royal mail group limited
annual report and financial statements  
201213
royal mail group limited  annual report and financial statements 201213 i
 basis of presentation
special purpose financial statements
as previously announced post office limited was transferred from under the ownership of 
royal mail group limited to become a fellow subsidiary undertaking of royal mail holdings plc 
on 1 april 2012 one week into the 201213 reporting year accordingly to enable comparative 
analysis special purpose consolidated financial statements for royal mail group limited 
excluding post office limited have been prepared for 201213 201112 and 201011
adjusted 52 week basis
the 201213 financial year was a 53 week year and to provide meaningful comparisons 
revenue and operating costs are also presented on an adjusted 52 week basis 
the adjustment removes the 53rd week’s revenue and incremental costs associated with 
that revenue
general logistics systems gls reports results for a 52 week year ending 31 march 
no adjustments have been made for gls
likeforlike revenue and cost growth 
in addition to the 52 week adjustment the impact of translating gls’s euro results into 
sterling using different average exchange rates has also been eliminated to permit revenue 
and cost growth rates to be calculated on a likeforlike basis 
the average rates for 201213 are £1  €12262 compared with £1  €11572 for 201112 – 
a weakening in the euro of six per cent had last year’s gls revenue of €1808 million 
reported as £1562 million been translated at the 201213 average rate it would have been 
reported as £1474 million or £88 million lower the translational impact of foreign currency 
on ukpil’s revenue is some £2 million which is not material and therefore has not been 
included in the likeforlike calculations
the transactional cash impact of foreign currency is not eliminated there are natural hedges 
in the group to cover this exposure and the impact on operating profit is estimated as £3 million
ultimate parent 
royal mail holdings plc is the immediate and ultimate parent of royal mail group limited and 
consolidated financial statements for the 53 weeks ending 31 march 2013 will be prepared for 
royal mail holdings plc a summary of the group structure at 31 march is shown below
royal mail holdings plc
post ofﬁce limited
royal mail 
group limited
royal mail
investments limited
royal mail
estates limited
general logistics
systems bv
 royal mail group limited and its main subsidiaries annual report and financial 
statements 201213
contents
overview
who we are 01
financial and business performance highlights 04
chairman’s statement 05
chief executive officer’s review 07
strategy
our strategy 10
key performance indicators 12
performance
financial performance overview 14
financial review 16
uk parcels international  letters ukpil 21
general logistics systems gls 23
business risks 24
corporate responsibility 28
governance
our board of directors 34
directors’ report 37
corporate governance 38
directors’ remuneration report 46
financial statements
consolidated income statement  56
consolidated statement of comprehensive income  57
consolidated statement of cash flows 58
consolidated balance sheet 59
consolidated statement of changes in equity 60
notes to the consolidated financial statements 61
significant accounting policies 117
group five year summary unaudited 124
statement of directors’ responsibilities in relation to the  
group financial statements 125
other information
forward looking statements 127
corporate information 128
go online for  
more information
this icon is used to indicate 
reporting against a kpi 
throughout the document
case studies
information key  01
overview
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
who we are
as the sole provider of the universal service in the uk 
royal mail group delivers a sixdaysaweek oneprice
goesanywhere postal service to more than 29 million 
addresses across the uk 
royal mail is the preferred delivery company in the uk 
we are a vital link connecting communities businesses 
and customers in 201213 we collected and delivered 
more than one billion parcels and 14 billion addressed 
letters across the country
the transformation of royal mail group is 
helping to ensure the sustainability of the 
universal service by putting our company on 
a sound financial footing our strategy is to 
capitalise on our strength in delivery to grow 
our presence in the dynamic parcels market 
thereby maintaining a financially viable 
universal service 
delivering increasing numbers of parcels 
through our combined uk network and 
capturing the benefits of the new regulatory 
regime will help us to mitigate the financial 
impacts of structural decline in the letters 
market addressed volumes have fallen from 
around 63 million items a day in 201112 to 
58 million items in 201213
achieving our strategic priorities together 
with becoming a more customerfocused 
company underpins our vision to be the 
most successful delivery company in the uk 
driving sustainable profitable growth will 
allow us to obtain ongoing access to external 
capital build a sustainable business and 
continue to provide as many good quality 
jobs as we can for our people
we are making good progress however 
more remains to be done to ensure we can 
complete the transformation of our business 
from one that predominantly handles letters 
to one that handles an increasing number 
of parcels
five year group revenue £m
reported 53 
weeks 2013
adjusted 52  
weeks 2013
reported 52 
weeks 2012
reported 52 
weeks 2011
reported 52 
weeks 2010
reported 52 
weeks 2009
9279 9146 8764 8415 8547 8695
five year group operating profit after transformation costs £m
reported 53 
weeks 2013
adjusted 52  
weeks 2013
reported 52 
weeks 2012
reported 52 
weeks 2011
reported 52 
weeks 2010
reported 52 
weeks 2009
440 403 152 18 147 101
five year group free cash inflowoutflow £m
reported 53 
weeks 2013
adjusted 52  
weeks 2013
reported 52 
weeks 2012
reported 52 
weeks 2011
reported 52 
weeks 2010
reported 52 
weeks 2009
334 334 154 246 390 493 overview
02
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
who we are continued
ukpil
royal mail group through its core uk business 
uk parcels international  letters ukpil is 
the uk’s sole provider of the universal service 
it is also a leading uk provider of express 
parcels services through parcelforce worldwide 
ukpil provides letter and parcel services to 
and from countries around the world under 
reciprocal arrangements with other overseas 
postal administrations it is also responsible 
for the design and production of the uk’s 
stamps and philatelic products
through marketreach ukpil provides a 
fullservice marketing mail offering and helps 
businesses derive more value from their 
direct mail 
ukpil’s transformation programme is one of 
the largest undertaken in the uk in recent 
history the programme is about making our 
combined ukpil core network which handles 
over 90 per cent of the parcels and all of the 
letters we deliver more competitive and 
effective we are delivering benefits 79 per 
cent of letters are now sequenced to delivery 
point we are progressing with delivery 
revisions with modernisation underway or 
completed in 860 delivery offices since the 
programme began representing more than 
half of walks 
gls
general logistics systems gls is one of the 
largest groundbased deferred parcel delivery 
service providers in europe it is a pan
european business providing parcel and 
express services as well as logistics solutions 
the gls network covers 37 countries through 
wholly owned and partner companies is 
globally connected through contractual 
agreements and acts as the group’s gateway 
to europe opening up new opportunities
revenue by business and market £m adjusted 52 weeks 2013
business segmentproduct parcels
marketing  
mail
letters  
 other
mail
1
total
uk parcels international  letters 
ukpil 2933 1118 3582 7633
general logistics systems gls 1498   1498
other   15 15
group 4431 1118 3597 9146
percentage of revenue by market adjusted 52 weeks 2013
group  
revenue 
parcels 48
letters  other mail
1
40
marketing mail 12
1
  includes letters publishing data and philatelic 03
overview
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
group legal structure 
royal mail holdings plc is directly owned by 
hm government and is the ultimate parent 
company of royal mail group limited the 
group primarily operates within the united 
kingdom including a number of subsidiaries 
associates and a joint venture it also has a 
presence in most european countries mainly 
through general logistics systems
the basic legal structure of the group as at 
25 march 2012 is shown in diagram one
on 1 april 2012 post office limited was 
transferred from under the ownership of 
royal mail group limited to become a direct 
subsidiary of royal mail holdings plc the 
revised group structure at this date is as 
shown in diagram two
further details on the principal subsidiaries 
are shown in note 30 to the group 
financial statements
25 march 2012 – preseparation
diagram one
royal mail holdings plc
royal mail group limited
post ofﬁce limited royal mail 
estates limited
general logistics systems bv
royal mail investments limited
1 april 2012  postseparation
diagram two
royal mail holdings plc
royal mail group limited post ofﬁce limited
royal mail 
estates limited
general logistics systems bv
royal mail investments limited overview
04
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial and business  
performance highlights
our financial performance
revenue and volume
•  reported group revenue was £9279 million 
on a likeforlike basis it increased by five 
per cent reported group parcel revenue 
increased to £4477 million with growth 
of nine per cent on a likeforlike basis 
parcels remain a major contributor to 
group revenue accounting for almost 
half 48 per cent
• ukpil reported revenue was £7766 million 
up six per cent on a likeforlike basis ukpil 
parcel revenue increased by 13 per cent 
and volumes increased five per cent on a 
likeforlike basis reported parcel volumes 
were 1081 million items compared with 
1016 million items in 2012 
1
  marketing mail numbers are calculated using statistical 
analysis from surveys in order to estimate how our mail 
is being used data services and redirections were added 
into the marketing mail portfolio in 201213 numbers 
have been restated accordingly
key financial highlights
group
reported 
53 weeks 
2013
adjusted 
52 weeks 
2013
reported 
52 weeks 
2012
revenue £m 9279 9146 8764
operating profit after transformation costs £m 440 403 152
operating profit margin after transformation  
costs  47 44 17
free cash inflow £m 334 na 154
net debt £m 906 na 1186
revenue £m
operating profitloss after  
transformation costs £m
business unit
reported 
53 weeks 
2013
adjusted 
52 weeks 
2013
reported 
52 weeks 
2012
reported 
53 weeks 
2013
adjusted 
52 weeks 
2013
reported 
52 weeks 
2012
uk parcels 
international  letters 
ukpil 7766 7633 7189 331 294 33
general logistics 
systems gls 1498 1498 1562 101 101 128
other businesses 15 15 13 8 8 9
group 9279 9146 8764 440 403 152
likeforlike growth rates 
revenue addressed volumes
parcels 9 4
– ukpil 13 5
– gls 2 1
letters 3 8
• within ukpil reported letter revenue grew 
to £4787 million including marketing mail 
likeforlike growth of three per cent was 
achieved addressed letter volumes declined 
eight per cent on a likeforlike basis which 
was in line with expectations within letter 
revenue reported marketing mail revenue 
was £1135 million
1
 this was a two per 
cent increase on a likeforlike basis
• at gls reported revenue was four per cent 
lower at £1498 million due to the 
weakness of the euro against the pound 
however on a likeforlike basis revenue 
increased by two per cent to €1837 million 
volumes increased one per cent on a 
likeforlike basis
operating profits and margins after 
transformation costs
• reported group operating profit increased 
to £440 million the operating profit margin 
increased from 17 per cent to 44 per cent 
on a likeforlike basis 
• ukpil generated a reported operating profit 
of £331 million and its operating profit 
margin increased from 05 per cent to 
39 per cent on a likeforlike basis the uk 
business is now the biggest contributor to 
group operating profit
cash flow 
• ebitda before transformation costs was 
£915 million £665 million was invested 
back into the business which was mainly 
transformationrelated
•  free cash inflow of £334 million was 
generated mainly due to our improved 
trading performance as a result net debt 
decreased by £280 million to £906 million
modernisation
• delivery and processing productivity 
increased by 17 per cent across the core 
network in addition nine mail centres were 
closed in the year in total 25 mail centres 
have closed to date while four have been 
opened since modernisation began 
representing a 30 per cent net reduction
• 79 per cent of letters are now sequenced to 
delivery point 05
overview
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
chairman’s statement
we have a clear strategy in 
place to meet successfully 
the challenges we face in 
our changing marketplace
donald brydon 
chairman
a year of further significant progress
i wrote last year about the company’s 
considerable improvement i am pleased to 
announce a year of further progress we have 
reported a stronger financial performance 
helping to safeguard the continued delivery  
of the universal service secure the provision 
of longterm good quality employment and 
create new opportunities for the group  
we have a clear strategy in place to meet 
successfully the challenges we face in our 
changing marketplace
moya greene our chief executive officer  
is leading the business with considerable 
energy and focus her commitment to deliver 
our business strategy and her determination 
to put the company in a position where it is 
strong enough to access external capital is one 
of the key drivers of our continuing success
our changing business
we have delivered a robust financial and 
operational performance behind the 
numbers lies one of the largest transformation 
programmes in the uk in recent history 
it is greatly to the credit of the senior 
management team and the union leadership 
that this transformation has been carried out 
with a limited impact on our quality of service 
– especially when the standards set for royal 
mail are the highest of any major european 
country see page 29 for more information 
on our quality of service performance 
the changing communications market  
has significant implications for our future 
letters will always be an important part of 
our business however it has been clear  
for some years that we need to diversify  
our revenue base to ensure the continued 
provision of the universal service 
the vast majority of the letters we deliver  
are now sorted and sequenced automatically 
our delivery revisions programme is in place 
ensuring colleagues are able to manage the 
demands of delivering increasing numbers of 
parcels as part of their daily rounds our 
progress is testament to the commitment  
of our people to delivering this difficult 
wholesale change to the way they work
royal mail is adapting to keep pace with this 
competitive market we need ongoing access 
to external capital i am confident that our 
company is capable of rising to the challenge
some key developments
the last two years have seen some of the 
most important legislative and regulatory 
changes with respect to postal services in 
the group’s history 
in april 2012 ofcom implemented a new 
regulatory framework we welcomed this 
change it recognises that the universal 
service provider must be able to earn  
a reasonable commercial rate of return  
we are harnessing the benefits of the new 
framework to secure our financial future 
today approximately five per cent of royal 
mail revenue is subject to direct price control
ofcom has recently concluded its review  
of postal users’ needs in which it ruled  
out the need for any major changes to the 
universal service we also welcomed the 
recent clarification by the regulator of the 
circumstances in which it would be minded  
to intervene in direct delivery competition in 
order to protect the viability of the oneprice
goesanywhere service 
the pension transfer in april 2012 gave our 
colleagues who are members of the royal mail 
pension plan considerably more security with 
respect to the pension benefits they had 
earned up until 31 march 2012 it also 
immediately removed the obligation to make 
cash payments of around £300 million every 
year to address the pension deficit of course 
the cost of continuing to provide one of the 
largest defined benefit pension schemes in the 
uk is material and growing see page 75 for 
more information 
at the same time as the pension transfer post 
office limited formally separated from royal 
mail group limited royal mail and the post 
office have signed a longterm commercial 
agreement to ensure the two companies will 
continue to work together in the future with 
its extensive network and its important place 
in rural communities the post office is a 
natural partner for royal mail as we serve 
communities across the uk overview
06
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
chairman’s statement continued
safety
we have made progress on tackling the  
threat dangerous dogs pose to our people 
last year i announced the launch of an 
independent judgeled inquiry to gather 
evidence on this issue and make 
recommendations for action in 2012  
sir gordon langley published his report 
making clear the necessity for government 
action and proposals to protect postmen  
and women from this unacceptable hazard 
in february 2013 i welcomed the 
government’s announcement that it is 
planning to extend legal protection over dog 
attacks to cover those that take place on 
private property since the year end this 
legislation has been put firmly on the agenda 
through the announcement of the antisocial 
behaviour crime and policing bill in the 
queen’s speech in may 2013 following the 
langley report’s recommendations we are 
establishing a process where attacks on our 
people are more likely to be the subject of 
legal action in addition we will take a more 
robust approach to the suspension of deliveries 
where dogs pose a danger to our postmen 
and women 
our board 
the board was pleased to welcome two new 
nonexecutives to royal mail during the year 
john allan was appointed a non executive 
director of the company in january 2013 
john brings a wealth of strategic financial and 
marketing experience including an indepth 
knowledge of the postal sector in march 
2013 we announced the appointment of  
jan babiak as a non executive director  
jan’s extensive it and regulatory experience 
will further strengthen our board 
in september 2012 dame jane newell obe 
stepped down as chair of royal mail pension 
trustees limited after eight years in the role 
all involved in the pension fund have cause to 
be grateful to her we welcomed her 
successor joanna matthews earlier in the 
year and are delighted to see someone with 
such a wealth of experience and knowledge 
take on this important role 
our role in the community
the business has continued to develop  
and maintain its role in national culture  
and heritage last year i confirmed that  
royal mail had granted a lease to give the 
british postal museum and archive bpma  
a new home in calthorpe house the new 
exhibition centre on this site continues  
to progress
i congratulate the bpma team on securing 
national lottery funding to support the 
creation of their brand new ‘mail rail’ visitor 
attraction which will help bring royal mail’s 
historic role in the life of the capital to a wider 
national and international audience
our place in serving the community goes 
beyond delivering the universal service 
across the uk our people play a crucial role 
both in support of their communities and 
charitable organisations this year our 
colleagues chose to appoint prostate cancer 
uk as the group’s charity partner through 
our colleagues’ fundraising activities and 
matched funding from the company we  
have already raised approximately £800000 
for this very important cause we hope  
to raise at least £2 million during our  
twoyear partnership
royal mail played an important role in helping 
the uk to support the london 2012 olympic 
and paralympic games the games saw royal 
mail at its best enhancing our reputation and 
position in uk culture our operational teams 
especially in london faced severe challenges 
in delivering to our customers but with careful 
planning and dedication continued to deliver 
to our high service standards our gold post 
boxes provided a means for local communities 
to mark the success of their athletes so too 
did the wonderful olympic and paralympic 
stamps which proved very popular with the 
public and the philatelic community 
thank you
we have delivered a great deal the year ahead 
is an important one for royal mail and i believe 
we are now in a good position to build on our 
substantial achievements
i join our chief executive officer in expressing 
my gratitude to the secretary of state for 
business innovation  skills vince cable 
minister of state for business and enterprise 
michael fallon and all their colleagues in 
government for their continued support  
most of all i would like to pay tribute to all  
my colleagues for their loyalty commitment 
and conscientiousness 
donald brydon 
chairman 
royal mail group limited 
31 july 2013 overview
07
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
chief executive officer’s  
review
our vision is to be the 
most successful delivery 
company in the uk
moya greene 
chief executive officer
we are reporting a strong financial 
performance our strategy is delivering 
the transformation of royal mail is 
well underway
our key metrics are moving in the right 
direction reported group operating profit after 
transformation costs grew from £152 million 
to £440 million due to cost control and 
improved revenue generated by parcel volume 
and letter revenue growth our operating profit 
margin after transformation costs increased 
to 44 per cent on a likeforlike basis free 
cash inflow increased from £154 million to 
£334 million mainly generated by trading 
parcels continue to be a major contributor 
to group revenue at 48 per cent 
just over three years ago our core uk 
business had significant cash outflows 
now despite the challenging uk economic 
conditions ukpil contributes the majority of 
group operating profit its reported operating 
profit margin after transformation costs has 
increased to 39 per cent on a likeforlike 
basis as the transformation of ukpil gathers 
pace we are harnessing the benefits of the 
new regulatory framework introduced in the 
uk in april 2012 today approximately five per 
cent of royal mail revenue is subject to direct 
price control in short we are delivering a 
stronger commercial performance and our 
prices are now closer to the european median
gls our groundbased european parcels 
carrier delivered a resilient performance 
difficult trading conditions in germany 
and france were mitigated to some extent 
by improved trading performance in 
other countries 
delivering our strategy
our vision is to be the most successful delivery 
company in the uk royal mail is already a 
market leader by revenue in both the uk 
parcels and letters markets gls is an 
established groundbased parcels player 
in all its markets this means we are well 
positioned to deliver our strategic priorities
1 being a successful parcels business
2 managing the decline in letters and
3 being customerfocused
we are creating a commercial customer
focused company offsetting addressed letter 
declines with revenue growth from parcels 
which is expected to drive profitable growth 
with the continued support and engagement 
of our people we can deliver these objectives 
to help to ensure that we are financially 
successful and able to access the capital 
needed to deliver the ongoing transformation 
of our business 
being a successful parcels business
we operate in a dynamic and growing parcels 
market during the year we handled a 
reported total of 1461 million parcels 
2012 1391 million through our three parcel 
networks in the uk and continental europe 
for more information on our parcels strategy 
see page 21
we remain well positioned to benefit from 
significant growth in online retailing in the uk 
where royal mail is the biggest overall parcel 
delivery player by revenue a recent survey
1
 
found that 76 per cent of people in the uk are 
more likely to use a particular online retailer 
again if they deliver through royal mail
over 90 per cent of the ukpil parcels that we 
handle including universal service obligation 
uso parcels are delivered by our core uk 
network through which we also handle letters 
in the last financial year this combined network 
handled reported volumes of 1010 million 
parcels 2012 950 million with quality being 
a key consideration this focus on quality 
is important in a market where businesses 
and consumers rightly demand high 
service standards
parcelforce worldwide our uk express parcels 
delivery business handled reported volumes 
of 71 million items during the year 2012 
66 million about seven per cent of our ukpil 
parcel volumes it benefits from a very high 
quality of service performance and is poised 
to deliver a significant increase in the volumes 
it handles in the years to come in october 
2012 we announced a £75 million fouryear 
investment programme for parcelforce 
worldwide as we expand our position 
in the uk express parcels market 
gls carried 380 million parcels in 201213 
2012 375 million its parcel volumes grew 
by one per cent during the year with growth 
in both domestic and international volumes
1
  hall  partners delivery matters 2013 overview
08
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
chief executive officer’s review continued
managing the decline in letters
ukpil’s letters business is key to our financial 
success generating £4787 million including 
marketing mail in reported revenue during 
the year however as i have said in my 
previous reports addressed letter volumes 
have been in structural decline for a number 
of years in 201112 we handled 63 million 
addressed items every day today this has 
fallen to 58 million for more detail on our 
letters strategy see page 21
our letter revenue including marketing mail 
increased by three per cent on a likeforlike 
basis addressed letter volumes decreased by 
eight per cent on a likeforlike basis in line with 
our expectations following price increases we 
are making a profit on access mail – the mail 
other postal operators place in our downstream 
network for us to deliver on their behalf this 
is a significant step forward as it accounts 
for approximately half of our addressed letter 
volumes access mail also makes a considerable 
contribution to the cost of funding the uso 
network marketing mail remains a significant 
contributor to letter revenue
2
 marketreach 
an initiative we launched in july 2012 to help 
companies and their agencies derive more value 
from mail is focused on helping to mitigate the 
impact of the letters decline the advertising 
market has shown little growth during the year 
despite this marketing mail revenue increased 
by two per cent on a likeforlike basis 
as i have also reported in previous years 
our transformation programme one of the 
largest of its kind in uk industry is improving 
our productivity 79 per cent of letters are 
now sequenced to delivery point our delivery 
revisions programme is well underway as 
we roll out new methods processes and 
equipment to help our colleagues manage 
the fundamental shift in our traffic towards 
parcels 
in march 2013 ofcom published guidance 
setting out its regulatory approach to 
protect the universal service from growing 
direct delivery endtoend competition 
we welcome ofcom’s acknowledgement in its 
guidance of its duty powers and willingness 
to act to protect the universal service if 
direct delivery competition threatened its 
sustainability we are also pleased to note 
ofcom’s commitment to actively monitor all 
direct delivery market participants and track 
developments and any prospective risks to the 
universal service
being customer focused
in a recent survey of adults in great britain
3
 
royal mail was the most favourably viewed 
company of all the participating organisations 
our own research shows that our mean 
business customer satisfaction score is 74 
an increase of four points on last year but 
we are aware that our customers have 
many options 
to be their first choice we must get the 
basics right and be easy to do business with 
we gather customer feedback extensively 
across our business and use this insight 
to increase customer satisfaction reduce 
customer complaints and improve the 
whole customer experience 
for example last year we launched a monthly 
customer report which focuses on a number 
of key metrics including benchmarking our 
performance against our peers and how likely 
our customers are to recommend royal mail 
assessing all the information available to us 
including social media activity and inputs from 
our sales teams provides a holistic view of 
how we are meeting customer needs and 
where we need to take action 
a number of important customer initiatives 
were implemented during the year in april 
2013 just after the financial year end we 
streamlined our consumer first class parcels 
offering from 15 to seven weight bands and 
introduced two parcel categories – small and 
medium this simplified our product range 
making it easier for customers to understand 
and make informed choices 
we know the areas where we need to 
improve our service over 60 per cent of all 
our complaints are caused by four issues – 
p739 ‘something for you’ cards redelivery 
redirection and misdelivery we have made 
good progress on redirection redelivery and 
misdelivery where complaints have reduced 
since 2009 for example we offer a free 
redelivery service where customers can have 
an item redelivered to their address on a day 
of their choosing or select an alternative 
address in the same postcode area
we want to give recipients of parcels more 
control having secured regulatory approval 
from ofcom we rolled out our delivery to 
neighbour programme across the uk in 
september 2012 our postmen and women 
can now leave parcels with a neighbour if the 
recipient is not at home feedback from 
people in the areas where we trialled delivery 
to neighbour revealed that 92 per cent
4
 of 
customers whose items were left with a 
neighbour were satisfied with the overall 
experience
in addition we work with mailing customers 
on forecasting delivery volumes in order to 
ensure extra temporary operational capacity 
is available to cope with seasonal peaks and 
that we can continue to deliver a high quality 
of service this approach ensured we had the 
capacity required to manage increased parcel 
volumes over the christmas period through 
the installation of eight temporary parcel 
sort centres 
our people
our people are key to our transformation and 
in particular the successful delivery of our 
strategic priorities in a recent survey eight 
out of ten royal mail customers were pleased 
about the helpfulness of our postmen and 
women
5
 they are our ambassadors and 
a credit to royal mail 
the safety of our colleagues in the workplace 
and on their rounds continues to be of 
paramount importance 
over the course of the year the lost time 
accident frequency rate reduced by 
20 per cent
our world class mail programme – designed 
to promote continuous improvement across 
safety and productivity – continues to be 
embedded across the organisation 
in 2012 we reintroduced a full employee 
engagement survey for 150000 colleagues 
across the uk following a benchmark survey 
in autumn 2011 almost twothirds of our 
colleagues are proud to work for royal mail 
threequarters 76 per cent have a clear 
understanding of what customers want 
we are redoubling our efforts to communicate 
with our people about the challenges we face 
and our strategy to address them we have 
2
  marketing mail numbers are calculated using statistical 
analysis from surveys in order to estimate how our mail 
is being used data services and redirections were added 
into the marketing mail portfolio in 201213 numbers 
have been restated accordingly
3
 ipsos mori corporate image survey december 2012
4
  illuminas research 720 telephone interviews with 
trial participants
5
  ipsos mori corporate image survey december 2012 overview
09
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
provided managers with tools and support to 
help with action planning allowing members 
of teams to feel more engaged in the business’ 
future alongside our broader engagement 
programme we are undertaking a series of 
‘town hall’ events where members of our 
senior management team will address as 
many as 1000 colleagues at a time 
we are in ongoing discussions with our 
trade unions on a number of issues in these 
discussions we have reached agreement on 
some key issues the company has extended 
until april 2014 its existing voluntary 
redundancy terms for those impacted by 
modernisation and renewed its commitment 
to maintaining a predominantly fulltime 
workforce we separately confirmed that 
a change in royal mail’s ownership 
structure will not affect colleagues’ 
contracts of employment 
in last year’s report i confirmed that just 
after the end of the financial year almost all 
of the liabilities and assets in the royal mail 
pension plan rmpp were transferred to 
hm government this transfer could not 
address the ongoing costs of such a large 
plan with approximately 112000 active 
members which are material for more 
information please see page 75
our role in society
london 2012 was a major highlight for 
royal mail we delivered 16 million envelopes 
enclosing approximately 75 million tickets 
to customers with over 98 per cent of them 
arriving first time on time we were the first 
postal administration to paint its post boxes 
gold in the communities that gold medal
winning british athletes are associated with 
the first to pay olympians and paralympians 
the same financial consideration for their 
image rights and the first to produce a 
stamp in honour of every british olympic and 
paralympic gold medal athlete in this very 
special year for the uk we were touched by 
the very positive response we received from 
members of the public as we celebrated the 
achievements of team gb and paralympicsgb
we have a long heritage of contributing to our 
communities we connect millions of customers 
companies and communities including those 
in the most remote rural areas making 
commerce happen in the process our 
contribution to the uk at this difficult time for 
the economy is significant for the 201112 
financial year research from the centre for 
economics and business research cebr 
estimated that i in terms of ‘value added’ 
from uk operations of companies our core uk 
business ranked as the eighth highest in the 
uk ii we contributed 04 per cent to the uk’s 
total gross domestic product gdp rising to 
07 per cent when our wider economic impacts 
were included and iii for every £1 we paid in 
wages an estimated additional 57p in wages 
was generated in the wider economy through 
indirect and induced impacts
obtaining ongoing access to external capital
as we said at the interim report stage ongoing 
access to external capital is a key part of the 
transformation process
we believe that royal mail will combine the 
best of the public and private sectors we are 
the provider of the onepricegoesanywhere 
sixdaysaweek universal service obligation 
we are honoured to provide the universal 
service to more than 29 million addresses 
across the uk the service is enshrined in the 
postal services act 2011 the act sets out 
clear and specific minimum requirements 
which can only be changed by a vote in both 
houses of parliament we are pleased that 
ofcom found recently that nine out of ten 
residential and business customers consider 
our current level of service meets their core 
needs and there is no need for change 
our quality of service standard specifications 
are the highest of any major european 
country and will continue to apply our 
societal obligations would also remain in place 
and again we are very proud to deliver them 
for example our free articles for the blind
6
 
service is enshrined in the postal services 
act 2011 
demonstrating that royal mail can attract 
external capital will pave the way for continued 
investment in our company it also represents 
a further opportunity to increase the 
alignment that already exists between 
royal mail and its people 
outlook 
we are well positioned to continue to benefit 
from the structural change to eretailing 
which is driving increases in parcel volumes 
and to manage the decline in letters in the 
early weeks of 201314 we have seen 
similar trends to those seen in 201213 
in this year’s report i must again thank our 
shareholder hm government for its continued 
support in particular i wish to thank the 
secretary of state for business innovation 
 skills vince cable minister of state for 
business and enterprise michael fallon and 
their officials i also wish to thank dame jane 
newell obe until september 2012 the chair 
of royal mail pension trustees limited and 
her successor joanna matthews for their 
counsel and support 
most importantly i would like to extend my 
thanks to my colleagues these are times of 
significant change and we are asking a lot of 
our people i continue to be grateful for their 
hard work dedication and support as the 
ambassadors of this cherished company 
i know that they will continue to drive our 
business forward as we seek to realise our 
collective objectives
moya greene 
chief executive officer 
royal mail group limited 
31 july 2013
6
  a freeofcharge service for people sending items 
specifically designed for blind and visually impaired 
people within the uk and overseas 10
strategy
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
strategy
our strategy
royal mail group has a clear vision to be the most 
successful delivery company in the uk
this is underpinned by three priorities capitalising on 
growth in online retailing to grow our parcels businesses 
continuing to mitigate structural decline in the letters 
market by maximising the value of mail and by being 
customerfocused by doing this we believe we can drive 
sustainable profitable growth that will enable us to 
obtain ongoing access to external capital and secure a 
sustainable future for our company
our corporate strategy has three priorities
firstly being a successful parcels business 
the uk parcels market has shown continued 
growth thanks to the growth of online 
retailing in 201213 parcels accounted for 
48 per cent of group revenue we are 
investing in our three main parcels networks 
and our tracking technology to meet customer 
needs a longterm investment programme in 
our core combined uk network will ensure we 
have the capability we need to accommodate 
the changing traffic mix from letters to 
parcels
our second strategic priority focuses on 
managing the decline in letters we have 
already transformed how we sort letters 
automating the handling process in our  
mail centres 79 per cent of letters are now 
sequenced to delivery point we are pressing 
on with our programme of delivery revisions 
changing the way we deliver to more than 
29 million addresses across the uk this also 
allows us to effectively manage growth in 
parcel volumes and at the same time improve 
our productivity 
changes in the regulatory framework last year 
have given us greater commercial freedoms 
these enable us to respond better to market 
changes we have already taken steps to 
simplify and improve many of our propositions 
marketing mail is one of the most successful 
ways to reach out to customers we launched 
marketreach last year to transform our direct 
marketing offering we are now developing 
ways to help our customers to derive more 
value from all the mail they send 
thirdly we need to continue to be a customer
focused company in this competitive market 
our customers have a choice we are 
developing the services we offer to ensure 
they meet our customers’ needs we are 
investing in technology to provide the tracking 
services our customers expect we are 
working with our customers to anticipate 
times of peak demand and ensure we can 
deliver the high quality service they need
our strategic priorities and how we 
achieve them are central to our internal 
communications programme so our 
colleagues understand their role in delivering 
our strategy we have achieved a great deal 
but more remains to be done to safeguard 
the sustainability of the universal service 
and ensure we can continue to provide high 
quality jobs for our people 11
strategy
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
strategy
priority one — being a successful parcels business
definition
to leverage our network reach and our strong brand to ensure we 
can capture increasing parcel volumes as a result of the growing 
popularity of online retailing in the uk 
to use our new regulatory freedom for parcels to develop new 
offerings and compete more effectively in the marketplace
to ensure our combined core uk network can accommodate 
increasing parcel volumes and meet customer needs through the 
completion of our modernisation programme
key initiatives
• investing in our technology from how customers access our 
networks through to tracking and management information
• progressing our core uk network transformation improving 
safety customer service quality and productivity to deliver 
parcels effectively and efficiently
• enhancing products and services expanding services such as 
delivery to neighbour to give parcel recipients more choice 
and convenience
• expanding parcelforce worldwide increasing the capacity of 
the network to meet customer needs and
• strengthening our competitive position in the countries 
where gls operates
priority two — managing the decline in letters
definition
to manage the structural decline in the letters market by becoming 
more productive and effective and ensuring we remain the carrier of 
choice for delivery of letters in the uk 
harnessing the new regulatory freedoms we have won to ensure we 
make a reasonable commercial return for the letters we deliver
making marketing and business mail more valuable to our customers 
by increasing the data and insight they can gather 
key initiatives
• continuing to focus on improving operational productivity 
through the automation of the sequencing and sorting 
process and completing our programme of delivery revisions
• demonstrating to customers the value of mail in customer 
retention and when used in conjunction with other media
• building on the successful launch of marketreach last year to 
develop new ways to prove the value of mail in a digital world 
and enable businesses to take advantage of it and
• investing in barcode tracking services to provide far greater 
information and value for bulk mail customers
priority three — being customerfocused
definition
putting the customer at the heart of everything we do to ensure that 
we continue to be the delivery partner of choice
being easy to do business with and building new propositions that 
truly meet customer needs
key initiatives
• extending and enhancing our services launching the uk’s 
largest ‘click  collect’ network working with the post office 
as it lengthens opening hours in many branches simplifying 
our international product portfolio
• tackling the root causes of complaints focusing on the four 
areas that cause most dissatisfaction – ‘something for you’ 
cards redelivery redirection and misdelivery and
• transforming our digital channels to serve customers better
we are creating a commercial customerfocused company capitalising on parcels growth while successfully managing the decline 
in letters we are changing from a letters company that carries parcels to a parcels company that also brilliantly delivers letters
customer
customer
focus 12
strategy
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
strategy
key performance indicators 
kpi measured by key activities in the year strategic links more information
people people
safety lost time accident frequency rate the number of ukpil 
employee workrelated accidents resulting in an absence 
on a subsequent day or shift per 100000 hours worked
we continue the rollout of our walk risk assessment programme this identifies key risks 
on every walk so that our people are aware of potential hazards and we can take action to 
reduce risk where appropriate our zero accidents programme continues focusing on road 
safety and ensuring that our people have the training they need to operate safely on their 
round and in the yard
  
see ‘corporate responsibility’ on pages 2833
engagement 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 
we produced a corporate action plan in response to the 2012 engagement survey developed 
with the involvement of both unions and an employee panel one of the actions within this 
plan was continued communication with our colleagues as part of our ‘town hall’ events 
members of our senior management team including the chief executive officer have addressed 
as many as 1000 colleagues at a time at more than 20 meetings following the survey we 
also used a specialised planning tool to develop and monitor actions being taken across the 
organisation to improve engagement over 90 per cent of managers are involved in action 
planning to improve local engagement
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer focus an annual survey by ipsos mori measuring how focused our 
people are on delivering improvements in customer service 
through the corporate action plan we have focused on raising awareness of the key causes 
of customer complaints and working with colleagues to bring the number of complaints down 
we rolled out our delivery to neighbour programme across the uk from 1 october 2012 
we delivered 16 million envelopes enclosing approximately 75 million tickets for london 
2012 with over 98 per cent arriving on time first time
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer customer
first class quality of 
service
an independent audited measure of quality of service for first 
class retail products adjusted for force majeure
1

through our modernisation programme we are driving improvements in the pipeline to be 
more productive and effective for example 79 per cent of letters are now sequenced to 
delivery point
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
second class quality 
of service
an independent audited measure of quality of service for second 
class retail products adjusted for force majeure
1

    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer 
satisfaction
average business customer satisfaction scores on a number of 
issues including price service quality and customer experience
a customer satisfaction questionnaire is completed by a sample of business customers every 
month helping us to identify key areas for action in response to customer needs we opened 
eight parcels hubs at christmas to manage anticipated increases in volumes
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer 
complaints
number of complaints captured by our customer service team
2
 we continue to take action to focus on redelivery misdelivery ‘something for you’ cards and 
redirections which account for more than 60 per cent of complaints we have made 
considerable progress in redelivery misdelivery and redirection since 2009
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
performance performance
group revenue group revenue revenue increases were driven by a five per cent likeforlike increase in ukpil parcel 
volumes and price increases during the year the group is also successfully harnessing the 
benefits of the new regulatory framework helping us to ensure we can generate a reasonable 
commercial rate of return for the services we offer
  
see ‘financial performance overview’ on page 14
delivery hours 
reduction
percentage yearonyear reduction in the gross hours spent on 
delivery and collection activities
delivery transformation continues and is providing our people with tools to manage the 
changing mail mix with fewer letters and more parcels while we have reduced the gross 
hours spent on delivering mail and improved productivity factors including the changing 
traffic mix are impacting our progress
  
see ‘corporate responsibility’ on pages 2833
delivery offices fully 
modernised
number of delivery offices that have been modernised we are more than halfway through our delivery revisions programme which is changing 
every aspect of the way our postmen and women work this will ensure we are more 
productive and effective and can manage the changing traffic mix
  
see ‘corporate responsibility’ on pages 2833
financial financial
total expenditure total expenditure for uk businesses excluding all exceptional items uk costs have been held in line with inflation increases in nonpeople costs in ukpil were 
partially offset by a programme of procurement savings
  
see ‘financial review’ on pages 1620
group operating 
profit
group operating profit before exceptional items price increases as a result of the introduction of a new regulatory framework are a key 
driver of revenue increases that have supported an increase in group operating profit this has 
been supported by tight controls which have ensured costs increased in line with inflation
  
see ‘financial review’ on pages 1620
free cash flow free cash flow this year free cash flow has principally been generated by trading performance
  
see ‘financial performance overview’ on page 14
the four sections below people customer performance and financial and their respective kpis reflect the four quadrants of our corporate 
balanced scorecard for the year 201213 we said last year that as the business changes we may adapt our kpis this year we have added 
second class quality of service replaced process sequencing which has been completed with a broader kpi on delivery office modernisation 
and replaced riddors with lost time accident frequency rate 13
strategy
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
strategy
kpi measured by key activities in the year strategic links more information
people people
safety lost time accident frequency rate the number of ukpil 
employee workrelated accidents resulting in an absence 
on a subsequent day or shift per 100000 hours worked
we continue the rollout of our walk risk assessment programme this identifies key risks 
on every walk so that our people are aware of potential hazards and we can take action to 
reduce risk where appropriate our zero accidents programme continues focusing on road 
safety and ensuring that our people have the training they need to operate safely on their 
round and in the yard
  
see ‘corporate responsibility’ on pages 2833
engagement 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 
we produced a corporate action plan in response to the 2012 engagement survey developed 
with the involvement of both unions and an employee panel one of the actions within this 
plan was continued communication with our colleagues as part of our ‘town hall’ events 
members of our senior management team including the chief executive officer have addressed 
as many as 1000 colleagues at a time at more than 20 meetings following the survey we 
also used a specialised planning tool to develop and monitor actions being taken across the 
organisation to improve engagement over 90 per cent of managers are involved in action 
planning to improve local engagement
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer focus an annual survey by ipsos mori measuring how focused our 
people are on delivering improvements in customer service 
through the corporate action plan we have focused on raising awareness of the key causes 
of customer complaints and working with colleagues to bring the number of complaints down 
we rolled out our delivery to neighbour programme across the uk from 1 october 2012 
we delivered 16 million envelopes enclosing approximately 75 million tickets for london 
2012 with over 98 per cent arriving on time first time
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer customer
first class quality of 
service
an independent audited measure of quality of service for first 
class retail products adjusted for force majeure
1

through our modernisation programme we are driving improvements in the pipeline to be 
more productive and effective for example 79 per cent of letters are now sequenced to 
delivery point
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
second class quality 
of service
an independent audited measure of quality of service for second 
class retail products adjusted for force majeure
1

