2014
report
accounts overview
setting the scene for our
business and the markets in
which we operate
highlights of the year 1
chairman’s statement 3
how we do it 4
strategic report
a review of our strategy 
and how we are delivering
against this
chief executive’s statement 7
strategy 8
divisional review 11
key performance indicators 14
financial review 16
principal risks and uncertainties 20
our people 22
corporate responsibility 24
governance
how we manage our business
and an introduction to our
board and their priorities
board of directors 28
chairman’s letter 29
corporate governance report 31
audit committee report 37
remuneration committee 40
nomination committee 40
directors’ report 42
remuneration report 47
independent auditors report 67
financial statements
our financial statements
provide a complete picture of
our 201314 performance
consolidated statement of 
comprehensive income 71
consolidated balance sheet 72
company balance sheet 73
cash flow statements 74
consolidated statement of changes in equity 75
company statement of changes in equity 76
notes to the financial statements 77
five year summary of results 105
shareholder information 106
contents highlights of the year
group performance
mail courier pallets
key brands
sorted mail
unsorted mail
packets 
imail  letters 
data  postcards
ipostparcels
retail logistics
international parcels
sameday courier
retail courier
istore
palletised
consignments
revenue
£2453m
revenue
£2199m
19 32
revenue
£162m
revenue
£271m
£127m
18
group revenue
£5085m
7
profit before
taxation
£228m
282
£224m
372
£27m
72
£09m
188
1
parcels
15 162
1932 16215
operating profit 2
uk mail report  accounts 2014
2
we have now entered a new phase of
significant strategic investment which will
set us up well for the next stage of
profitable growth with the benefits
expected to be seen from 2015 onwards
peter kane  chairman
‘‘
2 uk mail performed strongly in the year to march 2014  financial
highlights for the year include
group revenues up 70
group pbt up 282
eps up 296 and
final dividend increased 145 to 142p per share 
strategy
our strategy is to grow our revenue and profit margins by establishing a
market leading position in our key markets of parcels mail and courier
services with a clear focus on network efficiency together with product and
service innovation
as you will read later in this report imail ipost parcels packets and retail
logistics all product innovations of the last few years are gaining real
traction now delivering real returns for the business
our strategic investments are now coming together as we have clarity
following the agreement we reached to relocate our birmingham hub as a
result of the hs2 link in december 2013 we reached contractual agreement
with the secretary of state for transport and have since commenced
construction of a new enlarged and largely automated national hub near
coventry which we anticipate will be fully operational by september 2015
our investment in it continues at pace as we build the infrastructure
necessary to create the future platforms for growth our management teams
have again been strengthened during the year not only with a number of
new appointments but through continued training throughout the business
these investments will provide us with the necessary platform to achieve
significant operating efficiencies and continued volume growth over the
years ahead 
in april 2014 i was delighted to welcome carl moore to the board as group
operations director carl has been with the company since 2007 and his
contribution to the improvements made in our network efficiency are
demonstrably clear in the results i am pleased to announce today
dividend
the board has proposed an increase in the final dividend of 18p taking the
final dividend to 142p 2013  124p resulting in a total dividend for the
year of 213p 2013 188p
this represents a full year increase of 133
the total dividend for the year is covered 150 times by earnings 2013
131 times which the board considers to be at an appropriate level for our
business
people
one of the characteristics of our business that has struck me is the ability
to get things done which i see from our colleagues across the business day
in day out 
the results this year are testament to the success this approach yields
on behalf of the board i would like to thank all of our colleagues and our
associates working within our franchise and pallet networks for their
continued hard work and commitment in providing this great service to our
customers  
outlook
i remain confident in our strategy and believe that the group is well
positioned to take advantage of opportunities as they arise
we have now entered a new phase of significant strategic investment which
will set us up well for the next stage of profitable growth with the benefits
expected to be seen from 2015 onwards
with the strength of our market positions a wellinvested integrated and
automated network and a growing suite of innovative and industry leading
products and services i am excited by the medium term growth prospects
for uk mail
thank you again for your continued support
peter kane chairman
i am excited by the medium term growth 
prospects for uk mail
chairman’s statement
3 how we do it
uk mail report  accounts 2014       
our customers and markets
our customers range from the largest banks supermarkets
telecommunication businesses and government through to
midrange and small independent companies and sole
traders key to our business model is the development of
new products and services expanding the markets available
to us and increasing our share of those markets we are
already in whilst delivering the same high level efficient
service to our customers
our infrastructure
with over 30 years experience in parcel mail and 
logistics services and with our extensive network of 
52 sites 2800 staff 2206 vehicles including the sub
contractor fleet nationwide mail sortation machines and
automation this enables us to provide industry leading
service on a cost efficient basis
our people
our people have the support training and confidence to
respond and enhance the customer experience 
we encourage our people to be passionate innovative and
empower them to make decisions we develop our people with
training both internally and externally our people know what is
right for our company and customers due to the training we
undertake and the tools we provide for the job
our customers  markets                     our infrastructure                                   
our customers  markets                     our infrastructure                                   
     our people
sustained
growth
financial
discipline
strong cash
generation
4 on a daily basis we collect some 200000 parcels and 115 million items of mail
these are sorted overnight into their destinations at our sort centres largely at our
central hub mail items are then delivered the next day to one of 38 royal mail
centres for final delivery parcels are delivered to businesses and residential
locations across the uk we use advanced technology to track all these items
through our network to their destinations providing customers with sophisticated
reporting of delivery performance
uk mail report  accounts 2014          
5
royal mail 2
we continue to benefit from our strong
market positions across our business
thanks to our efficient integrated network
and high service levels
‘‘
uk mail report  accounts 2014       
guy buswell  chief executive
6 these results reflect an excellent year for
uk mail with increased revenues and
strong margin progression we have also
achieved profitable growth across all areas
of the business
chief executive’s statement
7
uk mail report  accounts 2014          strategic report
these results reflect an excellent year for uk mail with increased revenues and
strong margin progression  we have also achieved profitable growth across all
areas of the business  such a robust performance shows that we have
accomplished almost all that we set out to achieve through the programme of
investment and change over recent years
we continue to benefit from our strong market positions across our business
thanks to our efficient integrated network and high service levels  during march
2014 we experienced the highest ever daily volumes across our combined
parcels and mail businesses given the group’s continued focus on network
management we maintained our strong customer service levels
reported group revenues for the year at £5085m were up 70 compared to the
previous year  adjusting for there being four extra working days than in the
previous year underlying group revenues increased by 53  group profit
before tax increased by 282 on the previous year to £228m we estimate that
each extra working day equates to some £05m of contribution  adjusting for
this factor the underlying increase in profit before tax was some 170
our parcels business 43 of group revenues continued to deliver a good
performance with high volumes throughout the year leading to an increase in
market share and a doubledigit operating margin of 102 2013 86 this
volume growth was partly driven by an increase in home deliveries related to
online shopping with a continuation of the mix change towards b2c that we
have previously seen  revenues grew by 162 to £2199m 2013 £1893m
and operating profit grew strongly by 372 to £224m 2013 £163m as we
continued to focus on innovation and operational efficiency to help drive margin
improvement
our mail business 48 of group revenues showed a 15 increase in revenues
for the year alongside a positive uplift in volumes driven by strong customer
retention and new business wins our mail volumes increased by some 20
compared to the prior year while the overall uk mail market has seen a decline
in transactional volumes of some 5 per annum in recent years operating profit
increased by 180 to £127m 2013  £107m and the operating margin
increased to 52 2013 44  our mail business remains well positioned in
its market with a healthy pipeline of new business opportunities  we again saw
good progress from imail and other new product innovations
our courier business 3 of group revenues saw an improving trend of revenue
throughout the year however for the full year revenues declined by 19 strong
operational management reduced operating costs helping to increase the operating
margin to 170 for the period 2013 155 leading to 72 growth in operating
profit to £27m 2013 £26m
in our pallets business 6 of group revenues revenues declined by 32 however
operating profit increased by 188 to £09m 2013  £08m
the move of our head office and national hub to a newly constructed site in 2015
will be a major change for our business  the new automated hub will be a
significant major step forward in how we operate creating extra capacity and
reducing operating costs the move however will create challenges as we relocate
with a key objective being to retain the knowledge and experience of our teams we
have instigated a programme to manage this change which will involve substantial
engagement with our staff
our cash generation and financial position remains strong with net cash balances
at the period end of £270m 2013  £270m
profit before 
tax up
282
earnings per share
up
296
dividend
up
133
strategic report governance financial statements our strategy is to grow our revenue and margins by establishing
a market leading position in our key markets of parcels mail
and courier services with a clear focus on network efficiency
together with product and service innovation
strategy
strategy
our strategy is to grow our revenue and margins by establishing a market leading
position in our key markets of parcels mail and courier services with a clear focus
on network efficiency together with product and service innovation
network efficiency
a low cost efficient network with high service levels is key to our market position
this allows us to win and retain contracts at good profit levels in a market which
continues to be very competitive
the key factors in achieving this objective are
an integrated network for our parcels mail and courier businesses
this integration allows us to spread the fixed costs of our operation and drive
operational benefits  the integrated nature of our network which is unique in the
uk also allows us to offer services our competitors cannot match  we have
continued to progress this objective in the current year with further integration of
our courier network providing enhanced delivery facilities for customers
extensive and innovative use of it
in our industry it is a key differentiator  we handle some 200000 parcels each
night together with some 115m mail items  the ability to track the progress of
these items through our network and to provide customers with information on this
progress is vital as is the provision of sophisticated solutions centred on the end
consumer experience
in the year we have continued to invest in our it infrastructure increasing
capacity and resilience  we have also introduced new data services and
information to the endcustomer  the key change here has been the introduction
of onehour delivery windows which puts us alongside the industry leaders in our
market
strong operational management
the organisation and management of our network is vital to achieving the
consistently high operational levels we achieve  this comes down to operating
disciplines and cost control
we believe we excel in this area and continue to introduce improvements to help
drive down our operating costs whilst improving service levels
as a reflection of the importance of strong operational management to the group’s
success carl moore our group operations director was promoted to the board
with effect from 8th april 2014  with his strong operational focus widereaching
experience of parcel distribution networks and of the implementation of automated
parcel sortation operations he is a  valuable addition to the board
automation
effective use of automated sortation is vital in our industry to further reduce
sortation costs and to increase capacity  having partially automated our
operations in 2010 we now handle some 20 of our parcels volumes through
these automated facilities
we intend to increase the level of automated sortation to some 80 of our parcels
volumes the maximum we believe our business can achieve at this stage due to
the consignments we handle not all being compatible with automated sortation
as previously announced this will involve the installation of further automated
sortation equipment at a capital cost of approximately £20m of which some
£33m has been incurred in the financial year just finished with the balance to be
incurred in the new financial year  we are targeting a double digit net return on
the automation investment we make and the full run rate of benefits from
september 2015
we estimate that this increased automation of our parcels operations will increase
our central sortation capacity by some 45
10 8
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strategy
product and
service 
innovation
strong 
operational
management
an integrated
network
network
capacitynew 
hub
extensive and
innovative 
use of it
automation
9
uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report
strategic report governance financial statements we are pleased with the
performance we have delivered
for the year
we expect construction of our new hub to be completed in late
2014 with the hub fully operational from mid2015
strategy
network capacitynew hub
growing network capacity is vital in a market that continues to show strong growth
largely due to the rapid growth of internet shopping  we aim to achieve this
capacity growth through localised expansion of capacity where needed together
with the expansion of our central hub  the expansion of our central hub is overdue
and was delayed due to the uncertainty caused by the relocation of our
birmingham hub as a result of the hs2 rail link
this position was resolved in december 2013 and our new hub is under
construction at a site near coventry  this new hub together with increased
automation is key to our future growth plans  we expect construction to be
completed in late 2014 with the hub being fully operational from mid2015 
product and service innovation
the second key factor in our strategy is product and service innovation  we are
focussed on continuing to expand the size of the markets available to us and on
increasing our share of these markets  to do so we have introduced new and
innovative products and services in both our parcels and our mail businesses
this strategy is gaining valuable traction helping us to win new customers
the key areas we are progressing are
imail – a market leading hybrid mail service
imailprint – an internet based printing service linked to imail that can meet
localised printing requirements
ipostparcels – a leading parcels collection and delivery service targeting the
internet end customersmall businesses
retail logistics – a parcel delivery service targeting the needs of retail
businesses
packets – a packet collection and delivery service providing cost effective
solutions in conjunction with royal mail’s delivery service
istore – a localised storage and delivery service targeting local repair engineer
services that need fast access locally to parts and components
more details are provided on the progress of these initiatives in the following
review
strategy summary 
over the past three years excellent progress has been made in developing the
business to its current position with a clear focus on network efficiency and
product innovation the result is a robust operational platform and strong
competitive positions in our chosen markets  the new products that we have
introduced have gained valuable traction and we have become a significantly
more consumerfocused business  the benefits can be seen in the strong results
we have achieved
as previously announced we are now entering the next phase of strategic
investment targeting significant improvements in our capacity customerfacing
technology it infrastructure and automation  combined these will create the
platform for the next chapter of growth over the coming years
uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report
our new hub is due to be fully operational from mid2015
10 we have achieved strong volume growth in both the b2b and
b2c market segments throughout the period with parcels
average daily volumes increasing by some 19 compared to
last year
divisional review
parcels
revenues in parcels which comprises the group’s businesstobusiness b2b businessto
consumer b2c and international parcel delivery service were up 162 to £2199m 2013
£1893m on an adjusted basis taking account of the four extra days compared to last year
they increased by some 142
we have achieved strong volume growth in both the b2b and b2c market segments
throughout the period with parcels average daily volumes increasing by some 19 compared
to last year  this performance is driven by good customer retention and a number of high
quality customer wins  we continue to see an ongoing volume mix change towards the lower
margin b2c segment
the strong volume growth allows us to spread our fixed costs across the increased volumes
and so improve our operating margins  as a result despite the continued competitive pricing
environment we have improved our parcels operating margin to 102 for the year 2013
86  
the good growth in revenues combined with the operating margin increase has led to a strong
growth in the parcels operating profit of 372 to £224m 2013 £163m  on an adjusted
basis taking account of the additional working days operating profit grew by some 275  
we continue to make progress with our specialised retail logistics product which provides
services tailored to the specific needs of retailers with a special capability to handle hanging
garments  following the opening of our specialist distribution centre in july 2013 we have
now introduced automated sortation capabilities for hanging garments as well as improved
software which allows us seamlessly to combine our parcels and courier networks providing
a more flexible integrated product for our customers
ipostparcels represents one of the lowestcost and most userfriendly online collection and
delivery services available in the uk while growth slowed slightly year on year as the
business becomes more established among our target customer base 2013 christmas
volumes were double those achieved in the previous year 
the overall uk parcels market is growing rapidly but remains highly competitive  while we
experienced the usual mix of contract changes over the period we continue to be successful
in winning new customers as a result of our high service levels lowcost network our strong
brand and dislocation elsewhere in the market to allow us to handle these increasing
volumes we continue to expand our capacity with three sites in our fiftystrong network having
been expanded during the period and up to eight additional sites earmarked for expansion in
the next 12 months 
key to our parcels market position is the provision of value added services that customers
increasingly demand  in march we introduced our enhanced next day delivery service that will
offer advancenotice onehour delivery and collection windows which can easily be re
arranged this includes our new “you’re next” texting service to inform customers when their
delivery is some ten minutes away an industry first which will further improve the first time
delivery experience for our customers this added functionality gives parcels tremendous
opportunity for customer acquisition and puts us firmly in the top tier of an increasingly
polarised market
looking forward we expect parcels growth to slow during the 201415 financial year as our
capacity is partially constrained ahead of the increases in which we are investing coming on
stream 
parcels revenue
up
162
parcels operating
profit up
372
mail revenue
up
15
mail operating
profit up
18
uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report uk mail report  accounts 2014          strategic report
11
strategic report governance financial statements uk mail report  accounts 2014          strategic report
mail
mail revenues increased by 15 to £2453m 2013 £2416m  on an adjusted
basis taking account of the four extra days compared to last year they declined
by some 04  this decline however was largely caused by a mix change towards
customer direct access cda mail which carries a lower revenue per item
our mail volumes increased by some 20 compared to the prior year while the
overall uk mail market has seen a decline in transactional volumes of some 5
per annum  this growth in market share has been achieved through generating
additional mail volumes from existing customers and a number of new customer
wins
mail operating profits increased by 180 to £127m 2013 £107m on an
adjusted basis taking account of the additional working days the increase was
some 140 the operating margin increased to 52 2013 44  
uk mail remains a market leader with an operational template that is ideally suited
to adapt to the demands of an evolving mail market and we have continued to
focus on growing our business by gaining additional volumes from new and
existing customers and on investing for the future  to increase the efficiency of
our operations and to provide additional facilities to our customers we have
invested in two new stateoftheart mail sortation machines at a capital cost of
some £09m which reflects our confidence in the future prospects of our mail
business
in february 2014 ofcom announced that it was to investigate a complaint from tnt
concerning certain access prices introduced in april 2014  in april 2014 ofcom
confirmed that this would be dealt with under its compensation act powers we
believe this ofcom investigation has no direct effect on uk mail  it does however
create uncertainty in the wider market and we would trust that ofcom resolves the
matter as swiftly as practical  in april 2014 ofcom also announced a review of
access mail arrangements  we will fully assist with this review but again see no
direct implications for our business
imail our webtoprint postal service continues to show healthy growth and
monthly items are now in excess of 2m  we continue to invest to increase our
capacity and provide additional services such as high speed insertion and this
year we launched a brand new website for the service providing customers with
enhanced personalisation options innovative data services and a new suite of
products  this includes the introduction of advanced software and functionality for
sme clients to promote integrated customer communications strategies
the success of imail has meant that we have become the fastest growing digital
printer of our type in the uk   our area of speciality remains small run printing
we have now decided to build on this business to create ‘imailprint’  this will
provide a specialist printing service which rather than being purely mailed as with
our current service can produce printed documents for general usage  we see
this as a natural low risk mediumterm growth opportunity
packets represents an exciting new growth area for the group  we have recently
launched a new packets service based on a new agreement with royal mail which
will allow us to offer customers a twothree day low cost delivery service  the
new agreement enables us to collect packets using our nationwide efficient
network and sort them for final delivery by royal mail  this combination allows 
us to provide a profitable product to customers which can compete with the
‘lifestyle couriers’ who provide a basic service at low cost  we estimate the
packets market to be worth some £12bn of which we estimate some £200m is
handled by ‘lifestyle couriers’
we would expect the new packets product to make a positive contribution in the
new financial year with good mediumterm growth prospects once it is fully
established in the market
courier
revenues in our courier business which provides sameday delivery services
decreased slightly by 19 to £162m 2013 £165m we are continuing to
focus on national contracts that can leverage our network and blue chip customer
base  operating margins increased to 170 2013 155 helping to increase
operating profit by 72 to £27m 2013  £26m  the increase in operating
margin reflects the actions management have taken to improve operational
effectiveness and reduce overheads in the business
our courier network also provides the ‘istore’ service  this involves the local
storage of parts and components for which service engineers need easy access to
complete timely service jobs  we provide the storage facilities largely in our
parcels depots and the courier delivery service to the engineers  this is a growing
market in which we have developed a market leading position
we have now developed a highly efficient nationwide courier network with a proven
ability to support national contracts which adds to our ability to offer a fully
integrated proposition and supports product development across the group 
pallets
revenues in our pallets business which provides a nationwide palletised goods
delivery service decreased by 32 to £271m 2013 £280m  operating profit
for the period however increased by 188 to £09m 2013 £08m  
the pallets business is based on a national network of members  in the last
financial year we experienced temporary gaps in the network which reduced input
volumes and gave rise to additional delivery costs  those gaps are resolved
although it is taking time for the new members to achieve the sales volumes that
would be expected from established members  operating profits have now started
to recover as these plans have taken effect
changes we have made to our pallets business have resulted in a more sustainable
business model for the future and we remain convinced that it can be successful
in a market with good long term growth prospects
central costs
central costs increased by 262 to £160m 2013 £127m this increase is largely
due to increase it costs reflecting our increased investments in this key area
guy buswell chief executive
uk mail remains a market leader with an operational template
that is ideally suited to adapt to the demands of an evolving mail
market and we have continued to focus on growing our
business by gaining additional volumes from new and existing
customers and on investing for the future
divisional review
12 we continue to be successful in winning
new customers as a result of our high
service levels lowcost network our
strong brand and dislocation elsewhere
in the market
‘‘
guy buswell  chief executive
13
strategic report governance financial statements 4
key performance indicators
4
uk mail report  accounts 2014          strategic report
14
2010
2011
2012
2013 108
84
28
01
operating profit margin 
revenue growth 
2010
2011
2012
2013
roace 
2010
2011
2012
2013
208
144
177
197
free cashflow £m
2010
2011
2012
2013 192
108
116
163
group revenues have grown 
70 in the year this is 
a good indicator of the 
growth of activity within
the company  
operating profit margin is the
kpi used by the board 
to measure profit margins 
both on a group and
segmental basis
the operating profit margin
has increased to 76
return on average capital
employed is the boards’ prime
measure for the return profits
on assets utilised within 
the business 
the roace improved from
208 to 283 in the year
under review
free cash flow is the kpi the
board uses to measure 
cash generated excluding
financing activities
free cash flow has decreased
by £86m to £106m
64
2014 70
2014
2014
283
2014 106
76
62
70
81
the group uses a number of key performance indicators kpi’s
to assess the development underlying business performance
and position of the group and its divisions these kpi’s are
reviewed periodically to ensure they remain appropriate and
meaningful measures of the group’s performance 15
uk mail report  accounts 2014          strategic report
debtor days
2010
2011
2012
2013 330
313
2014 322
329
335
health  safety compliance 
2010
2011
2012
2013 950
934
2014 966
912
871
co2 emissions tonnes
2010
2011
2012
2013
waste recycling 
2010
2011
2012
2013
iso 14001 implementation 
2010
2011
2012
2013
1000
550
2014
1000
190
50
debtor days are the kpi the
board uses to measure and
monitor the efficiency of cash
collection from customers
debtor days have decreased
08 days to 322 days
health and safety compliance
has improved from 950 to
966 of all sites
co2 emissions is the kpi the
board uses to monitor its
effect on the environment 
this kpi is used by the board
to monitor the amount of 
waste recycled thereby
avoiding landfill
the group recycled 963 of all
waste generated
iso 14001 is the key standard for
environmental management
systems it sets out rigorous
demands for environmental
management and is externally
audited on a regular basis
the group has achieved 100
certification at all corporate sites
579k
590k
2014 610k
599k
907
2014 963
763
710
623k
910
strategic report governance financial statements financial position
the group has maintained its financial position during the year  despite the initial investment in our new hub and in automation – details of which are set out
below  we had net cash at the end of the period of £270m 2013 £270m  
net cash inflow from operations totalled £332m 2013 £311m  net cash outflow for the period was £08m 2013 inflow £66m which included £16m of
cash generated from working capital 2013 £56m 
the group paid £107m 2013 £99m of dividends during the period 
to provide funding for the investment in the new hub and automation the group put in place a £25m five year revolving credit facility with lloyds bank plc on
14 may 2014  this facility will support the cash requirements of the investment programme
16
uk mail report  accounts 2014          strategic report
financial review
the group has maintained its financial
position during the year despite the initial
investment in our new hub and automation
revenue
2014 2013 change
segment £m £m 
mail 2453 2416 15
parcels 2199 1893 162
courier 162 165 19
pallets 271 280 32
total revenue 5085 4754 70
reported group revenues for the year at £5085m were up 70 compared to the previous year however the underlying increase was 53 after adjusting for the
additional four trading days in the year under review
the increases in both mail and parcels reflected both strong levels of customer retention together with good volumes resulting from new customer wins 
operating profit
op profit op profit op profit op profit reported change in
2014 margin 2013 margin op profit op profit
segment £m  £m  change  margin 
mail 127 52 107 44 180  08  
parcels 224 102 163 86 372  16
courier 27 170 26 155 72  15
pallets 09 33 08 27 188  06
total segmental operating profit 387 76 304 64 274 12
central costs 160  127  262 
reported operating profit 227 45 177 37 283  08
reported operating profit increased 283 largely driven by volume increases in both mail and parcels 
mail operating profits increased by some £20m largely driven by strong customer retention and new business wins the operating margin within mail increased to
52 
parcels operating profits increased by 372 as we continue to see an increase in home deliveries related to online shopping with a continuation of the mix towards
b2c that we have seen previously as a result parcels reported operating margin of 102 some 16 percentage points better than 2013
as reported last year actions taken to control the cost base have enabled courier to report a 15 percentage point increase in the operating margin despite reduced
revenues 
operating profits within pallets increased by 188 as gaps reported in the network last year are now resolved although it is taking time for members to achieve the
growth expected from established members 7
hs2
in december 2013 we reached agreement with the secretary of state for transport concerning compensation for the relocation of our birmingham hub as a result of the
proposed high speed two hs2 railway
this will involve the sale of our heartlands site to the department for transport dft and the relocation of our central hub and head office to a newly constructed facility
near coventry 
the value we have agreed with the dft and hs2 ltd for our heartlands site is £95m  £86m of this value was received in december 2013 with the balance payable
from the dft when we fully vacate the heartlands site and complete the deal expected to be in late 2015  we have also agreed further specific compensation payments
with the dft and hs2 ltd  of these amounts £29m was received in the period with the balance to be received over the next two financial years  
the costs of the move to the new site including the it data centre move and related staff costs will be incurred over the next two financial years  we anticipate that
these costs will be compensated by the dft and hs2 ltd subject to the requirements of the compensation code
17
uk mail report  accounts 2014          strategic report
capital expenditure
capital expenditure for the period included our underlying business capital expenditure combined with the initial investment in our new hub and in automation
this can be summarised as follows
year to 31st march
2014 2013
£m £m
underlying capital expenditure 113 92
investment in new hub 133 
investment in automation 33 
total capital expenditure 279 92
the underlying capital expenditure includes £66m on it as we continue to develop our system infrastructure and £33m on our network
the investment in the new hub is the cost of the land together with the initial payments for the construction contract  the total expected to be spent on the land and
building over the period to march 2015 is some £35m we expect our contribution to the building of the new hub will be some £15m which covers the enhancement
of the site and building beyond the scale of the current facility the investment in automation reflects the initial payments for the design and development of the hub
and network automation equipment  as previously guided the total expected to be spent on this equipment over the period to september 2015 is some £20m
balance sheet
2014 2013 change
£m £m £m
noncurrent assets 701 500 201
current assets – excluding cash 726 670 56
cash  274 282 08
current liabilities – excluding taxborrowings 833 746 87
borrowings  04 12 08
tax 27 23 04
noncurrent liabilities – excluding borrowings 114 27 87
net assets 723 644 79
net cash  270 270 
net assets increased by £79m to £723m 2013 £644m
goodwill represents £95m 2013 £95m of the balance sheet total this has been tested for impairment as detailed in note 9 there being no requirement for a resultant
adjustment 
noncurrent assets increased by £201m with £166m being the initial investment in our new hub and automation
increased business activity largely accounts for the increase in current assets with high cash collections debtor days reduced to 322 days 2013 330 days
this increased activity was also reflected in the £87m increase in current liabilities where other creditors which include franchise afa and subcontractor creditors
increased £36m deferred compensation £26m and trade creditors increased £24m yearonyear
noncurrent liabilities excluding borrowings increased by £87m of which £89m represents the deferred compensation to be utilised in 2015
strategic report governance financial statements 18
uk mail report  accounts 2014          strategic report
the 67 increase in cash generated from operations was driven by a £50m increase in operating profits offset by a decrease in cash generated from working capital
£16m this year 2013 £56m
with an increase in the amount expended on capital expenditure free cash flow decreased 448 to £106m 2013 £192m
as a result net cash at the year end was £270m 2013 £270m comprising of £274m 2013 £282m of cash at bank and in hand and £04m 2013 £12m total debt
further information can be found in note 28
net finance income
continued strong control over working capital enabled the group to maintain high average cash balances throughout the year enabling the group to earn £02m 2013
£02m of bank deposit interest income  
once other interest costs of £01m 2013 £01m are taken into account the group reported net finance income of £01m 2013 £01m
taxation
the group’s effective tax rate was 233 2013 243 the reduction largely a direct reflection of the 1 reduction in corporation tax effective from 1 april 2013
earnings per share
basic earnings per share increased 296 to 320p 2013 247p  
dividend
the board has proposed a 145 increase in the final dividend to 142p 2013 124p resulting in a total dividend for the year of 213p 2013 188p an increase of
133  the final dividend is payable on 25 july 2014 to shareholders registered on 27 june 2014
the total dividend is covered 150 times by earnings 2013 131 times  the board believes this level of dividend cover is appropriate for the business
treasury risk management
the treasury function of the group operates within policies and procedures approved by the board  these procedures cover funding banking relationships foreign currency
interest rate exposures and cash management
the group has considered carefully its cash flows and banking covenants for the next three years these have been appraised in light of the current economic climate and
on a number of forecast scenarios as such conservative assumptions on profitability and working capital performance have been used to determine the level of financial
resources required by the group and to assess liquidity risk
