b	is	for	members	or	beneficiaries	of	members	who	joined	on	or	after	1 december	1971	and	before	1 april	1987	or	for	members	 
of section a who chose to receive section b benefits and
section	c	is	for	members	or	beneficiaries	of	members	who	joined	on	or	after	1 april	1987	and	before	1 april	2008
benefits	provided	are	based	on	career	salary	blocks	for	years’	service	revalued	annually
following	conclusion	of	the	march	2012	actuarial	valuation	the	regular	future	service	contribution	rate	for	rmpp	rm	section	expressed	as	a	
percentage	of	pensionable	pay	remained	at	171	per	cent	2013	171	per	cent	following	the	state	aid	clearance	granted	on	21 march	2012	and	
the	subsequent	transfer	of	almost	all	of	the	rmpp	assets	and	liabilities	to	hm	government	on	1 april	2012	no	rmpp	rm	section	cash	deficit	
correction	payment	was	made	during	the	year	the	group	expects	to	contribute	around	£400	million	to	the	rmpp	rm	section	in	respect	of	
normal cash service costs in 201415 
royal mail senior executives pension plan rmsepp
the	group	also	contributes	to	a	smaller	defined	benefit	scheme	for	executives	royal	mail	senior	executives	pension	plan	rmsepp	–	which	
closed	in	december	2012	to	future	accrual	the	201213	contributions	were	made	at	359	per	cent	until	31 december	2012	the	company	and	
the	trustee	have	reached	agreement	over	the	march	2012	actuarial	valuation	as	the	plan	is	closed	to	future	accrual	there	will	be	no	regular	
future	service	contributions	the	company	is	required	to	continue	to	make	deficit	correction	payments	of	£10	million	per	annum	until	at	least	the	
date	on	which	the	2018	valuation	is	completed	no	later	than	30 september	2018	as	part	of	a	funding	agreement	with	the	trustee	deficit	
correction payments in 201314 were £10 million 2013 £28 million including a special oneoff payment of £19 million
on	25 march	2013	the	group	placed	£20	million	into	a	money	market	fund	investment	established	to	provide	security	to	rmsepp	as	part	of	a	
funding	agreement	with	the	rmsepp	trustee	this	is	treated	as	an	investment	in	the	group’s	balance	sheet
a liability of £1 million 2013 £1 million has been recognised for future payment of pension benefits to a past director
pensions reform
in	june	2013	the	company	began	a	consultation	with	rmpp	rm	section	members	on	a	proposal	to	ensure	the	rmpp	rm	section	could	remain	
open	to	future	accrual	subject	to	certain	conditions	at	least	until	the	conclusion	of	the	next	periodic	review	in	march	2018	subsequently	on	
26 september	2013	the	company	agreed	with	the	rmpp	trustee	to	implement	a	pensions	reform	with	effect	from	1 april	2014
under	the	pensions	reform	basic	pay	elements	of	members’	pensionable	pay	after	subtraction	of	the	lower	earnings	deduction	for	section	c	
members	will	increase	by	rpi	up	to	five	per	cent	each	year	regardless	of	whether	employees’	actual	basic	pay	increases	by	more	or	less	subject	
to	potential	additional	increases	to	take	account	of	certain	increments	or	progressions	within	pay	groups
the	agreed	changes	due	to	the	pensions	reform	are	considered	to	be	a	‘plan	amendment’	which	meets	the	ias	19	definition	of	a	past	service	
cost	and	as	such	£1350	million	has	been	recognised	in	the	income	statement	of	the	group	for	the	year	ended	30 march	2014	
89
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
8 employee benefits – pensions continued
accounting and actuarial surplusdeficit position rmpp rm section and rmsepp 
accounting ias 19 actuarialcash funding
at 30 march 
2014 
reported 
£m
at	31 march	
2013 
reported 
£m
at 31 march 
2014 
reported 
£m
at	31 march	
2013 
reported  
£m
fair	value	of	schemes’	assets	see	b	below 3833 3343 3873 3343
present	value	of	schemes’	liabilities 2097 2513 2451 3505
surplusdeficit	in	schemes’	pre	ifric	14 1736 830 1422 162
ifric 14 adjustment 13 5 na na
surplusdeficit 1723 825 1422 162
there	is	no	element	of	the	present	value	of	the	schemes’	liabilities	above	that	arises	from	schemes	that	are	wholly	unfunded	
the	surplus	in	rmsepp	is	assumed	to	be	available	as	a	refund	as	per	ifric	14	and	as	such	is	shown	net	of	withholding	taxation
the	surplus	in	rmpp	rm	section	is	assumed	to	be	recoverable	as	a	reduction	to	future	employer	contributions	therefore	no	ifric	14	
adjustment is required the directors do not believe that the current excess of pension scheme assets over the liabilities on an accounting basis 
will result in an excess of pension assets on a funding basis however the directors are required to account for the pension scheme based on their 
legal right to benefit from a surplus using longterm actuarial assumptions current at the reporting date as required by ifrss
the	actuarialcash	funding	surplus	of	£1422	million	2013	deficit	of	£162	million	allows	the	rmpp	rm	section	to	remain	open	for	the	benefit	 
of	the	members	at	least	until	march	2018	subject	to	certain	conditions	as	part	of	the	pensions	reform	agreement	without	requiring	either	the	
company	or	individuals	to	make	unaffordable	increases	to	their	cash	contributions	
the	following	disclosures	relate	to	the	major	assumptions	sensitivities	gainslosses	and	surplusdeficit	in	the	rmpp	rm	section	and	rmsepp	
defined benefit schemes
ias 19 accounting
a major longterm assumptions – rmpp rm section and rmsepp
the major assumptions used to calculate the accounting position of the pension schemes were as follows
at 30 march 
2014  
reported  
 pa
at	31 march	
2013 
 reported  
 pa
retail price index rpi 34 33
consumer price index cpi 24 23
discount rate
– nominal 45 48
– real nominal less rpi
3
 11 15
rate of increase in pensionable salaries
4
rpi01 rpi  1
rate	of	increase	for	deferred	pensions	–	rmsepp	members	transferred	from	section	a	or	b	of	rmpp
5
cpi rpi
rate of increase for deferred pensions – all other members cpi cpi
rate	of	pension	increases	–	rmpp	rm	section	sections	ab cpi cpi
rate	of	pension	increases	–	rmpp	rm	section	section	c
4
rpi01 rpi01
rate	of	pension	increases	–	rmsepp	members	transferred	from	section	a	or	b	of	rmpp
5
cpi rpi
rate	of	pension	increases	–	rmsepp	all	other	members
4
rpi01 rpi01
life	expectancy	from	age	60	–	for	a	current	4060	year	old	male	rmpp	rm	section	member 2927 years 2926 years
life	expectancy	from	age	60	–	for	a	current	4060	year	old	female	rmpp	rm	section	member 3230 years 3229 years
3
	 the	real	discount	rate	used	reflects	the	long	duration	of	the	rmpp	rm	section	scheme	of	around	28	years
4
	 	 the	rate	of	increase	in	salaries	and	the	rate	of	pension	increase	for	section	c	members	who	joined	rmpp	on	or	after	april	1987	and	rmsepp	‘all	other	members’	is	capped	at	
five	per	cent	which	results	in	the	average	longterm	pension	increase	assumption	being	10	basis	points	lower	than	the	rpi	longterm	assumption
5
	 this	rate	of	increase	is	set	by	reference	to	cpi	following	a	high	court	ruling	on	11 june	2013
mortality 
the	mortality	assumptions	for	rmpp	rm	section	are	based	on	the	latest	self	administered	pension	scheme	saps	s1	mortality	tables	with	
appropriate scaling factors 106 per cent for male pensioners and 101 per cent for female pensioners future improvements are based on the 
cmi	2012	core	projections	with	a	longterm	trend	of	125	per	cent	per	annum	
90
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 8 employee benefits – pensions continued
sensitivity analysis for rmpp rm section liabilities
the	rmpp	rm	section	liabilities	are	sensitive	to	changes	in	key	assumptions	the	potential	impact	of	the	largest	sensitivities	on	the	rmpp	
rm section	liabilities	is	shown	in	the	table	below	
key assumption change
potential 
increase in 
liabilities 
£m
additional one year of life expectancy 50
increase in inflation rate both rpi and cpi simultaneously of 01 pa 50
decrease in discount rate of 01 pa 50
increase	in	cpi	assumption	assuming	rpi	kept	constant	of	01	pa 15
this sensitivity analysis has been determined based on a method that assesses the impact on the defined benefit obligation resulting from 
reasonable	changes	in	key	assumptions	occurring	at	the	end	of	the	reporting	year	changes	opposite	to	those	in	the	table	eg	an	increase	in	
discount rate would have the opposite effect on liabilities
the	average	duration	of	the	rmpp	rm	section	obligation	is	28	years	2013	28	years
b schemes’ assets – rmpp rm section and rmsepp
at 30 march 2014 at	31 march	2013
6
quoted 
 £m
unquoted 
£m
total  
£m
quoted  
£m
unquoted 
£m
total  
£m
equities
uk 28 82 110 80 88 168
overseas 321 – 321 371 – 371
bonds
fixed interest – uk 101 8 109 75 – 75
 – overseas 371 – 371 270 – 270
index	linked	 –	uk 156 – 156 287 – 287
 – overseas – – – 3 – 3
pooled investments
managed	funds 303 – 303 80 – 80
unit trusts 1864 – 1864 1298 – 1298
property uk 250 – 250 218 – 218
cash and cash equivalents 345 – 345 553 – 553
other 5 – 5 20 – 20
derivatives 1 – 1 – – –
total schemes’ assets 3743 90 3833 3255 88 3343
6
	 the	categorisation	of	the	schemes’	assets	at	31 march	2013	has	been	restated	as	a	result	of	ias	19	‘employee	benefits’	revised
there	were	no	open	equity	derivatives	within	this	portfolio	at	30 march	2014	at	31 march	2013	£nil	included	within	the	pension	assets	are	
£20	billion	2013	£14	billion	of	hm	government	bonds	the	schemes’	assets	do	not	include	property	occupied	by	the	group	the	group’s	own	
shares or assets used by the group
risk exposure and investment strategy
the	investment	strategy	of	the	rmpp	trustee	aims	to	safeguard	the	assets	of	the	scheme	and	to	provide	together	with	contributions	the	
financial	resource	from	which	benefits	are	paid	investment	is	inevitably	exposed	to	risks	the	investment	risks	inherent	in	the	investment	
markets	are	partially	mitigated	by	pursuing	a	widely	diversified	approach	across	asset	classes	and	investment	managers	the	rmpp	rm	section	
uses	derivatives	such	as	swaps	and	futures	to	reduce	risks	whilst	maintaining	expected	investment	returns	the	rmpp	trustee	recognises	that	
there	is	a	natural	conflict	between	improving	the	potential	for	positive	return	and	limiting	the	potential	for	poor	return	the	rmpp	trustee	has	
specified objectives for the investment policy that balance these requirements
the	rmpp	trustee	has	elected	to	use	interest	rate	and	inflation	rate	swaps	‘derivatives’	to	deliver	the	investment	strategy	whilst	managing	risk	
these	derivatives	are	recorded	at	market	value	within	the	table	above	and	are	commonly	used	by	pension	funds	the	interest	rate	and	inflation	
rate	swaps	are	used	to	hedge	the	exposure	to	movements	in	interest	rates	and	inflation	which	are	key	longterm	assumptions	used	to	estimate	
future pension liabilities the economic exposure of these swaps full exposure to the relevant asset class incurred by entering into a derivative 
contract	held	in	a	specific	managed	portfolio	for	this	purpose	at	30 march	2014	is	£38	billion	march	2013	£15	billion
the	spread	of	investments	continues	to	balance	security	and	growth	in	order	to	pay	the	rmpp	rm	section	benefits	when	they	become	due
91
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
8 employee benefits – pensions continued
c movement in schemes’ assets liabilities and net position – rmpp rm section and rmsepp
changes	in	the	present	value	of	the	defined	benefit	pension	liabilities	fair	value	of	the	schemes’	assets	and	the	net	defined	benefit	asset
obligation are analysed as follows
defined benefit asset defined benefit liability
net defined benefit 
assetliability
at 
30 march 
2014 
reported 
£m
at  
31 march	
2013 
reported 
£m
at 
30 march 
2014 
reported 
£m
at  
31 march	
2013 
reported 
£m
at 
30 march 
2014 
reported 
£m
at  
31 march	
2013 
reported 
£m
opening net retirement benefit surplusdeficit – pre ifric 14 adjustment 3343 30745 2513 33667 830 2922
amounts included in the income statement
ongoing uk defined benefit pension scheme costs included in people costs see note 12 – – 448 412 448 412
royal	mail	pension	plan	amendment – – 1350 – 1350 –
pension interest incomecost
7
172 159 103 129 69 30
total included in profit from continuing operations before taxation 172 159 799 541 971 382
amounts included in other comprehensive income – remeasurement  
gainslosses
actuarial gainloss arising from
demographic assumptions – – 4 – 4 –
financial assumptions – – 256 865 256 865
experience adjustment – – 2 101 2 101
return	on	schemes’	assets	excluding	interest	income
8
203 518 – – 203 518
total actuarial lossesgains on defined benefit schemes 203 518 250 764 453 246
amounts taken directly to equity
transfer	of	historic	pension	deficit	to	hm	government – 28438 – 32450 – 4012
transfer of post office limited subsidiary to parent – 193 – 145 – 48
total included in the statement of changes in equity – 28631 – 32595 – 3964
other
employer contributions 407 435 – – 407 435
employee contributions 136 136 136 136 – –
benefits paid 25 17 25 17 – –
curtailment costs – – 20 17 20 17
movement	in	pensionrelated	accruals 3 2 2 – 1 2
total other movements 521 552 133 136 388 416
closing net retirement benefit surplusdeficit – pre ifric 14 adjustment 3833 3343 2097 2513 1736 830
7
	 	 the	pension	interest	income	is	the	result	of	applying	the	schemes’	discount	rate	at	31 march	2013	to	the	schemes’	assets	at	that	date	similarly	the	pension	interest	cost	results	
from	applying	the	schemes’	discount	rate	as	at	31 march	2013	to	the	schemes’	liabilities	at	that	date	the	pension	interest	for	the	position	at	31 march	2013	has	been	restated	for	
the	effect	of	ias	19	‘employee	benefits’	revised	–	see	‘significant	accounting	policies’	section
8
  includes asset returns movements on pension prepayments and changes to brought forward estimates
in addition to the above items which affect the defined benefit asset additional curtailment costs of £34 million 2013 £11 million were 
recognised in the income statement on a consistent basis with the associated redundancy costs estimates of both are included in any redundancy 
provision raised
 
92
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 9 notional earnings per share 
this	note	explains	the	calculation	of	the	group’s	earnings	per	share	the	calculation	for	both	reporting	years	is	based	on	the	1000000000	
shares	that	were	issued	in	september	2013	and	which	were	subsequently	listed	on	the	london	stock	exchange	in	october	2013	it	is	
therefore	deemed	to	be	‘notional’	earnings	per	share	as	the	shares	were	not	in	existence	for	the	whole	of	the	reporting	years	the	note	
also includes nongaap information relating to specific items
52 weeks 2014 52	weeks	2013 53	weeks	2013
 reported
1
excluding 
specific 
items 
adjusted
2
unaudited 
excluding 
specific 
items 
unaudited reported
1
profit from continuing operations attributable to equity holders of the parent £m 1277 263 525 210 594
number of shares million 1000 1000 1000 1000 1000
basic and diluted notional earnings per share pence
3
1277 263 525 210 594
1 
prepared in accordance with ifrss
2
	 prepared	in	accordance	with	ifrss	except	for	the	nonconsolidation	of	pol	and	excluding	the	impact	of	the	53rd	week	in	2013
3
	 	 the	basic	and	diluted	notional	earnings	per	share	have	been	calculated	based	on	the	one	billion	shares	in	issue	at	30 march	2014	being	in	existence	for	the	entirety	of	both	
reporting years
in future reporting periods earnings per share will be calculated using the weighted average number of shares in issue over the relevant period
10 organisation structure and share capital changes
this	note	explains	the	incorporation	of	royal	mail	plc	and	the	subsequent	changes	in	share	capital	following	the	company’s	listing	on	the	
london	stock	exchange	on	15 october	2013
a	new	company	royal	mail	limited	was	incorporated	on	6 september	2013	with	share	capital	of	100	ordinary	shares	of	£150	each	total	£150	
issued	to	royal	mail	holdings	plc	royal	mail	holdings	plc	was	renamed	postal	services	holding	company	plc	on	11 september	2013	and	was	
subsequently	renamed	postal	services	holding	company	limited	‘psh’	on	12 december	2013	on	12 september	2013	the	special	share	in	
royal	mail	group	limited	held	by	hm	government	was	redeemed	at	par	value	of	£1	
subsequently	also	on	12 september	2013	share	capital	of	999999900	ordinary	shares	of	£150	each	total	£1499999850	was	issued	by	
royal	mail	limited	to	psh	in	consideration	for	the	transfer	from	psh	of	the	entire	issued	share	capital	of	royal	mail	group	limited	
50001 £100 shares
following	this	transfer	and	therefore	as	at	12 september	2013	the	issued	share	capital	of	royal	mail	limited	comprised	1000000000	ordinary	
shares of £150 each total £1500000000 
on	17 september	2013	royal	mail	limited	approved	a	reduction	of	capital	by	way	of	solvency	statement	to	cancel	£149	from	each	issued	
ordinary	share	of	£150	this	reduction	of	capital	was	registered	on	18 september	2013	and	reduced	share	capital	from	£1500	million	to	 
£10 million and increased distributable reserves by £1490 million 
following	this	reduction	and	therefore	as	at	18 september	2013	the	issued	share	capital	of	royal	mail	limited	comprised	1000000000	
ordinary	shares	of	£001	each	total	£10000000	on	19 september	2013	royal	mail	limited	was	reregistered	as	royal	mail	plc	royal	mail	
plc	subsequently	listed	on	the	premium	segment	of	the	official	list	and	the	main	market	of	the	london	stock	exchange	on	15 october	2013
11 sharebased payment
this	note	provides	details	about	the	free	shares	allocated	to	employees	including	the	associated	accounting	charge	to	the	group’s	income	
statement under ifrs 2 and the number of shares held in the share incentive plan sip at the end of the reporting year details of shares 
awarded under the long term incentive plan ltip are also included
employee free shares
ordinary	shares	representing	ten	per	cent	of	the	value	of	the	company	were	granted	free	of	charge	to	eligible	employees	on	15 october	2013	 
the	date	of	the	initial	public	offering	these	free	shares	are	held	on	behalf	of	employees	in	an	hm	revenue	and	customs	hmrcapproved	sip	
administered by equiniti share plan trustees limited equiniti and it was expected that each eligible fulltime employee would receive a total of 
725	free	shares	at	the	date	of	the	initial	public	offering	however	under	hmrc	rules	at	the	time	of	flotation	employees	can	only	be	given	a	
maximum of £3000 worth of free shares in any taxation year
93
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
11 sharebased payment continued
employee free shares continued
the	initial	market	value	of	the	award	was	measured	at	the	closing	midprice	of	the	company’s	shares	on	15 october	2013	489	pence	per	share	
this	valued	an	eligible	fulltime	employee’s	award	at	£354525	in	excess	of	the	£3000	maximum	accordingly	613	shares	were	awarded	to	each	
eligible fulltime employee as their 2013 sip allocation the company allocated a further 116 shares 729 in total – see below to eligible fulltime 
employees	on	9 april	2014	as	a	2014	sip	allocation	subject	to	them	remaining	employees	of	royal	mail	group	limited	
the 729 total shares awarded to eligible fulltime employees comprises the 725 initial expected allocation of shares and an additional four shares 
resulting from the reallocation of shares forfeited by certain employees who left the group
parttime eligible employees have been allocated a prorata number of shares 
all allocated shares will be equitysettled
the fair value of the award of free shares is £490 million which will be charged to the income statement on a straight line basis adjusted for 
‘good	leavers’	over	the	period	of	vesting	three	years	for	the	2013	sip	and	four	years	for	the	2014	sip	in	each	case	from	the	award	date	
a charge	to	the	group	income	statement	of	£94	million	including	£3	million	national	insurance	has	been	made	for	the	year	ended	 
30 march	2014	for	both	sip	allocations	as	they	were	granted	as	one	award	
the	free	shares	are	held	in	a	trust	funded	by	royal	mail	and	may	only	be	distributed	to	or	for	the	benefit	of	eligible	employees	the	trust	is	under	
the	control	of	the	company	and	is	operating	for	its	benefit	at	march	2014	the	trust	has	been	included	in	these	consolidated	financial	statements
a	reconciliation	of	the	ordinary	shares	held	in	the	sip	at	30 march	2014	is	shown	below	
number of 
shares
initial	shares	award	on	15 october	2013 84415327
shares	transferred	out	of	sip	–	‘good	leavers’ 809247
remaining shares to be allocated 15744673
total	shares	remaining	in	sip	at	30 march	2014 99350753
award of shares under the long term incentive plan ltip
as a result of the flotation in october 2013 and as permitted under the rules of the ltip the award granted to the executive directors and senior 
leadership population in 2013 was converted from a cash award into an award of a total of around 22 million shares based on a volume 
weighted average price of 52914 pence these shares are not part of the sip explained above and will be acquired separately by the company 
from	the	market	the	performance	conditions	applying	to	this	award	will	be	measured	in	201516
the	award	will	be	accounted	for	as	cashsettled	in	accordance	with	the	requirements	of	ifrs	2	‘sharebased	payment’
94
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 other notes – income statement
the notes in this section provide details of people costs and numbers and other operating costs eg pensions depreciation and 
amortisation and operating lease charges
12 people information
13 operating costs
95
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
12 people information
of	the	total	group	operating	costs	60	per	cent	2013	60	per	cent	relate	to	our	people	this	note	provides	a	breakdown	of	our	people	
costs and numbers
people costs for continuing operations
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
wages and salaries 4426 4354
uk based 4120 4072
gls 306 282
pensions 479 434
defined benefit uk 448 412
defined contribution uk 25 17
gls 6 5
social security 377 359
uk based 322 309
gls 55 50
group total 5282 5147
defined benefit pension rate
income statement 203 182
cash flow 171 171
defined contribution pension average rate
income statement and cash flow
1
4 4
1
	 	 employer	contribution	rates	are	one	per	cent	for	employees	in	the	entry	level	category	and	five	per	cent	to	seven	per	cent	for	those	in	the	standard	level	category	depending	on	the	
employees’	selected	contribution	rate
people numbers for continuing operations
the number of people employed during the period on a headcount basis was as follows
period end average employees
52 weeks 
2014
53	weeks	
2013
52 weeks 
2014
53	weeks	
2013
ukpil 148441 149940 149172 149710
gls 13811 13646 13592 13569
uk partially owned subsidiaries 3999 4030 4049 4013
group total 166251 167616 166813 167292
directors’ emoluments
52 weeks 
2014 
reported 
£000
53	weeks	
2013 
reported 
£000
directors’	emoluments
2
3173 3753
amounts earned under long term incentive plans ltip
3
2654 –
number of directors accruing benefits under defined benefit schemes – –
2
  these amounts include any cash supplements received in lieu of pension
3
	 the	2014	ltip	amount	consists	of	£1327000	for	each	of	the	2010	and	2011	ltip	awards	that	vested	at	30	march	2014
 
