Annual Report and
Financial Statements
2022-23

“I said before that we had reached a crossroads at Royal Mail. Now that we have
anegotiators agreement with CWU that will shortly go out to ballot, and thanks
tothegood progress made on our five-point plan to stabilise Royal Mail, our
destination is coming into sight.
“There is now a clear path towards a more competitive and profitable Royal Mail,
delivering improved services for our customers whilst further reducing our
environmental impact. Importantly, if ratified, the CWU agreement provides
greaterjobsecurity and increased rewards – through both pay and profit share
–forouremployees. Successful delivery of the agreement will be key.
“Quality of service has been significantly affected by industrial action and high levels of
absence. I am sorry that we have not delivered the high standards of service our
customers expect. Improving quality of service is our top priority.
“GLS has a proven track record of growth, solid margins and cash generation.
During2022-23 it delivered a robust performance in a tough macro-economic
climate.Its flexible operating model, balanced B2C and B2B portfolio, diversified
geographic exposure and continued investment have underpinned good progress
thisyear andwecontinue to invest for long-term growth and margin accretion.
“So as we enter 2023-24 we have grounds for optimism. The economic climate
remainschallenging, and Royal Mail faces the task of rebuilding business from
thedamage caused by industrial action. To do this successfully and plan for the
longterm, urgent reform of the Universal Service Obligation is essential. Our plan is to
return to group profitability this year but also seizetheopportunity for both businesses
to deliver ongoing profits thereafter, tothebenefit of both our employees, customers
and shareholders.”
Keith Williams, Independent Non-Executive Chair
Introduction

Contents
Strategic Report
02 Who we are
04 Chair’s statement
06 Royal Mail and GLS operating reviews
10 Our marketplace
12 Our business model
14 Our strategy and progress
20 Measuring our performance
22 Our stakeholders
24 Section 172 statement
26 ESG review
38 TCFD statement
46 Risk management and our principal
risksanduncertainties
56 Viability statement
59 Financial review
71 Non-financial information statement
Corporate Governance
74 Chair’s introduction
76 Board of Directors
78 Application of Code principles
79 Board leadership and company purpose
85 Division of responsibilities
86 Composition, succession and evaluation
89 Nomination Committee Report
93 Audit and Risk Committee Report
101 Environmental, Social and Governance
CommitteeReport
103 Directors’ Remuneration Report
137 Directors’ Report
141 Statement of Directors’ Responsibilities
Financial Statements
142 Independent auditor’s report
160 Consolidated income statement
161 Consolidated statement of comprehensive income
162 Consolidated balance sheet
164 Consolidated statement of changes in equity
165 Consolidated statement of cash flows
167 Notes to the consolidated financial statements
234 International Distributions Services plc
– Parent Company financial statements
Additional Information
237 Shareholder information
238 Glossary of alternative performance measures
243 Forward-looking statements
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
01

Group reported operating loss split
£(748)m
RM £(1,044)m
GLS £296m
R
oyal Mail
(2021-22: £250m)
GL
S
£(1,044)m
£296m
(2021-22: £327m)
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
02
Who We Are
International Distributions Services plc
(the Group) is a holding company. The group
structure (the Group) includes two separate
operations, our UK-based operation, which
includes Royal Mail and Parcelforce Worldwide
(Royal Mail), and our international operation,
General Logistics Services (GLS).
Our purpose
To connect customers, companies and countries.
Our values
Our values, which shape our culture, underpin everything
wedo. We focus on our customers and on providing reliable
and convenient value-for-money services. We want our
people tobe proud to work for our businesses.
1. Reflects intragroup revenue eliminations of £17m split
between Parcelforce Worldwide (£14m) and GLS (£3m).
(2021-22: intragroup revenue was £21m split between
Parcelforce Worldwide (£16m) and GLS (£5m)).
2. Parcel revenue includes GLS freight revenue.
2022-23 Performance
Royal Mail
Be positive – about
whatwe can achieve.
Be brilliant – for
ourcustomers.
Be part of it – each
oneofus is responsible.
GLS
Reliability
Security
Transparency
Flexibility
Sustainability
Our ambition
To build a more balanced and diverse international business.
Our business
We provide postal and delivery services across
our extensive networks.
Where we operate
Royal Mail operates throughout the UK and offers letter
andparcel delivery services internationally. GLS has a
growing international footprint which currently includes
around 40 countries and nation states.
39% 61%
R
oyal Mail £7,411m (2021-22:
£8,514m)
GL
S £4,650m
(2021-22: £4,219m)
29% 71%
Parcels
£8,543m (2021-22:
£8,998m)
Letters
£3,501m
(2021-22: £3,714m)
Group revenue split (parcels and letters)
2
Segmental revenue split
£12,044m
1
£12,044m

Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
03
Royal Mail GLS
Collects, sorts and delivers letters
and parcels.
As the UK’s sole designated Universal
Service Provider
1
Royal Mail delivers
a‘one-price-goes-anywhere’ service on
arange of letters and parcels toaround
32 million addresses across theUK.
Parcelforce Worldwide is a leading provider
ofexpress parceldelivery services.
Collects, sorts and delivers parcels.
One of the largest parcelservices providers
inEurope, with a growing presence in
NorthAmerica. GLS seamlessly connects
itscustomers and communities with millions
ofparcels every day.
Employees
c.22,000
Network hubs
3
c.120
Pick-up/drop-off points
c.47,000
Depots (including
franchisesandagencies)
c.1,600
Employees
2
c.130,000
Mail Centres
37
Local Connect Network
(Customer Service Points
andPost Offices)
c.11,000
Vehicles
c.53,000
1. Under the Postal Services Act 2011, Ofcom is the regulator for postal services in the UK.
Ofcom’s primary regulatory duty for postal services is to secure the provision of the Universal
Postal Service. Ofcom has designated Royal Mail as the Universal Service Provider.
2. This number represents permanent employees and employees engaged on fixed-term
contracts, including in the various separate UK subsidiary companies.
3. Includes Italian franchises.
Other information Other information
GLS revenue by region Royal Mail parcel/letter revenue split
Europe 87%
North America 13%
Parcels 53%
Letters 47%
13% 87%
47% 53%

2022-23 Group Financial Highlights
Revenue
1
£12,044m
2021-22: £12,712m
Reported operating loss
1
£(748)m
2021-22: £577m profit
Adjusted operating loss
1
£(71)m
2021-22: £758m profit
Reported basic earnings per share
1
(91.3)p
2021-22: 61.7p
Adjusted basic
earnings per share
1
(20.5)p
2021-22: 60.0p
FY dividend
Nilp
2021-22: 20.0p
Net debt
£1,500m
2021-22: £985m
Keith Williams
Non-Executive Chair
Overview
A challenging operating environment persisted throughout 2022-23.
Macro-economic headwinds and the unwind of temporary benefits from
COVID lockdown restrictions resulted in lower parcel volumes year on year
for both Royal Mail and GLS. The Board would like to thank all of our
colleagues across Royal Mail and GLS who have worked over the past
year to keep people and businesses connected.
Quality of service in Royal Mail has been significantly affected by
industrial action and high levels of absence. I am sorry that we have not
delivered the high standards of service our customers expect. Improving
quality of service is our top priority.
At the start of this year, and again at the interim results, I said we were at
a crossroads. Whilst GLS was performing well, and we had confidence
that its flexible business model would continue to demonstrate resilience, we
needed to accelerate and broaden the scope of change in Royal Mail to
meet the demands of our customers, deliver real efficiency savings and
remain competitive to support sustainable growth and secure jobs for the
future. Given the failure of talks with the CWU and the prospect of
damaging strike action, all options remained open, including business
separation, to preserve the value in GLS and to bring about the change
necessary in Royal Mail. The group structure and name change to International
Distributions Services plc was important to demonstrate that the Board
will not cross-subsidise Royal Mail if its position is not sustainable.
I am pleased to say we have moved on from the crossroads. We now
have more options to deliver change and progress has already been
achieved in Royal Mail in the second half of the year. Following industrial
action, we served notice in September 2022 on a number of historic CWU
agreements and policies which were delaying transformation, to move to
a more modern industrial relations framework. This allowed us to move
ahead with elements of our change programme during the second half.
Accordingly, we were able to complete revisions across all delivery and
processing units and right size the workforce to current workload, with far
fewer people leaving under voluntary redundancy than anticipated. As a
result, we are starting the current year with 10,000 fewer full time
equivalent employees (FTE) than last year, with an anticipated benefit in
2023-24 of £150 million. There are further revisions to come during the
course of the current year.
In reaching an agreement with the CWU on pay and change in April 2023, which
members are still to vote on, we have the opportunity for further operational
efficiencies. Assuming the Business Recovery, Transformation and Growth
Agreement is ratified, it provides a path towards making Royal Mail more
competitive, with adjusted operating profits, excluding voluntary redundancy
charges, starting in 2024-25, by improving services to our customers and
further strengthening our environmental performance. The agreement
provides for pay increases over the two years to March 2025 at a cumulative
cost of c. £600 million, which is expected to be broadly covered by cost
efficiencies, with changes to working practices, network changes and
attendance policies introduced successively over the next 24 months. These
changes will also provide greater working flexibility which is expected to
improve quality.
1. Reported results are prepared in accordance with International Financial Reporting Standards
(IFRS). In addition, the Group’s performance is explained through the use of Alternative
Performance Measures (APMs) that are not defined under IFRS. Management is of the view that
these measures provide a more meaningful basis on which to analyse business performance.
They are also consistent with the way financial performance is measured by management and
reported to the Board. The APMs used are explained on pages 238 to 242 and reconciliations to
the closest measure prescribed under IFRS (and in the case of GLS reconciliations between the
Group’ functional currency of Sterling and Euro) are provided where appropriate.
2. As referenced in Royal Mail’s ESG Report 2021-22, page 9.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
04
Chair’s Statement