    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer 
satisfaction
average business customer satisfaction scores on a number of 
issues including price service quality and customer experience
a customer satisfaction questionnaire is completed by a sample of business customers every 
month helping us to identify key areas for action in response to customer needs we opened 
eight parcels hubs at christmas to manage anticipated increases in volumes
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
customer 
complaints
number of complaints captured by our customer service team
2
 we continue to take action to focus on redelivery misdelivery ‘something for you’ cards and 
redirections which account for more than 60 per cent of complaints we have made 
considerable progress in redelivery misdelivery and redirection since 2009
    
customer
customer
focus
see ‘corporate responsibility’ on pages 2833
performance performance
group revenue group revenue revenue increases were driven by a five per cent likeforlike increase in ukpil parcel 
volumes and price increases during the year the group is also successfully harnessing the 
benefits of the new regulatory framework helping us to ensure we can generate a reasonable 
commercial rate of return for the services we offer
  
see ‘financial performance overview’ on page 14
delivery hours 
reduction
percentage yearonyear reduction in the gross hours spent on 
delivery and collection activities
delivery transformation continues and is providing our people with tools to manage the 
changing mail mix with fewer letters and more parcels while we have reduced the gross 
hours spent on delivering mail and improved productivity factors including the changing 
traffic mix are impacting our progress
  
see ‘corporate responsibility’ on pages 2833
delivery offices fully 
modernised
number of delivery offices that have been modernised we are more than halfway through our delivery revisions programme which is changing 
every aspect of the way our postmen and women work this will ensure we are more 
productive and effective and can manage the changing traffic mix
  
see ‘corporate responsibility’ on pages 2833
financial financial
total expenditure total expenditure for uk businesses excluding all exceptional items uk costs have been held in line with inflation increases in nonpeople costs in ukpil were 
partially offset by a programme of procurement savings
  
see ‘financial review’ on pages 1620
group operating 
profit
group operating profit before exceptional items price increases as a result of the introduction of a new regulatory framework are a key 
driver of revenue increases that have supported an increase in group operating profit this has 
been supported by tight controls which have ensured costs increased in line with inflation
  
see ‘financial review’ on pages 1620
free cash flow free cash flow this year free cash flow has principally been generated by trading performance
  
see ‘financial performance overview’ on page 14
strategic links key
being a successful parcels business
to leverage our network reach and our 
strong brand to ensure we can capture 
increasing parcel volumes as a result of 
the growing popularity of online retailing 
in the uk 
to use our new regulatory freedom 
for parcels to develop new offerings 
and compete more effectively in 
the marketplace
to ensure our combined uk network 
can accommodate increasing parcel 
volumes and meet customer needs 
through the completion of our 
modernisation programme
managing the decline in letters
to manage the structural decline in 
the letters market by becoming more 
productive and effective and ensuring 
we remain the carrier of choice for the 
delivery of letters in the uk 
harnessing the new regulatory freedoms 
we have won to ensure we make a 
reasonable commercial return for the 
letters we deliver
making marketing and business mail more 
valuable to our customers by increasing 
the data and insight they can gather
customer
customer
focus
being customerfocused
putting the customer at the heart of 
everything we do to ensure that we 
continue to be the delivery partner 
of choice
being easy to do business with and 
building new propositions that truly meet 
customer needs
this icon is used to indicate 
reporting against a kpi 
throughout the document
1
  this accounts for the impact of factors which are 
beyond royal mail’s control such as weather and 
the logistical impact of the london 2012 olympic 
and paralympic games 
2
  we also provide detailed annual disclosure on customer 
complaints to our regulator which is publicly available 14
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial performance 
overview
reported group revenue was £9279 million
 
see kpis pages 1213
group revenue increased by five per cent on a likeforlike basis with the key 
performance drivers being 
 – letters revenue up three per cent
 – ukpil parcel revenue up 13 per cent
 – gls euro revenue up two per cent
• operating costs have increased by three per cent on a likeforlike basis 
benefiting from productivity improvements and tight cost management
• operating profit after transformation costs before other exceptional items 
of £403 million is £251 million higher than last year mainly due 
to revenue growth 
• other net exceptional items comprise profit from property disposals last year 
saw significant profit on disposals property writeoffs industrial diseases 
provisions postal services act related costs and it costs relating to the 
separation of post office limited 
• the current year taxation charge effective rate of 12 per cent is due to the 
charge on current year profit being partly offset by past years’ losses
• the group has recognised a deferred taxation asset primarily in respect of 
taxation losses carried forward and decelerated capital allowances this is a 
result of an improved profit outlook for the group
profit and loss summary  
see page 56 for more details
reported
53 weeks
2013 
£m
adjusted
52 weeks
2013 
£m
reported
52 weeks
2012 
£m
revenue 9279 9146 8764
operating costs 8644 8548 8383
transformation exceptional costs 195 195 229
operating profit after 
transformation costs
1
440 403 152
other net exceptional items 73 125
earnings before interest and 
taxation ebit 367 not 277
net finance costs and pension interest 43 adjusted 76
taxation  current charge 38 at this 36
  deferred creditcharge 284 level 15
profit for the period 570 150
operating profit after 
transformation costs margin  nm 44 17
free cash flow summary  
see page 58 for more details
reported
53 weeks
2013
£m
reported
52 weeks
2012
£m
ebitda before transformation costs  
– 52 weeks 878 681
– 53rd week 37 –
ebitda before transformation costs see page 15 915 681
working capital 142 19
other pension payments 3 45
investment costs 665 579
other taxation interest dividends from associates 81 87
other exceptional items 26 37
disposal of property and business 52 240
free cash inflow for the period 334 154
balance sheet summary  
see page 59 for more details
as at
31 march
2013
£m
as at
25 march
2012
£m
net operating assets 1397 1456
net debt 906 1186
operating assets less net debt 491 270
net deferred taxation assetsliabilities 89 9
retirement benefit assetliabilities 825 2716
net assetsliabilities 1405 2455
1
  before other exceptional items
net debt has reduced by £280 million mainly as a result of free cash flow 
generation of £334 million
• a £98 million increase in net deferred taxation assets has resulted from the 
recognition of uk deferred taxation due to an improved profit outlook
• to comply with accounting standards a pension surplus of £825 million has 
been recognised following the transfer of the majority of rmpp pension 
liabilities and assets to hm government as at 1 april 2012 more information 
can be found in note 9 to the financial statements
free cash inflow of £334 million was generated
 
see kpis pages 1213
• ebitda before transformation costs of £878 million on a 52 week basis 
is £197 million higher than last year’s £681 million due to an improved 
trading performance 
• working capital inflows include the impact of higher stamp holdings by 
customers and tighter working capital management
• investment costs of £665 million 2012 £579 million comprises
 – business transformation payments of £55 million 2012 £60 million
 – redundancy payments of £75 million 2012 £129 million
 – oneoff project costs of £100 million 2012 £55 million
 – transformation capital expenditure of £177 million 2012 £185 million 
 – other capital expenditure gls it including software of £258 million 
2012 £150 million
the profit and loss summary and commentary below provides an analysis of an 
equivalent 52 week period for 2013 compared with the 52 week period for 2012
the free cash flow and balance sheet summary and commentary below relates 
to the 53 weeks ending 31 march 2013 and 52 weeks ending 25 march 2012 15
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
adjusted 52 weeks 2013 reported 52 weeks ended 25 march 2012
operating profit after 
transformation costs
ukpil
£m
gls
£m
other
£m
total
£m
ukpil
£m
gls
£m
other
£m
total
£m
revenue 7633 1498 15 9146 7189 1562 13 8764
operating profit after 
transformation costs 294 101 8 403 33 128 9 152
operating profit after 
transformation costs 
margin  39 67 533 44 05 82 692 17
reported 53 weeks ended 31 march 2013 reported 52 weeks ended 25 march 2012
ebitda before 
transformation costs
ukpil
£m
gls
£m
other
£m
total
£m
ukpil
£m
gls
£m
other
£m
total
£m
operating profit before 
exceptional items 526 101 8 635 262 128 9 381
adjust for
depreciationamortisation 249 31 1 281 269 32 – 301
share of profitloss from 
associates – – 1 1 2 – 3 1
ebitda before 
transformation costs 775 132 8 915 533 160 12 681
comparison of 2013 vs 2012
growth rates 
reported
2013
likeforlike
2
2013
group revenue 59 54
– ukpil letters  marketing mail 44 25
– ukpil parcels 144 127
– gls 41 16
– other 154 154
group operating costs 31 30
– people 46 36
– distribution and conveyance 17 41
– infrastructure 08 07
– other 19 11
comparison of 2013 vs 2012
growth rates 
reported
2013
likeforlike
2
2013
group volumes na na
– addressed letters 71 84
– ukpil parcels 63 48
– gls 14 14
gls financial information
reported
53 weeks
2013
€m
reported
52 weeks
2012
€m
reported
52 weeks
2011
€m
likeforlike
2
comparison of
2013 vs 2012

revenue 1837 1808 1746 16
costs 1714 1660 1607 33
operating profit after transformation costs 123 148 139 169
average £  € rate 12262 11572 11758 na
2
  the methodology to calculate the ‘likeforlike’ 
growth rates is explained on page i 16
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial review
matthew lester 
chief finance officer
the 201213 financial year comprised 53 weeks compared with 52 weeks in 201112 
and 201011 as a result the 201213 income statement is presented both on a reported 
53 week basis and 52 week adjusted basis to provide a direct comparison of revenue and 
costs see page 56 furthermore in order to obtain likeforlike growth percentages for 
revenue and costs the material impact arising from foreign exchange has also been eliminated 
a further explanation of how likeforlike growth is calculated is shown on page i and  
likeforlike percentages can be found on page 15
summary group results
the group has delivered an improved financial performance in 201213 with our core uk 
business ukpil delivering strong growth both in revenue and operating profit before and 
after transformation costs the group improved its operating profit margin from 17 per cent 
to 44 per cent on a likeforlike basis
the trading performance resulted in ebitda of £915 million on a reported basis and 
£878 million on an adjusted 52 week basis 2012 £681 million in addition the group 
generated a free cash inflow of £334 million 2012 £154 million this improvement 
was mainly due to trading compared with last year where material disposals generated 
£240 million of cash inflows
revenue operating profit after transformation costs
business unit performance £m
reported
53 weeks
2013
adjusted
52 weeks
2013
reported 
52 weeks
2012
reported
53 weeks
2013
adjusted
52 weeks
2013
reported 
52 weeks
2012
ukpil 7766 7633 7189 331 294 33
gls 1498 1498 1562 101 101 128
other businesses 15 15 13 8 8 9
group 9279 9146 8764 440 403 152
revenue
the group’s revenue increased by five per cent on a likeforlike basis largely driven by revenue growth in ukpil of six per cent on a likeforlike 
basis ukpil’s growth was mainly due to a 13 per cent likeforlike improvement in parcel revenue driven by both higher volumes and price 
increases in addition the letter price increases that came into effect in april 2012 increased letter revenue by three per cent on a likeforlike 
basis this enabled the group to offset the addressed letter volume decline of eight per cent on a likeforlike basis
underlying gls euro revenue increased by two per cent on a likeforlike basis to €18 billion all countries apart from france portugal and 
romania saw revenue growth on conversion to sterling gls revenue decreased by four per cent to £15 billion 2012 £16 billion due 
to the weakening of the euro gls parcel volumes increased by one per cent on a likeforlike basis with growth in both domestic and 
international volumes
group operating costs
group operating costs before transformation and other exceptional items increased by three per cent on a likeforlike basis
people costs increased by four per cent on a likeforlike basis this reflects an increase in ukpil people costs mainly due to a 35 per cent pay 
award in line with the pay and transformation agreement a higher ongoing pension cost due to the pension rate increasing to 182 per cent 
and the implementation of the agency workers directive however the delivery and processing operations in royal mail delivered a productivity 
improvement of 17 per cent 
group costs including transformation costs £m
reported 53
weeks 2013
adjusted 52
weeks 2013
reported 52
weeks 2012
people costs 5147 5077 4920
distribution and conveyance costs 1785 1771 1755
infrastructure costs 1052 1047 1060
other operating costs 660 653 648
transformation costs operating exceptional items – see note 5 195 195 229
total operating and transformation costs 8839 8743 8612 17
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
distribution and conveyance costs increased by four per cent on a likeforlike basis as follows
• an expected increase in the ukpil networks as a result of the increase in the number of vehicles higher fuel price hedged using a rolling 
three year programme at approximately 90 per cent of expected usage and higher costs of maintaining the fleet of approximately 
40000 vehicles
• higher third party subcontractor costs in gls germany which reflect the low unemployment rates of five per cent however when gls euro 
costs are translated into sterling they decrease on a reported basis by three per cent
infrastructure costs decreased by one per cent on a likeforlike basis due to lower depreciation and amortisation charges offsetting property 
cost increases in ukpil
other costs include those nonpeople costs mainly driven by the commercial and central functions in the uk these have increased by just one 
per cent and this is mainly due to tight cost control measures
 expenditure relating to uk businesses was £7247 million 2012 £6950 million see kpis pages 1213
ukpil transformation exceptional costs
transformation exceptional costs are 15 per cent lower and are the same under the reported or adjusted basis
ukpil transformation exceptional costs £m
reported 53
weeks 2013
reported 52
weeks 2012
voluntary redundancy 78 77
business transformation payments 22 87
project and property costs 95 65
total 195 229
voluntary redundancy costs are in line with last year and relate to delivery modernisation and announced mail centre closures to date 25 mail 
centres have been closed a further 11 have been through the appropriate consultation process and are expected to be closed by 2015
the £22 million business transformation payments relate to the pay and transformation 2010 agreement where colleagues receive payments 
of up to £1000 based on specific milestones and specific bonuses with respect to transforming the network
project and property costs mainly relate to key business transformation projects such as the implementation of new delivery methods mail centre 
reductions and deployment of automation equipment increased activity in delivery office revisions during the year has contributed to this increase
 operating profit before transformation costs was £635 million on a reported basis 2012 £381 million see kpis pages 1213
operating profit after transformation costs
all three of the group’s business segments generated an operating profit after transformation costs resulting in a group operating profit after 
transformation costs of £440 million on a reported basis and £403 million on an adjusted basis with ukpil contributing around 75 per cent 
to the group total 2012 22 per cent 
on a likeforlike basis gls experienced a 17 per cent decline in operating profit after transformation costs from €148 million to €123 million 
germany reported a profit decline reflecting the challenging trading conditions operational performance issues remain in france in most other 
countries profit improved particularly in italy and denmark
on a likeforlike basis group margin improved from 17 per cent to 44 per cent ukpil’s margin was 39 per cent and gls’s margin was 
67 per cent
net exceptional items including transformation costs same under a reported and adjusted basis
exceptional items £m
reported 52
weeks 2013
reported 52
weeks 2012
operating exceptional items
– transformation costs see above 195 229
– other 77 57
total operating exceptional items 272 286
nonoperating exceptional items
– asset disposals 4 156
– business disposals – 26
net exceptional items 268 104 18
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial review continued
other operating exceptional items mainly comprise costs relating to legacy industrial diseases claims of £28 million 2012 £10 million oneoff 
it costs associated with the separation of post office limited during the year of £20 million 2012 £nil impairments mainly property of 
£20 million 2012 £7 million and charges related to the implementation of the postal services act of £10 million 2012 £24 million 
nonoperating exceptional items are not material this year last year there were property disposal gains of £156 million £104 million of which 
relates to the sale of the rathbone place property and £26 million mainly from the sale of the group’s investment in romec services limited 
a subsidiary of romec limited
net finance and pension interest costs
net finance and pension interest costs of £43 million 2012 £76 million comprise a £34 million net pension interest credit 2012 £24 million 
and net finance costs of £77 million 2012 £100 million relating to net debt 
the pension interest credit is noncash and comprises the investment returns on the pension assets held by the trustee at the start of the year 
and the unwinding of the discount rate on the associated pension liabilities 
the net finance costs of £77 million comprise finance costs of £104 million 2012 £112 million offset by finance income of £27 million 
2012 £12 million
the finance costs of £104 million for this year mainly comprise £82 million 2012 £91 million relating to average loans and borrowings 
of £972 million 2012 £1478 million resulting in an average interest rate of 84 per cent 2012 62 per cent of the £82 million charge 
£51 million 2012 £45 million relates to the 120 per cent general purposeworking capital facility this is an unsecured facility that has 
preconditions to any early repayment and the interest is rolledup rather than paid meaning actual cash interest costs are lower by 
this amount
during april and may 2012 the group paid down £600 million of one of its facilities and at 31 march 2013 the following facilities were 
drawn down
purpose of loanborrowing
2013
average
balance
£m
2013
average
interest rate

facility
end date
facility
£m
drawn
balance at
31 march
2013
£m
average loan
maturity date
gls funding 500 58 20212025 500 500 2023
general purposeworking capital 48 20 2014 600 – –
general purposeworking capital – – 2014 300 – –
general purposeworking capital 424 120 2016 473 473 2016
total 972 1873 973
current taxation uk businesses and gls
the current tax charge of £39 million 2012 £34 million represents an effective rate on profit before taxation of 12 per cent five per cent rate 
in the uk due to current year uk taxable profit being offset by previous years’ trading tax losses which arose both due to trading and up to 
201011 the annual cash costs of nearly £300 million used to fund the historic pension deficit the reason for the low overall uk effective tax 
rate is because no deferred tax asset had previously been recognised for these tax losses the majority of the remaining trading tax losses 
available to royal mail group limited will be extinguished at the end of 201213 as part of the postal services act pension transfer implementation 
gls blended current taxation rates of 26 per cent are in line with the standard rates for the countries in which it operates
deferred taxation uk businesses only
the return to profitability in the uk and the pension transfer – bringing an end to royal mail pension plan rmpp deficit correction payments 
– has meant that the uk businesses produced taxable profit in 201213 consequently the net deferred tax credit of £284 million in the income 
statement in 201213 includes £290 million relating to uk tax mainly to recognise the improved profit outlook for the group and future tax 
benefits associated with carried forward tax reliefs including capital allowances of approximately £24 billion these unused reliefs have built 
up mainly because of there being insufficient profit to use the potential deductions which had been deferred to later years
pension plans
on 1 april 2012 – after the granting of state aid approval by the european commission on 21 march 2012 – almost all of the pension liabilities 
and pension assets of the royal mail pension plan rmpp built up until 31 march 2012 were transferred to hm government on this date 
the rmpp was also sectionalised with royal mail group limited and post office limited each responsible for their own liabilities in future this 
arrangement left the rmpp fully funded on an actuarial basis in respect of historic liabilities at this date 
royal mail group’s ongoing pension costs mainly relating to approximately 112000 active members in rmpp will continue to be material 
with associated cash costs being similar to the charges to the income statement there is no difference between the reported and adjusted basis 19
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
pension costs in the income statement £m
reported 53
weeks 2013
reported 52
weeks 2012
uk defined benefit mainly rmpp 412 384
uk defined contribution 17 11
gls defined contribution 5 5
total group ongoing pension costs 434 400
pension balance sheet amounts under an ias 19 basis
the balance sheet pension deficit has reduced from a deficit of £27 billion at march 2012 to a surplus of £825 million at march 2013 the 
movement in the pension liability is almost entirely due to the transfer of pension liabilities and pension assets to hm government 
royal mail senior executives pension plan rmsepp
this plan was closed to future accruals on 31 december 2012 the company has reached an agreement with the rmsepp trustees to maintain 
their cash contribution requirement at £10 million per annum until the march 2018 triennial valuation is complete also as a part of the 
agreement the company made a oneoff deficit correction payment of £19 million to the plan during the year and placed £20 million into 
an escrow account
cash flow
ebitda before transformation costs of £915 million 2012 £681 million increased due to the trading performance explained above
working capital inflow of £142 million 2012 £19 million outflow is mainly due to the increase in stamp holdings by customers in light of the 
april 2012 price increases and overall tighter working capital management
total investment of £665 million 2012 £579 million comprises £407 million 2012 £429 million resulting from the continuation of the 
transformation programme and business as usual spend of £258 million 2012 £150 million the 201213 depreciation charge was 
£281 million 2012 £301 million
taxation and interest cash costs of £81 million 2012 £91 million comprise £44 million 2012 £56 million relating to net interest paid and 
£37 million 2012 £35 million relating to current taxation payments the interest cash costs are lower than the net interest charge of 
£77 million mainly due to the rollup of interest as explained above the taxation payments are broadly in line with the current income 
taxation charge of £41 million 2012 £36 million
cash inflows associated with disposals have reduced from £240 million in 201112 to £52 million in 201213 the 201112 inflow included 
£120 million from the sale of the rathbone place property off oxford street london and £29 million from the sale of the group’s investment 
in romec services limited
the combination of these cash flows resulted in a free cash inflow of £334 million 2012 £154 million and excluding the oneoff impacts of 
disposals of £52 million 2012 £240 million a cash inflow of £282 million 2012 outflow of £86 million
net debt
net debt has decreased by £280 million to £906 million during the year ending 31 march 2013 mainly due to cash flow generated during the 
year £600 million of loans were repaid to hm government
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 in the table below together with how much the 201314 operating profit would differ 
from 201213 as a result of the changes in commodity costsexchange rates up to 31 march 2013 post the impact of the respective 
hedging programmes
exposure – royal mail group
impact on
operating profit
of a 5 increase
in price
weakening of
sterling before
hedging
£m lossgain
impact of no
further change
in pricerate on
201314
operating
profit versus
201213
post hedging
£m lossgain
diesel and jet 5 1
us 4 2
euro 9 1 20
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial review continued
it is anticipated that there will be a £1 million favourable impact on profits arising from the change in effective post hedging impact diesel costs 
from 51ppl in 201213 to an anticipated 50ppl in 201314 without hedging this favourable variance would become an adverse £3 million 
variable based upon closing fuel prices at 31 march 2013
the group’s exposure to fuel prices is shown in the table below together with the coverage provided by the hedges in place the exposure 
represents the cost of the underlying commodity and excludes fuel duty which costs the group approximately £100 million each year  
diesel and fuel costs including duty for 201314 are expected to be £196 million
underlying 
product incl 
irrecoverable 
vat in 201314
£m
fuel duty in 
201314
£m
total cost in 
201314
£m
 of  
underlying 
product  
for 201314 
hedged 
£m
diesel 80 100 180 93
jet 16 nil 16 92
total 96 100 196
the currency exposure arises mainly from the group’s trading with overseas postal operators the profits of gls and intercompany loans with 
gls there is a significant degree of offset between these exposures and hedge programmes in place which reduce the impact on 201314 
operating profit the residual unhedged exposure for 201314 is estimated at £14 million for the euro and £50 million for the us
the group manages its interest rate risk through predominantly fixed rate debt at the year end 100 per cent of the loans were at fixed rate to 
maturity consequently and taking into account financial assets held but excluding the rmpp pension escrow investments an increase of 100 
basis points to interest rates during the year end would have resulted in an increase to profit of £3 million the rmpp pension escrow 
investments were sold in april 2012 and hence would not have been materially affected by an interest rate change during the year
counterparty risk is managed by limiting aggregate exposure to any individual counterparty based on their financial strength
off balance sheet arrangement
in 2000 royal mail entered into a defeased lease arrangement whereby certain automation equipment was leased and the lease rentals 
concurrently prepaid by royal mail into an investment fund following the general falls in credit ratings a letter of credit loc 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 chances  
of this loc being called upon are considered to be remote so no liability to reimburse the bank who have provided the loc has been included  
in the balance sheet for royal mail the current value of the loc is £40 million and it is currently not collateralised
equity
on 27 june 2012 the company reduced the amount of its share premium account by £3784 million with the company reducing the deficit 
on its distributable reserves by the same amount at that time this reduction of capital was approved by a special resolution of the company 
supported by a solvency statement made by its directors pursuant to section 642 of the companies act 2006 the reduction was executed 
through a noncash accounting entry and has no effect on total equity or the number of the company’s ordinary shares in issue or their 
nominal value
matthew lester 
chief finance officer 
royal mail group limited 
31 july 2013 21
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
uk parcels international 
 letters ukpil
trading results
reported 
 53 weeks
2013
adjusted 
 52 weeks
2013
reported 
52 weeks
2012
revenue £m 7766 7633 7189
operating profit after transformation 
costs £m 331 294 33
operating profit margin after transformation 
costs  43 39 05
volumes m
royal mail uk core parcels network 1010 994 950
parcelforce worldwide 71 70 66
total parcels 1081 1064 1016
addressed letters including international 14079 13869 15147
unaddressed letters 3307 3258 3077
about ukpil
as the uk’s sole provider of the universal 
service ukpil’s 150000 employees deliver 
letters and parcels sixdaysaweek to more 
than 29 million addresses across the uk at 
affordable and competitive prices it is a leading 
uk provider of collection and delivery services 
for express parcels through parcelforce 
worldwide and royal mail marketreach 
provides a fullservice marketing mail offering 
and helps businesses derive more value from 
marketing mail ukpil is responsible for the 
design and production of the uk’s stamps and 
philatelic products it is also responsible for 
the processing of international mail under 
reciprocal arrangements with other overseas 
postal administrations
our strategy
our letters and parcels strategies go hand in 
hand we derive competitive advantage from 
a combined network strategically we are 
focused on capturing the growth in online 
retailing to ensure a sustainable and profitable 
universal service as the number of letters we 
handle continues to decline
our parcels strategy
• getting the basics right we are streamlining 
our parcels offering to make it easier for 
customers to choose the right service for 
them we have simplified our terms and 
conditions we have provided our colleagues 
with more of the tools they need to deliver 
increasing numbers of parcels 
• getting the technology right we are 
investing in it to offer our customers the 
services they expect from a parcels 
operator including sms messaging and 
tracking services by christmas 2013 we 
aim for every postman and woman to have 
access to a handheld scanner for their 
delivery round and
• expanding and automating our networks 
we are investing to adapt the royal mail 
network to handle more parcels and 
expanding the capacity of parcelforce 
worldwide’s express network
our letters strategy
• using our new regulatory freedom to receive 
a commercial return for the letters we deliver 
price increases in april 2012 are a key driver 
of ukpil’s improved profitability 
• investing in our operations to improve 
efficiency and in tracking business mail 
we have put in place initiatives to make 
traditional mail more attractive to 
customers and increase our share 
of the business mail market and
• leveraging our position in marketing mail to 
reach customers in new and innovative ways 
trading performance
price increases across ukpil’s letters and 
parcels portfolio combined with increasing 
parcel volumes contributed to a strong 
revenue performance reported revenue grew 
to £7766 million and grew six per cent on a 
likeforlike basis an increase in nonpeople 
costs was offset by a number of other factors 
including procurement savings reported 
operating profit after transformation costs 
increased to £331 million
the operating profit margin after 
transformation costs increased to 39 per cent 
from 05 per cent on a likeforlike basis as 
delivery and processing productivity across 
the core network increased by 17 per cent 
ukpil parcel volumes grew five per cent on 
a likeforlike basis reported volumes were 
1081 million 2012 1016 million generating 
a likeforlike increase in parcel revenue of 
13 per cent and reported revenue of 
£2979 million royal mail handled 14079 
million addressed letters over the period 
letters including marketing mail accounted 
for £4787 million of ukpil’s total reported 
revenue during the year while unaddressed 
mail volumes increased by six per cent 
addressed letter volumes declined by eight 
per cent on a likeforlike basis this was 
more than offset by price increases which 
contributed to likeforlike letter revenue 
growth including marketing mail of 
three per cent 22
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
uk parcels international  
 letters ukpil continued
1
  marketing mail numbers are calculated using statistical 
analysis from surveys in order to estimate how our mail 
is being used data services and redirections were added 
into the marketing mail portfolio in 201213 numbers 
have been restated accordingly
£1135 million of reported group revenue in 
201213 equivalent to 12 per cent came 
from marketing mail
1
 including marketreach 
the advertising market has shown little 
growth during the year despite this marketing 
mail revenue increased by two per cent on 
a likeforlike basis 
we had a strong christmas due to the 
comprehensive planning we put in place to 
prepare for this important trading period 
we recruited approximately 20000 temporary 
staff to handle increased christmas traffic 
with eight temporary parcel sort centres 
opening at the beginning of november the 
ukpil core network handled 125 million 
parcels and parcelforce worldwide handled 
eight million express parcels in the four weeks 
to 23 december 2012 a poll carried out after 
the festive period by the leading consumer 
website moneysavingexpertcom voted 
royal mail the best uk parcel carrier while 
parcelforce worldwide was in third position
royal mail’s special stamps programme has 
had a landmark year thanks to the queen’s 
diamond jubilee and london 2012 gold 
medal stamps we issued 63 gold medal 
stamps during london 2012 and painted 
110 gold post boxes in honour of our 
olympians and paralympians the post 
boxes painted to celebrate every gold medal 
win will remain gold as a permanent 
celebration of these wonderful achievements 
by so many british athletes another highlight 
– in a strong year for our stamps programme 
– was the great success of our doctor who 
stamp issue
stamps  collectibles
likeforlike growth rates  revenue addressed volumes
parcels 13 5
letters 3 8
for more information visit 
wwwroyalmailgroupcom
uk parcels  
international   
letters ukpil 
case study 1 of 1 23
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
general logistics systems 
gls
about gls
general logistics systems gls is one of 
the largest groundbased deferred parcel 
delivery service providers in europe it is a 
paneuropean business providing reliable 
parcel and express services as well 
as logistics solutions 
the gls network covers 37 countries through 
wholly owned and partner companies is 
globally connected through contractual 
agreements and acts as the group’s gateway 
to europe opening up new opportunities
our strategy
gls aims to be a high quality of service leader 
in the parcels segments in which it operates 
its strategy is to invest in systems products 
and processes which will provide efficiencies 
and opportunities to develop new delivery 
options for the european parcels market 
while gls already has a strong presence in 
the european businesstobusiness parcels 
market businesstoconsumer parcels 
currently represent approximately one 
quarter of gls volumes new initiatives 
include investing in improved technology 
to offer customers near realtime track 
and trace services in the gls network 
the expansion of the gls network through 
organic growth and targeted acquisitions 
focused on the standard parcels market is a 
key objective gls’s groundbased network 
and paneuropean reach mean it is already 
benefiting from crossborder growth in parcel 
volumes its broad customer base means it 
is not dependent on specific accounts to 
maintain and grow volumes
almost threequarters 71 per cent of gls’s 
revenue is generated in three major markets 
germany italy and france gls provides 
high service levels supported by its tracked 
crossborder technology platform and 
european reach it continues to monitor 
emerging markets particularly those 
seeking to join the eu for further 
growth opportunities
trading performance
european parcel carriers have been faced with 
a difficult market in recent times low or zero 
gdp growth across the eurozone has 
constrained volume growth and a tight labour 
market in germany has driven up costs in 
gls’ largest businesstobusiness market 
in this context gls performance can be 
considered robust with likeforlike revenue 
growth of two per cent
parcel volumes grew one per cent to 
380 million operating costs increased more 
rapidly than revenue mainly due to the higher 
distribution and conveyance costs arising in 
germany as low unemployment rates resulted 
in higher subcontractor costs this was 
partially offset by profit growth in italy 
denmark and austria
operating profit declined by 17 per cent on a 
likeforlike basis to £101 million this was 
due to a £20 million decline in likeforlike 
operating profit and a £7 million foreign 
exchange impact as a result operating profit 
margin declined to 67 per cent
trading results
reported 52
weeks 2013
reported 52
weeks 2012
revenue £m 1498 1562
operating profit after transformation costs £m 101 128
revenue €m 1837 1808
operating profit after transformation costs €m 123 148
operating profit margin after transformation costs  67 82
volumes m 380 375
note gls reports results for the 52 weeks ending 31 march 24
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
business risks
principal risk impact mitigation
changes in customer 
preferences and 
competitor activity
customer behaviours are 
constantly evolving and 
competition is increasing 
consequently there is a risk that 
our product offerings and the 
customer experience we provide 
may not meet changing 
customer needs
in addition customer or 
competitor actions could trigger 
significant volumes of physical mail 
bypassing royal mail downtrading 
to lower revenue products and 
acceleration in esubstitution
postal operators and other third 
parties may set up discrete direct 
delivery networks in urban areas
the market and our share of it 
may shrink more rapidly than we 
expect leading to lower growth 
rates and profitability
direct delivery may also threaten 
the sustainability of royal mail’s 
universal service
• we have placed significant focus on the key growth area of parcels 
including investment in parcelforce worldwide and enhancing the 
core network to accommodate growing customer traffic
• we have introduced initiatives to simplify products improve our 
product delivery and the customer experience to drive loyalty 
and advocacy
• we have held discussions with key stakeholders and continue to do 
so on the risk to the universal service if direct delivery competition 
is allowed to develop unchecked 
• we are developing proposals to maximise commercial opportunities 
from the freedoms we have gained
• we are focusing product development and sales resource on growth 
opportunities with the greatest potential for added value especially 
outside esubstitutable markets
• we launched a new media business marketreach to improve our 
direct marketing mail proposition for customers and
• we remodeloptimise the operational network as necessary to 
cater for a different mix of products local direct delivery and 
to reduce costs
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 3845
the table below details the principal business risks their impact and how the group mitigates these risks 25
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
principal risk impact mitigation
economic environment
historically there has been a 
correlation between the state of 
the uk economy and the level of 
mail volumes there is a risk that 
the continuation of flat or adverse 
economic conditions could impact 
our ability to stay profitable  
either by reducing volumes or  
by encouraging downtrading  
to lower revenue products 
additionally we have significant 
european operations and current 
uncertainty and economic 
weakness in the eurozone 
could impact these businesses
adverse economic conditions and 
uncertainty would have a direct 
impact on mail volumes and 
consequently on group revenues 
and profit
economic conditions may impact 
the ability of key customers or 
critical suppliers to continue 
trading this would directly 
impact our revenues or dayto
day operations
• we continually review our costs to find areas where we can mitigate 
the impacts of any downturn
• we have conducted a programme of organisational restructuring to 
reduce managerial headcount in line with changing business volumes 
and monitor closely our progress in realising these savings
• 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 anticipate better the impact of price rises and reflect the 
increasingly deregulated market and 
• we targeted price increases for 201213 tariffs to ensure prices 
remained affordable
business modernisation
we are undergoing a significant 
extensive modernisation 
programme to improve our 
equipment and technical and it 
infrastructure and operating 
models the success of the 
business strategy relies on 
successful extraction of benefits 
from the programme whilst 
maintaining key business 
outcomes such as quality of 
service levels
failure to implement our 
modernisation programme 
effectively and extract benefits 
would adversely impact our ability 
to compete
at the same time a reduction 
in quality of service standards 
could result in loss of traffic 
reputational damage and failure 
to meet our quality of service 
standards will result in 
regulatory scrutiny and 
possible regulatory sanctions
failure to improve our it 
infrastructure would increase 
the risk of delivery or security 
shortfalls and the risk that the 
it platform might not be able 
to support the business 
plan initiatives
• we track progress and outcomes of all 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
• we have increased focus on delivery modernisation and 
performance with the new operational organisation
• we follow an agreed framework for all transformation revisions
• we are closely managing and monitoring the it 
transformation project 
• we are embedding our world class mail
1
 initiative into delivery 
operations to ensure that operational change is backed up by 
cultural change 
• we are closely monitoring our progress in realising role reductions 
in line with operational changes and
• we are engaging closely with our unions and colleagues with 
regard to the rationale behind and our progress with regard 
to modernisation
1
  developed inhouse and based on leading global practice 
and expert advice world class mail is a comprehensive 
system for improving safety and productivity 26
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
principal risk impact mitigation
risks inherent in the postal 
industry
the postal industry has specific 
characteristics that bring particular 
operational and commercial risks 
operations are at risk of disruption 
by for example adverse weather 
health and safety incidents 
industrial action operational 
change terrorism either as a 
target or a conduit or failure of 
critical suppliers
in addition to the new regulatory 
regime in the postal sector there 
is a risk of noncompliance with a 
wide range of legal and regulatory 
requirements such as 
procurement and competition law 
bribery act and financial services 
and data security regulations
the legal and regulatory 
environment in which the group 
operates is subject to change
breakdowns in the network would 
reduce quality of service increase 
costs and reduce revenue and 
damage our reputation
failure to meet regulatory 
competition law or bribery act 
or other legal requirements 
could result in prolonged 
investigations with potentially 
severe financial consequences 
and reputational damage
changes in legal and regulatory 
requirements including at eu 
level could impact the group’s 
ability to meet its targets and 
goals for example any change in 
the vat treatment of network 
access services may make the 
use of third party delivery 
services which take advantage of 
those network access services 
less attractive
• we have business continuity plans in place which are owned 
maintained and reviewed by the operations executive
• we have a communication model in place to keep customers 
appraised of potential or actual service impacts
• we continue to engage constructively with ofcom
• our regulation team works with key hm government and eu 
stakeholders on future legislative changes
• we are embedding a structured approach to relationship 
management for our key suppliers including providing visibility 
of contract performance throughout the business
• we have engaged with trade unions at all levels across the 
business and there is constant visibility of issues action taken 
and potential risks 
• the risk management committee conducts formal ongoing 
environmental scanning to identify emerging risks and episodes and 
root causes of incidents that have impacted other businesses and 
might have implications for royal mail group
• comprehensive compliance programmes are in place addressing mail 
integrity aviation security and control of dangerous goods and
• the royal mail group compliance team works with business units 
to maintain an overall compliance framework covering postal 
regulation competition law and bribery act compliance policy 
and processes awareness raising and training programmes
business risks continued 27
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
principal risk impact mitigation
preparing for attracting 
external capital
we need to be in a position to 
implement the provisions of the 
postal services act 2011 
including reaching a sufficient state 
of readiness to obtain access to 
external capital
as we are a recipient of state 
aid granted to hm government 
hm government must submit 
annual reports to the european 
commission about progress with 
our restructuring
without the changes provided for 
by the postal services act 2011 
we would be unable to generate 
sufficient cash to meet these 
obligations on a sustainable basis 
or reach a sufficient state of 
readiness to obtain access to 
external capital
in the event that we fail to 
implement our state aid 
restructuring plan such that this 
amounts to a failure to comply 
with the conditions imposed by 
the european commission the 
european commission has the 
power to reopen its decision to 
approve the state aid we received 
a reopening of the decision 
would at a minimum create 
significant additional work as well 
as a great deal of uncertainty to 
our financial condition
• we successfully completed separation of post office limited and 
royal mail group on 1 april 2012
• we transferred the majority of the liabilities and assets of the 
royal mail pension plan for service up to and including 31 march 
2012 to hm government on 1 april 2012
• we work with hm government in its preparation of an annual 
report to the european commission about progress with our 
restructuring hm government submitted a first report in october 
2012 we are investing in our processes and data readiness to 
help ensure we are in a position to meet any due diligence demands 
relating to any potential transaction
• a director of investor relations has been appointed 
• we are engaging and involving the shareholder to ensure it has 
a full understanding of our plan and business model and
• we have had continuing ongoing dialogue and consultation with 
ofcom during the year to minimise the risk that the regulatory regime 
will be a barrier to our initiatives to drive profitability and to 
maximise commercial freedom within the new ofcom framework 28
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
customers
82 per cent
1
proportion of our customers  
who are satisfied with the  
attitude of royal mail’s  
delivery staff 
75 million
tickets delivered in 16 million  
envelopes for london 2012
people community  environment
£800000
raised by our colleagues and the  
company for prostate cancer uk  
royal mail contributed  
£95 million
2
 in support  
of good causes over the year
bronze
shadow rating in the dow jones 
sustainability world index only  
two other postal operators are  
included in the index
£25 billion
invested annually through procuring  
goods and services from over  
7000 suppliers
50000 days
invested in our people through  
formal training programmes
corporate responsibility
1
  ipsos mori consumer csi and brand tracker survey 
201213
2
  includes our mandated commitments to articles for the 
blind and bpma totalling £61 million 29
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
royal mail group makes a major contribution to the uk’s 
social and economic infrastructure as the sole provider 
of the universal service we play a vital role connecting 
millions of customers businesses organisations and 
communities – including those in the most remote rural 
areas our 124000 postmen and women play a vital role 
in local communities reaching everyone in the uk
the objective at the heart of our business 
strategy and our corporate responsibility cr 
strategy is the same – to ensure a sound and 
sustainable universal service for the benefit 
of everyone in the uk
corporate responsibility is a core part of our 
focus on being a sustainable and stakeholder
centred business it is essential to our business 
success that we behave responsibly and 
sustainably in relation to our people customers 
suppliers communities and environment 
our cr strategy links with our business 
priorities to ensure longterm performance by
• delivering economic and social benefit to the 
communities we serve
• managing our modernisation programme
• driving colleague advocacy of the group and 
its community role
• reducing the environmental impact of our 
business and operations and
• communicating our management 
of corporate responsibilities openly 
and transparently
measuring our progress
we measure our overall corporate 
responsibility performance using business 
in the community’s bitc corporate 
responsibility index alongside our platinum 
ranking in bitc’s corporate responsibility 
index we have achieved a shadow bronze 
ranking in the dow jones sustainability index 
only two other postal operators globally are 
included in the dow jones world index 
our aim is to maintain our platinum bitc 
ranking this objective is one of our key 
deliverables progress against each deliverable 
is reported to the chief executive’s committee 
on a regular basis 
our corporate balanced scorecard supports 
the implementation of our strategy by 
linking achievement of cr objectives such 
as quality of service and customer focus 
to managers’ remuneration 
dedicated to customer service
becoming a more customerfocused 
company is one of our strategic objectives 
see page 10 we are committed to delivering 
for everyone in the uk and set high targets 
for customer satisfaction rates to drive 
our performance
this year we achieved a mean business 
customer satisfaction score of 74 up from 
70 in 201112
3
 