96
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 13 operating costs
below is an analysis of operating costs in the income statement that because of their materiality or nature require separate disclosure  
under ifrss
operating profit from continuing operations before transformation costs is stated after charging the following operating costs
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
ongoing pension costs	note	8	included	in	‘people	costs’ 479 434
post office limited charges	included	in	‘other	operating	costs’ 358 371
depreciation and amortisation included	in	‘infrastructure	costs’ 274 281
depreciation of property plant and equipment note 21 241 238
amortisation of intangible assets mainly software – note 23 33 43
charges from overseas postal administrations	included	in	‘distribution	and	conveyance	costs’ 322 313
costs of inventories expensed 177 184
fuel	stock	included	in	‘distribution	and	conveyance	costs’ 130 132
other	inventory	included	in	‘other	operating	costs’ 47 52
operating lease charges 158 153
property	plant	and	equipment	included	in	‘other	operating	costs’ 146 141
vehicles	included	in	‘distribution	and	conveyance	costs’ 12 12
research and development expenditure during the year amounted to £nil 2013 £nil
the following disclosure is relevant in understanding the extent of costs in relation to the regulation of the group
regulatory body costs
52 weeks 
2014 
reported 
£m
53	weeks	
2013 
reported 
£m
ofcom 4 5
consumer futures 3 3
total 7 8
disclosure of statutory audit costs is a requirement of the companies act 2006
auditor’s fees
52 weeks 
2014 
reported 
£000
53	weeks	
2013 
reported 
£000
audit of statutory financial statements 402 402
other fees to auditor
statutory audits for subsidiaries 1423 1566
other services including regulatory audits 257 208
transactionrelated support services 4025 –
taxation services 178 228
total 6285 2404
the group paid £90000 additional amounts in 201314 in respect of the 201213 audit £80850 in 201213 in respect of the 201112 audit
 
97
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
other notes – financial assets financial liabilities and hedging programmes
the	notes	in	this	section	explain	how	the	group	is	financed	including	details	of	associated	risks	interest	rates	additional	loan	facilities	
available and hedging programmes in place to mitigate volatility in commodity prices and foreign currency exchange rates
14	financial	assets	and	liabilities	–	summary	and	management	of	financial	risk
15 cash and cash equivalents 
16 loans and borrowings
17 financial liabilities – net and gross maturity analysis
18 financial assets and liabilities – additional analysis
19 hedging programmes 
 
98
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 14 financial assets and liabilities – summary and management of financial risk
below is a summary of financial assets eg cash investments and deposits and liabilities eg loans and finance lease obligations and 
details	of	how	the	various	risks	associated	with	these	assets	and	liabilities	are	managed	subsequent	notes	in	this	section	provide	more	
detailed disclosures on specific financial assets and liabilities
the	group’s	financial	assets	and	liabilities	are	shown	in	the	table	below	
at 30 march 2014 
reported
at	31 march	2013 
reported
non 
current 
£m
current 
£m
total  
£m
non
current  
£m
current  
£m
total  
£m
rmsepp	pension	escrow	investments 20 – 20 20 – 20
cash and cash equivalents – 366 366 – 351 351
other	bank	and	local	authority	deposits – 1 1 – 1 1
derivative assets 3 2 5 3 9 12
total financial assets 23 369 392 23 361 384
syndicated	bank	loans	 600 – 600 – – –
hm	government	loans – – – 973 – 973
total loans and borrowings 600 – 600 973 – 973
finance leases obligations 255 87 342 226 79 305
derivative liabilities 5 12 17 1 2 3
total financial liabilities 860 99 959 1200 81 1281
financial assets and liabilities − financial risk management objectives and policies
the	group’s	principal	financial	assets	and	liabilities	comprise	shortterm	deposits	money	market	liquidity	investments	loans	finance	leases	and	
cash the main purposes of these financial instruments are to raise finance and manage the liquidity needs of the business operations the group 
has various other financial instruments such as trade receivables and trade payables which arise directly from operations and are not disclosed 
further in this section
the group enters into derivative transactions which create derivative assets and liabilities principally commodity price swaps interest rate swaps 
and	forward	currency	contracts	their	purpose	is	to	manage	the	commodity	interest	rate	and	currency	risks	arising	from	the	group’s	operations	
and finances 
it	is	and	has	been	throughout	the	year	under	review	the	group’s	policy	that	no	speculative	trading	in	financial	instruments	shall	be	undertaken
the	main	risks	arising	from	the	group’s	financial	assets	and	liabilities	are	interest	rate	risk	liquidity	risk	foreign	currency	risk	commodity	price	
and	credit	risk	the	board	reviews	and	agrees	policies	for	managing	these	risks	each	of	which	is	summarised	below
interest rate risk
the	group’s	exposure	to	market	risk	for	changes	in	interest	rates	arises	from	the	group’s	loans	leases	and	interest	bearing	financial	assets	the	
drawn	hm	government	loans	were	at	a	fixed	rate	from	the	dates	they	were	originally	drawn	until	they	were	repaid	at	the	company’s	listing	date	
the	drawings	under	the	syndicated	bank	loan	facilities	are	£600 million	2013	£nil	but	interest	rates	on	£150	million	of	term	loan a	have	been	
fixed	over	the	life	of	the	loan	facility	by	entering	into	interest	rate	swaps	the	combined	average	maturity	date	is	2017	2013	the	drawn	hm	
government	loans	had	an	average	maturity	date	of	2019	the	finance	lease	obligations	of	£342	million	are	all	at	a	fixed	rate	2013	£305 million	
all	at	fixed	rate	the	total	interest	bearing	financial	assets	of	the	group	excluding	the	noncurrent	investments	of	£395 million	2013	
£336 million	which	consist	of	the	fixed	and	floating	rate	cash	and	cash	equivalent	investments	plus	the	current	financial	asset	investments	 
are	at	shortdated	fixed	or	variable	interest	rates	with	average	maturity	three	days	2013	average	maturity	nine	days	these shortdated	
financial instruments are maturity managed to obtain the best value out of the interest yield curve
the	group’s	policy	is	to	manage	its	net	interest	expense	using	an	appropriate	mix	of	fixed	and	floating	rate	financial	instruments	combined	with	
external	hedging	of	interest	rate	risk	as	appropriate	to	keep	a	high	percentage	of	its	net	debt	fixed
foreign currency transaction risk
the	group	is	exposed	to	foreign	currency	risk	due	to	trading	with	overseas	postal	operators	for	carrying	uk	mail	abroad	and	delivering	foreign	
origin	mail	in	the	uk	and	various	purchase	contracts	denominated	in	foreign	currency	all	of	these	exposures	are	in	ukpil	gls’	reporting	
currency is the euro and most of its revenues and profits are euro based there is some exposure to noneuro currencies principally in emerging 
european	markets
these	risks	are	mitigated	by	hedging	programmes	managed	by	group	treasury	where	possible	exposures	are	netted	internally	and	any	
remaining exposure is hedged using a combination of external spot and forward contracts hedging will not normally be considered for exposures 
of less than £1 million and hedging is normally confined to 80 per cent of the forecast exposure where forecast cash flows are highly probable 
 
99
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
14 financial assets and liabilities – summary and management of financial risk 
continued
foreign currency risk translational risk
the	group’s	functional	currency	is	the	pound	sterling	gls’	functional	currency	is	the	euro	gls	euro	profits	are	converted	at	the	average	
exchange	rate	for	the	year	which	can	result	in	reported	growth	or	decline	which	does	not	relate	to	underlying	performance	gls’	balance	sheet	 
is	converted	at	year	end	rates	and	movements	related	to	foreign	currency	translation	are	taken	to	equity
ukpil’s	obligation	to	settle	with	overseas	postal	operators	is	denominated	in	special	drawing	rights	sdrs	–	a	basket	of	currencies	comprised	 
of us dollar japanese yen sterling and euro group treasury operates a rolling 18month hedge programme which is subsequently reviewed  
on a quarterly basis 
ukpil’s	obligations	to	settle	conveyance	charges	in	us	dollar	have	been	hedged	to	april	2015
ukpil has two hedge programmes one of which was completed during the reporting year covering obligations to settle euro invoices on 
automation projects
the group does not hedge the translation exposure created by the net assets of its overseas subsidiaries mainly gls however it does hedge 
the transactional exposure created by intercompany loans with these subsidiaries and uses the translational exposure arising from gls euro 
profits to offset with other transactional exposures
commodity price risk
ukpil	is	exposed	to	fuel	price	risk	arising	from	operating	one	of	the	largest	vehicle	fleets	in	europe	which	consumes	over	130	million	litres	of	fuel	
per	year	and	a	jet	fuel	price	risk	arising	from	the	purchasing	of	air	freight	services	the	group’s	fuel	risk	management	strategy	aims	to	reduce	
uncertainty	created	by	the	movements	in	the	oil	and	foreign	currency	markets	the	strategy	uses	overthecounter	derivative	products	in	both	
us dollar commodity price and us dollarsterling exchange rate to manage these exposures
in	addition	the	group	is	exposed	to	the	commodity	price	risk	of	purchasing	electricity	and	gas	the	group’s	risk	management	strategy	aims	to	
reduce	uncertainty	created	by	the	movements	in	the	electricity	and	gas	markets	these	exposures	are	managed	by	locking	into	fixed	rate	price	
contracts with suppliers and using overthecounter derivative products
as	the	gls	business	model	works	using	subcontractors	responsible	for	purchasing	their	own	fuel	gls	has	no	direct	exposure	to	diesel	costs	the	
only other significant commodity exposure within gls is power which is fragmented across its european bases in view of the other highly hedged 
positions	in	royal	mail	the	group	takes	the	view	that	the	unhedged	exposure	arising	from	the	commodities	in	gls	does	not	add	significant	risk	to	
the group
credit risk
ukpil considers that a fair and equitable credit policy is in operation for all its account customers the level of credit granted is based on a 
customer’s	risk	profile	assessed	by	an	independent	credit	referencing	agent	the	credit	policy	is	applied	rigidly	within	the	regulated	products	area	
so as to ensure that ukpil is not in breach of compliance legislation assessment of credit for the nonregulated products is based on commercial 
factors	which	are	commensurate	with	the	group’s	appetite	for	risk
ukpil	has	a	dedicated	credit	management	team	which	sets	and	monitors	credit	limits	and	takes	corrective	action	as	and	when	appropriate	the	
level of bad debt incurred for the whole group is 01 per cent 2013 01 per cent of turnover
with	respect	to	credit	risk	arising	from	other	financial	assets	of	the	group	which	comprise	cash	cash	equivalent	investments	loans	and	
receivables	financial	assets	and	certain	derivative	instruments	the	group	investstrades	only	with	highquality	financial	institutions	the	group’s	
exposure	to	credit	risk	arises	from	default	of	the	counterparty	with	a	maximum	exposure	equal	to	the	carrying	amount	of	these	instruments
gls	operates	a	decentralised	credit	management	model	whereby	each	country	is	responsible	for	managing	the	credit	risk	associated	with	their	
customers	where	appropriate	external	credit	checks	are	performed	for	new	and	existing	customers	taking	into	account	the	customer	profile	
expected	volume	of	business	and	consequent	risk	to	the	company	
liquidity risk
the	group’s	primary	objective	is	to	ensure	that	the	group	has	sufficient	funds	available	to	meet	its	financial	obligations	as	they	fall	due	this	is	
achieved by aligning shortterm investments and borrowing facilities with forecast cash flows typical shortterm investments include money 
market	funds	and	term	deposits	with	approved	counterparties	borrowing	facilities	are	regularly	reviewed	to	ensure	continuity	of	funding
the unused facilities for the group of £800 million expire in 2018 2013 £900 million expiring in 2014 
capital management
the group aims to maintain debt and equity levels consistent with an investment grade credit profile the group intends to pursue a progressive 
dividend policy having regard to the normalised earnings progression of the group 
sensitivity
as a result of the mix of fixed and variable rate financial instruments and the currency and commodity hedge programmes in place the group  
has	no	material	exposure	to	operating	profit	risk	from	interest	rate	risk	exchange	rate	risk	or	commodity	price	risk	2013	£nil	the	group	has	an	
exposure	to	the	exchange	rate	risk	on	translating	the	gls	net	assets	into	sterling	on	consolidation	the	impact	of	a	five	per	cent	strengthening	of	
sterling would have been to reduce the group net assets by £34 million 2013 £31 million
 
100
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 15 cash and cash equivalents
this note summarises the cash and cash equivalents balances held by the group
cash	and	cash	equivalents	at	30 march	2014	and	at	31 march	2013	are	as	follows
at 30 march 
2014 
reported 
£m
at	31 march	
2013 
reported £m
cash	at	bank	and	in	hand 51 136
cash	equivalent	investments	shortterm	bank	and	local	authority	deposits	and	money	market	fund	investments 315 215
total cash and cash equivalents 366 351
cash	and	cash	equivalents	comprise	amounts	held	physically	in	cash	bank	balances	available	on	demand	and	deposits	for	three	months	or	less	
dependent on the immediate cash requirements of the group where interest is earned this is either at floating or shortterm fixed rates based 
upon	bank	deposit	rates		
16 loans and borrowings
details of loans and borrowings including interest rates additional loan facilities available and any security provided against the loans  
are provided below
on	12	september	2013	the	group	entered	into	new	syndicated	bank	loan	facilities	on	the	date	of	the	company’s	listing	on	the	london	stock	
exchange	15 october	2013	drawdowns	of	£600	million	were	made	against	these	new	facilities	and	used	along	with	£418	million	of	surplus	cash	
to	repay	all	existing	hm	government	debt	£973	million	and	accrued	interest
below is a summary of loans and borrowings at the year end the average interest rate facility availability and security granted
at 30 march 2014  
reported
syndicated bank loan facilities
loans and 
borrowings 
£m
further 
committed 
facility  
£m
total facility  
£m
average 
interest rate 
of loan 
drawn down  

basis of 
interest rate 
chargeable 
at 30 march 
2014 
– libor plus  

average 
maturity 
date of loan 
drawn down  
year
average 
maturity 
date of loan 
facility  
year
term loan a 300 – 300 15 100 2018 2018
term loan b 300 – 300 14 090 2016 2016
revolving credit facilities – 800 800 – 085 – 2018
total 600 800 1400 14 2017 2018
at	31 march	2013 
reported
loans and 
borrowings 
£m
further 
committed 
facility  
£m
total facility 
£m
average 
interest rate 
of loan drawn 
down  