the group continually assesses its actual and forecast cash position on a weekly basis  this ensures that in the short term the group’s cash is used optimally each month
a medium term review of the forecast is undertaken to ensure full compliance with the banking covenants
liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due the group’s strong levels of operating cash flow and low indebtedness
mean that it is not significantly exposed to liquidity risk 
the group is not significantly exposed to the effects of fluctuations in exchange rates since all income is in sterling and costs denominated in foreign currency principally
the euro represent less than 1 of all expenditure  
the group’s exposure to any significant interest risk is minimal due to the relatively low level of debt
steven glew group finance director
cash flow and net cash
2014 2013
£m £m
cash generated from operations 332 311
tax paid 52 41
net capital expenditure 174 78
free cash flow 106 192
dividends 107 99
other movements 07 27
decreaseincrease in cash 08 66
financial review ipostparcels represents one of the
lowest cost and most userfriendly online
collection and delivery services available
in the uk
‘‘
19
strategic report governance financial statements uk mail report  accounts 2014          strategic report
a successful risk management process considers the potential risks in the context of their impact and probability the board has overall responsibility for ensuring that the
group has an appropriately balanced approach to risk management and internal control whilst achieving the group’s overall business plans and strategic objectives
the group has an established risk management monitoring and review process as described in the corporate governance report on pages 31 to 41 the process requires
management to identify evaluate and monitor risks and take steps to reduce eliminate or manage those risks  
these risks facing the group are scored as to the likelihood of their occurrence and the scale of their potential impact with allowance made for the effectiveness of existing or
planned mitigating controls such that the overall risk register can be suitably prioritised 
this register together with the identification implementation and progression of mitigation plans are reviewed on an ongoing basis in detail by senior management of the group
the audit committee on behalf of the board who ultimately retain the responsibility for the company’s risk management framework review the risk management process and
the highest category risks identified on the risk register on a regular basis
these highest category risks are reported in detail to the audit committee on a high entity risk register ‘herr’ of which 28 risks had been identified at the date of this report
further detail of the work undertaken by the audit committee in this area can be found in the audit committee report on page 37
the table below details the principal risks and uncertainties faced by the group and the steps taken to mitigate their impact the board considers these to be the most significant
risks and whilst not directly comparable they have been ranked in terms of relative importance to the company at this time  
they do not comprise all of the risks identified by the company nor those presently unknown to management or those currently deemed less material which may also have
an adverse effect on the business
additionally the group in common with others is exposed to a number of financial risks including market risk credit risk interest risk liquidity risk and capital risk details of
which can be found in note 24
risk
potential operational and financial
impact resulting from the relocation
of the national hub
a new national hub ryton is in the
process of being constructed following
contractual agreement with hs2 ltd to
acquire the existing national hub
birmingham  
completion of the ryton construction is
expected to be in late 2014 with the hub
fully operational from mid2015
potential impact
the group could be exposed to a number
of unforeseen costs or expenditure for
which no compensation will be received
management is distracted from the
achievement of daytoday objectives to
management of the move
loss of key personnel affected by a
period of uncertainty andor
unwillingness to relocate
mitigation
plans are discussed and agreed with
hs2 ltd in advance of funds being
committed
the relocation is being closely managed
by a dedicated hs2 steering group 
plans are in place to retain employees
before during and after the move
assurance
the board monitors the hs2 plan on a
periodic basis and receives regular
reports from the head of hr and the
steering group
contingency plans have been reviewed
and approved
22
it systems failure
reliance is placed upon the proper
functioning of it systems for the effective
running of operations
any prolonged interruption to the
group’s it systems could have a
materially adverse effect on its business
the group has a business continuity
plan in the event of it systems failure
networks are protected by firewalls and
antivirus protection systems are
backed up and offsite disaster recovery
facilities exist in the event that a major
issue affects one of our key locations
executive director approval is required
for any material system changes a full
implementation review andor parallel
running isare undertaken by the
sponsoring department and it prior to
any new system ‘go live’
disaster recovery and business
continuity plans are regularly reviewed
and tested at frequent intervals
internal it department constantly
monitors threats to data protection by
viruses hacking and breach of access
controls
deloitte llp have been appointed as the
group’s ‘internal it audit’ resource to
provide specialist expertise
risk is an inevitable fact of life the real challenge for any
business is to identify the principal risks it faces be they
operational commercial or financial in nature and to develop
appropriate mitigating controls
principal risks and uncertainties
20 uk mail report  accounts 2014          strategic report
risk potential impact mitigation assurance
competitive
the group operates in highly competitive
markets and faces competition from
international national regional and local
companies as well as the royal mail
increased competitive activity could lead
to an adverse effect on results either
through loss of customers or pressure on
margins
market activity and competitor
behaviour and trading opportunities are
regularly reviewed 
dedicated customer account teams exist
for larger accounts
hierarchy approval for customer rates
charged
the group seeks to expand the available
market through the introduction of new
products and services 
the group’s customers are spread
across a large number of business
sectors and wide geography
competitor activity is monitored at both a
strategic and tactical level to enable
suitable actions to be developed in
response
feedback from customers including
complaints together with the findings
from customer satisfaction surveys are
routinely monitored and discussed
the group’s performance against kpi’s is
discussed at operating and main board
meetings
23
business continuity
the group could be materially affected if
there was a significant incident such as a
terrorist incident fire or flooding
particularly at one of the major hubs
severe disruption and reputational
damage to the business which would
ultimately impact on the group’s
financial performance
business continuity plans are in place
for each site and tested on a rotational
basis
disaster recovery and business
continuity plans are regularly reviewed
and tested at frequent intervals
legislation and regulation
the group is subject to numerous laws
and regulations with the mail market
additionally regulated by the office of
communications ‘ofcom’
the group in common with many
businesses is subject to litigation from
time to time
failure to comply or respond could lead
to financial loss either from financial
penalties or damages redeployment of
management resource or reputational
damage to the group 
the group keeps abreast of forthcoming
legislative and regulatory changes and
maintains controls and procedures to
ensure full compliance
the group maintains active engagement
with ofcom responding to consultations
when relevant
the group maintains both in house and
external legal expertise
the board reviews reports from senior
executives including the group legal
manager
the group is subject to various audits
and compliance visits from both external
bodies and in house internal audit and
security teams 
fuel
fuel shortages or strikes could affect the
group’s operations
fuel costs could increase significantly
more than forecast
any prolonged interruption to the
group’s fuel supplies could have a
materially adverse effect on its business
higher fuel costs could lead to reduced
margins and profitability
the group has an established fuel
contingency plan
in common with industry practise the
group operates a fuel surcharge
mechanism whereby increases in fuel
prices are recharged to the majority of
the group’s customer base
the fuel contingency plan is reviewed
and tested at frequent intervals
the board monitors both the fuel price
and the fuel surcharge mechanism on a
periodic basis
21
strategic report governance financial statements the uk mail people strategy has been developed to engage our
people to deliver the company vision
our people
uk mail report  accounts 2014          strategic report
policy
the uk mail people strategy has been developed to engage our people to deliver
the company vision  it is a three year rolling plan reviewed on an annual basis
recruiting rewarding and recognising our people by creating a business that puts
its people and its customers at the centre of all its activities and recognising that
our people matter and are key to the business achieving its goals remains key to
the business
we  review and improve how we engage and communicate as this is key to our
employees understanding the part they play to achieve the company vision
having an open honest and transparent communications strategy is key to this
learning developing coaching and mentoring is a key priority and this is
achievable by continuing to develop both our employee and leadership capability
through our internal learning and management development programme
demonstrating our commitment to people development  in addition our driver
training programme is taking a further step forward enhanced by the development
of a specific driver training team whose objective is to provide the best drivers in
the industry
working safely continues to be top of the agenda with our processes and
procedures under a programme of continuous review therefore demonstrating that
we value the safety of our employees and customers ensuring that nothing we do
will cause harm
we continue to work towards our employees describing uk mail as ‘a great place
to work’ and achieving our aim of being an ‘employer of choice’ within the parcel
and mail sector
diversity
it is our policy to ensure that no job applicant employee customer or contractor
receives less favourable treatment for any reason we want to make sure no one is
disadvantaged by unjustifiable conditions criteria or practices because of their
sex gender race colour ethnic origin religion sexual orientation
disabilitymarital status age or any other grounds of discrimination prohibited by
legislation
we are an equal opportunities employer and being this is about good employment
practices and efficient use of our most valuable assets our employees every
manager and employee has personal responsibility for the implementation of our
equal opportunities policies
our gender split is as follows
� 1 14 female directors including non executives of the company
� 6 86male directors including non executives of the company
� 8 24 number of female employees who are senior managers of 
the company
� 26 76 number of male employees who are senior managers of 
the company
� 628 22 number of female employees of the company
� 2163 78 number of male employees of the company
communication and engagement
uk mail completed its first employee survey in march  april 2013 and were
encouraged with a 50 response rate  employees were asked about  their views on
their understanding of business objectives and achievements together with their
thoughts on team work recognition and learning and development so that employee
engagement could be assessed 
the findings of the survey were analysed by department through to an overall group
view and actions plans were developed and worked through the year 201314
the aim was to ensure a programme of continuous improvement and increased
engagement was developed from a group action plan perspective changes have been
made to policies enhancing the long service policy to the way we communicate to
the expansion of our learning and development programme through better promotion
of learning offered and accessibility and to the enhancement of our employee
consultative group   our second employee survey is planned for june 2014 and we
are looking forward to receiving and acting on the results
in february 2014 the group was reassessed for the ‘investors in people’ accreditation
and are proud to have been reaccredited for a further 3 years
the employee consultative group ‘ecg’ is well established and provides the voice
of the employees to the senior management team with the aim of influencing
workplace change by giving their views thoughts and opinions and to ensure that
company feedback is communicated back to employees in a structured and
consistent way
the ecg representative numbers continue to increase and in 2013 14 a new ecg
modular learning and development programme was launched in order to ensure that
the training available to all ecg representatives upskilled their knowledge and
showed progression of the group  in january 2014 a new ecg chairperson was
appointed from our driver population who will serve for a three year term  we are
looking forward to working with him to development and implement some of his
progressive and forward thinking ideas so that the ecg can move to the next level
the ecg brand aims and objectives were reviewed and refreshed in 2013 again to
ensure that the ecg is kept up to date  in 2014  15 the plan is to revisit the ecg
constitution which has come about due to the appointment of 6 ecg area
representatives who are an area support function for the ecg chairperson we
continue to hold the bi annual ecg t eam conferences in march and september of each
year and continue to use these for ecg representatives to get direct access to the
senior management of uk mail and  be able to give them direct information advice
and support which supplements our aim of making uk mail a great place to work
22 recognition and reward 
during 201314 we started a programme of employee benefit reviews and engaged with an external
benefits expert to review the benefits both contractual and voluntary on offer at uk mail ensuring
that what is offered matches employee expectation
in november 2013 uk mail staged into the pension auto enrolement arena and have had a limited
numbers of opt outs of the scheme  the scheme continues to be run on a salary sacrifice basis
therefore continuing to allow employees to make savings on their national insurance
the ‘i delivered’ awards is the uk mail recognition scheme and is now in its fourth year  the
scheme recognises employees for going the extra mile and above and beyond what is required  in
the 201314 year the scheme had its highest nomination rates with awards being made on a
quarterly basis which are then carried forward to the national awards held in may 2014
learning and development
during 201314 learning and development formally plotted the succession planning process for all
roles within uk mail via a learning and development matrix  this is  linked to the first learning and
development directory within the business this tracks what courses and development an employee
should have by role promoting succession and career planning and makes it easier for line
managers to be able to review development requirements during the performance review process
management development training continues and the objective for 201415 is to offer the institute
of leadership and management level 3 and 5 accredited qualification
the uk mail employee incumbent apprenticeship programme continues to run enabling employees
to study whilst working for a recognised accredited qualification
‘app for that’ – apprenticeships with uk mail’ was rolled out to a further 11 pilot sites in 201314
in the areas of warehousing mail sortation and customer care therefore totaling 15 sites
participating in the scheme to date  all uk mail apprencticeship positions are permanent
employees filling an established rolled in the business and have a full training programme available
to them over a 12 month period
the uk mail work experience programme continues and all operational sites have an objective to
have a least one work experience student in their site over a 12 month period  where possible
successful work experience candidates are offered a permanent position when one comes available
and are then also started on the uk mail apprenticeship programme
health wellbeing occupational health and support continues to be a top priority and part of the
people strategy with support being provided when required for those employees unfortunate to be
long term sick  this continues to form part of the group’s health and wellbeing strategy
uk mail report  accounts 2014          strategic report
response rate to
employee survey
50
investors in people
accreditation
‘app for that’
rolled out to 
11 sites
23
strategic report governance financial statements guy buzzell chief executive
uk mail continues to be committed to corporate responsibility
‘cr’ and regard the integration of sound cr practices which
take into account the interests of all our stakeholders
corporate responsibility
uk mail report  accounts 2014          strategic report
uk mail continues to be committed to corporate responsibility ‘cr’ and regard the integration of sound cr practices which take into account the
interests of all our stakeholders be they employees customers shareholders or the wider community as a longterm sustainable approach to business
we continue to devote significant resources towards improving cr standards and practices within the group our cr programme has four key elements
environment health and safety employment and community
uk mail is a signatory to the united nations global compact confirming our committal to cr  we have committed to aligning our operations and
strategies with ten universally accepted principles in areas such as labour business integrity employment human rights and the environment
steven glew is the board member responsible for cr and the strategy is approved at board level  he together with the cr steering committee
manages develops and communicates our cr strategy to provide direction and guidance on all aspects of business practice and responsibility the
members of the cr steering committee are drawn from a number of disciplines across the company human resources health and safety operations
transport procurement communications and legal
the board takes account of the significance of social environmental and ethical ‘see’ matters to the business of the company currently we have
identified no social environmental or ethical risks that would have a material impact on our business
the environment   
the group recognises that it has a responsibility to reduce its impact on the environment and seeks to increase the environmental sustainability of its
operations and those of its suppliers  whilst we recognise that we have an important role to play in delivering goods and mail in the uk we are acutely
aware of the impact that transport operations have on the environment and the group is committed to reducing this impact by the introduction of cost
effective solutions and changes which result in real benefits to the environment as a whole our environmental policy is regularly reviewed and is
available on our company website wwwukmailcom 
our 201314 cr targets and achievements
we are one year into our three year programme and we have made a good start  again the main focus is on co² emissions health and safety utilities
waste and our people  we will be using 201213 as the key baseline to ensure continuous improvement  following the successful implementation of
iso14001 we are going to work toward certification of ohsas18001
our performance in the year against our targets is as follows
actual target actual change variance 
2013 2014 2014 against 2013 against target
1 co² emissions tonnes 584k 555k 610k 45 99
579k 0riginal baseline
co² emissions  by consignment 0441kg not set 0393kg 109 na
2 health  safety compliance 9577 950 9661 084 161
3 workplace fatalities 00 0 0 0
4 maintain iso 14001 corporate site compliance  100 100 100 0 0
 of the 41 corporate sites
5 iso14001 franchise site compliance na na na na na
 of the six franchise sites
6 ohsas 18001 compliance na na na na na
 of the 41 corporate sites
7 land diversion  9057 950 9632 575 132
8 waste to landfill tonnes 2706t 2571t 1256t 536 511
9 total waste tonnes 2917t 2771t 3563t 221 286
10 water consumption m
3
 36938m³ 35091m³ 32886m³ 110 62
11 staff turnover  2017 20 1643 374 357
26
baseline increased by 500 tonnes to reflect more accurate data
24 1 uk mail’s carbon emissions
• 2014 achievement – 99 adverse to target
• 109 favourable to 201213 by consignment volume
• 2014 target – reduce by 5
uk mail’s total carbon emissions were 610k tonnes this is overwhelmingly made up of emissions
from fuel burn the calculation of these emissions is based on respected industry measurements
carbon trust and defra
uk mail’s carbon emissions
emission total 
tonnes
co² emitted from transportation activities 1 55336
co² equivalent from facilities 2 5712
total emissions co² 61048
1 emissions from transportation activities are internally verified  note that the co² reported figure for fuel emissions
is actual co² which is emitted from all fuel dependent assets including heavy good vehicles cd vans company
cars and mechanical handling machinery  co² equivalents from franchise or service partner operations are not
included in the reporting of co² emissions emissions calculated using the defra ghg conversion factors 2008
guidelines for conversion of fuel
2 emissions calculated using the carbon trust energy  carbon conversions 2011 update guidelines for conversion
of grid electricity and gas
in addition to total emissions uk mail also monitors emissions per item handled 3
at 0393kg per item uk mail has significantly reduced this figure over the last year in the 201213
financial year uk mail’s emissions per item handled was 0441kg per item representing a 109
or 48 grams per item improvement
3 this is a measure of how efficiently a single parcel item or consolidated mail item tray or bag of envelopes is
handled from the point of collection through to the point of delivery  it does not include equivalents from franchise
or service partner operations
we have again set ourselves challenging emission reduction targets for the next three years which
we aim to meet by a number of initiatives which includes a new consignment volume target
fuel
uk mail’s two key objectives remain
objective 1 to reduce the distance travelled by our vehicle fleet through effective route
planning and optimisation of vehicle fill
we continue to use sophisticated route planning software to optimise the mileage travelled by our
fleet
telematics devices are fitted to allow our heavy commercial vehicles to provide information on a
number of key factors such as harsh braking not driving in the ‘green zone’ idling time and speed
all of which can have a negative effect on miles per gallon ‘mpg’
close management of our telematics devices in all of our heavy commercial vehicles has
significantly improved driving behaviour and fuel consumption per journey we will continue to
proactively manage our drivers to ensure we optimise the mpg by vehicle and route  
during the year we implemented new software for our parcel delivery scanners which ensure our
drivers take the most optimum route when collecting and delivering parcels one of the key benefits
of this software is to significantly reduce the miles driven
the move to automation in 2015 will mean improved vehicle loading resulting in fewer vehicles and
less journeys made
objective 2 to reduce the fuel consumption of our vehicles through a review of the
vehicle designs used and other effective means
we have replaced 193 commercial vehicles over the past two years including 88 the euro 6 tractor
units which comply with the latest diesel engine emission standards over the next 12 months we
will be replacing a number of trailers with improved aerodynamic features we continue to review
and reengineer our vehicle and trailer specifications and designs to maximise mpg through the use
of sloping roof trailers and other innovations
uk mail report  accounts 2014          strategic report
co
2
emmisions
per consignment 
109
improvement
health  safety
compliance
966
waste to landfill
down
536
staff turnover
down
164
25
strategic report governance financial statements 8
corporate responsibility
uk mail report  accounts 2014          strategic report
we have recently recruited a driver trainer and one of his key objectives will
be to ensure maximum mpg from our drivers through changing driver
behaviour
improved tyre husbandry ensures our tyres run to maximum performance
lower rolling resistance tyres to aid mpg are being fitted as standard
our co² emissions across our company cars has reduced to an average of
120gkm  drivers are encouraged to make fewer business journeys by
replacing them with conference calls and we now have video conferencing
on all desk and laptop computers
energy
we have reduced our electricity consumption by 51 and gas consumption
by 53 during the year
we have installed energy ‘smart’ meters in all of our sites these meters
provide regular ‘on line’ energy usage readings for both gas and electricity
throughout the day every day this information is enabling us to identify and
reduce unusual energy usage particularly during the periods when we are
not operating
during the year we replaced the lighting in our birmingham manchester
thames valley leicester and docklands sites to more energy efficient
lighting with movement and light sensors which reduced our lighting energy
consumption by around 14
during the coming year we are looking at extending the replacement lighting
initiative at a number of other sites we have also installed energy reduction
systems at various sites to reduce electricity consumption of our automation
equipment
we have launched an environmental challenge with the aim of further
engaging all our employees in energy conservation
2 health safety and environment compliance
• 2014 achievement – 966 
• 2016 target 950
the group fully embraces and endorses the legal and moral obligation to
protect the health safety and welfare of employees and others who may be
affected by our operations
robust policies are deployed to ensure training risk assessment safe
systems of work and accident investigations are carried out throughout the
company policies are updated on an ongoing basis to ensure they reflect the
changing environment in which we operate health and safety is discussed at
group board meetings utilising our monthly health and safety report which
outlines proactive and reactive measures for discussion and debate 
a full health safety and environmental hse audit is conducted at each
operating location at least annually with locations receiving a score and an
improvement plan on completion  locations are challenged to achieve a
“pass mark” of 95 and those failing to do so undertake a reaudit within six
months to ensure that improvement plan actions have been implemented
we are pleased to report that the average score achieved in the year has
increased to 9661 with all sites achieving the 95 pass mark  this has
been achieved through improved staff awareness new working methods and
safety being integrated into the way we work
our health and safety intranet site hosts management information which
includes specific procedures and policies such as emergency response safe
operating methods risk assessments accident investigation procedures and
the carriage of dangerous goods as well as communications to promote
health and safety in the workplace
3 workplace fatalities
• 2014 achievement – 0
• 2014 target – 0
there were no fatalities during the year
4 iso 14001 corporate sites
• 2014 achievement – maintained certification at all sites
• 2016 target – maintain certification
iso 14001 is the key certification standard for environmental management
systems  it sets rigorous demands for the continuous improvement of our
environmental management system provisions and is externally audited and
verified by an ukas accredited certification body on a regular basis  we are
pleased to report that we continue to hold iso14001 certification across all
of our corporate sites
5 iso 14001 franchise sites
• 2014 achievement – work not yet started
• 2016 target – 100 compliance at franchise sites
we plan to extend our iso14001 certification to our franchise sites by 2016
work on this objective has not yet started
6 ohsas18001 at corporate sites
• 2014 achievement – work not yet started
• 2016 target – 100 compliance at corporate sites
we have an objective to achieve ohsas18001 certification across all of our
corporate sites which is the british standard for occupational health and
safety management systems  work on this objective has not yet started
waste management
7 landfill diversion waste which goes to materials or energy
recycling or transfer stations
• 2014 achievement – increased to 963
• 2014 target – 950
8 waste to landfill waste which goes directly to landfill only
• 2014 achievement – 511 favourable to target
• 2014 target – reduce by 50
9 total waste the volume of total waste generated
• 2014 achievement – 286 adverse to target
• 2014 target – reduce by 50
we continue to improve the management of our waste uk mail now
backhauls all of our cardboard and stretchwrap waste to a regional site in
order to make recycling more efficient we now only have two waste streams
landfill and mixed recyclables  our landfill diversion rates are over 96
compared with just 5 in 2008 
although we are sending significantly less waste to landfill our volume of
waste generated has increased due to the growth in our business volumes
our key focus over the next 12 months is to reduce this 
10 water consumption
• 2014 achievement – 62 favourable to target
• 2014 target – reduce by 50
28 26 good progress has been made in reducing our water consumption by 62 against our target of a 5 reduction
the average number of employees has increased since the 201213 base year which means that the comparison
of usage per employee has reduced by 14
• 2013 – 2649 employees – 1394m³
• 2014 – 2756 employees – 1193m³
we have installed water saving devices at all sites to reduce consumption and waste we have also removed
vehicle wash facilities at a number of sites to further reduce our water usage and have installed smart metres at
our high consumption sites
employee involvement
we continue to raise awareness amongst our employees by ensuring they understand how their actions impact
the environment we encourage switching off lights powering off desktop computers laptops photocopiers and
ensuring that office materials and ensuring that work practices increase recycling
working with our suppliers
we work closely with our suppliers to improve their environmental standards and we request details about their
environmental practices and accreditation as part of the supplier selection process  our supplier code of
conduct defines our minimum standards of business activity and shapes the way we work with our suppliers for
mutual gain  we continually work with suppliers to develop new products and in the reengineering of existing
products to use more environmentally friendly materials and less finite materials such as paper and polymer  we
are introducing degradable plastic to our bagits at a lower micron thickness which will use about 10 less
polymer we are in the process of rolling out a new fleet of photocopiers which will be set to print doublesided
this along with the introduction of the driver scanning system which will mitigate the need for driver run sheets
will see the amount of copier paper reduce by some 10  we also work with more uk based suppliers who
produce our high volume products in the uk instead of other parts of the world and this significantly reduces the
transportation involved
community
we believe in community investment and that uk mail should play our part as a good corporate citizen
supporting charities and community activities that affect our staff and customers
we financially support employees who are involved in personal fundraising initiatives for causes close to their
hearts  during the year we donated £28200 to a diverse range of charities through our staff sponsorship
scheme helping fund cancer charities children’s charities local hospices the british heart foundation and air
ambulance amongst others  
our commitment to working with job centre plus and employment partners that support the long term
unemployed continues so that wherever possible we support recruitment from welfare to sustained employment
this is achieved through our work experience programme and our apprenticeship programme ‘appforthat’ the
company has been successful in converting a number of work experience candidates into either apprenticeships
or employed status and continues to actively support this government initiative
the ‘appforthat’   apprenticeship programme was launched in april 2013  after being piloted in four operational
sites it has now been rolled out to a further 11 sites across the uk  the programme works in partnership with
an external training partner
charity giving
throughout the year uk mail chose to support the nspcc one of the uk’s largest children’s charities we
raised just under £34000 for the cause and the money has been donated to the nspcc’s childline schools
service this service trains volunteers to visit primary schools around the uk educating children about when
they should contact childline about issues such as abuse or bullying  
this includes a donation made by uk mail our employees organised local fundraising activities for the
nspcc such as sky dives bike rides and half marathons or smaller fundraisers such as dress down days
and cake sales which took place during working hours  we also ran an employee payroll lottery scheme
generating £1800 for the charity  
throughout 2015 uk mail will be working in partnership and raising money for both the nspcc and the
royal british legion  the legion has been raising funds and providing care and support to serving members
of the armed forces veterans and their families since 1921 we are proud to be supporting them for the year
in which they commemorate 100 years since world war 1 began 
uk mail operates a ‘payroll giving scheme’ allowing all our employees the opportunity to contribute to their
preferred charity through tax efficient salary deductions  
finally we have a policy of supporting supplier and client charitable fundraising initiatives through donations
of monies or gifts
steven glew group finance director
20 may 2014
uk mail report  accounts 2014          strategic report
corporate sites
iso 14001
compliance
100
charity donations
£34k
water
consumption
down
110
27
strategic report governance financial statements 8 30
board of directors
guy joined the company in 1989
and was appointed sales director
in 1992 after a period elsewhere in
the industry he rejoined the company
in 1997 and was appointed to the
board in august 1998 guy started the
company’s mail business in 2002 and
became the chief executive in
december 2005  
guy buswell
chief executive
peter founded the company after a
period as chief executive was
appointed chairman in july 2001 
peter kane
chairman
michael was appointed to the
board in september 2009 and is
currently a member of the audit
and nomination committees and
chairs the remuneration
committee he was appointed as the
senior independent director on 1 june
2012 michael is a managing director
and cohead of bank of america
merrill lynch’s corporate broking
business in emea he is also chairman
of fin capital limited
steven was appointed to the board
as group finance director in june
2006 he has held the positions of
group finance director at crown
sports plc booker plc and mothercare
plc having previously held a number of
senior positions with tesco store plc
steven is a chartered accountant
steven glew
group finance director
carl joined uk mail as operations
director in 2007 having previously
held a number of senior positions
in parcel distribution companies
across the uk he was appointed to
the board in april 2014 after
successfully managing our operations
for the past seven years
carl moore
group operations 
director
bill was appointed to the board in
november 2011 and chairs the
audit committee bill has a wide
range of financial experience and was
chief financial officer of intertek group
plc from 1995 to 2010 he is a
chartered management accountant
and is also a nonexecutive director
and audit committe chairman of exova
group plc
jessica joined the board as a non
executive director on 1 september
2012 she is ceo of msix a full
service media agency which
specialises in digital direct and social
media marketing jessica has over 20
years experience in the advertising and
media industry and has previously
been a nonexecutive director of
jacques vert plc and talktalk plc prior
to this jessica was managing director
of the national magazine company
and coo for acpnatmag she
previously held senior positions at
financial times business a subsidiary
of ft group and future publishing
limited 
michael findlay
senior independent 
nonexecutive director
bill spencer
independent 
nonexecutive director
jessica burley
independent 
nonexecutive director
28 strategic report governance financial statements
29
dear shareholder
in my letter to you last year i confirmed my long held belief that good corporate governance is the foundation on which strong corporate performance can be built
i am fortunate to chair a board who share this view one which remains not only fully committed to the high standards of corporate governance as laid down in the financial
reporting council’s ‘frc’ uk corporate governance code 2012 the ‘code’ but one which supports the very principles on which that was written
i believe that these principles have been important to our success
as is often said “tone comes from the top” and i see the board’s role is to create the right culture that will enable our colleagues to perform their duties to the best of their
abilities whilst at the same time enabling them to develop and maximise their own skill sets and experience
this drives career advancement which the board is highly supportive of regardless of age gender educational achievement or background
this equally applies to members of the board who also strive to improve their own performance yearonyear central to this is the board evaluation exercise undertaken
annually from which objectives and targets are derived for the coming year