 
see kpis pages 1213
we measure the level of employee focus on 
our customers through regular monitoring of 
their opinions on key aspects of the customer 
experience this year we achieved a score of 
65 compared with 63 last year
 
see kpis pages 1213
three quarters of nonbusiness customers 
polled by ipsos mori agree that “my postie 
provides a good service”
4
 
we employ a range of communication 
channels to listen and respond to customer 
needs including via telephone letter email 
and twitter during 201213 we received 
662 million calls from customers and 
148 million calls from business customers
this year we delivered a quality of service 
performance of 925 per cent in first class 
retail and 987 per cent in second class 
retail
5
 2012 927 per cent and 987 per cent 
respectively
 
see kpis pages 1213
we are very pleased to have exceeded our 
second class target of 985 per cent we 
narrowly missed our first class target of 
93 per cent we are disappointed not to have 
achieved our goal however our performance 
still means that over 12 billion first class 
stamped and metered items were delivered 
on time first time against a backdrop of 
significant operational change 
of course customer service extends beyond 
our commitment to achieving our quality of 
service specifications we are working hard 
to maintain customers’ trust and loyalty while 
at the same time delivering one of the biggest 
modernisation programmes of its kind in 
uk industry
regrettably the number of complaints 
we received increased last year from 
approximately 457600
6
 to 486400
 
see kpis pages 1213
3
 ipsos mori business csi survey 201213 
4
  ipsos mori consumer csi and brand tracker survey 
201213
5
  adjusted measures this accounts for the impact of 
factors which are beyond royal mail’s control such as 
weather and the logistical impact of the london 2012 
olympic and paralympic games
6
  a new complaint type was introduced for 201213 called 
p739 complaints now include a new category for items 
not located at the delivery office which were previously 
reported as claims the 201112 number has been 
restated from 439600 complaints to provide 
a likeforlike comparison 30
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
we are working hard to reduce the number 
of complaints we receive four issues cause 
over 60 per cent of royal mail complaints 
misdelivery redelivery redirection and p739 
or ‘something for you’ cards 
we have introduced a number of measures 
to improve the service our customers receive 
such as the delivery to neighbour programme 
see page 8
supporting our people 
royal mail has long been part of the fabric of 
the uk our people interact with customers on 
a daily basis quite unlike most other companies 
our colleagues are trusted and respected 
they take great pride in the work that they do 
royal mail employs a rich and 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 as part of this endeavour we work 
with business in the community’s 
‘opportunity now’ and ‘race for opportunity’ 
programmes which promote best practice in 
equal opportunities in addition in 201213 
we signed up to the government’s think act 
report initiative which encourages companies 
to share progress in promoting gender equality
springboard is one of our initiatives to promote 
gender equality it is focused on helping 
women to advance their careers within the 
business since 2005 we have run over 50 
courses across the company and have seen 
almost 800 female nonmanagers participate 
in the coming year we hope to offer the 
programme to another 1000 colleagues
overall royal mail’s ethnic profile is 
representative of the uk workforce
7
 with 
around 10 per cent of our employees from 
ethnic minorities however we recognise that 
ethnic minorities could be better represented 
amongst our management population our 
priority going forward is to increase the 
representation of ethnic minorities at all levels 
in royal mail
corporate responsibility  
case study 1 of 2
london 2012 was a major highlight for 
royal mail
we were proud to deliver the tickets for the 
london 2012 olympic and paralympic games 
we successfully handled over 16 million 
items delivering approximately 75 million 
tickets to customers with over 98 per cent 
of them arriving first time on time 
we were also proud to celebrate the 
achievements of team gb 
and paralympicsgb 
we were the first postal administration to 
produce stamps for every gold medallist in 
both games
we also honoured the victories by painting 
110 post boxes gold across the uk in locations 
associated with our gold medal athletes 
the post boxes have now become cherished 
local landmarks and in november 2012 we 
announced that these would remain gold 
permanently with a plaque to name the 
athlete and mark their gold medal 
achievement or mark the location’s 
connection with london 2012
the decision to keep the post boxes gold 
marks the first time in royal mail’s history 
that it has painted its iconic post boxes 
a different colour permanently to mark 
an historic achievement
delivering tickets for london 2012
for more information visit  
wwwroyalmailgroupcom
7
 ons 201011
corporate responsibility continued 31
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
8
  percentage of employees identifying themselves as 
having a disability in the 2013 employee opinion survey
9
  includes our mandated commitments to articles for the 
blind and bpma totalling £61 million
performance
royal mail aims to be a disability confident 
employer we are committed to employing 
people with disability and supporting disabled 
employees during employment 
approximately six per cent of our employees 
have a disability
8
 
to support our people we also make a 
significant investment in our learning and 
development programmes almost 31000 
colleagues undertook formal training last year 
people development also forms a pillar of our 
world class mail wcm programme
we achieved an employee engagement score 
of 50 up from 49 in 201112
 
see kpis pages 1213
our annual employee opinion survey helps us 
identify the areas where we are doing well and 
those we need to improve on threequarters 
of our people responded to the survey up 
from 68 per cent last year 
over threefifths 62 per cent of our people 
feel proud to work for royal mail group and 
seven out of ten say they still want to work for 
us in two years’ time
safeguarding our workforce
our commitment to the safety of our 
employees is an enduring priority for us 
not only does a safer workplace mean less 
harm to our people it means more efficient 
operations our goal is to reduce the number 
of accidents to zero a commitment driven 
throughout the business by a kpi on our 
corporate balanced scorecard
royal mail’s safety strategy is to make safety 
an integral part of the management of our 
business by
• providing visible safety leadership
• ensuring that our safety management 
programmes drive continual improvement 
and are sustainable
• enhancing employee engagement on 
safety and
• continuing to build competency in 
safety management
by supporting our people in their ability to 
manage risk we have achieved a 20 per cent 
reduction in the lost time accident frequency 
rate 117 ukpil employee work related 
accidents resulting in an absence on a 
subsequent day or shift per 100000 hours 
worked in 201213 compared with 147 in 
201112
 
see kpis pages 1213
we strive to improve our safety performance 
in everything we do it is with great regret that 
we report seven people lost their lives in 
connection with our activities in the uk in the 
past year all the 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 the findings are 
communicated across the group and 
discussed at the monthly meeting of the 
board we are improving our processes to 
ensure that recommendations from the 
independent investigations team are dealt 
with in a timely manner our investigations 
have alerted us to potential dangers arising 
when we reverse our vehicles we are tackling 
this hazard by installing reversing sensors on 
our vans
modernising royal mail
central to our relationship with our people is 
the ongoing modernisation of our operations 
this root and branch revision of every aspect 
of the way we work is difficult for our people 
but we are making progress 
452 delivery offices began modernising 
during the year taking the total number of 
offices that have commenced or completed 
modernisation to 860 since the programme 
began this represents over half of our 
locations with the remainder to commence 
by march 2014 298 delivery offices began 
modernising in 201112
 
see kpis pages 1213
we achieved a reduction in delivery hours of 
19 per cent compared with 22 per cent in 
201112 improving the effectiveness of our 
delivery operations is absolutely crucial to our 
continued financial stability and the provision 
of good quality jobs
 
see kpis pages 1213
in consultation with our unions the group has 
made significant commitments to job security 
including an overarching objective to complete 
our modernisation programme without 
compulsory redundancies and a commitment 
to remain a predominantly fulltime workforce
supporting our communities
our support for communities starts with the 
services we provide and our direct economic 
impact as an employer and purchaser of 
goods and services we make one of the single 
biggest economic contributions of any uk 
company research commissioned by royal 
mail from the centre for economics and 
business research cebr estimated that in 
the 201112 financial year in terms of the 
‘valueadded’ from uk operations of companies 
our core uk business ranked as the eighth 
highest in the uk this is supported by our 
active investment in communities and our 
charitable giving programme we recognise 
that our business will only thrive if the 
communities that we serve are thriving too 
in 201213 royal mail contributed  
£95 million
9
 directly to charities good  
causes and schemes for disadvantaged 
groups we also supported £32 million of 
colleague fundraising for charities and good 
causes across the uk and in july 2012 we 
further increased our support for colleague 
fundraising by introducing a penny for penny 
matched giving scheme for our new charity  
of the year programme 
following a successful partnership with the 
children’s charity barnardo’s in march 2012 
our colleagues voted to support prostate 
cancer uk as our new charity of the year 
partner from 2012 to 2014 our aim is to 
raise at least £2 million to fund specialist 
prostate cancer nurses during 201213 
we raised enough money to fund 20 nurses 
royal mail provided £144000 in matched 
giving and grant schemes to support 
employees’ fundraising for all other charities 
and good causes 32
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
corporate responsibility  
case study 2 of 2
managing our environmental footprint
we recognise that our business operations 
have environmental impacts we are 
committed to discovering and adopting 
solutions that minimise our use of natural 
resources safeguard the built and natural 
environment and support the communities 
we serve
in 2008 royal mail was the first postal 
services operator in the uk to achieve the 
carbon trust standard in september 2012 
we successfully achieved recertification this 
was in recognition of our robust approach to 
measuring managing and reducing our 
carbon emissions
over the last year we have been working to 
further strengthen our performance setting a 
clear strategic framework for environmental 
management as part of this renewed drive 
we have set a vision for 2020 and a number 
of new targets these include an aim to 
reduce carbon emissions by 20 per cent 
against a 201011 baseline and send zero 
waste to landfill by 2020 we also strengthened 
our governance framework establishing 
a new environment governance board to 
drive our strategy in addition in 201314 
we will introduce a new groupwide 
environment policy
supplier relationships
royal mail makes a significant contribution to 
the uk economy through our procurement 
spend we contribute around £25 billion 
annually procuring goods and services from 
over 7000 suppliers 
we are committed to ensuring that these 
suppliers maintain high standards of social 
ethical and environmental conduct we expect 
suppliers to adhere to our responsible 
procurement policy and regularly audit their 
compliance the policy is based on the un 
global compact’s ten principles around good 
human rights labour and environmental 
practice and anticorruption in addition we 
encourage them to set targets to improve 
their performance in social environmental 
and ethical issues in 2012 the chartered 
institute of purchasing and supply cips 
recognised our efforts in this area by 
royal mail group supported the movember 
campaign in 2012 a global moustache
growing charity event to raise funds and 
awareness for prostate and testicular 
cancers our charity partner prostate cancer 
uk benefits from funds raised by movember 
in the uk 
over 2500 royal mail employees signed up 
to take part in movember we were informed 
by prostate cancer charity movember that we 
had the second largest number of registered 
fundraisers of any single company network 
worldwide and of our top ten fundraisers 
three were women
we raised over £525500 during the 
campaign including matched giving from the 
company according to movember that is 
more than any other single company network 
in the world we also engaged 23 mps msps 
and researchers in fundraising these funds 
will pay for 13 new prostate cancer nurses in 
areas of need across the uk 
our campaign was shortlisted for two third 
sector business charity award categories 
receiving a highly commended in the 
challenge event in may 2013 
owen sharp ceo prostate cancer uk said 
“reaching men and women from a wide range 
of backgrounds who are not office based is 
very tough to do but royal mail has done 
exactly that thousands of its employees took 
part in movember and for every participant 
there will have been hundreds of other 
people who will have seen the moustache 
when the post was being delivered”
royal mail’s movember campaign
corporate responsibility continued
for more information visit  
wwwroyalmailgroupcom 33
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
awarding royal mail a gold certificate of 
excellence for our purchasing policies and 
procedures – at year end only 15 other 
organisations worldwide had achieved this 
we are now aiming to achieve the prestigious 
platinum standard
transparency
royal mail is committed to being open and 
transparent with our stakeholders we feel 
it is important to ensure that information on 
our performance is as comprehensive and 
comprehensible as possible 
freedom of information requests
each year we receive hundreds of freedom of 
information foi requests about our business 
we have a dedicated team working on requests 
ensuring that we respond as fully as possible 
there are of course times when we may not 
be able to make certain information available 
for example as a commercial operation we 
would decline requests for information that 
would damage commercial interests in other 
cases we do not hold the data requested 
last year 536 requests were referred to our 
central information rights team of those 
188 were answered in full a further 118 were 
answered in part there were 151 requests 
where the information requested was not 
provided for commercial and data protection 
reasons in 79 cases we did not hold the 
information requested these figures are 
broadly comparable with the previous year
returned mail
the overwhelming majority of mail items we 
handle are delivered safely to the correct 
address a small proportion of items are 
however undeliverable for reasons beyond 
our control these include incomplete 
addresses lack of forwarding addresses for 
recipients who have moved house and lack of 
return addresses our national returns 
centre in belfast handles undeliverable mail 
we aim to return undeliverable mail to the 
sender or if this is not possible securely 
dispose of it in 201213 the centre 
processed 1915 million items that should be 
set against the total of some 15 billion 
addressed mail items we handled in 201213
exceptions to our collection and 
delivery service
royal mail aims to collect and deliver every 
item of mail that passes through our network 
there are however cases where this might 
not be possible we publish annual reports 
that detail the universal service exceptions on 
which we are required to report the 2012 
exceptions report published in october 2012 
showed there were 3000 addresses where it 
was not possible to deliver mail compared with 
3013 in 2012 considering royal mail delivers 
to over 29 million uk addresses that figure 
represents only 001 per cent of this total 
during 201213 there were 2001 longterm 
universal service collection exceptions across 
the uk compared with 2100 in 201112 
this represents one per cent of around 
205000 collection points across the uk 
these exceptions can be caused by difficulties 
in accessing post boxes there were also 118 
temporary collection exceptions of more than 
four months 117 in the prior year these 
were due to road or building works that 
limited access to post boxes we report all 
such exceptions to ofcom on a regular basis
mail security
10
we take the security of mail we deliver very 
seriously our security team works around the 
clock to identify any threats to our products 
and services and we have robust measures in 
place to deal with any breaches we now 
publish data on the team’s investigation into 
internal and external crime during 201213 
we raised 658 full criminal investigations into 
internal crime 2012 757 248 former 
employees of royal mail group were 
prosecuted in the uk 2012 315 these 
individuals form a small proportion of an 
overall employee population of almost 
150000 we raised 218 full criminal 
investigations into external crime against 
royal mail 2012 160 with 116 external 
prosecutions 2012 66
political donations
in line with group policy no donations were 
made for political purposes in 201213
summary
corporate responsibility is a core part of our 
focus on being a sustainable and stakeholder
focused business it is integral to our business 
success we have an excellent track record 
in 2012 we achieved our platinum ranking in 
business in the community’s cr index placing 
us amongst the most responsible companies 
in the uk we also achieved a shadow bronze 
ranking in the dow jones sustainability 
world index the leading global sustainability 
benchmark only two other postal operators 
are included
our people make a major contribution to 
the social fabric of the uk they go the extra 
mile in supporting good causes in their local 
communities and we support them in so 
doing over the course of our twoyear 
partnership with prostate cancer uk we 
aim to raise at least £2 million to fund new 
specialist prostate cancer nurses in areas 
of need
looking forward we need to continue to 
improve customer experience across all our 
businesses initiatives such as delivery to 
neighbour aim to do just that we also 
recognise that we need to drive greater 
environmental efficiencies through our 
operations most of all we need to support 
and engage our people throughout this 
period of significant change
10
  numbers have been restated to include parcelforce 
worldwide numbers for full criminal investigations 
were incorrectly reported last year 34
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
governance
les owen 
non executive director
paul murray 
non executive director
cath keers 
non executive director
nick horler 
non executive director
jan babiak 
non executive director
john allan 
non executive director
mark higson 
managing director operations 
and modernisation
our board of directors
donald brydon cbe 
chairman
orna nichionna 
senior independent 
non executive director
moya greene 
chief executive officer
matthew lester 
chief finance officer
details of membership of the 
various board committees can be 
found in the corporate 
governance section 35
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
donald brydon cbe chairman age 68
appointed to the board 27 january 2009 
as a director and 26 march 2009 as chairman
skills and experience donald had a career in 
finance during which he ran two of the major 
global asset management companies owned 
respectively by barclays and axa 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 smiths group 
due to retire in 2013 and 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 the london metal exchange amersham plc 
taylor nelson sofres plc and the ifs school of 
finance and a past director of allied domecq plc 
scottish power plc and axa uk plc  
he is a past chairman of everychild
committee membership chairman of the 
nomination committee and a member of the 
remuneration committee
moya greene chief executive officer age 59
appointed to the board 15 july 2010
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 
retail products at cibc moya became 
president and chief executive officer of 
canada post corporation in 2005 in that 
role she led a wideranging transformation 
programme to improve quality of service 
and efficiency across the organisation
external appointments current and 
former currently director of tim hortons 
in canada prior to joining canada post 
she held senior roles at companies including 
bombardier inc and td bank
committee membership chair of the 
chief executive’s committee
orna nichionna non executive director 
age 57
appointed to the board 1 june 2010 
orna was appointed as senior independent 
non executive director on 1 april 2011
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 and chair of 
trustees of the soil association formerly 
senior independent director of hmv plc 
northern foods plc and of bupa and a non 
executive director of the 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 24 november 2010
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
external appointments current and 
former matthew is a non executive 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 
chief executive’s committee and chairman 
of the pensions committee
mark higson managing director operations 
and modernisation age 57
appointed to the board 5 november 2007
skills and experience mark was previously 
divisional director 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 
chief executive’s committee
john allan non executive director age 64
appointed to the board 14 january 2013
skills and experience john is currently 
chairman of dixons retail plc care uk and 
worldpay he is also a non executive director 
of the home office where he is chair of the 
audit and risk committee
external appointments current and 
former john is also a former senior executive 
and corporate board member of deutsche 
post world net previously amongst other 
senior executive roles john is a former cfo 
and corporate board member of deutsche 
post dhl previously he was ceo of exel plc 
a ftse 100 global logistics company 
committee membership member of the 
audit  risk committee 36
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
our board of directors continued
jan babiak non executive director age 55
appointed to the board 1 march 2013
skills and experience jan previously held 
managing partner and executive board level 
roles at ernst  young she has also been 
an independent board member and audit 
committee chair for logica plc
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
committee membership member of the 
nomination committee and the 
remuneration committee
nick horler non executive director age 54
appointed to the board 1 april 2010
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
external appointments current and 
former currently a non executive director 
of secure electrans ltd and the goahead 
group plc nick is also ceo at alderney 
renewable energy ltd and also chairs the 
advisory board for kpmg’s energy and 
natural resources practice
committee membership member of 
the audit  risk committee and the 
nomination committee
cath keers non executive director age 48
appointed to the board 1 june 2010
skills and experience cath was previously 
customer director and marketing director 
of 02 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 non executive director of 
telefónica europe home retail group plc and 
the insurance group lv
committee membership member of the 
audit  risk committee and the nomination 
committee
paul murray non executive director age 51
appointed to the board 1 august 2009
skills and experience paul has been 
chairman of the audit  risk committee since 
august 2009 and is audit committee 
chairman at qinetiq plc
external appointments current and 
former trustee of pilotlight and non 
executive director of knowledge peers plc 
naked energy ltd qinetiq group plc and 
ventive ltd formerly senior independent 
director of taylor nelson sofres plc and group 
finance director of carlton communications 
plc and of lasmo plc
committee membership chairman of the 
audit  risk committee member of the 
remuneration committee
les owen non executive director age 64
appointed to the board 27 january 2010
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 
and responsible for axa’s asian life insurance 
and wealth management operations
external appointments current and 
former currently non executive chairman 
of jelf group plc and non executive director 
of computershare cpp group plc 
just retirement ltd and of discovery 
holdings a south african listed health and 
life insurer he was chief executive officer of 
axa sun life plc and a member of the global 
axa group executive board and was until 
15 march 2012 a non executive director 
of post office limited
committee membership member of the 
audit  risk committee the pensions 
committee and the remuneration committee
directors who left during the year 
david currie 30 august 2012  37
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ report
directors’ report
the directors present the group annual 
report and audited financial statements for 
royal mail group limited for the year ended 
31 march 2013 25 march 2012
principal activities
the group provides a nationwide and 
international distribution service principally 
of mail and parcels from 1 april 2012 the 
principal activities of post office limited no 
longer form part of royal mail group limited
to enable you to assess 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 
annual report and financial statements 
and are incorporated by reference
index page
review of business and 
future developments 113
results 55116
board of directors 3436
charitable contributions 2833
financial assets and liabilities 87102
people 2833
corporate responsibility 2833
disabled employees 2833
going concern 63
policy on the payment of suppliers
the policy of the company and its principal 
operating subsidiaries is to use their 
purchasing power fairly payment terms are 
agreed in advance for all major contracts 
for lower value transactions the standard 
payment terms of the supplier apply it is the 
company’s policy to abide with the agreed 
terms the company’s average creditor days 
for 201213 were 37 days
land and buildings
the net book value of the group’s land and 
buildings based upon a historic cost 
accounting policy and excluding fitout is 
£724 million 2012 £674 million in the 
opinion of the directors the aggregate market 
value of the group’s land and buildings 
exceeds this net book value by £310 million 
2012 £390 million
qualifying third party indemnity 
provisions for directors
a partial qualifying third party indemnity 
provision as defined in section 234 of the 
companies act 2006 was and remains in 
force for the benefit of all the directors of 
the company and former directors who held 
office during the year the indemnity is 
granted under article 115 of the company’s 
articles of association the indemnity is partial 
in that it does not allow the company to cover 
the costs of an unsuccessful defence of a third 
party claim
directors and their interests
the directors of the company and details 
of changes during the year are given on 
pages 3436 the secretary of state bis 
appoints the chairman all other directors are 
appointed by the company with the secretary 
of state’s consent uk government is the 
company’s sole shareholder the directors 
have no interest in shares of the company
audit information
the directors confirm that so far as they are 
aware there is no relevant audit information 
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
auditor
the auditor is deemed to be reappointed 
under section 4872 of the companies 
act 2006
by order of the board 
jon millidge 
company secretary 
31 july 2013
royal mail group limited 
100 victoria embankment 
london 
ec4y 0hq
company number 4138203 38
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
corporate governance
with effect from 1 april 
2012 post office limited 
became a subsidiary of 
royal mail holdings plc and 
became a sister company 
to royal mail group limited
donald brydon 
chairman
chairman’s introduction
the board is collectively responsible for the 
longterm success of the business we take 
decisions only after the necessary level of 
information has been made available to us 
and with the necessary consideration of all the 
facts including risk the following statement 
is intended to explain our governance 
arrangements in light of the uk corporate 
governance code the ‘code’ principles and 
provisions and to provide insight into how the 
board and management run the business for 
the benefit of the shareholder
the board of directors strongly supports 
the principles of best practice in corporate 
governance and we comply with the uk 
corporate governance code principles 
and provisions in so far as it is appropriate 
to royal mail group as a company with 
a single shareholder
we have undertaken our annual review of the 
performance of the board and have shared 
any issues which have arisen from this review 
with individual directors
an effective board is created by bringing 
together the right mixture of individuals and 
by promoting the right dynamic among those 
individuals in this regard the company is very 
privileged to have on its board a number of 
directors with significant large business 
experience to help guide the business through 
its transformation programme and in helping 
the board to understand the cultural change 
necessary for the business
i trust that you will find this corporate 
governance report helpful and informative
donald brydon 
chairman
the board has focused on the following 
matters during the year
• safety
• operations and modernisation
• growth and innovation
• discussing with ofcom the new regulatory 
framework
• balance sheet restructuring and
• pensions funding
expected board focus for the next year
• safety
• growth segments of the business
• gls
• operations and modernisation
• ongoing access to external capital and 
• pensions funding
governance framework
the board considers that it complied with the 
full provisions of the code during the year 
this report explains the key features of the 
governance framework and how it 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 are either disclosed 
separately or indexed in the directors’ report 
and are therefore incorporated by reference
the role of the board
the board is responsible for setting the 
objectives and strategy of the group and for 
monitoring performance and risk 
management at the end of the year the 
board comprised a chairman three executive 
directors and seven non executive directors 
the biographies of each of the directors 
setting out their current roles commitments 
and previous experience are on pages 3436 
the board met on nine occasions during the 
course of the year under review
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 it delegates responsibilities 
to the board committees detailed in 
this report  39
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
for each scheduled meeting of the board 
the company secretary on behalf of the 
chairman collates and circulates the papers 
aiming to allow sufficient time for the 
directors to review the information provided
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 12 month contracts and non executive 
directors are generally appointed for three 
year terms
the board considers that each of the non 
executive directors is independent this 
means that in the views 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 there is also 
a clear division of responsibilities between the 
chairman and the chief executive officer
the chairman of each of the committees 
reports to the board on matters discussed 
at committee meetings and highlights any 
significant issues requiring board attention 
reports on the work of the audit  risk 
committee and nomination committee on 
work during the year are given on pages 4043 
full terms of reference for these board 
committees can be found on our website 
wwwroyalmailcom
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 following last year’s 
evaluation with the help of the london 
business school this year’s evaluation was 
conducted via questionnaires with an 
opportunity to discuss any issues arising 
it was completed during may 2013 a more 
detailed process will take place again next 
year a performance evaluation of the audit 
 risk committee was conducted by the 
chairman of the committee other committees 
are undertaking a review of their terms 
of reference 
directors’ support
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
director appointment and election
all directors are reappointed with the 
consent of the shareholder 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 the group engages in twoway 
communication with the shareholder to discuss 
information on its strategy performance and 
policies the board receives feedback on these 
meetings from the directors attending them
balance is considered a key requirement for 
the composition of the board not only in 
terms of the executive and non executive 
directors but also with regard to the mix of 
skills experience and knowledge
biographical details for all the directors can be 
found on pages 3436
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 
of the group the board’s policy is normally to 
limit executive directors to one non executive 
directorship for which the director may retain 
the fees see the directors’ remuneration 
report on pages 4654 for details
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 
31 march 2013
gender balance
 female
 male
36 
64 
balance of non executive and 
executive directors
 chairman
 non executive directors
 executive directors
27
9
64  40
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
corporate governance continued
chief executive’s committee cec
chair moya greene
membership rico back ceo gls catherine doran director cio  technology matthew lester group chief finance officer 
neil harnby general counsel mark higson managing director operations and modernisation mike newnham cco 
stephen agar director consumer and network access emily pang chief of staff john duncan group hr director 
sue whalley director of regulation and government affairs shane o’riordain managing director strategy and 
communications and jon millidge company secretary
role the committee is responsible for all the key areas of commercial activity within royal mail 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 
shareholder regulatory and legal requirements the committee also assigns key accountabilities for business performance
audit  risk committee 
chair paul murray
membership non executive directors – orna nichionna cath keers nick horler les owen and john allan
role the committee which is supported by the risk management committee provides a forum for reporting by both internal 
and external auditors and is responsible for a wide range of matters including
• to oversee the process for managing risks across the business including review of the group risk profile and ensuring 
risks are being addressed by the board relevant committees and management
• to monitor the integrity of the financial statements of the group
• to monitor and review the effectiveness of the group’s risk management processes and the control environment
• to monitor and review the scope of work authority resources and effectiveness of the group’s internal audit  risk 
management function
• to recommend to the board for shareholder approval the appointment of the external auditor and to approve its 
remuneration and terms of engagement to monitor and review the scope and work of the external auditor to ensure 
that it is appropriate including the external auditor’s independence and objectivity and
• where the committee’s monitoring and review activities reveal cause for concern or scope for improvement to make 
recommendations to the board or management on action needed to address the issue 41
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
audit  risk committee continued
work during the year key matters the committee considered and actions taken during the year include
• material judgements used by management in the interim and year end results including assessment of accrued 
income provision for industrial diseases and accounting for pensions each of these was assessed in light of ranges of 
estimates and third party expert reports
• relevant changes to accounting standards
• the external audit engagement letters and annual audit fee and the policy for approval of nonaudit fees paid to the 
group’s auditors
• a review of the effectiveness of the external audit process including consideration of team structure global integration 
tailoring of audit leveraging of sources of assurance use of technology professional scepticism technical ability 
communication and reporting audit efficiency and effectiveness and independence and quality control
• reviewing the external auditor’s report on their audit activity and opinion on royal mail’s annual report including 
observations on the control environment
• royal mail’s treasury policy statement
• the group risk profile showing those risks of most significance to royal mail
• the remit resources and plan of the internal audit function and the breadth of the internal audit plan which includes 
reviews of selected specific critical business controls reviews and investigations into specific areas of the business 
selected on a risk basis and reviews of key risk management processes
• reports from internal audit on key areas and initiatives in the business including modernisation programme fleet 
pension system post office separation and regulatory compliance
• summary of results of whistleblowing cases
• the chair of the audit  risk committee met formally with the internal audit  risk management director and with 
the external auditors separate from royal mail senior executive management as part of standard process on five 
occasions in the year to provide a further opportunity for any issues to be aired and dealt with
• summary of results of depot and head office audits in gls
• the compliance report including changes in external environment and rollout of training in relation to bribery act 
and competition law
• reviewing a report from royal mail’s external auditors on royal mail’s compliance with the uk corporate governance 
code which would be applicable to royal mail had it been listed for the year ended 31 march 2013 
• directors’ expenses for the period
• the audit  risk committee’s calendar and agenda for 2013
• the committee also held direct discussions with senior management to understand and review issues and actions in 
key areas of the business including human resources and regulatorycompetition law compliance and
• the committee carried out a selfassessment of its own effectiveness using issuespecific questionnaires and 
nedonly discussion of responses
chairman’s statement although not members of the committee the group cfo company secretary director internal audit  risk 
management and director of financial control attend each meeting by invitation as does the lead audit partner from our 
external auditors the committee met on five occasions during the year a significant amount of time this year has been 
spent reviewing the group risk profile obtaining management updates on specific risks and ensuring the alignment of 
the group risk profile to the strategic plan
after each committee meeting i report to the board on the main issues that the committee has discussed
it has been a year of sound progress and our forward business schedule suggests another busy year ahead given the 
skills knowledge and experience of the committee members we are well placed to meet the challenges and 
opportunities we face
paul murray 
chairman of the audit  risk committee 42
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
corporate governance continued
remuneration committee
chair orna nichionna
membership chairman – donald brydon non executive directors – les owen paul murray and jan babiak
role • 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 chairman the executive directors and the company 
secretary subject where necessary to the consent of the secretary of state and
• to agree the targets for any performancerelated incentive schemes applicable to senior executives
work during the year examples of matters the committee considered during the year include reviews of
• performance targets
• reward philosophy and policy
• gls bonus and pay and
• committee’s independent consultants
chairman’s statement the committee met on eight occasions during the year a report detailing the work carried out by the remuneration 
committee during the year including an explanation of how it applies the principles of the code in setting executive 
directors’ remuneration follows this section
orna nichionna 
chair of the remuneration committee
nomination committee
chair donald brydon
membership non executive directors – orna nichionna nick horler cath keers and jan babiak
role • to lead a formal rigorous and transparent process for appointments to the board of the company to the boards of 
subsidiaries and to other senior executive positions
• to advise the board on succession planning for the positions of chairman chief executive officer and all other board 
appointments and
• to keep under review the balance of board membership to ensure that it has the required mix of skills knowledge and 
experience
work during the year examples of matters the committee considered during the year include
• the recruitment and appointment of new non executive directors
• succession planning and
• considering future experience skills and capabilities required on the board
chairman’s statement the committee has continued to evaluate the balance of skills knowledge and experience of the board and its diversity 
and is committed to its progressive renewal through orderly succession succession plans for the non executive directors 
and executive directors were kept under review during the year we welcomed john allan and jan babiak as new non 
executive directors to the board
donald brydon 
chairman of the nomination committee 43
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
pensions committee
chair matthew lester
membership jon millidge company secretary neil harnby general counsel and les owen non executive director
role • to review funding benefits scheme structure and strategic developments impacting the group’s occupational pension 
schemes and
• to represent the group in discussions with the trustees of the group’s occupational pension schemes
work during the year examples of matters the committee considered during the year include
• scheme funding
• investment strategy
• scheme design and
• implementation of workplace pension reform ‘autoenrolment’
chairman’s statement the committee has continued to monitor strategic developments impacting on the company’s pension arrangements 
including the government’s ‘autoenrolment’ legislation due to the size of its workforce the company was one of the 
first employers to implement these new requirements it has also worked closely with stakeholders regarding the march 
2012 actuarial valuations of the royal mail pension plan and the royal mail senior executives plan and oversaw the 
closure of the latter to future benefit accrual from 31 december 2012
matthew lester 
chairman of the pensions committee
during the year the directors attended the following number of meetings of the board and its main committees
attendance at board and committees
name board audit  risk remuneration nomination
total number of meetings 9 5 8 3
chairman
donald brydon 99 – 88 33
executive directors
moya greene 89   
mark higson 89   
matthew lester 99   
non executive directors
david currie 33 22 44 
nick horler 89 55 14 33
cath keers 79 45 24 33
paul murray 99 55 88 
orna nichionna 99 45 88 33
les owen 99 45 88 
john allan 23 11  
jan babiak 11    44
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
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 group chief executive officer
nonaudit services provided by the 
external auditor
in some cases the nature of advice required 
makes it more timely and cost effective to 
select the external auditor who already has  
a good understanding of the group in order 
to maintain the objectivity and independence 
of the external auditor the audit  risk 
committee has determined what work can  
be provided by the external auditor and the 
approval processes associated with the auditor 
the audit  risk committee monitors the level 
of nonaudit fees paid to the external auditor
for this financial year the statutory auditor 
prepared a report outlining how it assesses its 
own independence
risk management and control overview
the board believes that effective risk 
management and a sound control 
environment are fundamental to the group
the 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 turnbull committee 
as part of ‘the combined code’ including 
financial operational compliance risks and 
risks to reputation the process incorporates 
both a topdown element which collates 
executive managementboard view of key 
risks and a bottomup element which 
collates the views of the business units and 
functions on risks in their area taken 
together these two perspectives are 
combined to form the group risk profile
the process has been in place throughout the 
year and up to the date of approval of these 
financial statements
the responsibility for joint ventures and 
associates rests on the whole with the senior 
management of those operations the group 
monitors its investments and exerts influence 
through board representations
risk environment
in the main the principal risks facing the 
group have not changed a risk with respect 
to insufficient readiness to access private 
sector capital has been added and the risk 
relating to cash management activities do not 
maintain solvency was removed as it no 
longer represented an exposure to the group
the group has classified its principal risks into 
five main categories changes in customer 
preferences and competitor activity economic 
environment preparing for attracting external 
capital business modernisation and risks 
inherent in the postal industry an analysis of 
the risks their impacts and mitigating actions 
is given on pages 2427
risk framework
the groupwide risk management 
framework includes risk governance risk 
identification measurement and management 
and risk reporting
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’ 
that is
a  primary controls over the risks to 
the business are located in the  
daytoday operation
b  these are supported by internal 
monitoring and oversight and
c  independent assessments by internal 
audit and others provide the third line
the process for risk identification and 
management consists of formal identification 
by management at each level of the group of 
the key risks to achieving their business 
objectives and the controls in place to manage 
them the likelihood and potential impact of 
each risk is evaluated risk management 
action plans are monitored at executive level 
to ensure key risks are being mitigated
the views of top management and units
functions are collated and brought together 
in the group risk profile to form a 
comprehensive view of key risks in the 
organisation the group risk profile is 
reviewed annually against the business 
strategy and refreshed where necessary
the process also includes an annual 
certification by management that the internal 
controls are such that they provide reasonable 
assurance that the risks are appropriately 
identified evaluated and managed
the system of risk management and internal 
control is embedded into the operations of the 
group and the actions taken to mitigate risk 
or address any weaknesses are monitored
risk governance and the board
the board has delegated responsibility for 
specific review of risk and control processes 
to the audit  risk committee arc and 
the arc in turn is supported by the risk 
management committee rmc to help 
discharge its duties the key responsibilities 
for risk and control among the board 
arc and rmc are set out in this section 
of this report
royal mail group’s attitude to risk
the structural legacy issues relating to 
pensions and the regulatory framework have 
been resolved and the group’s revenues 
profits margins and cash flows have all 
improved the letters portfolio remains under 
structural decline but at the same time the 
shift to online retailing has provided 
opportunities in the parcels portfolio whilst 
the european parcels business operates in 
difficult economic market conditions
the group risk profile which identifies the 
highest risks in terms of financial impact and 
possibility has been modified during the year 
and each risk has clear accountabilities and 
milestones to ensure that all mitigating action 
can be taken during the year executives from 
human resources and compliance were 
invited to attend the arc and explain their 
respective risk and how it is being managed 
internal control
the group operates a system of internal 
control including operational financial and 
compliance controls and risk management 
systems to control the daytoday operations 
of the group’s activities in terms of the ‘three 
lines of defence’ model the key processes 
and controls include
corporate governance continued 45
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
first line
• management the group has an established 
management organisation with structure 
reporting lines accountabilities and 
delegated authorities
• key policies and documentation
 – a number of royal mail’s activities are 
mandated through the postal services 
act 2011 and royal mail is further 
bound by regulatory requirements 
including those which cover service 
standards complaint handling 
integrity of mail access to postal 
facilities accounting separation and 
process for postal services
 – the group’s code of business standards 
sets the principles of professionalism 
and integrity for our people
 – standard policies exist within 
each function
• standard daily and monthly management 
accounting and payroll processes through 
centralised shared services for the 
uk businesses 
• a budget prepared reviewed and set once 
a year providing clarity on the shortterm 
strategies for each part of the group this 
along with the delegated authorities resets 
the levels of delegated spend in each area 
on an annual basis
• performance management reviews include 
production of weekly indicators and a 
pyramid of monthly balanced scorecards 
from front line operations to holdings board 
level which underpin quarterly reviews and 
the interim and year end results
• mediumterm business plans are collated on 
a regular basis and submitted to both the 
shareholder and the regulator as part of 
formal external processes such as 
regulatory framework reviews and state aid 
applications this provides regular 
opportunities for executive management 
and the board to reappraise and confirm 
longterm strategies and objectives for 
the group
second line
• regular rolling reviews and audits are 
carried out within the operations covering 
key operational areas
• a self assessment is conducted of key 
financial and nonfinancial processes across 
all parts of the uk businesses including 
commercial and operations and within each 
key function
• annual signoff by finance directors to 
provide a formal confirmation including 
proper preparation of financial results 
compliance with group accounting policies 
compliance to statutory reporting standards 
and tax accounting arrangements 
disclosure of post balance sheet events and 
related party transactions and maintenance 
of an appropriate system of internal control 
including disclosure of material weaknesses 
and confirmation of remedial action plans
third line
• specific and targeted internal audit work 
programme the effectiveness of the 
internal control system is reviewed regularly 
by internal audit  risk management 
iarm the group’s independent internal 
audit function iarm reports to the arc 
and provides assurance to executive 
management and the board on the 
effectiveness of the internal control system 
internal audit reports include an action plan 
where issues have been identified and 
progress against action plans is regularly 
tracked and reported
iarm establishes and agrees with the arc 
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 and the 
communications industry
• external audit and other reviews
external audits and reviews take place during 
the year to provide management the board 
and the regulator with assurance on specific 
matters including
 – 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 condition 1 requirements
 – the external auditor confirms that the 
statement to the regulator on 
‘necessary resources’ is consistent with 
their audit findings as part of 
transitory condition 3 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
 – the 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 provider 
condition requirements
statement by the independent 
non executive directors
a number of structured processes exist 
throughout the business to support good 
governance
the independent non executive directors 
are satisfied that the company’s corporate 
governance and internal controls have been 
effective throughout the financial year ended 
31 march 2013
orna nichionna 
senior independent director 46
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ remuneration 
report for 201213
this report explains the approach adopted by the 
remuneration committee when setting the remuneration 
of the company’s executive directors and certain 
other senior executives it has been prepared taking 
due account of the directors’ remuneration report 
regulations in so far as royal mail group as a nonlisted 
company can comply with them this report is split 
into two sections i the policy report setting out 
the overall policy for executive remuneration and ii 
the implementation report setting out details of 
remuneration paid or awarded in 20122013 
overview by the chair of the 
remuneration committee
201213 was a year of very significant 
progress for royal mail as we put the universal 
service on a secure footing we have made 
considerable headway with respect to the 
achievement of our three strategic objectives 
see page 10 particular highlights include 
• group revenue has increased by five per 
cent on a likeforlike basis profit after 
transformation costs grew to £403 million 
on a 52 week basis and we generated free 
cash inflows of £334 million mainly through 
our trading performance 
• ukpil our core uk business is now the 
biggest contributor to group profit its parcel 
revenue increased by 13 per cent while 
letter revenue increased by three per cent 
on a likeforlike basis and
• our customer satisfaction ratings are high 
we delivered more than 75 million tickets 
for london 2012 with over 98 per cent 
arriving on time first time we rolled out our 
delivery to neighbour programme across 
the uk
this robust financial and operating 
performance reflects the substantial progress 
made by the group led by the executive team 
the committee recognises that executive 
reward is a sensitive issue for society at large 
the committee determines remuneration 
levels carefully and the secretary of state for 
the department for business innovation and 
skills bis approves any material changes to 
the remuneration arrangements of royal mail 
group executive directors including the 
approach and targets relating to the short 
term and long term incentive plans 
review of remuneration for executive 
directors
during 201213 the committee conducted 
a comprehensive review of the remuneration 
packages of the senior executive population 
including the executive directors 
benchmarking them against comparable 
companies appropriate comparator 
companies were chosen from the utilities 
consumer services industrials and 
telecommunications industries the 
companies were selected as they shared 
certain characteristics relating to size and 
complexity and regulatory environment 
the key findings of this review were 
• the base salaries of the executive directors 
are below the median with the chief 
executive officer’s salary falling in the 
bottom quartile range it is worth noting 
that neither the chief executive officer nor 
the chief finance officer has received an 
increase in their base salary since they 
joined the company in july and november 
2010 respectively 
• the incentive opportunity stip and ltip 
is significantly below market average both 
as  a percentage of base salary and in 
value terms
• total remuneration levels are below the 
market average with total remuneration 
for the chief executive in the bottom 
quartile range
the remuneration arrangements are 
structured so that a significant proportion 
of the overall reward package for executives 
is dependent on performance against short 
term and longer term measures and targets 
the committee is satisfied that there is a 
strong link between the rewards received by 
the executive directors under the short term 
incentive plan ‘stip’ and the financial and 
operational performance of the group 
the stip is primarily dependent on the 
achievement of corporate targets as 
summarised in the corporate balanced 
scorecard which lists 13 key performance 
indicators kpis in four equallyweighted 
quadrants people customer performance and 
financial within these quadrants performance 
achieved or exceeded the target level for 11 
out of the 13 kpis with stretch performance 
achieved for six of them there are no long 
term incentive plan ‘ltip’ awards vesting to 
executive directors this year the performance 
targets for the first awards under the current 
ltip have been met in full reflecting the strong 
financial performance of the group over the 
three year period to 201213 however 
the awards are subject to an additional 
deferral period requiring continued service 
to 31 march 2014 
the committee believes that the current 
remuneration policy is appropriately aligned 
to the business strategy and that there is a 
strong link between performance and reward 
no changes to the policy are proposed for 
201314 except that the ltip award for 
201314 will convert to shares upon a 
transaction
on behalf of the committee i commend this 
report to all stakeholders in royal mail group
orna nichionna 
chair of the remuneration committee 47
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
governance
policy report 
this part of the executive directors’ 
remuneration report sets out the current 
remuneration policy the policy remains 
unchanged for the forthcoming year except 
for the change to the ltip arrangement 
outlined in my overview above
summary of executive director 
remuneration policy
the remuneration committee determines on 
behalf of the board the company’s policy on 
the remuneration of senior executives and the 
executive directors subject where necessary 
to the consent of the secretary of state 
the company’s policy on executive directors’ 
remuneration is that
•	a	significant	proportion	of	the	remuneration	
package should be dependent on 
achievement of stretching performance 
targets – both short and long term
•	incentives should be designed so that they 
align the interests of senior executives 
customers and the shareholder
•	variable reward should be structured so as 
to achieve a balance between short term 
and long term incentive programmes and 
•	the overall remuneration package should be 
sufficiently	competitive	to	attract	and	retain	
executives with the commercial experience 
to run a large complex business in a highly 
challenging context
the table summarises each element of the 
remuneration policy for the executive 
directors explaining how each element 
operates and how each part links to the 
corporate strategy
summary table setting out the key features of remuneration policy  
for executive directors
the following table sets out a summary of each element of the executive directors’ remuneration 
packages the policy for how these are operated and their link to the company’s strategy 
element of 
reward
 