average 
maturity date 
of loan drawn 
down  
year
hm	government	facilities 973 900 1873 88 2019
the	group’s	blended	interest	rate	on	loans	and	finance	leases	over	the	next	five	years	is	forecast	to	be	35	per	cent	as	shown	in	note	5
the undrawn committed facilities in respect of which all conditions precedent had been met at the balance sheet date expire as follows
at 30 march 
2014  
reported 
£m
at	31 march	
2014 
reported £m
expiring in one year or less – 900
expiring in more than one year but not more than two years – –
expiring in more than two years 800 –
total 800 900
101
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
16 loans and borrowings continued
there	is	no	security	in	place	under	the	new	syndicated	bank	loan	facilities
the	following	securities	applied	to	the	hm	government	facilities	at	31 march	2013
2013 
facility  
£m
2013  
facility end 
date security
royal	mail	group	limited	senior	
debt facility
900 2014 fixed	charges	over	royal	mail	holdings	plc’s	shares	in	royal	mail	group	limited	and	royal	mail	
group	limited’s	shares	in	royal	mail	estates	limited	floating	charges	over	all	assets	of	royal	
mail	holdings	plc	royal	mail	group	limited	and	royal	mail	estates	limited
royal	mail	group	limited	
shareholder loan facility
473 2016 none
royal	mail	group	limited	other	
drawn down loans
500 202125 fixed	charges	over	any	royal	mail	group	limited	loans	to	general	logistics	systems	bv	any	
royal	mail	group	limited	loans	to	subsidiaries	of	general	logistics	systems	bv	and	royal	mail	
investments	limited’s	shares	in	general	logistics	systems	bv	floating	charge	over	
nonregulated	assets	of	royal	mail	group	limited
total 1873
the	syndicated	bank	loans	become	repayable	immediately	on	the	occurrence	of	an	event	of	default	under	the	loan	agreements	these	events	of	
default include nonpayment insolvency and breach of covenant relating to interest net debt and ebitda it is not anticipated that the group is at 
risk	of	breaching	any	of	these	obligations	
17 financial liabilities – net and gross maturity analysis
this note focuses on loans and borrowings finance leases and derivatives and provides further details of when amounts fall due both for 
principal and for total ie including interest contractual payments
below is a summary of when all the financial liabilities fall due
at 30 march 2014  
reported
loans and 
borrowings 
£m
finance 
leases  
£m
derivative 
liabilities 
£m
total  
£m
amounts falling due in
one year or less or on demand current – 87 12 99
more	than	one	year	noncurrent 600 255 5 860
more	than	one	year	but	not	more	than	two	years – 76 5 81
more	than	two	years	but	not	more	than	five	years 600 151 – 751
more	than	five	years – 28 – 28
total 600 342 17 959
at	31 march	2013	 
reported
loans and 
borrowings 
£m
finance 
leases 
£m
derivative 
liabilities 
£m
total 
£m
amounts falling due in
one year or less or on demand current – 79 2 81
more	than	one	year	noncurrent 973 226 1 1200
more	than	one	year	but	not	more	than	two	years – 56 1 57
more	than	two	years	but	not	more	than	five	years 473 139 − 612
more	than	five	years 500 31 − 531
total 973 305 3 1281
102
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 17 financial liabilities – net and gross maturity analysis continued
obligations under finance leases are either unsecured or secured on the leased assets the average interest rate is 34 per cent 2013 37 per 
cent the average maturity date is more than five years 2013 more than five years
the	tables	below	set	out	the	gross	undiscounted	contractual	cash	flows	of	the	group’s	financial	liabilities	for	overdrafts	loans	and	finance	lease	
contracts these cash flows represent the undiscounted total amounts payable including interest for derivatives that are settled gross these cash 
flows represent the undiscounted gross payment due and do not reflect the accompanying inflow for derivatives that are settled net these cash 
flows represent the undiscounted forecast outflow
at 30 march 2014 
reported
gross  
loans and 
borrowings 
commitments 
£m
gross  
finance lease 
instalments 
£m
subtotal  
£m
gross 
payments on 
derivatives 
settled gross 
£m
gross 
payments on 
derivatives 
settled net  
£m
total  
£m
amounts falling due in
one year or less or on demand current 9 94 103 188 11 302
more	than	one	year	noncurrent 642 356 998 – 5 1003
more	than	one	year	but	not	more	than	two	years 13 82 95 – 5 100
more	than	two	years	but	not	more	than	five	years 629 161 790 – – 790
more	than	five	years – 113 113 – – 113
total 651 450 1101 188 16 1305
less interest 51 108 159 na na na
net total 600 342 942 na na na
at	31 march	2013 
reported
gross loans and 
borrowings 
commitments 
£m
gross finance 
lease 
instalments  
£m
subtotal  
£m
gross payments 
on derivatives 
settled gross 
£m
gross payments 
on derivatives 
settled net  
£m
total  
£m
amounts falling due in
one year or less or on demand current 29 87 116 120 2 238
more	than	one	year	noncurrent 1435 330 1765 2 1 1768
more	than	one	year	but	not	more	than	two	years 29 61 90 2 1 93
more	than	two	years	but	not	more	than	five	years 752 147 899 – – 899
more	than	five	years 654 122 776 – – 776
total 1464 417 1881 122 3 2006
less interest 491 112 603 na na na
net total 973 305 1278 na na na
103
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
18 financial assets and liabilities – additional analysis
this note provides an analysis of the pound sterling carrying values of the financial assets and liabilities held in various foreign currencies  
along	with	details	of	interest	rates	interest	rate	risk	and	maturity	timescales	
table 1 shows all the financial assets and liabilities in detail and on a net basis table 2 shows the net amount by currency table 3 shows the 
respective assetsliabilities by whether they are fixed floating or noninterest bearing table 4 shows the effective interest rate and maturity 
analysed as fixed rate floating rate and noninterest bearing
carrying amounts and fair values 
trade receivables payables prepayments accruals and client payables have been omitted from this analysis on the basis that carrying value is a 
reasonable approximation of fair value pension scheme assets and liabilities are also excluded fair values have been calculated using current 
market	prices	forward	exchange	ratescommodity	prices	and	discounted	using	appropriate	discount	rates	there	are	no	material	differences	
between the fair value transaction price of all financial instruments at initial recognition and the fair value calculated using these valuation 
techniques	the	fair	value	of	the	hm	government	loans	noncurrent	is	£nil	at	30 march	2014	2013	hm	government	loans	£1165	million	the	
fair	value	of	total	‘obligations	under	finance	leases’	is	£341	million	2013	£308	million	for	all	other	financial	instruments	fair	value	is	equal	to	the	
carrying	amount	the	tables	below	also	set	out	the	carrying	amount	of	the	currency	of	the	group’s	financial	instruments
the	following	tables	show	the	currency	classification	maturity	and	effective	interest	rate	of	the	group’s	financial	assets	and	liabilities	
table 1 level classification
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported £m
financial assets
cash	at	bank	in	hand	 51 136
cash equivalent investments 315 215
money	market	funds loans and receivables 255 88
shortterm deposits – local government loans and receivables – 7
shortterm	deposits	–	bank loans and receivables 60 120
cash and cash equivalents 366 351
financial assets – investments current – local government deposit loans and receivables 1 1
financial	assets	–	pension	escrow	investments	noncurrent	–	rmsepp	pension	escrow	–	
money	market	funds loans and receivables 20 20
derivative assets – current 2 2 9
derivative assets – noncurrent 2 3 3
total financial assets 392 384
financial liabilities
obligations under finance leases current amortised cost 87 79
financial liabilities – loans and borrowings noncurrent 600 973
syndicated	bank	loans	 amortised cost 600 –
hm	government	loans	 amortised cost – 973
obligations under finance leases noncurrent amortised cost 255 226
derivative liabilities – current 2 12 2
derivative liabilities – noncurrent 2 5 1
total financial liabilities 959 1281
net total financial liabilities 567 897
there are no financial assets or liabilities designated at fair value through the income statement on initial recognition
 
104
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 18 financial assets and liabilities – additional analysis continued
the	‘level’	classification	in	the	above	table	is	described	in	the	‘fair	value	measurement	of	financial	instruments’	accounting	policy
derivative assets £2 million current £3 million noncurrent 2013 £9 million current £3 million noncurrent and liabilities £12 million current 
£5 million noncurrent 2013 £2 million current £1 million noncurrent are valued at fair value effective changes in the fair value of derivatives 
which	are	part	of	a	designated	cash	flow	hedge	under	ias	39	are	deferred	into	equity	all	other	changes	in	derivative	fair	value	are	taken	straight	
to the income statement
none of the financial assets listed above is either past due or considered to be impaired the net total financial assets are held in various different 
currencies	as	summarised	in	the	table	below	the	majority	of	the	nonsterling	financial	assets	are	held	within	cash	at	bank	in	hand
table 2
sterling  
£m
us  
£m
euro  
£m
other  
£m
total  
£m
net total financial assetsliabilities at 30 march 2014 reported 638 4 57 18 567
net	total	financial	assetsliabilities	at	31 march	2013	reported 1005 5 66 37 897
interest rate risk
interest on financial instruments classified as floating rate is repriced at intervals of less than one year interest on financial instruments 
classified	as	fixed	rate	including	£150	million	of	the	syndicated	bank	loans	that	have	been	fixed	by	entering	into	interest	rate	swaps	is	fixed	until	
the	maturity	of	the	instrument	the	rate	in	table	4	below	for	the	fixed	£150	million	of	syndicated	bank	loans	is	shown	inclusive	of	the	interest	
rate swap rate to show the total rate of interest payable
the	tables	below	set	out	the	carrying	amount	by	maturity	of	the	group’s	financial	instruments	that	are	exposed	to	interest	rate	risk	the	pension	
escrow	investment	of	£20	million	at	30 march	2014	represents	a	money	market	fund	investment	established	to	provide	security	to	the	royal	mail	
senior	executives	pension	plan	rmsepp	in	support	of	a	deficit	recovery	plan	agreed	with	the	trustee	in	june	2013	the	next	scheduled	review	
point	in	the	agreement	is	30 september	2018	and	therefore	the	investment	is	disclosed	as	maturing	in	two	to	five	years
at 30 march 2014  
reported
table 3
fixed  
rate  
£m
floating 
rate  
£m
non 
interest 
bearing 
£m
total  
£m
cash 17 62 28 51
cash equivalent investments 60 255 – 315
financial asset investments current 1 – – 1
rmsepp	pension	escrow	investments – 20 – 20
derivative – assets – – 5 5
 – liabilities – – 17 17
syndicated	bank	loans	 150 450 – 600
obligations under finance leases 342 – – 342
net total financial liabilities 414 113 40 567
at	31 march	2013	 
reported
table 3
fixed rate 
£m
floating 
rate  
£m
non
interest 
bearing  
£m
total  
£m
cash 18 102 16 136
cash equivalent investments 127 88 – 215
financial asset investments current 1 – – 1
rmsepp	pension	escrow	investments – 20 – 20
derivative – assets – – 12 12
 – liabilities – – 3 3
hm	government	loans 973 – – 973
obligations under finance leases 305 – – 305
net total financial liabilitiesassets 1132 210 25 897
105
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
18 financial assets and liabilities – additional analysis continued 
at 30 march 2014 reported
table 4
average 
effective 
interest 
rate  

within  
1 year  
£m
12 years 
£m
25 years 
£m
more than 
5 years  
£m
total  
£m
fixed rate
cash	at	bank 10 17 – – – 17
cash	equivalent	investments	–	shortterm	deposits	–	bank 04 60 – – – 60
financial assets – investments current – local government deposit 77 1 – – – 1
financial liabilities
syndicated	bank	loans	 25 – – 150 – 150
obligations under finance leases 34 87 76 151 28 342
total 9 76 301 28 414
floating rate
cash	at	bank 04 62 – – – 62
cash	equivalent	investments	–	money	market	funds 04 255 – – – 255
financial assets – pension escrow investments noncurrent
rmsepp	pension	escrow	–	money	market	funds 04 – – 20 – 20
financial liabilities
syndicated	bank	loans	 14 – – 450 – 450
total 317 – 430 – 113
noninterest bearing 
cash	at	bank	or	in	hand	 28 – – – 28
derivative assets 2 – 3 – 5
derivative liabilities 12 5 – – 17
total 38 5 3 – 40
net total financial assetsliabilities 270 81 728 28 567
	at	31 march	2013	reported
table 4
average 
effective 
interest 
rate  

within  
1 year  
£m
12 years  
£m
25 years  
£m
more	than	
5 years  
£m
total  
£m
fixed rate
cash	at	bank 32 18 – – – 18
cash	equivalent	investments	–	shortterm	deposits	–	bank 04 120 – – – 120
shortterm	deposits	–	hm	governmentlocal	government 04 7 – – – 7
financial assets – investments current
shortterm	deposits	–	hm	governmentlocal	government 77 1 – – – 1
financial liabilities
hm	government	loans	 88 – – 473 500 973
obligations under finance leases 36 79 56 139 31 305
total 67 56 612 531 1132
floating rate
cash	at	bank 06 102 – – – 102
cash	equivalent	investments	–	money	market	funds 04 88 – – – 88
financial assets – pension escrow investments noncurrent
rmsepp	pension	escrow	–	money	market	funds 03 – – – 20 20
total 190 – – 20 210
noninterest bearing 
cash	at	bank	or	in	hand	 16 – – – 16
derivative assets 9 3 – – 12
derivative liabilities 2 1 – – 3
total 23 2 – – 25
net total financial assetsliabilities 280 54 612 511 897
106
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 19 hedging programmes 
information regarding the various hedging programmes in place to mitigate volatility in commodity prices and foreign currency exchange rates 
is provided below
the hedging programmes use a number of financial derivative products to manage volatility in commodity prices interest rates and foreign 
exchange	if	these	hedges	are	‘in	the	money’	ie	hedged	rates	are	better	than	the	current	market	rate	then	a	derivative	asset	is	recognised	
and	if	they	are	‘out	of	the	money’	a	derivative	liability	is	recognised	full	disclosures	are	provided	in	this	note	even	though	the	balance	sheet	
amounts	are	not	material	in	the	context	of	the	group’s	total	assets	and	liabilities
the	purpose	of	the	group’s	hedging	programmes	is	to	mitigate	volatility	in	commodity	prices	interest	rates	and	foreign	exchange	rates	thereby	
providing	certainty	for	planning	there	are	no	significant	concentrations	of	credit	risk	accounting	rules	require	the	company	to	choose	whether	 
to designate cash flow hedge programmes or not subject to various tests the impact of not designating a cash flow hedge programme is that  
all	gains	or	losses	on	the	derivatives	in	the	programme	have	to	be	taken	immediately	to	the	income	statement	and	cannot	be	deferred	into	equity	
the group had the following designated cash flow hedge programmes during the current and previous reporting years 
hedging activities
i the diesel fuel hedge programme uses forward commodity price swaps in us dollar or sterling and forward currency purchase 
contracts to hedge the exposure arising from commodity price and us dollarsterling exchange rates for forecast diesel fuel purchases
ii the jet fuel hedge programme uses forward commodity price swaps and forward currency purchase contracts to hedge the exposure 
arising from commodity price and us dollarsterling exchange rates for forecast jet fuel usage 
iii the air conveyance hedge programme uses us dollar forward currency purchase contracts to hedge the exposure arising from us 
dollarsterling exchange rates for forecast air conveyance purchases
iv two capital programmes one of which completed during 201314 use euro forward currency purchase contracts to hedge the 
exposure arising from sterlingeuro exchange rates for contracted capital expenditure on automation projects
v the electricity hedge programme uses forward commodity price swaps to hedge the exposure arising from electricity prices
vi the gas hedge programme uses forward commodity price swaps to hedge the exposure arising from gas prices
vii the interest rate hedge programme uses interest rate swap contracts to hedge the exposure arising from interest rates on borrowings 
under	the	syndicated	bank	loan	facilities
viii the ukpil overseas postal operations hedge programme uses us dollar and japanese yen forward currency purchase contracts to 
hedge the exposure arising from the us dollarsterling and japanese yensterling exchange rates elements of the forecast future net 
purchases of delivery services in sdrs from overseas postal operators this hedge programme covers the exposure up until the 
purchases are incurred and recognised on the balance sheet
the group had undesignated cash flow hedge programmes for the transactional exposure created by intercompany loans with gls and the 
exposure of ukpil to overseas postal operator liabilities for the period after the purchases have been incurred and recognised on the balance 
sheet until the time when they are settled the derivative balances of these programmes are not material
commodity price hedging
the	group’s	normal	operating	activities	result	in	the	consumption	of	fuel	both	diesel	and	jet	electricity	and	gas	the	prices	of	these	commodities	
can	be	volatile	so	the	group	enters	into	price	swap	contracts	to	lock	future	purchases	at	an	agreed	volume	into	a	known	price	for	diesel	fuel	and	
jet	fuel	these	price	swaps	are	sometimes	entered	into	on	the	us	dollar	price	for	the	commodity	based	upon	available	market	prices	in	which	
case	the	group	uses	forward	foreign	currency	contracts	to	lock	into	a	combined	sterling	price	for	the	commodity	
the	following	table	shows	the	commodity	risk	and	the	percentage	of	the	expected	consumption	hedged	the	group	hedges	the	cost	of	the	
underlying commodity and any irrecoverable vat that is incurred on this cost it does not hedge any fuel duty the exposures shown in the 
following	table	exclude	the	costs	of	fuel	duty	and	are	based	upon	the	hedges	in	place	combined	with	market	prices	at	the	balance	sheet	date	for	
the unhedged amounts fuel duty and the associated vat adds an additional cost of c£100 million to diesel costs each reporting year total fuel 
costs for 201415 are estimated to be £185 million
 exposure excluding fuel duty and expected consumption hedged 2014
52 weeks 2015 52 weeks 2016 52 weeks 2017
commodity risk
exposure 
£m  hedged
exposure 
£m  hedged
exposure 
£m  hedged
diesel fuel us price and £ exchange rate movements 76 94 74 81 71 9
jet fuel us price and £ exchange rate movements 13 86 12 82 11 –
electricity £ price movement 17 83 18 65 17 7
gas £ price movement 15 75 15 66 14 –
107
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
19 hedging programmes continued
exposure excluding fuel duty and expected consumption hedged 2013
52	weeks	2014 52	weeks	2015 52	weeks	2016
commodity risk
exposure 
£m  hedged
exposure 
£m  hedged
exposure 
£m  hedged
diesel fuel us price and £ exchange rate movements 80 93 82 79 83 8
jet fuel us price and £ exchange rate movements 16 92 16 – 16 –
electricity £ price movement 18 83 18 54 19 6
gas £ price movement 14 81 14 56 14 7
foreign currency hedging for noncommodity items
as highlighted in note 14 the group where possible nets exposure to foreign currency internally the remaining net exposure is hedged with 
external forward foreign currency contracts for existing currency liabilities the underlying exposures eg the foreign postal administration 
liabilities	and	the	derivatives	are	both	revalued	to	current	market	prices	at	the	balance	sheet	date	meaning	that	no	net	gains	or	losses	arise	in	 
the income statement for forecast future currency exposures the derivatives are revalued at the balance sheet date and effective movements  
in value are deferred into equity until the hedged transaction occurs
the	following	table	shows	for	each	hedge	programme	the	risk	and	the	percentage	hedged	of	the	next	12	months’	exposure
percentage of next 12 
months’ exposure that has 
been hedged
hedge programme risk
at 30 march 
2014 
reported
at	31 march	
2013 
reported
air conveyance us£ exchange rate movements 94 92
capital programmes €£ exchange rate movements 100 95
overseas postal operator sdr£ exchange rate movements 59 17
gls intercompany loan €£ exchange rate movements 100 100
the	next	12	months’	exposure	is	calculated	as	the	combination	of	the	cost	of	settling	liabilities	during	the	next	12	months	and	the	cost	of	revaluing	
unsettled liabilities at the end of 12 months 
as highlighted in note 14 the company does not hedge the translational exposure created by the net assets of its overseas subsidiaries mainly gls
derivative values
at	any	point	in	time	the	derivatives	in	these	cash	flow	hedge	programmes	are	either	‘in	the	money’	which	means	the	hedged	rates	are	better	than	
current	market	rates	or	‘out	of	the	money’	which	means	the	hedged	rates	are	worse	than	current	market	rates	the	gains	‘in	the	money’	and	
losses	‘out	of	the	money’	as	at	the	balance	sheet	date	are	deferred	into	equity	where	the	hedge	is	effective	and	an	associated	financial	asset	or	
financial liability is created in the balance sheet the financial assetliability is released when the derivative matures the amounts deferred into 
equity	are	released	when	the	hedged	transaction	occurs	the	following	tables	show	the	derivative	contracts	entered	into	at	30 march	2014	and	
31 march	2013	and	the	associated	derivative	assets	and	liabilities
108
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 19 hedging programmes continued
commodity
currency nominal amount maturity date
average contracted 
commodity price
exchange rate 
interest rate
derivative 
asset 
non
current 
fair value 
£m
derivative 
asset 
current 
fair value 
£m
derivative 
liability 
non
current 
fair value 
£m
derivative 
liability 
current 
fair value 
£m
at 30 march 2014 reported
diesel fuel diesel fuel 215m litres apr 14 – apr 16 us 077litre – 1 1 1
diesel fuel us 188m apr 14 – jan 17 us158£ – – – 1
diesel fuel diesel fuel 80m litres apr 14 – oct 16 £05litre – – 3 3
jet fuel jet fuel 44m litres apr	14	–	mar	16 us 076litre – – – –
jet fuel jet fuel 33m apr	14	–	mar	16 us155£ – – – 1
air conveyance us 7m apr 14 – apr 15 us159£ – – – –
capital programmes euro €02m oct 14 £08€ – – – –
electricity electricity 528k	mwh apr 14 – oct 16 £55mwh – – – 2
gas gas 33m therms apr 14 – apr 16 £070therm – – 1 2
overseas postal operators us 43m apr 14 us166£ – – – –
overseas postal operators jpy 780m jpy apr 14 jpy172£ – – – –
interest rate swaps gbp £150m apr 14 – sep 18 15 vs 1 month libor 3 – – 2
cash flow hedges 3 1 5 12
other derivatives – 1 – –
total 3 2 5 12
commodity 
currency nominal amount maturity	date
average contracted 
commodity price 
exchange rate
derivative 
asset 
non
current 
fair value	 
£m
derivative 
asset 
current 
fair value	 
£m
derivative 
liability 
non
current 
fair value	 
£m
derivative 
liability 
current 
fair value	 
£m
at	31 march	2013	reported
diesel fuel diesel fuel 215m litres apr 13 – apr 15 us 079litre – 3 1 1
diesel fuel us 169m apr 13 – apr 15 us156£ 1 2 – –
diesel fuel diesel fuel 93m litres apr 13 – oct 15 £05litre 2 – – –
jet fuel jet fuel 20m litres apr 13 – dec 13 us 081litre – – – –
jet fuel jet fuel 17m apr 13 – dec 13 us156£ – – – –
air conveyance us 29m apr	13	–	may	14 us160£ – 1 – –
capital programmes euro €4m jun 13 – oct 14 £082€ – – – –
electricity electricity 535k	mwh apr 13 – oct 15 £55mwh – 1 – 1
gas gas 33m therms apr 13 – oct 15 £070therm – 1 – –
cash flow hedges 3 8 1 2
other derivatives – 1 – –
total 3 9 1 2
other derivatives represent hedges by the group of other foreign exchange and commodity price exposures which are not designated under ias 
39 including the hedge of the trading balance with overseas postal operators and the hedge of intercompany loans with overseas subsidiaries
there are timing differences between the maturity of the derivatives and the maturity of the underlying hedged transaction for example diesel 
derivatives	that	hedge	the	exposure	to	purchasing	fuel	in	march	2013	mature	in	april	2013	hence	at	31 march	2013	the	balance	sheet	includes	
the	market	value	of	these	derivatives	but	the	cumulative	gains	and	losses	on	these	derivatives	have	been	released	from	the	hedge	reserve	to	the	
income	statement	to	match	the	exposure	to	purchasing	fuel	in	march	2013	therefore	there	are	differences	between	derivative	balances	shown	
above and the balance on the hedging reserve
 