in the report that follows we provide an overview of our corporate governance practices describing how the main principles of the code have been applied throughout the
year
the report includes individual reports from the chairmen of the audit committee the nomination committee and the remuneration committee which together describe
how we conduct our business in line with the code’s provisions and other accepted principles of good corporate governance
finally i would again welcome the opportunity to see you at this year’s agm
peter kane
chairman of the board
chairman’s letter 30 the listing rules of the uk listing authority require listed companies to disclose how they comply with the principles of good governance and code of best practice known
as the uk corporate governance code 2012 the ‘code’ and whether there has been compliance with its provisions throughout the financial year a copy of the code may
be found on the financial reporting council’s website wwwfrcorguk 
the company is a smaller company for the purposes of the code and in consequence certain provisions of the code either do not apply to the company or may be judged
to be less relevant to the company
the directors consider that the company has complied fully with the provisions of the code applicable to it throughout the financial year ended 31 march 2014
this statement explains how the company has applied the principles of good governance set out in the code
the governance structure
the board
the board is collectively responsible for the longterm success of the company and is ultimately accountable to shareholders and other stakeholders for the group’s strategy
risk management and performance further details of the board’s activities are provided on pages 32 to 35
audit committee
the audit committee’s primary responsibilities are to monitor the integrity of the group’s financial statements to review internal and external audit activity and to review
and monitor the effectiveness of risk management and internal controls further details on the activities of the audit committee are provided on pages 37 to 39
nomination committee
the nomination committee is responsible for board and senior executive recruitment and succession planning thereby ensuring the appropriate balance of skill sets are
present in the boardroom the committee also makes recommendations to the board on membership of its committees further details on the activities of the nomination
committee are provided on pages 40 to 41
remuneration committee
the remuneration committee is responsible for determining all elements of remuneration for the executive directors and senior executives of the group and for approving
all incentive plans further details on the activities of the remuneration committee are provided on page 40
company secretary
the company secretary’s primary responsibility is to ensure that good information is provided to the board and all of its committees and that all necessary compliance
issues and rules and regulations are followed the company secretary reports to the chairman on all board governance matters all directors have access to the services of
the company secretary and may take independent professional advice at the company’s expense in conducting their duties
corporate governance report
31
remuneration
committee
audit
committee
nomination
committee
operating
board
administrative
committee
risk
management
internal
audit
external 
audit
company 
secretary
executive
directors
uk mail group plc  board of directors
non executive 
directors
strategic report governance financial statements
others shareholders corporate governance report
risk management committee
the risk management committee’s primary responsibility is to identify monitor and review the group’s nonfinancial risks reporting at least biannually to the audit
committee
internal audit
the internal audit function including externally sourced advisors provides an independent inhouse assurance and consulting activity designed to add value and improve
the company’s operations it helps the business accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk
management control and governance processes
external audit 
the external audit function provides independent audit and review
operating board
the operating board has daytoday responsibility to execute the strategy approved by the board and comprises of the most senior executive management within the group
including the functional heads of network and operations mail it as well as the chief executive and group finance director
administrative committee
the administrative committee which comprises a quorum of at least two main board directors has a delegated responsibility from the board to enter into the legal
agreements or contracts approved by the board on its behalf all actions undertaken are reported at the next board meeting
the board
the board is collectively responsible for the longterm success of the company and is ultimately accountable to shareholders and other stakeholders for the group’s strategy
risk management and performance
the board has the powers and duties as set out in all relevant laws and the company’s articles of association amendments to the company’s articles of association may
be made in accordance with the provisions of the companies act 2006 
the board has also reserved a number of matters for its sole consideration these include
� the approval of major items of expenditure or commitment including acquisitions
� major operational projects including new contract wins
� financing including leasebuy decisions and the use of derivatives and insurance and
� policy changes relating to the franchise network 
the board routinely monitors the various financial operational and commercial risks facing the company through reports from management and takes full consideration of
legislative health and safety environmental employment and governance issues in forming decisions the board considers the impact on wider stakeholders including
employees suppliers and the environment
internal control
the board of directors has overall responsibility for ensuring that the group maintains a system of internal control to provide it with reasonable assurance regarding effective
and efficient operations internal financial control and compliance with laws and regulations whilst the role of management is to implement the board’s policies on risk and
control and provide assurance on compliance with those policies
in discharging these responsibilities the board confirms that it has established the procedures necessary to comply with the code including clear operating procedures
lines of responsibility and delegated authority
the key elements of the review processes and control framework across the group are as follows
� the board agrees the corporate strategy and business objectives to be followed over both the medium term a three year plan and in the shortterm annual
budgetsforecasts which divisional management incorporate into their own financial and operational plans
� periodic reporting and subsequent review and discussions with relevant management of business development kpi achievement health and safety operational and
financial performance 
� centralisation of certain key functions such as hr legal and treasury enabling the group to benefit from centres of expertise in the most efficient and cost 
effective manner
� proposed capital investment and it project implementations require detailed justification review and appraisal prior to any approvals being granted and post
implementation reviews are undertaken
32 corporate governance report
� clearly defined hierarchy of responsibilities including authorisation levels and documentation of operational and administrative procedures 
� a groupwide risk management framework which accords with the turnbull guidance and is supported by reports by the head of internal audit and group risk that
the significant risks faced by the group are being identified evaluated and appropriately managed having due regard to the balance of risk cost and opportunity and
� a whistleblowing policy which sets out a framework for dealing with any allegations of fraud financial misreporting and any whistleblowing notification
the system of internal control is designed to manage and mitigate rather than eliminate risks completely and it should be recognised that it can only provide
reasonable not absolute assurance against material misstatement or loss
within that context the audit committee on behalf of the board has conducted reviews of the effectiveness of the system of internal controls and processes described
above as recommended by the uk corporate governance code 2012 and is satisfied that it accords both with the code and turnbull guidance
financial reporting
in addition to the general risk management and internal control processes described above the group has also implemented internal controls specific to the financial
reporting process and the preparation of the annual and interim consolidated financial statements
the main control aspects are as follows
� formal written financial policies and procedures applicable to and consistent for all business units
� a detailed reporting calendar including the submission of detailed monthly accounts for each business unit in addition to the yearend and interim reporting 
process
� detailed management review at operating board and main board level of the monthly management accounts with additionally an audit committee review in 
respect of the interim and yearend accounts and
� monthly reconciliation and review of all balance sheet accounts
all financial information published by the group is subject to the approval of the board on the recommendation of the audit committee
board meetings 
the chairman in conjunction with the chief executive and company secretary plans the agenda for each board meeting that agenda is issued to all board members
whether attending the meeting or not together with all supporting papers before the meeting is held 
the company secretary ensures that the supporting papers provide the board with the appropriate and necessary information such that the board as a whole may
discharge their duties however where a director feels that more information may be required heshe may either access the services of the company secretary or
alternatively may take independent professional advice at the company’s expense
board meetings are normally held at the head office of the group albeit at least one meeting per annum is held at the national hub in birmingham operational
management are invited to attend board meetings on a regular basis this together with visits to the sites helps to provide the individual directors of the board with
an opportunity to broaden their knowledge of the business and to meet employees and management of the group
the board meets formally not less than ten times a year with other meetings held as necessary  reports are also supplied to directors in months when a board
meeting does not take place 
formal minutes recording the activities and decisions of the board and committee meetings are prepared and circulated to each director if a director objects to a
particular decision this is recorded in the minutes of the relevant meeting
board composition
the board currently comprises the chairman the chief executive the group finance director who is also the company secretary the group operations director
appointed 8 april 2014 and three independent nonexecutive directors there is a clear division of responsibilities between the chairman and the chief executive
set out in writing and agreed by the board 
the chairman is primarily responsible for the effective working of the board ensuring that the board as a whole plays a full and constructive part in the development
and determination of the company’s strategy and its overall commercial objectives he ensures that the board determines the nature and extent of the significant risks
the company is willing to accept in the implementation of its agreed strategy he is also responsible for promoting the highest standards of integrity and also manages
the relationship and communication with shareholders in relation to any governance matters
the chief executive is responsible for all executive management matters affecting the company his principal responsibility is the daytoday running of the business
and implementation of board strategy and policy
report  accounts 33
strategic report governance financial statements corporate governance report
the senior independent nonexecutive director provides a sounding board for the chairman and serves as an intermediary for the other directors as necessary he also
acts as a line of contact for shareholders if they have concerns which are not appropriate for discussion with the chairman the chief executive or the other executive
directors
the nonexecutive directors challenge and agree the company’s strategy with the chief executive and executive management and assess their performance against it 
nonexecutive directors are initially appointed for a three year term with an expectation that they will continue for at least a second term
as can be seen from the director’s profiles on page 28 the directors have a wide range of skills knowledge and experience and can bring independent judgement to bear
on matters of strategy performance and governance
board induction and development
on appointment the chairman agrees a personalised induction plan for all new directors tailored to their experience background and particular area of focus which is
designed to develop their understanding of the group’s culture and operations the programme has evolved over time having been modified following feedback but will
usually involve meetings with senior management and site visits
on an annual basis the chairman reviews and approves individual development plans directors are encouraged to attend seminars andor other forums relevant to their
role
time commitment
service agreements and letters of appointment for both the executive and nonexecutive directors are available for inspection at the company’s registered office and at
the agm 
the letters of appointment for each of the nonexecutive directors state that in accepting the appointment the director confirms that heshe is able to allocate sufficient
time to meet the expectations of the role with an anticipated time commitment of approximately 20 days per year
executive directors are permitted to take a maximum of one nonexecutive directorship position with another company but any such involvement must be subject to the
board’s prior approval
board membership meetings and attendance
director date of position actual number of possible number of
appointment meetings attended meetings attended
peter kane 10 july 2001 chairman 10 10
jessica burley 1 sept 2012 independent nonexecutive director 9 10
guy buswell 5 dec 2005 chief executive 10 10
carl moore  8 apr 2014 group operations director  
michael findlay 1 sept 2009 senior independent nonexecutive director 10 10
steven glew 5 june 2006 group finance director 10 10
bill spencer 1 nov 2011 independent nonexecutive director 10 10
 carl moore was appointed on 8 april 2014
board changes during the year
there were no new appointments to the board during the year  
since the year end carl moore was appointed to the board as group operations director on 8 april 2014 having served on the operations board as network director
since his appointment in 2007 in accordance with the company’s articles of association carl will be standing for election at the 2014 agm
as a result the board excluding the chairman now comprises of an equal number of executive and independent nonexecutive directors 
details of the current board members’ experience and the composition of its committees can be found on pages 34 to 41
34   uk mail group plc corporate governance report
board evaluation
an evaluation of the board its committees the individual directors and the chairman was conducted internally this was led by the chairman who invited each director
to complete a survey the results of which were discussed both collectively as a board and with each individual director  
in addition the chairman regularly convenes meetings of the nonexecutive directors to assess the performance of the board in the absence of the executive directors
furthermore both the independence and the performance of the chairman were discussed separately by the nonexecutives without the chairman present
overall the board and its committees remain satisfied that they continue to operate effectively that the information directors receive is both of the required quality and
provides sufficient time for adequate review and that there are consequently no material changes required to existing practices
board independence
the code states that the board should determine whether a director is independent in character and judgement and whether there are relationships or circumstances
which are likely to affect or could appear to affect the director’s judgement for example serving on a board for more than nine years or where heshe has had a material
business relationship with the company within the last three years
the board considers all the company’s nonexecutive directors to be independent in character and judgement and free from any relationships or circumstances which are
likely to affect or could appear to affect their judgement
the chairman of the company peter kane is not judged to be independent due to his significant shareholding peter kane was appointed as a director in april 2001 and
having now served on the board for more than nine years is required under the provisions of the code to submit himself for reelection each year
the board have evaluated peter’s performance and the operation of the board as a whole and are satisfied that no one individual dominates proceedings
directors’ conflicts of interests
under the companies act 2006 the directors have a statutory duty to avoid a situation where they have or could have a direct or indirect interest that conflicts or possibly
may conflict with the interests of the company directors of public companies may authorise conflicts and potential conflicts where appropriate if the articles of
association contain a provision to this effect
the board is aware of the other commitments of its directors and is satisfied that these do not conflict with their duties as directors of the company the process for
monitoring conflicts is as follows
� changes to the commitments of all directors are reported to the board
� the directors are required to complete a conflicts questionnaire on appointment and annually thereafter
� any conflicts identified are presented to the board for consideration and as appropriate authorised in accordance with the companies act 2006 and the articles of
association and
� directors are responsible for immediately notifying the company secretary if they become aware of any actual or potential conflict situation or a change in
circumstances relating to an existing authorisation
the board has not identified any conflict of interests during the year and believes that the procedures established to deal with conflicts of interest are operating effectively
relations with shareholders
whilst there is a substantial shareholding represented on the board the company values its dialogue with both institutional and private investors twoway communication
with institutional investors analysts and private investors is actively pursued and a series of presentations and meetings are held throughout the year carefully recognising
statutory constraints concerning the disclosure of information feedback from these meetings is collated by the company’s advisers and circulated to members of the
board to ensure that they are kept informed of the views of shareholders  in addition the chairman periodically attends meetings with shareholders and nonexecutive
directors are invited to attend results presentations
the group’s annual and halfyearly results interim management statements trading updates presentations given to analysts and all announcements made through the
rns are published on the company’s website at wwwukmailcom a full annual report is sent to all shareholders who wish to receive one
all shareholders are given at least 20 working days’ notice of the agm it is standard practice for all directors to attend the agm to which all shareholders are invited and
at which they may put questions to the chairmen of the various committees or the board generally the proxy votes for and against each resolution as well as votes withheld
which may be recorded on the proxy form accompanying the notice of agm are counted before the agm commences and are made available to shareholders at the close
of the formal business of the meeting the proxy votes are also announced through the rns and posted on the company’s website shortly after the close of the meeting
strategic report governance financial statements
report  accounts 35 corporate governance report
board committees
the board has a number of committees the principal ones being the audit remuneration and nomination committees  membership of these committees as at may 2014
and their principal terms of reference are set out below
audit committee
bill spencer chairman 
jessica burley michael findlay
oversees the group’s financial statements 
monitors the adequacy of internal controls and
risk management processes
reviews the critical accounting policies and
compliance with accounting standards
oversees the selection compensation
independence and performance of the group’s
external auditors
monitors the independence and performance of
the group’s head of internal audit and group
risk
remuneration committee
michael findlay chairman 
jessica burley bill spencer
sets remuneration for all executive directors
including sharebased incentives pensions
and other benefits
monitors the level and structure of
remuneration for the first layer of management
below board level
approves initial grants and subsequent vesting
of all sharebased incentives
responsible for appointing remuneration
consultants
uk mail group plc
board of directors
nomination committee
peter kane chairman
jessica burley michael findlay bill spencer
leads the process for and recommends all
appointments to the board
reviews succession planning for the board
36   uk mail group plc audit committee report
“during the year the audit committee has deepened its focus on the effectiveness of risk management internal controls assurance and the review of financial statements”    
responsibilities
the main roles and responsibilities of the audit committee are set out in written terms of reference available on the company’s website wwwukmailcom these terms
are considered annually by the audit committee and referred to the board for approval 
the main responsibilities of the audit committee are summarised below
� monitoring the integrity of the company’s financial reporting including the selection of the most appropriate accounting policies and compliance with accounting 
standards
� advising the board on whether the committee believes that the annual report when taken as a whole is fair balanced and understandable and provides the
information necessary for shareholders to assess the company’s performance business model and strategy
� reviewing the integrity of the risk management and internal control framework
� monitoring the role and effectiveness of the internal audit function and
� approval and appointment of the external auditors including their terms of engagement fees and independence
governance
the audit committee is composed of entirely independent nonexecutive directors the board has satisfied itself that the chairman of the audit committee and the
committee collectively have recent and relevant financial experience due to the senior positions they hold or held in other public companies to enable the committee
to function effectively and to discharge its responsibilities
audit committee membership meetings and attendance
director date of appointment position actual number of possible number 
meetings attended meetings attended
bill spencer  chairman 1 nov 2011 independent nonexecutive director 4 4
jessica burley 1 sept 2012 independent nonexecutive director 4 4
michael findlay 1 sept 2009 senior independent nonexecutive director 4 4
other attendees
the audit committee retains discretion as to who from outside the committee can attend meetings in full but typically invites the chairman chief executive group finance
director group financial controller head of internal audit and group risk externally sourced advisors and senior representatives of the external auditors although it
reserves the right to request any of these individuals to withdraw  at least once a year the committee meets separately with the external auditors and with the head of
internal audit and group risk without executive management present
activities
the committee met four times during the year and reports of these meetings were provided to the subsequent board meetings 
the main areas of focus considered by the committee during the year were as follows
financial reporting
during the year the committee reviewed the group’s draft interim and annual financial reports prior to board approval as part of these reviews the committee received a
number of reports from both management and the external auditors setting out the accounting issues and significant judgments made by management which required its
attention 
report  accounts 37
strategic report governance financial statements the significant issues considered by the committee were
areas of management judgement on an ongoing basis management exercise judgement over the level of provisioning required in a number of areas including sales
ledger credits claims and bad debts bonus accruals insurance reserves dilapidations the outcome of sharebased payment plans and purchase order accruals the
committee challenged both the underlying assumptions made by management and the work undertaken by the external auditors and after discussion and debate agreed
with the accounting treatment adopted in the preparation of the financial statements
going concern the committee received going concern papers prepared by management and additional papers prepared by the internal auditor the papers included the
forecast spending requirements resulting from the planned relocation of the national hub financed by the new banking facility agreed with lloyds bank plc on 14 may
2014 the committee paid particular focus to the sensitivities to any potential deterioration in trading and the options available to management in this event and agreed
with management’s recommendation that preparation of the accounts on a going concern basis was appropriate
goodwill impairment the committee received the annual ‘goodwill impairment review’ papers prepared by management used to support the carrying value of goodwill
in the balance sheet the committee having reviewed the underlying assumptions used in the model against the agreed plans for the relevant business units and the
sensitivities to any deterioration in future cash flow projections agreed with managements conclusion that goodwill remained unimpaired
accounting for hs2 the committee considered papers on the accounting treatment of the sale of the national hub to hs2 ltd and other compensation payments the
key issues that the committee considered included the timing and required financial reporting disclosures
fair balanced and understandable the committee is satisfied with the overall picture presented by the annual report having questioned whether the company had truly
conveyed a ‘fair balanced and understandable’ message and whether the report taken as a whole provided the information necessary for shareholders to assess the
company’s performance business model and strategy
risk management and internal control
the committee on behalf of the board is responsible for reviewing the effectiveness of the risk management framework within the group in relation to the key operational
compliance and financial risks the company faces the committee therefore reviewed the following
risk register the committee twice reviewed the prime financial and nonfinancial risks as identified on the risk register during the year together with the effectiveness
of the group’s controls to manage and mitigate the impact of those risks 
as part of this work the committee approved an enhanced ‘risk impact’ scoring mechanism with those risks and uncertainties which are currently judged by the board to
have the largest potential impact on the group set out on pages 20 to 21
internal control procedures the committee considered reports from both the head of internal audit and group risk and the group finance director on the operation of
and issues arising from the group’s internal control procedures together with observations from the external auditors and discussions with senior management
whistleblowing and fraud incidents the committee received whistleblowing and fraud incident reports and in reviewing those not only assessed the cause of those
incidents but the subsequent actions taken by management to both resolve and prevent recurrence
revenue assurance and it systems the committee received a number of reports on revenue assurance from both management and the internal auditors which were
discussed in detail with subsequent actions set for management this highlighted an opportunity to improve the group’s it infrastructure and control processes to provide
additional assurance as to the completeness of income the committee supported management’s recommendation to appoint deloitte llp  as our ‘internal it audit’
resource to provide specialist expertise in this area and to support internal audit more generally in it audit activity and in developing an it audit and risk assessment
plan
business continuity tests the committee was briefed on the key issues identified from the business continuity tests undertaken at four sites during the year ensuring
relevant points were carried into the business continuity plan
in conclusion whilist no significant failings or weaknesses had been identified from the above reviews the committee had noted a number of areas where recommeded
improvements were required
internal audit
the committee monitored and reviewed the work of the internal audit function during the year as follows
internal audit plan the internal audit plan which is initially determined by the head of internal audit and group risk through a structured process of risk assessment
was reviewed by the committee twice during the year with a number of priorities changed as a result as discussed above the committee in recognition of the specialist
knowledge required to audit it systems and the benefits to be gained from independent review approved the appointment of deloitte llp as internal it auditors to the
company
38   uk mail group plc
audit committee report internal audit reports members of the audit committee received internal audit reports on a regular basis throughout the year as and when they were concluded twice
during the course of the year the head of internal audit and group risk presented updates to the committee as to the most significant findings resulting from this work
together with a status and progress report of the agreed management action implementation plans
the committee also met with the head of internal audit and group risk in private during the year
external audit
the committee monitored and reviewed the work of the external audit function during the year as follows
audit scope the scope fee and performance of the external auditors were considered by the audit committee the committee considered the external auditors
assessment in relation to the group’s financial statements which for this year were ‘risk of fraud in revenue recognition’ ‘management override of controls’ ‘the relocation
of the national hub’ and ‘goodwill impairment’ throughout the year the committee tracked these risks and the associated work undertaken by the external auditors
audit effectiveness the committee monitored the effectiveness and coverage of external audit through consideration of the content of their report the degree to which
the agreed audit plan had been delivered the significant control weaknesses identified together with their recommended solutions to these the experience and expertise
of the auditors and their overall audit judgments and findings
significant accounting and control issues the external auditors reported twice to the committee once after the interim review and one after the yearend audit on the
significant accounting and control issues identified during the course of their work the key accounting and audit judgements made by management the level of errors
noted during the audits and made a number of internal control recommendations in their management letter
accounting and reporting changes the committee received a number of reports from the external auditors during the year regarding developments in accounting and
reporting regulatory and corporate governance matters
auditor independence the external audit was last put out to tender in 2011 after pricewaterhousecoopers llp had been in tenure since the year ended 31 march 2003
following which the audit committee recommended the reappointment of pricewaterhousecoopers llp to the board which was subsequently ratified by shareholders at
the 2012 annual general meeting a new lead audit partner was appointed at this time the external auditors are required to rotate the audit partners responsible for the
group and subsidiary audits at least every five years and employees of the external auditor who have worked on the audit in the past two years are not appointed to senior
financial positions within the group
there are no contractual obligations restricting the company’s choice of external auditor
the committee believes it can receive particular benefit from certain nonaudit services provided by the external auditors due to their wide and intricate knowledge of the
group however the committee is also mindful of the potential conflict that can result whether real or perceived and therefore has an approved policy for the provision
of nonaudit services which can be viewed on the company’s website wwwukmailcom 
the policy specifically details a number of services which are not permitted to be provided by the external auditor including those activities normally undertaken by
management where the auditor would be rewarded through a success fee or where the auditor could be required to audit their own work
the policy permits the external auditors to provide a number of specified nonaudit services to the company without reference to the committee where the work is closely
related to the performance of the audit or is a logical extension of the audit or is of an assurance or compliance nature where the auditors are in the best place to undertake
and where the fee is both less than £50000 and cumulatively less than 50 of that financial year’s audit fee    
the committee reviewed the nonaudit fees paid to the group’s auditors which was noted as compliant with this policy further details of the amounts paid to the
company’s auditors can be found in note 4 to the financial statements
the committee remains confident that the objectivity and independence of the auditors is not impaired in any way by reason of their nonaudit work or other factors and
has adopted controls to ensure that this independence is not compromised the auditors further confirmed their independence to the committee in a formal statement
the committee also met with the external auditors in private during the year
bill spencer
chairman of the audit committee
20 may 2014
report  accounts 39
audit committee report
strategic report governance financial statements role and responsibilities
the main roles and responsibilities of the remuneration committee are set out in written terms of reference available on the company’s website wwwukmailcom these
terms are considered annually by the remuneration committee and referred to the board for approval 
the prime responsibility of the remuneration committee is to determine the policy for the remuneration of the chairman the executive directors and the members of the
operating board
the committee is responsible for making recommendations to the board within agreed terms of reference on the company’s framework of executive remuneration
remuneration committee membership meetings and attendance
director date of appointment position actual number of possible number of
meetings attended meetings attended
michael findlay  chairman 1 sept 2009 senior independent nonexecutive director 5 5
jessica burley 1 sept 2012 independent nonexecutive director 5 5
bill spencer 1 nov 2011 independent nonexecutive director 5 5
further details of the committees membership and responsibilities together with details of director’s remuneration can be found within the remuneration report on page 47
michael findlay
chairman of the remuneration committee
20 may 2014
nomination committee
role and responsibilities
the main roles and responsibilities of the nomination committee are set out in written terms of reference available on the company’s website wwwukmailcom these
terms are considered annually by the nomination committee and referred to the board for approval 
the committee is responsible for making recommendations to the board within these agreed terms of reference
the main responsibilities of the nomination committee are summarised below
composition of the board and its committees
the nomination committee is responsible for a number of matters relating to the composition of the board and its committees the committee meets as necessary to
consider the size composition and structure of the board and succession planning the nomination committee plays a key role for appointments to the board in agreeing
the principle job description appointing independent recruitment consultants and interviewing the preferred candidates 
the committee keeps itself updated on key developments relevant to the company including most recently on the subject of diversity in the boardroom  whilst no specific
targets have been set the nominations committee confirms that the benefits of diversity including gender diversity will continue to be a consideration when changes to
the board are contemplated whilst ensuring that the primary objective remains ensuring that the board has the appropriate balance of skills experience and independence
the committee also makes recommendations to the board on the membership of its committees
performance evaluation
the committee is responsible for reviewing the effectiveness of the board as a whole and its committees including its own as part of this responsibility the committee
is required to review the time commitments required from nonexecutives on an annual basis through use of a performance evaluation process
reelection of directors
the committee makes recommendations to the board under both the annual reelection and retirement rotation provisions in the company’s articles of association having
regard to both the overall balance of knowledge skills and experience on the board and the need for the board to be progressively refreshed particularly in relation to
directors being reelected for a term beyond nine years
40   uk mail group plc
remuneration committee director date of appointment position actual number of possible number of 