structure and opportunity 
base salary its	aim	is	to	help	recruit	and	retain	executives	of	a	sufficiently	high	calibre	
to manage	a	large	and	complex	business	in	a	highly	challenging	context	
paid monthly in cash and reviewed annually but not necessarily  
increased annually
the secretary of state’s bis consent is required for all material changes  
to remuneration including base salary increases
pension its	purpose	is	to	provide	appropriate	levels	of	retirement	benefits	it	consists	
of	a	mix	of	company	contributions	to	defined	contribution	pension	schemes	
and a cash supplement in lieu of pension amounting to a total of 40 per 
cent of salary
other	benefits company	car	and	health	insurance	or	the	cash	equivalent	of	any	benefits	 
not	taken	and	other	contractual	benefits
the	chief	executive	is	eligible	for	two	return	flights	to	canada	each	year	and	
financial	advice	
short term 
incentive plan 
stip
its	aim	is	to	drive	and	reward	annual	performance	against	financial	and	
nonfinancial	targets
80 per cent of the stip is dependent on the achievement of corporate targets 
as summarised in the corporate balanced scorecard cbs the cbs is directly 
linked to the achievement of the group’s strategic objectives see page 10 and 
is used to determine stip awards for all royal mail group managers cbs 
targets	relate	to	financial	and	operational	performance	and	people	and	
customer measures with all four quadrants given equal weighting
the	stip	operates	between	three	specific	points	for	each	measure	
threshold	target	and	stretch	once	a	measure	has	achieved	a	specific	
threshold 50 per cent of the stip for that measure is awarded if a measure 
achieves target 100 per cent of the stip for that measure is awarded if the 
measure outperforms the stip pays out above its target rate proportionally 
up to a maximum stretch at which it is capped 
see page 52 for details of the metrics used in the corporate scorecard for 
201213
the remaining 20 per cent of the stip is dependent on the achievement of 
specific	personal	targets	in	addition	to	the	corporate	and	personal	targets	
a minimum	level	of	operating	profit	must	be	achieved	before	any	executive	
director becomes eligible for a payment
for ontarget performance the stip opportunity is 60 per cent of base salary 
for the chief executive and finance director with the maximum at stretch 
performance being 100 per cent of salary the stip opportunity for ontarget 
performance is 48 per cent of base salary for the managing director 
operations and modernisation with the maximum being 80 per cent of salary
payable in cash annually based on performance against the group’s kpis 
as outlined	in	the	cbs	and	personal	goals
the structure and size of the stip is approved by the secretary of state for 
the department for business innovation and skills  48
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ remuneration report continued
element of 
reward
 
structure and opportunity 
long term 
incentive plan 
ltip
its purpose is to drive and reward delivery of sustained long term financial 
performance the measures and targets are chosen to support the 
achievement of the company’s key strategic objectives
awards take the form of a right to receive a cash amount normally three 
years after grant subject to continued employment and the satisfaction of 
the performance conditions awards are made each year a threshold applies 
below which no payment is made the threshold is 70 per cent of the 
operating profit target the maximum payment is awarded upon achievement 
of a stretch target the stretch target is 120 per cent of the operating profit 
target full details are set out on page 53
the performance conditions are based on both operating profit and return 
on total assets rota in the third year of a three year performance period 
with the targets for each measure derived from the company’s business plan 
the operating profit is the audited figure as presented in the company’s 
annual report the rota figure is verified by auditors separately
the primary performance measure is operating profit with the indicative 
payout under this measure then subject to a downwardonly adjuster based 
on rota targets rota was chosen as the secondary measure as it covers 
the need to make a sufficient return both on any new investments and on  
the existing asset base 
for awards to pay out in full both the operating profit and rota targets  
must be met in full details of the operating profit and rota targets applying 
to existing ltip awards are provided on page 53
for achieving target performance the ltip opportunity is 70 per cent of 
salary for each of the executive directors the maximum ltip opportunity  
is 98 per cent of salary for achieving the stretch target
the ltip award for 201314 will have the same basic structure as last year 
but instead of the target ltip opportunity 70 per cent of salary being based 
on the business plan number as in prior years the target ltip opportunity 
will be subject to a level of performance which will be 10 higher than the 
business plan number 
in the event of a sale of shares in royal mail group the ltip award for 
201314 will convert into shares at the volume weighted average price 
vwap for a specified period post transaction and these shares will be 
subject to the same multiplier
the remuneration committee has the discretion to clawback the value of  
any cash amount received if it transpires that an award has been paid on  
the basis of misstated results due to willful wrongdoing by employees  
this restriction lapses five years from the vesting date
the ltip grants size and targets are approved by the secretary of state  
for the department of business innovation and skills 49
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
governance
date of contract
unexpired term 
months
moya greene 15 july 2010 12
matthew lester 24 november 2010 12
mark higson 5 november 2007 12
the nonexecutive directors have service contracts but do not have employment contracts 
the company is committed to the service contracts for the remaining term of appointments 
subject to annual review and notice for nonexecutive directors including the chairman  
the service contract dates as at 31 march 2013 for the nonexecutive directors who have 
served during the year are as follows
date of contract
unexpired term 
months
donald brydon 26 march 2012 24
john allan
1
14 january 2013 33
jan babiak
2
1 march 2013 35
nick horler
3
1 april 2013 36
cath keers
4
1 june 2010 2
paul murray
5
1 august 2012 28
orna nichionna
6
1 june 2010 2
les owen
7
27 january 2013 34
fees for the chairman and  
non executive directors
the fee levels are set taking into account the time 
commitment and responsibilities of the chairman  
and non executive directors
fees are paid monthly in cash
the fees for the chairman are set by the secretary  
of state for the department of business innovation 
and skills 
fees for the non executive directors are determined 
by the executive directors and are submitted to the 
secretary of state for approval
details of the current fee levels are set out in the 
implementation report fees are reviewed on a 
periodic basis
directors’ service contracts 
the committee’s policy is that executive 
directors appointed to the board are given 
notice periods of one year and that they  
must give six months’ notice of departure 
the committee has a defined policy on 
remuneration and mitigation to be applied in 
the event of an executive director’s contract 
being prematurely terminated in such 
circumstances steps would be taken to ensure 
that poor performance is not rewarded 
the rolling service contracts of the executive 
directors include the following terms as at  
31 march 2013
1
  john allan was appointed on 14 january 2013  
for a three year term to 13 january 2016
2
  jan babiak was appointed on 1 march 2013  
for a three year term to 28 feb 2016
3
  nick horler was reappointed on 1 april 2013  
for a further three year term to 31 march 2016
4
  cath keers was subsequently reappointed on 1 june 
2013 for a further three year term to 31 may 2016
5
  paul murray was reappointed on 1 august 2012  
for a further three year term to 31 july 2015
6
  orna nichionna was subsequently reappointed  
on 1 june 2013 for a further three year term to  
31 may 2016
7
  les owen was reappointed on 27 january 2013  
for a further three year term to 26 january 2016 50
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ remuneration report continued
reward scenarios
the chart opposite shows how the 
composition of each of the executive directors’ 
remuneration packages varies at different 
levels of performance achievement the chart 
also shows the total amount of remuneration 
and the proportion made up by each element 
of pay under each scenario 
ontarget performance assumes a payment 
of 60 per cent of salary under the stip  
48 per cent for mark higson and 70 per cent 
of salary under the ltip 
maximum performance assumes full 
achievement of the stip and ltip stretch 
targets providing an stip award of 100 per 
cent of salary 80 per cent for mark higson 
and an ltip award of 98 per cent of salary 
14 x target 
0
250
500
750
1000
1250
1500
1750
ltip stip fixed pay
on
target
matthew lester
minimum maximum on
target
moya greene
minimum
executive directors’ reward scenarios
 
£738
£1386
£1724
£614
£1171
£1462
£615
£1120
£1377
maximum minimum on
target
mark higson
maximum
100 53 43 100 52 42 100 55 45
22
26
18
27
25
30
29
29
29
28
22
25
£’000
fixed pay includes salary benefits and pension 51
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
governance
implementation report
this part of the directors’ remuneration 
report sets out how the remuneration  
policy and practices for the company were 
implemented over the financial year details  
of the remuneration earned by executive 
directors and the outcomes of incentive 
schemes together with the link to company 
performance are also provided in this 
implementation report
the detailed information about the executive 
directors’ remuneration set out below and  
on pages 46 to 54 has been audited by the 
company’s independent auditors ernst  
young llp
membership of the remuneration 
committee
the members of the committee during the 
last financial year were orna nichionna 
chair donald brydon jan babiak from  
1 march 2013 paul murray and les owen 
david currie nick horler and cath keers were 
also members of the committee until 20 june 
2012 all of these are or were independent 
nonexecutive directors as defined under  
the 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 43
the committee obtains information and 
advice from inside and outside the group  
jon millidge the company secretary acted as 
secretary to the committee internal support 
was provided by john duncan the group hr 
director supported by other members of the 
hr department as appropriate moya greene 
the chief executive was also invited to attend 
meetings where appropriate no individual 
was present when matters relating directly  
to their own remuneration were discussed 
new bridge street was appointed by the 
committee in 2011 to act as the independent 
adviser to it on remuneration matters new 
bridge street nbs is a trading name of aon 
hewitt limited which is a subsidiary of aon 
plc advice provided by nbs to the committee 
during the year included
• attendance at committee meetings
• provision of pay benchmarking data  
for the senior executive team see below
• annual update for the committee on 
developments in best and market practice 
and regulatory requirements for all 
remuneration elements
• review of the incentive schemes and 
structure of the remuneration packages
• assistance with the drafting of the 
remuneration report
nbs is also assisting the company in the 
design of the employee share scheme as 
outlined in the postal services act 2011 
which provides that a minimum of ten per cent 
of shares in the company or the equivalent 
value will be reserved for employees in the 
event that the government’s shareholding in 
the group falls to zero the remuneration 
committee is satisfied that these additional 
services in no way compromised the 
independence of advice provided by nbs 
nbs is a signatory to the remuneration 
consultants’ code of conduct
during the year towers watson limited 
provided the company with advice on 
pensions and actuarial matters and cameron 
mckenna provided advice on service contracts 
base salaries
as stated above the committee’s underlying 
policy with regard to senior executive base 
salaries is that levels are enough to recruit 
and retain executives of a suitably high calibre 
to manage a very large and complex company 
which faces many challenges during 201213 
a comprehensive review of the senior 
executive population against a comparator 
group of similar companies found that the 
base salaries of the executive directors were 
below the median with the chief executive 
officer’s salary falling in the bottom quartile 
notwithstanding this no increases were made 
to the base salary of the executive directors 
this means that neither moya greene nor 
matthew lester have received an increase  
in their base salary since they joined the 
company in july 2010 and november 2010 
respectively mark higson’s base salary has 
not increased since 2008 
pensions
as in previous years mark higson and matthew 
lester receive a cash supplement of 40 per 
cent of salary in lieu of pension contributions 
moya greene also receives pension 
arrangements valued at 40 per cent of basic 
salary in line with other executive directors in 
201213 moya greene received a contribution 
to an approved defined contribution plan  
of £50000 the hmrc annual limit and 
£150000 cash in lieu of pension contributions 
in total worth 40 per cent of salary 
in previous financial years the company  
has made contributions for moya greene to  
a uk hmrc approved pension plan and an 
unfunded promise which together total 40 per 
cent of salary the cumulative value of this 
unfunded promise was £277943 at the end of 
201213 201112 £261222 based on the 
value of the amounts accrued having been 
invested in uk 5year gilts 52
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ remuneration report continued
20 per cent of the stip award is based on 
specific	personal	targets	the	targets	were	 
set at the start of the year based on each 
executive director’s area of responsibility  
the committee reviewed performance against 
these objectives at the end of the year and 
awarded bonus payments accordingly
the total stip payments awarded to the 
executive directors for performance in 
201213 were as follows
•	moya greene – 80 per cent of salary
•	matthew lester – 80 per cent of salary
•	mark higson – 57 per cent of salary
the	above	payments	reflect	the	achievement	
of very strong performance against most of 
the measures and targets in the stip 
customer 25
financial 25
performance 25
people 25
first class retail quality of service
mean customer 
   satisfaction
total 
 complaints
    total 
   expenditure – 
  operating 
 cost of uk 
businesses
      operating 
   proﬁt before 
exceptionals
free cash ﬂow
total revenue
transformation                  
delivery               
 gross hours          
yearonyear     
reduction
delivery    
ofﬁces   
fully  
modernised 
lost time 
accident   
frequency    
rate     
employee
engagement      
increase           
index               
employee 
engagement  
customer 
focus
5
5
5
5
10
10
10
10
5
10
10
corporate
balanced
scorecard
100
10
5
second class retail 
      quality of service
short term incentive plan stip
the structure of the stip is outlined in the 
table on page 47 for each of the executive 
directors 80 per cent of the stip was 
dependent on the achievement of corporate 
targets with 20 per cent dependent on the 
achievement	of	specific	personal	targets	
again our benchmarking advice in 201213 
demonstrated that the total opportunity 
remained below typical market levels with  
the	opportunity	for	the	chief	executive	officer	
again falling in the bottom quartile both for 
ontarget and for stretch performance 
a	minimum	level	of	operating	profit	before	
transformational costs and other exceptional 
items must be achieved before an executive 
director becomes eligible for a payment  
this payment then depends on to what  
extent the corporate and personal objectives 
were achieved for the year in question this 
minimum	profit	level	was	£400	million	actual	
profit	achieved	was	£633	million	
a blend of targets determined the extent to 
which stips could be earned in 201213  
the chart above contains a summary of  
the corporate metrics under the corporate 
balanced scorecard which was used to 
determine 80 per cent of the stip award  
the same corporate balanced scorecard was 
also used to determine stip awards for all 
royal mail group managers the committee 
reviewed these measures and targets to 
ensure that they were appropriate and 
consistent with challenging levels of 
performance
strong performance was achieved across all 
four quadrants people customer performance 
and financial target performance or above 
was achieved in 11 out of the 13 kpis and the 
stretch hurdle was exceeded in six of them the 
total award resulting from achievement of the 
scorecard for 201213 was at 80 per cent of 
the maximum ie 64 per cent of salary for moya 
greene and matthew lester and 51 per cent  
of salary for mark higson the maximum 
opportunity was of 80 per cent and 64 per cent 
of salary respectively  53
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
governance
long term incentive plan ltip
as outlined in last year’s report in 201112 the remuneration committee established a new 
ltip the structure of which is set out below the ltip is a conditional award payable in cash 
which usually vests in the third year after the grant is made provided that stretching financial 
performance conditions are met in 201112 the remuneration committee awarded two 
grants to the majority of participants including executive directors to reflect the fact that  
an award it intended to grant in 2010 had not been made both grants reward performance 
over a three year period however the award in respect of 2010 will not vest for another  
year ie until the end of 201314 to provide additional long term focus a further grant of  
70 per cent of salary was made in respect of 201213 which will vest at the end of 201415 
ie in march 2015 subject to performance against targets 
the table below sets out details of the outstanding ltip awards
name ltip award
final year of 
performance 
period
target  
value  
of award  
£’000
maximum 
value  
of award 
£’000
moya greene 2010 201213 £349 £488
2011 201314 £349 £488
2012 201415 £349 £488
mark higson 2010 201213 £300 £420
2011 201314 £300 £420
2012 201415 £300 £420
matthew lester 2010 201213 £300 £419
2011 201314 £300 £419
2012 201415 £300 £419
the ltip is subject to two performance conditions the primary measure is operating profit
operating profit performance in the  
final year of the performance period  
ie 201213 201314 or 201415 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 to 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
the secondary measure is a downwards only 
adjustment based on rota targets if rota 
is greater than 90 per cent of target there 
is no adjustment if rota is between 75 per 
cent of target and 90 per cent of target there 
is a 50 per cent reduction in the level of 
vesting achieved under the operating profit 
performance condition if rota is less than 
75 per cent of target then the award lapses 
irrespective of operating profit performance
the year being reported on 201213 was 
the last year of the performance period for 
the 2010 ltip award the operating profit 
target for 201213 was £368 million and 
the rota target was 135 per cent actual 
operating profit for 201213 was £635 million 
and rota was 258 per cent accordingly the 
total percentage of ltip awards for 201213 
vesting was 140 per cent of target equivalent 
to 98 per cent of salary 
this results in the following potential awards 
to the executive directors moya greene – 
£488000 mark higson – £420000 matthew 
lester – £419000 the awards are still 
subject to a forfeiture condition the awards 
will be paid at the end of 201314 providing 
the executive director remains in employment 
with the company and is not under notice at 
the payment date 
the ltip is also subject to clawback for a 
maximum of five years after the vesting date 
if it transpires that an award has been made 
on the basis of misstated results because of 
wilful wrongdoing by employees 54
governance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
directors’ remuneration report continued
remuneration for 201213
the table below sets out the remuneration received by the executive directors in relation to performance andor service during the year  
the table has been prepared in accordance with the requirements of schedule 8 of the companies act 2006
£’000
annual  
salaryfees
salary  
and fees 
received
contractual
benefits
14
other
15
amount  
in lieu  
of pension
short term 
incentive plan
total  
2013
total  
2012
chairman
donald brydon 200 200     200 200
executive directors
moya greene 498 498 127 250 200 399 1474 1107
mark higson 428 428 15 171 245 859 887
matthew lester 428 428 15 171 344 958 934
nonexecutive directors
john allan
8
40 12     12 
jan babiak
9
40 3     3 
nick horler 40 40     40 40
cath keers 40 40     40 40
paul murray
10
50 50     50 50
orna nichionna
11
60 60     60 60
les owen 40 40     40 40
former directors
david currie
12
40 17     17 40
paula vennells
13
       463
david smith        59
total 2013 1816 157 250 542 988 3753
total 2012 2124 81 578 1137 3920
executive directors’ outside appointments
the annual fees received by the executive directors as at 31 march 2013 in respect of their nonexecutive directorships are shown in the  
table below
name directorship
2013
£’000
2012
£’000 
moya greene tim hortons 18
16
16
16
matthew lester man group plc 95 79
approval
this remuneration report including both the 
policy and implementation reports has been 
approved by the board of directors
signed on behalf of the directors by
orna nichionna 
remuneration committee chair 
31 july 2013
8
 john allan joined the board on 14 january 2013
9
 jan babiak joined the board on 1 march 2013
10
  paul murray’s fee includes £10000 for his role  
as chairman of the audit and risk committee
11
  orna nichionna’s fee includes £10000 for her role  
as chairman of the remuneration committee and 
£10000 for her role as senior independent director
12
  david currie stood down from the board on  
31 august 2012
13
  paula vennells stood down from the board on 31 march 
2012 following the separation of post office limited
14
  the chief executive’s other benefits include medical 
insurance contractual relocation payments financial 
advice and return flights to canada 
15
  the company’s relocation policy states that any fees  
or charges associated with relocation at the company’s 
request are subject to payment by the company to assist 
any executive
  in the exceptional circumstances of the chief executive’s 
relocation and commitment to the uk additional 
assistance on the purchase of a home was offered given 
the difference in residential costs between the uk and 
canada the remuneration committee consisting of all 
nonexecutive directors at the time determined that a 
single payment should be made to the chief executive 
rather than an annual allowance the additional 
assistance amounted to £120000 after tax
  the chief executive was not involved in the decision nor 
does she engage with government about payments made 
to her by the company
  the secretary of state for business innovation and skills 
has advised the remuneration committee that this was a 
material variation to her remuneration and it therefore 
ought to have sought his prior approval although it had 
not done so the remuneration committee considers  
it made its decision in good faith in exceptional 
circumstances  when she learned of this background  
the chief executive voluntarily offered to return this 
assistance the remuneration committee has accepted 
this offer and is arranging the process for repayment
  the remuneration committee will also determine the 
process for the reimbursement of the company of any 
unrealised gain to date associated with this payment
16
  sterling equivalent of payments received during the year  
 
 
consolidated income statement
1
 
  
consolidated statement of comprehensive income
1
  
consolidated statement of cash flows
1
  
consolidated balance sheet
2
  
consolidated statement of changes in equity
2
  
core notes to the consolidated financial statements  
1 basis of preparation – note explaining how these statements have been prepared  
2 going concern and funding  
3 segment information  
4 revenue  
5 operating exceptional items transformation and nontransformation  
6 net finance costs and net debt  
7 taxation  
8 cash flow information  
9 employee benefits – pensions  
10 changes in equity  
11 events after the reporting period  
other notes – income statement  
12 people information  
13 other operating costs  
other notes – financial assets financial liabilities and hedging programmes  
14 financial assets and liabilities – introduction summary and management of financial risk  
15 pension escrow investments  
16 cash and cash equivalents  
17 loans and borrowings  
18 financial liabilities net and gross maturity analysis  
19 financial assets and liabilities – additional analysis  
20 hedging programmes  
other notes – balance sheet  
21 provisions  
22 property plant and equipment  
23 goodwill  
24 intangible assets  
25 investments in associates  
26 current trade and other receivables  
27 current trade and other payables  
28 issued share capital and reserves  
29 commitments  
30 related party information  
significant accounting policies  
group five year summary unaudited  
statement of directors’ responsibilities in relation to the group financial statements  
independent auditor’s report to the members of royal mail group limited  
forwardlooking statements  
1
 for the 53 weeks ended 31 march 2013 52 weeks ended 25 march 2012 and 27 march 2011 
2
 at 31 march 2013 25 march 2012 and 27 march 2011 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 55
financial statements
consolidated financial  
statements  
 
  52 weeks 
 notes 
reported 
53 weeks 
2013 
£m 
adjusted 
2013
2 
unaudited 
£m 
reported 
2012 
£m 
reported 
2011 
£m 
revenue 34 9279 9146 8764 8415 
people costs 12 5147 5077 4920 4986 
distribution and conveyance operating costs  1785 1771 1755 1616 
infrastructure costs property it depreciationamortisation  1052 1047 1060 1025 
other operating costs  660 653 648 578 
operating profit before exceptional items  635 598 381 210 
transformation costs – operating exceptional items 5 195 195 229 192 
operating profit after transformation costs
1
  440 403 152 18 
other operating exceptional items 5 77  57 48 
operating profitloss  
363 
 95 30 
profit on disposal of property plant and equipment  
4 
 156 60 
profit on disposal of business  –  26 44 
earnings before interest and taxation ebit  367  277 74 
finance costs 6 104  112 107 
finance income 6 27  12 23 
net pension interest creditcharge 9g 34  24 155 
profitloss before taxation  324  201 165 
taxation  current charge 7 38  36 35 
  deferred creditcharge 7 284  15 88 
profitloss for the period  570  150 288 
profitloss for the period attributable to      
equity holder of the parent company  566  149 289 
noncontrolling interest other partner interest in romec limited and  
ndc 2000 limited  4  1 1 
1 
before other operating exceptional items 
2 
the methodology to calculate the 52 week comparative period is explained on page i 
 
 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 56
financial statements
consolidated income  
statement
for the 53 weeks ended 31 march 2013
52 weeks ended 25 march 2012 and 27 march 2011  
 
  52 weeks 
 notes 
reported 
53 weeks 
2013 
£m 
adjusted 
2013
2 
unaudited 
£m 
reported 
2012 
£m 
reported 
2011 
£m 
revenue 34 9279 9146 8764 8415 
people costs 12 5147 5077 4920 4986 
distribution and conveyance operating costs  1785 1771 1755 1616 
infrastructure costs property it depreciationamortisation  1052 1047 1060 1025 
other operating costs  660 653 648 578 
operating profit before exceptional items  635 598 381 210 
transformation costs – operating exceptional items 5 195 195 229 192 
operating profit after transformation costs
1
  440 403 152 18 
other operating exceptional items 5 77  57 48 
operating profitloss  
363 
 95 30 
profit on disposal of property plant and equipment  
4 
 156 60 
profit on disposal of business  –  26 44 
earnings before interest and taxation ebit  367  277 74 
finance costs 6 104  112 107 
finance income 6 27  12 23 
net pension interest creditcharge 9g 34  24 155 
profitloss before taxation  324  201 165 
taxation  current charge 7 38  36 35 
  deferred creditcharge 7 284  15 88 
profitloss for the period  570  150 288 
profitloss for the period attributable to      
equity holder of the parent company  566  149 289 
noncontrolling interest other partner interest in romec limited and  
ndc 2000 limited  4  1 1 
1 
before other operating exceptional items 
2 
the methodology to calculate the 52 week comparative period is explained on page i 
 
 
 
 
 
  reported 
 notes 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
profitloss for the period from continuing operations  570 150 288 
other comprehensive income for the period     
foreign exchange translation differences  5 47 11 
 translation differences on foreign currency net investments  5 47 11 
amounts relating to pension accounting  411 1436 3184 
 ifric 14 adjustment relating to pensions 9c 5 – – 
 actuarial lossesgains on defined benefit schemes 9g 218 1436 3184 
 taxation on items taken directly to equity 7b 
188 
– – 
cash flow hedges  2 14 10 
 lossesgains on cash flow hedges deferred into equity  1 4 24 
 lossesgains on cash flow hedges released from equity to income  2 15 7 
 gains on cash flow hedges released from equity to the carrying amount of  
 nonfinancial assets  1 3 3 
 taxation on items taken directly to equity 7b 2 8 4 
gains on financial assets  22 14 3 
 gains on financial assets deferred into equity  
– 
14 3 
 gains on financial assets released from equity to income 6 
22 
– 6 
  
 
  
total comprehensive income for the period  
134 
1539 2892 
total comprehensive income for the period attributable to     
equity holder of the parent company  130 1547 2891 
noncontrolling interest other partner interest in romec limited and  
ndc 2000 limited  4 8 1 
 
 
 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 57
financial statements
consolidated statement of  
comprehensive income
for the 53 weeks ended 31 march 2013
52 weeks ended 25 march 2012 and 27 march 2011  
 
the statement of cash flows below is prepared using the template prescribed under ifrs note 8 provides a summary statement of cash flows used 
by management and includes a reconciliation to the statement shown below 
  reported 
 notes 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
cash flow from operating activities     
operating profit before exceptional items  635 381 210 
adjustment for     
depreciation and amortisation  13 281 301 286 
share of post taxation profit from associates 25 1 1 3 
ebitda before exceptional items 8 915 681 493 
working capital movements 8 142 19 58 
 decreaseincrease in inventories  8 1 1 
 decreaseincrease in receivables  25 148 21 
 increasedecrease in payables  136 116 25 
 net increase in derivative assets  15 6 12 
 decreaseincrease in nonexceptional provisions  12 18 1 
difference between pension costs charged in operating profit and pension cash flows 8 3 9 263 
payments in respect of transformation operating exceptional items  8 230 280 242 
payments in respect of nontransformation operating exceptional items 8 26 37 5 
cash inflowoutflow from operations  798 336 75 
income taxation paid 8 37 35 36 
net cash inflowoutflow from operating activities  761 301 111 
cash flows from investing activities     
dividends received from associates 8 – 4 9 
finance income received 8 5 12 22 
proceeds from sale of property plant and equipment 8 52 203 157 
proceeds from disposal of business  – 37 73 
purchase of property plant and equipment  388 287 270 
 transformation investment in ukpil 8 177 185 166 
 other gls and business as usual ukpil spend 8 211 102 104 
acquisition of business in gls 8 3 2 2 
purchase of intangible assets software 8 41 45 70 
payment of deferred consideration in respect of prior years’ acquisitions 8 3 1 – 
net salepurchase of financial assets investments noncurrent  129 4 88 
net salepurchase of financial assets investments current   30 30 – 
net cash outflowinflow from investing activities  219 113 7 
net cash inflowoutflow before financing activities  542 188 104 
cash flows from financing activities     
finance costs paid 8 49 68 54 
payment of capital element of obligations under finance lease contracts  74 49 62 
cash received on sale and leasebacks   58 88 115 
new loans  – – 300 
repayment of borrowings  600 1 42 
net cash outflowinflow from financing activities  665 30 257 
net decreaseincrease in cash and cash equivalents   123 158 153 
effect of foreign currency exchange rates on cash and cash equivalents  1 4 2 
cash and cash equivalents at the beginning of the period  473 319 168 
cash and cash equivalents at the end of the period 16 351 473 319 
 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 58
financial statements
consolidated statement  
of cash flows
for the 53 weeks ended 31 march 2013
52 weeks ended 25 march 2012 and 27 march 2011  
 
the statement of cash flows below is prepared using the template prescribed under ifrs note 8 provides a summary statement of cash flows used 
by management and includes a reconciliation to the statement shown below 
  reported 
 notes 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
cash flow from operating activities     
operating profit before exceptional items  635 381 210 
adjustment for     
depreciation and amortisation  13 281 301 286 
share of post taxation profit from associates 25 1 1 3 
ebitda before exceptional items 8 915 681 493 
working capital movements 8 142 19 58 
 decreaseincrease in inventories  8 1 1 
 decreaseincrease in receivables  25 148 21 
 increasedecrease in payables  136 116 25 
 net increase in derivative assets  15 6 12 
 decreaseincrease in nonexceptional provisions  12 18 1 
difference between pension costs charged in operating profit and pension cash flows 8 3 9 263 
payments in respect of transformation operating exceptional items  8 230 280 242 
payments in respect of nontransformation operating exceptional items 8 26 37 5 
cash inflowoutflow from operations  798 336 75 
income taxation paid 8 37 35 36 
net cash inflowoutflow from operating activities  761 301 111 
cash flows from investing activities     
dividends received from associates 8 – 4 9 
finance income received 8 5 12 22 
proceeds from sale of property plant and equipment 8 52 203 157 
proceeds from disposal of business  – 37 73 
purchase of property plant and equipment  388 287 270 
 transformation investment in ukpil 8 177 185 166 
 other gls and business as usual ukpil spend 8 211 102 104 
acquisition of business in gls 8 3 2 2 
purchase of intangible assets software 8 41 45 70 
payment of deferred consideration in respect of prior years’ acquisitions 8 3 1 – 
net salepurchase of financial assets investments noncurrent  129 4 88 
net salepurchase of financial assets investments current   30 30 – 
net cash outflowinflow from investing activities  219 113 7 
net cash inflowoutflow before financing activities  542 188 104 
cash flows from financing activities     
finance costs paid 8 49 68 54 
payment of capital element of obligations under finance lease contracts  74 49 62 
cash received on sale and leasebacks   58 88 115 
new loans  – – 300 
repayment of borrowings  600 1 42 
net cash outflowinflow from financing activities  665 30 257 
net decreaseincrease in cash and cash equivalents   123 158 153 
effect of foreign currency exchange rates on cash and cash equivalents  1 4 2 
cash and cash equivalents at the beginning of the period  473 319 168 
cash and cash equivalents at the end of the period 16 351 473 319 
 
 
 
 
  reported 
 notes 
at 
31 march 
2013 
£m 
at 
25 march 
2012 
£m 
at 
27 march 
2011 
£m 
noncurrent assets     
property plant and equipment 22 1916 1822 1829 
leasehold land payment  3 3 3 
goodwill mainly investment in gls 23 196 189 197 
intangible assets mainly software 24 139 135 126 
investments in associates 25 3 3 9 
financial assets – pension escrow investments 61415 20 149 87 
     – bank deposits 61419 – – 44 
     – derivatives 1419 3 2 6 
retirement benefit asset net of ifric 14 adjustment 9c 825 – – 
other receivables  8 – – 
deferred taxation assets 7 112 9 8 
  3225 2312 2309 
noncurrent assets held for sale  2 4 4 
current assets     
inventories  24 32 33 
trade and other receivables 26 1004 1036 906 
financial assets  – derivatives 1419 9 9 36 
     – shortterm deposits 61419 1 31 1 
cash and cash equivalents 16 351 473 319 
  1389 1581 1295 
total assets  4616 3897 3608 
current liabilities      
trade and other payables 27 1611 1512 1394 
financial liabilities  – obligations under finance leases  61419 79 86 61 
      – derivatives 1419 2 4 3 
income taxation payable  14 9 6 
provisions  21 119 132 167 
  1825 1743 1631 
noncurrent liabilities     
financial liabilities – interest bearing loans and borrowings 61417
19 
973 1522 1478 
     – obligations under finance leases 61419 226 231 184 
     – derivatives 1419 1 1 – 
provisions 21 127 85 85 
retirement benefit obligation – pension deficit 9b – 2716 4185 
other payables  36 36 29 
deferred taxation liabilities 7 23 18 10 
  1386 4609 5971 
total liabilities  3211 6352 7602 
net assetsliabilities   1405 2455 3994 
equity     
share capital 28 – – – 
share premium 10 – 3784 3784 
retained earnings – all distributable  1318 6347 7941 
other reserves  83 108 155 
equity attributable to equity holder of parent company  1401 2455 4002 
noncontrolling interest other partner interest in romec limited and ndc 2000 limited  4 – 8 
total equity 10 1405 2455 3994 
 
 
 
 
 
moya greene     matthew lester 
chief executive officer    chief finance officer 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 59
financial statements
consolidated balance sheet
at 31 march 2013 25 march 2012 and 27 march 2011  
 
 
share 
premium 
£m 
retained 
earnings 
£m 
financial 
assets 
reserve 
£m 
foreign 
currency 
translation 
reserves 
£m 
hedging 
reserve 
£m 
equity 
holder 
of the 
parent 
£m 
non 
controlling 
interest 
£m 
total 
equity 
£m 
at 28 march 2010 3784 10836 11 136 12 6893 7 6886 
lossprofit for the period  – 289 – – – 289 1 288 
other comprehensive incomeexpense for the period – 3184 3 11 10 3180 – 3180 
at 27 march 2011 3784 7941 8 125 22 4002 8 3994 
profit for the period – 149 – – – 149 1 150 
other comprehensive incomeexpense for the period – 1436 14 47 14 1389 – 1389 
dividend from noncontrolling interest – 9 – – – 9 9 – 
at 25 march 2012 3784 6347 22 78 8 2455 – 2455 
profit for the period  – 566 – – – 566 4 570 
other comprehensive expenseincome for the period – 411 22 5 2 436  436 
pension deficit transfer to hm government on  
1 april 2012 see note 9d – 3726 – – – 3726 – 3726 
capital reduction see note 10 3784 3784 – – – – – – 
at 31 march 2013 – 1318 – 73 10 1401 4 1405 
 
 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 60
financial statements
consolidated statement  
of changes in equity
at 31 march 2013 25 march 2012 and 27 march 2011  
 
 
share 
premium 
£m 
retained 
earnings 
£m 
financial 
assets 
reserve 
£m 
foreign 
currency 
translation 
reserves 
£m 
hedging 
reserve 
£m 
equity 
holder 
of the 
parent 
£m 
non 
controlling 
interest 
£m 
total 
equity 
£m 
at 28 march 2010 3784 10836 11 136 12 6893 7 6886 
lossprofit for the period  – 289 – – – 289 1 288 
other comprehensive incomeexpense for the period – 3184 3 11 10 3180 – 3180 
at 27 march 2011 3784 7941 8 125 22 4002 8 3994 
profit for the period – 149 – – – 149 1 150 
other comprehensive incomeexpense for the period – 1436 14 47 14 1389 – 1389 
dividend from noncontrolling interest – 9 – – – 9 9 – 
at 25 march 2012 3784 6347 22 78 8 2455 – 2455 
profit for the period  – 566 – – – 566 4 570 
other comprehensive expenseincome for the period – 411 22 5 2 436  436 
pension deficit transfer to hm government on  
1 april 2012 see note 9d – 3726 – – – 3726 – 3726 
capital reduction see note 10 3784 3784 – – – – – – 
at 31 march 2013 – 1318 – 73 10 1401 4 1405 
 
 
 
 
 
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 these notes are the 
same as those included in the preliminary results announced on 21 may 2013 except for an additional ‘going concern and funding’ note which 
was not considered relevant for a preliminary statement but which is nonetheless an important disclosure and additional disclosures in the 
‘taxation’ and ‘employee benefits – pensions’ notes in order to fully comply with ifrs 
since the publication of the preliminary statement the company has announced a consultation with members of the royal mail pension plan 
rmpp and details of the proposals have been included in the ‘events after the reporting period’ note 
 