109
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
other notes – balance sheet
the notes in this section provide additional information regarding certain assets and liabilities on the group balance sheet most notably 
provisions – mainly in relation to transformation costs and fixed and intangible assets and goodwill
20 provisions
21 property plant and equipment
22 goodwill
23 intangible assets
24 investments in associates
25 current trade and other receivables 
26 current trade and other payables
27 issued share capital and reserves
28 commitments
29 related party information
110
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 20 provisions
a summary of the provisions that have been made in the accounts including in relation to transformation costs is shown below
transformation costs
management 
reorganisation 
programme  
£m
other  
£m
specific 
items  
£m
other  
£m
total  
£m
reported	at	1 april	2013 – 105 87 54 246
arising during the period
−	charged	in	transformation	costs	and	operating	specific	items 102 14 7 – 123
−	charged	in	other	operating	costs – – – 19 19
unused amounts reversed – 2 7 10 19
utilised in the period – 83 3 18 104
discount rate adjustment – – 3 – 3
reported at 30 march 2014 102 34 87 45 268
disclosed as
current	at	30 march	2014 102 24 19 28 173
noncurrent	at	30 march	2014 – 10 68 17 95
102 34 87 45 268
current	at	31 march	2013 – 69 18 32 119
noncurrent	at	31 march	2013 – 36 69 22 127
– 105 87 54 246
transformation provisions charged as transformation costs
transformation cost provisions of £136 million 2013 £105 million principally comprise redundancy schemes of £134 million 2013 £92 million 
including £102 million charged in respect of the management reorganisation programme a further £2 million 2013 £13 million relates to 
onerous property contracts associated with restructuring current transformation provisions of £126 million are expected to be utilised in 201415 
with the remainder within two to three years
specific items
the	specific	items	provisions	of	£87	million	at	30 march	2014	2013	£87	million	include	£62	million	2013	£67	million	for	potential	industrial	
diseases claims relating to both current and former employees of the group 
royal	mail	group’s	liability	in	respect	of	former	employees	arose	in	2010	as	a	result	of	a	court	of	appeal	judgement	that	held	the	group	liable	for	
diseases claims brought by individuals who were employed in the general post office telecommunications division and whose employment ceased 
prior to october 1981 consequently a provision was first recognised in 201011
the group has derived its current provision by using estimates and ranges calculated by its actuary which are based on current experience of 
claims and an assessment of potential future claims the majority of which are expected to be received over the next 25 to 30 years the group 
has a rigorous process of ensuring that only valid claims are accepted £3 million of this provision is expected to be utilised in 201415 
the remaining £25 million 2013 £20 million mainly relates to it systems costs associated with post office limited separation of which  
£12 million is expected to be utilised in 201415 with the remainder expected to be utilised in the following year an additional £7 million is in 
respect	of	a	german	property	tax	liability	of	£4	million	expected	to	be	utilised	in	201415	and	employer’s	national	insurance	associated	with	the	
award of employee free shares of £3 million expected to be utilised within three to five years
other provisions charged as operating costs
‘other’	provisions	of	£45	million	2013	£54	million	mainly	comprise	onerous	lease	obligations	decommissioning	costs	and	estimated	exposures	
resulting	from	legal	claims	incurred	in	the	normal	course	of	business	the	majority	of	‘other’	provision	amounts	are	expected	to	be	utilised	in	
201415 with £3 million onerous lease obligations and decommissioning costs expected to be utilised within two to three years £2 million within 
three to five years and a further £12 million over a period greater than five years
 
111
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
21 property plant and equipment
below	are	details	of	the	group’s	property	equipment	and	vehicles	which	are	recorded	at	their	historic	cost	what	we	paid	for	them	less	
accumulated depreciation reflecting their usage within the business over their useful life – from 3 to 50 years
land and buildings
freehold 
£m
long 
leasehold 
£m
short 
leasehold 
£m
plant and 
machinery 
£m
motor 
vehicles 
£m
fixtures 
and 
equipment 
£m
total  
£m
cost
reported	at	1 april	2013 1622 262 650 1187 538 362 4621
exchange rate movements 5 – – 2 1 2 10
reclassification 26 1 22 – – 3 –
additions 121 3 39 22 117 36 338
disposals 40 1 19 23 45 20 148
reclassification to noncurrent assets held for sale 23 – – – – – 23
reported at 30 march 2014 1649 265 692 1184 609 379 4778
depreciation and impairment
reported	at	1 april	2013 835 162 432 718 289 269 2705
exchange rate movements 2 – – 1 – 2 5
reclassification 1 – 1 – – – –
depreciation see note 13 45 6 45 68 48 29 241
disposals 34 1 15 23 41 20 134
reclassification to noncurrent assets held for sale 18 – – – – – 18
reported at 30 march 2014 825 167 463 762 296 276 2789
net book value
reported at 30 march 2014 824 98 229 422 313 103 1989
reported	at	1 april	2013 787 100 218 469 249 93 1916
depreciation rates are disclosed within accounting policies no depreciation is provided on freehold land which represents £210 million 2013 
£196	million	of	the	total	cost	of	properties	the	net	book	value	of	the	group’s	property	plant	and	equipment	held	under	finance	leases	amounts	to	
£382 million 2013 £378 million comprising £227 million 2013 £208 million vehicles £132 million 2013 £146 million plant and machinery 
and	£23	million	2013	£24	million	land	and	buildings	the	net	book	value	of	the	group’s	property	plant	and	equipment	includes	£116	million	
2013	£206	million	in	respect	of	assets	in	the	course	of	construction	the	net	book	value	of	the	group’s	land	and	buildings	includes	£424	million	
2013 £382 million in respect of building fitout 
the £338 million 2013 £392 million additions include borrowing costs capitalised in relation to specific qualifying assets of £nil 2013 £nil
 
112
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 21 property plant and equipment continued
land and buildings
freehold 
£m
long 
leasehold 
£m
short 
leasehold 
£m
plant and 
machinery 
£m
motor	
vehicles  
£m
fixtures 
and 
equipment 
£m
total 
 £m
cost
reported	at	26 march	2012 1598 276 747 1228 482 1037 5368
transfer of post office limited on 1 april 2012 70 17 114 4 34 709 948
exchange rate movements 4 – – 2 1 2 9
reclassification 29 1 27 1 – – –
additions 176 4 19 47 110 36 392
disposals 33 2 29 87 21 4 176
legal entity transfer to post office limited during the year 22 – – – – – 22
reclassification to noncurrent assets held for sale 2 – – – – – 2
reported	at	31 march	2013 1622 262 650 1187 538 362 4621
depreciation and impairment
reported	at	26 march	2012 869 173 517 739 296 949 3543
transfer of post office limited on 1 april 2012 68 16 114 4 34 709 945
exchange rate movements 1 – – 2 – 1 4
reclassification – – 1 – 1 – –
depreciation 40 6 46 68 46 32 238
impairment see note 4 21 – – – – – 21
disposals 16 1 16 87 20 4 144
legal entity transfer to post office limited during the year 11 – – – – – 11
reclassification to noncurrent assets held for sale 1 – – – – – 1
reported	at	31 march	2013 835 162 432 718 289 269 2705
net	book	value
reported	at	31 march	2013 787 100 218 469 249 93 1916
reported	at	26 march	2012 729 103 230 489 186 88 1825
22 goodwill
this	note	provides	details	of	the	goodwill	at	the	start	and	end	of	the	reporting	year	most	of	which	relates	to	the	group’s	acquisition	of	its	
overseas subsidiary general logistics systems gls
2014  
£m
2013  
£m
cost
reported	at	1 april	2013	and	26 march	2012 611 599
exchange rate movements 9 8
acquisition of businesses 4 4
disposal of business 37 –
reported at 30 march 2014 and 31 march 2013 569 611
impairment
reported	at	1	april	2013	and	26	march	2012 415 410
exchange rate movements 6 5
disposal of business 37 –
reported at 30 march 2014 and 31 march 2013 372 415
net book value
reported at 30 march 2014 and 31 march 2013 197 196
reported	at	1	april	2013	and	26	march	2012 196 189
the carrying value of goodwill arising on business combinations of £197 million 2013 £196 million at the balance sheet date includes £195 million 
2013	£194	million	relating	to	the	general	logistics	systems	gls	business	segment	in	line	with	the	group’s	accounting	policy	see accounting	
policies this goodwill has been reviewed for impairment an impairment loss is recognised for the amount by which the carrying value of an asset 
or cash generating unit exceeds the recoverable amount the recoverable amount is the higher of net realisable value and value in use the 
carrying	value	of	gls	excluding	interest	bearing	and	tax	related	assets	and	liabilities	is	£492	million	2013	£487	million	at	30	march	2014	and	
the operating profit before transformation costs items is £108 million 2013 £101 million for the period note 2
113
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
22 goodwill continued
the	disposal	of	business	relates	to	the	sale	of	g3	worldwide	mail	nv	spring	an	associate	company	on	2	april	2013
the carrying value of gls £492 million represents a multiple of 46 2013 48 of operating profit before transformation costs the net realisable 
value	of	gls	for	the	purposes	of	the	impairment	review	ie	the	‘fair	value	less	costs	of	disposal’	has	been	assessed	with	reference	to	earnings	
multiples for quoted entities in a similar sector of 66 on this basis the net realisable value has been assessed to be in excess of the carrying 
value the earnings multiples referenced would need to reduce by more than 47 per cent to 35 to reduce the net realisable value to below the 
carrying value
23 intangible assets
intangible assets mainly software are recorded in much the same way as our physical assets such as property and vehicles but with 
shorter useful lives over which they are amortised three to six years
2014 2013
master 
franchise 
licences 
£m
customer 
listings  
£m
software 
£m
total  
£m
master	
franchise 
licences  
£m
customer 
listings  
£m
software 
£m
total  
£m
cost
reported	at	1	april	2013	and	26	march	2012 23 32 287 342 23 30 431 484
transfer of post office limited on 1 april 2012 – – – – – – 183 183
additions – – 88 88 – – 44 44
disposals – – 5 5 – – 5 5
acquisition of business – 1 – 1 – 2 – 2
exchange rate movements – 1 – 1 – – – –
reported at 30 march 2014 and 31 march 2013 23 32 370 425 23 32 287 342
amortisation and impairment
reported	at	1	april	2013	and	26	march	2012 23 28 152 203 23 26 300 349
transfer of post office limited on 1 april 2012 – – – – – – 183 183
impairment note 4 – – – – – – 1 1
amortisation note 13 – 1 32 33 – 2 41 43
disposals – – 5 5 – – 5 5
exchange rate movements – 1 – 1 – – – –
reported at 30 march 2014 and 31 march 2013 23 28 179 230 23 28 152 203
net book value
reported at 30 march 2014 and 31 march 2013 – 4 191 195 – 4 135 139
reported	at	1	april	2013	and	26	march	2012 – 4 135 139 – 4 131 135
the intangible assets outlined above none of which has been internally generated have finite lives and are being written down on a straight
line basis
24 investments in associates 
this	note	provides	details	of	the	group’s	associate	companies	including	the	group’s	share	of	the	revenue	profit	and	net	assets	of	 
these entities
in	early	march	2013	it	was	announced	that	g3	worldwide	mail	nv	spring	one	of	only	two	associate	companies	of	the	group	was	to	be	sold	
and	accordingly	the	group’s	investment	in	the	company	£1	million	was	held	within	the	‘noncurrent	assets	held	for	sale’	category	on	the	group	
balance	sheet	at	31	march	2013	the	group’s	investment	in	the	company	held	by	royal	mail	investments	limited	was	subsequently	sold	on	
2 april	2013	the	group’s	share	of	the	company’s	revenue	and	profits	for	the	period	up	to	2	april	2013	was	not	material	and	the	group’s	share	 
of the net assets of the company at that date was £1 million
quadrant	catering	limited	‘quadrant’	the	group’s	sole	remaining	51	owned	associate	company	has	a	reporting	date	as	the	last	day	of	
september	each	year	accordingly	to	ensure	that	the	reported	share	of	the	profit	of	this	company	aligns	with	the	group’s	reporting	year	ended	
30 march	2014	2013	period	ended	31	march	2013	the	cumulative	profit	figure	for	this	period	is	taken	from	the	company’s	management	
reporting	systems	although	this	includes	an	estimated	profit	figure	for	the	month	of	march
the majority of board membership and voting power in quadrant a company incorporated in the united kingdom providing catering services for 
the	uk	businesses	is	held	by	the	other	investor	company	hence	it	is	not	a	subsidiary	the	group’s	investment	in	quadrant	is	held	by	royal	mail	
group limited there are no significant restrictions on the ability of quadrant catering limited to transfer funds to the group in the form of cash 
dividends repayment of loans or advances
114
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 24 investments in associates continued
the	group’s	share	of	quadrant’s	revenue	for	the	reporting	year	was	£19	million	2013	£22	million	and	its	share	of	quadrant’s	profit	after	tax	was	
£3	million	2013	£1	million	the	group’s	share	of	the	net	assets	of	quadrant	at	30	march	2014	was	£4	million	at	31	march	2013	£3	million	
during the reporting year the group received a £2 million dividend 2013 £nil from quadrant
25 current trade and other receivables
the following details relate to amounts owed to the group by third parties including post office limited and also the level of bad and 
doubtful debts that the company has provided for in the financial statements
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported 
£m
trade receivables 809 758
prepayments and accrued income 111 241
income tax receivable 6 5
total 926 1004
movements	in	the	provision	for	bad	and	doubtful	debts	were	as	follows
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported 
£m
at	1	april	2013	and	26	march	2012	 30 40
transfer of post office limited – 5
receivables provided for during the period 8 11
release of provision 4 10
utilisation of provision 7 6
at	30	march	2014	and	31	march	2013 27 30
the amount of trade receivables that were past due but not impaired are shown below
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported 
£m
past due not more than one month 61 93
past due more than one month and not more than two months 8 8
past due more than two months 14 29
total past due but not impaired 83 130
provided for or not yet overdue 753 658
provision for bad and doubtful debts 27 30
total 809 758
115
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
26 current trade and other payables
the following details relate to amounts owed by the group to third parties including post office limited
at 30 march 
2014 
reported 
£m
at	31	march	
2013 
reported 
£m
trade payables and accruals 1156 1076
advance customer payments mainly for stamps held not yet used by customers 322 375
social security 104 102
capital expenditure payables 60 48
other 10 10
total 1652 1611
the fair value of trade and other payables is not materially different from the carrying value 
27 issued share capital and reserves
authorised share capital
at 30 march 
2014 
reported 
 £m
at	31	march	
2013 
reported 
 £m
1000000000 ordinary shares of £001 each 10 –
total 10 –
issued and fully paid share capital
at 30 march 
2014  
reported 
£m
at	31	march	
2013 
reported 
£m
1000000000 ordinary shares of £001 each 10 –
total 10 –
for eps purposes the 1000000000 ordinary shares are deemed to have been authorised and in issue for the entirety of both reporting years 
see notes 9 and 10 for further details
reserves included in the consolidated statement of changes in equity
financial assets reserve
the financial assets reserve is used to record fair value changes on available for sale financial assets
foreign currency translation reserve
the	foreign	currency	translation	reserve	is	used	to	record	the	gains	and	losses	arising	from	29	march	2004	on	translation	of	assets	and	liabilities	
of subsidiaries denominated in currencies other than the reporting currency
hedging reserve
the	hedging	reserve	is	used	to	record	gains	and	losses	arising	from	cash	flow	hedges	since	28	march	2005
other reserves
these reserves related to post office limited pol associate and joint venture investments and were therefore included in the loss on the 
transfer	of	pol	to	royal	mail	holdings	plc	on	1	april	2012	taken	through	equity	in	the	comparative	year	201213
share premium account
this account established as part of the dissolution of the post office corporation in 200102 was subject to a capital reduction on 
27 june 2012	the	capital	reduction	was	approved	by	a	special	resolution	of	royal	mail	group	limited	supported	by	a	solvency	statement	made	
by its directors pursuant to section 642 of the companies act 2006
116
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 28 commitments
the information below includes details of committed future rental payments for the use of assets which the group does not legally own 
and	are	either	not	recognised	on	the	group’s	balance	sheet	operating	leases	or	are	recognised	on	the	group’s	balance	sheet	finance	
leases	on	the	basis	that	the	risks	and	rewards	incidental	to	ownership	of	the	finance	leased	assets	lie	with	royal	mail	plc	group
operating lease commitments
the group is committed to the following future minimum lease payments under noncancellable operating leases 
land and buildings vehicles and equipment it equipment total
at 30 march 
2014  
reported 
£m
at	31	march	
2013  
reported 
£m
at 30 march 
2014  
reported 
£m
at	31	march	
2013  
reported 
£m
at 30 march  
2014  
reported 
£m
at	31	march	
2013  
reported 
£m
at 30 march 
2014  
reported 
£m
at	31	march	
2013  
reported 
£m
within one year 115 125 12 13 9 8 136 146
between one and five years 373 391 12 14 10 17 395 422
beyond five years 470 507 8 – – – 478 507
total 958 1023 32 27 19 25 1009 1075
existing leases for uk land and buildings have an average term of 16 years and lease renewals are agreed with the lessor as appropriate existing 
land and buildings leased overseas by the gls subsidiary have an average lease term of eight years vehicle leases generally have a term of 
between one and seven years depending on the asset class with the average term being two years – the existing leases have an average term 
remaining of one year the majority of the it commitments relate to 10year contracts with an average term remaining of three years
finance lease commitments
at 30 march 2014  
reported
at	31	march	2013	 
reported
minimum 
lease 
payments  
£m
present value 
of minimum 
lease 
payments 
£m
minimum 
lease 
payments  
£m
present value 
of minimum 
lease 
payments 
£m
within one year 94 87 87 79
between one and five years 243 227 208 195
beyond five years 113 28 122 31
total minimum lease payments 450 342 417 305
less future finance charges 108 – 112 –
total finance lease obligations 342 342 305 305
the group has finance lease contracts for vehicles land and buildings and plant and equipment the leases have no terms of renewal purchase 
options escalation clauses or restrictions concerning dividends borrowings or additional leases vehicle leases have a term of between one and 
seven years depending on the class of vehicle with the average term being four years property leases have a term of between 10 and 104 years 
with the average term being 46 years the terms of the plant and equipment leases range from five to eight years with the average being  
five years
capital commitments
the	group	has	commitments	of	£35	million	at	30	march	2014	31	march	2013	£42	million	which	are	contracted	for	but	not	provided	for	in	the	
financial statements
117
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information notes to the consolidated  
financial statements continued
29 related party information
this note provides details of amounts owed to and from related parties which include the royal mail pension plan rmpp the group’s 
associate companies and payments to key management personnel details of the group’s principal subsidiaries and associates are also 
provided
related party transactions
during the reporting year the group entered into transactions with related parties the transactions were in the ordinary course of business and 
included administration and investment services recharged to the group’s pension plans by royal mail pension trustees limited of £6 million 
2013 £5 million and services charged to the group by its associate company quadrant catering limited quadrant of £22 million 2013 
£26 million amounts owed by the group to quadrant at 30 march 2014 were £2 million at 31 march 2013 £1 million owed by quadrant to 
the group
the group also trades with numerous hm government bodies on an arm’s length basis hm government has retained a c30 per cent stake in 
royal mail plc on the company’s stock market flotation hm government still owns 100 per cent of post office limited through its postal services 
holding company limited entity transactions with hm government entities including post office limited are not disclosed owing to the 
significant volume of transactions that are conducted
the sales to and purchases from related parties are made at normal market prices balances outstanding at the year end are unsecured interest 
free and settlement is made by cash 
key management compensation
52 weeks 
2014 
reported 
£000
53 weeks 
2013 
reported 
£000
shortterm employee benefits 3173 3753
postemployment benefits – –
other longterm benefits
1
2654 –
total compensation earned by key management 5827 3753
1
 the 2014 other longterm benefits amount consists of £1327000 for each of the 2010 and 2011 ltip awards that vested at 30 march 2014
key management comprises executive and nonexecutive directors of royal mail plc at 30 march 2014
the ultimate parent and principal subsidiaries
royal mail plc is the ultimate parent company of the group the consolidated financial statements include the financial results of royal mail group 
limited and the other principal subsidiaries listed below
company principal activities country of incorporation
 equity 
interest 
2014
 equity 
interest 
2013
general logistics systems bv parcel services holding company netherlands 100 100
royal mail estates limited property holdings united kingdom 100 100
royal mail investments limited holding company united kingdom 100 100
romec limited facilities management united kingdom 51 51
associates
company principal activities country of incorporation
 
ownership 
2014
 
ownership 
2013
quadrant catering limited catering services united kingdom 51 51
g3 worldwide mail nv spring mail services netherlands 3245 3245
the majority of board membership and voting power in quadrant catering limited is held by the other investor company hence it is not 
a subsidiary
the investment in quadrant catering limited is held by royal mail group limited the investment in g3 worldwide mail nv spring was held by 
royal mail investments limited until its disposal on 2 april 2013
the company has taken advantage of the exemption under section 410 of the companies act 2006 a schedule of interests in all undertakings  
will be filed with the annual return
 