meetings attended meetings attended
peter kane  chairman 10 july 2001 chairman 2 2
jessica burley 1 sept 2012 independent nonexecutive director 2 2
michael findlay 1 sept 2009 senior independent nonexecutive director 2 2
bill spencer 31 may 2012 independent nonexecutive director 2 2
nomination committee activity during the year
the nomination committee met twice during the year the committee discharged its obligations in respect of the financial year in the following ways
� an initial review of the results of the annual board evaluation exercise prior to a subsequent full board discussion see page 35
� a review of the size structure and composition of the board
� a review of the time commitments required of the nonexecutives and
� the reappointment of those directors standing for reelection at the agm
diversity
the committee recognises the importance of ensuring there is a diversity of background experience and perspective in its board and within the wider workforce since
the business was first established in 1971 it has supported the progression of individuals through the organisation regardless of gender age background or formal
qualifications
following the appointment of one female director in 2012 and one male director in april 2014 the board now has 14 female representation whilst the board remains
supportive of the aims of the davies report on women on boards it does not believe that the setting of a specific target for a small board is necessarily appropriate as
there is a real risk of overlooking other wellqualified candidates 
therefore in evaluating potential board appointments the prime objective of the nomination committee will continue to focus on finding the candidate that can bring the
most appropriate skillsets and experience to the board whilst mindful of the davies reports’ aims
agm election and reelection of directors
the nomination committee is aware of the frc’s suggestion that companies outside the ftse 350 should consider the annual reelection of all directors on the basis
that this is neither a requirement of the code nor has it been raised as an issue by any shareholder the nomination committee has chosen not to change its existing
practice 
the nomination committee strongly supports both the reelection of the three directors standing for reelection and the election of the one director standing for election
at the company’s forthcoming annual general meeting details of which can be found in the notice of meeting accompanying this annual report
peter kane
chairman
20 may 2014
report  accounts 41
nomination committee membership meetings 
and attendance
strategic report governance financial statements directors’ report
the directors present their annual report and the audited consolidated financial
statements of uk mail group plc for the year ended 31 march 2014 
strategic report 
the companies act 2006 requires us to present a fair review of the business during
the year to 31 march 2014 and of the position of the group at the end of the
financial year along with a description of the principal risks and uncertainties faced
known as a ‘strategic report’ the purpose of the strategic report is to enable
shareholders to assess how the directors have performed their duty under section
172 of the companies act 2006 duty to promote the success of the company
the information that fulfils the requirements of the strategic report can be found on
pages 7 to 27
corporate governance report
the disclosure and transparency rules require certain information to be included
in a corporate governance statement in the directors’ report information that fulfils
the requirements of the corporate governance statement can be found in the
corporate governance report on pages 29 to 36 and is incorporated into this
directors’ report by reference
results and dividends 
the profit for the financial year of £175 million is reported in the consolidated
statement of comprehensive income on page 71 the directors recommend a final
dividend of 142p per share 2013 124p payable on 25 july 2014 to
shareholders on the register on 27 june 2014 this gives a total dividend for the
year of 213p per share 2013 188p 
political donations 
the group did not make any political donation or incur any political expenditure
during the year 2013 £nil
research and development
the group is engaged in ongoing research and development aimed at improving
processes and expanding the range of service offerings research and development
expenditure is expensed when incurred or in the case of internal software
developments capitalised see note 10 where it meets the recognition criteria
detailed in note 1 to the financial statements
greenhouse gas emissions
details of the group’s greenhouse gas emissions as required to be disclosed
under the companies act 2006 strategic report and directors’ report
regulations 2013 are set out on page 24 of the strategic report
directors and their interests
a list of directors their interests in the ordinary share capital of the company their
interests in in its longterm incentive and share matching plans together with
details of their options over the ordinary share capital of the company are given in
the remuneration report on pages 47 to 66
brief particulars of the directors in office as at the date of this report are shown in
the board of directors section of this annual report on page 28
directors’ indemnities
as at the date of this report indemnities which are qualifying thirdparty indemnity
provisions as defined in section 234 of the companies act 2006 are in place under
which the company has agreed to indemnify the directors of the company and the
former directors of the company who held office during the year ended 31 march
2014 to the extent permitted by law in and by the company’s articles of
association in respect of liabilities incurred as a result of their office the company
maintains insurance against certain liabilities which could arise from a negligent
act or a breach of duty by its directors and officers in the discharge of their duties
employment policy 
the group’s policy is to maintain as far as practicable close consultations with
employees on matters likely to affect their interests and to this end has an
established employee consultative group the group is an equal opportunities
employer and holds an ‘investors in people’ certificate
the group’s policy and practice is to encourage the recruitment and subsequent
training career development and promotion of disabled persons according to their
aptitudes and abilities and the retention and retraining of employees who may
become disabled during their employment 
many employees are stakeholders in the business through participation in share
option and long term incentive plan schemes
further information concerning the group’s human resource management activities
is set out in the ‘our people’ report on page 22 
environmental responsibility and health and safety 
a statement on the steps taken to operate the business in pursuit of good
environmental and health standards is set out in the corporate responsibility
statement on page 24 
financial instruments
the group’s accounting policies in respect of financial instruments are set out in
note 24 to the financial statements the group’s financial risk management
objectives and policies and its exposure to the following risks – credit market
price interest rate liquidity and capital  are included in note 24 to the financial
statements
going concern
the group’s business activities together with the factors likely to affect its future
development performance and position are set out in the strategic report on page
7 the financial position of the group its cash flows liquidity position and
borrowing facilities are also described in the strategic report the strategic report
and note 24 to the financial statements include a description of the group’s
objectives policies and processes for managing its capital its financial risk
management objectives and its exposures to credit risk and liquidity risk
the group has considerable financial resources available and a strong balance
sheet together with long term contracts with a wide range of public and private
sector customers and suppliers as explained in the strategic report  cash flow
plans are prepared as part of the group’s annual budget and three year plan  these
plans are sensitised to provide an understanding of the impact of risks  the plans
are subject to review by internal audit who provide a report to the board the board
has reviewed and approved these plans as a result the directors believe that the
group is well placed to manage its business risks successfully despite the
challenging market conditions
the directors are satisfied that the group has adequate financial resources to
continue in business for the foreseeable future and consequently a going concern
basis continues to be appropriate in preparing the accounts
share capital
the company has a single class of share capital which is divided into ordinary
shares of 10p each all shares rank equally and are fully paid no person holds
shares carrying special rights with regard to the control of the company
each share carries the right to one vote at general meetings of the company and no
right to fixed income
42   uk mail group plc directors’ report
directors are still limited as to the number of shares they can allot the current
authority allows directors to allot shares up to a nominal amount of £1526701
during the year ended 31 march 2014 the directors exercised their authority to
allot shares in respect of employee share schemes see note 22
the company may purchase its own shares an authority from ordinary
shareholders for the company to purchase up to 5473298 shares representing
approximately 10 of its issued share capital at 21 may 2013 remained in force
at 31 march 2014
the company operates an employee benefit trust to hold shares in the company
which are used to satisfy grants under the group’s share incentive schemes
computershare trustees jersey limited is the current trustee of the trust the
trustees may vote in respect of any shares held in the trust but has waived this right
details of the movement in the authorised and issued share capital of the company
during the financial year to 31 march 2014 and of the outstanding options over
shares in the company at 31 march 2014 can be found in note 22 to the financial
statements on page 92
general rights attaching to shares
the rights attaching to the ordinary shares are set out in the companies act
2006 and the company’s articles of association a copy of the articles can be
obtained on request from the company secretary the articles may only be
changed by special resolution of shareholders which requires on a vote on a
show of hands at least threequarters of the shareholders or proxies present at
the meeting to be in favour of the resolution or on a poll at least threequarters
in nominal value of the votes cast by shareholders or their proxies to be in favour
of the resolution
a shareholder whose name appears on the register of members may choose
whether those shares are evidenced by share certificates certificated form or
held in electronic form uncertificated in crest
dividend rights
subject to the provisions of the companies act 2006 the company may by
ordinary resolution declare a dividend to be paid to shareholders but the
amount of the dividend may not exceed the amount recommended by the board
the board may also pay interim dividends at any time and of any amount
whenever in the opinion of the board there are sufficient distributable profits of
the company to merit payment
voting rights
subject to the restrictions set out below a shareholder is entitled to attend or
appoint another person as hisher representative a ‘proxy’ to attend and to
exercise all or any of hisher rights to speak ask questions and vote at any
general meeting of the company a shareholder may also appoint more than one
proxy provided that each proxy is appointed to exercise the rights attached to a
different share or shares held by that shareholder a proxy need not be a
shareholder of the company
the right to appoint a proxy does not apply to a person who has been nominated
under section 146 of the 2006 act to enjoy information rights a ‘nominated
person’ heshe may however have a right under an agreement with the
registered shareholder holding the shares on hisher behalf to be appointed or
to have someone else appointed as a proxy alternatively if a nominated
person does not have such a right or does not wish to exercise it heshe may
have a right under such an agreement to give instructions to the person holding
the shares as to the exercise of voting rights
in accordance with section 327 of the 2006 act in order to be valid any form
of proxy sent by the company to shareholders or any proxy registered
electronically in relation to any general meeting must be delivered to the
company’s registrars not later than 48 hours before the time fixed for holding
the meeting or any adjourned meeting in calculating the 48 hour period no
account shall be taken of any part of a day that is not a working day full details
of the deadlines for exercising voting rights in respect of the 2014 agm are set
out in the notice of agm
subject to any rights or restrictions for the time being attached to any class or
classes of shares and to any other provisions of the articles of association or
statutes on a vote on a resolution at a general meeting on a show of hands every
shareholder present in person every proxy present who has been duly appointed
by one or more shareholders entitled to vote on the resolution and every
authorised representative of a corporation which is a shareholder of the
company entitled to vote on the resolution shall have one vote if a proxy has
been duly appointed by more than one shareholder and has been instructed by
one or more of those shareholders to vote for the resolution and by one or more
of those shareholders to vote against it that proxy shall have one vote for and
one vote against the resolution on a poll every shareholder present in person
or by proxy shall have one vote for every share held
a resolution put to the vote at a general meeting shall be decided on a show of
hands unless the notice of the meeting specifies that a poll will be called on
such resolution or a poll is before the resolution is put to the vote on a show of
hands or on the declaration of the results of the show of hands directed by the
chairman or demanded in accordance with the articles of association
if a person fails to give the company any information required by a notice served
on him by the company under section 793 of the 2006 act which confers upon
public companies the power to require information to be supplied in respect of
a person’s interests in the company’s shares then the company may no sooner
than 21 days later and after warning that person serve a disenfranchisement
notice upon the shareholder registered as the holder of the shares in respect of
which the section 793 notice was given unless the information required by the
section 793 notice is given within 14 days such holder will not be entitled to
receive notice of any general meeting or attend any such meeting of the
company and shall not be entitled to exercise either personally or by proxy the
votes attaching to such shares in respect of which the disenfranchisement notice
has been given unless and until the information required by the section 793
notice has been provided 
liquidation
if the company is wound up the liquidator may with the sanction of a special
resolution of the company and any other sanction required by law divide
amongst the shareholders the whole or any part of the assets of the company
he may for such purposes set such value as he deems fair upon any property
to be divided and may determine how such division shall be carried out as
between the shareholders or different classes of shareholders the liquidator
may also transfer the whole or any part of such assets to trustees to be held in
trust for the benefit of the shareholders no shareholder can be compelled to
accept any shares or other securities which would give him any liability
transfer of shares
there are no specific restrictions on the size of a holding nor on the transfer of
shares which are both governed by the general provisions of the articles and
legislation the directors are not aware of any agreements between the
company’s shareholders that may result in restrictions on the transfer of shares
or on voting rights
strategic report governance financial statements
report  accounts 43 directors’ report
in accordance with the listing rules of the financial conduct authority certain
employees are required to seek the approval of the company to deal in its
shares
the directors may decline to register the transfer of any certificated share unless
the instrument of transfer is duly stamped if stampable and accompanied by
the certificate of the shares to which it relates and such other evidence as the
directors may reasonably require to show the right of the transferor to make the
transfer
transfers of uncertificated shares must be conducted through crest and the
directors can refuse to register transfers in accordance with the regulations
governing the operation of crest
all share transfers must be registered as soon as practicable
change of control – significant agreements
the following significant agreements contain provisions entitling the counter
parties to exercise termination rights in the event of a change of control in the
company
under the terms of the banking facility agreement detailed in the financial
review if any person or group of persons acting in concert gains control of the
company lloyds bank plc is no longer obliged to fund any loan and may
cancel its commitment under the facility and declare its participation in all
outstanding loans together with accrued interest and all other amounts payable
under the facility immediately due and repayable
the group’s share schemes also contain provisions relating to the vesting and
exercising of awardsoptions in the event of a change of control of the group
the executive directors’ service agreements contain provisions for up to 12
months compensation for loss of office or employment following a takeover
further details are reported in the remuneration report
amendment of the company’s articles of association
any amendments to the company’s articles of association may be made in
accordance with the provisions of the companies act 2006 by way of special
resolution
appointment and replacement of directors
the board must comprise of not less than three directors and no more than 15
directors 
no person other than a director retiring at a general meeting shall unless
recommended by the directors for election be eligible for election to the office
of director unless not less than seven nor more than 42 days beforehand the
company has been given notice executed by a shareholder eligible to vote at
the meeting of hisher intention to propose such person for election together
with a notice executed by that person of hisher willingness to be elected
the company may by ordinary resolution of which special notice has been
given in accordance with section 312 of the 2006 act remove any director
before the expiration of hisher period of office and may by ordinary resolution
appoint another person in hisher stead
substantial shareholders 
as at 31 march 2014 in accordance with the disclosure and transparency rules
the company had been notified of the following substantial shareholdings other
than those of the directors in the issued share capital of the company
as a percentage of 
the issued 
no of shares share capital
mr john kane 15669127 2863
m  g investment management 5634755 1029
mr michael kane 5300000 968
liontrust asset management 3634911 664
mr matthew and mrs joanna bailey 3333333 609
unicorn asset management 2800174 512
schroder investment management 2522926 461
fidelity worldwide investment 1767850 323
mr john kane and mrs joanna bailey are the adult children of peter kane
as at 20 may 2014 the company has not been notified of any changes to the
above pursuant to the requirements of rule 5 of the dtr any such information
provided to the company pursuant to the dtr is published on a regulatory
information service and on the company’s website
post balance sheet events
there were no post balance sheet events
annual general meeting
the annual general meeting ‘agm’ will be held at the offices of investec 2
gresham street london ec2v 7qp on wednesday 9 july 2014 at 1200 noon a
letter from the chairman and the notice of meeting ‘notice’ is made available to
all ordinary shareholders at least 21 working days before the meeting and may be
found at wwwukmailcom
the routine business of an agm is to receive and adopt the director’s annual
report and accounts to approve the annual statement by the chairman of the
remuneration committee together with the annual report on remuneration to re
elect directors in respect of those retiring to appoint auditors and fix their
remuneration and to declare a dividend 
additionally at this year’s agm following changes to the companies act 2006
the ‘act’ the company is required to present the directors’ remuneration policy
to members for separate approval the policy report which sets out the
company’s forwardlooking policy on directors’ remuneration including the
approach to exit payments to directors is subject to a binding shareholder vote
by ordinary resolution at least every three years once the directors’ remuneration
policy has been approved all payments made by the company to the directors
and any former directors must be made in accordance with the policy unless a
payment has been separately approved by a shareholder resolution if the
company wishes to change the directors’ remuneration policy it will need to put
the revised policy to a shareholder vote again before it can implement the new
policy if the directors’ remuneration policy remains unchanged the act requires
the company to put the policy to shareholders for approval again no later than the
2017 agm
providing that notice is given to the company no later than six weeks before an
agm or no later than the date on which the notice of agm is given shareholders
representing at least 5 of the total voting rights of all the shareholders who have
a right to vote at the agm or at least 100 shareholders who have that right and who
hold shares in the company on which there has been paid up an average sum per
shareholder of at least £100 may require the company to include an item in the
business to be dealt with at the agm all directors are requested to attend the
agm the chairmen of the board and each board committee make themselves
available to take questions from ordinary shareholders at the agm
44   uk mail group plc directors’ report
annual general meeting  special business  
in addition to the routine business of the meeting the special business set out
below will be transacted 
resolution 11
resolution 11 renews a similar authority given at last years annual general
meeting and if passed will authorise the directors to allot shares in the
company and to grant such rights up to an aggregate nominal amount of
£1526551  if given this authority will expire at the conclusion of the
companys next annual general meeting or on 9 october 2015 whichever is the
earlier  it is the directors intention to renew this authority each year as at the
date of this document no ordinary shares are held by the company in treasury
this resolution complies with the latest guidance issued by the association of
british insurers the ‘abi’
resolution 12
generally if the directors wish to allot new shares or other equity securities
within the meaning of section 560 of the companies act 2006 ‘act’ for cash
then under the act they must first offer such shares or securities to shareholders
in proportion to their existing holdings  these statutory preemption rights may
be disapplied by shareholders
resolution 12 which will be proposed as a special resolution renews a similar
power given at last years annual general meeting and if passed will enable the
directors to allot equity securities for cash up to a maximum aggregate nominal
amount of £273672 without having to comply with statutory preemption rights
but this power will be limited to allotments
a in connection with a rights issue open offer or other preemptive offer to
ordinary shareholders and to holders of other equity securities if required
by the rights of those securities or the directors otherwise consider
necessary but in accordance with normal practice subject to such
exclusions or other arrangements such as for fractional entitlements and
overseas shareholders as the directors consider necessary and
b in any other case up to an aggregate nominal amount of £273672 which
represents approximately 5 of the issued ordinary share capital of the
company as at 20 may 2014
the company has issued 1501 ordinary shares in the last year and 40509
ordinary shares in the last three years on a non preemptive basis representing
0003 and 0074 respectively of the issued ordinary share capital of the
company  this is in line with the 2008 statement of principles issued by the
preemption group which provides that a company should not issue shares
representing more than 50 in any period and no more than 75 of its issued
ordinary share capital for cash in any rolling three year period other than on a
preemptive basis without prior consultation with shareholders 
if given this power will expire at the conclusion of the companys next annual
general meeting or on 9 october 2015 whichever is the earlier  it is the
directors intention to renew this power each year
save for issues of shares in respect of various employee share schemes the
directors have no current plans to exercise the authorities sought under
resolutions 11 and 12 although they consider their renewal appropriate in order
to take advantage of business opportunities as they arise
resolution 13
resolution 13 which will be proposed as a special resolution renews a similar
authority given at last years annual general meeting  if passed it will allow the
company to purchase up to 5473448 ordinary shares in the market which
represents approximately 10 of the issued ordinary share capital of the
company as at 20 may 2014 the minimum and maximum prices for such a
purchase are set out in the resolution  if given this authority will expire at the
conclusion of the companys next annual general meeting or on 9 october
2015 whichever is the earlier  it is the directors intention to renew this
authority each year
the directors have no current intention to exercise the authority sought under
resolution 13 to make market purchases but consider the authority desirable to
provide maximum flexibility in the management of the companys capital base
if passed the directors will only exercise this authority if they believe that to do
so would result in an increase in earnings per share and would be in the best
interests of the company and of its shareholders generally 
the treasury shares regulations allow shares purchased by the company out of
distributable profits to be held as treasury shares which may then be cancelled
sold for cash or used to meet the company’s obligations under its employee
share schemes the authority sought by this resolution is intended to apply
equally to shares to be held by the company as treasury shares in accordance
with the treasury shares regulations
while held in treasury the shares are not entitled to receive any dividend or
dividend equivalent apart from any issue of bonus shares and have no voting
rights this power will only be exercised if and when in the light of market
conditions prevailing at that time the directors believe that such purchases
would increase earnings per share and would be for the benefits of shareholders
generally the directors will have regard to institutional shareholder guidelines
which may be in force at the time of any such purchase holding or resale of
shares held in treasury as at 20 may 2014 the company holds no ordinary
shares in treasury
as at 20 may 2014 being the last practicable date before the publication of this
document there were options outstanding over 1245519 ordinary shares in
the company which represents 228 of the issued ordinary share capital of the
company at that date  if the authority to purchase the companys ordinary
shares was exercised in full and those shares were subsequently cancelled
these options would represent 253 of the issued ordinary share capital of the
company
resolution 14 notice period for general meetings
the directors are proposing resolution 14 set out in the notice to renew the
authority obtained at last year’s agm to reduce the notice period for general
meetings other than agm’s to at least 14 days it is intended that this shorter
notice period will only be used for nonroutine business and where it is in the best
interests of shareholders as a whole
annual general meetings will continue to be held on at least 21 clear days notice
if given the approval will be effective until the companys next annual general
meeting when it is intended that a similar resolution will be proposed
note that the changes to the act mean that in order to be able to call a general
meeting on less than 21 clear days notice the company must make a means
of electronic voting available to all shareholders for that meeting
strategic report governance financial statements
report  accounts 45 cautionary statement
this report contains statements that are or may be forwardlooking regarding the group’s financial position and results business strategy plans and objectives such statements involve risk and uncertainty because they relate
to future events and circumstances and there are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements forwardlooking
statements speak only as of the date they are made and no representation or warranty whether expressed or implied is given in relation to them including as to their completeness or accuracy or the basis on which they were
prepared other than in accordance with the company’s legal or regulatory obligations including under the listing rules and the disclosure and transparency rules the company does not undertake any obligation to update
or revise publicly any forwardlooking statement whether as a result of new information future events or otherwise information contained in this report relating to the company or its share price or the yield on its shares
should not be relied upon as an indicator of future performance nothing in this report should be construed as a profit forecast 
directors’ report
statement of directors’ responsibilities
the directors are responsible for preparing the annual report the directors’
remuneration report and the financial statements in accordance with applicable
law and regulations
company law requires the directors to prepare financial statements for each
financial year under that law the directors have prepared the group and parent
company financial statements in accordance with international financial
reporting standards ifrss as adopted by the european union under
company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the
group and the company and of the profit or loss of the group for that period  in
preparing these financial statements the directors are required to
� select suitable accounting policies and then apply them consistently
� make judgements and accounting estimates that are reasonable and
prudent
� state whether applicable ifrss as adopted by the european union have
been followed subject to any material departures disclosed and explained
in the financial statements
� prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business
the directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company’s transactions and disclose with
reasonable accuracy at any time the financial position of the company and the
group and enable them to ensure that the financial statements and the directors’
remuneration report comply with the companies act 2006 and as regards the
group financial statements article 4 of the ias regulation they are also
responsible for safeguarding the assets of the company and the group and
hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities
the directors are responsible for the maintenance and integrity of the
company’s website – wwwukmailcom  legislation in the united kingdom
governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions
the directors consider that the report  accounts taken as a whole is fair
balanced and understandable and provides the information necessary for
shareholders to assess the company’s performance business model and
strategy
each of the directors whose names and functions are listed on page 34 confirm
that to the best of their knowledge
� the group financial statements which have been prepared in accordance
with ifrss as adopted by the eu give a true and fair view of the assets
liabilities financial position and profit of the group and
� the strategic report contained in the report  accounts includes a fair
review of the development and performance of the business and the
position of the group together with a description of the principal risks and
uncertainties that it faces
the directors also confirm that
� so far as they are aware there is no relevant audit information of which the
company’s auditors are unaware and
� they have taken all steps that they ought to have taken as a director in order
to make themselves aware of any relevant audit information and to establish
that the company’s auditors are aware of that information
the directors’ responsibilities statement was approved by a duly authorised
committee of the board of directors on 20 may 2014 and signed on its behalf
by steven glew company secretary
by order of the board
steven glew 
company secretary
20 may 2014
46   uk mail group plc remuneration report
dear shareholder
it gives me great pleasure to present the remuneration report for 201314
this year’s report has been prepared in accordance with the new remuneration reporting regime and will be presented to shareholders for approval at the forthcoming
agm to be held on 9 july 2014 at the agm shareholders will have the opportunity to vote on two separate remuneration resolutions as follows
� a binding vote on the directors’ remuneration policy as set out on page 49 which describes the company’s forward looking remuneration policy which
will operate from 1 april 2014 and will subject to shareholder approval become formally effective from the conclusion of the 2014 agm and
� an advisory vote on the remainder of the remuneration report which covers the annual statement and the annual report on remuneration as set out on pages
47 and 57 the annual report on remuneration provides details of the remuneration earned by directors in the year ended 31 march 2014 and how the
remuneration policy for the year ended 31 march 2015 will be applied
performance and reward for 201314
as set out in the financial review 201314 was a very strong period of growth driven particularly by strong increases in our parcel volumes group pbt of £228m
was 282 greater than prior year with operating profits increasing in all of our segments these financial indicators determine the reward delivered under the annual
bonus plan as a result of the exceptional performance during the year bonuses of 77 of the maximum were approved the committee believes this payout reflects
the financial performance delivered and the 72 increase in share price over the year
no awards were made in 2011 under either the ltip or smp and thus there are no awards eligible to vest for this financial year 
key committee decisions made in 201415
as readers of this report in previous years will be aware the committee’s prime aim is to ensure that the company continues to attract motivate and retain the highest
calibre individuals to deliver the best possible returns for shareholders however after six years of particularly modest salary increases three of which salaries were
frozen the fixed pay of the executive directors is now considerably below market levels and therefore out of line with the companys policy the committee believes
now is the right time to address this shortfall and is proposing salary increases of 127 and 8 for the ceo and the group finance director respectively the
committee has also taken the opportunity to increase pension provisions to that of companies of a similar size to uk mail
a second but nonetheless important objective of the committee is to ensure that there is close alignment between the interests of directors and those of shareholders
the committee aims to achieve this through the linking of short and longterm incentives to the successful financial performance of the company with the potential
to receive competitive levels of total pay only if stretching performance targets are met
however following consultation with a number of institutional shareholders and subsequent review by the committee it became apparent that share matching plans
are no longer favoured by investors and as a result this year will see the last such grant under the plan
strategy
in summary the committee’s strategy is to set remuneration packages that
� attract motivate and retain the best employees
� reward the achievement of the groups key short and longterm strategic goals
� aligns managements interests with the interests of shareholders and other stakeholders in the group
� is weighted towards variable pay dependent on performance and
� remains consistent with the groups risk policies
this part of the remuneration report is unaudited
the chairman’s annual statement
strategic report governance financial statements
report  accounts 47 remuneration report
carl moore’s appointment 
on 8 april 2014 the company announced the promotion of carl moore to the board as group operations director having served as the company’s operations director
since 2007 in determining his remuneration the committee had demonstrable knowledge of his experience and contribution to the recent success of the group and
therefore aligned his package with those of the existing executives save for ensuring that the policies on termination included in his service contract accord with
current best practice
further details can be found in the following reports
summary
as set out elsewhere in this annual report 2014 has been another successful year for the business
the committee believes that the remuneration outcome for 2014 reflects the performance of the business the committee is satisfied that the remuneration policy
which is designed to reward success and to align directors’ interests with shareholders remains appropriate as a committee we recognise the expectations of
shareholders on executive pay and our history should demonstrate the caution and sensitivity with which we have dealt with such issues
the committee unanimously supports the following remuneration policy and therefore recommends shareholders approve the resolutions to be put forward at this
year’s agm where i hope to get an opportunity to see you
michael findlay
chairman of the remuneration committee
20 may 2014
this part of the remuneration report is unaudited
48   uk mail group plc remuneration report
this report to shareholders has been prepared on behalf of the board by the remuneration committee the committee adopts the principles of good governance as