1 basis of preparation – note explaining how these statements have been prepared  
2 going concern and funding  
3 segment information  
4 revenue  
5 operating exceptional items transformation and nontransformation  
6 net finance costs and net debt  
7 taxation  
8 cash flow information  
9 employee benefits – pensions  
10 changes in equity  
11 events after the reporting period   
 
61
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
1 basis of preparation  
this note explains how these royal mail group limited consolidated financial statements have been prepared including management’s 
decision to exclude the consolidated results of the company’s main subsidiary company post office limited up until its transfer of ownership 
to royal mail holdings plc on 1 april 2012 to enable a comparative analysis 
introduction  
in preparing these group financial statements royal mail group limited continues to embrace recent guidance issued by the financial reporting 
council frc the frc outlined principles in its ‘louder than words’ and ‘cutting clutter’ discussion papers to make corporate reporting clearer and 
less complex 
based on the views of the group as well as the key areas of focus from stakeholders royal mail group limited has separated the notes to the 
financial statements into two sections ‘core’ and ‘other’ in order to assist the users of the financial statements while the financial statements need 
to be considered as a whole ‘core’ notes to the financial statements represent those that are regarded by the board to be of most importance to  
a user of the financial statements all remaining notes are included in the ‘other’ category 
the group comprises royal mail group limited the company and its subsidiaries the company is incorporated in the united kingdom which is also 
the group’s country of domicile 
these group consolidated special purpose financial statements are presented in pounds sterling because that is the currency of the primary 
economic environment in which the group operates the consolidated financial statements have been prepared on a going concern basis and on a 
historic cost basis except for pension assets derivative financial instruments and available for sale financial assets which have been measured at fair 
value 
the directors have established a principle to produce a set of consolidated results for royal mail group limited which includes the trading activities  
of uk parcels international  letters ukpil and general logistics systems gls these financial statements therefore exclude the results of post 
office limited a subsidiary of royal mail group limited up until its transfer to royal mail holdings plc on 1 april 2012 these financial statements do 
however include transactions with post office limited ie revenue and costs and trade payablereceivable balances as though post office limited 
was like any other external customersupplier of royal mail group limited 
basis of accounting 
these group consolidated special purpose financial statements do not constitute statutory financial statements as defined in section 434 and 435 of 
the companies act 2006 but have been prepared in accordance with applicable international financial reporting standards ifrs as adopted by the 
european union except for the nonconsolidation of the company’s post office limited subsidiary up until its transfer to royal mail holdings plc on  
1 april 2012 the effect of this is as follows 
• there is no difference between the closing balance sheet position at 31 march 2013 under this methodology and that required if post office 
limited had been consolidated up until the date of its transfer to royal mail holdings plc 
• there has been no disposal accounting in respect of the post office limited transfer  
• if disposal accounting had been effected in line with ifrs certain components of these financial statements would have been impacted as follows 
– 2012 and 2011 comparative information – which would have included the results of post office limited and the related intergroup 
eliminationconsolidation accounting entries  
– income statement – which would have included the results of post office limited as a discontinued operation for the period 26 march 2012 to 
31 march 2012 – ie up until its transfer to royal mail holdings plc and  
– total equity – through which the transfer of post office limited on 1 april 2012 would have been recorded as a transaction with the company’s 
owner royal mail holdings plc in their capacity as owner ias 1 presentation of financial statements 
the royal mail group limited statutory financial statements are publicly available from wwwroyalmailgroupcom 
estimation and accounting judgements 
the preparation of these consolidated financial statements requires management to make various judgements estimates and assumptions when 
determining the carrying value of certain assets and liabilities actual results may differ from the estimates further details can be found in ‘significant 
accounting policies’ on page 117 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 62
financial statements
notes to the consolidated  
financial statements  
 
1 basis of preparation  
this note explains how these royal mail group limited consolidated financial statements have been prepared including management’s 
decision to exclude the consolidated results of the company’s main subsidiary company post office limited up until its transfer of ownership 
to royal mail holdings plc on 1 april 2012 to enable a comparative analysis 
introduction  
in preparing these group financial statements royal mail group limited continues to embrace recent guidance issued by the financial reporting 
council frc the frc outlined principles in its ‘louder than words’ and ‘cutting clutter’ discussion papers to make corporate reporting clearer and 
less complex 
based on the views of the group as well as the key areas of focus from stakeholders royal mail group limited has separated the notes to the 
financial statements into two sections ‘core’ and ‘other’ in order to assist the users of the financial statements while the financial statements need 
to be considered as a whole ‘core’ notes to the financial statements represent those that are regarded by the board to be of most importance to  
a user of the financial statements all remaining notes are included in the ‘other’ category 
the group comprises royal mail group limited the company and its subsidiaries the company is incorporated in the united kingdom which is also 
the group’s country of domicile 
these group consolidated special purpose financial statements are presented in pounds sterling because that is the currency of the primary 
economic environment in which the group operates the consolidated financial statements have been prepared on a going concern basis and on a 
historic cost basis except for pension assets derivative financial instruments and available for sale financial assets which have been measured at fair 
value 
the directors have established a principle to produce a set of consolidated results for royal mail group limited which includes the trading activities  
of uk parcels international  letters ukpil and general logistics systems gls these financial statements therefore exclude the results of post 
office limited a subsidiary of royal mail group limited up until its transfer to royal mail holdings plc on 1 april 2012 these financial statements do 
however include transactions with post office limited ie revenue and costs and trade payablereceivable balances as though post office limited 
was like any other external customersupplier of royal mail group limited 
basis of accounting 
these group consolidated special purpose financial statements do not constitute statutory financial statements as defined in section 434 and 435 of 
the companies act 2006 but have been prepared in accordance with applicable international financial reporting standards ifrs as adopted by the 
european union except for the nonconsolidation of the company’s post office limited subsidiary up until its transfer to royal mail holdings plc on  
1 april 2012 the effect of this is as follows 
• there is no difference between the closing balance sheet position at 31 march 2013 under this methodology and that required if post office 
limited had been consolidated up until the date of its transfer to royal mail holdings plc 
• there has been no disposal accounting in respect of the post office limited transfer  
• if disposal accounting had been effected in line with ifrs certain components of these financial statements would have been impacted as follows 
– 2012 and 2011 comparative information – which would have included the results of post office limited and the related intergroup 
eliminationconsolidation accounting entries  
– income statement – which would have included the results of post office limited as a discontinued operation for the period 26 march 2012 to 
31 march 2012 – ie up until its transfer to royal mail holdings plc and  
– total equity – through which the transfer of post office limited on 1 april 2012 would have been recorded as a transaction with the company’s 
owner royal mail holdings plc in their capacity as owner ias 1 presentation of financial statements 
the royal mail group limited statutory financial statements are publicly available from wwwroyalmailgroupcom 
estimation and accounting judgements 
the preparation of these consolidated financial statements requires management to make various judgements estimates and assumptions when 
determining the carrying value of certain assets and liabilities actual results may differ from the estimates further details can be found in ‘significant 
accounting policies’ on page 117 
 
 
2 going concern and funding  
this note provides details of how the directors have concluded that royal mail group limited remains a going concern including their review of 
the group’s cash headroom position 
the group’s business activities strategy and performance are outlined on pages 1 to 33 
introduction 
in assessing the going concern status of the group the directors have to look forward by a minimum of 12 months from the date of signing the 
annual report and financial statements to ensure that there is sufficient headroom broadly available cash and cash equivalents plus available 
unrestricted unused committed facilities to enable the group to pay its creditors as they fall due 
there are two significant events that the directors have noted and considered whilst performing this review 
i  pension transfer to hm government 
on 1 april 2012 one week into the current financial year – after the granting of state aid by the european commission to hm government on  
21 march 2012 – almost all of the pension liabilities and pension assets of the royal mail pension plan rmpp built up until 31 march 2012  
were transferred to a new hm government pension scheme the royal mail statutory pension scheme rmsps   
this transfer left the rmpp fully funded on an actuarial basis and by using longterm actuarial assumptions agreed at that date it was predicted that 
the company would have to make no further deficit cash contributions to rmpp previously the group had made payments including £272 million in 
2011 and £262 million in 2010 
further details on pensions can be found in note 9 
ii available loans and borrowings 
note 17 of these financial statements details the loan facilities agreed between hm government and royal mail group limited this note confirms 
that the £900 million senior debt facility £600 million term loan £300 million revolver is due to expire in march 2014 at 31 march 2013 and at 
the date of signing this annual report and financial statements these facilities had not been used and until their expiry the directors can assume 
that they are available to be used after their expiry they should normally expect that they are not available 
the board however has written assurance from hm government that alternative financing on commercial terms would be available to replace these 
borrowing facilities should a sale transaction not take place and the cash headroom position deteriorated sufficiently to require hm government to 
roll over the existing facilities 
review assumptions 
for the current review of going concern the directors undertook a review of the company’s cash headroom to march 2015 a longer window than 
the minimum requirement under two different scenarios 
• a realistic but pessimistic downside case assuming no transaction takes place and placing reliance on the assurance from hm government referred 
to above and 
• a realistic but pessimistic downside case assuming a sale transaction takes place and that as a consequence the existing facilities are replaced by 
new facilities 
summary 
the directors concluded from their review that under both of the above scenarios sufficient cash headroom exists for the foreseeable future and 
accordingly the group remains a going concern 
 
 
63
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
3 segment information 
royal mail group’s revenue certain costs and profit before financing and taxation are segmented below aligned with how the business  
is managed 
 
business unit brand 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 france sas 
gls italy spa 
other – uk operations 
facilities management 
design consultancy 
catering services 
romec limited 51 owned subsidiary 
ndc 2000 limited 51 owned subsidiary 
quadrant catering ltd 51 owned associate 
royal mail group is structured on a geographic business unit basis and these business units report into the chief executive’s committee and the 
royal mail group board each of these units have discrete revenue costs profit cash flows assets and people and 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  
64
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
3 segment information 
royal mail group’s revenue certain costs and profit before financing and taxation are segmented below aligned with how the business  
is managed 
 
business unit brand 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 france sas 
gls italy spa 
other – uk operations 
facilities management 
design consultancy 
catering services 
romec limited 51 owned subsidiary 
ndc 2000 limited 51 owned subsidiary 
quadrant catering ltd 51 owned associate 
royal mail group is structured on a geographic business unit basis and these business units report into the chief executive’s committee and the 
royal mail group board each of these units have discrete revenue costs profit cash flows assets and people and 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  
 
 
3 segment information continued 
reported 53 weeks ended 31 march 2013 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
revenue external as reported 7766 15 7781  1498 9279 
intersegment revenue  – 148 148  –
1
 148 
total segment revenue 7766 163 7929  1498 9427 
       
operating profit before exceptional items 526 8 534  101 635 
transformation costs – operating exceptional items 195 – 195  – 195 
operating profit after transformation costs before other 
operating exceptional items 331 8 339  101 440 
other operating exceptional items 77 – 77  – 77 
operating profit 254 8 262  101 363 
profit on disposal of property plant and equipment 4 – 4  – 4 
earnings before interest and taxation ebit 258 8 266  101 367 
net finance costs  
not charged at this level 
82  5 77 
net pension interest 34  – 34 
profit before taxation 218  106 324 
taxation 279  33 246 
profit for the period after taxation 497  73 570 
free cash flow 
not reported at this level 
309  25 334 
ebitda before transformation costs 775 8 783  132 915 
 
reported 52 weeks ended 25 march 2012 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
revenue external as reported 7189 13 7202  1562 8764 
intersegment revenue  – 121 121  –
1
 121 
total segment revenue 7189 134 7323  1562 8885 
       
operating profitloss before exceptional items 262 9 253  128 381 
transformation costs – operating exceptional items 229 – 229  – 229 
operating profit after transformation costs before other 
operating exceptional items 33 9 24  128 152 
other operating exceptional items 42 15 57  – 57 
operating lossprofit 9 24 33  128 95 
profit on disposal of property plant and equipment 156 – 156  – 156 
profit on disposal of business – 25 25  1 26 
earnings before interest and taxation ebit 147 1 148  129 277 
net finance costs  
not charged at this level 
109  9 100 
net pension interest 24  – 24 
profit before taxation 63  138 201 
taxation 6  45 51 
profit for the period after taxation 57  93 150 
free cash flow  not reported at this level  90  64 154 
ebitda before transformation costs 533 12 521  160 681 
1
 trading between gls and ukpil is not material 
65
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
3 segment information continued 
reported 52 weeks ended 27 march 2011 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
revenue external as reported 6885 45 6930  1485 8415 
intersegment revenue  – 135 135  –
1
 135 
total segment revenue 6885 180 7065  1485 8550 
       
operating profit before exceptional items 82 10 92  118 210 
transformation costs – operating exceptional items 192 – 192  – 192 
operating lossprofit after transformation costs before other 
operating exceptional items 110 10 100  118 18 
other operating exceptional items 48 – 48  – 48 
operating lossprofit 158 10 148  118 30 
profit on disposal of property plant and equipment 60 – 60  – 60 
profit on disposal of business – 44 44  – 44 
earnings before interest and taxation ebit 98 54 44  118 74 
net finance costs  
not charged at this level 
90  6 84 
net pension interest 155  – 155 
lossprofit before taxation 289  124 165 
taxation 79  44 123 
lossprofit for the period after taxation 368  80 288 
free cash flow  not reported at this level  331  85 246 
ebitda before transformation costs 335 6 341  152 493 
1
 trading between gls and ukpil is not material 
total expenditure for uk businesses in 2013 was £7247 million 2012 £6949 million 2011 £6838 million 
the following amounts are included within operating profit before exceptional items 
reported 53 weeks ended 31 march 2013 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
depreciation  210 1 211  27 238 
amortisation of intangible assets mainly software 39 – 39  4 43 
share of post taxation profit from associates – 1 1  – 1 
 
reported 52 weeks ended 25 march 2012 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
depreciation  240 – 240  28 268 
amortisation of intangible assets mainly software 29 – 29  4 33 
share of post taxation lossprofit from associates 2 3 1  – 1 
 
66
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
3 segment information continued 
reported 52 weeks ended 27 march 2011 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
revenue external as reported 6885 45 6930  1485 8415 
intersegment revenue  – 135 135  –
1
 135 
total segment revenue 6885 180 7065  1485 8550 
       
operating profit before exceptional items 82 10 92  118 210 
transformation costs – operating exceptional items 192 – 192  – 192 
operating lossprofit after transformation costs before other 
operating exceptional items 110 10 100  118 18 
other operating exceptional items 48 – 48  – 48 
operating lossprofit 158 10 148  118 30 
profit on disposal of property plant and equipment 60 – 60  – 60 
profit on disposal of business – 44 44  – 44 
earnings before interest and taxation ebit 98 54 44  118 74 
net finance costs  
not charged at this level 
90  6 84 
net pension interest 155  – 155 
lossprofit before taxation 289  124 165 
taxation 79  44 123 
lossprofit for the period after taxation 368  80 288 
free cash flow  not reported at this level  331  85 246 
ebitda before transformation costs 335 6 341  152 493 
1
 trading between gls and ukpil is not material 
total expenditure for uk businesses in 2013 was £7247 million 2012 £6949 million 2011 £6838 million 
the following amounts are included within operating profit before exceptional items 
reported 53 weeks ended 31 march 2013 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
depreciation  210 1 211  27 238 
amortisation of intangible assets mainly software 39 – 39  4 43 
share of post taxation profit from associates – 1 1  – 1 
 
reported 52 weeks ended 25 march 2012 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
depreciation  240 – 240  28 268 
amortisation of intangible assets mainly software 29 – 29  4 33 
share of post taxation lossprofit from associates 2 3 1  – 1 
 
 
 
3 segment information continued 
reported 52 weeks ended 27 march 2011 uk operations  
other 
european 
operations  
 
uk parcels 
international 
 letters 
£m 
other 
£m 
 
total 
£m  
general 
logistics 
systems 
£m 
total 
£m 
depreciation  223 – 223  27 250 
amortisation of intangible assets mainly software 29 – 29  7 36 
share of post taxation lossprofit from associates 1 4 3  – 3 
 
4 revenue  
a summary of royal mail group revenue segmented by business unit and subdivided by type ie parcels letters and other and marketing mail 
 
 reported 
group revenue 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
ukpil 7766 7189 6885 
 letters 3652 3485 3504 
 parcels 2979 2604 2348 
 marketing mail 1135 1100 1033 
gls     
parcels 1498 1562 1485 
other 15 13 45 
total 9279 8764 8415 
    
parcels 4477 4166 3833 
letters and other 3667 3498 3549 
marketing mail 1135 1100 1033 
total 9279 8764 8415 
within ukpil 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 occasionally prior period results may be restated 
67
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
5 operating exceptional items transformation and nontransformation 
these are nonrecurring or restructuring 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 
 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
transformation costs    
incentive payments    
– business transformation payments  22 87 31 
– ‘colleagueshare’ – legacy share scheme release – – 101 
restructuring costs    
– voluntary redundancy 78 77 223 
– project and property costs 95 65 27 
impairment of property plant and equipment – – 12 
total transformation costs 195 229 192 
other operating exceptional costs    
potential industrial diseases claims 28 10 30 
post office limited separation – it costs  20 – – 
postal services act related costs 10 24 15 
other exceptional items romec transformation costs in 201112 1 16 – 
impairments  20 7 3 
total nontransformation costs 77 57 48 
total operating exceptional items 272 286 240 
business transformation payments represent payments linked to the achievement of key modernisation milestones as part of the pay deal with the 
communication workers union 
the nontransformation related impairments of £20 million 2012 £7 million 2011 £3 million comprise £21 million 2012 £1 million  
2011 £nil relating to property plant and equipment a £1 million impairment reversal 2012 £3 million charge 2011 £1 million charge relating 
to intangible software assets and £nil 2012 £3 million 2011 £2 million in respect of the group’s investment in its g3 worldwide mail nv  
spring associate company 
68
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
5 operating exceptional items transformation and nontransformation 
these are nonrecurring or restructuring 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 
 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
transformation costs    
incentive payments    
– business transformation payments  22 87 31 
– ‘colleagueshare’ – legacy share scheme release – – 101 
restructuring costs    
– voluntary redundancy 78 77 223 
– project and property costs 95 65 27 
impairment of property plant and equipment – – 12 
total transformation costs 195 229 192 
other operating exceptional costs    
potential industrial diseases claims 28 10 30 
post office limited separation – it costs  20 – – 
postal services act related costs 10 24 15 
other exceptional items romec transformation costs in 201112 1 16 – 
impairments  20 7 3 
total nontransformation costs 77 57 48 
total operating exceptional items 272 286 240 
business transformation payments represent payments linked to the achievement of key modernisation milestones as part of the pay deal with the 
communication workers union 
the nontransformation related impairments of £20 million 2012 £7 million 2011 £3 million comprise £21 million 2012 £1 million  
2011 £nil relating to property plant and equipment a £1 million impairment reversal 2012 £3 million charge 2011 £1 million charge relating 
to intangible software assets and £nil 2012 £3 million 2011 £2 million in respect of the group’s investment in its g3 worldwide mail nv  
spring associate company 
 
 
6 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 metric 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 on page 59 shows these items gross within the different categories of assets and liabilities 
 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
unwinding of discount relating to ‘colleagueshare’ legacy share scheme – – 6 
unwinding of discount relating to industrial diseases provision 1 1 – 
interest payable on financial liabilities 103 111 101 
 loans and borrowings 82 91 79 
 finance leases 13 15 12 
 unused facility fees 5 2 3 
 other facility fees 3 3 7 
finance costs 104 112 107 
release of gains held in equity on disposal of pension escrow gilts 22 – 6 
other interest received on gilts and treasury bills – 4 9 
interest receivable on other financial assets 5 8 3 
interest receivable on vat refund – – 5 
finance income 27 12 23 
net finance costs excluding net pension interest 77 100 84 
a summary of the group’s net debt position is shown below 
 
 
 
 
 balance sheet category 
at 
31 march 
2013 
£m 
at 
25 march 
2012 
£m 
at 
27 march 
2011 
£m 
pension escrow investments noncurrent assets 20 149 87 
bank deposits noncurrent assets – – 44 
shortterm deposits current assets 1 31 1 
cash and cash equivalents     
– cash at bank and in hand current assets 
136 172 100 
– cash equivalent investments shortterm bank and local authority 
depositsmoney market fund investments current assets 215 301 219 
obligations under finance leases  current liabilities 79 86 61 
interest bearing loans and borrowings  noncurrent liabilities 973 1522 1478 
obligations under finance leases noncurrent liabilities 226 231 184 
net debt  906 1186 1272 
 
69
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
6 net finance costs and net debt continued 
as from 1 april 2012 following the transfer of almost all of the rmpp pension liabilities and pension assets to hm government and hence the 
removal of the historic pension deficit £149 million of investments – which were previously held in pension escrow in royal mail group limited – 
were released to the company these were subsequently sold and proceeds used to pay down loans to hm government 
on 25 march 2013 the company placed £20 million in a money market fund investment established to provide security to the royal mail senior 
executives pension plan rmsepp as part of a funding agreement with the rmsepp trustee this is treated as an investment in the group’s 
balance sheet rmsepp was closed to future accruals on 31 december 2012 
the company repaid £600 million of loans and borrowings from hm government in 201213  
net debt has decreased overall by £280 million during 201213 and by £86 million during 201112 as shown below 
 
 
 
 
at 
31 march 
2013 
£m 
at 
25 march 
2012 
£m 
net debt brought forward at 26 march 2012 1186 1272 
free cash flow 334 
154 
increase in value of pension escrow investments – 
14 
increase in loans and borrowings rollup of interest on 120 per cent facility 51 45 
increase in new finance lease obligations noncash 4 33 
foreign currency exchange impact on cash and cash equivalents 1 4 
net debt carried forward at 31 march 2013 906 1186 
the table below shows the average interest bearing loans and borrowings and the interest payable and average interest rate on those loans  
and borrowings 
 
 
 
 
2013 
£m 
2012 
£m 
as 2011 
£m 
average interest bearing loans and borrowings 972 1478 1283 
interest payable on interest bearing loans and borrowings 82 91 79 
average interest rate 84 62 62 
during 201213 the group was financed as follows 
purpose of loanborrowing 
2013 
average 
balance 
£m 
2013 
average 
interest 
rate  
 
facility 
end date 
facility 
£m 
drawn  
balance at 
31 march 
2013 
£m 
average loan 
maturity date 
gls funding 500 58 20212025 500 500 2023 
general purposeworking capital senior debt facility 48 20 2014 600 – – 
general purposeworking capital senior debt facility – – 2014 300 – – 
general purposeworking capital shareholder loan 424 120 2016 473 473 2016 
total facilityfacilities utilised 972   1873 973  
 
70
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
6 net finance costs and net debt continued 
as from 1 april 2012 following the transfer of almost all of the rmpp pension liabilities and pension assets to hm government and hence the 
removal of the historic pension deficit £149 million of investments – which were previously held in pension escrow in royal mail group limited – 
were released to the company these were subsequently sold and proceeds used to pay down loans to hm government 
on 25 march 2013 the company placed £20 million in a money market fund investment established to provide security to the royal mail senior 
executives pension plan rmsepp as part of a funding agreement with the rmsepp trustee this is treated as an investment in the group’s 
balance sheet rmsepp was closed to future accruals on 31 december 2012 
the company repaid £600 million of loans and borrowings from hm government in 201213  
net debt has decreased overall by £280 million during 201213 and by £86 million during 201112 as shown below 
 
 
 
 
at 
31 march 
2013 
£m 
at 
25 march 
2012 
£m 
net debt brought forward at 26 march 2012 1186 1272 
free cash flow 334 
154 
increase in value of pension escrow investments – 
14 
increase in loans and borrowings rollup of interest on 120 per cent facility 51 45 
increase in new finance lease obligations noncash 4 33 
foreign currency exchange impact on cash and cash equivalents 1 4 
net debt carried forward at 31 march 2013 906 1186 
the table below shows the average interest bearing loans and borrowings and the interest payable and average interest rate on those loans  
and borrowings 
 
 
 
 
2013 
£m 
2012 
£m 
as 2011 
£m 
average interest bearing loans and borrowings 972 1478 1283 
interest payable on interest bearing loans and borrowings 82 91 79 
average interest rate 84 62 62 
during 201213 the group was financed as follows 
purpose of loanborrowing 
2013 
average 
balance 
£m 
2013 
average 
interest 
rate  
 
facility 
end date 
facility 
£m 
drawn  
balance at 
31 march 
2013 
£m 
average loan 
maturity date 
gls funding 500 58 20212025 500 500 2023 
general purposeworking capital senior debt facility 48 20 2014 600 – – 
general purposeworking capital senior debt facility – – 2014 300 – – 
general purposeworking capital shareholder loan 424 120 2016 473 473 2016 
total facilityfacilities utilised 972   1873 973  
 
 
 
7 taxation 
this disclosure provides details about taxation charges relating to current profit and deferred taxation movements for the impact of past events 
on expected future taxation liabilities 
 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
a taxation charged in the income statement    
current income taxation    
uk corporation taxation  11 2 2 
foreign taxation  28 36 35 
current income taxation charge 39 34 37 
amounts overunder provided in earlier years 1 2 2 
total current income taxation 38 36 35 
deferred taxation    
origination and reversal of temporary differences 284 15 88 
taxation creditexpense in the consolidated income statement 246 51 123 
 
b taxation relating to items charged or credited to other comprehensive income    
deferred taxation    
actuarial losses on defined benefit pension plans 188 – – 
net gainloss on revaluation of cash flow hedges 2 8 4 
total expensecredit in the statement of other comprehensive income 186 8 4 
 
c reconciliation of the total taxation charge 
a reconciliation between the taxation charges and the product of accounting profitloss multiplied by the uk rate of corporation taxation for the 
years ended 31 march 2013 25 march 2012 and 27 march 2011 is as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
profitloss before taxation 324 201 165 
    
at uk standard rate of corporation taxation of 24 2012 26 2011 28 78 52 46 
effect of higher taxes on overseas earnings 1 1 3 
taxation overunder provided in prior years 1 2 2 
nontaxable income 6 45 29 
nondeductible expenses 11 13 14 
associates’ profit after taxation charge included in group pretaxation profit – – 1 
net decreaseincrease in taxation charge resulting from recognitionderecognition of deferred 
taxation assets 329 30 191 
other – – 1 
taxation creditcharge in the income statement 246 51 123 
 
71
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
7 taxation continued 
deferred taxation relates to the following 
 balance sheet income statement 
 
2013 
£m 
2012 
£m 
2011 
£m 
2013 
£m 
2012 
£m 
2011 
£m 
liabilities       
accelerated capital allowances – 1 1 1 – – 
goodwill qualifying for taxation allowances 23 17 9 6 8 5 
deferred taxation liabilities 23 18 10    
assets        
deferred capital allowances 244 – 9 244 9 8 
provisions and other 37 4 1 33 3 29 
pensions temporary differences 222 – – 34 – 2 
losses available for offset against future taxable income 51 5 6 46 1 62 
hedging derivatives temporary differences 2 – 8 – – 2 
deferred taxation assets 112 9 8    
       
net deferred taxation assetliability disclosed on the  
balance sheet 
89 9 2    
       
consolidated income statement    284 15 88 
at 31 march 2013 the group had unrecognised deferred taxation assets of £66 million 2012 £1176 million 2011 £1610 million comprising  
£nil 2012 £632 million 2011 £1132 million relating to the retirement benefit obligation £54 million 2012 £219 million 2011 £206 million 
relating to taxation losses that are available to offset against future taxable profits and £12 million 2012 £324 million 2011 £273 million relating 
to other temporary differences the group has capital losses carried forward the taxation effect of which is £4 million 2012 £4 million 2011 £nil 
and temporary differences related to capital losses of £73 million 2012 £80 million 2011 £91 million the group has rolled over capital gains of  
£53 million 2012 £59 million 2011 £57 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  
the finance act 2012 reduced the main rate of corporation taxation to 23 per cent with effect from 1 april 2013 the effect of this change on 
deferred tax balances is included in these financial statements as detailed above in the 2012 autumn statement the chancellor of the exchequer 
announced that the main rate of corporation taxation will be 21 per cent for the year commencing 1 april 2014 and in the march 2013 budget he 
announced that the rate will be further reduced to 20 per cent with effect from 1 april 2015 it is anticipated that both of these rate changes will be 
included in the finance bill 2013 in accordance with accounting standards the effect of these rate reductions on deferred taxation balances has not 
been reflected in these accounts due to the relevant legislation not having been substantively enacted at the balance sheet date a reduction of 20 
per cent would based on losses and temporary differences at 31 march 2013 reduce the group’s recognised deferred taxation assets by £14 million 
and reduce unrecognised deferred taxation assets by £4 million 
under the postal services act 2011 trading losses which arose due to employer’s pension contributions paid which are unused at 31 march 2013 
are extinguished the gross amount of losses extinguished is estimated to be £250 million losses and deferred taxation assets carried forward are 
stated above net of the extinguished amount 
royal mail group limited is committed to paying taxation in accordance with all relevant laws and regulations in the territories in which it operates 
72
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
7 taxation continued 
deferred taxation relates to the following 
 balance sheet income statement 
 
2013 
£m 
2012 
£m 
2011 
£m 
2013 
£m 
2012 
£m 
2011 
£m 
liabilities       
accelerated capital allowances – 1 1 1 – – 
goodwill qualifying for taxation allowances 23 17 9 6 8 5 
deferred taxation liabilities 23 18 10    
assets        
deferred capital allowances 244 – 9 244 9 8 
provisions and other 37 4 1 33 3 29 
pensions temporary differences 222 – – 34 – 2 
losses available for offset against future taxable income 51 5 6 46 1 62 
hedging derivatives temporary differences 2 – 8 – – 2 
deferred taxation assets 112 9 8    
       
net deferred taxation assetliability disclosed on the  
balance sheet 
89 9 2    
       
consolidated income statement    284 15 88 
at 31 march 2013 the group had unrecognised deferred taxation assets of £66 million 2012 £1176 million 2011 £1610 million comprising  
£nil 2012 £632 million 2011 £1132 million relating to the retirement benefit obligation £54 million 2012 £219 million 2011 £206 million 
relating to taxation losses that are available to offset against future taxable profits and £12 million 2012 £324 million 2011 £273 million relating 
to other temporary differences the group has capital losses carried forward the taxation effect of which is £4 million 2012 £4 million 2011 £nil 
and temporary differences related to capital losses of £73 million 2012 £80 million 2011 £91 million the group has rolled over capital gains of  
£53 million 2012 £59 million 2011 £57 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  
the finance act 2012 reduced the main rate of corporation taxation to 23 per cent with effect from 1 april 2013 the effect of this change on 
deferred tax balances is included in these financial statements as detailed above in the 2012 autumn statement the chancellor of the exchequer 
announced that the main rate of corporation taxation will be 21 per cent for the year commencing 1 april 2014 and in the march 2013 budget he 
announced that the rate will be further reduced to 20 per cent with effect from 1 april 2015 it is anticipated that both of these rate changes will be 
included in the finance bill 2013 in accordance with accounting standards the effect of these rate reductions on deferred taxation balances has not 
been reflected in these accounts due to the relevant legislation not having been substantively enacted at the balance sheet date a reduction of 20 
per cent would based on losses and temporary differences at 31 march 2013 reduce the group’s recognised deferred taxation assets by £14 million 
and reduce unrecognised deferred taxation assets by £4 million 
under the postal services act 2011 trading losses which arose due to employer’s pension contributions paid which are unused at 31 march 2013 
are extinguished the gross amount of losses extinguished is estimated to be £250 million losses and deferred taxation assets carried forward are 
stated above net of the extinguished amount 
royal mail group limited is committed to paying taxation in accordance with all relevant laws and regulations in the territories in which it operates 
 
 
8 cash flow information 
royal mail uses free cash flow to monitor and manage its cash performance this measure eliminates inflowsoutflows between net debt items 
see note 6 and includes finance cash costs paid   
a reconciliation of ‘net cash inflowoutflow before financing activities’ in the consolidated statement of cash flows on page 58 to ‘free cash 
inflowoutflow as used internally by management’ is included below 
 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
ebitda before exceptional items see page 58 915 681 493 
working capital 142 19 58 
other uk pension – ongoing – difference between profit and loss and cash flow rates note 9 25 1 15 
    – deficit correction payments 28 8 278 
    – pension costs relating to redundancy – 36 29 
total investment costs 665 579 555 
 transformation investment in ukpil – voluntary redundancy 75 129 110 
 transformation investment in ukpil – business transformation paymentsbonus 55 60 95 
 transformation investment in ukpil – capital expenditure 177 185 166 
 transformation investment in ukpil – oneoff project costs 100 55 8 
 total transformation investment 407 429 379 
 other nontransformation spend it incl software gls and business as usual ukpil spend 258 150 176 
other exceptional items 26 37 5 
 postal services act related payments 21 16 5 
 romec enterprise project – 15 – 
 industrial diseases claims 1 3 – 
 other 4 3 – 
other 81 87 59 
 taxation paid 37 35 36 
 net finance costs paid 44 56 32 
 dividends from associates – 4 9 
    
cash inflowoutflow before disposal of assets and noncore business 282 86 476 
disposal of property and noncore business 52 240 230 
free cash inflowoutflow as used internally by management 334 154 246 
the transformation programme commenced in 200607 for which the cumulative spend is shown below 
 
at 
31 march 
2013 
£m 
capital expenditure 1093 
redundancy 875 
incentive payments 515 
project and property costs 
312 
total cumulative transformation spend 
2795 
 
 
 
73
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
8 cash flow information continued 
the following analysis provides a reconciliation of ‘net cash inflow before financing activities’ in the statement of cash flows see page 58 and free 
cash flow as used internally by management 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
net cash inflowoutflow before financing activities in the statement of cash flows 542 188 104 
net salepurchase of gilts and treasury bills financial asset investments – noncurrent 129 4 88 
net salepurchase of bank deposits financial asset investments – current 30 30 – 
finance costs paid 49 68 54 
free cash inflowoutflow  334 154 246 
 
 
 
74
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
8 cash flow information continued 
the following analysis provides a reconciliation of ‘net cash inflow before financing activities’ in the statement of cash flows see page 58 and free 
cash flow as used internally by management 
 reported 
 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
net cash inflowoutflow before financing activities in the statement of cash flows 542 188 104 
net salepurchase of gilts and treasury bills financial asset investments – noncurrent 129 4 88 
net salepurchase of bank deposits financial asset investments – current 30 30 – 
finance costs paid 49 68 54 
free cash inflowoutflow  334 154 246 
 
 
 
 
 
9 employee benefits – pensions 
for a number of years the group has reported a significant defined benefit pension obligation on its balance sheet which exceeded its other  
net assets  
at 31 march 2013 a pension asset of £825 million has been recognised compared with a £2716 million pension obligation at 25 march 2012 
this is because the majority of pension liabilities and assets were transferred to hm government in the first week of the financial year  
on 1 april 2012 leaving the group’s main defined benefit scheme fully funded at that date 
 
 reported 
summary pension financial information 
53 weeks 
2013 
£m 
52 weeks 
2012 
£m 
52 weeks 
2011 
£m 
pension costs    
ongoing     
 uk defined benefit scheme pl rates 182 171 178 412 384 423 
 uk defined contribution scheme 17 11 9 
total uk ongoing pension costs 429 395 432 
total gls defined contribution type scheme costs 5 5 5 
total group ongoing pension costs 434 400 437 
difference between profit and loss and cash flow rates cash flow rates 171 for all three years 25 1 15 
total group pension cash flows relating to ongoing pension costs 409 401 422 
uk defined benefit scheme  active membership at 31 march 112000 116000 121000 
background 
royal mail group had one of the largest defined benefit pension schemes in the uk based on membership and assets called the royal mail pension 
plan rmpp and for a number of years the company 
i made significant pension deficit cash contributions on top of its ongoing pension costs and 
ii recognised a pension deficit on its balance sheet which has ranged from £27 billion to £75 billion 
this meant the company faced issues with respect to going concern it was balance sheet insolvent and it carried material pension risk and volatility  
to address this historic legacy issue the postal services act passed in june 2011 proposed to transfer the majority of pension assets and liabilities 
to hm government in order to achieve this hm government had to seek state aid approval from the european commission and made its 
application in the summer of 2011   
at 25 march 2012 a defined pension obligation of £2716 million was reported in the balance sheet   
transfer of pension liabilitiesassets to hm government 
on 1 april 2012 one week into the 201213 financial year – after the granting of state aid approval by the european commission to  
hm government on 21 march 2012 – almost all of the pension liabilities and pension assets of rmpp built up until 31 march 2012 were 
transferred to a new government pension scheme the royal mail statutory pension scheme rmsps  
on this date rmpp was also sectionalised with royal mail group and post office limited each responsible for their own sections from  
1 april 2012 onwards   
the transfer left the rmpp 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 deficit cash contributions 
75
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
9 employee benefits – pensions continued 
the total royal mail group and post office limited liabilities transferred of £410 billion comprise 
i all liabilities relating to deferred members or pensioners on 1 april 2012 and 
ii for the liabilities of active members currently employed on 1 april 2012 
– benefits accrued under the final salary arrangements to 31 march 2008 based on number of years in scheme and respective salary  
at 1 april 2012 the rmsps rules increase this final salary benefit by rpi
2
 each year for active membership and 
– benefits accrued under the career average salary arrangements from 1 april 2008 to 31 march 2012 assuming an rpi
2
 future increase  
the total assets royal mail group and post office limited transferred were £285 billion leaving £22 billion with the rmpp trustee to match the 
liabilities royal mail group and post office limited relating to the final salary benefit for active members at 1 april 2012 that the government did 
not take on these remaining liabilities relate to the difference in increases to the final salary benefit that the rmsps provides for at rpi and the 
rmpp trustee assumes at rpi  1
3
 
therefore the royal mail group and post office limited retained the liability for each year of future service under the career average salary 
arrangements and the following risk for active members only 
i liability for salary growth above rpi increases up to 1 above rpi are covered by the £22 billion funding described above 
ii changes in future longterm economic assumptions eg interest rates rpicpi  
iii changes in future longterm demographic assumptions eg mortality  
iv changes in market assumptions returns on assets gilt yields etc and 
v all existing aspects relating to the rmsepp scheme the company closed this plan to future accruals on 31 december 2012 
all other financial information other than in this note relates to the amounts that have been sectionalised to royal mail group 
application of international financial reporting standards ifrs 
applying ifrs in the accounting valuation of the defined benefit position at 31 march 2013 resulted in the recognition of an accounting pension 
surplus of £825 million compared with an obligation of £2716 million at 25 march 2012 the £825 million comprises pension assets of £3343 
million less pension liabilities of £2513 million adjusted as required by ifric 14 in respect of rmsepp by £5 million 
why the accounting position is different to the funding actuarial position 
on an actuarial basis at 31 march 2013 the pension actuarial deficit was £162 million on an estimated rolled forward basis formal valuations are 
part of the triennial review the funding requirements a mutual agreement between the company and the pension trustees are normally set every 
three years with the last agreement dating back to 2010 for the march 2009 valuation the longterm assumptions used for funding by the pension 
trustees are generally more conservative than those that must be used under ifrs 
as noted in the financial review the company has reached an agreement with the rmsepp trustee on their cash contribution requirements the 
group and the rmpp trustee are currently in discussion about the future funding requirements and at the date of this report no new assumptions 
have been agreed 
defined benefit 
rmpp is funded by the payment of contributions to separate trustee administered funds rmpp 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 to 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 
the regular future service contribution rate for rmpp expressed as a percentage of pensionable pay remained at 171 per cent 2012 and 2011 
171 per cent effective from april 2010 the company is currently in discussion with the plan trustee regarding the march 2012 actuarial valuation 
and the contribution rate required to provide future benefit accrual a conclusion to these discussions is expected by september 2013 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 deficit payment was made during the year  
2
 section c members who joined rmpp on or after april 1987 have this increase capped at five per cent 
3
 rpi  1 has been used by the rmpp trustee in the valuation which was agreed in 2010 because it reflected longterm historical actual pay increases 
76
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
9 employee benefits – pensions continued 
the total royal mail group and post office limited liabilities transferred of £410 billion comprise 
i all liabilities relating to deferred members or pensioners on 1 april 2012 and 
ii for the liabilities of active members currently employed on 1 april 2012 
– benefits accrued under the final salary arrangements to 31 march 2008 based on number of years in scheme and respective salary  
at 1 april 2012 the rmsps rules increase this final salary benefit by rpi
2
 each year for active membership and 
– benefits accrued under the career average salary arrangements from 1 april 2008 to 31 march 2012 assuming an rpi
2
 future increase  
the total assets royal mail group and post office limited transferred were £285 billion leaving £22 billion with the rmpp trustee to match the 
liabilities royal mail group and post office limited relating to the final salary benefit for active members at 1 april 2012 that the government did 
not take on these remaining liabilities relate to the difference in increases to the final salary benefit that the rmsps provides for at rpi and the 
rmpp trustee assumes at rpi  1
3
 
therefore the royal mail group and post office limited retained the liability for each year of future service under the career average salary 
arrangements and the following risk for active members only 
i liability for salary growth above rpi increases up to 1 above rpi are covered by the £22 billion funding described above 
ii changes in future longterm economic assumptions eg interest rates rpicpi  
iii changes in future longterm demographic assumptions eg mortality  
iv changes in market assumptions returns on assets gilt yields etc and 
v all existing aspects relating to the rmsepp scheme the company closed this plan to future accruals on 31 december 2012 
all other financial information other than in this note relates to the amounts that have been sectionalised to royal mail group 
application of international financial reporting standards ifrs 
applying ifrs in the accounting valuation of the defined benefit position at 31 march 2013 resulted in the recognition of an accounting pension 
surplus of £825 million compared with an obligation of £2716 million at 25 march 2012 the £825 million comprises pension assets of £3343 
million less pension liabilities of £2513 million adjusted as required by ifric 14 in respect of rmsepp by £5 million 
why the accounting position is different to the funding actuarial position 
on an actuarial basis at 31 march 2013 the pension actuarial deficit was £162 million on an estimated rolled forward basis formal valuations are 
part of the triennial review the funding requirements a mutual agreement between the company and the pension trustees are normally set every 
three years with the last agreement dating back to 2010 for the march 2009 valuation the longterm assumptions used for funding by the pension 
trustees are generally more conservative than those that must be used under ifrs 
as noted in the financial review the company has reached an agreement with the rmsepp trustee on their cash contribution requirements the 
group and the rmpp trustee are currently in discussion about the future funding requirements and at the date of this report no new assumptions 
have been agreed 
defined benefit 
rmpp is funded by the payment of contributions to separate trustee administered funds rmpp 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 to 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 
the regular future service contribution rate for rmpp expressed as a percentage of pensionable pay remained at 171 per cent 2012 and 2011 
171 per cent effective from april 2010 the company is currently in discussion with the plan trustee regarding the march 2012 actuarial valuation 
and the contribution rate required to provide future benefit accrual a conclusion to these discussions is expected by september 2013 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 deficit payment was made during the year  
2
 section c members who joined rmpp on or after april 1987 have this increase capped at five per cent 
3
 rpi  1 has been used by the rmpp trustee in the valuation which was agreed in 2010 because it reflected longterm historical actual pay increases 
 