118
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 basis of consolidation
the	consolidated	financial	statements	comprise	the	financial	statements	of	the	company	and	its	subsidiary	undertakings	the	financial	statements	
of the major subsidiaries are prepared for the same reporting year as the company using consistent accounting policies 
all intragroup balances and transactions including unrealised profits arising from intragroup transactions have been eliminated in full transfer 
prices between business segments are set on a basis of charges reached through negotiation with the respective businesses
subsidiaries are consolidated from the date on which control is obtained by the group and cease to be consolidated from the date on which control 
is no longer held by the group where the group ceases to hold control of a subsidiary the consolidated financial statements include the results 
for the part of the reporting year during which the group held control
noncontrolling interests represents the portion of profitloss gainslosses and net assets relating to subsidiaries that are not attributable to 
members of the company the noncontrolling interest balance is presented within equity in the consolidated balance sheet separately from 
parent	shareholders’	equity
changes in accounting policy and disclosures
the accounting policies applied in the preparation of these financial statements are consistent with those in the annual report for the year ended 
31	march	2013	except	for	the	adoption	of	amendedrevised	and	new	accounting	standards	with	effect	from	1	april	2013	and	new	accounting	
policies	relating	to	‘merger	accounting’	‘sharebased	payments’	and	‘earnings	per	share’	as	detailed	below
ias 1 ‘presentation of items of other comprehensive income’ amended
this amendment relates only to disclosure and requires the group to present items in other comprehensive income oci based on whether they 
can potentially be subsequently classified to profit or loss taxation associated with items presented before taxation must also be shown 
separately in oci depending on whether or not they can potentially be subsequently reclassified to profit or loss
ias 19 ‘employee benefits’ revised
the	key	impact	of	this	revision	has	been	to	replace	the	separate	assumptions	for	expected	return	on	schemes’	assets	and	discounting	of	schemes’	
liabilities and replace them with one single discount rate for the net surplus or deficit this net interest incomecost is measured based on the 
schemes’	discount	rate	asset	returns	greater	or	less	than	the	accounting	discount	rate	are	recognised	in	the	statement	of	comprehensive	income	
soci	the	effect	of	this	change	has	been	to	recognise	a	net	pension	interest	credit	of	£30	million	for	the	year	ended	31	march	2013	compared	
with the £34 million recognised previously in the 201213 annual report
ifrs 13 ‘fair value measurement’ 
this new standard applies to existing ifrss that require or permit fair value measurements or disclosures this standard requires additional 
disclosures but has no impact on the financial performance or position of the group
annual improvements to ifrss 2009 – 2011 cycle
these improvements clarify the requirements of ifrss and eliminate inconsistencies within and between standards the only impact on the group 
of	these	improvements	will	be	when	the	group	makes	distributions	to	holders	of	equity	instruments	and	the	recognition	of	income	tax	relating	to	
the	distribution	and	associated	transaction	costs	will	be	accounted	for	in	accordance	with	ias	12	‘income	taxes’	and	not	ias	32	‘financial	
instruments	presentation’
merger transaction of royal mail plc and royal mail group limited
as	part	of	the	group	reorganisation	prior	to	the	initial	public	offering	royal	mail	plc	acquired	the	entire	share	capital	of	royal	mail	group	limited	
through	issuance	of	its	shares	to	the	then	parent	company	royal	mail	holdings	plc	subsequently	renamed	postal	services	holding	company	plc	
on	11	september	2013	as	there	were	no	changes	to	the	shareholder	group	at	the	time	of	this	transaction	and	royal	mail	plc	is	not	a	business	
this	transaction	did	not	classify	as	a	business	combination	as	defined	under	ifrs	3	‘business	combinations’	the	consolidated	financial	statements	
of	royal	mail	plc	have	therefore	been	prepared	as	a	continuation	of	the	existing	group	
sharebased payment equitysettled transactions
the cost of equitysettled transactions with employees is measured by reference to the fair value of equity instruments at the date on which they 
are granted and is recognised as an expense over the vesting period which ends on the date on which the relevant employees become fully 
entitled to the award
no expense is recognised for awards that do not ultimately vest at each balance sheet date before vesting the cumulative expense is calculated 
representing	the	extent	to	which	the	vesting	period	has	expired	and	management’s	best	estimate	of	the	achievement	or	otherwise	of	service	
conditions and of the number of equity instruments that will ultimately vest the movement in cumulative expense since the previous balance 
sheet date is recognised in the income statement with a corresponding entry in equity
earnings per share eps
basic earnings per share eps from continuing operations is calculated by dividing the profit or loss from continuing operations adjusted for 
noncontrolling	interests’	share	of	profit	by	the	weighted	average	number	of	ordinary	shares	the	group	eps	is	calculated	in	the	same	way	
except that it also includes profit or loss from discontinued operations 
diluted eps is only relevant if the group has potential ordinary shares eg financial liabilities or equity instruments including preference shares 
that are convertible into ordinary shares options including employee share options and shares that would be issued in satisfaction of certain 
conditions that result from contractual arrangements
significant accounting policies
119
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information significant accounting policies 
continued
key sources of estimation uncertainty and critical accounting judgements
pensions
the value of the pension plan liabilities is determined by longterm actuarial assumptions which include inflation rates and mortality rates 
differences	arising	from	actual	experience	or	future	changes	in	assumptions	will	be	reflected	in	the	group’s	consolidated	statement	of	
comprehensive income the group exercises its judgement in determining the assumptions to be adopted after discussion with its actuary
deferred revenue
the group recognises advance customer payments on its balance sheet see note 26 relating to stamps and meter credits purchased by 
customers but not used at the balance sheet date the valuation of this deferred revenue is based on a number of different estimation and 
sampling	methods	using	external	specialist	resource	as	appropriate	the	results	of	which	are	reviewed	by	management	in	order	to	make	a	
judgement of the carrying amount of the accrual the total accrual is held within current trade and other payables but a portion which cannot  
be measured will relate to stamps and meter credits used one year or more after the balance sheet date
deferred taxation
assessment	of	the	deferred	tax	asset	requires	an	estimation	of	future	profitability	such	estimation	is	inherently	uncertain	in	a	market	subject	 
to various competitive pressures should estimates of future profitability change in future years the amount of deferred tax recognised will also 
change accordingly the carrying values of the deferred tax assets and liabilities are included within note 6
provisions
due to the nature of provisions a significant part of their determination is based upon estimates andor judgements concerning the future 
restructuring provisions including for redundancy and property costs are derived based upon the most recent business plan for direct 
expenditure	where	plans	are	sufficiently	detailed	and	appropriate	communication	to	those	affected	has	been	undertaken	this	includes	the	
expected number of employees impacted rate of compensation per employee rental costs and expected period of properties remaining vacant 
and dilapidation costs the industrial diseases claims provision is based on the best information available as at the year end including independent 
expert advice
revenue
revenue reported in the income statement is net of value added tax and comprises turnover which principally relates to the rendering of services 
as follows
uk parcels international  letters 
account revenue is derived from specific contracts and recognised when the delivery of an item is complete prepaid revenue mainly relating  
to stamp and meter income is recognised when the sale is made adjusted to reflect a value of stamp and meter credits held but not used by  
the customer 
general logistics systems
revenue is derived from specific contracts and is recognised at the time of delivery
distribution and conveyance costs
distribution and conveyance costs relate to nonpeople costs incurred in transporting and delivering mail these include conveyance by rail road 
sea and air together with costs incurred by international mail carriers and parcelforce worldwide delivery operators and gls these costs are 
disclosed separately on the face of the income statement
specific items
the	group	previously	disclosed	items	that	in	management’s	judgement	needed	to	be	shown	separately	by	virtue	of	their	size	nature	or	incidence	
as	‘exceptional	items’	there	are	however	other	items	of	incomeexpense	that	management	now	discloses	separately	which	do	not	ordinarily	
meet	the	definition	of	‘exceptional	items’	eg	finance	income	on	the	sale	of	pension	escrow	gilts	pension	interest	and	elements	of	taxation	the	
group	decided	therefore	not	to	continue	using	the	‘exceptional	items’	definition	and	instead	to	refer	to	items	of	incomeexpense	that	are	
considered	as	requiring	separate	disclosure	as	‘specific	items’	
this new definition has been introduced on the basis that the financial results excluding these specific items are consistent with how financial  
and	operational	performance	is	measured	by	management	in	providing	a	meaningful	analysis	of	the	group’s	trading	results	and	cash	flows	 
these specific items may not be comparable to similarly termed measures used by other companies
employee shares scheme
the group operates an equity settled sharebased compensation plan under which the group receives services from employees as consideration 
for equity instruments shares of the company the fair value of the employee services received in exchange for the grant of the shares is 
recognised	as	an	expense	in	the	income	statement	with	a	corresponding	credit	entry	in	equity	as	per	the	requirements	of	ifrs	2	‘sharebased	
payment’	the	total	amount	expensed	is	determined	by	reference	to	the	fair	value	of	the	shares	granted
the total expense is recognised over the vesting period which is the period over which all of the specified vesting conditions are to be satisfied 
the social security contributions payable in connection with the grant of shares is considered an integral part of the grant itself and the charge  
is treated as a cashsettled transaction
120
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 operating profit
operating profit is the profit arising from the normal recurring operations of the business and after charging operating specific items defined 
above it excludes the nonoperating specific items for profit or loss on disposal of businesses and profit or loss on disposal of property plant and 
equipment these items are not part of the normal recurring operations of the business but are material so are presented separately on the face 
of the income statement to allow a better understanding of financial performance in the reporting year in comparison to prior years
income taxation and deferred taxation
the charge for current taxation is based on the results for the reporting year as adjusted for items that are nonassessable or disallowed it is 
calculated using rates that have been enacted or substantively enacted at the balance sheet date
deferred income taxation assets and liabilities are recognised for all taxable and deductible temporary differences and unused taxation assets and 
losses except
• initial recognition of goodwill
• the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects 
neither the accounting profit nor taxable profit and loss 
• taxable temporary differences associated with investments in subsidiaries associates and interest in joint ventures where the timing of the 
reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable 
future and
• deferred taxation assets are recognised only to the extent that it is probable that taxable profit will be available against which they can  
be utilised
the carrying amount of deferred taxation assets is reviewed at each balance sheet date and increased or reduced to the extent that it is probable 
that sufficient taxable profit will be available to allow them to be utilised
deferred taxation assets and liabilities are measured at the taxation rates that are expected to apply to the period when the taxation asset is 
realised or the liability is settled based on tax rates and tax laws that have been substantively enacted at the balance sheet date deferred tax 
balances are not discounted
current and deferred taxation is charged or credited directly to equity if it relates to items that are credited or charged directly to equity 
otherwise it is recognised in the income statement
segment information
the	group’s	operating	segments	are	organised	and	managed	separately	according	to	the	nature	of	the	products	and	services	provided	with	each	
segment	representing	a	business	unit	that	offers	different	products	and	serves	largely	different	markets	management	monitors	the	operating	
results	of	its	business	units	separately	for	the	purpose	of	making	decisions	about	resource	allocation	and	performance	assessment	segment	
performance is evaluated based on ebitda before transformation costs
there	is	no	aggregation	of	operating	segments	the	operating	units	that	make	up	the	three	operating	segments	are	detailed	in	note	2	
the operating segments comprise operations in both the uk and other parts of europe the latter being relevant to the gls business segment 
the	uk	operations	include	the	remaining	two	operating	segments	plus	the	‘other’	segments	
segment revenues have been attributed to the respective countries based on the location of the customer
transfer prices between segments are set on a basis of charges reached through negotiation with the respective business units that form part  
of the segments
there	are	no	differences	in	the	measurement	of	the	respective	segments’	profitloss	and	the	consolidated	financial	statements	prepared	 
under ifrss 
property plant and equipment
property	plant	and	equipment	is	recognised	at	cost	including	directly	attributable	costs	in	bringing	the	asset	into	working	condition	for	its	
intended	use	depreciation	of	property	plant	and	equipment	is	provided	on	a	straightline	basis	by	reference	to	net	book	value	and	to	the	
remaining useful economic lives of assets and their estimated residual values the useful lives and residual values are reviewed annually and 
adjustments where applicable are made on a prospective basis the lives assigned to major categories of property plant and equipment are
land and buildings
freehold land not depreciated
freehold buildings up to 50 years
leasehold buildings the shorter of the period of the lease 50 years or the estimated remaining useful life
plant and machinery 315 years
motor	vehicles	and	trailers 212 years
fixtures and equipment 215 years
121
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information significant accounting policies 
continued
goodwill
business	combinations	on	or	after	29	march	2004	are	accounted	for	under	ifrs	3	‘business	combinations’	using	the	purchase	method	 
any	excess	of	the	cost	of	the	business	combination	over	the	group’s	interest	in	the	net	fair	value	of	the	identifiable	assets	liabilities	and	 
contingent liabilities at the date of acquisition is recognised in the balance sheet as goodwill and is not amortised
after initial recognition goodwill is stated at cost less any accumulated impairment losses goodwill arising from business combinations is 
reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired 
an impairment loss is recognised in the income statement for the amount by which the carrying value of the asset or cash generating unit 
exceeds	its	recoverable	amount	which	is	the	higher	of	an	asset’s	net	realisable	value	and	its	value	in	use	for	the	purpose	of	such	impairment	
reviews goodwill is allocated to the relevant cash generating units
goodwill arising on the acquisition of equity accounted entities is included in the cost of those entities and therefore not reported in the balance 
sheet as goodwill
intangible assets
intangible assets acquired as part of a business combination are capitalised separately from goodwill if the fair value can be measured reliably on 
initial recognition intangible assets acquired separately or development costs that meet the criteria to be capitalised are initially recognised at cost 
and are assessed to have either a finite or indefinite useful life those with a finite life are amortised over their useful life and those with an 
indefinite life are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may 
be impaired an impairment loss is recognised in the income statement for the amount by which the carrying value of the asset exceeds its 
recoverable	amount	which	is	the	higher	of	an	asset’s	net	realisable	value	and	its	value	in	use
amortisation of intangible assets with finite lives is charged annually to the income statement on a straightline basis as follows
customer listings 3 to 4 years
software 3 to 6 years
investments in associates
the	group’s	investments	in	its	associates	are	accounted	for	under	the	equity	method	of	accounting	under	the	equity	method	the	investment	 
is	carried	in	the	balance	sheet	at	cost	plus	postacquisition	changes	in	the	group’s	share	of	the	net	assets	of	the	associates	less	any	impairment	 
in	value	the	income	statement	reflects	the	group’s	share	of	posttax	profits	from	the	associates
any	goodwill	arising	on	acquisition	of	an	associate	representing	the	excess	of	the	cost	of	the	investment	compared	to	the	group’s	share	of	the	 
net fair value of the identifiable assets liabilities and contingent liabilities acquired is included in the carrying amount and not amortised 
noncurrent assets held for sale and discontinued operations
noncurrent assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell
noncurrent assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than 
through continuing use this condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its 
present	condition	management	must	be	committed	to	the	sale	which	should	be	expected	to	qualify	for	recognition	as	a	completed	sale	within	one	
year from the date of classification following their classification as held for sale noncurrent assets including those in a disposal group are not 
depreciated the results of operations disposed during the reporting year are included in the consolidated statement of comprehensive income up 
to the date of disposal 
a	discontinued	operation	is	a	component	of	the	group’s	business	that	represents	a	separate	major	line	of	business	or	geographical	area	of	
operations or is a subsidiary acquired exclusively with a view to resale that has been disposed of has been abandoned or that meets the criteria 
to be classified as held for sale discontinued operations are presented in the consolidated statement of comprehensive income as a single line 
which comprises the posttax profit or loss of the discontinued operation along with the posttax gain or loss recognised on the remeasurement to 
fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations
impairment reviews
unless otherwise disclosed in these accounting policies assets are reviewed for impairment if events or changes in circumstances indicate that the 
carrying value may be impaired the group assesses at each reporting date whether such indications exist where appropriate an impairment 
loss is recognised in the income statement for the amount by which the carrying value of the asset or cash generating unit exceeds its 
recoverable	amount	which	is	the	higher	of	an	asset’s	net	realisable	value	and	its	value	in	use
leases
finance	leases	where	substantially	all	the	risks	and	rewards	incidental	to	ownership	of	the	leased	item	have	passed	to	the	group	are	capitalised	
at the inception of the lease with a corresponding liability recognised for the fair value of the leased item or if lower at the present value of the 
minimum lease payments lease payments are apportioned between the finance charges and capital element of the lease liability to achieve a 
constant rate of interest on the remaining balance of the liability capitalised leased assets are depreciated over the shorter of the estimated 
useful life of the asset and the lease term
122
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 leases continued
leases	where	substantially	all	the	risks	and	rewards	of	ownership	of	the	asset	are	retained	by	the	lessor	are	classified	as	operating	leases	and	
rentals are charged to the income statement over the lease term the aggregate benefit of incentives is recognised as a reduction of rental 
expense over the lease term on a straightline basis
a leasehold land payment is an upfront payment to acquire a longterm leasehold interest in land this payment is stated at cost and is amortised 
on a straightline basis over the period of the lease
trade receivables
trade receivables are recognised and carried at the original invoice amount less an allowance for any noncollectable amounts an estimate for 
doubtful debts is made when collection of the full amount is no longer probable bad debts are writtenoff when identified
financial instruments
financial	assets	within	the	scope	of	ias	39	‘financial	instruments	recognition	and	measurement’	are	classified	as	financial	assets	at	fair	value	
through the income statement held for trading held to maturity investments loans and receivables or available for sale financial assets as 
appropriate financial liabilities within the scope of ias 39 are classified as either financial liabilities at fair value through the income statement  
or financial liabilities measured at amortised cost
the group determines the classification of its financial instruments at initial recognition and reevaluates this designation at each reporting date 
when financial instruments are recognised initially they are measured at fair value being the transaction price plus in the case of financial 
instruments	not	at	‘fair	value	through	the	income	statement’	any	directly	attributable	transactional	costs
the subsequent measurement of financial instruments depends on their classification as follows
loans and receivables
nonderivative	financial	assets	with	fixed	or	determinable	payments	that	are	not	quoted	on	an	active	market	do	not	qualify	as	trading	assets	
and	have	not	been	designated	as	either	‘fair	value	through	the	income	statement’	or	available	for	sale	are	carried	at	amortised	cost	using	the	
effective interest rate method if the time value of money is significant gains and losses are recognised in the income statement when the loans 
and receivables are derecognised or impaired as well as through the amortisation process
available for sale financial assets
‘available	for	sale	financial	assets’	are	nonderivative	financial	assets	that	are	designated	as	such	or	are	not	classified	in	any	of	the	three	preceding	
categories	after	initial	recognition	interest	is	taken	to	the	income	statement	using	the	effective	interest	rate	method	and	the	assets	are	
measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the 
investment is deemed to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement
financial liabilities at fair value through the income statement held for trading
derivatives liabilities are classified as held for trading unless they are designated as hedging instruments they are carried in the balance sheet  
at fair value with gains or losses recognised in the income statement
financial liabilities measured at amortised cost
all nonderivative financial liabilities are classified as financial liabilities measured at amortised cost nonderivative financial liabilities are initially 
recognised at the fair value of the consideration received less directly attributable issue costs after initial recognition nonderivative financial 
liabilities are subsequently measured at amortised cost using the effective interest method gains and losses are recognised in the income 
statement when the liabilities are derecognised or impaired as well as through the amortisation process
cash and cash equivalents
cash	and	cash	equivalents	in	the	balance	sheet	comprise	cash	at	bank	and	in	hand	and	shortterm	deposits	cash	equivalents	with	an	original	
maturity	date	of	three	months	or	less	in	addition	the	group	uses	money	market	funds	as	a	readily	available	source	of	cash	and	these	funds	are	
also categorised as cash equivalents
for the purpose of the statement of cash flows cash and cash equivalents consist of cash and cash equivalents as defined above net of  
bank	overdrafts
cash equivalents are classified as loans and receivables financial instruments
financial assets – pension escrow investments
financial	assets	–	pension	escrow	investments	comprise	cash	at	bank	conventional	gilt	edged	securities	indexlinked	gilt	edged	securities	
treasury	bills	and	a	money	market	fund	investment	established	to	provide	security	to	the	royal	mail	senior	executive	pension	plan	rmsepp	 
in support of a deficit recovery plan agreed with the trustee in 2013
conventional	gilt	edged	securities	indexlinked	gilt	edged	securities	and	treasury	bills	are	classified	as	available	for	sale	financial	instruments	 
on the basis that they are quoted investments that are not held for trading and may be disposed of prior to maturity
financial assets – other investments
financial	assets	–	other	investments	comprise	shortterm	deposits	other	investments	with	hm	government	local	government	or	banks	with	 
an original maturity of three months or more shortterm deposits are classified as loans and receivables financial instruments 
financial liabilities – interestbearing loans and borrowings
all loans and borrowings are classified as financial liabilities measured at amortised cost
123
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information significant accounting policies 
continued
financial liabilities – obligations under finance leases 
all obligations under finance leases are classified as financial liabilities measured at amortised cost
derivative financial instruments
the	group	uses	derivative	instruments	such	as	foreign	currency	contracts	in	order	to	manage	the	risk	profile	of	any	underlying	risk	exposure	 
of	the	group	in	line	with	the	group’s	treasury	management	policies	such	derivative	financial	instruments	are	initially	stated	at	fair	value
for the purpose of hedge accounting hedges are classified as cash flow hedges where they hedge exposure to variability in cash flows that  
is	attributable	either	to	a	particular	risk	associated	with	a	recognised	asset	or	liability	or	to	a	highly	probable	forecast	transaction
in	relation	to	cash	flow	hedges	to	hedge	the	interest	rate	foreign	exchange	or	commodity	price	risk	of	firm	commitments	that	meet	the	conditions	
for hedge accounting the portion of the gain or loss on the hedging instrument that is determined to relate to an effective hedge is recognised 
directly in equity and the ineffective portion is recognised in the income statement
when the hedged firm commitment results in the recognition of a nonfinancial asset or nonfinancial liability then at the time the asset or 
liability is recognised the associated gains or losses that had previously been recognised in equity are included in the initial measurement of the 
acquisition cost or other carrying amount of the asset or liability for all other cash flow hedges the gains or losses that are recognised in equity 
are transferred to the income statement in the same reporting year in which the hedged firm commitment affects the net profitloss for example 
when the hedged transaction actually occurs
for	derivatives	that	do	not	qualify	for	hedge	accounting	any	gains	or	losses	arising	from	changes	in	fair	value	are	taken	directly	to	the	income	
statement in the period
hedge accounting is discontinued when the hedging instrument expires or is sold terminated or exercised or no longer qualifies for hedge 
accounting	at	that	point	any	cumulative	gain	or	loss	on	the	hedging	instrument	recognised	in	equity	is	kept	in	equity	until	the	forecast	transaction	
occurs if a hedged transaction is no longer expected to occur the net cumulative gain or loss recognised in equity is transferred to the income 
statement for the reporting year
fair value measurement of financial instruments
the	fair	value	of	quoted	investments	including	conventional	gilt	edged	securities	indexlinked	gilt	edged	securities	and	treasury	bills	is	
determined	by	reference	to	bid	prices	at	the	close	of	business	on	the	balance	sheet	date	hence	the	conventional	gilt	edged	securities	indexlinked	
gilt edged securities and treasury bills are within level 1 of the fair value hierarchy as defined within ifrs 13
where	there	is	no	active	market	fair	value	is	determined	using	valuation	techniques	these	include	using	recent	arm’s	length	market	transactions	
reference	to	the	current	market	value	of	another	instrument	which	is	substantially	the	same	and	discounted	cash	flow	analysis	and	pricing	
models	specifically	in	the	absence	of	quoted	market	prices	derivatives	are	valued	by	using	quoted	forward	prices	for	the	underlying	commodity
currency and discounted using quoted interest rates both as at the close of business on the balance sheet date hence derivative assets and 
liabilities are within level 2 of the fair value hierarchy as defined within ifrs 13
for	the	purposes	of	disclosing	the	fair	value	of	investments	held	at	amortised	cost	in	the	balance	sheet	in	the	absence	of	quoted	market	prices	
fair values are calculated by discounting the future cash flows of the financial instrument using quoted equivalent interest rates as at close of 
business on the balance sheet date
provisions
provisions are recognised when the group has a present obligation legal or constructive as a result of a past event it is probable that an outflow 
of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation if the effect of the time 
value of money is material provisions are determined by discounting the expected future cash flows at an appropriate pretaxation rate 
pensions and other postretirement benefits
the pension assets for the defined benefit schemes are measured at fair value liabilities are measured on an actuarial basis using the projected 
unit credit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and 
term the resulting defined benefit asset or liability is presented separately on the face of the balance sheet full actuarial valuations are carried 
out at intervals not normally exceeding three years as determined by the trustees and with appropriate updates and accounting adjustments at 
each balance sheet date form the basis of the deficit disclosed all active members of defined benefit schemes are contracted out of the earnings
related part of the state second pension scheme
for defined benefit schemes the amounts charged to operating profit are the current service costs and any gains and losses arising from 
settlements	curtailments	and	past	service	costs	the	amount	resulting	from	applying	the	plan’s	discount	rate	for	liabilities	to	the	pension	surplus	
at	the	beginning	of	the	reporting	year	is	recognised	as	net	pension	interest	in	the	income	statement	due	to	the	substantial	change	in	the	rmpp	
surplus resulting from the pensions reform the net pension interest was recalculated at the half year to £69 million 2013 £30 million for the 
full year actuarial gains and losses are recognised immediately in the statement of comprehensive income any deferred tax movement 
associated with the actuarial gains and losses is also recognised in the statement of comprehensive income
for	defined	contribution	schemes	the	group’s	contributions	are	charged	to	operating	profit	within	people	costs	in	the	period	to	which	the	
contributions	relate	overseas	subsidiaries	make	separate	arrangements	for	the	provision	of	pensions	and	other	postretirement	benefits
124
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 foreign currencies
the	functional	and	presentational	currency	of	royal	mail	plc	is	sterling	£	the	functional	currency	of	the	overseas	subsidiaries	in	europe	is	
mainly the euro €
the assets and liabilities of foreign operations are translated at the rate of exchange ruling at the balance sheet date the trading results of 
foreign operations are translated at the average rates of exchange for the reporting year being a reasonable approximation to the actual 
transaction	rate	the	exchange	rate	differences	arising	on	the	translation	since	the	date	of	transition	to	ifrss	are	taken	directly	to	the	foreign	
currency translation reserve in equity 
transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the 
transaction	monetary	assets	and	liabilities	denominated	in	foreign	currencies	are	retranslated	at	the	functional	currency	rate	of	exchange	ruling	
at	the	balance	sheet	date	currently	hedge	accounting	is	not	claimed	for	any	monetary	assets	and	liabilities	all	differences	are	therefore	taken	to	
the	income	statement	except	for	differences	on	monetary	assets	and	liabilities	that	form	part	of	the	group’s	net	investment	in	a	foreign	operation	
these	are	taken	directly	to	equity	until	the	disposal	of	the	net	investment	occurs	at	which	time	they	are	recognised	in	profit	or	loss
nonmonetary items that are measured in terms of historic cost in a foreign currency are translated using the exchange rates as at the dates of 
the initial transactions nonmonetary items measured at fair value in foreign currency are translated using the exchange rates at the date when 
the fair value is determined 
accounting standards issued but not yet applied
the following new and revised accounting standards are relevant to the group and are in issue but were not effective and in some instances have 
not yet been adopted by the eu at the balance sheet date
ias 19 amended employee benefits employee contributions
ias 27 amended separate financial statements
ias 28 amended investments in associates and joint ventures
ias 36 amended impairment of assets 
ias	39	amended	financial	instruments	recognition	and	measurement
ifrs	9	financial	instruments	classification	and	measurement
ifrs 10 consolidated financial statements
ifrs 11 joint arrangements
ifrs 12 disclosure of interests in other entities
annual improvements 20102012 and annual improvements 20112013
the directors do not expect that the adoption of the standards listed above will have a material impact on the financial performance or position  
of the group in future periods
125
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information the	following	information	has	been	prepared	on	a	52week	basis	and	excludes	for	the	comparative	years	the	group’s	former	post	office	limited	
pol	subsidiary	which	was	transferred	to	royal	mail	holdings	plc	subsequently	renamed	postal	services	holding	company	limited	on	1	april	
2012 see note 1 for further details the directors are of the view that this nongaap presentation provides a meaningful comparative history of 
the current group excluding pol
income statement
financial reporting year 52 weeks ending march
2014  
£m
2013  
£m
2012  
£m
2011  
£m
2010  
£m
revenue 9456 9146 8764 8415 8547
operating profit before transformation costs 671 598 381 210 332
transformation costs 241 195 229 192 185
operating profit after transformation costs 430 403 152 18 147
operating specific items 1213 77 57 48 4
nonoperating specific items 21 4 182 106 2
earnings before interest and taxation ebit 1664 330 277 74 153
finance incomecosts – mainly net pension interest nonoperating specific item 69 52 230 419 306
1
finance costs – other 67 99 100 84 82
profitloss before taxation from continuing operations 1666 283 53 429 235
taxation specific items and other 386 246 51 123 87
profitloss after taxation from continuing operations 1280 529 104 552 322
1
 this net pension cost has not been adjusted in accordance with ias 19 revised as adopted during the 201314 reporting year
free cash flow
2
2014  
£m
2013 
 £m
2012 
 £m
2011 
 £m
2010 
 £m
ebitda before transformation costs 942 915 681 493 595
trading	working	capital	movements 57 60 19 58 31
difference between ongoing pension costs and pension cash flows 58 3 45 292 395
transformation investment – operating and capital expenditure 284 407 429 379 325
nontransformation investment – capital expenditure 333 258 150 176 234
other dividends taxation interest 69 81 87 59 64
underlying cash inflowoutflow 257 106 49 471 392
oneoff	working	capital	movements 140 202   
cash cost of operating specific items 35 26 37 5 8
disposal of assetsbusiness 36 52 240 230 10
free cash inflowoutflow 398 334 154 246 390
2
	 an	explanation	of	free	cash	flow	is	provided	in	note	7
balance sheet 
2014 
 £m
2013 
 £m
2012 
 £m
2011 
 £m
2010  
£m
property plant and equipment 1989 1916 1822 1829 1932
intangible assets mainly software 195 139 135 126 99
inventories 22 24 32 33 32
trade and other receivables 939 1012 1036 906 911
trade and other payables 1683 1647 1548 1423 1536
other net liabilitiesassets 20  4 40 10
provisions 268 246 217 252 233
goodwill mainly relates to gls 197 196 189 197 197
investments in associates 4 3 3 9 46
net operating assets and investments in associates 1375 1397 1456 1465 1458
cash and cash equivalents 366 351 473 319 171
pension escrow investments 20 20 149 87 178
loans and borrowings 600 973 1522 1478 1183
other net financial liabilities 341 304 286 200 123
net debt 555 906 1186 1272 957
deferred taxation liabilitiesassets 142 89 9 2 90
net assets before pension deficit and pension escrow investments 679 580 261 191 591
pension surplusdeficit 1723 825 2716 4185 7477
net assetsliabilities 2401 1405 2455 3944 6886
people numbers – period end employees 2014 2013 2012 2011 2010
ukpil 148441 149940 151156 155181 160291
gls 13811 13646 13362 13167 12885
uk partially owned subsidiaries 3999 4030 3926 4254 4217
group total 166251 167616 168444 172602 177393
 