At the same time, these changes should also support revenue growth by
improving our service offering – for example, next day products. Royal
Mail already has the lowest carbon footprint per parcel among UK
parcels companies
2
and these changes will help us diminish our
dependence on air transport and further reduce carbon emissions,
improving our environmental position. The agreement also provides for
joint working on an approach to the regulator and Government on the
much needed modernisation of the USO. In the longer term, the
agreement also confirms new starter terms and conditions which will be
important in reducing our cost base over time. Delivery of the plan will be
key, with continued investment in Royal Mail contingent on delivery of
operational change and a recovery in revenue following the impacts of
industrial action.
Turning to GLS, it delivered a good performance, despite the tough
macro-economic backdrop, offsetting almost all cost increases through
efficiency and pricing, as well as the impact from acquisitions, delivering
broadly flat adjusted operating profit year on year. GLS has a proven track
record of delivering top line growth, solid margins and good cash generation.
The business has continued to successfully execute on its strategy during
the year, and despite the economic downturn and consequent drop in parcel
volumes, margins are still significantly above pre-COVID levels. We have
made great progress in turning around underperforming countries,
particularly Spain, which is now delivering sustainable operating profits and
has just opened its new Madrid hub, and France which has now reached
breakeven. We are taking further measures to improve our performance in
the US. Its flexible operating model, broad customer base and geographic
diversity provides a strong platform for further organic and inorganic
growth. Over the medium term, GLS is targeting €500m operating profit in
2026-27.
Over the last two years, around two thirds of our investment has been
directed at modernising Royal Mail. With around 80% automation and the
second SuperHub opening this Summer, the Royal Mail business is
ending a significant period of capital investment. We need to leverage
those investments going forward, which our change agenda is designed to
do. Accordingly, there will be a switch in investment focus to GLS, with
Royal Mail capital expenditure scaled back to around £200 to £250 million a
year, whilst GLS investment will increase as it develops its last mile
proposition, including an expansion of lockers, and invests in new
markets and services. GLS remains focused on securing and optimising
its long-term growth prospects and continues to invest for growth,
diversification and long-term margin expansion.
The Group will continue to operate a conservative capital structure.
Liquidity at the end of the year was around £1.7 billion.
Looking forward, we therefore have grounds for optimism. We have a
plan that shows a return to group profitability next year and both
companies in profit the year after. This is not only good for investors it is
good for customers – increasing our ability to improve services and quality
– and good for employees in retaining job security.
Financial performance
Group revenue declined by 5.3%, driven by the decline in Royal Mail.
Group operating loss was £748 million on a reported basis
1
(2021-22: £577 million profit) reflecting the impairment charge in Royal
Mail in addition to business performance during the year. Group adjusted
operating loss
1
was £71 million (2021-22: £758 million profit), driven by
losses at Royal Mail. GLS adjusted operating profit in Euros was up slightly
year-on-year to €403 million. Group adjusted basic loss per share was 20.5
pence (2021-22: 60.0 pence earnings per share). On a reported basis, Group
loss per share was 91.3 pence, (2021-22: 61.7 pence earnings per share).
Capital allocation and dividend
The Group’s in year trading cash outflow was £34 million (2021-22
£519 million inflow) and on a pre-IFRS 16 basis in-year trading cash
outflow was £213 million (2021-22: £353 million inflow), driven by Royal
Mail trading performance. Net debt (pre-IFRS 16) was £181 million as at
26 March 2023 (£150 million of net cash at 25 September 2022,
£307 million net cash at 27 March 2022). The maintenance of a
conservative balance sheet has always been at the heart of the Group’s
capital allocation policy and the Board considers the Group’s net debt
position as robust, both in the context of the Group’s historic net debt
position and 1.0x net debt/EBITDA is well below covenant limits.
The Group had available liquidity of around £1.7 billion at the end of March
2023, including £773 million of cash and cash equivalents (excluding
£36 million GLS client cash) along with undrawn bank syndicate loan
facility of £925 million.
The Group continues to face uncertainty in respect of the macro-
economic environment. The different positions of our two businesses
mean that the Board will be disciplined in terms of capital allocation and
avoid cross subsidy between the businesses. Royal Mail is still trading at
a loss as it recovers from the impacts of the industrial dispute, and whilst
its performance is expected to stabilise, adjusted operating profit in H1 is
expected to be lower year on year. Continued investment in Royal Mail is
contingent on delivery of its business plan. Royal Mail will look to offset
trading cash outflows in the year with real estate disposals. GLS is performing
well in spite of the economic headwinds and is stepping up investment in
the short term, to support longer term growth and margin expansion.
The outlook in Royal Mail does pose a risk to the Group’s targeted
investment grade credit rating, and we have taken action to maintain the
best possible rating.
Given the performance of Royal Mail in 2022-23, and increased investment in
GLS, the Board has decided not to pay a final dividend in respect of 2022-23.
Board changes
As previously announced, Jourik Hooghe joined the Board with effectfrom
1 June 2022 and became a member of the Nomination and Audit and Risk
Committees. The Board has benefited greatly during the year from his
strong international strategic, financial andaccounting expertise.
On 12 May 2023, we announced that Simon Thompson had informed the
Board of his intention to step down as Chief Executive Officer (CEO) of
Royal Mail and had resigned from the Board. On behalf of the Board, I
would like to thank Simon for his significant contribution over more than
five years at Royal Mail, both as CEO and previously as a non-executive
director of the Board. As CEO, his leadership, resilience and unwavering
drive to ensure that Royal Mail transforms for the benefit of our
customers means we have set a clear path to turn the business around.
We are grateful for his dedication and what he has achieved at the
company, and wish him well for the future. As announced on 18 May
2023, Ingrid Ebner will join the Board with effect from 1 July 2023 and
become a member of the Nomination Committee.
Outlook 2023-24
The trading environment continues to be uncertain for both Royal Mail
and GLS. All of our markets are impacted by a challenging global
economy, including high levels of inflation and expectations of lower
future economic growth. Against that backdrop, we are targeting a
Group adjusted operating profit in 2023-24. Our detailed Outlook
statement is included on page 70.
Keith Williams
Non-Executive Chair
22 May 2023
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
05

Overview
The year has been difficult for everyone – our customers, our people,
and our shareholders. The CWU dispute has impacted on our operational
and financial performance, alongside macro-economic headwinds,
including inflation and cost of living increases which impacted consumer
online retail spend and parcel volumes. We also had the negative
impact year-on-year of fewer test kits, as free testing and COVID
restrictions ceased in the UK in the prior year.
The impact of strike action was more significant than we initially
expected when we issued our revised guidance in November. Whilst
we were able to achieve our revised guidance for the year, despite 18
days of strike action, six more than anticipated at that time, and the
impacts of the cyber incident that began in January 2023,
weexperienced further parcel market share loss inQ4. We estimate
we lost around 4 percentage points of revenue market share.
However, we did progress with change during the second half of the
year, making good progress on our five-point plan, deploying revisions
in all processing and delivery units and significantly exceeding our
FTE reduction target of 5k, delivering a reduction of 10k as an exit run
rate at the end of March 2023 vs. March 2022, to better match resource
to workload. The CWU Postal Executive Committee has ratified the
Business Recovery, Transformation and Growth Agreement we
reached with CWU in April 2023 and we hope that this will be
approved by CWU members. This agreement contains further
opportunities for change which will deliver efficiencies, help usto
improve quality and support revenue growth.
If CWU members vote in favour of the deal, we will work with the
CWU onimplementing a number of the changes within our
agreement including some important short-term items, although the
benefits of these changes will largely be delivered in 2024-25 and on
into 2025-26. Therefore, our trajectory in the second half of this year
will be critical in demonstrating progress, giving confidence in
execution and underpinning delivery of the full benefits of the deal for
everyone.
In the shorter term, we will start to rebuild Royal Mail, rebuild trust with
our customers and employees, improve quality of service and begin to
recover the parcel market share loss. We will continue to deploy
revisions, optimise our costs to match volume, and leverage the
investments we have made in our network.
Revenue
1
£7 , 411m
2021-22: £8,514m
Reported operating loss
1
£(1,044)m
2021-22: £250m profit
Adjusted operating loss
2
£(419)m
2021-22: £416m profit
Royal Mail parcel/letter revenue split %
1. Reported result. Reported results are prepared in accordance with IFRS.
2. The alternative performance measures (APMs) used to describe the Group’s
performance, including a reconciliation to reported results, are explained on
pages 238 to 242.
Royal Mail Operating Review
2022-23 Performance Highlights
47% 53%
2021-22 parcel/letter revenue split: 56%/44%
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
06

Operational performance
In 2022-23 Royal Mail revenue decreased 13.0% to £7,411 million. This
was driven by a 18.5% decline in parcel revenue impacted by industrial
action, weaker online spend as the high inflation environment affected
consumer spending and lower test kit volumes. Letter revenue also
declined by 5.7%, reverting to the trend of long-term structural decline.
Revenue from parcels accounted for 53% of total Royal Mail revenue
(2021-22: 56%). Reported operating loss was £1,044 million
(2021-22: £250 million profit) and adjusted operating losswas
£419 million (2021-22: £416 million profit). The adjusted operating loss
excluding voluntary redundancy charges was £386 million, which
compares to our guidance range of a £350 million to £450 million loss
and expectation in January 2023 that we would be around the
mid-point of that range, subject to potential customer attrition in Q4.
In-year trading cash outflow was £306 million (2021-22: £280 million
inflow) and pre-IFRS 16 was £410 million outflow, compared to an
inflow of £178 million in the prior year. Gross capital expenditure
decreased by £186 million to £255 million as we focused on maintaining
liquidity and cash conservation given the ongoing industrial action
and business performance. While we had to make some difficult
decisions on prioritising expenditure, we continued to invest in our
second new parcel Super Hub and increased parcel automation
across our network. Further detail on our performance is included in
the Financial Review.
Parcels
Domestic parcel volumes (ex. international)
4
decreased by 22%
reflecting a reduction in COVID test kit deliveries, ongoing macro-
economic headwinds and industrial action. Compared to pre-pandemic
levels (2019-20) domestic parcel volumes (ex. international) increased
by 2%. Volumes for our premium products, Tracked 24® / 48® and
Tracked Returns®, declined by 21% (2021-22: 17% growth).
Domestic parcel revenue (ex. international) decreased by 19.8%, reflecting
volume declines partially offset by price increases and mix.
International parcel volumes
5
, including import and export parcels
for Royal Mail and Parcelforce Worldwide, were down 7% year-on-
year, a result of global economic situation, and to a lesser extent, the
cyber incident in January 2023. International parcel revenue
5
decreased 12.2% year-on-year.
Letters
Addressed letter volumes (excluding elections) were down 9%,
reflecting a return to long-term structural decline. Advertising mail
volumes were down 8% year on year, while consumer and small
business mail volumes declined 21% driven by asignificant drop in
stamped letters volumes, which was particularly impacted by 10
days of industrial action during the peak Christmas period
(November and December 2022). Business mail volumes declined
5%, offset by price increases which led to revenue growth of4.6% in
that segment. Total letter revenue was down 5.7%, benefitting from
pricing, offset by volume decline and mix effects.
Compared to pre-pandemic levels (2019-20) addressed letter
volumes (excluding elections) were down 25% reflecting the
continued structural decline in the letters market.
Costs
Reported operating costs of £7,963 million decreased by 3.7%.
Totaladjusted operating costs decreased 3.3% to £7,830 million.
Adjusted people costs decreased 3.1%, due to volume related
savings, pay abatements as a result of industrial action, a reduction
in voluntary redundancy costs and flow through benefits of savings
delivered through our restructuring programme last year. This was
partially offset by the flowthrough impacts of the one-hour reduction
in the working week implemented in 2021-22, managerial pay deals
and increases dueto changes in the National Insurance Health and
Social Care Levy, as well as the 2% pay award for frontline staff. It
also includes the £500 one-off non-consolidated lump sum payment
for CWU grade employees as part of the Business Recovery,
Transformation and Growth Agreement. Whilst there were no
residual COVID costs (2021-22: £62 million) absence isstill higher
than pre-pandemic levels.
Adjusted non-people costs decreased 3.7%. Distribution and conveyance
costs decreased as a result of lower volumes. Infrastructure costs
increased, largely driven by higher depreciation and amortisation
costs, inflation, energy costs and the impact of the cyber incident.
Other operating costs reduced predominantly due to volume related
savings, for example commissions paid to the Post Office. Further
detail is included in the Financial Review.
4. Domestic Parcels excludes import and export for both Royal Mail and Parcelforce Worldwide.
5. International includes import and export for Royal Mail and Parcelforce Worldwide.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
07