 
9 employee benefits – pensions continued 
for rmsepp regular future service contributions remained at 359 per cent 2012 and 2011 359 per cent until 31 december 2012 when this 
plan closed to future accruals deficit recovery payments were £28 million including a special oneoff payment of £19 million 2012 £8 million 
2011 £6 million the company and the trustee have reached agreement over the march 2012 actuarial valuation as the plan is closed to future 
accruals there will be no regular future service contributions but the company will continue to make deficit payments of £10 million pa 
a liability of £1 million 2012 and 2011 £1 million has been recognised for future payment of pension benefits to a past director  
see page 51 of the directors’ remuneration report 
a major longterm assumptions used for accounting purposes – rmpp and rmsepp 
the major assumptions were 
 
at 31 march  
2013 
 pa 
at 25 march  
2012 
 pa 
at 27 march  
2011 
 pa 
inflation assumption rpi 33 33 35 
inflation assumption cpi 23 23 28 
discount rate – nominal 48 51 55 
 – real
4
 15 18 20 
rate of increase in salaries rpi  1 rpi  1 rpi  1 
rate of increase for deferred pensions – rmsepp members transferred from  
section a or b of rmpp rpi rpi rpi 
rate of increase for deferred pensions – all other members cpi cpi cpi 
rate of pension increases – rmpp sections ab cpi cpi cpi 
rate of pension increases – rmpp section c
5
 rpi rpi rpi 
rate of pension increases – rmsepp all members rpi rpi rpi 
expected average rate of return on assets na
6
 59 65 
4 
the real discount rate selected reflects the long duration of the schemes 
5 
section c members who joined rmpp on or after april 1987 have this increase capped at five per cent which results in the average longterm pension increase assumption being 10 basis 
points lower than the rpi longterm assumption at 31 march 2013 prior two years  this reduction did not apply 
6 
in accordance with the 2011 revision of ias 19 which applies for financial periods beginning on or after 1 january 2013 the historic expected return on assets assumption is no longer 
required to determine the 201314 expense 
mortality 
the mortality assumptions for the larger plan are based on the latest self administered pension scheme saps mortality tables with appropriate 
scaling factors 106 per cent for male pensioners and 101 per cent for female pensioners for future improvements the assumptions allow for 
‘medium cohort’ projections with a 125 per cent floor these are detailed below 
average expected life expectancy from age 60 
 2013 2012 2011 
for a current 60 year old male rmpp member 26 years 26 years 26 years 
for a current 60 year old female rmpp member 29 years 29 years 29 years 
for a current 40 year old male rmpp member 29 years 29 years 29 years 
for a current 40 year old female rmpp member 32 years 32 years 32 years 
77
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
9 employee benefits – pensions continued 
the company and the rmpp trustee are currently in discussion about the future funding requirements and this could materially change the pension 
costs and balance sheet amounts that are reported in future financial statements  
the following disclosures relate to the gainslosses and surplusdeficit in the schemes recognised for the rmpp and rmsepp defined benefit plans in 
the financial statements of the group 
the real discount rate has decreased to 15 per cent since march 2012 when it was 18 per cent march 2011 20 per cent  
demographic assumptions for example mortality remain unchanged from those made in march 2012 and march 2011 
the following table shows the potential impact on the rmpp liabilities and pension deficit of changes in key assumptions 
 
b plans’ assets and expected rates of return and deficit calculation – rmpp and rmsepp 
the assets in the plans and the expected rates of return were 
6 
in accordance with the 2011 revision of ias 19 which applies for financial periods beginning on or after 1 january 2013 the historic expected return on assets assumption is no longer 
required to determine the 201314 expense 
there is no element of the present value of plans’ liabilities above that arises from plans that are wholly unfunded  
included within the pension assets are £14 billion 2012 £116 billion 2011 £78 billion of hm government bonds
  
 
  
longterm expected rate 
of return 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
 pa 
2012 
 pa 
2011 
 pa 
equities 558 3151 3971  na
6
 77 82 
bonds 2479 23600 19812  na
6
 57 62 
property 218 1319 1480  na
6
 68 65 
cashother 88 310 389  na
6
 34 42 
derivatives – 236 110  na
6
 57 62 
fair value of plans’ assets 3343 28616 25762     
present value of plans’ liabilities 2513 31332 29947     
surplusdeficit in plans 830 2716 4185     
 
 
9 employee benefits – pensions continued 
the company and the rmpp trustee are currently in discussion about the future funding requirements and this could materially change the pension 
costs and balance sheet amounts that are reported in future financial statements  
the following disclosures relate to the gainslosses and surplusdeficit in the schemes recognised for the rmpp and rmsepp defined benefit plans in 
the financial statements of the group 
the real discount rate has decreased to 15 per cent since march 2012 when it was 18 per cent march 2011 20 per cent  
demographic assumptions for example mortality remain unchanged from those made in march 2012 and march 2011 
the following table shows the potential impact on the rmpp liabilities and pension deficit of changes in key assumptions 
 
b plans’ assets and expected rates of return and deficit calculation – rmpp and rmsepp 
the assets in the plans and the expected rates of return were 
6 
in accordance with the 2011 revision of ias 19 which applies for financial periods beginning on or after 1 january 2013 the historic expected return on assets assumption is no longer 
required to determine the 201314 expense 
there is no element of the present value of plans’ liabilities above that arises from plans that are wholly unfunded  
included within the pension assets are £14 billion 2012 £116 billion 2011 £78 billion of hm government bonds
  
 
  
longterm expected rate 
of return 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
 pa 
2012 
 pa 
2011 
 pa 
equities 558 3151 3971  na
6
 77 82 
bonds 2479 23600 19812  na
6
 57 62 
property 218 1319 1480  na
6
 68 65 
cashother 88 310 389  na
6
 34 42 
derivatives – 236 110  na
6
 57 62 
fair value of plans’ assets 3343 28616 25762     
present value of plans’ liabilities 2513 31332 29947     
surplusdeficit in plans 830 2716 4185     
78
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued
expectancy
 1 year life 
an additional
of 01 pa
assumptions 
cpi 
change in 
05 pa
growth of 
real salary 
change in 
of 01 pa
discount rate 
change in 
01 pa
increases of 
pension 
change in 
sensitivity analysis on rmpp liabilities
£m
 
60 60
20
50
720  
 
9 employee benefits – pensions continued 
the company and the rmpp trustee are currently in discussion about the future funding requirements and this could materially change the pension 
costs and balance sheet amounts that are reported in future financial statements  
the following disclosures relate to the gainslosses and surplusdeficit in the schemes recognised for the rmpp and rmsepp defined benefit plans in 
the financial statements of the group 
the real discount rate has decreased to 15 per cent since march 2012 when it was 18 per cent march 2011 20 per cent  
demographic assumptions for example mortality remain unchanged from those made in march 2012 and march 2011 
the following table shows the potential impact on the rmpp liabilities and pension deficit of changes in key assumptions 
 
b plans’ assets and expected rates of return and deficit calculation – rmpp and rmsepp 
the assets in the plans and the expected rates of return were 
6 
in accordance with the 2011 revision of ias 19 which applies for financial periods beginning on or after 1 january 2013 the historic expected return on assets assumption is no longer 
required to determine the 201314 expense 
there is no element of the present value of plans’ liabilities above that arises from plans that are wholly unfunded  
included within the pension assets are £14 billion 2012 £116 billion 2011 £78 billion of hm government bonds
  
 
  
longterm expected rate 
of return 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
 pa 
2012 
 pa 
2011 
 pa 
equities 558 3151 3971  na
6
 77 82 
bonds 2479 23600 19812  na
6
 57 62 
property 218 1319 1480  na
6
 68 65 
cashother 88 310 389  na
6
 34 42 
derivatives – 236 110  na
6
 57 62 
fair value of plans’ assets 3343 28616 25762     
present value of plans’ liabilities 2513 31332 29947     
surplusdeficit in plans 830 2716 4185     
 
 
9 employee benefits – pensions continued 
c plans’ assets and liabilities  
the combined plans’ assets and liabilities were 
 market value 
 
at 31 march 
2013 
£m 
at 25 march 
2012 
£m 
at 27 march 
2011 
£m 
fair value of plans’ assets 3343 28616 25762 
present value of plans’ liabilities 2513 31332 29947 
surplusdeficit in schemes pre ifric 14 adjustment 830 2716 4185 
ifric 14 adjustment 5 – – 
surplusdeficit in schemes 825 2716 4185 
the surplus in the 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 is assumed to be available as a reduction to contributions and this future benefit is recognised within the net deferred taxation 
asset 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 ifrs 
there were no open equity derivatives within this portfolio at 31 march 2013 
the rmpp trustee has elected to use interest rate and inflation rate swaps ‘derivatives’ to deliver the investment strategy whilst managing risk as 
described below these derivatives are recorded at market value within the table on the previous page 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 held in a specific managed portfolio for this purpose 
at 31 march 2013 is £153 billion march 2012 £99 billion march 2011 £66 billion 
the investment strategy of the rmpp trustee aims to safeguard the assets of the rmpp 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 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 spread of investments continues to balance security and growth in order to pay the rmpp benefits when they become due an actuarial 
valuation will be undertaken at 31 march 2012 and the trustee will seek to agree funding arrangements with the company as part of this exercise 
the rmpp trustee will be undertaking a full investment strategy review on conclusion of the review the rmpp’s statement of investment principles 
will be reviewed and updated  
d movement in plans’ assets and liabilities 
changes in the present value of the defined benefit pension obligations are analysed as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
opening net retirement benefit deficit at 26 march 2012 28 march 2011 and 29 march 2010 2716 4185 7477 
increase in value of pension assets 2631 march 2012
7
 
actuarial gain 224 – – 
increase in value of pension liabilities 2631 march 2012
7
 
actuarial loss 652 – – 
transfer of historic pension deficit to hm government
7
 3726 – – 
net retirement benefit surplusdeficit at 1 april 2012 28 march 2011 and  
29 march 2010 582 4185 7477 
current service cost see section g on page 81 412 384 423 
movement in company contributions accrued 2 5 4 
curtailment costs 17 31 33 
net pension interest creditcharge see section g on page 81 34 24 155 
employer’s contributions 435 429 715 
actuarial gains 1 april 2012 – 31 march 2013 28 march 2011 – 25 march 2012 and  
29 march 2010 – 27 march 2011
7
 210 1436 3184 
closing net retirement benefit surplusdeficit pre ifric 14 adjustment 830 2716 4185 
7 
taken directly to equity 
 
 
9 employee benefits – pensions continued 
the company and the rmpp trustee are currently in discussion about the future funding requirements and this could materially change the pension 
costs and balance sheet amounts that are reported in future financial statements  
the following disclosures relate to the gainslosses and surplusdeficit in the schemes recognised for the rmpp and rmsepp defined benefit plans in 
the financial statements of the group 
the real discount rate has decreased to 15 per cent since march 2012 when it was 18 per cent march 2011 20 per cent  
demographic assumptions for example mortality remain unchanged from those made in march 2012 and march 2011 
the following table shows the potential impact on the rmpp liabilities and pension deficit of changes in key assumptions 
 
b plans’ assets and expected rates of return and deficit calculation – rmpp and rmsepp 
the assets in the plans and the expected rates of return were 
6 
in accordance with the 2011 revision of ias 19 which applies for financial periods beginning on or after 1 january 2013 the historic expected return on assets assumption is no longer 
required to determine the 201314 expense 
there is no element of the present value of plans’ liabilities above that arises from plans that are wholly unfunded  
included within the pension assets are £14 billion 2012 £116 billion 2011 £78 billion of hm government bonds
  
 
  
longterm expected rate 
of return 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
 pa 
2012 
 pa 
2011 
 pa 
equities 558 3151 3971  na
6
 77 82 
bonds 2479 23600 19812  na
6
 57 62 
property 218 1319 1480  na
6
 68 65 
cashother 88 310 389  na
6
 34 42 
derivatives – 236 110  na
6
 57 62 
fair value of plans’ assets 3343 28616 25762     
present value of plans’ liabilities 2513 31332 29947     
surplusdeficit in plans 830 2716 4185     
79
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
9 employee benefits – pensions continued 
e movement in plans’ assets and liabilities – rmpp and rmsepp 
changes in the value of the plans’ assets and analysis is as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
plans’ assets at beginning of period 28616 25762 24017 
increase in value of pension assets 2631 march 2012 224 – – 
transfer of pension assets to hm government 26485 – – 
company contributions paid 435 429 715 
employee contributions paid 136 134 141 
movement in company contributions accrued 2 5 4 
finance income expected rate of return 163 1651 1594 
actuarial gains additional increase in market values 273 1738 437 
benefits paid to members 17 1093 1146 
plans’ assets at end of period 3343 28616 25762 
changes in the present value of the defined benefit pension obligations are analysed as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
plans’ liabilities at beginning of period 31332 29947 31494 
increase in value of pension liabilities 2631 march 2012 652 – – 
transfer of pension liabilities to hm government 30211 – – 
current service cost 412 384 423 
employee contributions  136 134 141 
curtailment costs
8
 17 31 33 
finance cost 129 1627 1749 
actuarial lossesgains recognised in statement of comprehensive income 63 302 2747 
benefits paid 17 1093 1146 
plans’ liabilities at end of period 2513 31332 29947 
8 
the curtailment costs in the income statement are recognised on a consistent basis with the associated compensation costs estimates of both are included for example in any redundancy 
provisions raised the curtailment costs above represent the costs associated with those people paid compensation in respect of redundancy during the accounting period such payments may 
occur in an accounting period subsequent to the recognition of costs in the income statement 
f history of experience gains and losses – rmpp and rmsepp 
the cumulative amount of actuarial gains and losses recognised since transition to ifrss at 29 march 2004 in the statement of comprehensive 
income is a £212 million gain 2012 £430 million gain 2011 £1006 million loss 
 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
fair value of assets 3343 28616 25762 24017 18670 
present value of liabilities 2513 31332 29947 31494 24971 
surplusdeficit in plans 830 2716 4185 7477 6301 
 
 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
experience adjustment on assets 497 1738 437 4156 5097 
experience adjustment on liabilities 101 5 7 626 9 
this disclosure is in accordance with ias 19 
80
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
9 employee benefits – pensions continued 
e movement in plans’ assets and liabilities – rmpp and rmsepp 
changes in the value of the plans’ assets and analysis is as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
plans’ assets at beginning of period 28616 25762 24017 
increase in value of pension assets 2631 march 2012 224 – – 
transfer of pension assets to hm government 26485 – – 
company contributions paid 435 429 715 
employee contributions paid 136 134 141 
movement in company contributions accrued 2 5 4 
finance income expected rate of return 163 1651 1594 
actuarial gains additional increase in market values 273 1738 437 
benefits paid to members 17 1093 1146 
plans’ assets at end of period 3343 28616 25762 
changes in the present value of the defined benefit pension obligations are analysed as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
plans’ liabilities at beginning of period 31332 29947 31494 
increase in value of pension liabilities 2631 march 2012 652 – – 
transfer of pension liabilities to hm government 30211 – – 
current service cost 412 384 423 
employee contributions  136 134 141 
curtailment costs
8
 17 31 33 
finance cost 129 1627 1749 
actuarial lossesgains recognised in statement of comprehensive income 63 302 2747 
benefits paid 17 1093 1146 
plans’ liabilities at end of period 2513 31332 29947 
8 
the curtailment costs in the income statement are recognised on a consistent basis with the associated compensation costs estimates of both are included for example in any redundancy 
provisions raised the curtailment costs above represent the costs associated with those people paid compensation in respect of redundancy during the accounting period such payments may 
occur in an accounting period subsequent to the recognition of costs in the income statement 
f history of experience gains and losses – rmpp and rmsepp 
the cumulative amount of actuarial gains and losses recognised since transition to ifrss at 29 march 2004 in the statement of comprehensive 
income is a £212 million gain 2012 £430 million gain 2011 £1006 million loss 
 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
fair value of assets 3343 28616 25762 24017 18670 
present value of liabilities 2513 31332 29947 31494 24971 
surplusdeficit in plans 830 2716 4185 7477 6301 
 
 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
experience adjustment on assets 497 1738 437 4156 5097 
experience adjustment on liabilities 101 5 7 626 9 
this disclosure is in accordance with ias 19 
 
 
9 employee benefits – pensions continued 
g recognised charges – rmpp and rmsepp 
a disaggregation of the amounts recognised in the income statement statement of comprehensive income and directly in equity is as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
analysis of amounts recognised in the income statement    
analysis of amounts charged to operating profit before exceptional items    
– current service cost 412 384 423 
total charge to operating profit before exceptional items 412 384 423 
    
analysis of amounts charged to operating exceptional items    
– loss due to curtailments within provision for restructuring charge – note 21 11 15 45 
total charge to operating profit 423 399 468 
    
analysis of amounts chargedcredited to financing    
– interest on plans’ liabilities 129 1627 1749 
– expected return on plans’ assets  163 1651 1594 
total net creditcharge to financing 34 24 155 
net charge to income statement before deduction for taxation 389 375 623 
    
analysis of amounts recognised in the statement of comprehensive income    
– actual return on plans’ assets 660 3389 2031 
– deduct expected return on plans’ assets 163 1651 1594 
actuarial gains on assets all experience adjustments 497 1738 437 
– experience adjustments on liabilities 101 5 7 
– effects of changes in actuarial assumption on liabilities  816 297 2754 
actuarial lossesgains on liabilities 715 302 2747 
total actuarial lossesgains recognised in the statement of comprehensive income before 
deduction for taxation see section d above 218 1436 3184 
    
analysis of amounts recognised directly in equity    
– transfer of pension assets to hm government 26485 – – 
– transfer of pension liabilities to hm government 30211 – – 
transfer of historic pension deficit to hm government 3726 – – 
 
81
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
10 changes in equity 
there have been material changes to the share premium account and to total equity and these have created £1318 million of distributable 
reserves 
share premium account 
on 27 june 2012 the company reduced the amount of its share premium account by £3784 million with the company reducing the deficit on its 
distributable reserves by the same amount at that time this reduction of capital was approved by a special resolution of the company supported by 
a solvency statement made by its directors pursuant to section 642 of the companies act 2006 the reduction was executed through a noncash 
accounting entry and has no effect on total equity and the number of the company’s ordinary shares in issue or their nominal value 
summary of movements in total equity 
 £m £m 
total equity brought forward at 26 march 2012  2455 
movement relating to defined benefit pension scheme note 9d   
increase in value of pension assets 2631 march 2012 224  
increase in value of pension liabilities 2631 march 2012 652  
transfer of historic pension deficit to government on 1 april 2012 3726  
actuarial gains 1 april 2012 – 31 march 2013 210 3508 
ifric 14 adjustment note 9 c  5 
taxation on items taken direct to equity deferred taxation relating to pensions   188 
  860 
profit for the period  570 
other reserves movements in the period release of gains on disposal of pension escrow gilts foreign currency 
translation losses and net gains on cash flow hedges 
 
25 
total equity carried forward at 31 march 2013  1405 
 
11 events after the reporting period 
this note confirms whether or not there have been any material events occurring between the end of the financial reporting period on  
31 march 2013 and the publication of the annual report and financial statements 
on friday 21 june 2013 the group launched a consultation with members of the royal mail pension plan on a proposal to change the terms of the 
plan under the proposal members’ basic pensionable pay under the plan would increase by rpi up to five per cent each year regardless of 
whether members’ actual basic pay goes up by more or less this change would subject to the agreement of the plan trustee allow the company to 
maintain its current rate of contributions 
if we are able to reach agreement with our unions on our proposal we would in return be able to commit that at least until we have concluded our 
next review in march 2018 
 the plan would remain open to future accruals and  
 there would be no change to members’ contribution rate accrual rates or normal retirement age  
an agreement of the type that we are proposing would subject to its conditions be legally binding on the company irrespective of any change of 
ownership  
the consultation will conclude on 25 august 2013 following which the company will consider the feedback received before making its final 
decision and then communicate the outcome to colleagues shortly afterwards 
 
82
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
10 changes in equity 
there have been material changes to the share premium account and to total equity and these have created £1318 million of distributable 
reserves 
share premium account 
on 27 june 2012 the company reduced the amount of its share premium account by £3784 million with the company reducing the deficit on its 
distributable reserves by the same amount at that time this reduction of capital was approved by a special resolution of the company supported by 
a solvency statement made by its directors pursuant to section 642 of the companies act 2006 the reduction was executed through a noncash 
accounting entry and has no effect on total equity and the number of the company’s ordinary shares in issue or their nominal value 
summary of movements in total equity 
 £m £m 
total equity brought forward at 26 march 2012  2455 
movement relating to defined benefit pension scheme note 9d   
increase in value of pension assets 2631 march 2012 224  
increase in value of pension liabilities 2631 march 2012 652  
transfer of historic pension deficit to government on 1 april 2012 3726  
actuarial gains 1 april 2012 – 31 march 2013 210 3508 
ifric 14 adjustment note 9 c  5 
taxation on items taken direct to equity deferred taxation relating to pensions   188 
  860 
profit for the period  570 
other reserves movements in the period release of gains on disposal of pension escrow gilts foreign currency 
translation losses and net gains on cash flow hedges 
 
25 
total equity carried forward at 31 march 2013  1405 
 
11 events after the reporting period 
this note confirms whether or not there have been any material events occurring between the end of the financial reporting period on  
31 march 2013 and the publication of the annual report and financial statements 
on friday 21 june 2013 the group launched a consultation with members of the royal mail pension plan on a proposal to change the terms of the 
plan under the proposal members’ basic pensionable pay under the plan would increase by rpi up to five per cent each year regardless of 
whether members’ actual basic pay goes up by more or less this change would subject to the agreement of the plan trustee allow the company to 
maintain its current rate of contributions 
if we are able to reach agreement with our unions on our proposal we would in return be able to commit that at least until we have concluded our 
next review in march 2018 
 the plan would remain open to future accruals and  
 there would be no change to members’ contribution rate accrual rates or normal retirement age  
an agreement of the type that we are proposing would subject to its conditions be legally binding on the company irrespective of any change of 
ownership  
the consultation will conclude on 25 august 2013 following which the company will consider the feedback received before making its final 
decision and then communicate the outcome to colleagues shortly afterwards 
 
 
 
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 other operating costs  
 
83
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
12 people information 
of the total group operating costs 60 per cent 2012 59 per cent 2011 61 per cent relate to our people this note provides a breakdown of 
our people costs and numbers 
 
  reported 
people costs  
 
53 weeks 
march 
2013 
£m  
52 weeks 
march 
2012 
£m 
 
 
52 weeks 
march 
2011 
£m 
wages and salaries       
 uk based 4072  3890  3940  
 gls 282 4354 290 4180 274 4214 
pensions       
 defined benefit uk 412  384  423  
 defined contribution uk 17 429 11 395 9 432 
 gls mainly defined contribution type  5  5  5 
social security       
 uk based 309  287  287  
 gls 50 359 53 340 48 335 
       
group total  5147  4920  4986 
       
defined benefit pension rate       
profit and loss   182  171  178 
cash flow  171  171  171 
defined contribution       
employer contribution rates – profit and loss and  
cash flow
9
  1  7  5  7  5  7 
9
 employer contribution rates are 1 per cent for employees in the entry level category and 5 per cent  7 per cent for those in the standard level category depending on the employees 
 selected contribution rate 
people numbers 
the number of people employed calculated on a headcount basis was 
 period end employees  average employees 
 
31 march 
2013 
25 march 
2012 
27 march 
2011 
 31 march 
2013 
25 march 
2012 
27 march 
2011 
uk parcels international  letters ukpil 149940 151156 155181  149710 152514 157317 
uk partially owned subsidiaries romec ndc 2000 4030 3926 4254  4013 3972 4244 
general logistics systems  13646 13362 13167  13569 13103 13120 
group total 167616 168444 172602  167292 169589 174681 
the number of fulltime equivalents fte employed was 
 period end fte  average fte 
 
31 march 
2013 
25 march 
2012 
27 march 
2011 
 31 march 
2013 
25 march 
2012 
27 march 
2011 
uk parcels international  letters ukpil 151191 153751 158376  154362 157286 162865 
uk partially owned subsidiaries romec ndc 2000 3655 3813 4214  3655 3813 4214 
general logistics systems  9272 9198 9021  9232 9568 9200 
group total 164118 166762 171611  167249 170667 176279 
84
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
12 people information 
of the total group operating costs 60 per cent 2012 59 per cent 2011 61 per cent relate to our people this note provides a breakdown of 
our people costs and numbers 
 
  reported 
people costs  
 
53 weeks 
march 
2013 
£m  
52 weeks 
march 
2012 
£m 
 
 
52 weeks 
march 
2011 
£m 
wages and salaries       
 uk based 4072  3890  3940  
 gls 282 4354 290 4180 274 4214 
pensions       
 defined benefit uk 412  384  423  
 defined contribution uk 17 429 11 395 9 432 
 gls mainly defined contribution type  5  5  5 
social security       
 uk based 309  287  287  
 gls 50 359 53 340 48 335 
       
group total  5147  4920  4986 
       
defined benefit pension rate       
profit and loss   182  171  178 
cash flow  171  171  171 
defined contribution       
employer contribution rates – profit and loss and  
cash flow
9
  1  7  5  7  5  7 
9
 employer contribution rates are 1 per cent for employees in the entry level category and 5 per cent  7 per cent for those in the standard level category depending on the employees 
 selected contribution rate 
people numbers 
the number of people employed calculated on a headcount basis was 
 period end employees  average employees 
 
31 march 
2013 
25 march 
2012 
27 march 
2011 
 31 march 
2013 
25 march 
2012 
27 march 
2011 
uk parcels international  letters ukpil 149940 151156 155181  149710 152514 157317 
uk partially owned subsidiaries romec ndc 2000 4030 3926 4254  4013 3972 4244 
general logistics systems  13646 13362 13167  13569 13103 13120 
group total 167616 168444 172602  167292 169589 174681 
the number of fulltime equivalents fte employed was 
 period end fte  average fte 
 
31 march 
2013 
25 march 
2012 
27 march 
2011 
 31 march 
2013 
25 march 
2012 
27 march 
2011 
uk parcels international  letters ukpil 151191 153751 158376  154362 157286 162865 
uk partially owned subsidiaries romec ndc 2000 3655 3813 4214  3655 3813 4214 
general logistics systems  9272 9198 9021  9232 9568 9200 
group total 164118 166762 171611  167249 170667 176279 
 
 
12 people information continued 
directors’ emoluments 
 
2013 
£000 
2012 
£000 
2011 
£000 
directors’ emoluments 3753 3398 2345 
amounts earned under longterm incentive plans    
    
number of directors accruing benefits under defined benefit schemes    
 
13 other operating costs 
below is an analysis of other operating costs in the income statement eg pensions depreciation and amortisation and operating lease charges 
that require specific disclosure under ifrs 
operating profit before exceptional items is stated after charging the following other operating costs 
 
2013 
£m 
2012 
£m 
2011 
£m 
uk pension costs note 9 429 395 432 
    
depreciation and amortisation    
depreciation of property plant and equipment note 22 238 268 250 
amortisation of intangible assets mainly software – note 24 43 33 36 
total 281 301 286 
    
operating lease charges on property plant and equipment  153 150 151 
    
costs of inventories expensed 184 174 157 
research and development expenditure during the year amounted to £nil 2012 £nil 2011 £nil 
the following information is relevant in understanding the extent of the group’s regulatory costs and statutory audit costs 
regulatory body costs 
2013 
£m 
2012 
£m 
2011 
£m 
postcomm  6 10 
ofcom 5 2  
consumer futures 3 3 3 
total 8 11 13 
 
auditor’s fees 
2013 
£000 
2012 
£000 
2011 
£m 
audit of statutory financial statements 402 402 402 
other fees to auditor    
statutory audits for subsidiaries 1566 1706 1398 
other services including regulatory audits 208 669 471 
taxation services 228 78 55 
total 2404 2855 2326 
the group paid £80850 additional amounts in 2013 in respect of the 2012 audit £267000 in 2012 in respect of 2011 audit £nil in 2011 in 
respect of the 2010 audit 
85
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
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 – introduction summary and management of financial risk  
15 pension escrow investments  
16 cash and cash equivalents  
17 loans and borrowings  
18 financial liabilities net and gross maturity analysis  
19 financial assets and liabilities – additional analysis  
20 hedging programmes  
 
86
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
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 – introduction summary and management of financial risk  
15 pension escrow investments  
16 cash and cash equivalents  
17 loans and borrowings  
18 financial liabilities net and gross maturity analysis  
19 financial assets and liabilities – additional analysis  
20 hedging programmes  
 
 
 
14 financial assets and liabilities – introduction 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 
 
 
2013  2012 
 
2011 
 
non 
current 
£m 
current 
£m 
total 
£m 
 non 
current 
£m 
current 
£m 
total 
£m  
 non 
current 
£m 
current 
£m 
total 
£m 
pension escrow investments 20 – 20  149 – 149  87 – 87 
cash and cash equivalents – 351 351  – 473 473  – 319 319 
other bank and local authority deposits – 1 1  – 31 31  44 1 45 
derivative assets 3 9 12  2 9 11  6 36 42 
total financial assets 23 361 384  151 513 664  137 356 493 
bis loans to royal mail group limited 973 – 973  1522 – 1522  1477 – 1477 
miscellaneous loans in subsidiaries – – –  – – –  1 – 1 
total loans and borrowings 973 – 973  1522 – 1522  1478 – 1478 
finance leases obligations 226 79 305  231 86 317  184 61 245 
derivative liabilities 1 2 3  1 4 5  – 3 3 
total financial liabilities 1200 81 1281  1754 90 1844  1662 64 1726 
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 government gilt edged 
securities 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 mainly commodity price swaps and forward currency 
contracts their purpose being to manage the commodity and currency risks arising from the group’s operations  
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 foreign currency risk commodity price risk credit risk and 
liquidity risk the board reviews and agrees policies for managing each of these risks and they are summarised below 
interest rate risk 
the group’s exposure to market risk for changes in interest rates relates to the group’s loans and borrowings and interest bearing financial assets 
the bis loans to royal mail group limited of £973 million 2012 £1522 million 2011 £1477 million are a mix of £nil 2012 £600 million 2011 
£600 million floating interest rate and £973 million 2012 £922 million 2011 £877 million fixed interest rate with a combined average maturity 
date of 2019 2012 average maturity date of 2017 2011 average maturity date of 2017 the total interest bearing financial assets of the group 
excluding the noncurrent investments of £336 million 2012 £487 million 2011 £319 million are at shortdated fixed or variable interest rates 
with average maturity nine days 2012 average maturity 18 days 2011 average maturity six days  
the group’s policy is to manage its net interest expense using a mix of fixed and floating rate financial instruments no external hedging  
of interest rate risk is undertaken 
foreign currency transaction risk 
the group is exposed to foreign currency transaction risk due to trading with overseas postal operators for carrying uk mail abroad and delivering 
foreign origin mail in ukpil and various purchase contracts denominated in foreign currency all in ukpil 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 
foreign currency translation 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 which does not relate to underlying performance this is addressed by using likeforlike 
growth rates as described on page i 
gls’ balance sheet is converted at year end rates and movements relating to foreign currency translation are taken to equity 
87
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
14 financial assets and liabilities – introduction summary and management of financial risk 
continued 
the group’s obligation to settle with overseas postal operators is denominated in special drawing rights sdrs – a basket of currencies comprised of 
us dollar us japanese yen sterling and euro group treasury operates a rolling 18month hedge programme which is subsequently reviewed 
on a quarterly basis 
the group’s obligations to settle conveyance charges in ukpil in us have been hedged to march 2014 
the group has two hedge programmes covering obligations to settle euro invoices on automation projects in ukpil 
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 
commodity price risk 
the group 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 
commodity price and ussterling exchange rate to manage these exposures mainly on a combined basis 
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 to manage these exposures 
credit risk 
royal mail 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 reference agent the credit policy is applied rigidly within the regulated products area so  
as to ensure that royal mail 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 
royal mail 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 2012 04 per cent of turnover 
with respect to credit risk arising from other financial assets of the group which comprise cash cash equivalent investments available for sale 
financial assets held to maturity financial assets held for trading financial assets 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 
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 time deposits with approved counterparties uk government gilts and treasury bills borrowing facilities are regularly reviewed to ensure 
continuity of funding 
the unused facilities for royal mail group limited of £900 million expire in 2014 2012 and 2011 £300 million expiring in 2014 additionally the 
group has £200 million 2012 and 2011 £200 million of uncommitted lines of credit which are reviewed annually 
capital management 
royal mail group limited is a limited company whose shares are not traded and the group regards its capital as share capital share premium 
retained earnings and debt provided by the uk government the ultimate shareholder and the provider of the majority of debt to the group is the uk 
government the management of capital is closely linked to the group’s relationship with its ultimate shareholder the group maintains its liquidity 
requirements by the management of its internal funds and by the drawing down of equity and debt from its ultimate shareholder as well as drawing 
on limited external debt facilities the group’s debt to equity ratio is determined by its ultimate shareholder 
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 from interest rate risk exchange rate risk or commodity price risk 2012 and 2011 £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 £31 million 2012 £39 million 2011 £37 million  
88
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
14 financial assets and liabilities – introduction summary and management of financial risk 
continued 
the group’s obligation to settle with overseas postal operators is denominated in special drawing rights sdrs – a basket of currencies comprised of 
us dollar us japanese yen sterling and euro group treasury operates a rolling 18month hedge programme which is subsequently reviewed 
on a quarterly basis 
the group’s obligations to settle conveyance charges in ukpil in us have been hedged to march 2014 
the group has two hedge programmes covering obligations to settle euro invoices on automation projects in ukpil 
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 
commodity price risk 
the group 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 
commodity price and ussterling exchange rate to manage these exposures mainly on a combined basis 
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 to manage these exposures 
credit risk 
royal mail 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 reference agent the credit policy is applied rigidly within the regulated products area so  
as to ensure that royal mail 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 
royal mail 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 2012 04 per cent of turnover 
with respect to credit risk arising from other financial assets of the group which comprise cash cash equivalent investments available for sale 
financial assets held to maturity financial assets held for trading financial assets 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 
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 time deposits with approved counterparties uk government gilts and treasury bills borrowing facilities are regularly reviewed to ensure 
continuity of funding 
the unused facilities for royal mail group limited of £900 million expire in 2014 2012 and 2011 £300 million expiring in 2014 additionally the 
group has £200 million 2012 and 2011 £200 million of uncommitted lines of credit which are reviewed annually 
capital management 
royal mail group limited is a limited company whose shares are not traded and the group regards its capital as share capital share premium 
retained earnings and debt provided by the uk government the ultimate shareholder and the provider of the majority of debt to the group is the uk 
government the management of capital is closely linked to the group’s relationship with its ultimate shareholder the group maintains its liquidity 
requirements by the management of its internal funds and by the drawing down of equity and debt from its ultimate shareholder as well as drawing 
on limited external debt facilities the group’s debt to equity ratio is determined by its ultimate shareholder 
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 from interest rate risk exchange rate risk or commodity price risk 2012 and 2011 £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 £31 million 2012 £39 million 2011 £37 million  
 
 
15 pension escrow investments 
this note provides an analysis of various pension escrow investments provided as security to the group’s pension trustees 
as from 1 april 2012 following the transfer of almost all of the rmpp pension liabilities and pension assets to hm government and hence the 
removal of the historic pension deficit £149 million of investments – which were previously held in pension escrow in royal mail group limited – 
were released to the company these were subsequently sold and proceeds used to pay down loans to hm government 
on 25 march 2013 the company placed £20 million in a money market fund investment established to provide security to the royal mail senior 
executives pension plan rmsepp as part of a funding agreement with the rmsepp trustees this is treated as an investment in the group’s 
balance sheet rmsepp was closed to future accruals on 31 december 2012 
the pension escrow investments are analysed in the table below 
 2013 
 
2012 
 2011 
 
average 
effective 
interest rate 
 £m 
 average 
effective 
interest rate 
 £m 
 average 
effective 
interest rate 
 £m 
treasury bills – –  04 45  – – 
gilt edged securities indexlinked – –  43 79  47 66 
gilt edged securities conventional – –  48 25  48 21 
money market fund 03 20  – –  – – 
total pension escrow investments  20   149   87 
treasury bills indexlinked gilt edged securities and conventional gilt edged securities 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 the investments are initially 
recognised at fair value being the purchase price after initial recognition interest is included in the reported profitloss for the year using the 
effective interest rate method and the assets are measured at fair value with gains and losses being recognised in the financial assets reserve until 
the investment is derecognised 
the decrease in the pension escrow investments of £129 million in 2013 consists of £149 million relating to rmpp due to the sale of the 
investments offset by a £20 million money market investment established as security for rmsepp the increase in the rmpp related pension 
escrow investments of £62 million in 2012 comprised £4 million interest on the investments £14 million fair value gain deferred into equity and 
£44 million paid into escrow on disposal of a property previously held under mortgage in escrow 
89
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
16 cash and cash equivalents 
below is a summary of the cash and cash equivalents balances held by the group 
cash and cash equivalents include cash and other cash equivalent investments as shown below 
 
2013 
£m 
2012 
£m 
2011 
£m 
cash at bank and in hand 136 172 100 
cash equivalent investments shortterm bank and local authority deposits and money market fund 
investments 215 301 219 
total cash and cash equivalents 351 473 319 
cash and cash equivalents 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 where interest is earned this is either at floating or shortterm fixed rates based upon bank deposit rates the fair value of cash and 
cash equivalent investments is not materially different from the carrying value of £351 million 2012 £473 million 2011 £319 million  
 