group five year summary unaudited
126
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 statement of directors’ responsibilities in 
respect of the group financial statements 
the directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations 
company law requires the directors to prepare financial statements for each reporting year under that law the directors are required to prepare 
the group financial statements in accordance with international financial reporting standards ifrss as adopted by the european union and 
article 4 of the ias regulation under company law the directors must not approve the financial statements unless they are satisfied that they 
give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period
in preparing these financial statements the directors are required to
• select suitable accounting policies and then apply them consistently 
• make	judgements	and	accounting	estimates	that	are	reasonable	and	prudent
• state that the group has complied with ifrs as adopted by the eu subject to any material departures disclosed and explained in the financial 
statements and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
the	directors	are	responsible	for	keeping	adequate	accounting	records	that	are	sufficient	to	show	and	explain	the	company’s	and	group’s	
transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure 
that the financial statements comply with the companies act 2006 they are also responsible for safeguarding the assets of the company and  
the	group	and	hence	for	taking	reasonable	steps	for	the	prevention	and	detection	of	fraud	and	other	irregularities
the	directors	are	also	responsible	for	preparing	the	directors’	report	the	corporate	governance	report	and	the	directors’	remuneration	report	 
in accordance with the companies act 2006 and applicable regulations including the listing rules and the disclosure and transparency rules
the	directors	are	responsible	for	the	maintenance	and	integrity	of	the	corporate	and	financial	information	included	on	the	company’s	website	
legislation in the united kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions
responsibility statement
each	of	the	directors	whose	names	and	functions	are	disclosed	on	page	38	confirms	that	to	the	best	of	their	knowledge
• the financial statements prepared in accordance with applicable accounting standards give a true and fair view of the assets liabilities 
financial	position	and	profit	of	the	company	and	the	group	taken	as	a	whole	and
• the	management	report	which	is	incorporated	into	the	strategic	report	and	the	directors’	report	includes	a	fair	review	of	the	development	and	
performance	of	the	business	and	the	group	taken	as	a	whole	together	with	a	description	of	the	principal	risks	and	uncertainties	that	they	face
in	addition	the	board	considers	that	the	annual	report	and	financial	statements	taken	as	a	whole	is	fair	balanced	and	understandable	and	
provides	the	information	necessary	for	shareholders	to	assess	the	company’s	performance	business	model	and	strategy
by order of the board
moya greene   matthew lester 
chief executive officer  chief finance officer 
6 june 2014   
127
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information we	have	audited	the	financial	statements	of	royal	mail	plc	for	the	period	ended	30	march	2014	which	comprise	the	consolidated	income	
statement the consolidated statement of comprehensive income the consolidated statement of changes in equity the consolidated balance 
sheet	the	consolidated	statement	of	cash	flows	statement	and	the	related	notes	1	to	29	the	financial	reporting	framework	that	has	been	
applied in their preparation is applicable law and international financial reporting standards ifrss as adopted by the european union
this	report	is	made	solely	to	the	company’s	members	as	a	body	in	accordance	with	chapter	3	of	part	16	of	the	companies	act	2006	our	
audit	work	has	been	undertaken	so	that	we	might	state	to	the	company’s	members	those	matters	we	are	required	to	state	to	them	in	an	
auditor’s	report	and	for	no	other	purpose	to	the	fullest	extent	permitted	by	law	we	do	not	accept	or	assume	responsibility	to	anyone	other	
than	the	company	and	the	company’s	members	as	a	body	for	our	audit	work	for	this	report	or	for	the	opinions	we	have	formed	
respective responsibilities of directors and auditor 
as	explained	more	fully	in	the	statement	of	directors’	responsibilities	set	out	on	page	127	the	directors	are	responsible	for	the	preparation	of	
the group financial statements and for being satisfied that they give a true and fair view our responsibility is to audit and express an opinion 
on the financial statements in accordance with applicable law and international standards on auditing uk and ireland those standards 
require	us	to	comply	with	the	auditing	practices	board’s	ethical	standards	for	auditors
scope of the audit of the group financial statements 
an audit involves obtaining evidence about the amounts and disclosures in the group financial statements sufficient to give reasonable 
assurance that the financial statements are free from material misstatement whether caused by fraud or error this includes an assessment 
of	whether	the	accounting	policies	are	appropriate	to	the	group’s	circumstances	and	have	been	consistently	applied	and	adequately	disclosed	
the reasonableness of significant accounting estimates made by the directors and the overall presentation of the group financial statements 
in addition we read all the financial and nonfinancial information in the annual report 2014 to identify material inconsistencies with the 
audited financial statements and to identify any information that is apparently materially incorrect based on or materially inconsistent with 
the	knowledge	acquired	by	us	in	the	course	of	performing	the	audit	if	we	become	aware	of	any	apparent	material	misstatements	or	
inconsistencies we consider the implications for our report 
opinion on financial statements 
in our opinion the group financial statements 
• give	a	true	and	fair	view	of	the	state	of	the	group’s	affairs	as	at	30	march	2014	and	of	its	profit	for	the	period	then	ended	
• have been properly prepared in accordance with ifrss as adopted by the european union and
• have been prepared in accordance with the requirements of the companies act 2006 and article 4 of the ias regulation
our assessment of risks of material misstatement 
we	identified	the	following	risks	that	have	had	the	greatest	effect	on	the	overall	audit	strategy	the	allocation	of	resources	in	the	audit	and	
directing the efforts of the engagement team 
• revenue	recognition	across	the	group’s	operations	specifically	in	relation	to	the	accounting	for	stamps	and	meters	deferred	revenue	and	the	
risk	of	management	override
• accounting	and	valuation	of	the	group’s	pension	scheme	and
• completeness	and	measurement	of	the	group’s	provisions	including	the	recognition	of	severance	provisions	and	industrial	diseases	claims
our application of materiality 
we apply the concept of materiality both in planning and performing our audit and in evaluating the effect of misstatements on our audit and 
on the financial statements for the purposes of determining whether the financial statements are free from material misstatement we define 
materiality	as	the	magnitude	of	misstatement	that	makes	it	probable	that	the	economic	decisions	of	a	reasonably	knowledgeable	person	relying	
on the financial statements would be changed or influenced we also determine a level of performance materiality which we use to determine the 
extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements 
exceeds materiality for the financial statements as a whole
when establishing our overall audit strategy we determined a magnitude of uncorrected misstatements that we judged would be material for 
the financial	statements	as	a	whole	we	determined	planning	materiality	for	the	group	to	be	£270	million	which	is	approximately	5	per	cent	
of adjusted	profit	before	tax	2013	05	per	cent	of	revenue	this	provided	a	basis	for	determining	the	nature	timing	and	extent	of	risk	
assessment	procedures	identifying	and	assessing	the	risk	of	material	misstatement	and	determining	the	nature	timing	and	extent	of	further	
audit procedures 
on	the	basis	of	our	risk	assessments	together	with	our	assessment	of	the	group’s	overall	control	environment	our	judgement	is	that	overall	
performance materiality for the group should be 75 per cent of planning materiality namely £203 million our objective in adopting this 
approach is to ensure that total detected and undetected audit differences do not exceed our planning materiality of £270 million for the 
financial statements as whole 
we	agreed	with	the	audit	and	risk	committee	that	we	would	report	to	the	committee	all	adjusted	and	unadjusted	audit	differences	in	excess	
of £14 million we also agreed to report differences below those thresholds that in our view warranted reporting on qualitative grounds
independent auditor’s report  
to the members of royal mail plc
128
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 an overview of the scope of our audit
following	our	assessment	of	the	risk	of	material	misstatement	to	the	group	financial	statements	we	selected	eleven	components	which	
represent	the	principal	business	units	within	the	group’s	reportable	segments	and	account	for	95	per	cent	of	the	group’s	revenue	and	 
99	per	cent	of	the	group’s	profit	before	tax	two	of	these	components	were	subject	to	a	full	audit	four	were	subject	to	audits	of	specific	
account balances and five were subject to review procedures for the remaining components we performed other procedures to confirm  
there	were	no	significant	risks	of	material	misstatement	in	the	group	financial	statements
the	audit	work	for	some	of	the	locations	and	the	statutory	audits	were	executed	at	levels	of	materiality	applicable	to	each	individual	entity	
which were much lower than group materiality
the group audit team continued to follow a programme of planned visits that has been designed to ensure that the senior statutory auditor 
or his designate visits each of the two full scope locations at least once a year this year the group audit team visited the uk and overseas  
full	scope	locations	for	all	full	scope	entities	the	group	audit	team	reviewed	key	working	papers	and	participated	in	the	component	team’s	
planning	including	the	component	team’s	discussion	of	fraud	and	error
our	response	to	the	risks	of	material	misstatement	included	the	following	procedures
• we	performed	controls	testing	over	revenue	recognition	including	the	timing	of	revenue	recognition	challenged	management’s	underlying	
assumptions and methodology used in its stamps and meters deferred revenue calculations as well as assessing whether the revenue 
recognition policies adopted complied with ifrss we performed analytical procedures and journal entry testing in order to identify and test 
the	risk	of	fraud	arising	from	management	override	of	controls
• using	the	knowledge	and	expertise	of	our	own	actuarial	specialists	we	challenged	management’s	key	assumptions	and	estimates	used	in	its	
pension	accounting	to	evaluate	the	appropriateness	of	the	methodology	we	also	considered	whether	the	group’s	pension	disclosures	are	
appropriate and in accordance with ifrss and
• we	reviewed	the	group’s	provisions	to	understand	the	appropriateness	of	assumptions	supporting	management’s	estimates	challenging	
management’s	accounting	treatment	and	disclosures	we	also	assessed	the	completeness	of	the	group’s	provisions	and	contingent	liabilities	
and compliance with ifrss recognition and measurement criteria
opinion on other matters prescribed by the companies act 2006 
in our opinion 
• the	information	given	in	the	strategic	report	and	the	directors’	report	for	the	financial	period	for	which	the	financial	statements	are	
prepared is consistent with the financial statements and
• the	part	of	the	directors’	remuneration	report	to	be	audited	has	been	properly	prepared	in	accordance	with	the	companies	act	2006
matters on which we are required to report by exception 
we have nothing to report in respect of the following 
under the isas uk and ireland we are required to report to you if in our opinion information in the annual report is 
• materially	inconsistent	with	the	information	in	the	audited	financial	statements	or	
• apparently	materially	incorrect	based	on	or	materially	inconsistent	with	our	knowledge	of	the	group	acquired	in	the	course	of	performing	
our audit or 
• is otherwise misleading 
in	particular	we	are	required	to	consider	whether	we	have	identified	any	inconsistencies	between	our	knowledge	acquired	during	the	audit	 
and	the	directors’	statement	that	they	consider	the	annual	report	is	fair	balanced	and	understandable	and	whether	the	annual	report	
appropriately	discloses	those	matters	that	we	communicated	to	the	audit		risk	committee	which	we	consider	should	have	been	disclosed	
under the companies act 2006 we are required to report to you if in our opinion 
• returns adequate for our audit have not been received from branches not visited by us or
• the	part	of	the	directors’	remuneration	report	to	be	audited	is	not	in	agreement	with	the	accounting	records	and	return	or
• certain	disclosures	of	directors’	remuneration	specified	by	law	are	not	made	or	
• we have not received all the information and explanations we require for our audit 
129
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information under the listing rules we are required to review 
• the	directors’	statement	set	out	on	page	46	in	relation	to	going	concern	and	
• the	part	of	the	corporate	governance	statement	relating	to	the	company’s	compliance	with	the	nine	provisions	of	the	uk	corporate	
governance code specified for our review
other matter
we	have	reported	separately	on	the	parent	company	financial	statements	of	royal	mail	plc	for	the	period	ended	30	march	2014	and	on	the	
information	in	the	directors’	remuneration	report	that	is	described	as	having	been	audited
richard wilson senior statutory auditor 
for and on behalf of ernst and young llp  
statutory auditor 
london 
6 june 2014
independent auditor’s report  
to the members of royal mail plc continued
130
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 the	majority	of	the	annual	report	and	financial	statements	relates	to	the	royal	mail	plc	group	consolidated	accounts	which	comprise	the	
aggregation	of	all	the	group’s	trading	entities	subsidiaries	and	associated	undertakings	this	mandatory	section	reports	the	individual	balance	
sheet	and	notes	of	the	ultimate	holding	company	royal	mail	plc	the	company
company balance sheet
at	30	march	2014
notes
at 30 march 
2014 
£m
fixed assets
investment in subsidiary 6 1591
total fixed assets 1591
current assets
debtors – amounts falling due in less than one year 7 –
current liabilities
creditors – amounts falling due in less than one year 4
provisions for liabilities and charges 8 –
net current assets 4
net assets 1587
capital and reserves
called up share capital 9 10
retained earnings 10 1577
shareholders’ funds 1587
the balance sheet was approved and authorised for issue by the board of directors on 6 june 2014 and signed on its behalf by
matthew lester
chief finance officer   
   