set out in the uk corporate governance code the ‘code’ and complies with the listing rules of the financial conduct authority and the relevant schedules of the
companies act 2006 and the directors’ remuneration report regulations in schedule 8 to the large and mediumsized companies and groups accounts and
reports regulations 2013
in accordance with the revised reporting regulations the report has been split into three sections the chairmans annual statement the remuneration policy setting
out the policy for the next three year period and the annual report on remuneration which sets out the remuneration paid in respect of the year under review 
remuneration policy report
the director’s remuneration policy which has been prepared under the new reporting framework will be subject to a binding vote at the 2014 agm if approved the
policy will be effective as of 9 july 2014 the date of the agm the remuneration policy is not audited
the remuneration committee 
the constitution and operation of the committee during the year has complied with the code’s guidance on directors’ remuneration
the committee’s principal duty is the determination of the remuneration packages for the chairman the executive directors and the members of the operating board
the committee’s detailed terms of reference are available on the company website at wwwukmailcom with the key responsibilities summarised as follows
� the determination of a senior remuneration strategy that ensures that the senior management of the company are provided with the appropriate incentives to
encourage enhanced performance and  are suitably rewarded for their individual contribution to the success of the company
� reviewing the effectiveness of the senior remuneration policy with regard to its impact and compatibility with remuneration policy across the rest of the
company
� ensuring that any contractual terms on termination are fair both to the company and to the individual and that failure is not rewarded
� ensuring the remuneration policy operates within an acceptable risk profile
� approving the design targets and payments for the company’s bonus schemes
� approving the design targets and annual awards made for all share incentive plans requiring shareholder approval and
� assessing the subsequent achievement of the performance targets in respect of both bonus schemes and share incentive plans
the committee is particularly keen to ensure that achievement of the company’s key strategic and financial goals is encouraged through the design and
implementation of suitably appropriate remuneration packages thereby aligning executive’s interests with those of all shareholders 
external trends and best practice are routinely monitored and the committee welcomes feedback from institutional shareholders advisory and shareholders
representative bodies
remuneration policy
our remuneration policy is to provide competitive remuneration packages that will recruit retain and motivate directors and individuals of the required calibre to meet
the group’s strategic and financial objectives  the objective is to ensure the policy is appropriate to the group’s needs and rewards executives for creating shareholder
value the committee monitors the group’s compliance with the code provisions and institutional investor guidelines for directors’ remuneration
the policy aims to balance appropriately the fixed and performancerelated elements of remuneration  the latter element is achieved through an annual bonus scheme
and longer term incentives  the bonus plan rewards the achievements of group financial or nonfinancial targets which the committee and the board believes are
highly relevant measures of annual performance  longer term performance remuneration is delivered through equitybased ltip schemes which may reward three
year relative total shareholder return ‘tsr’’ earnings per share ‘eps’ performance or any other metrics aligned to the company’s medium to longterm strategy
as determined by the committee
the committee normally reviews the executive directors’ and senior management team’s remuneration annually against a policy that positions base salaries at
competitive levels  the variable elements of the package are designed to attract high calibre individuals motivate outstanding performance and provide executive
directors and the senior management team with the opportunity to earn an overall upper quartile total remuneration package for top quartile performance  
details of the individual executive directors’ remuneration are described below
the remuneration policy for nonexecutive directors is determined by the board 
the table below summarises each element of the remuneration policy for the executive directors explaining how each component operates and how each part links
to the corporate strategy
this part of the remuneration report is unaudited
report  accounts 49
strategic report governance financial statements remuneration report
elements of the remuneration package of executive directors
this part of the remuneration report is unaudited
component alignment with strategy operation maximum potential value performance metrics
base salary set at the appropriate level for the
skills experience and general
performance of the individual and
the role
normally reviewed in april of each
year
any annual increases awarded are
ordinarily aligned with salary
increases across the company
increases beyond those granted to
the wider workforce in percentage
terms may be awarded in certain
circumstances such as where there
is a change in responsibility
progression in the role or the size
andor complexity of the group or
where salaries have fallen well
below the policy positioning for a
sustained period
periodic benchmarking may be
undertaken taking account of the
midmarket level in companies of
similar revenues profits and
market capitalisation
ordinarily salary increases in
percentage terms will be in line
with the wider workforce
however salary increases may be
made above this level at the
committee’s discretion to take
account of specific individual
circumstances such as
 an increase in scope and
responsibilities
 an increase to reflect the
individuals development and
performance in the role eg for a
new appointment where the initial
base salary may be increased over
time rather than set directly by
reference to the previous
incumbent
 alignment to the midmarket
level of similar size companies
none albeit the overall
performance of the individual is
considered by the committee when
setting and reviewing salaries
annually
provides a competitive retirement
benefit in a cost efficient manner
for the company
a defined contribution or
alternatively individuals can elect
to receive some or all of their
pension contributions as a salary
supplement
the maximum contribution or
salary supplement is 20 of the
executive director’s base salary
no element other than the base
salary is pensionable
none
provides a competitive way to
reward executives in a cost
efficient manner for the company
the main benefits executive
directors receive include private
health cover permanent health
insurance and death in service
benefits
executive directors can opt to
receive either a car or car
allowance
executive directors may partake in
the group’s saye scheme or any
other hmrc allemployee scheme
that may be introduced
in exceptional circumstances and
if considered appropriate and
reasonable by the remuneration
committee then additional
benefits such as relocation or
related expenses may be offered
insured benefit values which are
arranged under a group basis will
vary from year to year depending
on the cost of providing them
the maximum car allowance or
car benefit would be 10 of base
salary
saye scheme participation will
remain in line with hmrc limits
set at a level which the
remuneration committee
considers appropriate based on
the executive director’s role and
individual circumstances
none
pension
benefits
50   uk mail group plc remuneration report
this part of the remuneration report is unaudited
component alignment with strategy operation maximum potential value performance metrics
annual cash bonus designed to reward executives for
achieving short term objectives
linked to the business kpis
targets are set annually and any
payout is determined by the
committee after the yearend
based on performance against
those targets
the annual bonus is non
pensionable and is payable in
cash
the bonus is subject to clawback
for two years from the date of
payment or reasons of financial
misstatement administrative error
andor misconduct by the
individual
ordinarily the individual limit is
100 of base salary
the limit can be extended to
150 in exceptional
circumstances eg major
business initiative
the bonus targets will be
determined annually by the
remuneration committee from a
potential range of stretching
financial operational strategic or
personal metrics aligned to the
achievement of the company’s’
strategic goals
financial measures eg
underlying pbt operating margin
will ordinarily represent the
majority of the bonus
the bonus starts to accrue at
threshold performance
provides a mediumterm
motivational tool to executive
directors focussed on the creation
of shareholder value 
aligns directors and shareholders
interests over the longterm
supports shareholding guideline
requirements
approved by shareholders in july
2009
annual grant of share awards in
the form of nil cost or nominal
cost options or conditional awards
which are subject to performance
conditions measured over three
years
the ltip is subject to clawback for
reasons of material misstatement
of the financial results of the
company miscalculation error or
cessation of employment following
misconduct
to the extent that the awards vest
dividend equivalents are payable
the remuneration committee can
determine whether these are to be
satisfied in either shares or cash
overall ordinary individual limit of
100 of base salary
as per the share rules which were
approved by shareholders the
limit can be extended to 150 in
exceptional circumstances eg
on initial recruitment
awards granted under the ltip
2009 plan may be subject to the
following performance conditions
measured over three years
 eps growth 
 relative tsr compared to an
appropriate peer group 
the eps target range is set prior to
grant based on an assessment of
internal financial forecasts and
having due regard to external
analyst consensus
up to 25 of the awards will vest
at threshold performance with
100 vesting at maximum
performance there is straight line
vesting between these two points
the committee may alter the
weightings between metrics or
introduce another metric which
supports the company’s medium
term strategy kpi’s but would seek
to consult with shareholders prior
to any such change
long term 
incentive plan
report  accounts 51
strategic report governance financial statements remuneration report
this part of the remuneration report is unaudited
component alignment with strategy operation maximum potential value performance metrics
share matching
plan
provides retention and
alignment with shareholders whilst
rewarding longterm
value creation
supports shareholding
guideline requirements
for 201415 in respect of bonus
earned for performance in
201314 executive directors may
defer a portion of their annual
bonus the bonus will be deferred
in shares for a period of three
years and will vest subject to
continued employment
if bonus is voluntarily deferred a
matching award of shares of
equivalent value under the share
matching plan ‘smp’ will be
granted these awards will vest
after three years subject to
performance conditions
the share matching plan expires
in july 2014 and therefore any
award in respect of the 201314
bonus will be the last opportunity
to receive a matching award in
line with investor expectations on
matching plans the plan will not
be renewed
dividend equivalents are not
payable on matching awards
up to the lower of 25 of pretax
salary or 100 of the pretax
bonus may be voluntarily deferred
matching ratio of 11 on a gross of
tax basis
none for deferred bonus
matching awards are subject to a
sliding scale of eps growth targets
the target range is set prior to
grant based on an assessment of
internal financial forecasts and
having due regard to external
analyst consensus
33 of the awards will vest at
threshold performance with 100
vesting at maximum performance 
there is straight line vesting
between these two points
shareholding
requirements
to encourage a longterm
sustainable focus on shareholder
value
executive directors are expected to
retain all share awards which vest
post settlement of tax liabilities
until they have met the following
shareholding guideline
ceo – 200 of salary
group finance director  150 of
salary
group operations director – 100
of salary
none none
52   uk mail group plc remuneration report
this part of the remuneration report is unaudited
component alignment with strategy operation maximum potential value performance metrics
nonexecutive
directors
set at an appropriate level based
on the time commitments and
responsibility of the individual
new appointments base salary levels will be set with reference to the above policy but with the flexibility to reflect the experience and calibre of the individual  if a new
director is appointed on a below market salary initially they may be the subject of a series of phased increases to achieve a market positioning over an
appropriate time frame subject to their development in the role and overall performance
benefits and pension will generally be provided in accordance with the approved policy with relocation expenses andor an expatriate allowance paid
for if necessary for an overseas appointment the benefit and pension arrangements may be tailored to reflect local market practice subject to the
overall maximum limits on pension set out in the policy table tax equalisation may also be considered as may payment of the executive’s legal fees
in connection with the appointment
the structure and potential quantum of the variable pay elements will be in accordance with uk mail’s approved policy as detailed above however
the committee may set different performance measures and performance periods for awards under the annual bonus or long term incentive plan in the
year of appointment if the committee determines that the circumstances merit such alteration
the remuneration committee may consider it necessary to compensate an individual for the value of any remuneration forfeited on leaving their
current employer where this is considered appropriate the committee will endeavour to structure this compensation so that it mirrors the terms of
remuneration being replaced in terms of composition value and timing in order to facilitate this the committee may rely on an exemption in the
listing rules which allows for the grant of awards to facilitate in unusual circumstances the recruitment of a director 
the rationale for the application of any of the above would be reported within the director’s annual remuneration report
in the case of an internal hire ie promotion any outstanding variable pay awarded in relation to the previous role will be allowed to pay out
according to its term of grant
fees for a new chairman or nonexecutive director will be set in line with the approved policy
fees are paid in cash on a monthly
basis
the fees for the nonexecutive
directors are determined annually
by the chairman and the executive
directors whilst the fees for the
chairman are determined by the
remuneration committee
excluding the chairman
a basic fee is paid to all non
executive directors with
supplementary fees for holding the
position of senior independent
director andor chairing one of the
committees
fees are reviewed on an annual
basis and  set in context to fees
paid in companies of comparable
size and with reference to on
going time commitments
the nonexecutive directors do not
participate in the annual cash
bonus or ltip plans nor do they
receive any benefits or pension
contributions with the exception of
the chairman who receives health
benefits
the overall fees payable to non
executive directors will remain
within the limit stated in the
articles of association currently
£400000
none
report  accounts 53
strategic report governance financial statements remuneration report
for the avoidance of doubt in approving the policy report authority is given to the company to honour any commitments previously entered into with current
employees or former directors that have been disclosed previously to shareholders this includes any outstanding share matching awards made under the share
matching plan which has now been discontinued
incentive plan discretions
the committee will operate the annual bonus plan and ltip according to their respective rules the policy set out above and in accordance with the listing rules and
hmrc rules where relevant 
the committee consistent with market practice retains discretion over a number of areas relating to the operation and administration of these plans these include
but are not limited to the following
� who participates in the plans
� the timing of grant of award andor payment
� the size of an award andor a payment
� the choice of and adjustment of performance measures and targets for each incentive plan in accordance with the policy set out above and the rules of each
plan including the treatment of delisted companies for the purpose of the tsr comparator group
� discretion relating to the measurement of performance in the event of a change of control or reconstruction
� determination of a good leaver in addition to any specified categories for incentive plan purposes based on the rules of each plan and the appropriate treatment
under the plan rules
� adjustments required in certain circumstances eg rights issues corporate restructuring on a change of control and special dividends
any use of the above discretions would where relevant be explained in the annual report on remuneration and may as appropriate be the subject of consultation
with the company’s major shareholders
detailed remuneration policy report
base salaries
base salaries are reviewed annually although not necessarily increased  in considering appropriate salary levels the committee takes into account the remuneration
paid by comparable uk companies in terms of market capitalisation revenues and profits  the company’s practice is to target basic salaries by reference to the mid
market level in the appropriate market for the executive position however the committee will not review external benchmark data in isolation but will use it as part
of a broader review which considers experience and development in the role general performance levels and wider wage and inflationary indicators in forming their
decision the committee is mindful of the general increases awarded to the rest of the organisation and would ordinarily expect to approve a consistent approach
annual cash bonuses
the group operates an annual cash bonus scheme for executive directors 
executive director bonuses will be determined by performance against a sliding scale of stretching financial operational or strategic metrics aligned to the
achievement of the company’s strategic goals the level of bonus payment is primarily dependent upon the group’s performance against financial measures such
as the budgeted pretax profit and operating margin targets set out at the beginning of the year
the annual bonus is not pensionable by the company the bonus potential for executive directors is ordinarily up to 100 of basic salary for maximum performance
however the maximum limit can be extended to 150 of basic salary in exceptional circumstances eg major business initiative
the annual bonus is subject to clawback malus provisions which allow the committee to recover any undue bonus for reasons of material misstatement of the
company’s financial results cessation of employment as a result of misconduct or administrative error clawback applies for two years from the date of payment
share plans
long term incentive plan
the group’s long term incentive plan is a key link between executive remuneration and the longterm success and performance of the group 
the current plan was approved by shareholders at the agm in july 2009  this permits a maximum potential annual award of shares to an executive of 100 of salary
with the additional flexibility to grant awards worth up to 150 of salary in exceptional circumstances such as on recruitment  shares vest after three years
conditional upon the satisfaction of relevant performance criteria  
this part of the remuneration report is unaudited
54   uk mail group plc remuneration report
in order to align the interests of participants with those of shareholders the rules of the plan were amended to allow the remuneration committee to determine that
dividends accrue on the shares comprised in the award the remuneration committee can determine that these dividends are satisfied either as shares or as their
cash equivalent when the award vests to the extent that the performance criteria are achieved
in 2012 the remuneration committee introduced a ‘clawback’ provision whereby the committee retains the right in exceptional circumstances to reclaim any monies
based on financial misstatement andor the misconduct of an individual through means deemed appropriate to those specific circumstances
the performance conditions are determined by the remuneration committee in advance of the award grant performance conditions which determine vesting may
include eps growth ie on a continuing basis and excluding exceptional items relative total shareholder return ‘tsr’ compared to an appropriate and relevant
comparator group or any other measures which support the medium to long term strategy of the company where a new metric is introduced the committee will
seek to consult with shareholders in advance
share matching plan
in respect of bonus payable in 201415 only selected senior executives may defer voluntarily up to the lower of 25 of their pretax salary or 100 of any pretax
bonus received in return the executive will receive an award of matching shares under the share matching plan these awards will vest after three years subject to
eps performance targets and continued employment
saye scheme
executive directors are eligible to participate in the group’s hmrc approved sharesave scheme on the same terms as other employees  under this scheme
participants may contribute between £5 and £500 in total each month for a fixed period of three or five years contributions are deducted from net salary at the end
of the savings period these funds can be used to purchase ordinary shares in the company at a discount capped at 20 of the market price set at the grant date
composition of remuneration package
the targeted composition of each executive director’s remuneration between fixed and variable remuneration is as follows 
this part of the remuneration report is unaudited
report  accounts 55
strategic report governance financial statements
notes to charts
1 below threshold comprises fixed pay only ie base salary and
pension for 201415 and value of 201314 benefits
2 onplan bonus has been assumed to payout at 25 of the
maximum and 25 of the ltip vests
3 maximum full payout of the bonus and ltip
4 the smp expires in july 2014 and has therefore been excluded
5 no share price growth has been modelled
chief executive
£0
£100
£200
£300
£400
£500
£600
£700
£800
£900
£1000
£1100
£1200
£1300
£k
fixed         cash bonus        ltip
below threshold on plan maximum
100 70
15
15
£641k
31
31
£1204k
38
£454k
fixed         cash bonus        ltip
group operations director
£0
£100
£200
£300
£400
£500
£600
£700
£800
£900
£k
below threshold on plan maximum
100 70
15
15
£380k
31
31
£718k
38
£268k
fixed         cash bonus        ltip
group finance director
£0
£100
£200
£300
£400
£500
£600
£700
£800
£900
£1000
£k
below threshold on plan maximum
100 70
15
15
£433k
31
31
£815k
38
£305k remuneration report
external appointments
the committee believes that where board members hold directorships in other companies the company can benefit from their experience  as a result and subject
to the board’s prior approval executive directors may take on no more than one external directorship and retain any fees earned
directors’ service contracts and termination policy
it is the company’s policy that whilst there should not be a fixed duration in respect of directors’ service contracts each contract contains notice periods of not more
than one year it is also the company’s policy that contracts should provide the company with discretion to terminate employment by making a payment in lieu of
notice the chief executive and finance director’s contracts provide for a maximum termination payment of 12 months remuneration defined as base salary bonus
pension contributions car allowance and any other benefit then accruing 
for future director appointments including the group operations director who became a board director on 8 april 2014 the remuneration committee has previously
determined that any bonus element will be excluded from termination payments in line with best practice ensuring that any such compensation does not exceed the
sum of one year’s salary pension and benefits and will involve mitigation wherever possible although the remuneration committee would have discretion to award
a prorata bonus for part of the year worked based on performance in the year
mr glew’s contract provides that any payment in lieu of notice paid on termination by the company would consist of an initial payment of six months remuneration
thereafter he would receive a monthly payment at the same annual rate until the earlier of 12 months the date he commences employment with a third party or the
date he becomes selfemployed
however in the event of termination following a change of control executive directors are entitled to a termination payment of 12 months remuneration
there are no provisions for any of the executive directors or predetermined compensation in excess of one year’s remuneration 
the date of each service contract is noted in the table below
executive director contract date unexpired term as at 31 march 2014 or date of appointment if later
guy buswell 310306 12 months
steven glew 050606 12 months
carl moore 080414 12 months
the committees policy in an exit event is outlined in the table below
this part of the remuneration report is unaudited
56   uk mail group plc
payment bad leaver 
eg voluntary resignation or
termination for cause
departure on agreed terms good leaver 
eg death ill health redundancy
base salary pension and
benefits
paid for the proportion of the
notice period worked
treatment will normally fall
between good leaver and bad
leaver treatment subject to the
discretion of the remuneration
committee and the terms of any
termination agreement
paid up to the date of leaving including any untaken holidays
and subject to mitigation a payment in lieu of notice may be
made
annual bonus none bonus paid prorata based on the complete calendar months
worked
long term incentive plan unvested share awards lapse
share matching plan unvested share awards lapse
other none disbursements such as legal costs outplacement etc
at the discretion of the remuneration committee unvested
awards are eligible to vest either at the normal vesting date or
on cessation the remuneration committees normal policy is
i to apply performance targets over the original performance
period and ii the application of a prorata reduction the
committee may at its discretion and acting fairly and
reasonably decide not to apply a prorated reduction remuneration report
nonexecutive directors
all directors are required by the company’s articles of association to submit themselves for reelection at least every three years or in the case of a director appointed
by the directors in the past year such director is required to submit themselves for reelection at the next agm
nonexecutive director contract date unexpired term as at 31 march 2014
jessica burley 300712 17 months
peter kane 011001 indefinite
michael findlay 240412 17 months
bill spencer 101011 7 months
how employees pay is taken into account
the remuneration committee will consider the remuneration structures elsewhere in the group when setting pay for the executive directors and in particular by
considering the salary increase levels set for the group
regular updates are provided by the hr function so the remuneration committee is kept aware of the policies across the group 
no formal consultation with employees is conducted in relation to their views on the current pay policy although general engagement is continually assessed through
employee surveys which include several questions regarding the effectiveness of the current remuneration policy and ecg feedback
how executive directors remuneration policy relates to the wider group
the remuneration policy summarised in the table above provides an overview of the structure that operates for the executive directors and other senior management
levels
below this level the same broad remuneration principles will apply albeit it with the structure and quantum tailored according to the relevant job grade based on
seniority level of responsibility and ability to influence overall group performance
how shareholders views are taken into account
the remuneration committee considers shareholder feedback to be essential in developing a remuneration policy which is fair for both executives and the company
feedback is collected at each agm during meetings held with shareholders from time to time as well as more general ongoing guidance from shareholder
representative bodies  this feedback is then considered as part of the companys annual and ongoing reviews of remuneration policy  
the committee will consult with shareholders if any significant changes in the policy are proposed in the future
annual report on remuneration
the annual report on remuneration together with the annual statement will be subject to an advisory vote at the 2014 agm
implementation of the remuneration policy for 201415
as detailed in the notice of meeting approval of the committee’s remuneration policy will be sought from shareholders at the annual general meeting to be held on
9 july 2014 
this part of the remuneration report is unaudited
report  accounts 57
strategic report governance financial statements remuneration report
subject to approval the policy will be implemented as follows
201415 201314 
£000 £000 change
guy buswell 375 333 127
steven glew 255 236 80
carl moore 225 na
the remuneration committee is fully aware of the continued restraint on executive pay and in particular base salaries this has been reflected by the low increases
applied in the last six years with salaries frozen on three occasions and increases of 1 15 and 2 in the other years however salaries have now fallen
significantly below the committees desired midmarket positioning
the remuneration committee is firmly of the view that retention of the current management team is vital to the continuation of the success of the company the
committee believes that an important factor in securing their retention will be in ensuring that they regard their salary packages as fair and competitive the
committee therefore considered and approved increases in base salaries such that they are more closely aligned with the salaries of executive directors of similarly
sized uk companies and which better reflect the skills and experience of our wellestablished and highly regarded executive team
benefits and pension
benefits will be provided to executive directors in line with the policy as follows
pension contribution or
car or car allowance salary supplement equivalent 
£  of base salary
guy buswell 12000 175
steven glew 11000 150
carl moore 8000 150
increases in pension contributions or salary supplement were approved by the remuneration committee to more closely align the pension provision of executive
directors in similar sized uk companies no changes were made to the car or car allowance entitlement
annual bonus for 201415
as in previous years the 201415 bonus will be determined on a sliding scale of the group’s actual performance against the following two prime target measures
profit before tax – maximum opportunity 80 of base salary
operating margin – maximum opportunity 20 of base salary
these two measures continue to represent the most important factors in creating value for shareholders and the use of these measures supports the committee’s
principles of aligning executive interests with those of the wider shareholder base
the committee considers that the target measures are commercially sensitive on a forward looking basis and has therefore chosen not to disclose them at this time
full retrospective disclosure of actual achievement threshold and maximum targets will be included in the annual report on remuneration in 201415
any bonus received will be payable in cash following the end of the financial year
this part of the remuneration report is unaudited
58   uk mail group plc remuneration report
this part of the remuneration report is unaudited
long term incentive awards to be granted in 201415
the committee intends to grant an award to executive and operating board members in 201415 at 100 of base salary with the following vesting conditions
for performance between threshold and maximum awards will vest on a straight line basis
the committee considers that these two measures remain the most appropriate measures of longterm performance for the group in that they ensure executives are
incentivised and rewarded for the earnings performance of the group as well as returning value to shareholders
smp awards to be granted in 201415
to the extent executive directors voluntarily defer their bonus up to the lower of 25 of their pretax salary or 100 of their pretax bonus in respect of performance
in 201314 a 11 matching award will be granted the award will vest after three years subject to the eps targets set out below and continued employment
for performance between threshold and maximum awards will vest on a straight line basis
fees for the nonexecutive directors
the fee levels for 201415 for the nonexecutive directors remain unchanged and will be as follows
201415 201314 
£000 £000 change
chairman
1
70 70 
nonexecutive director – base fee 30 30 
supplementary fees
chair of committee 5 5
senior independent director 5 5
1 – the chairman’s fee is inclusive of his nomination committee chair role
membership of the remuneration committee
the members of the remuneration committee during the year were michael findlay chairman bill spencer and jessica burley all members are independent non
executive directors and no director plays a part in any discussion directly relating to their own remuneration 
advisors to the committee
during the year the committee sought advice from external remuneration consultants new bridge street ‘nbs’ largely as to best market practice and policy the
setting of suitably challenging targets for the long term incentive plan remuneration report drafting and determination of the vesting level in respect of the 2010 ltip
grant which matured in may 2013 
nbs also provided sundry administrative services such as the calculation of the company’s actual tsr performance against the benchmark actual ltip vesting levels
and of the fair values of share awards granted during the year nbs is a member of the remuneration consultants group and is a signatory to its code of conduct
the committee is satisfied that there are no potential conflicts no material additional work has been provided to the company by either nbs or any other company
within the aon plc group of companies of which nbs is a member
performance measure award proportion threshold performance maximum performance
eps 50 25 will vest where eps growth exceeds 8 pa 100 will vest where growth exceeds 14 pa
relative total shareholder
return
50 25 will vest for median performance against the
ftse allshare index exinvestment trusts
100 will vest for upper quartile performance
against the ftse allshare index exinvestment
trusts
performance measure award proportion threshold performance maximum performance
eps 100 333 will vest where eps growth exceeds rp i
 4 pa
100 will vest where eps growth exceeds rp i
 6 pa
report  accounts 59
strategic report governance financial statements remuneration report
during the year to 31 march 2014 the company incurred costs of £24k 2013 £26k in respect of fees for advice by nbs provided to the remuneration committee
the committee also sought internal support from the group’s chairman chief executive finance director and head of human resources all of whom may attend
meetings by invitation but are not present for any discussions that relate directly to their own remuneration
the company secretary acted as secretary to the committee during the year under review
review of the year
during the year ended 31 march 2014 the following agenda items were discussed
� review and approval of salary increases for executive directors operating board directors and the overall workforce
� determination and approval of the annual bonus payouts for the 201213 financial year and the vesting levels in respect of the 2010 ltip grant
� a review of the merits of offering a share matching plan with a decision taken to cease further grants with effect from 201516
� review and approval of the annual bonus schemes and targets for the financial year 201415 including the introduction of new targets for relevant senior
managers relating to the achievement of cost and benefit efficiencies within the new hub and automation project
� approval of an ltip grant to executive operating board and senior management and
� review and approval of the group’s remuneration policy
performance graph
the graphs shown below compare the total shareholder return for an investment in the shares of uk mail with the return for the same investment in the ftse allshare
index excluding investment trusts over a five year and a three year period commencing on 31 march 2009 and 31 march 2011 in the opinion of the committee
the ftse allshare index excluding investment trusts is currently the most appropriate index against which the tsr of uk mail should be measured and is also
the comparator group used in the long term incentive plan
this part of the remuneration report is unaudited
value £
uk mail group plc ftse allshare index
mar 09 mar 10 mar 11 mar 13 mar 12 mar 14
0
50
100
150
200
250
300
350
400
value £
uk mail group plc ftse allshare index
mar 11 mar 12 mar 13 mar 14
0
50
100
150
200
250
300
450
this graph shows the value by 31 march 2014 of £100 invested in uk mail group on 31
march 2009 compared with the value of £100 invested in the ftse all share excluding
investment trusts index the other points plotted are the values at intervening financial 
yearends source thomson reuters
this graph shows the value by 31 march 2014 of £100 invested in uk mail group on 31
march 2011 compared with the value of £100 invested in the ftse all share excluding
investment trusts index the other points plotted are the values at intervening financial 
yearends source thomson reuters
total share return total share return
the three year graph has also been included as it is more closely representative of the performance period of the executive incentive plans
60   uk mail group plc remuneration report
this part of the remuneration report is audited
2010
1
5270 5031 730
2011 000 000 386
2012 000 000 386
2013 1265 4509 578
2014
2
1