Operating Review
We continued to make good progress on our growth strategy and
delivered a robust financial performance in 2022-23.
GLS performed well during the year with revenue growth of 10.2% to
£4,650 million, 8.6% growth in Euro terms, compared to guidance of
high single digit provided in May 2022. This was driven by a
combination ofbetter pricing, and the contribution from the Rosenau
acquisition inCanada. Excluding acquisitions, revenue was up 7.7% in
Sterling. Revenue growth was achieved in almost all markets, with
particularly good performances in Canada, Germany, Italy and
Hungary. Parcel volumes declined 1% as a result of the unwinding of
positive effects from lockdown restrictions in the prior period, and a
general weakening in macro-economic conditions. B2C share of
volume was 55%, with B2B share at 45%, in line with last year.
Reported operating profit was £296 million (2021-22: £327 million).
Adjusted operating profit grew to £348 million (2021-22: £342 million),
or €403 million (2021-22: €402 million), slightly above the top end of our
revised guidance range of €380 to €400 million given in January 2023
(previously €370 to €410 million). Adjusted operating profit margin
declined by 60 basis points.
During the year, foreign exchange movements impacted revenue
favourably by £69 million and costs adversely by £64 million,
resulting in a net increase in operating profit of £5 million.
We continued to invest in growth and automation to generate efficiency
savings, with capital expenditure of £152 million (2021-22: £162 million).
In-year trading cash inflow pre-IFRS 16 remained robust, at £197 million,
which compared with £175 million inflow in the prior year. In-year trading
cash inflow was £272 million (2021-22: £239 million inflow). Further
detail is included in the Financial Review.
Market performance
Most markets saw a decline in parcel volumes compared to the prior
period but through pricing actions, and good customer retention,
underlying revenue growth was achieved in almost all markets.
Performance in our key markets is highlighted below, with
revenuegrowth and cost development detailed in Euro terms, (see
APMs on pages 238 to 242) unlessstated otherwise.
In Germany, the largest GLS market by revenue, revenues grew by
5.1% despite strong competition and weaker GDP. Revenue growth
was driven by strong price increases that were successfully implemented
to mitigate inflationary pressures, including the impact from the
higher German minimum wage. Operating profit declined slightly
aspricing actions could not fully mitigate cost increases.
In Italy revenue grew by 5.6%, benefitting from higher volumes, in
particular international, and better pricing. Operating profit increased
year on year.
GLS Spain continued to perform well, with revenue growth of 4.3%
driven by better pricing and broadly flat volumes. Operating profit
was lower than the prior year, as higher operational costs could not
be fully offset through improved pricing.
1. Reported result. Reported results are prepared in accordance with IFRS.
2. The alternative performance measures (APMs) used to describe the Group’s performance,
including a reconciliation to reported results, are explained on pages 238 to 242.
GLS Operating Review
2022-23 Financial Highlights
Revenue
1
£4 ,650m
2021-22: £4,219m
Reported operating profit
1
£296m
2021-22: £327m
Adjusted operating profit
2
£348 m
2021-22: £342m
GLS B2C/B2B volume split %
55%
45%
2021-22 B2C/B2B volume split: 55%/45%
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
08

We are pleased with our continued progress in France where revenue grew by 5.2%. Pricing and good cost control offset a decline in volume.
Despite the difficult macro-environment, France was breakeven in terms of operating profit, building on the improvements over the past three
years, and losses have been significantly reduced compared to 2019-20. We expect the business to continue on a positive trajectory.
In the US performance was disappointing, with a revenue decline of3.4% in USD. This was driven by lower volumes, partly offset by better
pricing, against a weaker market. Final-mile and line-haul costs were impacted by inflationary pressures which resulted in anincrease in
operational costs and a higher operating loss than theprior year. Measures focused on a turnaround of the business areinprogress, including
a headcount reduction programme which has already been completed, along with measures to lower unit costs and increase sales activity to
drive revenues.
GLS Canada revenue increased by 18.2% (11.5% in CAD) on an organic basis, driven by higher yield, including the benefits of pricing and fuel
surcharges. The integration of Rosenau is on track, and the business is performing ahead of plan. The Canadian business continues to
perform well, delivering margins above the GLS group average.
Other developing markets, where GLS has a high exposure to B2C, continued to grow despite the impact from the war in Ukraine and
inflationary pressures. Revenues were up 7.6% year on year, but operating profit declined, with a negative foreign exchange impact
onbothrevenue and profit.
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International Distributions Services plc
Annual Report and Financial Statements 2022-23
09

A number of trends have been driving structural change within our letters
andparcelmarkets. Since pre-pandemic, parcel volume has increased while
lettervolumehas declined. In addition, customer demand for convenient
andsustainable services has continued to grow.
Our Marketplace
Key trends driving structural change
Trend Our response
Digitalisation
48
TRACKED
Delivered
E-commerce penetration continues
to grow as retail stores invest in
digital platforms over physical
presence. As businesses increasingly
rely on digital forms of advertising
and customer communications, UK
letter volume decline continues.
25%
decline in letter volume since 2019-20
1
.
36%
growth in UK e-commerce
sales2019-2023
2
.
39%
of UK retail sales (excl. food & fuel)
now digital
2
.
Royal Mail and GLS are continuing to invest in data and technology to maximise the parcel
market growth opportunity, including increasing automation across their businesses,
developing innovative customer apps and enhancing logistical and customs procedures
toease international shipping.
Royal Mail’s Sunday delivery service has expanded from last year when it was only offered
to the business’ large on-line retailers. It is now available to all Tracked 24® users both
account and consumers. Royal Mail has also launched a Sunday Special Delivery
Guaranteed service to offerenhanced levels of security and convenience for business
account customers duringthe week.
Read more on pages 16 and 19.
Savvy customers
Customers want fast and convenient
delivery and pick-up as well as
great quality of service, all at
anaffordable price.
86%
of UK customers receive
parceldeliveriesat home
3
.
45%
of e-shoppers in Denmark
prefertouseaparcel shop
4
.
Improving and simplifying Royal Mail’s customer offering is a strategic priority. Parcel
Collect, the doorstep collection service, demonstrates the business’ commitment to
continuously make its services more convenient and re-invent the way Royal Mail delivers
to and from customers. Customers can now book Parcel Collect automatically for every
online parcel shipment and are immediately provided with an estimated collection time.
Since Parcel Collect’s launch in October 2020, c.20 million parcels have been collected.
GLS continues to invest in its operations to enhance its customer offering. In October 2022,
to further increase operational efficiency and enhance service levels, the business opened
a new hub in Madrid which has a fully automated small parcel sorter. In addition, GLS has
continued to expand its network of convenient customer pick-up and drop-off points and,
in June 2022, it acquired Tousfacteurs SAS to further optimise the last-mile customer
experience (see page 25).
In response to growing demand for consistent high-quality service, tracking services have
been enhanced across Royal Mail and GLS, and now provide more accurate delivery slots
and in-flight delivery options through a simple text message or email.
Read more on pages 16 to 19.
Sustainability
People of all ages are now seeking
to engage with responsible
businesses who provide more
sustainable products and services.
70%
UK consumers would prefer a carbon-free
delivery over a traditional delivery
3
.
Recognising the impact our operations have on society and the increasing demand
forsustainable products and services provided by trusted and responsible businesses,
wehave increased our focus on sustainability. During the year Royal Mail continued to
progress its ‘Steps to Zero’ environmental strategy, including seeking Science Based
Targets initiative (SBTi) validation for its targets and commitment to achieve net zero
greenhouse gas (GHG) emissions by 2040. GLS has also continued to progress its Climate
Protect environmental strategy, which is aimed at reducing GHG emissions to zero by 2045.
As a large-scale employer in the UK and Europe, we play an essential role in the communities
where we operate, providing a safe, fair and equal opportunity environment to our people.
Read more on pages 26 to 35.
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Annual Report and Financial Statements 2022-23
10

1. Addressed letters excluding elections, based on
internalanalysis.
2. Office for National Statistics Retail Sales, March 2023.
3. IMRG Consumer Home Delivery Review, 2022.
4. PostNord E-commerce in Europe, 2021.
Key trends driving structural change
Trend Our response
Digitalisation
48
TRACKED
Delivered
E-commerce penetration continues
to grow as retail stores invest in
digital platforms over physical
presence. As businesses increasingly
rely on digital forms of advertising
and customer communications, UK
letter volume decline continues.
25%
decline in letter volume since 2019-20
1
.
36%
growth in UK e-commerce
sales2019-2023
2
.
39%
of UK retail sales (excl. food & fuel)
now digital
2
.
Royal Mail and GLS are continuing to invest in data and technology to maximise the parcel
market growth opportunity, including increasing automation across their businesses,
developing innovative customer apps and enhancing logistical and customs procedures
toease international shipping.
Royal Mail’s Sunday delivery service has expanded from last year when it was only offered
to the business’ large on-line retailers. It is now available to all Tracked 24® users both
account and consumers. Royal Mail has also launched a Sunday Special Delivery
Guaranteed service to offerenhanced levels of security and convenience for business
account customers duringthe week.
Read more on pages 16 and 19.
Savvy customers
Customers want fast and convenient
delivery and pick-up as well as
great quality of service, all at
anaffordable price.
86%
of UK customers receive
parceldeliveriesat home
3
.
45%
of e-shoppers in Denmark
prefertouseaparcel shop
4
.
Improving and simplifying Royal Mail’s customer offering is a strategic priority. Parcel
Collect, the doorstep collection service, demonstrates the business’ commitment to
continuously make its services more convenient and re-invent the way Royal Mail delivers
to and from customers. Customers can now book Parcel Collect automatically for every
online parcel shipment and are immediately provided with an estimated collection time.
Since Parcel Collect’s launch in October 2020, c.20 million parcels have been collected.
GLS continues to invest in its operations to enhance its customer offering. In October 2022,
to further increase operational efficiency and enhance service levels, the business opened
a new hub in Madrid which has a fully automated small parcel sorter. In addition, GLS has
continued to expand its network of convenient customer pick-up and drop-off points and,
in June 2022, it acquired Tousfacteurs SAS to further optimise the last-mile customer
experience (see page 25).
In response to growing demand for consistent high-quality service, tracking services have
been enhanced across Royal Mail and GLS, and now provide more accurate delivery slots
and in-flight delivery options through a simple text message or email.
Read more on pages 16 to 19.
Sustainability
People of all ages are now seeking
to engage with responsible
businesses who provide more
sustainable products and services.
70%
UK consumers would prefer a carbon-free
delivery over a traditional delivery
3
.
Recognising the impact our operations have on society and the increasing demand
forsustainable products and services provided by trusted and responsible businesses,
wehave increased our focus on sustainability. During the year Royal Mail continued to
progress its ‘Steps to Zero’ environmental strategy, including seeking Science Based
Targets initiative (SBTi) validation for its targets and commitment to achieve net zero
greenhouse gas (GHG) emissions by 2040. GLS has also continued to progress its Climate
Protect environmental strategy, which is aimed at reducing GHG emissions to zero by 2045.
As a large-scale employer in the UK and Europe, we play an essential role in the communities
where we operate, providing a safe, fair and equal opportunity environment to our people.
Read more on pages 26 to 35.
Other factors
affectingtheGroup
In the UK, Ofcom regulates Royal Mail’s
Universal Service Obligation, a
framework we believe needs updating
to reflect the structural change in the
market (see page 24). Multiple countries
in Europe and their regulators have
recognised the need to modernise
andreform, including France, where
inJanuary 2023, all standard letter
deliveries moved to a three-day service.
There is extensive trade union
membership across our UK
workforceand industrial action
duringthe year has significantly
impacted the Royal Mail business.
Readmore on page 6.
All of the markets where we operate
areimpacted by the current challenging
economic environment, including high
levels of inflation, the cost-of-living
crisis and escalating costs.
Prolonged fiscal tightening in our
markets, including minimum wage
legislation and tax policy revisions,
including the tax treatment of
subcontractors, could increase our
costs or further impact consumer
confidence, which could affect parcel
and letter volumes.
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11