royal mail plc – parent company financial  
statements
131
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information 1 parent company accounting policies
financial reporting year
the company was incorporated on 6 september 2013 see note 9 for further details
the	financial	reporting	year	ends	on	the	last	sunday	in	march	and	accordingly	these	financial	statements	are	made	up	for	the	period	
6 september	2013	to	30	march	2014
basis of preparation
the financial statements of the company were authorised for issue by the board on 6 june 2014 
the financial statements and notes on pages 131 to 133 have been prepared in accordance with applicable uk accounting standards and law 
including the requirements of the companies act 2006 unless otherwise stated in the accounting policies below the financial statements have 
been prepared under the historic cost accounting convention 
the company has not presented its own profit and loss account as permitted by section 408 of the companies act 2006 however the results  
of the company are presented in notes 4 and 10 to the financial statements
the	company	has	taken	advantage	of	paragraph	2d	of	frs	29	ifrs	7	‘financial	instruments’	and	has	not	disclosed	information	required	by	 
that	standard	as	the	group’s	consolidated	financial	statements	in	which	the	company	is	included	provide	equivalent	disclosures	for	the	group	
under ifrs 7
no new uk accounting standards which affect the presentation of these financial statements have been issued
investment in subsidiary
the investment in subsidiary is stated at cost less any accumulated impairment losses
debtors
debtors are recognised with an allowance for any noncollectable amounts including where collection is no longer probable
2 directors’ emoluments
the directors of the company are not paid any fees by the company for their services as directors of the company the directors are paid fees by 
other companies of the group these emoluments are disclosed in the group financial statements
3 auditor’s remuneration
the auditor of the company is not paid fees by the company the auditor of the company is paid fees by other companies of the group this 
remuneration is disclosed in the group financial statements see note 13
4 profit and loss account
the company is a nontrading company the loss for the period of £4 million 2013 £nil is in respect of transactionrelated costs
5 taxation
there is no taxation chargecredit for the period
6 investment in subsidiary
£m
at 12 september 2013 1500
investment in subsidiary – cost of employee free shares 91
at 30 march 2014 1591
the	investment	in	subsidiary	at	12	september	2013	relates	to	the	transfer	of	royal	mail	group	limited	see	note	9
7 debtors – amounts falling due within one year
this balance includes the share capital issued at incorporation see note 9
8 provisions for liabilities and charges
in	connection	with	the	transfer	of	royal	mail	group	limited	see	note	9	a	provision	for	liabilities	and	charges	of	less	than	£1	million	is	recognised
notes to the parent company  
financial statements
132
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 9 called up share capital
at 30 march 
2014 
 £m
authorised
1000000000 ordinary shares of £001 each 10
total 10
allotted and issued
1000000000 ordinary shares of £001 each 10
total 10
the	company	was	incorporated	as	royal	mail	limited	on	6	september	2013	with	share	capital	of	100	ordinary	shares	of	£150	each	£150	
issued	to	royal	mail	holdings	plc	royal	mail	holdings	plc	was	renamed	postal	services	holding	company	plc	’psh’	on	11 september	2013	
subsequently on 12 september 2013 share capital of 999999900 ordinary shares of £150 each £1499999850 was issued by the company 
to	psh	in	consideration	for	the	transfer	from	psh	of	the	entire	issued	share	capital	of	royal	mail	group	limited	following	this	transfer	and	
therefore as at 12 september 2013 the issued share capital of the company comprised 1000000000 ordinary shares of £150 each 
£1500000000 in connection with the transfer a provision for liabilities and charges has been recognised see note 8 above this is included  
in the cost of investment
on	17	september	2013	royal	mail	limited	subsequently	reregistered	as	royal	mail	plc	on	19 september	2013	approved	a	reduction	of	 
capital by way of solvency statement to cancel £149 from each issued ordinary share of £150 this reduction of capital was registered on 
18 september	2013	and	reduced	share	capital	from	£1500	million	to	£10	million	and	increased	distributable	reserves	by	£1490 million	
postal	services	holding	company	plc	was	subsequently	renamed	postal	services	holding	company	limited	‘psh’	on	12 december	2013
10 shareholders’ funds
called up  
share capital  
£m
retained  
earnings 
 £m
2014 
total 
 £m
at 6 september 2013 incorporation – see note 9 – – –
loss for the period – 4 4
issue	of	shares	in	consideration	for	the	transfer	of	royal	mail	group	limited	shares 1500 – 1500
reduction of capital see note 9 1490 1490 –
investment in subsidiary – 91 91
at 30 march 2014 10 1577 1587
133
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information statement of directors’ responsibilities in 
respect of the parent company financial 
statements 
the	directors	are	responsible	for	preparing	the	directors’	report	and	the	financial	statements	in	accordance	with	applicable	law	and	regulations
company law requires the directors to prepare financial statements for each financial year under that law the directors have elected to prepare 
the financial statements in accordance with united kingdom generally accepted accounting practice united kingdom accounting standards 
including	financial	reporting	standard	102	‘the	financial	reporting	standard	applicable	in	the	uk	and	republic	of	ireland’	and	applicable	law	
under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the 
state of affairs of the company and of the profit or loss of the company for that period in preparing these financial statements the directors are 
required to
• select suitable accounting policies and then apply them consistently
• make	judgements	and	accounting	estimates	that	are	reasonable	and	prudent
• state whether applicable uk accounting standards have been followed subject to any material departures disclosed and explained in the 
financial statements and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business
the	directors	are	responsible	for	keeping	adequate	accounting	records	that	are	sufficient	to	show	and	explain	the	company’s	transactions	and	
disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements 
comply	with	the	companies	act	2006	they	are	also	responsible	for	safeguarding	the	assets	of	the	company	and	hence	for	taking	reasonable	
steps for the prevention and detection of fraud and other irregularities
matthew lester 
6 june 2014   
134
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 independent auditor’s report  
to the members of the parent company 
royal mail plc
we	have	audited	the	parent	company	financial	statements	of	royal	mail	plc	for	the	period	ended	30	march	2014	which	comprise	the	parent	
company	balance	sheet	and	the	related	notes	1	to	10	the	financial	reporting	framework	that	has	been	applied	in	their	preparation	is	applicable	
law and united kingdom accounting standards united kingdom generally accepted accounting practice
this	report	is	made	solely	to	the	company’s	members	as	a	body	in	accordance	with	chapter	3	of	part	16	of	the	companies	act	2006	our	audit	
work	has	been	undertaken	so	that	we	might	state	to	the	company’s	members	those	matters	we	are	required	to	state	to	them	in	an	auditor’s	
report and for no other purpose to the fullest extent permitted by law we do not accept or assume responsibility to anyone other than the 
company	and	the	company’s	members	as	a	body	for	our	audit	work	for	this	report	or	for	the	opinions	we	have	formed	
respective responsibilities of directors and auditors
as	explained	more	fully	in	the	statement	of	directors’	responsibilities	statement	set	out	on	page	134	the	directors	are	responsible	for	the	
preparation of the parent company financial statements and for being satisfied that they give a true and fair view our responsibility is to audit and 
express an opinion on the parent company financial statements in accordance with applicable law and international standards on auditing uk 
and	ireland	those	standards	require	us	to	comply	with	the	auditing	practices	board’s	ethical	standards	for	auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and disclosures in the parent company financial statements sufficient to give reasonable 
assurance that the parent company financial statements are free from material misstatement whether caused by fraud or error this includes an 
assessment	of	whether	the	accounting	policies	are	appropriate	to	the	parent	company’s	circumstances	and	have	been	consistently	applied	and	
adequately disclosed the reasonableness of significant accounting estimates made by the directors and the overall presentation of the parent 
company financial statements in addition we read all the financial and nonfinancial information in the annual report to identify material 
inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on or materially 
inconsistent	with	the	knowledge	acquired	by	us	in	the	course	of	performing	the	audit	if	we	become	aware	of	any	apparent	material	
misstatements or inconsistencies we consider the implications for our report
opinion on financial statements
in our opinion the parent company financial statements
• give	a	true	and	fair	view	of	the	state	of	the	company’s	affairs	as	at	30	march	2014
• have been properly prepared in accordance with united kingdom generally accepted accounting practice and
• have been prepared in accordance with the requirements of the companies act 2006
opinion on other matter prescribed by the companies act 2006
in our opinion 
• the	part	of	the	directors’	remuneration	report	to	be	audited	has	been	properly	prepared	in	accordance	with	the	companies	act	2006	and
• the	information	given	in	the	strategic	report	and	the	directors’	report	for	the	financial	period	for	which	the	financial	statements	are	prepared	is	
consistent with the parent company financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters where the companies act 2006 requires us to report to you if in our opinion
• adequate	accounting	records	have	not	been	kept	by	the	parent	company	or	returns	adequate	for	our	audit	have	not	been	received	from	
branches not visited by us or
• the	parent	company	financial	statements	and	the	part	of	the	directors’	remuneration	report	to	be	audited	are	not	in	agreement	with	the	
accounting records and returns or
• certain	disclosures	of	directors’	remuneration	specified	by	law	are	not	made	or
• we have not received all the information and explanations we require for our audit
other matter
we	have	reported	separately	on	the	group	financial	statements	of	royal	mail	plc	for	the	period	ended	30	march	2014
richard wilson senior statutory auditor 
for and on behalf of ernst and young llp  
statutory auditor 
london 
6 june 2014
135
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information 136
royal mail plc 
annual report and financial statements for the year ended 30 march 2014
shareholder information
financial calendar
interim management statement – 22 july 2014 
annual general meeting – 24 july 2014
dividend dates
exdividend date – 2 july 2014 
record date – 4 july 2014 
payment date – 31 july 2014
shareholder information online
the company’s registrars equiniti are able to notify shareholders by 
email of the availability of an electronic version of shareholder information
whenever new shareholder information becomes available such as  
the company’s interim and fullyear results equiniti will notify you by 
email and you will be able to access read and print documents at your 
own convenience
to take advantage of this service for future communications please go 
to wwwshareviewcouk and select ‘shareholder services’ where full 
details of the shareholder portfolio service are provided when 
registering for this service you will need to have your 11digit 
shareholder reference number to hand which is shown on your 
dividend tax voucher share certificate or form of proxy
should you change your mind at a later date you may amend your 
request to receive electronic communication by entering your 
shareview portfolio online and amending your preferred method of 
communication from ‘email’ to ‘post’
shareholder fraud
fraudsters use persuasive and highpressure tactics to lure investors 
into scams they may offer to sell shares that turn out to be worthless 
or nonexistent or to buy shares at an inflated price in return for an 
upfront payment while high profits are promised if you buy or sell 
shares in this way you will probably lose your money
5000 people contact the financial conduct authority fca about 
share fraud each year with victims losing an average of £20000  
if you are approached by fraudsters please tell the fca using the share 
fraud reporting form at wwwfcaorgukscams where you can find out 
more about investment scams you can also call the fca consumer 
helpline on 0800 111 6768 if you have already paid money to share 
fraudsters you should contact action fraud on 0300 123 2040
advisers
corporate brokers and financial advisers
barclays bank plc the north colonnade london e14 4bb
independent auditor
ernst  young llp 1 more london place london se1 2af
trustee of the royal mail share incentive plan
equiniti share plan trustees limited aspect house spencer road 
lancing west sussex bn99 6da 
wwwroyalmailemployeesharescouk 
tel 0800 012 1213
information for investors
information for investors is provided on the internet  
as part of the group’s website which can be found at  
wwwroyalmailgroupcominvestorcentre
investor enquiries
enquiries can be directed via our website or by contacting
registrars
equiniti
aspect house spencer road lancing west sussex bn99 6da 
wwwshareviewcouk 
tel 0871 384 2656 from outside the uk 44 0121 415 7086 
fax 0871 384 2100 from outside the uk 44 01903 698403
calls to this number cost 8p per minute from a bt landline other 
providers’ costs may vary lines are open 830am to 530pm uk time 
monday to friday
registered office
royal mail plc 
100 victoria embankment 
london ec4y 0hq
registered in england and wales 
company number 08680755
corporate websites
information made available on the group’s websites does not and is 
not intended to form part of these results
royal mail the cruciform and the parcelforce worldwide logo are 
registered trade marks of royal mail group limited the gls arrow 
logo is a registered trade mark of general logistics systems germany 
gmbh  co ohg annual report 201314 © royal mail group limited 
2014 all rights reserved 137
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information
forward looking statements
disclaimers
this document contains certain forward looking statements concerning 
the group’s business financial condition results of operations and 
certain of the group’s plans objectives assumptions projections 
expectations or beliefs with respect to these items forward looking 
statements are sometimes but not always identified by their use of 
a date in the future or such words as ‘anticipates’ ‘aims’ ‘due’ ‘could’ 
‘may’ ‘will’ ‘should’ ‘expects’ ‘believes’ ‘intends’ ‘plans’ ‘potential’ 
‘targets’ ‘goal’ or ‘estimates’
forward looking statements involve known and unknown risks 
uncertainties and other factors which may cause the group’s actual 
financial condition performance and results to differ materially from 
the plans goals objectives and expectations set out in the forward 
looking statements included in this document accordingly readers are 
cautioned not to place undue reliance on forward looking statements
by their nature forward looking statements relate to events and 
depend on circumstances that will occur in the future and are 
inherently unpredictable such forward looking statements should 
therefore be considered in light of various important factors that could 
cause actual results and developments to differ materially from those 
expressed or implied by these forward looking statements these 
factors include among other things changes in the economies and 
markets in which the group operates changes in the regulatory regime 
within which the group operates changes in interest and exchange 
rates the impact of competitive products and pricing the occurrence of 
major operational problems the loss of major customers undertakings 
and guarantees relating to pension funds contingent liabilities the 
impact of legal or other proceedings against or which otherwise affect 
the group and risks associated with the group’s overseas operations
all written or verbal forward looking statements made in this 
document or made subsequently which are attributable to the group 
or any persons acting on their behalf are expressly qualified in their 
entirety by the factors referred to above no assurance can be given 
that the forward looking statements in this document will be realised 
actual events or results may differ materially as a result of risks and 
uncertainties facing the group subject to compliance with applicable 
law and regulation the company does not intend to update the forward 
looking statements in this document to reflect events or circumstances 
after the date of this document and does not undertake any obligation 
to do so 138
royal mail plc 
annual report and financial statements for the year ended 30 march 2014
this page is intentionally left blank 100 recycled 100 fsc accredited royal mail plc annual report and financial statements 201314
royal mail the cruciform and the parcelforce worldwide logo are registered trade marks of royal mail group limited 
the gls arrow logo is a registered trade mark of general logistics systems germany gmbh  co ohg  
annual report 201314 © royal mail group limited 2014 all rights reserved