lti vesting is a weighted average of 6092 vesting under the ltip and 3667 vesting under the smp
2
no ltip or smp grant in 2011
 7700 652
chief executive  five year earnings history
the following table details the total remuneration of the ceo for the five year period ending 31 march 2014
single figure of total remuneration for 2014
the table below provides a single figure of total remuneration for 2014 for directors
pension 2014
salary benefits contributions sub total bonus ltip sub total total
£000 £000 £000 £000 £000 £000 £000 £000
chairman
peter kane 70   70    70
executive directors
guy buswell 333 13 50 396 256  256 652
steven glew 236 12 29 277 182  182 459
subtotal 569 25 79 673 438  438 1111
nonexecutive directors
jessica burley 30   30    30
michael findlay 40   40    40
bill spencer 35   35    35
subtotal 105   105    105
total 744 25 79 848 438  438 1286
fixed pay variable pay
report  accounts 61
strategic report governance financial statements
ceo single figure of 
total remuneration 
£000
annual variable 
element award rates against
maximum opportunity
long term incentive 
vesting rates against maximum
opportunity pension 2013
salary benefits contributions sub total bonus ltip sub total total
£000 £000 £000 £000 £000 £000 £000 £000
chairman
peter kane 70   70    70
executive directors
guy buswell 326 13 49 388 147 43 190 578
steven glew 232 11 29 272 104 31 135 407
subtotal 558 24 78 660 251 74 325 985
nonexecutive directors
jessica burley i 18   18    18
bill cockburn ii 7   7 7
michael findlay 39   39    39
bill spencer 35   35    35
subtotal 99   99    99
total 727 24 78 829 251 74 325 1154
i jessica burley was appointed to the board on 1 sept 2012
ii  bill cockburn retired from the board on 31 may 2012
annual bonus for 201314
the bonus in operation for 201314 was subject to sliding scale profit before tax and operating margin targets
performance was between threshold and maximum for both measures therefore total bonus payments were 77 of salary for the chief executive and 77 of salary
for the group finance director the committee is satisfied that the level of bonus is a fair reward for the performance delivered in the year 
the directors may defer up to 25 of their pretax salary into shares which will attract a matching award under the smp during 201415 the ultimate vesting of which
will be determined by eps achievement of the group in the financial year ended 31 march 2017 see above however following feedback from a number of
institutional shareholders the remuneration committee has determined that this will be the last such grant under the plan before it expires
share incentives granted during 201314
ltip awards were granted on 4 june 2013 on the following basis
the table below provides a single figure of total remuneration for 2013 for directors
this part of the remuneration report is audited
fixed pay variable pay
performance measure threshold maximum actual  of bonus payable
profit before tax £m £200m £236m £228m 57 max 80
operating margin  40 45 45 20 max 20
executive number of shares
comprising  award
facemaximum value of awards 
at grant date  salary
 of award vesting at
threshold
performance period
guy buswell 58260 £297126 90 25 010413 – 310316
steven glew 41345 £210860 90 25 010413 – 310316
remuneration report
62   uk mail group plc remuneration report
the awards will vest three years from the date of grant subject to the following challenging performance conditions
for performance between threshold and maximum vesting will be determined on a straight line basis
smp awards were granted on 11 june 2013 on the following basis
awards under the smp will vest according to the following conditions
for performance between threshold and maximum vesting will be determined on a straight line basis
the rp i measure is used because the remuneration committee believes it ensures that executives are only rewarded when there has been real growth
this part of the remuneration report is audited
performance measure award proportion definition vesting requirement
eps 50 the eps measure is calculated by reference to uk mail’s real
eps growth the measure is defined as annualised growth in
adjusted eps ie on a continuing basis and excluding
exceptional items over a three year performance period to 31
march 2016
threshold performance – 
25 will vest where eps growth
exceeds 723 pa
maximum performance –
100 will vest where eps 
growth exceeds 1547 pa 
tsr 50 the tsr is calculated on an annualised compound basis
assuming that all shares are reinvested no shares will be
released under the tsr condition if uk mail’s tsr over the three
year performance period to 31 march 2016 when compared to
that of the constituents of the ftse allshare index ex
investment trusts falls below the median
threshold performance – 
25 will vest for median
performance against the
benchmark index
maximum performance –
100 will vest for upper 
quartile or above performance
against the benchmark index
executive number of shares
comprising  award
facemaximum value of awards 
at grant date  salary
 of award vesting at
threshold
performance period
guy buswell 8823 £43674 13 333 010413 – 310316
steven glew 3018 £14939 6 333 010413 – 310316
performance measure award proportion definition vesting requirement
eps 100 the eps measure is calculated by reference to uk
mail’s real eps growth the measure is defined as
annualised growth in adjusted eps ie on a
continuing basis and excluding exceptional
items over a three year performance period
threshold performance – 
333 will vest where eps growth exceeds rp i
4 pa over a three year period
maximum performance – 
100 will vest where eps growth exceeds rp i
6 pa over a three year period
report  accounts 63
strategic report governance financial statements remuneration report
directors interests in shares held in the long term incentive plan are as follows
number at 
award performance number at granted in exercised in lapsed in 31 march
date of award plan price period ending 1 april  2013 the year the year the year 2014
guy buswell
260510 ltip 340p 310313 81391  10296 71095 
291112 ltip 298p 310315 94325    94325
040613 ltip 510p 310316  58260   58260
175716 58260 10296   71095 152585
steven glew
260510 ltip 340p 310313 57759  7307 50452 
291112 ltip 298p 310315 66939    66939
040613 ltip 510p 310316  41345   41345
124698 41345 7307   50452   108284
awards granted may be exercised between three and ten years following the date of grant subject to continuing employment with the group and performance
conditions being achieved
the ltip awards are primarily subject to two distinct performance conditions 50 relates to eps performance and 50 relates to the company’s tsr relative to the
ftse allshare index as detailed on page 51 the table below details the vesting history of awards granted under the ltip 2009 since it has been in operation
i eps and tsr target range represents minimummaximum range for 25 to 100 vesting with straightline prorata vesting between these two points
director’s interests in shares held in the share matching plan are as follows
number at 
award performance number at granted in exercised in lapsed in 31 march
date of award plan price period ending 1 april  2013 the year the year the year 2014
guy buswell
110613 smp 495p 310316  8823   8823
 8823     8823
steven glew
110613 smp 495p 310316  3018   3018
 3018     3018
this part of the remuneration report is audited
date of award vesting eps target 
range i
tsr target 
range i
eps achieved tsr achieved  awards
vesting
260510 280513 85  130 pa median to upper
quartile
no yes 1265
no award made in
2011
   
291112 live plan 116  181
pa
median to upper
quartile
live plan live plan live plan
040613 live plan 723  1547
pa
median to upper
quartile
live plan live plan live plan
64   uk mail group plc remuneration report
all directors interests are beneficially held there has been no change in the interests set out above between 31 march 2014 and 20 may 2014
executive directors have met the shareholding guideline as set out in the policy report
payments to past directors and payments for loss of office
there have been no payments to past directors or payments for loss of office
this part of the remuneration report is audited
310314 310313  of salary unvested vested unvested vested unvested vested 310314
executive
directors
guy buswell 255612 310693 605 yes 8823  152585  2149  419169
steven glew 121263 113919 312 yes 3018  108284  2149  234714
nonexecutive
directors
jessica burley    na      
michael findlay 1500 1500  na      1500
peter kane 3339633 3339633  na      3339633
bill spencer 4800 4800  na      4800
legally and
beneficially owned
 of salary
held under
shareholding
guideline
guideline 
met
share matching
plan awards
long term incentive
plan awards
sharesave
scheme awards
total
report  accounts 65
strategic report governance financial statements
director’s interests in shares held in the sharesave scheme are as follows
shareave scheme
earliest number at 
date exercise expiry exercise number at granted in exercised in lapsed in 31 march
of grant date date price 1 april  2013 the year the year the year 2014
guy buswell
250713 010916 010317 41867p  2149   2149
 2149   2149
steven glew 
250713 010916 010317 41867p  2149   2149
 2149   2149
the sharesave scheme provides a savings plan to purchase share and has no performance criteria to participate
the market price of the company’s shares at the end of the financial year was 650p and the range of prices during the year was between 37425p and 715p
interests in shares
the interests of the directors together with interests held by his or her persons in the ordinary shares of the company as at 31 march 2014 were as follows remuneration report
relative importance of the spend on pay
the following table sets out the percentage change in profit dividends and overall spend on pay in 2014 compared to 2013
2014 2013 
£000 £000 change
profit after taxation 175 135 299
dividends 107 99 73
employee remuneration costs 711 660 77
statement of change in pay of the ceo compared with other employees
the table below shows the movement in salary benefits and annual bonus for the ceo between the 2013 and 2014 financial years as compared to the average for all
employees
salary taxable benefits bonus
 change  change  change
ceo 19 11 743
all employees average per fte 02 83 538
share dilution limits
where new issued or treasury shares are used to satisfy share awards the aggregate dilution resulting from the issue of shares to satisfy executive share plan award grants
will not exceed 5 in any 10 year period dilution resulting from all incentives including allemployee incentive schemes will not exceed 10 in any 10 year period
the remuneration committee regularly reviews dilution against these limits and currently has headroom of 09 and 51 respectively
employee share ownership trust
the company’s employee share ownership trust holds shares in the company for subsequent transfer to employees under the long term incentive plan the share
matching plan and the sharesave plan  shares held by the trust are not voted at shareholder meetings and do not accrue dividends  at 31 march 2014 the trust held
a total of 6801 shares 2013 55493 shares
agm voting
at the company’s agm held on 10 july 2013 shareholders were asked to approve the 2013 remuneration report the following votes were received from shareholders
total number of votes percentage of votes cast
for 37135720 9996
against 13204 004
abstentions 2350 000
total 37151274 10000
michael findlay
chairman of the remuneration committee
on behalf of the board 
20 may 2014
this part of the remuneration report is unaudited
66   uk mail group plc independent auditors’ report to the members of 
uk mail group plc
our opinion
in our opinion
� the financial statements defined below give a true and fair view of the state of the group’s and of the company’s affairs as at 31 march 2014 and of the
group’s profit and the group’s and the company’s cash flows for the year then ended
� the group financial statements have been properly prepared in accordance with international financial reporting standards ifrss as adopted by the 
european union
� the company financial statements have been properly prepared in accordance with international financial reporting standards ifrss as adopted by the
european union and as applied in accordance with the provisions of the companies act 2006 and
� the financial statements have been prepared in accordance with the requirements of the companies act 2006 and as regards the group financial statements
article 4 of the ias regulation
this opinion is to be read in the context of what we say in the remainder of this report
what we have audited
the group financial statements and company financial statements the “financial statements” which are prepared by uk mail group plc comprise
� the consolidated and company balance sheets as at 31 march 2014
� the consolidated statement of comprehensive income for the year then ended
� the consolidated and company statements of cash flows for the year then ended
� the consolidated and company statements of changes in equity for the year then ended and
� the notes to the financial statements which include a summary of significant accounting policies and other explanatory information
the financial reporting framework that has been applied in their preparation is applicable law and ifrss as adopted by the european union and as regards the company
financial statements as applied in accordance with the provisions of the companies act 2006
certain disclosures required by the financial reporting framework have been presented elsewhere in the report  accounts the “annual report” rather than in the
notes to the financial statements these are crossreferenced from the financial statements and are identified as audited
what an audit of financial statements involves
we conducted our audit in accordance with international standards on auditing uk and ireland “isas uk  ireland” an audit involves obtaining evidence about
the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement
whether caused by fraud or error this includes an assessment of 
� whether the accounting policies are appropriate to the group’s and the company’s circumstances and have been consistently applied and adequately disclosed 
� the reasonableness of significant accounting estimates made by the directors and
� the overall presentation of the financial statements 
in addition we read all the financial and nonfinancial information in the annual report to identify material inconsistencies with the audited financial statements and
to identify any information that is apparently materially incorrect based on or materially inconsistent with the knowledge acquired by us in the course of performing
the audit if we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report
overview of our audit approach
materiality
we set certain thresholds for materiality these helped us to determine the nature timing and extent of our audit procedures and to evaluate the effect of
misstatements both individually and on the financial statements as a whole
based on our professional judgement we determined materiality for the group financial statements as a whole to be £114 million this represents approximately 5
of profit before tax  we have had regard to profit before tax as we believe this is the most appropriate measure of group performance
we agreed with the audit committee that we would report to them misstatements identified during our audit above £100000 as well as misstatements below that
amount that in our view warranted reporting for qualitative reasons
overview of the scope of the audit
the group consists of two operating subsidiaries and a holding company and reports its results along four business lines being parcels mail courier and pallets
the group financial statements are a consolidation of these uk based business lines and a centralised head office function
in establishing the overall approach to the group audit we determined the type of work that needed to be performed at each of the operating subsidiaries and the
holding company in order to ensure sufficient appropriate audit evidence had been obtained as a basis for our opinion on the group financial statements as a whole
we audited the complete financial information of all three companies and performed additional audit procedures over the consolidation adjustments in the group
financial statements
report  accounts 67
strategic report governance financial statements areas of particular audit focus
in preparing the financial statements the directors made a number of subjective judgements for example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently uncertain we primarily focused our work in these areas by assessing the directors’ judgements
against available evidence forming our own judgements and evaluating the disclosures in the financial statements
in our audit we tested and examined information using sampling and other auditing techniques to the extent we considered necessary to provide a reasonable basis
for us to draw conclusions we obtained audit evidence through testing the effectiveness of controls substantive procedures or a combination of both 
we considered the following areas to be those that required particular focus in the current year this is not a complete list of all risks or areas of focus identified by
our audit we discussed these areas of focus with the audit committee their report on those matters that they considered to be significant issues in relation to the
financial statements is set out on page 38
area of focus how the scope of our audit addressed the area of focus
goodwill impairment assessment
we focused on this area because the determination of whether or not an
impairment charge for goodwill was necessary involved significant
judgements about the future results of the pallets and courier segments
refer also to note 9 to the financial statements
we evaluated the directors’ future cash flow forecasts and the process by
which they were drawn up including comparing them to the latest board
approved budgets recent trading results and reperforming  the underlying
calculations
we challenged
� the directors’ key assumptions for long term growth rates in the 
forecasts by comparing them to historical results economic and 
industry forecasts and
� the discount rate by assessing the cost of capital for the company
we also performed a sensitivity analysis on these assumptions and the cash
flow forecasts having ascertained the extent of change in those
assumptions and cashflow forecasts that either individually or collectively
would be required for the goodwill to be impaired we considered the
likelihood of such a change in those key assumptions occurring
we also considered the adequacy of the disclosures made in note 9 to the
financial statements
accounting treatment and disclosure of compulsory purchase of
the group’s central hub
we focused on this area as the compulsory purchase of the group’s central
hub and the related compensation is material to the financial statements
additionally there is judgement around the timing of any recognition of
elements of compensation in the statement of comprehensive income
appropriate classification in the consolidated balance sheet and cash flow
statement
we read and considered the contract for the compulsory purchase of the
group’s central hub to understand the amount and underlying nature of the
compensation receivable 
by understanding the nature of the different streams of compensation we
were able to challenge whether the treatment adopted by management was
appropriate in terms of the timing of any amount recognised in the
consolidated statement of comprehensive income and also the
classification of amounts received in the consolidated balance sheet and
cash flow statement
our work included assessing the appropriateness of the disclosures made
in the report  accounts
68   uk mail group plc
independent auditors’ report to the members of 
uk mail group plc area of focus how the scope of our audit addressed the area of focus
risk of fraud in revenue recognition
isas uk  ireland presume there is a risk of fraud in revenue recognition
because of the pressure management may feel to achieve the planned
results
we focussed on this area due to the risk that revenue could be recorded for
transactions that did not occur
as the foundation of the evidence we obtained regarding the revenue
recorded in the financial statements we evaluated the relevant underlying it
systems and tested the operating effectiveness of internal controls over the
occurrence accuracy completeness and timing of revenue recognition for
the mail parcels courier and pallets segments
we traced revenue transactions to cash receipts or trade receivables and
performed procedures to satisfy ourselves as to the recoverability of those
receivables not yet settled  we used a combination of data analysis
techniques and other tests including testing manual journal adjustments to
identify revenue transactions that resulted in account balances other than
cash or trade receivables and obtained an understanding of the rationale for
such transactions together with supporting evidence for such entries where
these were material
risk of management override of internal controls
isas uk  ireland require that we consider this
we assessed the overall control environment of the group including the
arrangements for staff to “whistleblow” inappropriate actions and
interviewed senior management and the group’s internal audit function we
examined the significant accounting estimates and judgements relevant to
the financial statements for evidence of bias by the directors that may
represent a risk of material misstatement due to fraud 
we understood the key trigger points for incentive payments to senior
management and reviewed specific adjustments impacting the financial
statements which involve judgementdiscretion by management such as
releases of excess credits andor accruals
we also tested journal entries
going concern
under the listing rules we are required to review the directors’ statement set out on page 42 in relation to going concern we have nothing to report having performed our
review
as noted in the directors’ statement the directors have concluded that it is appropriate to prepare the financial statements using the going concern basis of accounting the going
concern basis presumes that the group and company have adequate resources to remain in operation and that the directors intend them to do so for at least one year from the
date the financial statements were signed as part of our audit we have concluded that the directors’ use of the going concern basis is appropriate
however because not all future events or conditions can be predicted these statements are not a guarantee as to the group’s and company’s ability to continue as a going concern
opinions on other matters prescribed by the companies act 2006
in our opinion
� the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with
the financial statements and
� the part of the remuneration report to be audited has been properly prepared in accordance with the companies act 2006
other matters on which we are required to report by exception
adequacy of accounting records and information and explanations received
under the companies act 2006 we are required to report to you if in our opinion
� we have not received all the information and explanations we require for our audit or
� adequate accounting records have not been kept by the company or returns adequate for our audit have not been received from branches not visited by us or
� the company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting records and returns
we have no exceptions to report arising from this responsibility
report  accounts 69
strategic report governance financial statements
independent auditors’ report to the members of 
uk mail group plc directors’ remuneration
under the companies act 2006 we are required to report to you if in our opinion certain disclosures of directors’ remuneration specified by law are not made we
have no exceptions to report arising from these responsibilities 
corporate governance statement
under the companies act 2006 we are required to report to you if in our opinion a corporate governance statement has not been prepared by the company we have
no exceptions to report arising from this responsibility
under the listing rules we are required to review the part of the corporate governance statement relating to the company’s compliance with nine provisions of the
uk corporate governance code “the code” we have nothing to report having performed our review 
on page 46 of the annual report as required by the code provision c11 the directors state that they consider the annual report taken as a whole to be fair balanced
and understandable and provides the information necessary for members to assess the group’s and company’s performance business model and strategy on page
38 as required by c38 of the code the audit committee has set out the significant issues that it considered in relation to the financial statements and how they
were addressed under isas uk  ireland we are required to report to you if in our opinion 
� the statement given by the directors  is materially inconsistent with our knowledge of the group and company acquired in the course of performing our audit or
� the section of the annual report describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee
we have no exceptions to report arising from this responsibility
other information in the annual report
under isas uk  ireland we are required to report to you if in our opinion information in the annual report is
� materially inconsistent with the information in the audited financial statements or
� apparently materially incorrect based on or materially inconsistent with our knowledge of the group and company acquired in the course of performing our audit or
� is otherwise misleading
we have no exceptions to report arising from this responsibility
responsibilities for the financial statements and the audit
our responsibilities and those of the directors
as explained more fully in the statement of directors’ responsibilities  set out on page 46 the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view
our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and isas uk  ireland those standards require
us to comply with the auditing practices board’s ethical standards for auditors
this report including the opinions has been prepared for and only for the company’s members as a body in accordance with chapter 3 of part 16 of the companies
act 2006 and for no other purpose we do not in giving these opinions accept or assume responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing
jaskamal sarai senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
uxbridge
20 may 2014
70   uk mail group plc
independent auditors’ report to the members of 
uk mail group plc 2014 2013
note £m £m
revenue 2 5085 4754
cost of sales 4403 4207
gross profit 682 547
administrative expenses 455 370
operating profit 4 227 177
finance income 3 02 02
finance costs 3 01 01
profit before taxation 228 178
taxation 6 53 43
profit for the financial year 175 135
total comprehensive income attributable to
equity holders of the company 175 135
basic earnings per share 8 320p 247p
diluted earnings per share 8 319p 246p
consolidated statement of comprehensive income
for the year ended 31 march 2014
the notes on pages 77 to 104 are an integral part of these financial statements
report  accounts 71
strategic report governance financial statements consolidated balance sheet
as at 31 march 2014
2014 2013
note £m £m
assets
noncurrent assets
goodwill 9 95 95
intangible assets 10 80 49
investment properties 11 18 18
property plant and equipment 12 501 335
deferred tax assets 20 07 03
701 500
current assets
inventories 15 02 03
trade and other receivables 16 724 667
cash and cash equivalents 17 274 282
1000 952
liabilities
current liabilities
borrowings 19 04 08
trade and other payables 18 829 743
current tax liabilities 27 23
provisions 21 04 03
864 777
net current assets 136 175
noncurrent liabilities
borrowings 19  04
deferred tax liabilities 20 15 17
provisions 21 10 10
trade and other payables 18 89 
114 31
net assets 723 644
shareholders equity
ordinary shares 22 55 55
share premium 153 153
retained earnings 515 436
total equity 723 644
the financial statements on pages 71 to 104 were approved by the board of directors on 20 may 2014 and were signed on its behalf by
guy buswell                                                                                                                                                                                                     steven glew
chief executive group finance director
registered number 02800218
the notes on pages 77 to 104 are an integral part of these financial statements
72   uk mail group plc company balance sheet
2014 2013
note £m £m
assets
noncurrent assets
investments in subsidiaries 14 196 187
196 187
current assets
trade and other receivables 16  01
current tax assets 01 
cash and cash equivalents 17 222 263
223 264
liabilities
current liabilities
trade and other payables 18 35 76
35 76
net current assets 188 188
net assets 384 375
shareholders equity
ordinary shares 22 55 55
share premium 153 153
retained earnings 176 167
total equity 384 375
the financial statements on pages 71 to 104 were approved by the board of directors on 20 may 2014 and were signed on its behalf by
guy buswell steven glew
chief executive group finance director
registered number 02800218
as at 31 march 2014
the notes on pages 77 to 104 are an integral part of these financial statements
report  accounts 73
strategic report governance financial statements consolidated company
2014 2013 2014 2013
note £m £m £m £m
profit for the year 175 135 108 99
adjustments for
depreciation and amortisation 75 77  
sharebased payment expense 09 01  
loss on sale of property plant and equipment 05 02  
finance income 02 02 04 06
finance costs 01 01 03 04
taxation 53 43 01 
operating profit before changes in working capital and provisions 316 255 106 97
decreaseincrease in inventories 01 01  
increasedecrease in trade and other receivables 57 32 01 31
increasedecrease in trade and other payables 71 96 41 76
increasedecrease in provisions 01 07  
total cash flow from working capital 16 56 40 107
cash generated from operations total 332 311 66 204
interest paid  01  
interest received 02 01 01 02
income tax paid 52 41  
net cash flow from operating activities 282 270 67 206
investing activities
purchase of property plant and equipment 12 235 62  
purchase of intangible assets 10 46 16  
deferred compensation 18 106   
proceeds from sale of plant and equipment 01   
net cash flow from investing activities 174 78 
financing activities
repayment of finance leases 28 08 08  
dividends paid to shareholders 7 107 99 107 99
net proceeds from issue of ordinary share capital  01  01
esot shares acquired 01  01 
repayment of term loan  20  20
net cash from financing activities 116 126 108 118
net decreaseincrease in cash and cash equivalents 28 08 66 41 88
cash and cash equivalents at the beginning of the year 28 282 216 263 175
cash and cash equivalents at the end of the year 28 274 282 222 263
cash flow statements
for the year ended 31 march 2014
the notes on pages 77 to 104 are an integral part of these financial statements
74   uk mail group plc ordinary share retained total
shares premium earnings equity
group note £m £m £m £m
balance as at 1 april 2012 55 153 401 609
profit for the year   135 135
total comprehensive income for the year   135 135
dividends paid to shareholders 7   99 99
employees share option scheme
 sharebased payments 23   01 01
total transactions with shareholders recorded directly in equity   100 100
balance as at 31 march 2013 55 153 436 644
ordinary share retained total
shares premium earnings equity
note £m £m £m £m
balance as at 1 april 2013 55 153 436 644
profit for the year   175 175
total comprehensive income for the year   175 175
dividends paid to shareholders 7   107 107
employees share option scheme
 sharebased payments 23   09 09
 purchase of uk mail shares by the esot   01 01
 tax credited to equity   03 03
total transactions with shareholders recorded directly in equity   96 96
balance as at 31 march 2014 55 153 515 723
the notes on pages 77 to 104 are an integral part of these financial statements
consolidated statement of changes in equity
for the year ended 31 march 2014
report  accounts 75
strategic report governance financial statements ordinary share retained total
shares premium earnings equity
company note £m £m £m £m
balance as at 1 april 2012 55 153 167 375
profit for the year   99 99
total comprehensive income for the year  99 99
dividends paid to shareholders 7   99 99
employees share option scheme
 decrease in investment in subsidiaries 14   01 01
 exercise of share options   01 01
total transactions with shareholders recorded directly in equity   99 99
balance as at 31 march 2013 55 153 167 375
ordinary share retained total
shares premium earnings equity
note £m £m £m £m
balance as at 1 april 2013 55 153 167 375
profit for the year   108 108
total comprehensive income for the year   108 108
dividends paid to shareholders 7   107 107
employees share option scheme 23
 purchase of uk mail shares by the esot   01 01
 sharebased payments   09 09
total transactions with shareholders recorded directly in equity   99 99
balance as at 31 march 2014 55 153 176 384
the notes on pages 77 to 104 are an integral part of these financial statements
company statement of changes in equity
for the year ended 31 march 2014
76   uk mail group plc notes to the financial statements
1 principal accounting policies
accounting policies for the year ended 31 march 2014
the principal accounting policies adopted in the preparation of these
financial statements are set out below these policies have been consistently
applied to all the years presented unless otherwise stated
general information
uk mail group plc registration 02800218 is a public limited company
incorporated and domiciled in england and the holding company of uk
mail limited and uk pallets ltd it is quoted on the london stock exchange
lse ukm the group’s principal activity is the provision of express
collection and delivery services for parcels mail and palletised goods the
address of its registered office is 120 buckingham avenue slough sl1
4lz
basis of preparation
these financial statements have been prepared in accordance with the
companies act 2006 and those international financial reporting standards
ifrss as adopted by the european union and international financial
reporting interpretation committee ifric interpretations which are
effective as at 31 march 2014
the financial statements have been prepared under the historical cost
convention and on the going concern basis as described in the going
concern statement in the directors’ report on page 42
new and amended standards adopted by the group 
there are no ifrss or ifric interpretations that are effective for the first
time for the current financial year that have had a material impact on the
consolidated or company financial statements of the group for the year
ended 31 march 2014 
new standards and interpretations not yet adopted 
new standards amendments and interpretations issued effective for the
financial year beginning 1 april 2014 and not yet adopted by the group
include ias 27 revised ‘separate financial statements’ ias 28 revised
‘investments in associates and joint ventures’ and ifrs 10 ‘consolidated
financial statements’ none of these are expected to have a material effect
on the consolidated and company financial statements of the group
the preparation of financial statements in conformity with ifrs requires the
use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period although
these estimates are based on managements best knowledge of the
amount event or actions actual results ultimately may differ from those
estimates
the critical accounting judgements and the key sources of estimation
uncertainty are detailed in note 31
consolidation
the group financial statements incorporate the financial statements of uk
mail group plc the ‘company’ and entities controlled by the company
its ‘subsidiaries’ made up to 31 march each year control is achieved
where the company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities 
the financial statements of subsidiaries are consolidated from the date that
control commences to the date control ceases on acquisition of a
subsidiary all of the subsidiarys assets and liabilities that exist at the date
of acquisition are recorded at their fair values reflecting their condition at
that date changes to those assets and liabilities and the resulting gains
and losses that arise after the group has gained control of the subsidiary
are credited or charged to the post acquisition statement of comprehensive
income
intragroup transactions and balances are eliminated on consolidation and
consistent accounting policies are used throughout the group for the
purposes of the consolidation
the results assets and liabilities of the franchise network are not
consolidated into the groups results as the group does not have a
participating share ownership in the franchises or the ability to direct and
control their activities additionally the group does not bear or benefit in
the majority of the risks and rewards
advantage has been taken of section 408 of the companies act 2006 not
to include the companys own statement of comprehensive income the
profit of the company for the year was £108m 2013 £99m
goodwill
goodwill represents the excess of the cost of an acquisition over the fair value of
identifiable net assets of a subsidiary at the date of acquisition goodwill is
initially recognised as an asset at cost and is subsequently measured at cost less
any accumulated impairment losses
goodwill is allocated to those cash generating units cgus expected to benefit
from the business combination and tested for impairment at least annually or
whenever there is an indication that the asset may be impaired impairment
testing is based on assets grouped at the lowest level at which goodwill is
monitored for internal management reporting purposes any impairment is
recognised immediately in the statement of comprehensive income and is not
subsequently reversed
on the disposal of a business goodwill relating to that business remaining on the
balance sheet is included in the determination of the gain or loss on disposal
intangible assets other than goodwill
intangible assets include acquired computer software licences not part of
the operating software acquired with a related piece of hardware these are
capitalised on the basis of the costs incurred to acquire and bring to use
the specific software these costs are amortised on a straight line basis
over their estimated useful lives of between three and seven years which
are reviewed annually 
costs that are directly associated with the development of identifiable and
unique software products generated for use by the group and where it is
probable that will generate economic benefits exceeding costs beyond one
year are recognised as intangible assets these represent the direct
employment costs of software developers time spent on relevant projects
computer software development costs recognised as assets are amortised