48
TRACKED
Delivered
How we create value
Underpinned by
Value delivered
Customer
Aiming to provide reliable, convenient and
value-for-money services that customers
want. See pages 16 to 19.
Our people
Our people play a key role in our business.
Fostering a fair, rewarding and values-based
culture and rebuilding trust with our people and
unions is essential to transforming our business.
Our customers
We connect customers,
companies and countries.
c.32m
UK addresses
c.230,000
GLS customers
Provide 1 in 175 jobs
in the UK economy as a whole
1
1. The Centre for Economics and Business Research (Cebr) research, conducted for Royal Mail in 2022, comprising direct and indirect contributions.
Our brands
Royal Mail and GLS are strong
andrenownedbrands.
Our people
We offer secure, fairly-paid employment with
long-term prospects and career development.
Transformation
Transforming Royal Mail into a more efficient and better
balanced business to reflect customers’ changing needs.
Sustainability and responsibility are embedded in how we operate
We seek to operate in a sustainable and responsible way. See pages 26 to 37. Our stakeholders are integral to our success and we engage withthem
to understand their issues and concerns. See pages 22 and 23.
Our Business Model
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Annual Report and Financial Statements 2022-23
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73,000 jobs
indirectly supported by Royal Mail
in the wider economy
1
£11.8 b n
gross value added by Royal Mail
(direct and indirect contribution)
1
£1,284m
cash to shareholders via dividend payments
and share buybacks over last five years
Our extensive network
Royal Mail has an unparalleled network,
includingc.1,200 customer service points, which
is abletodeliver to every address in the UK. GLS is
one of the largest ground-based deferred parcel
operators in Europe. GLS operates across Europe,
Canada and the US’ West Coast, leveraging its
integrated and robust network of over 1,600
depots and c.120 hubs.
Our suppliers and
business partners
We provide employment
across our supply chain.
Our financial position
Our robust balance sheet will enable us to
continue to invest in our business to transform
and grow in sustainable ways, with an increasing
focus on growth in GLS having invested
predominantly in Royal Mail in recent years.
Our communities
and society
We play an essential role in the
communitieswhere we operate.
Our technology
We provide a range of convenient delivery,
tracking and redirection options through our
apps.Automation levels across Royal Mail are
increasing. Parcel automation at March 2023 was
76%, upfrom 12% in 2018-19 and 50% in 2021-22.
GLS’automated operations contribute to the
efficient delivery of parcels.
Our shareholders
We generate returns.
Growth
Harnessing market trends to capture
growth opportunities. See pages 10 and 11.
Quality of Service
Investing to improve service levels
andmaintain customer trust.
Effective governance and risk management underpin everything we do
Effective governance contributes to the Group’s long-term success while risk management processes and controls protect the value we create.
Seepages 73 to 136 and pages 46 to 55.
48
TRACKED
Delivered
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Annual Report and Financial Statements 2022-23
13

Our ambition is to build a more balanced and diverse international Group.
Royal Mail
Objectives
Improve and simplify our customer
offering through great quality of
service, and easy to understand
and simple to use products.
Rebuild trust through a positive
step change in our relationships
with our people and the unions.
Grow our business, our share
andthe market through greater
capacity and new innovative
products and services.
KPIs
 Group revenue
 Group adjusted operating profit
 Royal Mail adjusted operating profit margin
 Lost time accident frequency rate
Read more on page 20 and 21.
Principal risks
1 111098765432
12
Read more on pages 50 to 55.
GLS
Objectives
Strengthen GLS’ top position
inthecross-border deferred
parcelsegment.
Strongly position GLS in
the2Cparcel market, whilst
securing its leading position
inthe2B segment.
Implement innovative digital and
sustainable solutions that are
centred around customer needs.
KPIs
 Group revenue
 Group adjusted operating profit
 GLS adjusted operating profit
 GLS free cash flow
Read more on page 20 and 21.
Principal risks
1
11109876
5
432
Read more on pages 50 to 55.
Our Strategy and Progress
Our strategy to transform Royal Mail into a more efficient and better balanced business to reflect the changing needs of our customers
remains the right one. Ifthebusiness is to deliver sustainable value over the medium and long term wemust improve our customer
offering,rebuild trust and modernise the businesstogrow and become more agile and customer focused.
12
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International Distributions Services plc
Annual Report and Financial Statements 2022-23
14

3. New resourcing models
 New contracts for new starters have been implemented.
 Under the Business Recovery, Transformation and Growth
Agreement, our new attendance and sick pay policies will come
into effect in August 2023, if approved by CWU members, to help
address ongoing high levels of absence. Lower absence will result
in better quality for our customers.
4. Efficient use of our network and assets
 On automation we reached 76% parcel automation in March 2023,
exceeding our target of 70% by the end of the year, up from 12% in
2018-19 and 50% in 2021-22. We are currently around 80% and expect
to achieve our 90% automated target soon after the Midlands Super
Hub opens in June 2023.
 Scan in, Scan out technology, or SISO, is deployed in all delivery
offices, replacing written sign in/sign out sheets, which enables
us to better manage our resource.
 c.346 dedicated parcel hubs are now fully rolled out to enable us
to compete in the growing midnight e-commerce order for
delivery the next day market which is what both our sending and
receiving customers want.
 We have committed to work with the CWU on indoor delivery
method changes in Royal Mail. Our delivery offices need to be
optimised for parcels as well as letters.
 We will commence a strategic review of the Parcelforce
Worldwide business which will consider how we move to an
integrated single parcel network, to maximise synergies. The
review will include how to utilise our new parcel Super Hubs,
thededicated parcel hubs and Parcelforce Worldwide depots
asasingle, parcels network covering the entirety of the UK.
Forlarge or small parcels, this network will deliver even better
quality at a more competitive price, whilst reducing emissions.
The ongoing industrial dispute and our failure to rightsize the business
quickly enough to match lower parcel volumes had a significant impact
on our first half financial performance and implementation of our
strategy. As a result in November 2022 we launched a five-point plan
focused on stabilising the UK business. During the second half we
made good progress, detailed below. This progress, together with the
changes contained in our proposed agreement with the CWU, gives
Royal Mail a chance to compete.
Our five-point plan
Our five-point plan announced in November 2022 to stabilise the
business, focused on:
1. Rightsizing our business
 We were successful in rightsizing the business, reducing FTE by 10k
as an exit run rate at end of March 2023 vs March 2022, exceeding our
target of c.5k, with a much lower voluntary redundancy requirement
than originally anticipated.
 Revisions are now completed in all processing and delivery units
to align resource to workload. Equalising workload and improving
productivity will allow us to improve quality of service for both
letters and parcels.
2. Creating the headroom to invest
 Tighter cash management enabled us to invest in key change
programmes such as automation, despite a £100 million reduction
in capital expenditure versus our 2022-23 plan. We also started
marketing a property in Royal College Street, in London.
Five-point plan
• Rightsizing the business.
• Creating the headroom to invest.
• New resourcing models.
• Efficient use of network and assets.
• Building management capability and effectiveness.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
15
Royal Mail

The Business Recovery, Transformation and Growth Agreement,
ifapproved by CWU members, will also enable us to:
 Move to later start times in delivery, from March 2024: This will
help Royal Mail respond to the market demand for more next
dayparcels, reduce our impact on the environment through the
removal of 18 domestic flights a day, improve quality of service
and create greater capacity to grow.
 Introduce seasonal working patterns: Delivery postmen and
women will work 39 hours per week in thepeak Christmas
season, 35 hours per week in the quieter summer season, and 37
hours for the remainder of the year tobetter reflect the seasonal
variations in letter and parcel volumes. It also means our core
team will deliver a greater proportion of our peak orders which
will be good for quality.
 Be more efficient at indoor mail preparation: Currently postmen
and women spend up to two hours a day sorting mail before their
delivery round. Under this agreement we will reduce the amount
of time spent sorting by 20-35 minutes, so that more time can be
spent delivering to our customers. It also means that our delivery
office layout and process will be better for parcels and therefore
better for letter quality.
Our strategic priorities
Despite concentrating our efforts and resources to deliver ourfive-
point plan and the agreement with CWU, we have also endeavoured
to progress our medium- and long-term strategic priorities which
are focused on improving our customer offering, rebuilding trust
andmodernising the business to grow and become more agile and
customer focused.
Customer
The first pillar of our strategy is all about the customer: simplifying
and improving our customer offering, listening, adapting to what
ourcustomers need, and delivering a great service every day.
At the start of the year, we set out plans to get back to achieving our
regulatory quality of service targets. We are disappointed to say that
we did not achieve this, largely due to the 18 days of industrial action,
but also because of high levels of absence. For the full year we
delivered 73.7% of first class mail the next working day (81.5%
adjusted for the impact of strike action
1
), against our target of 93%.
On second class we delivered 90.7% within three working days
(95.2% adjusted for the impact of strike action), vs. a 98.5% target.
Improving quality is a key focus and we need to change the way we
manage absences as well as gear our operations towards better
management of larger parcels through our dedicated parcel hubs,
and adapting to the change of traffic mix, with more parcels and
fewer letters. The Business Recovery, Transformation and Growth
Agreement will allow us to do just that, through changes to indoor
delivery methods, designed to ensure we can spend more time
outdoors delivering for our customers, along with continued
revisions to allocate work more fairly and better balance resource
with mail volumes. Improving quality will help to underpin the growth
of our business, which is an important way for us to generate
efficiencies in a network of our scale and make ourselves more
competitive.
5. Building management capability and effectiveness
 Our new operational management structure is now embedded
and delivering improved operational grip.
 We are upskilling our managers through our recently opened
Royal Mail Academy.
 Our Trust Score survey has shown our managers’ relationship with
our frontline team continues to improve, despite the backdrop of the
CWU dispute, which demonstrates the advantages of smaller
teams, better trained managers and better communication.
The Business Recovery, Transformation and Growth Agreement
The proposed agreement is an important step forward in the
turnaround of Royal Mail and, if approved by the CWU membership,
represents a good outcome for customers, employees and shareholders.
It provides a platform for the next phase of stabilising the business
whilst continuing to drive efficiency so we can compete in the highly
competitive parcels market. The agreement is designed to grow
parcel volumes and our share in the market by operating a 24/7
network, including Sundays, and allow Royal Mail to compete on
guaranteed next day services and develop a more innovative,
customer focused and low carbon product range. Ournew
infrastructure, combined with the new working practices contained
in the CWU agreement, allows Royal Mail to offer a compelling parcel
proposition for our customers, whilst aiming to deliver our USO
commitments, and will underpin a return to growth and future job
security for our colleagues.
A three-year pay deal (from 2022-23 to 2024-25) will provide
certainty for our employees and ensure Royal Mail remains the
industry leader on pay, terms, and conditions. The proposed
agreement includes a 10% salary increase and a one-off lump
sumof£500 for CWU grade employees in Royal Mail and
ParcelforceWorldwide. This is broken down as follows:
 The previously consolidated 2% pay rise that applied from 1 April 2022;
 A one-off non-consolidated lump sum payment of £500 (pro-
rated for part-time employees);
 A consolidated 6% pay rise applying from 1 April 2023;
 A consolidated 2% pay rise applying from 1 April 2024.
The agreement also covers changes to sick pay, attendance standards,
ill health retirement, and agreement on revised contracts for new
starters (introduced in 2022). It also includes a commitment to no
compulsory redundancies for the life of the agreement.
In addition to the pay increases, the offer includes a profit share scheme
over the life of this agreement. Subject to Royal Mail generating an
adjusted operating profit in any financial year up to and including
2024-25, 20% of adjusted operating profit will be distributed as a
one-off payment to employees.
The infrastructure we need to compete is in place – our Warrington
Super Hub is operating to plan, with the Midlands Super Hub opening
in June 2023, on time. We now need to change our ways of working
inour delivery offices to realise a return on that investment.
1 Quality of Service - Performance adjusted by removing all survey items posted on or due
delivery on a strike day, or posted during the three recovery days afterwards (parcels) or the
five recovery days afterwards (letters).
International Distributions Services plc
Annual Report and Financial Statements 2022-23
16
Strategic Report
Our Strategy and Progress continued