17 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 
below is a summary of loans and borrowings at the year end the average interest rate facility availability and security granted 
 2013 
 
loans 
and 
borrowings 
£m 
further 
committed 
facility 
£m 
total 
facility 
£m 
average 
interest rate 
of loan 
drawn down 
 
average 
maturity date of 
drawn loans 
average 
maturity 
date 
of facility 
senior debt facility term loan
10
 – 600 600 – – 2014 
senior debt facility revolver – 300 300 – – 2014 
gls funding loan 500 – 500 58 2023 2023 
shareholder loan 473 – 473 120 2016 2016 
total bis loans to royal mail group limited 973 900 1873 88   
10 
on 30 march 2012 the group agreed an amendment to this facility to permit repayment and reborrowing the outstanding balance was repaid during april and may 2012 since when no 
further drawdowns have been made 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2012 
 
loans 
and 
borrowings 
£m 
further 
committed 
facility 
£m 
total 
facility 
£m 
average 
interest rate 
of loan 
drawn down 
 
average maturity 
date of drawn 
loans 
average 
maturity 
date 
of facility 
senior debt facility term loan 600 – 600 22 2014 2014 
senior debt facility revolver – 300 300 – – 2014 
gls funding loan 500 – 500 58 2023 2023 
shareholder loan 422 – 422 120 –
11 
–
11 
total bis loans to royal mail group limited 1522 300 1822 61   
11 
loan facilities are repayable on the later of march 2016 and the release of the pension escrow investment as from 1 april 2012 following the transfer of almost all of the rmpp pension 
liabilities and pension assets to hm government the loan facilities are repayable in march 2016 
90
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
16 cash and cash equivalents 
below is a summary of the cash and cash equivalents balances held by the group 
cash and cash equivalents include cash and other cash equivalent investments as shown below 
 
2013 
£m 
2012 
£m 
2011 
£m 
cash at bank and in hand 136 172 100 
cash equivalent investments shortterm bank and local authority deposits and money market fund 
investments 215 301 219 
total cash and cash equivalents 351 473 319 
cash and cash equivalents 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 where interest is earned this is either at floating or shortterm fixed rates based upon bank deposit rates the fair value of cash and 
cash equivalent investments is not materially different from the carrying value of £351 million 2012 £473 million 2011 £319 million  
 
17 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 
below is a summary of loans and borrowings at the year end the average interest rate facility availability and security granted 
 2013 
 
loans 
and 
borrowings 
£m 
further 
committed 
facility 
£m 
total 
facility 
£m 
average 
interest rate 
of loan 
drawn down 
 
average 
maturity date of 
drawn loans 
average 
maturity 
date 
of facility 
senior debt facility term loan
10
 – 600 600 – – 2014 
senior debt facility revolver – 300 300 – – 2014 
gls funding loan 500 – 500 58 2023 2023 
shareholder loan 473 – 473 120 2016 2016 
total bis loans to royal mail group limited 973 900 1873 88   
10 
on 30 march 2012 the group agreed an amendment to this facility to permit repayment and reborrowing the outstanding balance was repaid during april and may 2012 since when no 
further drawdowns have been made 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2012 
 
loans 
and 
borrowings 
£m 
further 
committed 
facility 
£m 
total 
facility 
£m 
average 
interest rate 
of loan 
drawn down 
 
average maturity 
date of drawn 
loans 
average 
maturity 
date 
of facility 
senior debt facility term loan 600 – 600 22 2014 2014 
senior debt facility revolver – 300 300 – – 2014 
gls funding loan 500 – 500 58 2023 2023 
shareholder loan 422 – 422 120 –
11 
–
11 
total bis loans to royal mail group limited 1522 300 1822 61   
11 
loan facilities are repayable on the later of march 2016 and the release of the pension escrow investment as from 1 april 2012 following the transfer of almost all of the rmpp pension 
liabilities and pension assets to hm government the loan facilities are repayable in march 2016 
 
 
17 loans and borrowings continued 
 2011 
 
loans 
and 
borrowings 
£m 
further 
committed 
facility 
£m 
total 
facility 
£m 
average 
interest rate 
of loan 
drawn down 
 
average maturity 
date of drawn 
loans 
average 
maturity 
date 
of facility 
senior debt facility term loan 600 – 600 30 2014 2014 
senior debt facility revolver – 300 300 – – 2014 
gls funding loan 500 – 500 58 2023 2023 
shareholder loan 377 – 377 120 –
11
 –
11
 
miscellaneous loans and borrowings in subsidiaries 1 – 1 45 2012 2012 
total bis loans to royal mail group limited 1478 300 1778 63   
the undrawn committed facilities in respect of which all conditions precedent had been met at the balance sheet date expire as follows 
 
2013 
£m 
2012 
£m 
2011 
£m 
expiring in one year or less 900 – – 
expiring in more than one year but not more than two years – 300 – 
expiring in more than two years – – 300 
total 900 300 300 
the following securities apply to the group’s committed facilities 
 
2013 
facility 
£m 
facility 
end date 
2012 
 facility 
£m 
facility 
end date 
2011 
 facility 
£m 
facility 
end date security 
royal mail group limited senior debt 
facility 
900 2014 900 2014 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 422 –
12
 377 –
12
 none 
royal mail group limited other drawn 
down loans 
500 2021
2025 
500 2021
2025 
500 2021 
2025 
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 
 1873  1822  1777   
12
 loan facilities are repayable on the later of march 2016 and the release of the pension escrow investment as from 1 april 2012 following the transfer of almost all of the rmpp pension 
liabilities and pension assets to hm government the loan facilities are repayable in march 2016 
the royal mail group limited shareholder loan increased by £51 million 2012 £45 million 2011 £40 million as a result of accrued interest added 
to the loan balance 
the security in place in the previous year was as disclosed above – with the exception of £nil 2012 £60 million 2011 £102 million mortgages over 
certain group properties which were established in march 2011 
the bis loan to royal mail group limited becomes 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 and total indebtedness 
it is not anticipated that the group is at risk of breaching any of these obligations 
91
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
18 financial liabilities net and gross maturity analysis 
this note focuses on loans and borrowings finance leases and derivatives and provides further details on when amounts fall due both for 
principal and for total contractual payments eg including interest 
 
 2013 
 
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 
 
 2012 
 
loans 
and 
borrowings 
£m 
finance 
leases 
£m 
derivative 
liabilities 
£m 
total 
£m 
amounts falling due in     
one year or less or on demand current – 86 4 90 
more than one year noncurrent 1522 231 1 1754 
 more than one year but not more than two years 600 52 1 653 
 more than two years but not more than five years – 142 – 142 
 more than five years 922 37 – 959 
     
total 1522 317 5 1844 
 
 2011 
 
loans 
and 
borrowings 
£m 
finance 
leases 
£m 
derivative 
liabilities 
£m 
total 
£m 
amounts falling due in     
one year or less or on demand current – 61 3 64 
more than one year noncurrent 1478 184 – 1662 
 more than one year but not more than two years – 47 – 47 
 more than two years but not more than five years 601 103 – 704 
 more than five years 877 34 – 911 
     
total 1478 245 3 1726 
obligations under finance leases are either unsecured or secured on the leased assets these are repayable in variable and fixed amounts over their 
maturity periods the average interest rate is four per cent 2012 and 2011 four per cent the average maturity date is more than five years 2012 
and 2011 more than five years 
92
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
18 financial liabilities net and gross maturity analysis 
this note focuses on loans and borrowings finance leases and derivatives and provides further details on when amounts fall due both for 
principal and for total contractual payments eg including interest 
 
 2013 
 
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 
 
 2012 
 
loans 
and 
borrowings 
£m 
finance 
leases 
£m 
derivative 
liabilities 
£m 
total 
£m 
amounts falling due in     
one year or less or on demand current – 86 4 90 
more than one year noncurrent 1522 231 1 1754 
 more than one year but not more than two years 600 52 1 653 
 more than two years but not more than five years – 142 – 142 
 more than five years 922 37 – 959 
     
total 1522 317 5 1844 
 
 2011 
 
loans 
and 
borrowings 
£m 
finance 
leases 
£m 
derivative 
liabilities 
£m 
total 
£m 
amounts falling due in     
one year or less or on demand current – 61 3 64 
more than one year noncurrent 1478 184 – 1662 
 more than one year but not more than two years – 47 – 47 
 more than two years but not more than five years 601 103 – 704 
 more than five years 877 34 – 911 
     
total 1478 245 3 1726 
obligations under finance leases are either unsecured or secured on the leased assets these are repayable in variable and fixed amounts over their 
maturity periods the average interest rate is four per cent 2012 and 2011 four per cent the average maturity date is more than five years 2012 
and 2011 more than five years 
 
 
18 financial liabilities net and gross maturity analysis continued 
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 which are settled gross these cash 
flows represent the undiscounted gross payment due and do not reflect the accompanying inflow for derivatives which are settled net these cash 
flows represent the undiscounted forecast outflow 
 2013 
 
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 
 
 2012 
 
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 46 98 144 316 3 463 
more than one year noncurrent 2081 344 2425 3 1 2429 
 more than one year but not more than two years 646 60 706 3 1 710 
 more than two years but not more than five years 88 153 241 – – 241 
 more than five years 1347 131 1478 – – 1478 
       
total 2127 442 2569 319 4 2892 
less interest 605 125 730 na na na 
net total 1522 317 1839 na na na 
 
 2011 
 
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 49 72 121 379 2 502 
more than one year noncurrent 2144 297 2441 3 – 2444 
 more than one year but not more than two years 51 54 105 3 – 108 
 more than two years but not more than five years 717 112 829 – – 829 
 more than five years 1376 131 1507 – – 1507 
       
total 2193 369 2562 382 2 2946 
less interest 715 124 839 na na na 
net total 1478 245 1723 na na na 
93
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
19 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 for 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 bis loans to royal mail group limited noncurrent is £1165 million at 31 march 2013 2012 £1698 million 
2011 £1563 million the fair value of ‘obligations under finance leases’ is £308 million 2012 £327 million 2011 £248 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 
table 1 level classification 
2013 
total 
£m 
2012 
total 
£m 
2011 
total 
£m 
financial assets      
cash at bank or in hand   136 172 100 
cash equivalent investments   215 301 219 
 – money market funds  loans and receivables 88 271 98 
 – shortterm deposits – local government  loans and receivables 7 – 29 
 – shortterm deposits – bank  loans and receivables 120 30 92 
cash and cash equivalents   351 473 319 
financial assets – investments current   1 31 1 
 – shortterm deposits – governmentlocal government  loans and receivables 1 1 1 
 – shortterm deposits – bank  loans and receivables – 30 – 
financial assets – investments noncurrent – bank deposits  loans and receivables – – 44 
financial assets – pension escrow investments noncurrent 1  20 149 87 
 – money market funds  loans and receivables 20 – – 
 – treasury bills 1 available for sale – 45 – 
 – gilt edged securities conventional 1 available for sale – 25 21 
 – gilt edged securities index linked  1 available for sale – 79 66 
derivative assets – current 2  9 9 36 
   – noncurrent 2  3 2 6 
total financial assets   384 664 493 
      
financial liabilities      
obligations under finance leases current  amortised cost 79 86 61 
financial liabilities – loans and borrowings noncurrent   973 1522 1478 
 – bis loans to royal mail group limited  amortised cost 973 1522 1477 
 – miscellaneous loans in subsidiaries noncurrent  amortised cost – – 1 
obligations under finance leases noncurrent  amortised cost 226 231 184 
derivative liabilities – current 2  2 4 3 
derivative liabilities – noncurrent 2  1 1 – 
total financial liabilities   1281 1844 1726 
net total financial assets   897 1180 1233 
94
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
19 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 for 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 bis loans to royal mail group limited noncurrent is £1165 million at 31 march 2013 2012 £1698 million 
2011 £1563 million the fair value of ‘obligations under finance leases’ is £308 million 2012 £327 million 2011 £248 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 
table 1 level classification 
2013 
total 
£m 
2012 
total 
£m 
2011 
total 
£m 
financial assets      
cash at bank or in hand   136 172 100 
cash equivalent investments   215 301 219 
 – money market funds  loans and receivables 88 271 98 
 – shortterm deposits – local government  loans and receivables 7 – 29 
 – shortterm deposits – bank  loans and receivables 120 30 92 
cash and cash equivalents   351 473 319 
financial assets – investments current   1 31 1 
 – shortterm deposits – governmentlocal government  loans and receivables 1 1 1 
 – shortterm deposits – bank  loans and receivables – 30 – 
financial assets – investments noncurrent – bank deposits  loans and receivables – – 44 
financial assets – pension escrow investments noncurrent 1  20 149 87 
 – money market funds  loans and receivables 20 – – 
 – treasury bills 1 available for sale – 45 – 
 – gilt edged securities conventional 1 available for sale – 25 21 
 – gilt edged securities index linked  1 available for sale – 79 66 
derivative assets – current 2  9 9 36 
   – noncurrent 2  3 2 6 
total financial assets   384 664 493 
      
financial liabilities      
obligations under finance leases current  amortised cost 79 86 61 
financial liabilities – loans and borrowings noncurrent   973 1522 1478 
 – bis loans to royal mail group limited  amortised cost 973 1522 1477 
 – miscellaneous loans in subsidiaries noncurrent  amortised cost – – 1 
obligations under finance leases noncurrent  amortised cost 226 231 184 
derivative liabilities – current 2  2 4 3 
derivative liabilities – noncurrent 2  1 1 – 
total financial liabilities   1281 1844 1726 
net total financial assets   897 1180 1233 
 
 
19 financial assets and liabilities – additional analysis continued 
there are no financial assets or liabilities designated at fair value through the income statement on initial recognition 
the criteria for codification of ‘level’ in the above table is described in the accounting policy ‘fair value measurement of financial instruments’ on  
page 121 
derivative assets  £9 million current £3 million noncurrent 2012 £9 million current £2 million noncurrent 2011 £36 million current £6 million 
noncurrent and liabilities £2 million current £1 million noncurrent 2012 £4 million current £1 million noncurrent 2011 £3 million current £nil non
current 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 directly to the income statement 
none of the financial assets listed above are 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 or in hand 
table 2 
  
sterling 
£m 
us 
£m 
euro 
£m 
other 
£m 
total 
£m 
net total financial liabilitiesassets 2013   1005 5 66 37 897 
net total financial liabilitiesassets 2012   1343 11 118 34 1180 
net total financial liabilitiesassets 2011   1416 74 87 22 1233 
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 is fixed until the maturity of the instrument 
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 investments of £20 million at 31 march 2013 represent a money market fund investment established to provide security to the royal mail 
senior executives pension plan rmsepp in support of a deficit recovery period agreed with the trustee in 2013 and as such are disclosed as 
maturing in more than five years 
financial year ended 31 march 2013 
table 3 
fixed rate 
£m 
floating rate 
£m 
noninterest 
bearing 
£m 
total 
£m 
cash 18 102 16 136 
cash equivalent investments 127 88  215 
financial asset investments current 1   1 
pension escrow investments  20  20 
derivative  assets   12 12 
  liabilities   3 3 
bis loans to royal mail group limited 973   973 
obligations under finance leases 305   305 
net total financial liabilitiesassets 1132 210 25 897 
financial year ended 25 march 2012 
table 3 
fixed rate 
£m 
floating rate 
£m 
noninterest 
bearing 
£m 
total 
£m 
cash 28 127 17 172 
cash equivalent investments 30 271  301 
financial asset investments current 31   31 
pension escrow investments 25 124  149 
derivative  assets   11 11 
   liabilities   5 5 
bis loans to royal mail group limited 922 600  1522 
obligations under finance leases 317   317 
net total financial liabilitiesassets 1125 78 23 1180 
 
95
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
19 financial assets and liabilities – additional analysis continued 
financial year ended 27 march 2011 
table 3 continued 
fixed rate 
£m 
floating rate 
£m 
noninterest 
bearing 
£m 
total 
£m 
cash 12 87 1 100 
cash equivalent investments 121 98  219 
financial asset investments current 1   1 
pension escrow investments 21 66  87 
financial asset investments noncurrent 44   44 
derivative  assets   42 42 
   liabilities   3 3 
bis loans to royal mail group limited 877 600  1477 
miscellaneous loans and borrowings in subsidiaries 1   1 
obligations under finance leases 245   245 
net total financial liabilitiesassets 924 349 40 1233 
financial year ended 31 march 2013 
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 
bis loans to royal mail group limited 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 
pension escrow investments – money market finds 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 
 
96
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
19 financial assets and liabilities – additional analysis continued 
financial year ended 27 march 2011 
table 3 continued 
fixed rate 
£m 
floating rate 
£m 
noninterest 
bearing 
£m 
total 
£m 
cash 12 87 1 100 
cash equivalent investments 121 98  219 
financial asset investments current 1   1 
pension escrow investments 21 66  87 
financial asset investments noncurrent 44   44 
derivative  assets   42 42 
   liabilities   3 3 
bis loans to royal mail group limited 877 600  1477 
miscellaneous loans and borrowings in subsidiaries 1   1 
obligations under finance leases 245   245 
net total financial liabilitiesassets 924 349 40 1233 
financial year ended 31 march 2013 
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 
bis loans to royal mail group limited 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 
pension escrow investments – money market finds 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 
 
 
 
19 financial assets and liabilities – additional analysis continued 
financial year ended 25 march 2012 
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 42 28 – – – 28 
cash equivalent investments       
– shortterm deposits – bank 07 30 – – – 30 
financial assets – investments current       
– shortterm deposits – hm governmentlocal government 77 1 – – – 1 
– shortterm deposits – bank 24 30 – – – 30 
financial assets – pension escrow investments noncurrent       
– gilt edged securities conventional 48 – – – 25 25 
bis loans to royal mail group limited 87 – – – 922 922 
obligations under finance leases  38 86 52 142 37 317 
total  3 52 142 934 1125 
       
floating rate       
cash at bank 05 127 – – – 127 
cash equivalent investments       
 – money market funds 08 271 – – – 271 
financial assets – pension escrow investments noncurrent       
 – treasury bills 04 – – – 45 45 
 – gilt edged securities index linked 43 – – – 79 79 
bis loans to royal mail group limited 22 – 600 – – 600 
total  398 600 – 124 78 
       
noninterest bearing        
cash at bank or in hand  17 – – – 17 
derivative assets  9 2 – – 11 
derivative liabilities  4 1 – – 5 
total  22 1 – – 23 
net total financial assetsliabilities  423 651 142 810 1180 
97
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013   
 
19 financial assets and liabilities – additional analysis continued 
financial year ended 27 march 2011 
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 39 12 – – – 12 
cash equivalent investments       
– shortterm deposits – bank 06 29 – – – 29 
– shortterm deposits – bank 08 92 – – – 92 
financial assets – investments current       
– shortterm deposits – hm governmentlocal  
 government 77 1 – – – 1 
financial assets – investments noncurrent – bank deposits 04 – 5 24 15 44 
financial assets – pension escrow investments noncurrent       
– gilt edged securities conventional 48 – – – 21 21 
bis loans to royal mail group limited 84 – – – 877 877 
obligations under finance leases  43 61 47 103 34 245 
miscellaneous loans in subsidiaries 45 – – 1 – 1 
total  73 42 80 875 924 
       
floating rate       
cash at bank 08 87 – – – 87 
cash equivalent investments       
 – money market funds 07 98 – – – 98 
financial assets – pension escrow investments noncurrent       
 – gilt edged securities index linked 47 – – – 66 66 
bis loans to royal mail group limited 30 – – 600 – 600 
total  185 – 600 66 349 
       
noninterest bearing        
cash at bank or in hand   1 – – – 1 
derivative assets  36 6 – – 42 
derivative liabilities  3 – – – 3 
total  34 6 – – 40 
net total financial assetsliabilities  292 36 680 809 1233 
98
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued   
 
19 financial assets and liabilities – additional analysis continued 
financial year ended 27 march 2011 
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 39 12 – – – 12 
cash equivalent investments       
– shortterm deposits – bank 06 29 – – – 29 
– shortterm deposits – bank 08 92 – – – 92 
financial assets – investments current       
– shortterm deposits – hm governmentlocal  
 government 77 1 – – – 1 
financial assets – investments noncurrent – bank deposits 04 – 5 24 15 44 
financial assets – pension escrow investments noncurrent       
– gilt edged securities conventional 48 – – – 21 21 
bis loans to royal mail group limited 84 – – – 877 877 
obligations under finance leases  43 61 47 103 34 245 
miscellaneous loans in subsidiaries 45 – – 1 – 1 
total  73 42 80 875 924 
       
floating rate       
cash at bank 08 87 – – – 87 
cash equivalent investments       
 – money market funds 07 98 – – – 98 
financial assets – pension escrow investments noncurrent       
 – gilt edged securities index linked 47 – – – 66 66 
bis loans to royal mail group limited 30 – – 600 – 600 
total  185 – 600 66 349 
       
noninterest bearing        
cash at bank or in hand   1 – – – 1 
derivative assets  36 6 – – 42 
derivative liabilities  3 – – – 3 
total  34 6 – – 40 
net total financial assetsliabilities  292 36 680 809 1233 
 
 
20 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 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 we show the full picture 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 and foreign exchange rates as explained in note 14 
interest rate risk is managed using an appropriate mix of fixed and variable rate financial instruments there are no significant concentrations of 
credit risk accounting rules require the company to choose whether to designate effective 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 year 
hedging activities 
the diesel fuel hedge programme uses forward commodity price swaps in us or sterling and forward currency purchase contracts to hedge the 
exposure arising from commodity price and ussterling exchange rates for forecast diesel fuel purchases 
the jet fuel hedge programme uses forward commodity price swaps and forward currency purchase contracts to hedge the exposure arising from 
commodity price and ussterling exchange rates for forecast jet fuel usage 
the air conveyance hedge programme uses us forward currency purchase contracts to hedge the exposure arising from ussterling exchange 
rates for forecast air conveyance purchases 
three capital programmes one of which completed during the year use euro forward currency purchase contracts to hedge the exposure arising 
from sterlingeuro exchange rates for contracted capital expenditure on automation projects 
the electricity hedge programme uses forward commodity price swaps to hedge the exposure arising from electricity prices 
the gas hedge programme uses forward commodity price swaps to hedge the exposure arising from gas prices 
the group had undesignated cash flow hedge programmes for ukpil overseas postal operator liabilities and the transactional exposure created by 
intercompany loans with gls 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 and jet these 
price swaps are sometimes entered into on the us 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 the 
amount of the exposure 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 add an additional cost of approximately £100 million to diesel costs each year total fuel costs for 201314 are estimated to be 
£196 million 
 
99
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
20 hedging programmes continued 
 
 exposure excluding fuel duty and expected consumption hedged 2013 
  march year ending 2014 march year ending 2015 march year ending 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 9 
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 
 
  exposure excluding fuel duty and expected consumption hedged 2012 
  march year ending 2013 march year ending 2014 march year ending 2015 
commodity risk 
exposure 
£m 
 
hedged 
exposure 
£m 
 
hedged  
exposure 
£m 
 
hedged  
diesel fuel us price and £ exchange rate movements 83 91 86 51 84 9 
jet fuel us price and £ exchange rate movements 15 90 16 52 16 − 
electricity £ price movement 19 83 17 85 17 20 
gas £ price movement 15 78 14 80 13 9 
 
  exposure excluding fuel duty and expected consumption hedged 2011 
  march year ending 2012 march year ending 2013 march year ending 2014 
commodity risk 
exposure 
£m 
 
hedged 
exposure 
£m 
 
hedged  
exposure 
£m 
 
hedged  
diesel fuel us price and £ exchange rate movements 59 90 73 29 75 − 
jet fuel us price and £ exchange rate movements 13 90 16 30 16 − 
electricity £ price movement 15 76 17 26 18 − 
gas £ price movement 8 88 11 40 11 − 
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 may be hedged with 
external forward foreign currency contracts the underlying exposures eg the foreign postal administration liabilities and the derivatives are both 
revalued to current market prices at the balance sheet dates meaning that no net gains or losses arise in the income statement 
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 
31 march 
2013 
at 
25 march 
2012 
at 
 27 march 
 2011 
air conveyance £ exchange rate movements 92 89 90 
capital programmes €£ exchange rate movements 95 86 87 
overseas postal operator liabilities sdr£ exchange rate movements 17 36 41 
gls intercompany loan €£ exchange rate movements 100 100 100 
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 or profits 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’ 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 either realised in cash or used to discharge a liability when the derivative matures 
the amounts deferred into equity are released from equity to the income statement or to the initial carrying amount of nonfinancial assets when 
the hedged transaction occurs the following tables show the derivative contracts entered into at 31 march 2013 25 march 2012 and 27 march 
2011 and the associated derivative assets and liabilities 
100
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
20 hedging programmes continued 
 
 exposure excluding fuel duty and expected consumption hedged 2013 
  march year ending 2014 march year ending 2015 march year ending 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 9 
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 
 
  exposure excluding fuel duty and expected consumption hedged 2012 
  march year ending 2013 march year ending 2014 march year ending 2015 
commodity risk 
exposure 
£m 
 
hedged 
exposure 
£m 
 
hedged  
exposure 
£m 
 
hedged  
diesel fuel us price and £ exchange rate movements 83 91 86 51 84 9 
jet fuel us price and £ exchange rate movements 15 90 16 52 16 − 
electricity £ price movement 19 83 17 85 17 20 
gas £ price movement 15 78 14 80 13 9 
 
  exposure excluding fuel duty and expected consumption hedged 2011 
  march year ending 2012 march year ending 2013 march year ending 2014 
commodity risk 
exposure 
£m 
 
hedged 
exposure 
£m 
 
hedged  
exposure 
£m 
 
hedged  
diesel fuel us price and £ exchange rate movements 59 90 73 29 75 − 
jet fuel us price and £ exchange rate movements 13 90 16 30 16 − 
electricity £ price movement 15 76 17 26 18 − 
gas £ price movement 8 88 11 40 11 − 
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 may be hedged with 
external forward foreign currency contracts the underlying exposures eg the foreign postal administration liabilities and the derivatives are both 
revalued to current market prices at the balance sheet dates meaning that no net gains or losses arise in the income statement 
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 
31 march 
2013 
at 
25 march 
2012 
at 
 27 march 
 2011 
air conveyance £ exchange rate movements 92 89 90 
capital programmes €£ exchange rate movements 95 86 87 
overseas postal operator liabilities sdr£ exchange rate movements 17 36 41 
gls intercompany loan €£ exchange rate movements 100 100 100 
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 or profits 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’ 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 either realised in cash or used to discharge a liability when the derivative matures 
the amounts deferred into equity are released from equity to the income statement or to the initial carrying amount of nonfinancial assets when 
the hedged transaction occurs the following tables show the derivative contracts entered into at 31 march 2013 25 march 2012 and 27 march 
2011 and the associated derivative assets and liabilities 
 
 
20 hedging programmes continued 
 
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 
2013         
diesel fuel diesel fuel 182000 tonnes apr 13 – apr 15 us931tonne – 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 17000 tonnes apr 13 – dec 13 us1016tonne – – – – 
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 535000 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 
 
 
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 
2012         
diesel fuel diesel fuel 191000 tonnes apr 12 – oct 14 us963tonne 1 7 – – 
diesel fuel us 184m apr 12 – oct 14 us158£ – 1 – 1 
diesel fuel diesel fuel 32m litres may 13 – jul 14 £05litre 1 – – – 
jet fuel jet fuel 29000 tonnes apr 12 – sep 13 us1017tonne – 1 – – 
jet fuel jet fuel 29m apr 12 – sep 13 us158£ – – – – 
air conveyance us 28m mar 12 – apr 13 us160£ – – – – 
capital programmes euro €21m mar 12 – jun 12 £084 € – – – – 
electricity electricity 695000 mwh apr 12 – oct 14 £55mwh – – 1 2 
gas gas 40m therms apr 12 – oct 14 £070therm – – – – 
cash flow hedges     2 9 1 3 
other derivatives     – – – 1 
total     2 9 1 4 
 
 
101
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013   
 
20 hedging programmes continued 
 
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 
2011         
diesel fuel diesel fuel 148000 tonnes apr 11 – jan 13 us795tonne 4 17 – – 
diesel fuel us 118m apr 11 – jan 13 us157£ – – – 1 
air conveyance us 25m mar 11 – apr 12 us163£ – – – – 
capital programmes euro €67m mar 11 – apr 12 £085 € – 2 – – 
electricity electricity 378000 mwh apr 11 – jan 13 £46mwh 1 3   
gas gas 24m therms apr 11 – apr 13 £056therm  3 – – 
cash flow hedges     5 25 – 1 
other derivatives     1 11 – 2 
total     6 36 – 3 
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 the 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 hedging 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 
 
 
102
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued   
 
20 hedging programmes continued 
 
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 
2011         
diesel fuel diesel fuel 148000 tonnes apr 11 – jan 13 us795tonne 4 17 – – 
diesel fuel us 118m apr 11 – jan 13 us157£ – – – 1 
air conveyance us 25m mar 11 – apr 12 us163£ – – – – 
capital programmes euro €67m mar 11 – apr 12 £085 € – 2 – – 
electricity electricity 378000 mwh apr 11 – jan 13 £46mwh 1 3   
gas gas 24m therms apr 11 – apr 13 £056therm  3 – – 
cash flow hedges     5 25 – 1 
other derivatives     1 11 – 2 
total     6 36 – 3 
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 the 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 hedging 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 
 
 
 
 
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 
 
21 provisions  
22 property plant and equipment  
23 goodwill  
24 intangible assets  
25 investments in associates  
26 current trade and other receivables  
27 current trade and other payables  
28 issued share capital and reserves  
29 commitments  
30 related party information  
 
 
 
 
 
 
 
103
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
21 provisions 
a summary of the provisions that have been made in the accounts including for transformation costs are shown below 
 
 exceptional   
 
transformation 
£m 
non 
transformation 
£m 
other 
£m 
total 
£m 
at 28 march 2010 186 – 47 233 
arising during the year     
– charged in operating exceptional items 254 30 – 284 
– charged in other operating costs – – 23 23 
unused amounts reversed 113 – 7 120 
utilised in the year 159 – 15 174 
discount rate adjustment 6 – – 6 
at 27 march 2011 174 30 48 252 
arising during the year     
– charged in operating exceptional items 89 19 – 108 
– charged in other operating costs – – 32 32 
unused amounts reversed 7 2 2 11 
utilised in the year 148 6 12 166 
discount rate adjustment – 2 – 2 
at 25 march 2012 108 43 66 217 
arising during the year     
– charged in operating exceptional items 87 48 – 135 
– charged in other operating costs – – 27 27 
unused amounts reversed 17 – 17 34 
utilised in the year 73 5 22 100 
discount rate adjustment – 1 – 1 
at 31 march 2013 105 87 54 246 
     
disclosed as     
current at 31 march 2013 69 18 32 119 
noncurrent at 31 march 2013 36 69 22 127 
 105 87 54 246 
     
current at 25 march 2012 73 7 52 132 
noncurrent at 25 march 2012 35 36 14 85 
 108 43 66 217 
     
current at 27 march 2011 133 3 31 167 
noncurrent at 27 march 2011 41 27 17 85 
 174 30 48 252 
 
104
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
21 provisions 
a summary of the provisions that have been made in the accounts including for transformation costs are shown below 
 
 exceptional   
 
transformation 
£m 
non 
transformation 
£m 
other 
£m 
total 
£m 
at 28 march 2010 186 – 47 233 
arising during the year     
– charged in operating exceptional items 254 30 – 284 
– charged in other operating costs – – 23 23 
unused amounts reversed 113 – 7 120 
utilised in the year 159 – 15 174 
discount rate adjustment 6 – – 6 
at 27 march 2011 174 30 48 252 
arising during the year     
– charged in operating exceptional items 89 19 – 108 
– charged in other operating costs – – 32 32 
unused amounts reversed 7 2 2 11 
utilised in the year 148 6 12 166 
discount rate adjustment – 2 – 2 
at 25 march 2012 108 43 66 217 
arising during the year     
– charged in operating exceptional items 87 48 – 135 
– charged in other operating costs – – 27 27 
unused amounts reversed 17 – 17 34 
utilised in the year 73 5 22 100 
discount rate adjustment – 1 – 1 
at 31 march 2013 105 87 54 246 
     
disclosed as     
current at 31 march 2013 69 18 32 119 
noncurrent at 31 march 2013 36 69 22 127 
 105 87 54 246 
     
current at 25 march 2012 73 7 52 132 
noncurrent at 25 march 2012 35 36 14 85 
 108 43 66 217 
     
current at 27 march 2011 133 3 31 167 
noncurrent at 27 march 2011 41 27 17 85 
 174 30 48 252 
 
 
 
21 provisions continued 
transformation provisions charged as transformation operating exceptional items 
transformation exceptional provisions of £105 million 2012 £108 million 2011 £174 million principally comprise redundancy schemes of  
£92 million 2012 £87 million 2011 £156 million a further £13 million 2012 £21 million 2011 £18 million relates to onerous property contracts 
associated with restructuring current transformation provisions of £69 million are expected to be utilised in 201314 with the remainder due within 
two to three years except for onerous property provisions of £1 million expected to be utilised within three to five years and a further £3 million 
over a period greater than five years 
nontransformation provisions charged as other operating exceptional items 
included in nontransformation provisions of £87 million at 31 march 2013 2012 £43 million 2011 £30 million is £67 million 2012 £39 million 
2011 £30 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 judgment 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 £4 million of this provision is expected to be utilised in 201314  
the remaining £20 million 2012 and 2011 £nil relates to it systems costs associated with post office limited separation of which £14 million is 
expected to be utilised in 201314 with the remainder expected to be utilised in the following year  
other provisions charged in normal operating expenses 
‘other’ provisions of £54 million 2012 £66 million 2011 £48 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 201314 with £3 million onerous lease obligations and decommissioning costs expected to be utilised within two to three years  
£12 million within three to five years and a further £7 million over a period greater than five years 
105
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
22 property plant and equipment 
below are details of the group’s property automation 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 and impairments relating to 
underperformance of assets in their objective of generating economic benefits 
 
 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        
at 26 march 2012 1528 259 633 1224 448 328 4420 
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 pol 22 – – – – – 22 
reclassification to noncurrent 
assets held for sale  2 – – – – – 2 
at 31 march 2013 1622 262 650 1187 538 362 4621 
depreciation and impairment        
at 26 march 2012 801 157 403 735 262 240 2598 
exchange rate movements 1 – – 2 – 1 4 
reclassification – – 1 – 1 – – 
depreciation note 13 40 6 46 68 46 32 238 
impairment note 5 21 – – – – – 21 
disposals  16 1 16 87 20 4 144 
legal entity transfer to pol 11 – – – – – 11 
reclassification to noncurrent 
assets held for sale 1 – – – – – 1 
at 31 march 2013 835 162 432 718 289 269 2705 
net book value        
at 31 march 2013 787 100 218 469 249 93 1916 
at 26 march 2012 727 102 230 489 186 88 1822 
depreciation rates are disclosed within accounting policies page 119 no depreciation is provided on land which represents £196 million 
2012 £199 million 2011 £166 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 £378 million 2012 £320 million 2011 £262 million comprising £208 million 2012 £137 million 2011 £152 million 
vehicles £146 million 2012 £154 million 2011 £88 million plant and machinery and £24 million 2012 £29 million 2011 £22 million land and 
buildings the net book value of the group’s property plant and equipment includes £206 million 2012 £171 million 2011 £146 million in respect 
of assets in the course of construction the net book value of the group’s land and buildings includes £382 million 2012 £389 million 2011  
£383 million in respect of building fitout 
the £392 million 2012 £327 million 2011 £262 million additions include borrowing costs capitalised in relation to specific qualifying assets of £nil 
2012 £2 million 2011 £nil 
106
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
22 property plant and equipment 
below are details of the group’s property automation 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 and impairments relating to 
underperformance of assets in their objective of generating economic benefits 
 
 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        
at 26 march 2012 1528 259 633 1224 448 328 4420 
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 pol 22 – – – – – 22 
reclassification to noncurrent 
assets held for sale  2 – – – – – 2 
at 31 march 2013 1622 262 650 1187 538 362 4621 
depreciation and impairment        
at 26 march 2012 801 157 403 735 262 240 2598 
exchange rate movements 1 – – 2 – 1 4 
reclassification – – 1 – 1 – – 
depreciation note 13 40 6 46 68 46 32 238 
impairment note 5 21 – – – – – 21 
disposals  16 1 16 87 20 4 144 
legal entity transfer to pol 11 – – – – – 11 
reclassification to noncurrent 
assets held for sale 1 – – – – – 1 
at 31 march 2013 835 162 432 718 289 269 2705 
net book value        
at 31 march 2013 787 100 218 469 249 93 1916 
at 26 march 2012 727 102 230 489 186 88 1822 
depreciation rates are disclosed within accounting policies page 119 no depreciation is provided on land which represents £196 million 
2012 £199 million 2011 £166 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 £378 million 2012 £320 million 2011 £262 million comprising £208 million 2012 £137 million 2011 £152 million 
vehicles £146 million 2012 £154 million 2011 £88 million plant and machinery and £24 million 2012 £29 million 2011 £22 million land and 
buildings the net book value of the group’s property plant and equipment includes £206 million 2012 £171 million 2011 £146 million in respect 
of assets in the course of construction the net book value of the group’s land and buildings includes £382 million 2012 £389 million 2011  
£383 million in respect of building fitout 
the £392 million 2012 £327 million 2011 £262 million additions include borrowing costs capitalised in relation to specific qualifying assets of £nil 
2012 £2 million 2011 £nil 
 
 
22 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        
at 28 march 2011 1524 260 580 1178 438 312 4292 
exchange rate movements 16 1 – 8 3 5 33 
reclassification 32 – 32 – – – – 
additions 127 2 29 114 28 27 327 
disposals 55 1 8 60 15 6 145 
reclassification to noncurrent 
assets held for sale  20 1 – – – – 21 
at 25 march 2012 1528 259 633 1224 448 328 4420 
depreciation and impairment        
at 28 march 2011 797 153 357 718 224 214 2463 
exchange rate movements 4 1 – 5 2 4 16 
reclassification 9 – 9 – – – – 
depreciation note 13 46 6 45 82 54 35 268 
impairment note 5 1 – – – – – 1 
disposals  14 1 8 60 14 5 102 
reclassification to noncurrent 
assets held for sale 16 – – – – – 16 
at 25 march 2012 801 157 403 735 262 240 2598 
net book value        
at 25 march 2012 727 102 230 489 186 88 1822 
at 28 march 2011 727 107 223 460 214 98 1829 
 
 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        
at 29 march 2010 1647 250 494 1139 422 290 4242 
exchange rate movements 5 – – 2 1 1 9 
reclassification 73 4 77 2 3 1  
additions 73 19 12 85 43 30 262 
disposals 106 5 3 42 29 6 191 
reclassification to noncurrent 
assets held for sale  12 – – – – – 12 
at 27 march 2011 1524 260 580 1178 438 312 4292 
depreciation and impairment        
at 29 march 2010 821 150 280 678 195 186 2310 
exchange rate movements 1 – – 2 – 1 4 
reclassification 40 3 42 – 1 – – 
depreciation note 13 44 7 38 74 53 34 250 
impairment note 5 2 – – 10 – – 12 
disposals  19 1 3 42 25 5 95 
reclassification to noncurrent 
assets held for sale 10 – – – – – 10 
at 27 march 2011 797 153 357 718 224 214 2463 
net book value        
at 27 march 2011 727 107 223 460 214 98 1829 
at 29 march 2010 826 100 214 461 227 104 1932 
107
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
23 goodwill 
this note provides details of the goodwill at the start and end of the reporting period most of which relates to the group’s acquisition of its 
overseas subsidiary general logistics systems gls 
 
 
2013 
£m 
2012 
£m 
2011 
£m 
cost    
at 26 march 2012 and 28 march 2011 and 29 march 2010 599 628 636 
exchange rate movements 8 32 11 
acquisition of businesses  4 3 3 
at 31 march 2013 and 25 march 2012 and 27 march 2011 611 599 628 
impairment including amortisation up to the date of transition to ifrs    
at 26 march 2012 and 28 march 2011 and 29 march 2010 410 431 439 
exchange rate movements 5 21 8 
at 31 march 2013 and 25 march 2012 and 27 march 2011 415 410 431 
net book value    
at 31 march 2013 and 25 march 2012 and 27 march 2011 196 189 197 
at 26 march 2012 and 28 march 2011 and 29 march 2010 189 197 197 
the group’s investment in general logistics systems gls occurred substantially over the 199899 and 19992000 financial years in 200102 
£256 million of the goodwill recognised on acquisition was impaired based on the forecast underperformance of gls whilst this forecast under
performance did not fully materialise the goodwill impairment could not be reversed as this is not permitted under ifrs in retrospect this 
impairment would not have been recognised based on gls’ actual financial performance  
the remaining impairment amount of £159 million at 31 march 2013 relates to amortisation prior to the group’s transition to ifrs in 200506 and 
the impact of foreign exchange rates on translation of euros to pounds sterling 
the carrying value of goodwill arising on business combinations of £196 million 2012 £189 million 2011 £197 million at the balance sheet date 
includes £194 million 2012 £187 million 2011 £195 million relating to the gls business segment in line with the group’s accounting policy see 
page 118 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 net 
assets of gls excluding interest bearing and taxation related assets and liabilities is £487 million 2012 £446 million 2011 £450 million at  
31 march 2013 and the operating profit before exceptional items is £101 million 2012 £128 million 2011 £118 million for the year note 3 the 
carrying value of gls represents a multiple of 48 2012 35 2011 38 on operating profit before exceptional items the net realisable value of gls 
for the purposes of the impairment review ie the ‘fair value less costs to sell’ has been assessed with reference to earnings multiples for quoted 
entities in a similar sector 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 30 per cent to reduce the net realisable value to below the carrying value 
108
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
23 goodwill 
this note provides details of the goodwill at the start and end of the reporting period most of which relates to the group’s acquisition of its 
overseas subsidiary general logistics systems gls 
 