over their estimated useful economic lives of between three and seven
years which are reviewed annually
investment properties
investment properties comprise of freehold and leasehold land and buildings
held for long term rental yields and are not occupied by the group
investment properties are accounted for under the cost model at cost less
accumulated depreciation and accumulated impairment losses and are
depreciated either over fifty years in the case of freehold properties or
over the period of the lease on a straight line basis
property plant and equipment
property plant and equipment are stated at cost less accumulated
depreciation and any impairment in value cost includes the original
purchase price of the asset together with the costs attributable to bringing
the asset to its working condition for its intended use
where significant parts of an item of property plant and equipment have
different useful lives they are accounted for as separate items
report  accounts 77
strategic report governance financial statements notes to the financial statements
depreciation
depreciation is provided on a straight line basis so as to write off the cost of
the assets to their residual values over their estimated useful economic life
using the following rates 
freehold buildings                                 fifty years
short leasehold buildings the period of the lease
motor vehicles plant and equipment three to ten years
computer equipment three to seven years
land is not depreciated
the normal expected useful economic lives and residual values of the
major categories of property plant and equipment are reviewed annually
the carrying value of property plant and equipment is reviewed at least
annually any resultant impairment losses are charged immediately to the
statement of comprehensive income
impairment
at each balance sheet date the group reviews the carrying amount of all
its assets excluding deferred tax assets inventories and financial assets to
determine whether there is any indication that any of those assets have
suffered an impairment loss
an impairment loss is recognised in the statement of comprehensive income
whenever the carrying amount of an asset or its chu exceeds its recoverable
amount the recoverable amount is the higher of an assets fair value less
costs to sell and value in use in assessing value in use the estimated future
cash flows are discounted to their present value using a pretax discount rate
that reflects current market assessments of the time value of money and risks
specific to that asset where it is not possible to estimate the recoverable
amount of an individual asset the group estimates the recoverable amount of
the chu to which the asset belongs impairment losses recognised in respect
of cgu’s are allocated first to reduce the carrying amount of any goodwill
allocated to those units and then to reduce the carrying amount of other
assets in the chu on a prorata basis
an impairment loss for an individual asset or chu will be reversed if there
has been a change in estimate used to determine the recoverable amount
since the last impairment loss was recognised and is only reversed to the
extent that the asset’s carrying amount does not exceed the carrying
amount that would have been determined net of amortisation or
depreciation had no impairment loss been recognised impairment of
goodwill is not reversed
investments in subsidiaries
investments in group undertakings are stated at cost less any provision for
impairment
the company reflects the fair value of sharebased payments granted to
employees of subsidiary companies as an investment in subsidiaries with
a corresponding credit to equity
inventories
inventories represented by fuel stocks held by the group are stated at the
lower of cost and net realisable value
cost is determined using the firstinfirstout method and net realisable
value is the estimated selling price less costs of disposal in the ordinary
course of business
finance and operating leases
leasing agreements which transfer to the group substantially all the risks
and rewards of ownership of an asset are treated as if the asset has been
purchased outright and are classified as finance leases the assets are
included in noncurrent assets and the capital elements of the leasing
commitments are shown as obligations under finance leases the lease
rentals are treated as consisting of capital and interest elements the
capital element is applied to reduce the outstanding obligations and the
interest element is charged against profit so as to give constant periodic
rates of charge on the remaining balance outstanding at each accounting
period assets held under finance leases are depreciated over the shorter
of the lease term and the useful lives of equivalent owned assets
leases where the group does not retain substantially all the risks and
rewards of ownership of an asset are classified as operating leases
operating lease rental payments including lease incentives are
recognised as an expense in the statement of comprehensive income on a
straight line basis over the term of the lease similarly where the group
acts as a lessor operating lease income is credited to the statement of
comprehensive income on a straight line basis over the term of the lease
revenue
revenue reflects all sales made by the group whether delivered by network
services franchises or subcontractors the group remains the principal in
all transactions save where it acts as an agent on behalf of its customers
revenue is recognised in the accounting period in which consignments are
delivered for customers
income from investment properties is recognised on a straight line basis over
the term of the lease even if the payments are not received on such a basis
all revenues are stated net of value added tax
cost of sales
cost of sales reflects all the direct costs incurred in the collection and
delivery of a consignment including the costs of subcontracted and
employed drivers linehaul costs and royal mail access costs together
with the direct costs of operating the network cost of sales includes the
depreciation cost of network vehicles cages and site equipment
administrative costs
administrative costs reflect all the establishment and central support costs
of the group including the remuneration of nonoperational site based staff
and head office personnel depreciation of buildings amortisation of
central it systems and bad debts
operating segments
operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decisionmaker the chief
operating decisionmaker who is responsible for allocating resources and
assessing performance of the operating segments has been identified as
the board of the company
taxation
the tax expense represents the sum of the tax currently payable and
deferred tax
the tax currently payable is based on the taxable profit for the year taxable
profit differs from the net profit in the statement of comprehensive income
because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable
or deductible
the company provides deferred income tax using the balance sheet liability
method on all temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes deferred tax assets are recognised for all deductible
temporary differences to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences carry
forward of unused tax assets and unused tax losses can be utilised
deferred income tax assets and liabilities are measured at the tax rates that
apply to the period when the asset is realised or the liability is settled
based on tax rates and tax laws that have been enacted or substantively
enacted at the balance sheet date
78   uk mail group plc notes to the financial statements
full provision is made for deferred taxation on all taxable temporary
differences deferred tax assets and liabilities are recognised separately on
the balance sheet deferred tax assets are recognised only to the extent that
they are expected to be recoverable
deferred taxation is recognised in the statement of comprehensive income
unless it relates to taxable transactions taken directly to equity in which
case the deferred tax is also recognised in equity the deferred tax is
released to the statement of comprehensive income at the same time as the
taxable transaction is recognised in the statement of comprehensive
income 
pension costs
the group operates a defined contribution pension scheme the assets of
the scheme are held separately from those of the group in independently
administered funds the pension costs charged in the statement of
comprehensive income represent contributions payable by the group to the
scheme together with the administration charges of the scheme 
foreign currencies
transactions in foreign currencies are recorded in sterling at the rate ruling
at the transaction date monetary assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the
balance sheet date all exchange differences arising from trading
transactions are dealt with in the statement of comprehensive income
sharebased payments
the costs of equitysettled sharebased payments are recognised in the
statement of comprehensive income with a corresponding increase in
equity over the vesting period as services are provided to the group 
the charge is based on the fair value of the equity instrument granted and
the number of equity instruments that are expected to vest the fair value
is measured at grant date and takes account of vesting conditions that
relate to the market price of the companys shares in order to determine
the value of the instrument a pricing model relevant to the type of
instrument is used
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 embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation  
where the group expects a provision to be reimbursed for example under
an insurance contract the reimbursement is recognised as a separate asset
but only when the reimbursement is virtually certain 
contingent liabilities
contingent liabilities represent possible obligations whose existence will
be confirmed only by the occurrence or nonoccurrence of one or more
uncertain future events not wholly under the control of the group
contingent liabilities also include certain obligations that will probably not
lead to an outflow of resources embodying economic benefits or where the
outflow of resources embodying economic benefits cannot be measured
with sufficient reliability in accordance with ifrs contingent liabilities are
not recognised as liabilities
exceptional items
material and nonrecurring items of income and expense are disclosed in
the statement of comprehensive income as exceptional items examples of
items which may give rise to disclosure as exceptional items include
material gains or losses on the disposal of businesses or noncurrent
assets material asset impairments and business reorganisation and
restructuring costs
dividends
interim dividends are recognised as a distribution from retained earnings in
the period in which they are paid
final dividends are recognised as a distribution from retained earnings in
the period in which they are approved at the general meeting
share capital
ordinary shares are classified as equity incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds received own equity instruments that are reacquired
treasury shares or shares held in the employee share ownership trust
esot are deducted from equity no gain or loss is recognised in the
statement of comprehensive income on the purchase sale issue or
cancellation of the group’s own equity instruments
financial instruments
financial assets and financial liabilities are recognised in the balance sheet
when the group becomes a party to the contractual provisions of the
instrument financial assets are derecognised when the group no longer
has the rights to cash flows the risks and rewards of ownership or control
of the asset financial liabilities are derecognised when the obligation
under the liability is discharged cancelled or expires
trade and other receivables trade receivables are recognised initially
at fair value and subsequently measured at amortised cost using the
effective interest method less provision for impairment a provision is
made when there is objective evidence that the group will not be able to
collect the debts bad debts are written off to the statement of
comprehensive income when identified
trade and other payables trade payables are recognised initially at fair
value and subsequently measured at amortised cost using the effective
interest method 
interestbearing loans and borrowings all interestbearing loans and
borrowings are initially recognised at fair value plus directly attributable
transaction costs after initial recognition interestbearing loans and
borrowings are subsequently measured at amortised cost using the
effective interest method amortised cost is calculated by taking into
account any issue costs and any discount or premium
cash and cash equivalents these comprise cash in hand current
account and demand deposit balances with banks and similar institutions
which are readily convertible to a known amount of cash within three
months and which are subject to an insignificant risk of change in value 
for the purpose of the cash flow statements cash and cash equivalents
consist of cash and cash equivalents as defined above net of outstanding
bank overdrafts
report  accounts 79
strategic report governance financial statements notes to the financial statements
2 segmental information
management has determined the operating segments based on reports that are reviewed by the board for making strategic decisions these reports reflect the groups
defined management structure whereby distinct managers are accountable to the board for the results and activities of their identified segments and the different
markets in which they operate the board which is the group’s chief operating decision maker considers that the group has four reportable operating segments
the groups operating segments consist of mail parcels courier and pallets services the board assesses the performance of the operating segments based
on a measure of operating profit before net finance costs and taxation 
central costs comprises of network costs and central support costs central assets comprise mainly of corporate assets cash current and deferred tax balances 
the group manages its business segments on a national basis with all its operations in the uk as are nearly all of the customers 
intercompany transactions which are conducted on an arm’s length basis balances and unrealised gains on transactions between segments are eliminated
unrealised losses are also eliminated
no individual customer accounted for more than 5 of revenue in the periods included in these consolidated financial statements
business segments
the business segment results for the year ended 31 march 2014 are as follows
business segment
mail parcels courier pallets central total
£m £m £m £m £m £m
segmental revenue 2453 2199 189 271  5112
intersegment revenue   27   27
group revenue 2453 2199 162 271  5085
operating profitloss 127 224 27 09 160 227
finance income 02
finance costs 01
profit before taxation 228
taxation 53
profit attributable to equity shareholders 175
other segment items
capital expenditure including acquisitions
 property plant and equipment note 12 14 199   20 233
 intangible assets note 10 02   05 39 46
depreciation of property plant and equipment note 12
 owned assets 05 34   17 56
 under finance leases 05     05
amortisation of intangible assets note 10
 owned assets  01   11 12
 under finance leases     02 02
impairment of trade receivables  01 01   02
intangible assets 
1
03   08 164 175
property plant and equipment 
2
24 439   56 519
deferred tax assets    01 06 07
trade and other receivables 
3
498 349  81 07 935
eliminations 175   34  209
350 788  56 233 1427
cash and cash equivalents 15 42 05 222 274
total assets 365 830  51 455 1701
1 
including goodwill
2 
including investment properties
3 
including inventories
80   uk mail group plc the business segment results for the year ended 31 march 2013 are as follows
business segment
mail parcels courier pallets central total
£m £m £m £m £m £m
segmental revenue 2416 1893 188 280  4777
intersegment revenue   23   23
group revenue 2416 1893 165 280  4754
operating profitloss 107 163 26 08 127 177
finance income 02
finance costs 01
profit before taxation 178
taxation 43
profit attributable to equity shareholders 135
other segment items
capital expenditure including acquisitions
 property plant and equipment note 12 08 37  01 20 66
 intangible assets note 10 01   03 21 25
depreciation of property plant and equipment note 12
 owned assets 05 34 01  17 57
 under finance leases 06     06
amortisation of intangible assets note 10
 owned assets 01    12 13
 under finance leases     01 01
impairment of trade receivables  04  01  05
intangible assets 
1
02   03 139 144
property plant and equipment 
2
21 275 01 01 55 353
deferred tax assets    01 02 03
trade and other receivables 
3
492 300  89 05 886
eliminations 171   45  216
344 575 01 49 201 1170
cash and cash equivalents 12 11  04 263 282
total assets 356 586 01 45 464 1452
notes to the financial statements
report  accounts 81
strategic report governance financial statements 3 finance income – net
2014 2013
£m £m
interest receivable on
bank balances 02 02
finance income 02 02
interest payable on
other interest 01 
finance leases  01
finance costs 01 01
finance income  net 01 01
4 operating profit
2014 2013
£m £m
the following items have been chargedcredited in arriving at operating profit
royal mail access costs 2028 2018
subcontractor costs 1041 853
employee benefits expense note 5 711 660
cost of fuel inventories recognised included in cost of sales note 15 126 122
depreciation of property plant and equipment note 12 61 63
amortisation of intangibles included in administrative expenses note 10 14 14
loss on disposal of property plant and equipment 04 02
loss on foreign currency translation 01 
operating lease rentals payable 131 124
repairs and maintenance expenditure on property plant and equipment 48 44
operating lease rentals receivable 09 08
research and development 05 
trade receivables impairment included in administrative expenses 02 05
services provided by the companys auditor
during the year the group obtained the following services from the companys auditor and its associates
2014 2013
£000 £000
fees payable to the companys auditor for the audit of the parent company and consolidated financial statements 36 26
fees payable to the companys auditor and its associates for other services
 the audit of the companys subsidiaries pursuant to legislation 100 90
 other services pursuant to legislation 12 11
total audit and auditrelated services 148 127
tax compliance services  23
tax advisory services  7
all other services 1 14
total nonaudit services 1 44
total audit and nonaudit services 149 171
notes to the financial statements
82   uk mail group plc 5 employees and directors
employee benefit expense for the group during the year
2014 2013
£m £m
wages and salaries 631 596
social security costs 53 50
other pension costs 18 15
sharebased payments note 23 09 01
711 660
other pension costs all relate to defined contribution schemes
the monthly average number of people including executive directors employed by the group was
2014 2013
number number
by business group
mail services 214 200
parcel services 2164 2063
courier services 79 92
pallet services 117 127
central 182 167
2756 2649
key management compensation
2014 2013
£000 £000
salaries and shortterm employee benefits 2007 1794
postemployment benefits 104 113
termination benefits  73
sharebased payments 398 34
2509 1946
the key management figures given above include the main and operating board directors
directors’ remuneration
2014 2013
£000 £000
aggregate emoluments 1207 1002
pension costs 79 78
1286 1080 
pension contributions were made in respect of two 2013 two directors these contributions were paid as a supplement to the directors salaries as detailed in
the remuneration report
further details of director’s emoluments are set in the remuneration report
notes to the financial statements
report  accounts 83
strategic report governance financial statements 6 taxation
2014 2013
£m £m
analysis of charge in period
current tax  current year 56 47
total current tax 56 47
deferred tax note 20  current year 03 03
deferred tax note 20  prior years  01
total deferred tax 03 04
taxation 53 43
the differences between the total current tax shown above and the amount calculated by applying the standard rate of uk corporation tax to the profit before tax
are explained below
2014 2013
£m £m
profit before taxation 228 178
profit before taxation multiplied by the standard rate of corporation tax in the uk of 23 2013 24 53 43
effects of
expenses not deductible for tax purposes 02 02
effect of change in tax rate 01 01
adjustment in respect of prior years 01 01
total tax charge 53 43
£03m 2013 £nil of deferred tax has been credited directly to equity in respect of share options
a reduction in the uk corporation tax rate from 24 to 23 effective 1 april 2013 was substantively enacted on 3 july 2012  further reductions to 21
effective from 1 april 2014 and 20 effective from 1 april 2015 were substantively enacted on 2 july 2013  this will reduce the companys future current
tax charge accordingly 
the net deferred tax liability at 31 march 2014 has been calculated based on the rates of 20 and 21 substantively enacted at the balance sheet date
7 dividends
2014 2013
group and company £m £m
final dividend paid in respect of prior year 1240p 2012 1180p per 10p share 68 64
interim paid in respect of current year 710p 2013 640p per 10p share 39 35
107 99
in addition the directors are proposing a final dividend in respect of the financial year ending 31 march 2014 of 142p per share which will absorb an estimated
£78 million of shareholders funds it will be paid on 25 july 2014 to shareholders who are on the register of members on 27 june 2014
notes to the financial statements
84   uk mail group plc notes to the financial statements
8 earnings per share
basic earnings per share is calculated by dividing the profit for the year the earnings attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year excluding those held in the employee share ownership trust note 22 which are treated as cancelled
for diluted earnings per share the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares
the group has two classes of dilutive potential ordinary shares those share options granted to employees where the exercise price is less than the average
market price of the companys ordinary shares during the year and the contingently issuable shares under the groups long term incentive plan
reconciliations of the earnings and weighted average number of shares used in the calculations are set out below
2014 2013
weighted weighted
average per share average per share
earnings number of amount earnings number of amount
£m shares pence £m shares pence
basic eps
earnings attributable to ordinary shareholders 175 54705627 320 135 54632719 247
effect of dilutive shares
options  202631 01  75042 01
long term incentive plan  64039   
diluted eps 175 54972297 319 135 54707761 246
9 goodwill
2014 2013
group £m £m
cost and net book value  
at 1 april and 31 march 95 95
as required under ias 36 impairment of assets goodwill has been allocated to the lowest level of cashgenerating unit as follows
2014 2013
goodwill by segment £m £m
courier services 16 16
pallet services 79 79
net book value at 31 march 95 95
the goodwill carried in the courier services segment represents goodwill acquired on the acquisition of bxt limited in february 2003 the groups courier
operations were consolidated under single management during the year ended 31 march 2007 and as a result are now all reported in the books of uk mail
limited
the goodwill carried in the pallet services segment represents goodwill acquired on the acquisition of uk pallets ltd in july 2003
goodwill is tested for impairment at least annually the recoverable amount of the cgu is based on a value in use calculation using cash flow forecasts based
on the 201415 budget as approved by the board extrapolated over the following four years in line with the groups three year plan as approved by the board
and management estimates of the individual cgus growth rate thereafter the growth rate has assumed to be in line with the anticipated long term gdp rate of
the uk economy pretax discount rates derived from the groups pretax weighted average cost of capital are then applied to the projections
the key assumptions used in testing for impairment are as follows
 the 201415 budget year 1
 the rates of growth in years 2 to 5
 the longterm gdp growth rate of the uk economy
 the pretax discount rate used
budget 201415
the 201415 budgets were initially prepared by the management team of each cgu based on their detailed knowledge and experience of their own cgu these
budgets have subsequently been approved by the board following detailed discussions with management and rigorous testing of the underlying assumptions
noncash items have been added back to profit before interest and taxation in order to determine the cash flow for each cgu
rates of growth in years 2 to 5
the rates of growth in years 2 to 5 are based on the groups approved three year plan for years 2 and 3 and managements best estimates for years 4 and 5
based on past performance  expectations for future business development and known business initiatives the growth rates are in the range of 20 to 94
pa 2013 15 to 54 pa
long term gdp rate of the uk economy
the anticipated minimum long term gdp growth rate of the uk economy has been estimated at 175 pa 2013 175 pa
report  accounts 85
strategic report governance financial statements notes to the financial statements
pretax discount rate
the discount rate applied to a cgu represents a pretax rate that reflects the groups weighted average cost of capital
the pretax discount rate used is 83 2013  89
sensitivity to changes in assumptions
impairment testing is dependent on managements estimates and judgements in particular in relation to the forecasting of future cash flows and the discount
rate applied to those cash flows sensitivity analysis has been performed for these key assumptions
growth of market and market share
management has considered the impact of a variance in the growth of the market and market share for each cgu and believe that there is no reasonable
potential change in any of the key assumptions used that would cause the carrying value of the courier services cgu to exceed its recoverable amount
the value in use calculation for the pallet services cgu shows that if the forecasted market growth rates were only 67 achieved or the discounted cash flows
should fall by 65 the recoverable amount would be greater than its carrying value
pretax discount rate
management has considered the impact of an increase in the pretax discount rate applied to this calculation the value in use calculation shows that if the
pretax discount rate was increased to 25 the recoverable amount of each cgu would still be greater than its carrying value indicating no impairment
market structure
management believe that there will be no structural changes in either the palletised goods or courier markets which will affect these forecasts 
10 intangible assets
customer acquired internal software
lists software licences developments total
group £m £m £m £m
cost 
at 1 april 2013  45 60 105
additions  04 42 46
disposals  05 05 10
at 31 march 2014  44 97 141
accumulated amortisation
at 1 april 2013  24 32 56
charge for the year  05 09 14
disposals  05 04 09
at 31 march 2014  24 37 61
net book value at 31 march 2014  20 60 80
customer acquired internal software
lists software licences developments total
group £m £m £m £m
cost
at 1 april 2012 01 35 49 85
additions  11 14 25
disposals 01 01 03 05
at 31 march 2013  45 60 105
accumulated amortisation
at 1 april 2012 01 20 26 47
charge for the year  05 09 14
disposals 01 01 03 05
at 31 march 2013  24 32 56
net book value at 31 march 2013  21 28 49
amortisation of customer lists is charged through cost of sales software related amortisation charges have been charged through administrative expenses
86   uk mail group plc notes to the financial statements
11 investment properties
2014 2013
group £m £m
cost
at 1 april 26 26
at 31 march 26 26
accumulated depreciation
at 1 april 08 08
charge for the year  
at 31 march 08 08
net book value at 31 march 18 18
one 2013 one investment property is held by the group located in the west midlands and is being sublet under an operating lease the lease is due to expire on
23 june 2014 the rental income recognised in the year was £03m 2013 £03m direct operating expenses incurred were £nil 2013 £nil
the property was valued in march 2013 by the group property manager by reference to recent comparable property transactions in the same area at £24m to £25m
the property was last externally valued by qualified professional valuers working for the company of dtz debenham tie leung chartered surveyors acting in the
capacity of external valuers in december 2010 at £2445000 all such valuers are chartered surveyors being members of the royal institution of chartered surveyors
rics dtz debenham tie leung is a wholly owned subsidiary of dtz holdings plc the dtz group a part of the ugl service group in the financial year to 30 april
2013 the proportion of total fees payable by the group to the total fee income of the ugl service group was less than 5 the valuation was primarily derived using
comparable recent market transactions on arms length terms the valuation was carried out in accordance with the rics appraisal and valuation standards
12 property plant and equipment
motor
short vehicles
freehold land leasehold plant and computer
and buildings buildings equipment equipment total
group £m£m£m£m £m
cost 
at 1 april 2013 218 35 357 122 732
additions 133 03 76 21 233
disposals  04 46 25 75
at 31 march 2014 351 34 387 118 890
accumulated depreciation
at 1 april 2013 53 19 240 85 397
charge for the year 05 03 36 17 61
disposals  03 43 23 69
at 31 march 2014 58 19 233 79 389
net book value at 31 march 2014 293 15 154 39 501
report  accounts 87
strategic report governance financial statements notes to the financial statements
motor
short vehicles
freehold land leasehold plant and computer
and buildings buildings equipment equipment total
group £m £m £m £m £m
cost
at 1 april 2012 218 36 337 114 705
additions  03 43 20 66
disposals  04 23 12 39
at 31 march 2013 218 35 357 122 732
accumulated depreciation
at 1 april 2012 48 19 223 81 371
charge for the year 05 04 38 16 63
disposals  04 21 12 37
at 31 march 2013 53 19 240 85 397
net book value at 31 march 2013 165 16 117 37 335
two of the group’s properties included above with a net book value of £40m have been given as security against advanced payments for compensation received
from hs2 ltd
13 assets held under finance leases
property plant and equipment intangible
motor vehicles property plant acquired software licences
and equipment
2014 2013 2014 2013
£m £m £m £m
cost 43 44 19 09
additions    10
accumulated depreciation 33 37 10 10
disposals 08 01 02 
net book value 02 06 07 09
the majority of the leases are for an initial contractual period of 67 years with options to renew for varying further periods at fixed rates the interest rate
inherent in the lease is fixed at the contract date for the term of the lease
14 investments
company
noncurrent investments 2014 2013
£m £m
cost of investments in subsidiaries
at 1 april 187 188
increasedecrease in investments in subsidiaries  sharebased payments 09 01
at 31 march 196 187
a list of the principal subsidiary undertakings is given in note 30
88   uk mail group plc notes to the financial statements
15 inventories
2014 2013
£m £m
fuel stock 02 03
16 trade and other receivables
group company
2014 2013 2014 2013
£m £m £m £m
trade receivables 573 522  
less provision for impairment 01 01  
trade receivables net of provisions for impairment 572 521  
amounts due from subsidiary undertakings    
other debtors 21 31  
prepayments and accrued income 131 115  01
724 667  01
further information on the credit risks relating to trade and other receivables is given in note 24
company
amounts due from subsidiary undertakings bear interest at a rate linked to the london inter bank offer rate ‘libor’ are unsecured and are repayable on
demand
none 2013 none of the companys trade and other receivables were past due at the year end and the company does not consider it necessary to provide for
any impairments
17 cash and cash equivalents
cash and cash equivalents include the following for the purpose of the cash flow statement
group company
2014 2013 2014 2013
£m £m £m £m
cash at bank and in hand 274 282 222 263
the effective interest rate receivable on the cash and bank balances was approximately 10 2013 13 accruing on a daily basis
report  accounts 89
strategic report governance financial statements notes to the financial statements
18 trade and other payables  current
group company
2014 2013 2014 2013
£m £m £m £m
trade payables 429 397  
other payables 71 44   
amounts owed to franchises 19 19   
amounts owed to subsidiary undertakings   35 76
other taxes and social security payable 132 131  
accruals 151 151  
deferred compensation 26     
deferred income 01 01   
829 743 35 76
trade and other payables – non current
group company
2014 2013 2014 2013
£m £m £m £m
deferred compensation 89   
89   
amounts owed to subsidiary undertakings bear interest at a rate linked to libor are unsecured and are repayable on demand
two of the group’s properties have been given as security against advanced payments for compensation received from hs2 ltd total deferred compensation
of £115m relates to amounts received by the group in respect of reimbursements for operating expenditure business disruption costs and capital expenditure
resulting from the compulsory purchase of the group’s national hub 
19 borrowings
group company
2014 2013 2014 2013
£m £m £m £m
current
amounts due within one year or on demand
finance lease obligations see note 24 04 08  
04 08  
noncurrent
amounts due after one year
finance lease obligations see note 24  04  
 04  
the minimum lease payments under finance leases fall due as follows
group company
2014 2013 2014 2013
£m £m £m £m
amounts payable under finance leases
within one year 04 08  
between one and five years  04  
total minimum lease payments 04 12  
future finance charges    
present value of finance leases 04 12  
90   uk mail group plc notes to the financial statements
20 deferred tax
deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 20 2013 23
the movement on the deferred tax asset account is as shown below
group company
2014 2013 2014 2013
deferred tax assets £m £m £m £m
at 1 april 03 04  
credit to equity 03   
creditcharge to income statement 01 01  
at 31 march 07 03  
deferred tax assets which largely relate to share based payments are calculated on the difference between the market price at the balance sheet date and the
option exercise price the excess of the deferred tax over the cumulative income statement charge is recognised in equity
there are no unrecognised deferred tax assets
the movement on the deferred tax liability account is as shown below
group company
2014 2013 2014 2013
deferred tax liabilities £m £m £m £m
at 1 april 17 22  
credit to income statement 02 05  
at 31 march 15 17  
deferred tax liabilities which largely relate to accelerated capital allowances are calculated on the difference between the accounting net book value of the
asset and their carrying amount for tax purposes
deferred tax assets and liabilities are expected to be recovered as follows
group company
2014 2013 2014 2013
deferred tax assets £m £m £m £m
within 12 months 01 01  
after 12 months 06 02  
at 31 march 07 03  
deferred tax liabilities
within 12 months 02 04  
after 12 months 13 13  
at 31 march 15 17  
£03m deferred tax was credited to equity during the year 2013 £nil no deferred tax was credited to equity in the company 2013 £nil
report  accounts 91
strategic report governance financial statements notes to the financial statements
21 provisions
lease
dilapidations restructuring total
£m £m £m
at 1 april 08 05 13
provided in the year 04  04
utilised in the year 01 02 03
at 31 march 11 03 14
provisions have been analysed between current and noncurrent as follows
2014 2013
£m £m
current 04 03
noncurrent 10 10
14 13
lease dilapidations represent the anticipated expenditure resulting from the group’s contractual obligations to make good properties prior to subletting or reversion of
the lease in respect of leases expiring within one year and up to 14 years 
the timing of outflows is variable and is dependent not only on property lease expiry dates and opportunities to surrender leases but repair programmes and the results
of negotiation
restructuring relates to provisions arising following a change programme initiated in the financial year ended 31 march 2012 and relates to irrevocable property costs
which are expected to be utilised within one year and up to three years
22 ordinary shares
group and company 2014 2013
£m £m
authorised
70000000 2013 70000000 ordinary shares of 10p each 70 70
issued allotted and fully paid
2014 2013
ordinary shares of 10p each shares £m shares £m
at 1 april 54732981 55 54731471 55
allotted under share option schemes 1501  1510 
at 31 march 54734482 55 54732981 55
potential issues of ordinary shares
certain directors key managers and employees hold options to subscribe for shares in the company at prices ranging from nil to 41867p under share option
schemes approved by shareholders between 2004 and 2009 as follows
year of exercise exercise 2014 2013
scheme grant price period numbers numbers
sharesave scheme 2010  2013 18688p41867p 011015 to 010318 412187 350679
ltip 2012  2013 nil 291115 to 160923 716375 583513
smp 2013 nil 110616 to 111216 14199 
1142761 934192
employee share ownership trust
the companys employee share ownership trust holds shares in the company for subsequent transfer to employees under its incentive scheme awards shares
held by the trust are not voted at shareholder meetings and do not accrue dividends all other shares carry voting rights and accrue dividends
during the year the esot allotted 80503 ordinary shares of 10p each 2013 70978 with an aggregate nominal value of £8050 2013 £7098 to satisfy
exercises under the groups ltip and saye plans at an average price of 549p per share 2013 290p per share and repurchased 31811 ordinary shares of
10p each 2013 nil for a total consideration of £163373 2013 £nil following elections by participants to dispose of their shares
92   uk mail group plc notes to the financial statements
following the above transactions the trust held a total of 6801 shares with a market value of £44206 at 31 march 2013 2013 55493 shares with a market
value of £210318
23 sharebased payments
the group recognised a charge of £09m 2013 £01m credit in respect of equity settled sharebased payments during the year there have been no
cancellations or modifications to any of the plans during the year the main details of all the schemes which existed during the year are as follows
sharesave plan
the company has offered a saye share plan since 1996 to eligible employees including directors the plan is an hmrc approved allemployee share plan