We also improved our customer offering with delivery of parcels to
asafe place, photo on delivery, auto redelivery if customers are out
and we continued to enhance and grow Parcel Collect. Upgrades to
the functionality of the Royal Mail app mean customers can now book
parcel shipments and collections within 60 seconds. Non-account
customers using our online channel has grown, with now over 40%
of items posted online from around a third at the start of the year.
Despite the industrial disruption, we maintained our number one
position on net promoter score for customers sending parcels and
were number two for receiving parcels.
We know customers increasingly value a lower environmental
impact for their deliveries. Steps to Zero is our environment strategy
to achieve net zero by 2040 and reduce our average emissions per
parcel to 50gCO
2
e ahead of this date. Over the past two years, we
have invested significantly in deploying electric vans and the charging
infrastructure to support them. Our electric van fleet programme
now has over 4,900 vehicles. These vans operate at over 154 delivery
and collection units across the UK. We will also reduce the use of
domestic flights, moving volume to rail or road to reduce our
environmental impact, enabled by later start times as part of our
agreement with CWU. See pages 27 to 29.
It is clear that when letter volumes have declined by more than 60%
since their peak in 2004-05, in order to be financially sustainable, the
Universal Service requires major reform now. Ofcom’s own research
shows that a five-day (Monday-Friday) letters service would meet the
needs of 97% of consumers and SMEs. Being required to provide a
service that customers have said they no longer need, at significant
structural cost to Royal Mail, increases the threat to the sustainability
of the Universal Service. We urge the Government to recognise
Ofcom’s findings, to enable this change quickly, and work with us to
protect the long-term sustainability of the one-price-goes-anywhere
Universal Service.
Trust
Our colleagues are pivotal to the delivery of our mission to own trust
at the doorstep. They are the people our customers see every day.
Rebuilding their trust to work together to meet ever changing
customer needs in an efficient way is key.
During a turbulent year our employee relations climate has been
challenging. We have worked hard throughout to engage and
maintain the relationships we have with our people. Our focus was to
stay connected, keeping the lines of communication open and
answer the tough questions being asked.
Despite the challenging industrial relations environment, our Trust
score fell by only one point, to 67. Building “Trust” isakey component
of our employee strategy and we track progress through a series of
“Trust Check-ins” which ran monthly from September 2022 to
January 2023. Whilst the aggregate Trust index score fell, scores for
questions that assess the relationship our colleagues have with their
Managers improved, “My Manager delivers on promises” and “My
Manager treats people fairly” improved by +4 and +7 points
respectively.
Approximately 7,000 managers attended our new Academy at the
Midlands Super Hub in Daventry. The “Beyond” event was a significant
investment in our leaders where we provided them with visibility of
our strategic plan, our environmental ambitions, the future of the
Universal Service Obligation and the key role everyone has to play
inits delivery.
To achieve the objectives of the proposed Business Recovery,
Transformation and Growth Agreement, joint Royal Mail/CWU
recovery and transformation boards will be created, to track
progress and flag up any issues requiring urgent resolution.
TheCWU and Royal Mail have also committed to a joint review
torebuild trust and confidence between the parties and reset our
relationship to develop a positive shared approach to joint working,
recognising that all employees have a stake in how the business is
run and that change can best be delivered with their support.
Growth
Transforming our network and working practices to adapt to
parcelsis key to our growth. We need to do this as quickly as
possibleto ensure we are operating efficiently, and profitably,
tomake the most of the opportunity we have in the market.
Our state-of-the art North-West Super Hub opened in June 2022,
withthe capacity to sort over 800,000 parcels a day. Our Midlands
Super Hub, based in Daventry, is on track to open in June 2023.
In addition to the new Super Hub, this year we also installed
12parcelsorting machines in mail centres across the country.
Attheend of March 2023, the total number of machines in operation
was 36, three less than our initial target of 39 as we optimised our
rollout. We exceeded the major milestone of 70% automation in
parcel sortation by the end of the year – we are currently around 80%
– andare on track to reach 90% by end of 2023-24.
We also expanded our Sunday delivery service which saw growth of
over 60% in volumes year on year, excluding test kits.
We have a significant opportunity in the next day delivery market,
using our Tracked 24® product. The proposed Business Recovery,
Transformation and Growth Agreement enables more flexibility to
deliver more next day parcels. Later start times allow for parcels to
come into our network later in the day, with dedicated parcel hubs
and a “Single Parcel Network” approach leveraging both Royal Mail
and Parcelforce Worldwide networks.
The future
Royal Mail has many strengths – our trusted brand, our trusted
people, our hyper local network, low CO
2
per delivery and a strong
portfolio of products and services.
The coming year 2023-24 will be one where we start to rebuild Royal
Mail. If we can work together with the CWU to deliver the change we
need, the business can be successful, grow in the parcelsmarket,
and provide job security for our people.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
17

GLS has a proven track record of delivering top line growth, strong
margins and good cash flow generation. Its flexible operating model,
B2B/B2C balance and geographic diversity provides a strong platform
for further organic and inorganic growth.
Our strategy, which builds on our distinctive and proven business
model, is focused on:
 Strengthening GLS’ top position in the cross border deferred
parcel segment.
 Strongly positioning GLS in the 2C parcel market, whilst securing
its leading position in the 2B segment.
 Inspiring the market through innovative digital and sustainable
customer-focused solutions.
We have made good progress executing this strategy at the same
time as delivering a good set of financial results, despite the
challenging market conditions described in the Operating Review.
Strengthening our top position in the cross border deferred
parcel segment
During the year we further strengthened our network capacity and
footprint, in building, extending and upgrading our hubs and depots.
Our new state-of-the-art hub in Madrid came online during the year, with
a capacity of around 65,000 parcels per hour, which will provide new
growth opportunities, improve quality and increase efficiency
through a high level of automation, for example the hub has a fully
automated small parcel sorter. The hub is not only an important
investment for Spain and Iberia as a whole, but will also strengthen our
international capabilities.
Our Rosenau Transport acquisition in Canada performed well during
the year. Rosenau complements our existing business in Canada and
the combination gives us full national coverage, as well as connecting
our US and Canadian networks.
The cross-border market continues to grow, which GLS can benefit
from as we have a strong international offering supported by our
high-quality network.
Progress during the year
• Further strengthened network capacity and footprint.
• Opened new Madrid-based hub.
• Continued to enhance the customer experience.
• Launched global brand campaign.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
18
GLS

Our scalable and flexible business model, together with our proven track
record of successfully integrating our network in new markets, positions
us well to further grow our international footprint. In February GLS
Serbia successfully launched its operations and over the coming months
will focus on acquiring domestic customers as we continue to build our
network and infrastructure across the country.
Strongly positioning in 2C market and securing position
in2Bsegment
GLS has a strong product portfolio that serves both the 2B and 2C
segment. We will continue to develop products and services in both
segments to maintain our diverse portfolio and meet the needs of
our customers.
We are moving forward with our strategy to provide closer pick-up and
delivery points for our customers for a better experience. For example,
GLS Spain signed an agreement with 2 large retailers to open parcel
shops inside their stores (a ‘shop in shop’ concept) to complement its
existing parcel shop network of over 5,000 (including agencies).
GLS Italy strengthened its partnership with a parcelshop network
provider giving GLS access to more than 5,500 shops in Italy. This
partnership will help us to expand our services and provide
customers with the high quality service they expect from GLS.
As detailed elsewhere, we will invest more to grow our parcel locker
network. We already have a strong footprint in Eastern Europe with a
leading position in Hungary and Slovenia where we have been
successfully rolling out parcel lockers over the past 12 months.
With the fast-changing market, we need to continue to develop and
strengthen our portfolio to capture growth. Our strategy differs per
country and is based on local needs to maximise success.
Inspiring the market through innovative digital and sustainable
customer-focused solutions
Innovation drives positive customer experiences and is essential
ifwe are to enhance our competitive advantage, win in our growth
markets and achieve our strategic ambitions. We are continuing to
strengthen our connection with our customers through expansion
ofour digital offering.
Our transformation to become a more digital business is moving
forward. For example, GLS Italy and GLS Germany both released a
new app which allows customers to more conveniently track parcel
status and position, estimate the arrival time of both domestic and
international deliveries and select their preferred at home delivery
point.
In response to customer demand for more sustainable solutions we
are intensifying our efforts to make all aspects of our business more
sustainable, to support our ambition to reduce our emissions to zero
by 2045.
As part of our sustainability reduction initiatives we implemented a
rail solution in Germany for line haul transport between Nuremberg
and Hannover and our goal is to expand further across Germany.
The future
We will leverage our business model and logistics know how to
continue our long-term growth trajectory. We will push further
tobecome more global digital and diverse, and to achieve this
willcontinue to expand our network our sustainable delivery
modeland further digitalise and diversify the GLS portfolio.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
19

The KPIs
1
we use to assess the Group’s performance are set out below. They
demonstrate the deliverability of each business’ strategy and, in particular,
ourprogress against our efficiency and profitable growth objectives.
Group
revenue
2
Group
adjusted operating loss
1
Royal Mail
adjusted operating loss margin
1
Lost time accident frequency rate
(LTAFR) per 100,000 hours worked
3
GLS
adjusted operating profit in Euros
1
GLS
free cash flow
4, 5
£12,044m £(71)m (5.7)% 0.73 €403m €230m
2021-22 £12,712m
2022-23 £12,044m
2020-21 £12,638m
2021-22 £758m
2022-23 £(71)m
2020-21 £702m
2021-22 4.9%
2022-23 (5.7)%
2020-21 4.0%
2021-22 0.54
2022-23 0.73
2020-21 0.39
2021-22 €402m
2022-23 €403m
2020-21 €401m
2021-22 €213m
2022-23 €230m
2020-21 €307m
Relevance Relevance Relevance Relevance Relevance Relevance
Demonstrates revenue growth
acrossRoyalMailand GLS.
Our primary measure of business performance. Demonstrates efficiency and our
focusondrivingprofitable growth.
Targets a continually improving safety culture
foremployees, customers and communities.
Demonstrates efficiency and profitable growth. GLS’ strategy targets around €1 billion
accumulated free cash flow generation over
thesix years 2020-21 to 2025-26.
How we calculate How we calculate How we calculate How we calculate How we calculate How we calculate
Total reported Group revenue. Reported operating profit excluding pension
charge to cash difference adjustment and
operating specific items (see page 241).
Adjusted operating profit as a proportion
ofrevenue in percentage terms.
Total number of accidents resulting
inanabsence on the next day or shift,
per100,000hours worked.
Adjusted operating profit before
specificitems,inEuros.
Pre-IFRS 16 in-year trading cash flow
plusdisposal proceeds, in Euros.
6
Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23
 Group revenue was £12,044 million,
representing a decline of 5.3% year-on-year
and 4.7% compared with 2020-21.
 The macroeconomic backdrop had a negative
impact on volumes year-on-year. COVID
restrictions benefitted both Royal Mail and GLS
revenue in the prior year. Royal Mail revenue
was also impacted by 18 days of industrial
action.
 Royal Mail revenue fell by 13.0% year-on-year
with a decline in both parcel and letter revenue,
the latter reverting to its structural trend of
decline having grown in the prior year.
 GLS revenue grew 10.2% year-on-year in
Sterling terms, driven by better pricing and
good customer retention. This was despite a
decline in parcel volume. Revenue growth was
achieved in almost all markets.
 Group adjusted operating loss was £71 million
compared to a profit of £758 million in the prior
year.
 Royal Mail recorded an adjusted operating loss
of £419 million, primarily due to the impact of
industrial action.
 GLS adjusted operating profit was broadly flat
in Euro terms, and grew by 1.8% in Sterling
terms, with revenue growth offset by
inflationary cost increases.
 Royal Mail adjusted operating loss margin was
5.7%, compared to a profit margin of 4.9% in the
prior year.
 This was driven by the impact of industrial
action, an inability to deliver planned
productivity improvements on time, lower test
kit volumes and the macro-economic
environment.
 These were partly offset by successful
management actions to reduce costs and
rightsize the business in the second half of the
year.
 Royal Mail LTAFR increased by 36% to 0.73.
 Our total accident frequency rate (TAFR) also
increased by 13% from 2.26 to 2.56.
 This was driven by an increase in falls outdoors
when working off-site and an increase in dog
attacks.
 Slips & trips increased by 24% which are more
likely to lead to absence than dog attacks (our
other highest impacting accident type).
 GLS adjusted operating profit was slightly
ahead of revised guidance given in January
2023 of €380 to €400 million.
 In Euro terms, adjusted operating profit was
broadly flat year-on-year, with cost inflation
largely offset by price, service quality and
targeted efficiency measures.
 GLS free cash flow of €230 million remained
robust.
 The €1 billion target is now six years to
2025-26, previously five years 2020-21 to
2024-25, due to the weaker macroeconomic
backdrop.
Link to strategy Link to strategy Link to strategy Link to strategy Link to strategy Link to strategy
Measuring Our Performance
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
20