 
2013 
£m 
2012 
£m 
2011 
£m 
cost    
at 26 march 2012 and 28 march 2011 and 29 march 2010 599 628 636 
exchange rate movements 8 32 11 
acquisition of businesses  4 3 3 
at 31 march 2013 and 25 march 2012 and 27 march 2011 611 599 628 
impairment including amortisation up to the date of transition to ifrs    
at 26 march 2012 and 28 march 2011 and 29 march 2010 410 431 439 
exchange rate movements 5 21 8 
at 31 march 2013 and 25 march 2012 and 27 march 2011 415 410 431 
net book value    
at 31 march 2013 and 25 march 2012 and 27 march 2011 196 189 197 
at 26 march 2012 and 28 march 2011 and 29 march 2010 189 197 197 
the group’s investment in general logistics systems gls occurred substantially over the 199899 and 19992000 financial years in 200102 
£256 million of the goodwill recognised on acquisition was impaired based on the forecast underperformance of gls whilst this forecast under
performance did not fully materialise the goodwill impairment could not be reversed as this is not permitted under ifrs in retrospect this 
impairment would not have been recognised based on gls’ actual financial performance  
the remaining impairment amount of £159 million at 31 march 2013 relates to amortisation prior to the group’s transition to ifrs in 200506 and 
the impact of foreign exchange rates on translation of euros to pounds sterling 
the carrying value of goodwill arising on business combinations of £196 million 2012 £189 million 2011 £197 million at the balance sheet date 
includes £194 million 2012 £187 million 2011 £195 million relating to the gls business segment in line with the group’s accounting policy see 
page 118 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 net 
assets of gls excluding interest bearing and taxation related assets and liabilities is £487 million 2012 £446 million 2011 £450 million at  
31 march 2013 and the operating profit before exceptional items is £101 million 2012 £128 million 2011 £118 million for the year note 3 the 
carrying value of gls represents a multiple of 48 2012 35 2011 38 on operating profit before exceptional items the net realisable value of gls 
for the purposes of the impairment review ie the ‘fair value less costs to sell’ has been assessed with reference to earnings multiples for quoted 
entities in a similar sector 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 30 per cent to reduce the net realisable value to below the carrying value 
 
 
24 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 
 
 2013 
 
master 
franchise 
licences 
£m 
customer 
listings 
£m 
software 
£m 
total 
£m 
cost     
at 26 march 2012 23 30 248 301 
additions – – 44 44 
disposals – – 5 5 
acquisition of business – 2 – 2 
at 31 march 2013  23 32 287 342 
     
amortisation and impairment     
at 26 march 2012  23 26 117 166 
impairment note 5 – – 1 1 
amortisation note 13 – 2 41 43 
disposals – – 5 5 
at 31 march 2013  23 28 152 203 
net book value     
at 31 march 2013  – 4 135 139 
at 26 march 2012  – 4 131 135 
the £44 million 2012 £43 million 2011 £62 million additions include borrowing costs capitalised in relation to specific qualifying assets of  
£1 million 2012 £nil 2011 £1 million 
 2012 
 
master 
franchise 
licences 
£m 
customer 
listings 
£m 
software 
£m 
total 
£m 
cost     
at 28 march 2011  24 29 216 269 
additions – – 43 43 
disposals – – 10 10 
acquisition of business – 2 – 2 
exchange rate movements 1 1 1 3 
at 25 march 2012  23 30 248 301 
     
amortisation and impairment     
at 28 march 2011 24 25 94 143 
impairment note 5 – – 3 3 
amortisation note 13 – 2 31 33 
disposals – – 10 10 
exchange rate movements 1 1 1 3 
at 25 march 2012 23 26 117 166 
net book value     
at 25 march 2012 – 4 131 135 
at 28 march 2011 – 4 122 126 
 
109
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
24 intangible assets continued 
 2011 
 
master 
franchise 
licences 
£m 
customer 
listings 
£m 
software 
£m 
total 
£m 
cost     
at 29 march 2010 24 27 170 221 
additions – – 62 62 
disposals – – 16 16 
acquisition of business – 2 – 2 
at 27 march 2011 24 29 216 269 
     
amortisation and impairment     
at 29 march 2010 22 22 78 122 
impairment note 5 – – 1 1 
amortisation note 13 2 3 31 36 
disposals – – 16 16 
at 27 march 2011 24 25 94 143 
net book value     
at 27 march 2011 – 4 122 126 
at 29 march 2010 2 5 92 99 
the intangible assets above none of which have been internally generated have finite lives and are being written down on a straightline basis 
110
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
24 intangible assets continued 
 2011 
 
master 
franchise 
licences 
£m 
customer 
listings 
£m 
software 
£m 
total 
£m 
cost     
at 29 march 2010 24 27 170 221 
additions – – 62 62 
disposals – – 16 16 
acquisition of business – 2 – 2 
at 27 march 2011 24 29 216 269 
     
amortisation and impairment     
at 29 march 2010 22 22 78 122 
impairment note 5 – – 1 1 
amortisation note 13 2 3 31 36 
disposals – – 16 16 
at 27 march 2011 24 25 94 143 
net book value     
at 27 march 2011 – 4 122 126 
at 29 march 2010 2 5 92 99 
the intangible assets above none of which have been internally generated have finite lives and are being written down on a straightline basis 
 
 
25 investments in associates 
this note provides details of the group’s associate companies including its share of the net assets of these entities 
details of the group’s two associate companies are provided in note 30 during march 2013 it was announced that one of these companies  
g3 worldwide mail nv spring was to be sold and accordingly the group’s share of its net assets was reclassified to the ‘assets held for sale’ 
category on the group balance sheet g3 worldwide mail nv spring was subsequently sold on 2 april 2013 after the balance sheet date 
the reporting year end date for quadrant catering limited was 30 september 2012 30 september 2011 and for g3 worldwide mail nv spring 
was 31 december 2012 31 december 2011 to ensure that the reported share of profitloss of these two associate companies align with the 
group’s reporting period ending 31 march 2013 2012 25 march 2012 an estimated profitloss using forecasts from the respective companies’ 
management reporting systems was used for the month of march 2013 
there are no significant restrictions on the ability of associates to transfer funds to the group in the form of cash dividends repayment of loans  
or advances 
 
at 
26 march 
2012 
£m 
share of post 
taxation pre 
dividend 
profit 
£m 
impairment 
£m 
disposal 
£m 
reclassification 
£m 
dividend 
£m 
at 31 march 
2013 
£m 
share of net assets 3 1 – – 1 – 3 
total net investments in associates 3 1 – – 1 – 3 
 
 
at 
28 march 
2011 
£m 
share of post 
taxation pre 
dividend 
profit 
£m 
impairment 
£m 
disposal 
£m 
dividend 
£m 
at 25 march 
2012 
£m 
share of net assets  9 1 3 – 4 3 
total net investments in associates 9 1 3 – 4 3 
 
 
at 
29 march 
2010 
£m 
share of post 
taxation pre 
dividend 
profit 
£m 
impairment 
£m 
disposal 
£m 
dividend 
£m 
at 27 march 
2011 
£m 
share of net assets  35 3 – 20 9 9 
goodwill  11 – 2 9 – – 
total net investments in associates 46 3 2 29 9 9 
 
   
 
2013 
£m 
2012 
£m 
2011 
£m 
share of assets and liabilities    
current assets 6 10 25 
noncurrent assets – 1 3 
share of gross assets 6 11 28 
current liabilities 3 8 18 
noncurrent liabilities – – 1 
share of gross liabilities 3 8 19 
share of net assets 3 3 9 
share of revenue and profit    
revenue 61 68 341 
profit after taxation 1 1 3 
111
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
26 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 
 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
trade receivables  758 759 820 
prepayments and accrued income  241 275 86 
income taxation receivable 5 2 – 
total 1004 1036 906 
movements in the provision for bad and doubtful debts were as follows 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
at 26 march 2012 and 28 march 2011 and 29 march 2010  35 19 23 
receivables provided for during the year 11 26 8 
release of provision 10 4 4 
utilisation of provision 6 6 8 
at 31 march 2013 and 25 march 2012 and 27 march 2011 30 35 19 
the amount of trade receivables that were past due but not impaired are as follows 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
past due not more than one month 93 60 62 
past due more than one month and not more than two months 8 12 10 
past due more than two months  29 33 18 
total past due but not impaired 130 105 90 
provided for or not yet overdue 658 689 749 
provision for bad and doubtful debts 30 35 19 
total  758 759 820 
 
27 current trade and other payables 
the following details relate to amounts owed by the group to third parties including post office limited 
 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
trade payables and accruals  1076 1044 1004 
advance customer payments for stamps held not yet used by customers 375 292 241 
social security  102 85 85 
capital expenditure payables 48 47 44 
other 10 44 20 
total 1611 1512 1394 
 
 
112
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
26 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 
 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
trade receivables  758 759 820 
prepayments and accrued income  241 275 86 
income taxation receivable 5 2 – 
total 1004 1036 906 
movements in the provision for bad and doubtful debts were as follows 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
at 26 march 2012 and 28 march 2011 and 29 march 2010  35 19 23 
receivables provided for during the year 11 26 8 
release of provision 10 4 4 
utilisation of provision 6 6 8 
at 31 march 2013 and 25 march 2012 and 27 march 2011 30 35 19 
the amount of trade receivables that were past due but not impaired are as follows 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
past due not more than one month 93 60 62 
past due more than one month and not more than two months 8 12 10 
past due more than two months  29 33 18 
total past due but not impaired 130 105 90 
provided for or not yet overdue 658 689 749 
provision for bad and doubtful debts 30 35 19 
total  758 759 820 
 
27 current trade and other payables 
the following details relate to amounts owed by the group to third parties including post office limited 
 
  
 
2013 
£m 
2012 
£m 
2011 
£m 
trade payables and accruals  1076 1044 1004 
advance customer payments for stamps held not yet used by customers 375 292 241 
social security  102 85 85 
capital expenditure payables 48 47 44 
other 10 44 20 
total 1611 1512 1394 
 
 
 
 
28 issued share capital and reserves 
details of the authorised share capital of the company and that which has been issued are as follows 
authorised share capital 
 
2013 
£ 
2012 
£ 
2011 
£ 
ordinary shares of £1 each  100000 100000 100000 
special rights redeemable preference share special share of £1 each 1 – – 
total 100001 100000 100000 
issued and called up share capital 
 
2013 
£ 
2012 
£ 
2011 
£ 
ordinary shares of £1 each  50000 50000 50000 
special rights redeemable preference share special share of £1 each 1 – – 
total 50001 50000 50000 
the special share can be redeemed at any time by its holder the secretary of state for business innovation  skills subject to such redemption 
being compliant with the companies act 2006 the company cannot redeem the special share without the prior consent of its holder no premium 
is payable on redemption  
on distribution in a winding up of the company the holder of the special share is entitled to repayment of the lower of a the capital paid up on the 
special share in priority to any repayment of capital to any other member and b an amount equal to 24 per cent of the assets available for 
distribution to equity holders of the company the special share does not carry any rights to vote 
under section 637 of the postal services act 2000 for the purposes of the companies act 2006 certain shares issued shall be treated as if their 
nominal value had been fully paid up 
under section 72 of the postal services act 2000 the secretary of state for business innovation  skills may issue directions to royal mail holdings 
plc the company’s parent company which depending on the particulars of that direction could result in the establishment of a separate reserve in 
equity by the company 
other reserves identified 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 
dividends 
the directors do not recommend a dividend 2012 £nil dividend 
113
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
29 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 group 
operating lease commitments 
the group is committed to the following future minimum lease payments under noncancellable operating leases at 31 march 2013 and  
25 march 2012 and 27 march 2011 
 land and buildings  vehicles and equipment  it equipment  total 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
within one year  125 132 130  13 11 11  8 13 20  146 156 161 
between one and five years  391 414 412  14 18 13  17 16 19  422 448 444 
beyond five years  507 535 476  – – –  – 3 –  507 538 476 
total 1023 1081 1018  27 29 24  25 32 39  1075 1142 1081 
existing leases for uk land and buildings have an average term of 13 years and lease renewals tend to have a 10year term with a break in year five 
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 it commitments relate to 10year contracts with an average term remaining of four years 
finance lease commitments 
 2013  2012  2011 
 
minimum 
lease payments 
£m 
present value 
 of minimum 
 lease 
payments 
£m 
 
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  87 79  98 86  72 61 
between one and five years  208 195  213 194  166 150 
beyond five years  122 31  131 37  131 34 
total minimum lease payments 417 305  442 317  369 245 
less amounts representing finance charges 112 –  125 –  124 – 
present value of minimum lease payments 305 305  317 317  245 245 
the group has finance lease contracts for vehicles 47 per cent land and buildings 10 per cent and plant and equipment 43 per cent the leases 
have no terms of renewal purchase options or escalation clauses and there are no 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 1 and 106 years with the average term being 41 years the term 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 £42 million at 31 march 2013 25 march 2012 £81 million 27 march 2011 £140 million which are contracted for 
but not provided for in the financial statements 
114
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
29 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 group 
operating lease commitments 
the group is committed to the following future minimum lease payments under noncancellable operating leases at 31 march 2013 and  
25 march 2012 and 27 march 2011 
 land and buildings  vehicles and equipment  it equipment  total 
 
2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
 2013 
£m 
2012 
£m 
2011 
£m 
within one year  125 132 130  13 11 11  8 13 20  146 156 161 
between one and five years  391 414 412  14 18 13  17 16 19  422 448 444 
beyond five years  507 535 476  – – –  – 3 –  507 538 476 
total 1023 1081 1018  27 29 24  25 32 39  1075 1142 1081 
existing leases for uk land and buildings have an average term of 13 years and lease renewals tend to have a 10year term with a break in year five 
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 it commitments relate to 10year contracts with an average term remaining of four years 
finance lease commitments 
 2013  2012  2011 
 
minimum 
lease payments 
£m 
present value 
 of minimum 
 lease 
payments 
£m 
 
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  87 79  98 86  72 61 
between one and five years  208 195  213 194  166 150 
beyond five years  122 31  131 37  131 34 
total minimum lease payments 417 305  442 317  369 245 
less amounts representing finance charges 112 –  125 –  124 – 
present value of minimum lease payments 305 305  317 317  245 245 
the group has finance lease contracts for vehicles 47 per cent land and buildings 10 per cent and plant and equipment 43 per cent the leases 
have no terms of renewal purchase options or escalation clauses and there are no 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 1 and 106 years with the average term being 41 years the term 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 £42 million at 31 march 2013 25 march 2012 £81 million 27 march 2011 £140 million which are contracted for 
but not provided for in the financial statements 
 
 
30 related party information 
this note provides details of amounts owed to and from related parties which include post office limited 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 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 plan royal mail pension plan rmpp by the royal mail pensions trustees 
limited subsidiary the material transactions entered into and the balances outstanding at the year end reporting date were as follows 
 
counterparty 
business segment 
salesrecharges 
 to related party 
purchases 
recharges from 
related party 
amounts 
owed from related 
party including 
outstanding loans 
amounts 
owed to related 
party including 
outstanding loans 
  
2013 
£m 
2012 
£m 
2011 
£m 
2013 
£m 
2012 
£m 
2011 
£m 
2013 
£m 
2012 
£m 
2011 
£m 
2013 
£m 
2012 
£m 
2011 
£m 
royal mail pension plan rmpp ukpil 2 9 9 – – – – – – – – v 
quadrant catering limited ukpil – – – 26 35 34 1 – – – 3 3 
g3 worldwide mail nv spring ukpil – – – 6 6 6 3 4 3 – – 1 
post office limited ukpilother 37 33 35 371 359 346 6 9 12 – – – 
on 1 april 2012 post office limited became a sister company to royal mail group limited and the transactions summarised above are in respect of 
trading between the two entities from that date quadrant catering limited and g3 worldwide nv spring were both associate companies of the 
group during the reporting year 
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  
the group trades with numerous hm government bodies on an arm’s length basis transactions with these entities are not disclosed owing to the 
significant volume of transactions that are conducted  
key management compensation 
 
2013 
£000 
2012 
£000 
2011 
£m 
shortterm employee benefits 3753 3398 2345 
postemployment benefits – – – 
other longterm benefits – – – 
total compensation earned by key management 3753 3398 2345 
key management comprises executive and nonexecutive directors of the royal mail group limited board at 31 march 2013 
hm government is the company’s sole shareholder and accordingly the directors have no interest in the shares of the company 
royal mail group limited  principal subsidiaries 
royal mail holdings plc is the immediate and ultimate parent company of royal mail group limited these royal mail group limited consolidated 
financial statements include the financial results of the principal subsidiaries listed below 
company principal activities country of incorporation 
 equity 
interest 
2013 
 equity 
interest 
2012 
 equity 
interest 
2011 
royal mail investments limited holding company united kingdom 100 100 100 
general logistics systems bv parcel services netherlands 100 100 100 
royal mail estates limited property holdings united kingdom 100 100 100 
romec limited facilities management united kingdom 51 51 51 
the legal structure of the group is shown on page i 
115
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
30 related party information continued 
associates 
the following companies were the principal associates of the group at the balance sheet date 
company principal activities country of incorporation 
 
ownership 
2013 
 
ownership 
2012 
 
ownership 
2011 
quadrant catering limited catering services united kingdom 51 51 51 
g3 worldwide mail nv spring mail services netherlands 3245 3245 3245 
the majority of board membership and voting power in quadrant catering limited is held by the group’s business partner hence it is not a 
subsidiary company 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 during march 2013 it was announced that  
g3 worldwide mail nv spring was to be sold and accordingly the group’s share of its net assets was transferred to the ‘assets held for sale’ 
category on the group balance sheet g3 worldwide mail nv was subsequently sold on 2 april 2013 after the balance sheet date 
 
 
116
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
notes to the consolidated  
financial statements  
continued  
 
30 related party information continued 
associates 
the following companies were the principal associates of the group at the balance sheet date 
company principal activities country of incorporation 
 
ownership 
2013 
 
ownership 
2012 
 
ownership 
2011 
quadrant catering limited catering services united kingdom 51 51 51 
g3 worldwide mail nv spring mail services netherlands 3245 3245 3245 
the majority of board membership and voting power in quadrant catering limited is held by the group’s business partner hence it is not a 
subsidiary company 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 during march 2013 it was announced that  
g3 worldwide mail nv spring was to be sold and accordingly the group’s share of its net assets was transferred to the ‘assets held for sale’ 
category on the group balance sheet g3 worldwide mail nv was subsequently sold on 2 april 2013 after the balance sheet date 
 
 
 
royal mail group limited 
annual report and special purpose financial statements for the year ended 31 march 2013 
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 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 interest 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 
shareholder’s equity 
changes in accounting policy and disclosures 
the accounting policies adopted are consistent with those of the previous financial year the group adopted the amendment to ias 12 ‘income taxes’ 
during the year although this currently has no impact on the group’s financial position or performance no other new or amendedrevised accounting 
standards were required to be adopted by the group during the reporting period 
key sources of estimation uncertainty and critical accounting judgements 
deferred taxation 
assessment of the deferred taxation 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 taxation recognised will also 
change accordingly the carrying values of the deferred taxation assets and liabilities are included within note 7 
provisions 
due to the nature of provisions a significant part of their determination is based upon estimates and 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 at the year end including independent expert advice 
pensions 
the value of plan assets and liabilities is determined by longterm actuarial assumptions which include salary growth inflation rates returns on 
investments 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 
the pension deficit transfer to hm government on 1 april 2012 was taken directly through equity as in management’s judgement this transaction 
was undertaken with hm government in its capacity as the owner of royal mail holdings plc the company’s parent company rather than in its 
capacity as government 
deferred revenue 
the group recognises advance customer payments on its balance sheet see note 27 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 
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 post taxation 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  
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 117
financial statements
significant accounting policies  
 
revenue 
revenue reported in the income statement is net of value added taxation 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 
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 
operating exceptional items 
operating exceptional items are items of income and expenditure arising from the operations of the business which due to the nature of the events 
giving rise to them require separate presentation on the face of the income statement to allow a better understanding of financial performance in 
the year in comparison to prior years 
‘colleagueshare’  legacy share scheme  
this scheme introduced in 200708 was a fiveyear scheme spanning the accounting years from april 2007 to march 2012 and comprised both a 
‘share’ plan and a related stakeholder dividend throughout the life of the scheme 
the costs of the scheme were included in the income statement as an exceptional item throughout the life of the scheme and corresponding liabilities 
were included within payables or provisions as appropriate  
operating profit 
operating profit is the profit arising from the normal recurring operations of the business and after charging operating exceptional items defined 
above it excludes the nonoperating exceptional 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 year in comparison to prior years 
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 
 
118
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
significant accounting policies  
continued  
 
revenue 
revenue reported in the income statement is net of value added taxation 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 
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 
operating exceptional items 
operating exceptional items are items of income and expenditure arising from the operations of the business which due to the nature of the events 
giving rise to them require separate presentation on the face of the income statement to allow a better understanding of financial performance in 
the year in comparison to prior years 
‘colleagueshare’  legacy share scheme  
this scheme introduced in 200708 was a fiveyear scheme spanning the accounting years from april 2007 to march 2012 and comprised both a 
‘share’ plan and a related stakeholder dividend throughout the life of the scheme 
the costs of the scheme were included in the income statement as an exceptional item throughout the life of the scheme and corresponding liabilities 
were included within payables or provisions as appropriate  
operating profit 
operating profit is the profit arising from the normal recurring operations of the business and after charging operating exceptional items defined 
above it excludes the nonoperating exceptional 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 year in comparison to prior years 
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 
 
 
 
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 
noncurrent assets held for sale  
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  
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 
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 are 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 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 written off 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 financial year end 
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 
119
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
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 and 
treasury bills 
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 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 
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 either 
attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction 
in relation to cash flow hedges to hedge the 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 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 year 
120
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
significant accounting policies  
continued  
 
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 and 
treasury bills 
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 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 
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 either 
attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction 
in relation to cash flow hedges to hedge the 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 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 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 7 
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 commoditycurrency and 
discounted using quoted interest rates both 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 7 
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 at close of business on 
the balance sheet date 
income taxation and deferred taxation 
the charge for current taxation is based on the results for the 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 taxation rates and taxation laws that have been substantively enacted at the balance sheet date deferred taxation 
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 
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 plans 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 members of defined benefit schemes are contracted out of the earningsrelated part of the state 
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 net difference between the interest costs and the expected return on plan assets is recognised 
as net pension interest in the income statement actuarial gains and losses are recognised immediately in the statement of comprehensive income 
any deferred taxation movement associated with the actuarial gains and losses is also recognised in the statement of comprehensive income 
for defined contribution plans 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 
121
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
foreign currencies 
the functional and presentational currency of royal mail group limited is pound 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 period 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 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 
contingent liabilities  
contingent liabilities are not disclosed if the possibility of losses occurring is considered to be remote 
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 operating profitloss 
there is no aggregation of operating segments the operating units that make up the three operating segments are detailed in note 3 
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 ukpil and ‘other’ segments 
segment revenues have been attributed to the respective countries based on the location of the customer 
transfer prices between the 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 
122
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
significant accounting policies  
continued  
 
foreign currencies 
the functional and presentational currency of royal mail group limited is pound 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 period 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 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 
contingent liabilities  
contingent liabilities are not disclosed if the possibility of losses occurring is considered to be remote 
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 operating profitloss 
there is no aggregation of operating segments the operating units that make up the three operating segments are detailed in note 3 
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 ukpil and ‘other’ segments 
segment revenues have been attributed to the respective countries based on the location of the customer 
transfer prices between the 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 
 
 
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 
• annual improvements to ifrss 20092011 cycle 
• ifrs 7 amended offsetting financial assets and financial liabilities 
• ifrs 9 financial instruments classification and measurement 
• ifrs 10 consolidated financial statements ias 27 separate financial statements 
• ifrs 10 ifrs 12 and ias 27 investment entities amendments 
• ifrs 11 joint arrangements ias 28 investments in associates and joint ventures 
• ifrs 12 disclosures of interests in other entities 
• ifrs 13 fair value measurement 
• ias 1 amended presentation of items of other comprehensive income 
• ias 19 revised employee benefits 
• ias 32 amended offsetting financial assets and liabilities 
• ias 36 amended impairment of assets  
• ias 39 amended financial instruments recognition and measurement  
the directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the group in 
future periods except as follows 
ias 19 revised employee benefits 
the key impact will be to replace the separate assumptions for expected return on plan assets and discounting of scheme liabilities and 
replace them with one single discount rate for the net surplus or deficit this net interest incomecost will be measured based on the plan’s 
discount rate asset returns greater or less than the accounting discount rate will be recognised in the statement of comprehensive income 
soci 
 
 
123
financial statements
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013  
 
 
adjusted 
52 weeks 
reported 
53 weeks financial year ending march 
income statement 
march 
2013 
£m 
march 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
revenue 9146 9279 8764 8415 8547 8695 
operating profit before exceptional items 598 635 381 210 332 280 
operating exceptional items – transformation costs 195 195 229 192 185 179 
operating profit after transformation costs before other  
 operating exceptional items 403 
440 
152 18 147 101 
other operating exceptional items   77 57 48 4 26 
nonoperating exceptional items  4 182 106 2 3 
earnings before interest and taxation ebit  367 277 74 153 78 
finance interest income and costs including net pension interest  43 76 239 388 137 
profitloss before taxation   324 201 165 235 59 
taxation   246 51 123 87 290 
profitloss after taxation   570 150 288 322 349 
 
free cash flow

 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
ebitda before transformation costs  915 681 493 595 523 
working capital 142 19 58 31 63 
other pension payments 3 45 292 395 341 
transformation investment in ukpil 404 429 377 325 427 
other exceptional items 26 37 7 8 – 
other capital expenditure 261 150 176 234 237 
other dividends taxation interest 81 87 59 64 85 
cash inflowoutflow before disposal of assets 282 86 476 400 504 
disposal of assets 52 240 230 10 11 
free cash inflowoutflow 334 154 246 390 493 
 
an explanation of ‘free cash flow’ is provided in note 8 
balance sheet 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
property plant and equipment 1916 1822 1829 1932 1884 
intangible assets mainly software 139 135 126 99 78 
inventories  24 32 33 32 26 
trade and other receivables 1012 1036 906 911 934 
trade and other payables  1647 1548 1423 1536 1572 
other net assetsliabilities – 4 40 10 4 
provisions 246 217 252 233 248 
goodwill mainly relates to gls 196 189 197 197 206 
investments in associates 3 3 9 46 38 
net operating assets and investments in associates 1397 1456 1465 1458 1342 
cash and cash equivalents 351 473 319 171 214 
pension escrow investments 20 149 87 178 166 
loans and borrowings 973 1522 1478 1183 805 
other net financial liabilities 304 286 200 123 94 
net debt 906 1186 1272 957 519 
other net assetsliabilities deferred taxation 89 9 2 90 153 
net assets before pension deficit and pension escrow investments 580 261 191 591 976 
pension surplusdeficit 825 2716 4185 7477 6301 
net assetsliabilities 1405 2455 3994 6886 5325 
 
people numbers – period end employees 2013 2012 2011 2010 2009 
uk parcels international  letters ukpil 149940 151156 155181 160291 167396 
general logistics systems gls 13646 13362 13167 12885 13059 
uk partially owned subsidiaries 4030 3926 4254 4217 4438 
group total 167616 168444 172602 177393 184893 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 124
financial statements
group five year summary 
unaudited  
 
 
adjusted 
52 weeks 
reported 
53 weeks financial year ending march 
income statement 
march 
2013 
£m 
march 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
revenue 9146 9279 8764 8415 8547 8695 
operating profit before exceptional items 598 635 381 210 332 280 
operating exceptional items – transformation costs 195 195 229 192 185 179 
operating profit after transformation costs before other  
 operating exceptional items 403 
440 
152 18 147 101 
other operating exceptional items   77 57 48 4 26 
nonoperating exceptional items  4 182 106 2 3 
earnings before interest and taxation ebit  367 277 74 153 78 
finance interest income and costs including net pension interest  43 76 239 388 137 
profitloss before taxation   324 201 165 235 59 
taxation   246 51 123 87 290 
profitloss after taxation   570 150 288 322 349 
 
free cash flow

 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
ebitda before transformation costs  915 681 493 595 523 
working capital 142 19 58 31 63 
other pension payments 3 45 292 395 341 
transformation investment in ukpil 404 429 377 325 427 
other exceptional items 26 37 7 8 – 
other capital expenditure 261 150 176 234 237 
other dividends taxation interest 81 87 59 64 85 
cash inflowoutflow before disposal of assets 282 86 476 400 504 
disposal of assets 52 240 230 10 11 
free cash inflowoutflow 334 154 246 390 493 
 
an explanation of ‘free cash flow’ is provided in note 8 
balance sheet 
2013 
£m 
2012 
£m 
2011 
£m 
2010 
£m 
2009 
£m 
property plant and equipment 1916 1822 1829 1932 1884 
intangible assets mainly software 139 135 126 99 78 
inventories  24 32 33 32 26 
trade and other receivables 1012 1036 906 911 934 
trade and other payables  1647 1548 1423 1536 1572 
other net assetsliabilities – 4 40 10 4 
provisions 246 217 252 233 248 
goodwill mainly relates to gls 196 189 197 197 206 
investments in associates 3 3 9 46 38 
net operating assets and investments in associates 1397 1456 1465 1458 1342 
cash and cash equivalents 351 473 319 171 214 
pension escrow investments 20 149 87 178 166 
loans and borrowings 973 1522 1478 1183 805 
other net financial liabilities 304 286 200 123 94 
net debt 906 1186 1272 957 519 
other net assetsliabilities deferred taxation 89 9 2 90 153 
net assets before pension deficit and pension escrow investments 580 261 191 591 976 
pension surplusdeficit 825 2716 4185 7477 6301 
net assetsliabilities 1405 2455 3994 6886 5325 
 
people numbers – period end employees 2013 2012 2011 2010 2009 
uk parcels international  letters ukpil 149940 151156 155181 160291 167396 
general logistics systems gls 13646 13362 13167 12885 13059 
uk partially owned subsidiaries 4030 3926 4254 4217 4438 
group total 167616 168444 172602 177393 184893 
 
 
the directors are responsible for preparing the directors’ report and the special purpose financial statements the directors have prepared the 
group financial statements in accordance with note 1  
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 the basis of preparation in accordance with note 1 has been followed subject to any material departures disclosed and 
explained by the financial statements and 
• prepare the financial statements on a 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 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  
 
 
 
 
donald brydon       moya greene 
 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 125
financial statements
statement of directors’  
responsibilities in relation to  
the group financial statements  
 
independent auditor’s report to the directors of royal mail group limited 
we have audited the group financial statements of royal mail group limited for the year ended 31 march 2013 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 and the related notes 1 to 30 the financial statements have been prepared by directors of royal 
mail group limited based on the basis of preparation described in note 1 of the financial statements 
directors’ responsibility for the financial statements 
directors are responsible for the preparation of these group financial statements in accordance with note 1 and for such internal control as the 
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud  
or error  
the directors are also responsible for the preparation of the directors’ remuneration report which they have voluntarily prepared on the basis set 
out on page 46   
auditor’s responsibility 
our responsibility is to express an opinion on these financial statements based on our audit we conducted our audit in accordance with international 
standards on auditing those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable 
assurance about whether the financial statements are free from material misstatement 
an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements the procedures 
selected depend on the auditor’s judgement including the assessment of the risks of material misstatement of the financial statements whether due 
to fraud or error in making those risk assessments we consider internal control relevant to the entity’s preparation of the financial statements in 
order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of 
the entity’s internal control our audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting 
estimates made by directors as well as evaluating the overall presentation of the financial statements 
we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion 
in addition you have requested us to report on whether 
• the part of the directors’ remuneration report that has been described as audited has been properly prepared in accordance with the basis of 
preparation set out on page 46 and 
• the information given in the directors’ report is consistent with the group financial statements 
opinion of financial statements 
in our opinion 
• the financial statements of royal mail group limited for the year ended 31 march 2013 are prepared in all material respects in accordance with 
the basis of preparation described in note 1 
opinion on other matters 
in our opinion 
• the part of the directors’ remuneration report that has been described as audited has been properly prepared in accordance with the basis of 
preparation set out on page 46 and 
• the information given in the directors’ report is consistent with the group financial statements  
basis of accounting and restriction on use 
without modifying our opinion we draw attention to note 1 to the financial statements which describe the basis of accounting the financial 
statements are prepared to assist royal mail group limited to illustrate the results of royal mail group limited if post office limited had never been 
a subsidiary as a result the financial statements may not be suitable for another purpose our auditor’s report is intended solely for royal mail 
group limited in accordance with our engagement letter dated 7 march 2013 and should not be used by other parties 
 
 
 
richard wilson 
for and on behalf of ernst  young llp  
statutory auditor 
london 
31 july 2013 
 
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013 126
financial statements
independent auditor’s report  
to the members of  
royal mail group limited 127
other information
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
forward looking statements
forward looking statements
the group is subject to a number of risks relating to future events and other risks uncertainties and assumptions relating to its business and 
operations concerning among other things the results of operations financial condition prospects growth and strategies of the group and the 
industries markets and territories in which it operates
this document does not constitute or form part of and should not be construed as a an invitation offer or solicitation to purchase subscribe 
for or otherwise acquire or dispose of any shares or other securities of any member of the group or b any advice or recommendation with 
respect to any shares or other securities of any member of the group and should not be used as the basis of any investment decision
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 128
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
corporate information
registered office and group head office
royal mail group limited
100 victoria embankment
london
ec4y 0hq
telephone 020 7250 2888
registered no 4138203
royal mail the cruciform the colour red parcelforce worldwide and the parcelforce worldwide 
logo are registered trademarks of royal mail group limited group annual report and financial 
statements 2013 © royal mail group limited 2013 all rights reserved
corporate websites
information made available on the group’s websites does not and is not intended to form part 
of these financial statements
auditor
ernst  young llp
1 more london place
london
se1 2af
regulator ofcom
riverside house
2a southwark bridge road
london
se1 9ha
actuary
towers watson limited
watson house
london road
reigate
surrey
rh2 9pq
consumer body
consumer futures
fleetbank house
salisbury square
london
ec4y 8jx  royal mail the cruciform the colour red 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 201213 © royal mail group limited 2013 all rights reserved
royal mail group limited  annual report and financial statements 201213


Summary:
 14
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
financial performance 
overview
reported group revenue was £9279 million
 
see kpis pages 1213
group revenue increased by five per cent on a likeforlike basis with the key 
performance drivers being 
 – letters revenue up three per cent
 – ukpil parcel revenue up 13 per cent
 – gls euro revenue up two per cent
• operating costs have increased by three per cent on a likeforlike basis 
benefiting from productivity improvements and tight cost management
• operating profit after transformation costs before other exceptional items 
of £403 million is £251 million higher than last year mainly due 
to revenue growth 
• other net exceptional items comprise profit from property disposals last year 
saw significant profit on disposals property writeoffs industrial diseases 
provisions postal services act related costs and it costs relating to the 
separation of post office limited 
• the current year taxation charge effective rate of 12 per cent is due to the 
charge on current year profit being partly offset by past years’ losses
• the group has recognised a deferred taxation asset primarily in respect of 
taxation losses carried forward and decelerated capital allowances this is a 
result of an improved profit outlook for the group
profit and loss summary  
see page 56 for more details
reported
53 weeks
2013 
£m
adjusted
52 weeks
2013 
£m
reported
52 weeks
2012 
£m
revenue 9279 9146 8764
operating costs 8644 8548 8383
transformation exceptional costs 195 195 229
operating profit after 
transformation costs
1
440 403 152
other net exceptional items 73 125
earnings before interest and 
taxation ebit 367 not 277
net finance costs and pension interest 43 adjusted 76
taxation  current charge 38 at this 36
  deferred creditcharge 284 level 15
profit for the period 570 150
operating profit after 
transformation costs margin  nm 44 17
free cash flow summary  
see page 58 for more details
reported
53 weeks
2013
£m
reported
52 weeks
2012
£m
ebitda before transformation costs  
– 52 weeks 878 681
– 53rd week 37 –
ebitda before transformation costs see page 15 915 681
working capital 142 19
other pension payments 3 45
investment costs 665 579
other taxation interest dividends from associates 81 87
other exceptional items 26 37
disposal of property and business 52 240
free cash inflow for the period 334 154
balance sheet summary  
see page 59 for more details
as at
31 march
2013
£m
as at
25 march
2012
£m
net operating assets 1397 1456
net debt 906 1186
operating assets less net debt 491 270
net deferred taxation assetsliabilities 89 9
retirement benefit assetliabilities 825 2716
net assetsliabilities 1405 2455
1
  before other exceptional items
net debt has reduced by £280 million mainly as a result of free cash flow 
generation of £334 million
• a £98 million increase in net deferred taxation assets has resulted from the 
recognition of uk deferred taxation due to an improved profit outlook
• to comply with accounting standards a pension surplus of £825 million has 
been recognised following the transfer of the majority of rmpp pension 
liabilities and assets to hm government as at 1 april 2012 more information 
can be found in note 9 to the financial statements
free cash inflow of £334 million was generated
 
see kpis pages 1213
• ebitda before transformation costs of £878 million on a 52 week basis 
is £197 million higher than last year’s £681 million due to an improved 
trading performance 
• working capital inflows include the impact of higher stamp holdings by 
customers and tighter working capital management
• investment costs of £665 million 2012 £579 million comprises
 – business transformation payments of £55 million 2012 £60 million
 – redundancy payments of £75 million 2012 £129 million
 – oneoff project costs of £100 million 2012 £55 million
 – transformation capital expenditure of £177 million 2012 £185 million 
 – other capital expenditure gls it including software of £258 million 
2012 £150 million
the profit and loss summary and commentary below provides an analysis of an 
equivalent 52 week period for 2013 compared with the 52 week period for 2012
the free cash flow and balance sheet summary and commentary below relates 
to the 53 weeks ending 31 march 2013 and 52 weeks ending 25 march 2012 15
performance
royal mail group limited
annual report and special purpose financial statements for the year ended 31 march 2013
adjusted 52 weeks 2013 reported 52 weeks ended 25 march 2012
operating profit after 
transformation costs
ukpil
£m
gls
£m
other
£m
total
£m
ukpil
£m
gls
£m
other
£m
total
£m
revenue 7633 1498 15 9146 7189 1562 13 8764
operating profit after 
transformation costs 294 101 8 403 33 128 9 152
operating profit after 
transformation costs 
margin  39 67 533 44 05 82 692 17
reported 53 weeks ended 31 march 2013 reported 52 weeks ended 25 march 2012
ebitda before 
transformation costs
ukpil
£m
gls
£m
other
£m
total
£m
ukpil
£m
gls
£m
other
£m
total
£m
operating profit before 
exceptional items 526 101 8 635 262 128 9 381
adjust for
depreciationamortisation 249 31 1 281 269 32 – 301
share of profitloss from 
associates – – 1 1 2 – 3 1
ebitda before 
transformation costs 775 132 8 915 533 160 12 681
comparison of 2013 vs 2012
growth rates 
reported
2013
likeforlike
2
2013
group revenue 59 54
– ukpil letters  marketing mail 44 25
– ukpil parcels 144 127
– gls 41 16
– other 154 154
group operating costs 31 30
– people 46 36
– distribution and conveyance 17 41
– infrastructure 08 07
– other 19 11
comparison of 2013 vs 2012
growth rates 
reported
2013
likeforlike
2
2013
group volumes na na
– addressed letters 71 84
– ukpil parcels 63 48
– gls 14 14
gls financial information
reported
53 weeks
2013
€m
reported
52 weeks
2012
€m
reported
52 weeks
2011
€m
likeforlike
2
comparison of
2013 vs 2012

revenue 1837 1808 1746 16
costs 1714 1660 1607 33
operating profit after transformation costs 123 148 139 169
average £  € rate 12262 11572 11758 na
2
  the methodology to calculate the ‘likeforlike’ 
growth rates is explained on page i