hmrc does not permit performance conditions to be attached to the exercise of options under the plan participants are granted options over the companys
shares each participant may save between £5 and £250 per month to purchase shares in the company at a discount of up to a maximum 20 of the market
value at the time of the option grant
long term incentive plan ltip
the remuneration committee first introduced an ltip in 2004 as a more effective means of incentivising the companys senior management than the executive
share option scheme under the ltip the remuneration committee can grant options over shares in the company to employees of the company with a
contractual life of an option being between three and ten years  
the performance conditions attaching to any future awards granted under the plan were amended at the annual general meeting of the company held on 15
july 2009 such that 50 of an award is subject to a performance condition based on the companys annual earnings per share eps growth and 50 is
determined by the tsr performance of the company relative to all the other companies in the ftse all share index excluding investment trusts at the start
of the financial year in which an award is granted over a period of three financial years
additionally in order to further align the interests of participants with those of shareholders the rules of the plan were amended such that dividends accrue on
the shares comprised within the award to the extent that awards vest under the performance criteria the proportionate value of the accrued dividends thereon
will be satisfied as additional shares at the time of vesting
during the year ended 31 march 2014 the required targets under live ltip grants were as follows
1 vesting is on a sliding scale between the minimum and maximum points
awards made under the 2010 grant vested in may 2013 at a 1265 vesting level having met the threshold tsr condition however as the required eps was
below the required minimum threshold target level no awards vested under that condition successful award holders received a further 153 in respect of
their dividend equivalence entitlement
share matching plan smp
under the rules of the smp  selected executives may be invited to invest a portion of their bonus in the acquisition of company shares worth up to 25 of their
pretax salary however as detailed in the remuneration policy report the remuneration committee no longer considers this an appropriate means of
incentivising senior management with the last grant scheduled for july 2014
where such an investment is made the executives will receive a grant of a matching award over shares in the company with an equivalent value which may
be exercised between 36 and 42 months following the date of grant subject to the achievement of certain eps performance criteria further detail is provided
in the remuneration report on page 47
calculation of fair values
for equitysettled sharebased transactions fair values of share options awarded in the financial year are measured at the date of grant of the option using a
share pricing option model where the model is dependent on the companys tsr over a period the monte carlo model is used in all other circumstances
the blackscholes model is used nonmarket conditions such as the company meeting earnings per share targets are not incorporated into the calculation
of fair value at the grant date but are reflected in the amount of compensation expense accrued over the vesting period the expected life of options depends
on the behaviour of option holders which is incorporated into the option model consistent with historic observable data
year of grant
eps target range 1 tsr target range 1
threshold 25 vesting max 100 vesting threshold 25 vesting max 100 vesting outcome
2010 85 pa 130 pa median top quartile failed eps condition
253 vested under the
tsr condition
2013 72 pa 155 pa median top quartile live award
live award top quartile median 181 pa 116 pa 2012
report  accounts 93
strategic report governance financial statements notes to the financial statements
the fair values calculated are inherently subjective and uncertain due to the assumptions made and the limitations of the optionpricing model used the
significant assumptions used to estimate the fair value of the options granted in the financial year were as follows
ltip ltip smp saye
grant date 04062013 16092013 11062013 25072013
share price at grant date £510 £572 £495 £577
exercise price    £41867
number of employees 67 1 4 198
number of shares granted 512234 4939 14199 143650
vesting period years 3 3 3 3
expected volatility 296 296  285
option life years 3 3 3 3
expected life years 3 3 3 3
riskfree interest rate 052 052 na 063
expected dividends expressed as dividend yield 000 000 380 326
fair value per option £458 £458 £442 £150
expected forfeiture  150 150 00 na
the riskfree rate was determined by reference to the rate obtainable on uk government securities uk gilts with maturities commensurate with the expected
term remaining for each award the expected volatility is estimated by considering the companys historic average share price volatility over similar periods to
the expected life of the option under consideration in addition the expected dividend yield was based at the prevailing rates for the saye grants but is assumed
as zero for the ltip grant given the dividend equivalence term
reconciliation of option movements
a reconciliation of option movements over the year to 31 march 2014 is shown below
2014 2013
weighted weighted
average average
2014 exercise 2013 exercise
number price number price
outstanding as at 1 april 934192 £074 1284740 £056
granted 675022 £089 613948 £104
lapsed 389470 £032 893518 £056
exercised 76983 £108 70978 £227
outstanding as at 31 march 1142761 £095 934192 £074
exercisable at 31 march  
options are exercisable as follows
2014 2013
weighted weighted weighted weighted
average average average average
weighted remaining remaining weighted remaining remaining
average life life average life life
range of exercise number expected contracted exercise number expected contracted
exercise prices price of shares years years price of shares years years
£000  £099 £000 730574 21 89 £000 583513 12 81
£100  £199 £187 270401 19 21 £187 309900 29 31
£200  £299 £275 10330 18 20 £275 40779 14 16
£300  £399       
£400  £499 £419 131456 27 29   
94   uk mail group plc notes to the financial statements
24 financial instruments
the groups overall objective when managing financial risk is to safeguard its ability to continue as a going concern in order to provide returns for shareholders
and benefits to other stakeholders risk management is carried out by a central treasury function under written policies approved by the board under the
supervision of the group finance director the group treasury function identifies and evaluates financial risks in close cooperation with the operating divisions
the use of simple financial derivatives is considered in order to hedge specific financial risks where cost effective to do so the group does not enter into or
trade financial instruments including derivative financial instruments for speculative purposes at the year end the group has not entered into any financial 
derivatives contracts 2013 £nil
risks are inherent in the use of debt capital including interest rate risk additionally the group is routinely exposed to a number of other financial risks including
credit risk market risk liquidity risk and capital risk these are discussed below
classification of financial instruments
the tables below set out the group’s ias 39 classification for each of its financial assets and liabilities
group financial 
loans and liabilities at total carrying
receivables amortised cost value
at 31 march 2014 £m £m £m
cash at bank and in hand 274  274
borrowings due within one year  04 04
other financial assets 593  593
other financial liabilities  684 684
867 688 179
at 31 march 2013
cash at bank and in hand 282  282
borrowings due within one year  08 08
borrowings due after more than one year  04 04
other financial assets 552  552
other financial liabilities  624 624
834 636 198
company financial 
loans and liabilities at total carrying
receivables amortised cost value
at 31 march 2014 £m £m £m
cash at bank and in hand 222  222
other financial liabilities  35 35
222 35 187
at 31 march 2013
cash at bank and in hand 263  263
other financial liabilities  76 76
263 76 187
other financial assets comprise trade receivables and other receivables which are receivable within and after more than one year other financial liabilities
comprise trade payables accruals and other financial liabilities which are payable within and after more than one year
interest payable on financial instruments carried at amortised cost mainly comprising of bank overdraft and finance lease liabilities is disclosed in note 3 
report  accounts 95
strategic report governance financial statements notes to the financial statements
contractual cashflows
the contractual profile of the financial liabilities at 31 march is set out below the amounts disclosed are the contractual undiscounted cash flows and therefore
include interest cash flows forecast using libor interest rates as at 31 march in the case of floating rate financial assets
and liabilities the table also compares the book value and the fair value of the group’s financial assets and liabilities fair value is the amount at which a
financial instrument could be exchanged in an arms length transaction between informed and willing parties other than a forced or liquidation sale and
excludes accrued interest 
group total between between
contractual one and two and
book fair cash within two five over five
value value flows one year years years years
at 31 march 2014 £m £m £m £m £m £m £m
financial liabilities
finance leases 04 04 04 04   
trade payables 429 429 429 429   
other payables 71 71 71 71   
amounts owed to franchises 19 19 19 19   
accruals 151 151 151 151   
provisions 14 14 14 04 04 04 02
688 688 688 678 04 04 02
total between between
contractual one and two and
book fair cash within two five over five
value value flows one year years years years
at 31 march 2013 £m £m £m £m £m £m £m
financial liabilities
finance leases 12 12 12 08 04  
trade payables 397 397 397 397   
other payables 44 44 44 44   
amounts owed to franchises 19 19 19 19   
accruals 151 151 151 151   
provisions 13 13 13 03 05 03 02
636 636 636 622 09 03 02
company total between between
contractual one and two and
book fair cash within two five over five
value value flows one year years years years
at 31 march 2014 £m £m £m £m £m £m £m
financial liabilities
amounts owed to
subsidiary undertakings 35 35 35 35   
total between between
contractual one and two and
book fair cash within two five over five
value value flows one year years years years
at 31 march 2013 £m £m £m £m £m £m £m
financial liabilities
amounts owed to
subsidiary undertakings 76 76 76 76   
96   uk mail group plc notes to the financial statements
all financial assets and liabilities stated at fair value in the table above have carrying amounts where the fair value component is a level two fair value
measurement level two fair value measurements use inputs other than quoted prices that are observable for the relevant asset or liability either directly or
indirectly
the fair value of the bank loan approximates to the value reported in the balance sheet since it carries a floating rate where payments are reset to market rates
at intervals less than one year the value of finance leases is calculated by discounting the contracted cash flows at prevailing interest rates
all financial assets and liabilities are sterling denominated
fair value measurements
the group does not have any material financial instruments held at fair value
accordingly the three level hierarchy required by ifrs has not been presented
credit risk
credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations these risks
arise principally from the credit exposure to trade receivables as well as from cash and cash equivalents
the maximum exposure to credit risk is represented by the book value of each financial asset as recorded in the balance sheet
cash and cash equivalents held by the group include bank balances and short term deposits with a maturity of one week or less the credit risk on these liquid
funds is limited because in all cases the counterparties are banks with high credit ratings confirmed by international creditrating agencies
the group has no significant concentrations of credit risk concentrations of credit risk to trade receivables are limited due to the group’s customer base being
large and unrelated with no one customer accounting for more than 71 of trade receivables the group has implemented policies that require appropriate
credit checks on potential customers before sales commence and strict credit control of outstanding amounts trade credit insurance is employed to protect
any significant exposure to bad debts
trade receivables that are neither past due nor impaired are expected to be fully recovered as there is no recent history of default or any indications that the
debtors will not meet their payment obligations at the year end there are no trade receivables 2013 none whose terms have been renegotiated and would
otherwise be past due or impaired
impaired receivables mainly relate to debtors in financial difficulty where defaults in payments have occurred liability for payment is disputed or debtors have
entered into bankruptcy trade receivables are impaired when there is objective evidence that the group will not be able to collect all amounts due according
to the original terms however the group expects a portion of these receivables to be recovered
the group does not hold any material collateral as security and no assets have been acquired through the exercise of any collateral previously held
the groups trade receivables are stated after allowances for bad and doubtful debts an analysis of which is as follows
2014 2013
£m £m
at 1 april 01 02
amount released through administrative expenses  01
at 31 march 01 01
as at 31 march the ageing analysis of trade receivables before provisions is as follows
2014 2013
£m £m
less than 30 days 571 519
between 30  60 days  01
between 60  90 days  01
more than 90 days 01 01
572 522
report  accounts 97
strategic report governance financial statements notes to the financial statements
as at 31 march 2014 trade receivables of £01m 2013 £01m were impaired the amount of the provision was £01m at 31 march 2014 2013 £01m
the ageing of these impaired trade receivables is as follows
2014 2013 
£m £m
less than 30 days  
between 30  60 days  
between 60  90 days  
more than 90 days 01 01
01 01
as of 31 march 2014 trade receivables of £51m 2013 £78m were past due but not impaired these relate to a number of  independent customers for whom
there is no recent history of default and there are no indications that they will not meet their payment obligations in respect of the trade receivables recognised
in the balance sheet that are past due and unprovided the ageing analysis of these trade receivables is as follows
2014 2013 
£m £m
less than 30 days 51 74
between 30  60 days  01
between 60  90 days  01
more than 90 days  02
51 78
at 31 march 2014 there were £nil 2013 £nil trade receivables impaired but not past due for payment
none 2013 none of the other classes of financial assets within trade and other receivables contain impaired assets
credit quality of cash at bank and shortterm deposits
the credit quality of cash at bank and shortterm deposits is as follows
2014 2013
£m £m
current rating moody’s
a2 10 282
a3 264 
total 274 282
98   uk mail group plc notes to the financial statements
market risk
overall since the vast majority of the groups activities are provided to uk businesses the fortunes of the group are linked to the general health of the uk
economy the groups exposure is limited by being spread across a wide range of customers no customer accounts for more than 5 of revenue
price risk
royal mail access costs represent a significant cost to the group price risk is limited as ofcom is mandated to maintain sufficient headroom between retail
and access prices such that competition is encouraged within the mail industry
whilst fuel costs only constitute approximately 3 of total costs there is an element of price risk price risk is minimised as significant increases in the fuel
price can be passed onto the majority of customers via a fuel surcharge mechanism common throughout the express delivery industry
interest rate risk
the interest risk profile of the groups interestearning financial assets and interestbearing financial liabilities at 31 march 2014 was
2014 2013
fixed rate floating fixed rate floating
financial rate financial financial rate financial
book value assets assets book assets assets
total liabilities liabilities value total liabilities liabilities
£m £m £m £m £m £m
financial assets
cash and cash equivalents 274  274 282  282
274  274 282  282
financial liabilities
finance leases 04 04  12 12 
04 04  12 12 
group treasury monitor cash and cash equivalent balances on a daily basis placing surplus funds with approved financial institutions generally overnight
interest receivable is based on a rate linked to the base rate the group has additionally made a number of longer term deposits where the interest rate receivable
has been agreed on inception with the monies being able to be called back at immediate notice without penalty
the interest rate payable on finance leases is fixed at the inception of any agreement
the group has used a sensitivity analysis technique that measures the estimated change to profit before tax and equity of a 1 100 basis points difference
in interest rates from the rates applicable at the balance sheet date with all other variables remaining constant this being considered a reasonable possible
change to interest rates that could have affected the group
a change of 100 basis points in the average interest rate receivable and payable over the financial year would have increased or decreased profit before tax and
equity for the year as follows
2014 2013
profit profit
before tax equity before tax equity
£m £m £m £m
increase of 100 bp in the average rate receivablepayable 02 01 02 02
decrease of 100 bp in the average rate receivablepayable 02 01 02 02
report  accounts 99
strategic report governance financial statements notes to the financial statements
liquidity risk
the groups business activities together with the factors likely to affect its future development performance and position are set out in the strategic report the
financial position of the group its cash flows liquidity position and treasury risk management approach are described in the financial review on pages 16 to
19 and its borrowing facilities detailed in note 26
liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due
the board reviews both the long and shortterm financing requirements of the group to ensure that there are sufficient available funds both for the daytoday
operations of the group and for planned capital investments the group has considerable financial resources together with longterm contracts with a wide
range of public and private sector customers and suppliers across different geographic areas and industries as a consequence the directors believe that the
group is well placed to manage its business risks successfully despite the current economic outlook
as at 31 march 2014 the group had an undrawn committed overdraft facility of £5m 2013 £5m in place until 30 june 2014 and an undrawn committed
money market facility of £7m 2013 £7m in place until 30 november 2014
capital risk
the capital structure of the group consists of debt cash and cash equivalents and equity attributable to the parent company  the group’s policy has been to
maintain a strong capital base in order to maintain investor creditor and market confidence and to sustain future development of the business the board’s
objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure this includes maintaining the level of dividends at a level commensurate with underlying
operating profitability of the group and obtaining sufficient short and mediumterm debt facilities that are appropriate for the needs of the business
the board seeks to maintain a balance between the level of debt which for these purposes includes finance leases and the advantages and security afforded
by a sound capital position
in order to maintain or adjust the capital structure the group may adjust the amount of dividends paid to shareholders return or issue share capital to
shareholders draw on borrowing facilities or sell assets to reduce debt
an analysis of the group’s net cashdebt position is given in note 28
25 operating lease commitments  minimum lease payments
at 31 march the group had total commitments under noncancellable operating leases as follows
group group
2014 2013
vehicles vehicles
land and plant and land and plant and
buildings equipment buildings equipment
£m £m £m £m
commitments under noncancellable operating leases expiring
within one year 53 57 52 54
between one and two years 41 35 40 28
between two and five years 70 59 59 26
after five years 48 01 35 08
at 31 march 212 152 186 116
the group leases various properties under noncancellable operating lease agreements the leases have various terms escalation clauses and renewal rights
the group also leases vehicles and office equipment under noncancellable operating lease agreements which are generally negotiated for an average term of
four years during which time the rentals are fixed
100   uk mail group plc notes to the financial statements
the group sublets one of its properties see note 11 under a noncancellable operating lease agreement due to expire on 23 june 2014 at 31 march the
future minimum lease payments receivable were as follows
2014 2013
£m £m
commitments under noncancellable operating leases expiring
within one year 01 03
between one and two years  01
at 31 march 01 04
26 contingent liabilities
the company has guaranteed bank and other borrowings of subsidiary undertakings in a crossguarantee agreement on an undrawn group borrowing facility
amounting to £12m 2013 £12m
the group has a bank guarantee agreement with lloyds bank plc under which the bank provides a facility which allows the group to request that the bank issue
guarantees to third party suppliers for general business purposes the maximum total facility value is £110m 2013 £10m  at 31 march 2014 upon the
request of the group the bank has issued a guarantee with a value of £8m 2013 £8m to a third party supplier of a subsidiary company
the group has a documentary credit facility with lloyds bank plc of £14m 2013 £17m in respect of letters of credit opened with the bank
the group is subject to litigation from time to time as a result of its activities the group establishes provisions in connection with litigation where it has a
present legal or constructive obligation as a result of past events and where it is more likely than not that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated since these provisions which are reflected in the group’s consolidated financial statements represent
estimates the final resolution of any such matters could have a material effect on the group’s operating results and cash flows for a particular reporting period
27 capital and other financial commitments
at 31 march 2014 amounts contracted for but not provided in the financial statements amounted to £299m 2013 £nil are as follows
total
£m
assets under the course of construction 171
property plant and equipment 128
total 299
it is anticipated that £297m will be incurred within one year with the remaining £02m between one and two years
28 analysis of net cash
group
at 31 march at 31 march at 31 march
2012 cash flow other 2013 cash flow other 2014
£m £m £m £m £m £m £m
cash at bank and in hand 216 66  282 08  274
total cash 216 66  282 08  274
debt due within one year 10 10    
debt due after one year 10 10    
finance leases 12 08 08 12 08  04
total debt 32 28 08 12 08  04
net cash 184 94 08 270   270
report  accounts 101
strategic report governance financial statements notes to the financial statements
company
at 31 march at 31 march at 31 march
2012 cash flow other 2013 cash flow other 2014
£m £m £m £m £m £m £m
cash at bank and in hand 175 88  263 41  222
total cash 175 88  263 41  222
debt due within one year 10 10    
debt due after one year 10 10    
total debt 20 20    
net cash 155 108  263 41  222
29 related party transactions
the group has identified the directors of the company parties related to the directors its key management its esot see note 22 and its subsidiaries note
30 as related parties for the purpose of ias 24 ‘related party disclosures’
material transactions and year end balances with related parties were as follows
2014 2013
£000 £000
dividends paid by uk mail group plc and received in a beneficial capacity by
 the directors of uk mail group plc 740 686
 parties related to the directors of uk mail group plc 4191 3946
 pdmr’s of uk mail group plc other than above 5 6
dividends received by the ultimate parent company from subsidiaries 11005 10000
amounts owed to subsidiary undertakings 3465 7640
interest free loan to esot see note 22 3536 3438
p kane a director of the company and members of his close family and certain family trusts the beneficiaries of which are persons connected with p kane
control directly and indirectly 434 of the issued share capital of the company
key management compensation is disclosed in note 5
30 principal subsidiaries
at 31 march 2014 the company had the following principal wholly owned trading subsidiaries all operating within the uk
percentage of nominal value
country of description of of issued shares held by
subsidiary nature of business incorporation shares held the group
uk mail ltd collection and delivery of parcels and mail england ordinary £1 shares 100
uk pallets ltd collection and delivery services for palletised goods england ordinary £1 shares 100
the company holds 100 of the voting rights of each of the above subsidiaries
the financial results of all of the subsidiaries listed above are included within the consolidated financial statements the company also holds investments in
other subsidiaries which are not trading and which do not require a statutory audit
102   uk mail group plc notes to the financial statements
31 critical accounting judgements and key sources of estimation uncertainty
the groups accounting policies are set out in note 1 to these financial statements management is required to exercise significant judgement in the application
of these policies areas which management believes require the most critical accounting judgements are as follows apart from those policies involving
estimation which are outlined in b below
a critical accounting judgements in applying the groups accounting policies
exceptional items
the directors consider that items of income or expense which are material by virtue of their nature and amount should be disclosed separately if the financial
statements are to fairly present the financial performance of the group the directors label these items collectively as exceptional items
determining those transactions which are to be considered exceptional is often a subjective matter however circumstances that the directors believe would
give rise to exceptional items requiring separate disclosure would include
i loss or cessation of a material contract representing 5 or more of the groups revenues
ii disposal of noncurrent assets where the profit or loss represents 5 or more of the groups profit before tax
iii disposal of investments
iv organisational or restructuring programmes
leases
in determining whether a lease is a finance lease or an operating lease management is required to evaluate where the substantial risks and rewards reside
where management conclude that the arrangement constitutes a finance lease then it is necessary to both calculate the proportion of the payment which should
be treated as finance cost and capital repayment and to judge the likely period of use at the inception of the agreement
hs2 accounting
the directors have considered the contractual terms in determining the accounting treatment of the hs2 national hub acquisition and compensation contract
the key area of judgement include the timing of recognition specifically in relation to compensation payments where management assumptions are necessary
b key sources of estimation uncertainty
estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances  management makes estimates and assumptions about the future which will by definition seldom equal
the related actual results the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below
useful economic lives of property plant and equipment and intangible assets
depreciation of property plant and equipment and amortisation of intangible assets are charged so as to write down the value of those assets to their residual
value over their respective useful lives the directors are required to assess both the useful economic lives of the assets so that depreciation or amortisation
is charged on a systematic and proportionate basis and their probable residual values
the company assesses whether there are any indicators of impairment at each reporting date or at other times when such indicators exist when valueinuse
calculations are undertaken management must estimate the expected future cash flows from the asset
sharebased payments
the group measures the cost of equitysettled transactions with employees by reference to the fair value of the equity instruments at the date at which they are
granted estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments which is dependent on the terms and
conditions of the grant this also requires determining the most appropriate inputs to the valuation model including the expected life of the option volatility
and dividend yield and making assumptions about them
further detail of the assumptions used are detailed in note 23
goodwill impairment
goodwill impairment is tested for at least annually by calculating the estimated recoverable amount from each cashgenerating unit cgu on a valueinuse
basis in performing the test management needs to assess and consider
i the likely sales and cost growth assumptions used by the cgu
ii the sector specific short and longterm growth rates as well as that in the uk economy as a whole
iii the pretax discount rate applicable to the company
the carrying value of goodwill and the key assumptions used in performing the annual impairment assessment are disclosed in note 9
report  accounts 103
strategic report governance financial statements notes to the financial statements
recoverability of trade receivables
trade receivables are stated in the balance sheet at their nominal value less any appropriate provision for irrecoverable amounts in determining whether
provision is required against any trade receivable judgment is required in estimating the likely levels of recovery in exercising this judgment consideration is
given to both the overall economic environment in which a debtor operates as well as specific indicators that the recovery of the nominal balance may be in
doubt for example days’ sales outstanding in excess of agreed credit terms or other qualitative information such as historical trend the directors also consider
debtor specific circumstances
taxation
the group has from time to time deferred tax assets andor deferred tax liabilities judgement is required in the assessment of the future recoverability of
deferred tax assets as to both quantum and timing and the probability timing and size of any deferred tax liabilities that may become payable
provisions
the group has provided for the estimated cost of making good properties on cessation of the lease this requires the directors to make an assessment of the
potential cost of the work as at the reporting date however these costs will not be immediately incurred and on an ongoing basis the group maintains its
properties through a programme of repair and renewal which may result in changes required in the carrying value of these provisions
the group has previously provided for the estimated costs of reorganisation which involved making significant estimates for employee termination costs
onerous lease and other exit costs and to realisable values of assets made redundant or obsolete should the actual amounts differ from these estimates future
results could be materially impacted
104   uk mail group plc five year summary of results
2014 2013 2012 2011 2010
£m £m £m £m £m
revenue 5085 4754 4290 3958 3852
cost of sales 4403 4207 3804 3473 3335
gross profit 682 547 486 485 517
administrative expenses 455 370 357 323 338
operating profit 227 177 129 162 179
net finance incomecosts 01 01  01 01
profit before taxation 228 178 129 161 178
taxation 53 43 35 45 51
profit for the financial year 175 135 94 116 127
earnings per share  basic 320p 247p 173p 212p 234p
dividends per share  interim paid and final proposed 213p 188p 182p 182p 182p
 administrative expenses and taxation are stated inclusive of £22m cost and £06m exceptional credit respectively
the calculation of earnings per share for the five years ended 31 march 2014 is based on the following weighted numbers of shares in issue
31 march 2014 54705627
31 march 2013 54632719
31 march 2012 54586755
31 march 2011 54522247
31 march 2010 54245126
report  accounts 105
strategic report governance financial statements shareholder information
registrars and transfer office
equiniti
aspect house
spencer road
lancing
west sussex
bn99 6da
tel 0871 384 2799 or 0871 384 2255 text phone for shareholders with hearing difficulties
the call centre provides information and assistance on register queries between 830am and 530pm monday to friday excluding uk public holidays
calls to this number are charged at 8p per minute plus network extras
international callers 44 0 121 415 7047
wwwshareviewcouk
financial calendar
25 june 2014 exdividend date – final dividend
27 june 2014 record date to be eligible for the final dividend
9 july 2014 interim management statement – qtr 1
9 july 2014 annual general meeting commences 1200 noon
25 july 2014 payment of the final dividend for the year ended 31 march 2014
november 2014  results for the half year to 30 september 2014
january 2015  payment of interim dividend for the year ending 31 march 2015
provisional dates
sharegift
sometimes shareholders have only a small holding of shares which may be uneconomical to sell shareholders who wish to donate these shares to charity
can do so through sharegift an independent charity share donation scheme registered charity no 1052686 further information about sharegift may be
obtained from sharegift on 020 7930 3737 or at wwwsharegiftorg
shareholder security
shareholders are advised to be cautious about any unsolicited financial advice offers to buy shares at a discount or offers of free company reports further
information can be found at wwwmoneyadviceserviceorguk 
independent auditors stockbrokers and financial advisers
pricewaterhousecoopers llp investec investment banking
the atrium 2 gresham street
1 harefield road london
uxbridge ec2v 7qp
ub8 1ex
registered office
express house
120 buckingham avenue
slough
berkshire
sl1 4lz
tel  01753 706 070
email investorukmailcom
wwwukmailcom
company no 02800218
forward looking statements
the annual report contains certain statements about the future outlook for the group although the company believes that the expectations are based on reasonable
assumptions any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different
106   uk mail group plc


Summary:
 these results reflect an excellent year for
uk mail with increased revenues and
strong margin progression we have also
achieved profitable growth across all areas
of the business
chief executive’s statement
7
uk mail report  accounts 2014          strategic report
these results reflect an excellent year for uk mail with increased revenues and
strong margin progression  we have also achieved profitable growth across all
areas of the business  such a robust performance shows that we have
accomplished almost all that we set out to achieve through the programme of
investment and change over recent years
we continue to benefit from our strong market positions across our business
thanks to our efficient integrated network and high service levels  during march
2014 we experienced the highest ever daily volumes across our combined
parcels and mail businesses given the group’s continued focus on network
management we maintained our strong customer service levels
reported group revenues for the year at £5085m were up 70 compared to the
previous year  adjusting for there being four extra working days than in the
previous year underlying group revenues increased by 53  group profit
before tax increased by 282 on the previous year to £228m we estimate that
each extra working day equates to some £05m of contribution  adjusting for
this factor the underlying increase in profit before tax was some 170
our parcels business 43 of group revenues continued to deliver a good
performance with high volumes throughout the year leading to an increase in
market share and a doubledigit operating margin of 102 2013 86 this
volume growth was partly driven by an increase in home deliveries related to
online shopping with a continuation of the mix change towards b2c that we
have previously seen  revenues grew by 162 to £2199m 2013 £1893m
and operating profit grew strongly by 372 to £224m 2013 £163m as we
continued to focus on innovation and operational efficiency to help drive margin
improvement
our mail business 48 of group revenues showed a 15 increase in revenues
for the year alongside a positive uplift in volumes driven by strong customer
retention and new business wins our mail volumes increased by some 20
compared to the prior year while the overall uk mail market has seen a decline
in transactional volumes of some 5 per annum in recent years operating profit
increased by 180 to £127m 2013  £107m and the operating margin
increased to 52 2013 44  our mail business remains well positioned in
its market with a healthy pipeline of new business opportunities  we again saw
good progress from imail and other new product innovations
our courier business 3 of group revenues saw an improving trend of revenue
throughout the year however for the full year revenues declined by 19 strong
operational management reduced operating costs helping to increase the operating
margin to 170 for the period 2013 155 leading to 72 growth in operating
profit to £27m 2013 £26m
in our pallets business 6 of group revenues revenues declined by 32 however
operating profit increased by 188 to £09m 2013  £08m
the move of our head office and national hub to a newly constructed site in 2015
will be a major change for our business  the new automated hub will be a
significant major step forward in how we operate creating extra capacity and
reducing operating costs the move however will create challenges as we relocate
with a key objective being to retain the knowledge and experience of our teams we
have instigated a programme to manage this change which will involve substantial
engagement with our staff
our cash generation and financial position remains strong with net cash balances
at the period end of £270m 2013  £270m
profit before 
tax up
282
earnings per share
up
296
dividend
up
133
strategic report governance financial statements