Royal Mail
Customer Connect Europe
Trust
Inspire the marketGrowth
Strengthen 2C parcel market
position and lead in 2B
GLS
Group
revenue
2
Group
adjusted operating loss
1
Royal Mail
adjusted operating loss margin
1
Lost time accident frequency rate
(LTAFR) per 100,000 hours worked
3
GLS
adjusted operating profit in Euros
1
GLS
free cash flow
4, 5
£12,044m £(71)m (5.7)% 0.73 €403m €230m
2021-22 £12,712m
2022-23 £12,044m
2020-21 £12,638m
2021-22 £758m
2022-23 £(71)m
2020-21 £702m
2021-22 4.9%
2022-23 (5.7)%
2020-21 4.0%
2021-22 0.54
2022-23 0.73
2020-21 0.39
2021-22 €402m
2022-23 €403m
2020-21 €401m
2021-22 €213m
2022-23 €230m
2020-21 €307m
Relevance Relevance Relevance Relevance Relevance Relevance
Demonstrates revenue growth
acrossRoyalMailand GLS.
Our primary measure of business performance. Demonstrates efficiency and our
focusondrivingprofitable growth.
Targets a continually improving safety culture
foremployees, customers and communities.
Demonstrates efficiency and profitable growth. GLS’ strategy targets around €1 billion
accumulated free cash flow generation over
thesix years 2020-21 to 2025-26.
How we calculate How we calculate How we calculate How we calculate How we calculate How we calculate
Total reported Group revenue. Reported operating profit excluding pension
charge to cash difference adjustment and
operating specific items (see page 241).
Adjusted operating profit as a proportion
ofrevenue in percentage terms.
Total number of accidents resulting
inanabsence on the next day or shift,
per100,000hours worked.
Adjusted operating profit before
specificitems,inEuros.
Pre-IFRS 16 in-year trading cash flow
plusdisposal proceeds, in Euros.
6
Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23 Performance in 2022-23
 Group revenue was £12,044 million,
representing a decline of 5.3% year-on-year
and 4.7% compared with 2020-21.
 The macroeconomic backdrop had a negative
impact on volumes year-on-year. COVID
restrictions benefitted both Royal Mail and GLS
revenue in the prior year. Royal Mail revenue
was also impacted by 18 days of industrial
action.
 Royal Mail revenue fell by 13.0% year-on-year
with a decline in both parcel and letter revenue,
the latter reverting to its structural trend of
decline having grown in the prior year.
 GLS revenue grew 10.2% year-on-year in
Sterling terms, driven by better pricing and
good customer retention. This was despite a
decline in parcel volume. Revenue growth was
achieved in almost all markets.
 Group adjusted operating loss was £71 million
compared to a profit of £758 million in the prior
year.
 Royal Mail recorded an adjusted operating loss
of £419 million, primarily due to the impact of
industrial action.
 GLS adjusted operating profit was broadly flat
in Euro terms, and grew by 1.8% in Sterling
terms, with revenue growth offset by
inflationary cost increases.
 Royal Mail adjusted operating loss margin was
5.7%, compared to a profit margin of 4.9% in the
prior year.
 This was driven by the impact of industrial
action, an inability to deliver planned
productivity improvements on time, lower test
kit volumes and the macro-economic
environment.
 These were partly offset by successful
management actions to reduce costs and
rightsize the business in the second half of the
year.
 Royal Mail LTAFR increased by 36% to 0.73.
 Our total accident frequency rate (TAFR) also
increased by 13% from 2.26 to 2.56.
 This was driven by an increase in falls outdoors
when working off-site and an increase in dog
attacks.
 Slips & trips increased by 24% which are more
likely to lead to absence than dog attacks (our
other highest impacting accident type).
 GLS adjusted operating profit was slightly
ahead of revised guidance given in January
2023 of €380 to €400 million.
 In Euro terms, adjusted operating profit was
broadly flat year-on-year, with cost inflation
largely offset by price, service quality and
targeted efficiency measures.
 GLS free cash flow of €230 million remained
robust.
 The €1 billion target is now six years to
2025-26, previously five years 2020-21 to
2024-25, due to the weaker macroeconomic
backdrop.
Link to strategy Link to strategy Link to strategy Link to strategy Link to strategy Link to strategy
1. The KPIs used to measure performance include alternative performance measures (APMs). The APMs including a reconciliation to reported results are explained on page 59 and pages 238 to 242.
2. Reported result prepared in accordance with IFRS.
3. Refers to direct employees only.
4. GLS free cash flow is calculated as pre-IFRS 16 in-year trading cash flow plus disposal proceeds, and is explained and reconciled to reported results on page 241.
5. Five-year target set in 2020-21.
6. This measure is considered as the Group’s banking covenants are calculated on a pre-IFRS 16 basis.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
21

Our purpose – connecting customers, companies and countries – demonstrates
the importance we place on our stakeholder relationships and our impact on wider
society. Our stakeholders are integral to our success and we must take account of
theirissues and concerns if we are to create sustainable long-term value.
Colleagues
Our workforce who underpin the delivery
ofourstrategy.
Customers
People who rely on and buy the
serviceswe provide.
Shareholders
Shareholders, including our employees,
who provide capital to run our business.
Unions
Organisations that
represent the interests
ofour workforce.
Regulator
Ofcom, the body that oversees our
provision of the Universal Service.
Governments
Administrations that levy taxes and determine
legislation that affects our business.
Suppliers
Our commercial partners who
supportour business.
Local communities
The people who our
activities may impact.
Their key issues Their key issues
Health, safety and wellbeing.
Fair, diverse and inclusive working environment.
Attractive pay and conditions.
Development opportunities.
High-quality, value-for-money, reliable,
convenient and sustainable service.
Long-term sustainable value.
Strategy and execution.
Strong ESG performance.
Protection of
workers’interests.
Pay and conditions.
Effective delivery of our Universal
ServiceProvider obligations.
Delivery of annual Quality of
Servicetargets.
Effective delivery of our Universal Service
Provider obligations.
Provision of employment.
Tax income.
Transitioning to a low-carbon future.
Fair commercial terms.
On-time payment.
Long-term relationships.
Positive social and
economic impact.
Sustainable business
operations.
How we engage across the Group How we engage across the Group
Two-way and peer-to-peer dialogue through a
number of channels, including the Workplace
platform.
Share information through internal
communication channels including Courier
magazine, Royal Mail TV and Workplace.
Listen and act on employee feedback through the
annual Big Trust survey, regular pulse surveys,
Employee Voice Forums and PeoplePanels.
Face-to-face programmes to enhance
colleagues’ understanding of our strategy.
Direct customer engagement.
Regular customer surveys.
Net promoter score monitoring.
Trustpilot reviews.
Complaint management and resolution.
Active investor relations (IR)
programme,including investor
meetings,multi-day roadshows and
participation in industry conferences.
Quarterly results announcements.
Regular meetings with
union representatives.
Elected union
representatives work with
Royal Mail management.
Engagement with GLS’
local works councils.
Royal Mail executive team meets
regularly withOfcom.
Dedicated regulation team engages
withOfcom and participates in
regularmeetings.
Royal Mail executive team meets with
Government ministers, key politicians andcivil
servants, including the Postal Affairs Minister.
Public affairs engagement programme.
Regular updates and briefings.
Regular commercial dialogue. Execute UK community
strategy.
GLS supports numerous
regional and national
charitable initiatives.
See pages 34 and 35.
How we engage at Board level How we engage at Board level
Designated Non-Executive Director workforce
engagement programme and regular Board
updates about the programme (see pages 84 and
80).
Regular ESG Committee Board updates.
Attendance at Employee Voice Forums.
Review of employee feedback and Board
discussion in relation to actions to address
anyissues arising.
Site visits.
Regular Board updates on quality
ofservice.
Regular Board updates on the
impactofindustrial action within
theRoyal Mail business.
Chair and Executive Directors participate
in shareholder meetings to understand
shareholders’ views on governance and
strategy execution.
Attend Annual General Meeting (AGM).
Remuneration Committee Chair engages
with shareholders on remuneration
matters as required, including consulting
with shareholders on proposals for the
2023 Directors’ Remuneration Policy to
be approved by shareholders at the AGM
in July 2023. See page 103.
Regular Board updates on our IR
programme and the investor landscape
from the Director of IR. Our corporate
brokers also provide updates.
Royal Mail senior
management meet
regularly with senior union
leaders and updates the
Board on that engagement.
Participation in negotiations
with the CWU in relation to
industrial dispute.
Chair and Group CFO engage regularly
with Ofcom and subsequently provide
updates to the Board.
Dedicated Ofcom regulation team also
provides regular Board updates on
regulatory activity, particularly in
relationto USO reform.
Regular Board updates on matters of relevance
including updates on relevant legislation.
As appropriate, members of Public Affairs
teamattend Board meetings and participate
indiscussions.
ESG Committee receives updates on
ESG-related consultations and policies.
Chair engages with ministers on key business
issues.
Chair and Royal Mail CEO participated in Select
Committee hearings.
Contracts considered critical in terms
ofrisk profile approved by Board prior
toaward.
Audit and Risk Committee considers
reports on payment practices for
relevantbusinesses.
ESG Committee discussion on Royal Mail
and GLS’ engagement with their
respective supply chains on ESG issues
(see page 102).
Site visits.
ESG Committee
discussion onsociety,
vulnerable customers and
community engagement,
and received updates
onRoyal Mail’s national
charity partner programme
(see page 102).
Outcomes (see pages 24 and 25) Outcomes
Trust scores. See pages 17 and 32. New and enhanced products and services
that meet customers’ needs. See pages
16 to 19.
Actions to address quality issues.
Seepage 16.
Actions to mitigate the impact of
industrial action in Royal Mail, including
detailed contingency plans for recovery
periods and support from non-
operational managers on strike days.
Renaming Royal Mail plc to International
Distributions Services plc. See page 24.
Embedded new
operational management
structure in Royal Mail.
See page16.
The CWU’s Postal
Executive Committee
ratified and recommended
approval of the Business
Recovery, Transformation
and Growth Agreement.
See page 16.
We continue to work with Ofcom to
demonstrate the need for them to take
action on USO reform.
Annual regulatory Quality of
Servicetargets.
£11.8 billion of gross value added by RoyalMail
(direct and indirect contribution)
1
.
73,000 jobs indirectly supported
byRoyalMail in the wider economy
1
.
Promote responsible business practices
through supply chain compliance. See
page 37.
Publish information on payment
practicesin line with the Duty to Report
on Payment Practices andPerformance.
1 in every 175 jobs in the
UK economy as a whole is
provided by Royal Mail
1
.
Community investment.
Seepages 34 and 35.
Principal risks (see pages 50 to 55) Principal risks (see pages 50 to 55)
1 6 11 12 1 4 7 8 11 12 1 2 3 4 5 6 7
8 9 10 11 12
1 2 6 7
11 12
1 2 7 9 10 12 1 3 4 7 8 10 12 1 3 4 5 10 12 1 7 10 11
12
Our Stakeholders
1. Cebr research conducted for Royal Mail in 2022, comprising direct and indirect contributions.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
22