Summary:
 moya greene
chief executive officer
our vision is to be 
recognised as the 
best delivery 
company in the uk 
and across europe
chief executive officer’s review
i am pleased to report another good performance  
we have built a foundation for sustained steady 
performance against a backdrop of significant  
structural and operational change
the group’s operating profit after 
transformation costs increased to £430 
million from £403 million this was due to 
parcel revenue growth more than offsetting 
letter volume declines operating profit 
margin declined from 44 to 42 per cent  
due to the provision for our management 
reorganisation programme profit before 
taxation excluding specific items increased  
to £363 million and our notional earnings  
per share was 263 pence free cash flow 
increased to £398 million primarily due to an 
improved trading performance and reduced 
investment spend
ukpil revenue was up two per cent at £7787 
million parcel revenue increased by seven per 
cent to £3162 million while volumes were 
flat mainly due to the impact of sizebased 
pricing on consumers and small and medium
sized enterprises smes and the industrial 
relations environment at the end of 2013 the 
operating profit margin before transformation 
costs increased as costs grew at a slower rate 
than revenue however the provision for the 
management reorganisation programme 
reduced the operating profit margin after 
transformation costs to 35 per cent
gls delivered revenue growth across all its 
markets total revenue was £1651 million 
and operating profits were £108 million the 
operating profit margin was slightly lower 
than last year at 65 per cent despite 
increasing revenue in germany significant 
competitor investment in capacity and 
increasing subcontractor rates put pressure 
on margins revenue growth was driven by  
a strong performance in italy due to our 
network of owned and franchised operations 
we are making progress with our turnaround 
programme in france 
our vision
our vision is to be recognised as the best 
delivery company in the uk and across 
europe 
we are the leading provider of postal and 
delivery services in the uk gls operates one 
of the largest groundbased deferred parcel 
delivery networks in europe 
a clear strategy
our strategy is based on three priorities
1 being a successful parcels business
2 managing the decline in letters
3 being customer focused
we are focused on delivering efficiency and 
productivity improvements as our mail mix 
changes we must increase the pace at which 
we deliver change – whether large or small –  
if we are to succeed our strategy is also 
underpinned by a focus on managing our 
business successfully which includes people 
customer and financial measures see pages 
16 to 17 for more information
parcels
our parcels strategy key points
• getting the basics right improving our 
first time delivery rates through 
initiatives like delivery to neighbour
• getting the technology right including 
making it easier for our customers to 
access our networks and rolling out 
flexdelivery in gls
• expanding and automating our networks 
detailed planning for parcels systems 
upgrades and automation in the core 
royal mail network expanding the 
geographic footprint of gls through 
organic growth and selective acquisitions
ukpil collects and delivers parcels and letters 
predominantly through the royal mail core 
network and parcelforce worldwide we offer 
deferred express and courier services across 
a number of segments over recent years 
eretailing has driven parcel volume increases 
in the uk competition is intense and capacity 
is increasing we are focused on maintaining 
our leading position by becoming increasingly 
flexible and efficient and offering additional 
service features and options while our 
volumes are driven largely by growth in 
ecommerce we do not benefit from growth 
in all areas of eretailing for example we do 
not operate in all online segments and are 
underrepresented in some areas such as 
returns for clothing and shoes we are now 
focusing on faster growing market segments 
08
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 we are increasing the proportion of items we 
can carry costeffectively on foot enabled 
by trolleys 
our parcel customer base is large and diverse 
around a quarter of our domestic parcel 
revenue excluding parcelforce worldwide 
is generated by large and mediumsized 
companies whilst approximately three 
quarters is generated by consumers 
microsmes and smes our single largest 
parcel customer accounts for approximately 
six per cent of ukpil parcel revenue changes 
to its minimum order for free delivery and the 
expansion of its own delivery capabilities are 
expected to reduce available volume however 
we believe the breadth of our customer base 
and our strategy of supporting smes to grow 
through ecommerce means we are not as 
exposed to the actions of our largest 
customers as some of our competitors
in april 2013 we introduced sizebased 
pricing for consumers and smes to ensure 
that parcels are delivered through the most 
appropriate uk network this approach has 
driven significant growth in revenue while 
parcel volumes were flat declines in 
consumer volumes were greater than 
expected we recognised this quickly and  
took action to fix it – expanding small parcels 
dimensions in october 2013
we are also making it easier for customers to 
receive and return parcels royal mail is to 
pilot sunday afternoon opening at around 100 
of its delivery offices across the uk later this 
summer we will also trial sunday parcel 
deliveries later this summer to addresses 
within the m25 motorway parcelforce 
worldwide will also launch a sunday delivery 
service in june for online shoppers through 
participating eretailers 
we have added tracking to all contract returns 
services so customers can check whether 
items have gone back to the seller and the 
seller can see when an item is coming 
working with the post office royal mail has 
launched local collect – the uk’s largest click 
and collect network receiving a parcel at 
home is still the uk consumer’s preferred 
method of delivery if this is not convenient 
customers can choose one of around 10500 
participating post offices as a parcel collection 
point we have completed the expansion of 
the capacity of parcelforce worldwide with a 
domestic hub opened in chorley in 2013 and 
eleven depots newly opened or upgraded 
across the uk in the financial year
delivery companies are increasingly 
technology companies as they seek to provide 
improved tracking and delivery solutions  
in 2011 ukpil began a five year it 
transformation programme one objective  
of which was to support the delivery of our 
parcels strategy we completed the issue of 
more than 74000 handheld scanners to our 
postmen and women in time for christmas 
2013 looking forward key areas of 
investment will provide additional tracking 
systems including expanding barcoding and 
sms messaging
gls is a strategically important part of royal 
mail group it provides geographical 
diversification of our earnings its experience 
and focus on parcel delivery means it is a core 
component of royal mail’s vision of being 
recognised as the best delivery company  
in the uk and across europe
businesstobusiness b2b parcel customers 
form gls’ core market representing more 
than 70 per cent of all parcel volumes it 
delivered in the year it is mainly active in the 
deferred parcels segment – the least time
sensitive type of delivery 94 per cent of gls’ 
revenue came from deferred parcels
gls continued its introduction and 
enhancement of flexdelivery this is a 
monitoring and tracking service that allows 
customers to change the delivery time and 
location of parcels flexdelivery is currently 
available in ten markets with plans to roll it 
out to more countries it is also available for 
crossborder traffic in selected markets 
gls operates through whollyowned and 
partner companies in 37 countries and  
nation states across europe with strategies 
developed based on the dynamics of each local 
market however every business focuses  
on reliable quality with a strong customer 
emphasis optimising the use of technology  
to provide the services and flexibility 
customers expect
letters
our letters strategy key points
• managing the structural decline in the 
letters market by adding value to 
customer mailings rolling out mailmark™ 
barcoding technology and promoting the 
value of marketing mail 
• calling on ofcom to address the potential 
threat to the economics of the universal 
service created by the uncertainty 
caused by its competition act 
investigation access pricing policy review 
and the unfettered growth of direct 
delivery competition 
• leveraging the benefits of our 
investments in letter automation by 
increasing the number of letters sorted 
into delivery order and optimising mail 
handling techniques
our letters performance was at the better end 
of our expectations revenue was down two 
per cent addressed letter volumes declined by 
four per cent during the year the decline in 
addressed letter volumes moderated in the 
second half this was due to strengthening 
economic conditions alongside oneoff 
impacts such as energy companies writing to 
customers about price rises in october 2013 
and an increase in stamped mail volumes in 
december 2013 including christmas cards 
in march 2014 we began the rollout of 
mailmark™ which provides barcode 
technology and online reporting for machine
readable business advertising and publishing 
mail mailmark™ will deliver a number of 
additional benefits for customers including 
timely reporting on performance and 
predicted delivery times and more accurate 
and transparent billing 
marketing mail revenue was £1111 million 
research has demonstrated that using 
marketing mail in combination with other 
media significantly increases communications 
effectiveness our marketreach business aims 
to prove and promote the commercial value of 
mail and enables customers to realise that 
value within their own businesses these 
additional services complement the extensive 
uk delivery network which royal mail uses for 
the distribution of customers’ marketing mail
as we seek to win business we are flexing our 
services to provide what customers want 
during march 2014 we were awarded a 
significant contract to collect and deliver  
mail for 14 councils across london this 
collaborative agreement where mail services 
have been procured centrally in order to gain 
efficiencies is the first of its kind for royal 
mail and the councils 
regulation
we are proud to deliver the universal service 
but the sustainability of the universal service 
depends on royal mail being able to use 
revenue from easytoserve urban areas  
to cover the cost of a nationwide network 
capable of serving all addresses at a 
uniform price
on 10 january 2014 we announced a 
number of changes to royal mail’s access 
contracts the changes were intended to help 
secure the provision of the universal service 
against the backdrop of a continuing decline in 
letter volumes following a complaint by tnt 
post uk ofcom opened an investigation into 
some of the access contract changes on 
21 february 2014 the price changes subject 
to ofcom’s investigation are suspended 
until the outcome of this investigation on 
9 april 2014 ofcom confirmed that it would 
09
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information chief executive officer’s review continued
use its powers under the competition act 
1998 to investigate the complaint 
the planned changes to access contracts are 
an important part of our commercial response 
to changing market conditions including the 
expansion of direct delivery
1
 competition we 
believe tnt post uk’s complaint is unfounded 
we believe the changes are fair reasonable 
and fully within the guidance provided by 
ofcom
2
 we are cooperating fully with ofcom 
to ensure the investigation is completed as 
quickly as possible so that our planned 
changes can be put into effect 
on 9 april 2014 following the end of the 
reporting period ofcom also announced a 
policy review of the access conditions imposed 
on royal mail in march 2012 and ofcom’s 
guidance on those conditions ofcom has  
said it will complete this by the end of 2014 
we are proactively engaging with ofcom on 
this review 
tnt post uk now has direct delivery 
operations in much of london and in 
manchester and in liverpool it has stated its 
intention to take its own direct delivery 
service to a number of other cities with the 
aim of covering around 42 per cent of 
addresses by 2017 tnt post uk can 
cherrypick easytoserve urban areas 
delivering easytohandle post to homes less 
frequently than royal mail and to no defined 
quality standard royal mail is required to 
deliver sixdaysaweek overnight 
throughout the whole country to stringent 
quality standards and at a uniform affordable 
tariff moreover we are also required to 
deliver any items tnt post uk does not 
consider economic to deliver itself if tnt 
post uk is successful in delivering its stated 
objectives this could threaten the 
fundamental economics of the universal 
service based on our estimates of the impact 
of tnt post uk’s publiclystated plans this 
could reduce royal mail revenue by over 
£200 million in 201718
3
 at the same time 
our ability to reduce costs to offset this would 
be limited by our obligations to deliver the 
universal service
our analysis is that without timely 
intervention from the regulator direct delivery 
competition will have a serious impact on the 
sustainability of the universal service ofcom 
has stated that an ebit margin range of 
between five and ten per cent for royal mail’s 
reported business is appropriate and 
consistent with the need for royal mail to earn 
a reasonable commercial rate of return
4
 with 
our proposed access price changes remaining 
suspended and unfettered direct delivery 
rollout there is a reasonable prospect that 
this level of margin may never sustainably  
be achieved 
we do not believe the current situation serves 
the best interests of consumers ofcom has 
acknowledged in a recent guidance document 
its duty powers and willingness to act to 
protect the universal service if required
5
 
however effective regulatory action could 
take some time to implement meanwhile the 
competition act investigation and ofcom’s 
access policy review may create a significant 
period of uncertainty in the uk postal market 
this uncertainty combined with our universal 
service commitments means our ability to 
respond commercially is constrained at the 
same time direct delivery operators are 
continuing to expand their operations this is 
why we are preparing a regulatory submission 
calling on ofcom to take action now and carry 
out a full review of direct delivery such a 
review would be in line with ofcom’s primary 
duty to secure the provision of the universal 
service it would also allow for full 
1 
direct delivery refers to a situation where other postal operators convey mail from customer to recipient entirely using their own delivery network and not royal mail 
2
 ofcom ‘endtoend competition in the postal sector final guidance on ofcom’s approach to assessing the impact on the universal postal service ’ of 27 march 2013 and ‘securing 
the universal postal service decision on the new regulatory framework’  ofcom statement of 27 march 2012
3 
based on tnt post uk’s stated ambition of 423 per cent delivery point coverage in 2017 expected addressed inland letter market volumes of approximately 11 billion items in 
201718 using royal mail’s forecast range of a 46 per cent per annum decline in addressed letter market volumes our estimate that tnt post uk achieves a 20 per cent local market 
share in areas where it operates in 201718 and an annual rpi increase in our average unit revenue per downstream access item
4 
‘securing the universal postal service decision on the new regulatory framework’ ofcom statement of 27 march 2012 paragraph 547
5 
‘final guidance on ofcom’s approach to assessing endtoend competition’ ofcom statement of 27 march 2013
a year of achievement
royal mail and post office announce 
launch of local collect the uk’s 
largest click and collect network  
may 2013
july 2013 
andy murray’s historic wimbledon win  
celebrated with special stamps 
£70 million
initiative announced to improve the value 
of business mail through mailmark™ 
barcode technology 
july 2013
pensions reform confirmed following 
consultation with plan members 
september 2013
april 2013 may 2013 june 2013 july 2013 august 2013 september 2013
10
royal mail plc 
annual report and financial statements for the year ended 30 march 2014 6 
not adjusted for force majeure
7 
this is not adjusted for force majeure in 201213 the adjusted for force majeure result was 925 per cent including external events such as snow volcanic ash clouds and the 2012 
london olympics
8 
an internal measure for all retail parcel products in the royal mail core network
9 
this has been restated from 486400 due to the addition of door to door complaints these were previously tracked separately and have been integrated to improve oversight of 
complaints across the business 
consideration of what regulatory interventions 
may be necessary at the same time we are 
raising the issue with hm government and are 
seeking a legislative amendment that would 
require a review of direct delivery if ofcom 
does not initiate one in a timely manner
customers
we have a trusted brand our most recent 
corporate image report conducted by ipsos 
mori in november 2013 indicated that 71 per 
cent of customers believe royal mail’s services 
are good value for money 
our own research indicates that our mean 
business customer satisfaction score is 75 
this is an increase on 74 last year and 70 in 
201112
 see kpis pages 18 to 19
it is strategically important that we maintain 
this customer loyalty
our regulated quality of service specifications 
are amongst the highest of any major 
european country 
i am delighted to report that we exceeded our 
regulatory targets for both first and second 
class mail in 201314 932
6
 per cent of first 
class mail was delivered the following day 
2013 917
7
 per cent and 989 per cent of 
second class mail was delivered within three 
days of posting 
 see kpis pages 18 to 19
we have delivered a significant improvement 
on prior years against our internal composite 
parcels measure
8
 we achieved a performance 
of 951 per cent meeting our target 
 see kpis pages 18 to 19
overall complaints were down six per cent on 
last year 2013 489900
9
 2014 458700  
improving our performance in this important 
area is a key strategic focus 
 see kpis pages 18 to 19
four issues account for the majority of 
complaints redirection misdeliveries 
redeliveries and ‘something for you’ cards 
our performance has improved for three of 
these complaints the exception being 
‘something for you’ cards our delivery to 
neighbour initiative is a key focus as we seek 
to improve the effectiveness of our delivery 
operations and reduce redeliveries recent 
ofcom research found that 94 per cent of 
customers were satisfied with this service 
transformation and cost control
royal mail is continuing to transform as we 
seek to mitigate falling letter volumes and 
manage increasing parcel volumes in an 
increasingly competitive parcels market as a 
matter of course we look to organise similar 
tasks into single areas to avoid unnecessary 
duplication since 2003 more than 50000 
people have left the uk business with 12000 
leaving in the last four years on 25 march 
2014 we launched a consultation with our 
unions on a proposal to achieve a net 
reduction of 1300 roles mainly within our 
managerial population we recognise that this 
change is tough on our people but we must 
continuously improve our efficiency this is a 
key way to sustain the universal service and 
secure good quality jobs for our people 
as we have said before the initial phase of our 
transformation is largely complete almost all 
of our delivery offices have now commenced 
or completed modernisation we continue to 
drive improvements in the network to be 
admission to trading on the london stock  
exchange £490 million of free shares in  
royal mail allocated to approximately  
150000 employees  
october 2013
december 2013 
winning designs from  
children’s competition feature  
on christmas stamps 
£2 million
fundraising target met including matched 
giving for our charity of the year prostate 
cancer uk 
march 2014
new industrial relations framework 
approved by cwu members  
february 2014
october 2013 november 2013 december 2013 january 2014 february 2014 march 2014
11
royal mail plc  
annual report and financial statements for the year ended 30 march 2014
strategic report governance financial statements other information more productive and effective we are now 
focusing on standardising processes and 
embedding examples of best practice 
relatively small changes implemented across 
our business can deliver significant efficiency 
benefits we will be launching a nationwide 
campaign to ensure delivery to neighbour is 
deployed consistently where appropriate 
improving our rate of first time delivery is a 
key strategic focus across our operations 
our expansion programme in parcelforce 
worldwide is now complete we are continuing 
to plan for automation in the royal mail 
core network 
the productivity improvement of 17 per cent 
was disappointing whilst we reduced collections 
processing and delivery hours by 29 per cent 
the industrial relations environment meant  
we were unable to extract more hours to 
compensate for the impact on workload 
associated with flat parcel volumes most of royal 
mail’s nonpeople costs are subject to inflationary 
pressures this year we were particularly 
successful in addressing this nonpeople costs 
were down by three per cent in ukpil
our people
following our recent flotation the 
overwhelming majority of our uk employees 
are also shareholders in our company free 
shares gave our people a direct stake in the 
company and its future success each eligible 
fulltime employee who participated in the 
free shares offer now has 729 shares  
they along with all shareholders will receive 
a final dividend in july 2014 subject to 
shareholder approval 
in december 2013 we announced an 
agreement in principle with the 
communication workers’ union cwu 
this was approved by its members in 
february 2014 the agreement is wide 
ranging in its coverage and focused in its 
support of the business it represents a joint 
commitment to radically improve industrial 
relations and create a cando culture in the 
interests of customers employees and the 
company we are focused on bedding down 
this agreement to ensure that we provide a 
stable and unique platform for problem
solving and for jointly moving the business 
forward at a faster pace
outlook
our key value drivers of single digit revenue 
growth margin expansion and underlying  
free cash flow growth remain the objectives 
for the group for the 201415 financial year 
however while we are satisfied with our 
progress in 201314 we are facing increasing 
challenges in the parcels and letters markets 
in the uk 
we intend to pursue a progressive dividend 
policy having regard to the normalised 
earnings progression of the group as the 
regulatory position on direct delivery becomes 
clearer the board would expect to provide 
more clarity on our dividend policy 
royal mail in the private sector
we must continue to deliver change at an 
increasing pace to meet the challenges of the 
changing mix of mail the liberalised uk postal 
market intense parcel competition and a 
need to become more productive and efficient 
royal mail’s transformation is being delivered 
whilst maintaining our high quality of service 
levels i would like to thank all my colleagues 
for the fortitude and conscientiousness with 
which they have embraced these changes 
i am confident that with their continued 
diligence and support we will be able to make 
ongoing progress in delivering our strategy
moya greene
chief executive officer 
6 june 2014
chief executive officer’s review continued
12
royal mail plc 
annual report and financial statements for the year ended 30 march 2014