Colleagues
Our workforce who underpin the delivery
ofourstrategy.
Customers
People who rely on and buy the
serviceswe provide.
Shareholders
Shareholders, including our employees,
who provide capital to run our business.
Unions
Organisations that
represent the interests
ofour workforce.
Regulator
Ofcom, the body that oversees our
provision of the Universal Service.
Governments
Administrations that levy taxes and determine
legislation that affects our business.
Suppliers
Our commercial partners who
supportour business.
Local communities
The people who our
activities may impact.
Their key issues Their key issues
Health, safety and wellbeing.
Fair, diverse and inclusive working environment.
Attractive pay and conditions.
Development opportunities.
High-quality, value-for-money, reliable,
convenient and sustainable service.
Long-term sustainable value.
Strategy and execution.
Strong ESG performance.
Protection of
workers’interests.
Pay and conditions.
Effective delivery of our Universal
ServiceProvider obligations.
Delivery of annual Quality of
Servicetargets.
Effective delivery of our Universal Service
Provider obligations.
Provision of employment.
Tax income.
Transitioning to a low-carbon future.
Fair commercial terms.
On-time payment.
Long-term relationships.
Positive social and
economic impact.
Sustainable business
operations.
How we engage across the Group How we engage across the Group
Two-way and peer-to-peer dialogue through a
number of channels, including the Workplace
platform.
Share information through internal
communication channels including Courier
magazine, Royal Mail TV and Workplace.
Listen and act on employee feedback through the
annual Big Trust survey, regular pulse surveys,
Employee Voice Forums and PeoplePanels.
Face-to-face programmes to enhance
colleagues’ understanding of our strategy.
Direct customer engagement.
Regular customer surveys.
Net promoter score monitoring.
Trustpilot reviews.
Complaint management and resolution.
Active investor relations (IR)
programme,including investor
meetings,multi-day roadshows and
participation in industry conferences.
Quarterly results announcements.
Regular meetings with
union representatives.
Elected union
representatives work with
Royal Mail management.
Engagement with GLS’
local works councils.
Royal Mail executive team meets
regularly withOfcom.
Dedicated regulation team engages
withOfcom and participates in
regularmeetings.
Royal Mail executive team meets with
Government ministers, key politicians andcivil
servants, including the Postal Affairs Minister.
Public affairs engagement programme.
Regular updates and briefings.
Regular commercial dialogue. Execute UK community
strategy.
GLS supports numerous
regional and national
charitable initiatives.
See pages 34 and 35.
How we engage at Board level How we engage at Board level
Designated Non-Executive Director workforce
engagement programme and regular Board
updates about the programme (see pages 84 and
80).
Regular ESG Committee Board updates.
Attendance at Employee Voice Forums.
Review of employee feedback and Board
discussion in relation to actions to address
anyissues arising.
Site visits.
Regular Board updates on quality
ofservice.
Regular Board updates on the
impactofindustrial action within
theRoyal Mail business.
Chair and Executive Directors participate
in shareholder meetings to understand
shareholders’ views on governance and
strategy execution.
Attend Annual General Meeting (AGM).
Remuneration Committee Chair engages
with shareholders on remuneration
matters as required, including consulting
with shareholders on proposals for the
2023 Directors’ Remuneration Policy to
be approved by shareholders at the AGM
in July 2023. See page 103.
Regular Board updates on our IR
programme and the investor landscape
from the Director of IR. Our corporate
brokers also provide updates.
Royal Mail senior
management meet
regularly with senior union
leaders and updates the
Board on that engagement.
Participation in negotiations
with the CWU in relation to
industrial dispute.
Chair and Group CFO engage regularly
with Ofcom and subsequently provide
updates to the Board.
Dedicated Ofcom regulation team also
provides regular Board updates on
regulatory activity, particularly in
relationto USO reform.
Regular Board updates on matters of relevance
including updates on relevant legislation.
As appropriate, members of Public Affairs
teamattend Board meetings and participate
indiscussions.
ESG Committee receives updates on
ESG-related consultations and policies.
Chair engages with ministers on key business
issues.
Chair and Royal Mail CEO participated in Select
Committee hearings.
Contracts considered critical in terms
ofrisk profile approved by Board prior
toaward.
Audit and Risk Committee considers
reports on payment practices for
relevantbusinesses.
ESG Committee discussion on Royal Mail
and GLS’ engagement with their
respective supply chains on ESG issues
(see page 102).
Site visits.
ESG Committee
discussion onsociety,
vulnerable customers and
community engagement,
and received updates
onRoyal Mail’s national
charity partner programme
(see page 102).
Outcomes (see pages 24 and 25) Outcomes
Trust scores. See pages 17 and 32. New and enhanced products and services
that meet customers’ needs. See pages
16 to 19.
Actions to address quality issues.
Seepage 16.
Actions to mitigate the impact of
industrial action in Royal Mail, including
detailed contingency plans for recovery
periods and support from non-
operational managers on strike days.
Renaming Royal Mail plc to International
Distributions Services plc. See page 24.
Embedded new
operational management
structure in Royal Mail.
See page16.
The CWU’s Postal
Executive Committee
ratified and recommended
approval of the Business
Recovery, Transformation
and Growth Agreement.
See page 16.
We continue to work with Ofcom to
demonstrate the need for them to take
action on USO reform.
Annual regulatory Quality of
Servicetargets.
£11.8 billion of gross value added by RoyalMail
(direct and indirect contribution)
1
.
73,000 jobs indirectly supported
byRoyalMail in the wider economy
1
.
Promote responsible business practices
through supply chain compliance. See
page 37.
Publish information on payment
practicesin line with the Duty to Report
on Payment Practices andPerformance.
1 in every 175 jobs in the
UK economy as a whole is
provided by Royal Mail
1
.
Community investment.
Seepages 34 and 35.
Principal risks (see pages 50 to 55) Principal risks (see pages 50 to 55)
1 6 11 12 1 4 7 8 11 12 1 2 3 4 5 6 7
8 9 10 11 12
1 2 6 7
11 12
1 2 7 9 10 12 1 3 4 7 8 10 12 1 3 4 5 10 12 1 7 10 11
12
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
23

Our stakeholders are integral to the Group’s success. Our engagement with our
stakeholders helps us understand what matters to them. It builds trust, fosters
stronger relationships and ensures that we provide the products and services
customers need, which helps drive the Group’s long-term success.
The outcomes of decisions are not always positive for all stakeholders. On occasions the Board has to make difficult choices and prioritise the
interests of different stakeholders. In such circumstances, what matters to each stakeholder is carefully considered and, after taking account
of all relevant factors, a decision is made based on the long-term interests of the Group.
In relation to the decisions taken during the year ended 26 March 2023, and up until 21 May 2023, the Directors of International Distributions
Services plc consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to
promote the success of the Company for the benefit of its members as a whole, having regard to the stakeholders and matters set out
insection 172 of the Companies Act 2006.
Examples of principal decisions made by the Board during the year, and the stakeholder issues and section 172 matters considered as part of
thedecision-making process, are set out on this page and on the following page. We define ‘principal decisions’ as decisions which are material
orstrategic to the Group, and/or significant to any of our stakeholders. Ineach case, given the materiality and importance of these matters,
therelevant management team made recommendations to the Board and, where relevant, its Committees for consideration.
Name change to International
Distributions Services plc
In July 2022 it was announced that the holding company of
the Group, Royal Mail plc, would be renamed International
Distributions Services plc (IDS). In approving this decision
theBoard considered the following matters:
 The long-term interests of the Group and all its
stakeholders: The Group’s positioning needed to
beupdated to reflect recent developments and the
organisation’s operational structure, which includes
twoseparate sub-groups – Royal Mail and GLS. The
renaming also reflected the increased importance of GLS,
which over the last three years has contributed more than
twothirds of the Group reported operating profit.
 Customers and suppliers: The potential impact on
commercial relationships was considered. However,
asnochanges were being made to the Royal Mail and
GLSbrands or each business’ respective positioning
initsmarketplace, it was determined that the change
would notadversely affect either customers or suppliers.
 Shareholders: The name change demonstrated the
Board’s commitment that there should be no cross-
subsidy within the Group. It also served to allay any
shareholder concerns that GLS would be used to support
Royal Mail and, as a result, necessary transformation in
Royal Mail would be avoided or delayed.
Universal Service Obligation
In November 2022 the Board approved the making of a request
to the Secretary of State for Business and Trade toreform the
Universal Service. Royal Mail wants to move from a six- to a
five-day-a-week letter service under the USO,whilst continuing
to improve parcel services. As part of this, Royal Mail remains
committed to the ‘one-price-goes-anywhere’ service on a range of
letters and parcels to all addresses across the country. In reaching
this decision the Board considered the following matters:
 Customers: To secure Royal Mail’s long-term survival,
itmust operate a sustainable business model based on
customer demand; that means delivering more parcels
and fewer letters. Ofcom’s User Needs Review showed that
a five-day (Monday to Friday) letters service would meet
the needs of 97% of consumers and SMEs. In relation to
those customers who could be affected by the change, for
example magazine publishers, it was noted that RoyalMail
was working to manage the change and mitigate the impact.
 The long-term interests of the Group and all its
stakeholders: According to Ofcom, a financially
sustainable Universal Service should be able to achieve an
EBIT margin of 5-10%. Since privatisation in 2013, the
Universal Service network has only achieved this twice.
Letter volumes have declined by more than 60% since their
peak in 2004-05. Reforming the Universal Service is
essential if Royal Mail is to have a sustainable future.
 Employees: A reformed USO would enable Royal Mail to
grow in a more financially sustainable way, which would
support job security in the long term. Moving to a Monday
to Friday letter service, and focusing on parcels at
weekends, would create an opportunity to offer employees
different working patterns, including more Saturdays off.
Section 172 Statement
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
24

Industrial relations
In September 2022, following five months of talks, including
two dispute resolution procedures, no agreement had been
reached with the CWU to resolve ongoing damaging
industrial action. In light of these circumstances, the Board
agreed that Royal Mail should review or serve notice on
Agenda for Growth protections and other union agreements
and work with the CWU to move to a more modern industrial
relations framework. In coming to this decision the Board
considered the following matters:
 The long-term interests of the Group and all its
stakeholders: During the first half of 2022-23 Royal Mail
made an adjusted operating loss of £219 million. To enable
the business to succeed in a highly competitive market, it
must adapt much faster to changing customer demands.
However, the CWU had blocked any meaningful discussion
on the proposed change agenda and had not put forward
any viable alternative plans. Accordingly, to secure Royal
Mail’s long-term survival, a more modern industrial
relations framework was required to enable the business
to become more agile and compete more effectively.
 Customers: Royal Mail needs to adapt much faster to
changing customer demands in a highly competitive
market. The ongoing industrial action had significantly
impacted Royal Mail’s customers and the decision to
serve notice on Agenda for Growth protections and other
union agreements was a means of breaking the impasse
and enabling Royal Mail’s transformation to move ahead
at pace. At the same time, the Board recognised that the
action could cause further short-term disruption for
customers. However, to secure the long-term survival of
Royal Mail, it was the best course of action.
 Employees: Rebuilding the trust of Royal Mail’s employees
and working with them to deliver transformation is an
essential part of the business’ growth strategy. In the
long term, serving notice on Agenda for Growth
protections and other union agreements to establish a
more modern industrial framework, which would help
secure Royal Mail’s survival and its ability to offer
long-term job security, was considered to be in the best
interests of the business’ employees. By taking steps to
modernise agreements and ways of working with the
CWU, it would allow Royal Mail, amongst other things,
toretain its position as the best employer in its industry,
with the best pay, pensions and conditions.
Likely consequences ofany
decision in the longterm.
The interests of employees.
The need to foster businessrelationships
withsuppliers, customersandothers.
The impact of operations onthe community
and theenvironment.
The desirability of maintaining areputation
for high standards ofbusiness conduct.
The need to act fairly asbetween members.
Acquisition of Tousfacteurs SAS
In June 2022, GLS acquired Tousfacteurs SAS (Tousfacteurs),
atech logistics company and provider of live-tracking
software solutions which allow customers to interact with
senders through targeted advertising and green bike delivery.
The Board considered and approved the acquisition and in
coming to this decision considered the following matters:
 The long-term interests of the Group and all its
stakeholders: Through the acquisition GLS would secure
access to Tousfacteurs’ software delivery solutions. This
new capability supports GLS’ strategy and the creation of
long-term value, including positioning GLS asa premium
player in the B2C segment. The transaction also created
an opportunity for GLS to secure strategic advantage by
leveraging Tousfacteurs’ logistics expertise to drive
further digital innovation.
 Customers: The development of innovative services
would enable GLS to better respond to changing customer
needs with new digital services and the expansion of
Tousfacteurs’ greenbike delivery operations (see below).
The acquisition would also enable GLS to further optimise
the last-mile customer experience and strengthen its
sustainable delivery services.
 The impact of operations on the community and
environment: Tousfacteurs’ last-mile bike delivery
operations already cover Paris, Lyon and Toulouse.
Byleveraging its community of independent bike riders,
Tousfacteurs has the ability to build a scalable green
bikedelivery service across more locations in France.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
25

We seek to be an integral, trusted and valued part of every community, operating
in a responsible and sustainable way. Demonstrating leadership across the broad
ESG agenda is also essential to achieving a competitive advantage and creating
value for stakeholders.
Our ESG approach
In recognition of the impact our operations have
onsociety and the continuing growth in demand
forsustainable products and services, our ESG
Principles are built around the issues that are most
relevant to our stakeholders and our businesses.
These Principles, which are set out below, encapsulate
our commitment to operate in a sustainable way
andsupport several United Nations Sustainable
Development Goals (SDGs).
Royal Mail and GLS undertake regular materiality
assessments to ensure that their respective ESG
programmes continue to take account of the areas
stakeholders consider most important. Information
about Royal Mail and GLS’ most recent materiality
assessments and further detail about each
business’ESG programme, are included in their
respective ESGReports, which are available at
www.internationaldistributionsservices.com/en/
sustainability/reporting-and-performance and
www.gls-group.eu/GROUP/en/our-responsibility.
We aim to operate in an environmentally
responsible way, focused on reducing the
impacts associated with our operations,
andplaying our part in the transitionto
alow-carbon future.
Sustainable Development Goals
See pages 27 to 29 See pages 30 to 35 See pages 36 and 37
Sustainable Development Goals Sustainable Development Goals
Environment Social Governance
We aim to deliver economic and social
benefits for our people, our customers
andthe communities weserve. As the
UK’sUniversal Service Provider, we are
inauniqueposition to play an active part
inthe UK economy.
We endeavour to act with integrity
andtransparency in the interest ofour
stakeholders, ensuring we have effective
mechanisms in place to deliver our business
operations in a responsible manner. Our
stakeholders trust us to deliver forthem.
Maintaining that trust, andoperating with
integrity, are fundamental to protecting our
valuedplace in society.
ESG Review
Our ESG Principles
Our ESG Principles underpin Royal Mail and GLS’ strategies, which aim to create stakeholder value and achieve sustainable growth.
Theyfocus on the topics identified by our stakeholders as being material while supporting a number of UN SDGs.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
26

Environment
Supporting the transition to a low-carbon future
Royal Mail and GLS’ environmental strategies include pathways, targets and mitigating
actions that will help us reduce our environmental footprint and play our part in the
transition to a low-carbon future while offering a wide range of green solutions to our
customers. The metrics and targets associated with their implementation are set out
below.
Decarbonising our business
We recognise the need to take decisive steps to help tackle
theglobal climate emergency and prepare our business for
alow-carbon future. We aim to take a leadership role in our
industry’s transition and to support the implementation of
theParisAgreement.
Royal Mail
Royal Mail is the UK’s greenest delivery option for letters and parcels
1
.
The business is currently awaiting validation by the Science Based
Targets initiative (SBTi) of its target to reduce Scope 1 and 2 emissions
by 50% by 2030, reduce Scope 3 emissions by 25% by 2030 and
reduce Scopes 1, 2 and 3 emissions by 90% by 2040, in alignment
with the latest climate science and a 1.5°C decarbonisation pathway.
On its route to net zero, Royal Mail UK (which excludes Parcelforce
Worldwide) also aims to reach an average of 50g CO
2
e per parcel
delivered, a c.75% reduction compared with 2020-21. Largely as a
result of its final-mile foot delivery model, Royal Mail UK’s average
reported CO
2
e per parcel through its domestic network is currently
218g CO
2
e. In comparison, the reported emissions of its industry
competitors are between c.300g and 500g CO
2
e per parcel (based
onpublicly reported data).
As part of its ‘Steps to Zero’ environmental strategy, Royal Mail will:
 Optimise its distribution network and modernise its vehicles
toreduce transport fuel emissions.
 Improve the energy efficiency of its buildings, making space
formore parcel automation and technology.
 Transform its operations and behaviours to embrace circularity
by enabling re-use models and reducing single-use items.
 Use its size, scale and reputation to play a positive role in
championing sustainability initiatives in its industry, for its
workforce and customers.
During the year, as a result of updates to the Royal Mail business
plan 2023-24, investments in initiatives to support the
environmental strategy were scaled back. However, these have not
impacted the ambitions and targets detailed in the adjacent panel.
Carbon ambitions and targets
Royal Mail
Net zero by 2040 across Scopes 1, 2 and 3 at UK operations,
aligned to 1.5°C, the latest climate science
1
and science-
based target standards.
To 2040 our targets are:
GHG emissions 90% reduction in Scope 1, 2 and 3 emissions
Renewable
electricity
100% by 2022
Zero-emission final
mile
100% by 2035
Company cars 100% zero emission by 2030
Royal Mail will achieve this target by increasing its use of
low- and zero-emission transport alternatives, including
rail, while minimising the use of domestic air freight.
RoyalMail will also decarbonise its network and buildings.
GLS
Zero GHG emissions from Scopes 1, 2 and 3
2
by 2045 for
worldwide operations.
Offsetting
European emissions since 2022
3
Renewable
electricity
80% by 2022 (European locations
operatedbyGLS)
Fleet 50% zero/low emission by 2030
100% of new vehicles will be low
orzeroemission by 2035
100% by 2045
Company cars 100% zero emission by 2030
1. We report our carbon emissions in line with the GHG Protocol Corporate Standard.
The standard classifies a company’s GHG emissions into threescopes. Scope 1
emissions are direct emissions from sources that are ownedor controlled, including
combustion of fuel and operation of facilities. Scope2emissions are indirect emissions
from the purchase of electricity, heat, steam and cooling purchased for own use.
Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in
the value chain of the reporting company, including both upstream and downstream
emissions. We use the latest conversion factors from the UK Government (source:
www.gov.uk/government/collections/government-conversion-factors-for-
company-reporting).
2. Pathways will be developed to deliver this reduction, including the setting of
interimtargets. GLS Scope 3 emissions currently include the categories parcel
transport (Well-to-Wheel), water, waste, paper, business travel, Well-to-Tank
(WTT)emissions for Scopes 1 and 2, WTT emission from fuel consumption of
company cars and shunters, franchises and subcontracted depots, capital
goodsand employee commuting which have been added in 2022.
3. Offsetting of all European Scope 1, 2 and 3 emissions, excluding Scope 3 emissions
from capital goods and employee commuting. GLS Serbia’s operations commenced
in February 2022-23 and are not included in the compensation for 2022-23.
1. Based on reported CO
2
e per parcel.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
27

GLS
As part of Climate Protect, the ambition of GLS’ environmental
strategy is to reduce GLS’ worldwide Scope 1, 2 and 3 emissions to
zero by 2045. During the year the business’ environmental strategy
has been expanded to include its North American operations.
To achieve its ambition to reduce worldwide Scope 1, 2 and 3
emissions to zero by 2045 GLS will:
 Work with its transport partners to transform its parcel and
freight delivery fleet towards zero- and low- emissions.
 Implement distribution network and last mile efficiency,
including extending its parcel shop and locker network.
 Reduce and avoid emissions by ensuring new buildings conform
with zero- and low-emission operations.
 Improve the energy efficiency of its existing buildings by
introducing own-green electricity production and renewable
heating systems.
While emission reduction and avoidance are a key focus,
compensation is an important short-term measure to tackle
climate change. Accordingly GLS compensates the emissions of all
sold parcels and shipments of its GLS European subsidiaries, as
well as the emissions from these subsidiaries’ sites and business
travel. Emissions relating to capital goods and employee
commuting are not compensated.
Our environmental performance
In 2022-23, Royal Mail’s total carbon footprint and energy use
decreased by 7% and 11% respectively, compared to our base-year
(2020-21). This was due to a decrease in vehicle fuels, electricity
and gas usage across our operations, half of which was a result of
electrification and energy management initiatives across our
buildings. The remaining reduction was due to declines in
workload, specifically parcel volumes. As a result, our key intensity
metrics (carbon emissions per million revenue and per parcel)
Carbon emissions performance CO
2
e (’000 tonnes)
1
FY2022-23 FY2021-22
Total Royal Mail GLS
2
Total Royal Mail³ GLS³
Scope 1
4
501.0 407.6 93.4 504.9 483.7 21.2
Scope 2 (location-based)
4
74.0 52.5 21.5 80.9 58.6 22.3
Scope 3 1,822.4 681.9 1,140.5 742.6 742.6 –
Total 2,397.4 1,142.0 1,255.4 1,328.4 1,284.9 43.5
Tonnes CO
2
e per £1m revenue
5
47.7 62.1 24.7 46.1 63.7 10.3
Scope 2 (market-based) 6.2 0.7 5.5 6.1 1.3 4.8
Energy consumption kWh (’000)
4
2,607,957 2,104,861 503,096 2,622,616 2,434,395 188,221
1. We report our carbon emissions to the GHG Protocol Corporate Standard, which classifies a company’s emissions into three ‘scopes’. Scope 1 emissions are direct emissions from sources that
are owned or controlled by Royal Mail, including the combustion of fuel and operation of facilities. Scope 2 emissions are indirect emissions from the purchase of electricity, heat, steam and
cooling for own use. Scope 3 emissions are all other indirect emissions that occur in a company’s value chain and are voluntary to report. Royal Mail reports all its Scope 3 emissions including
purchased goods and services, capital goods, fuel and energy related activities, upstream and downstream transportation and distribution, employee commute, business travel, waste disposal.
end-of-life treatment of sold products and investments. GLS reports emissions related to its owned transport fleet (most of North America) within Scope 1 and emissions related to its
subcontracted transport fleet (Europe and part of North America) within Scope 3.
2. GLS emission data reflects the calendar year rather than the financial year. Since 2021-22 GLS’ reporting scope has changed. 2022-23 data includes Scope 1 and Scope 2 emissions from Rosenau
and transport emissions from own vehicles of GLS US and GLS Canada and a full Scope 3 inventory for the first time. ‘Like for like’ Scope 1-2 emissions have decreased by 8.3% in the year. Around
85% of GLS’ Scope 3 emissions come from parcel transport by transport partners. Hence, emissions reduction in the supply chain mainly take place via the transformation of our fleet, which we
do by incentivising our transport partners. Transport emissions are calculated yearly using the EN 16258 standard.
3. 2021-22 data for Royal Mail has been restated following the provision of data which was previously estimated. GLS Scope 1 and Scope 2 emissions have also been restated following the provision
of data which was previously estimated. Royal Mail has also increased its scope 3 emissions reporting to cover 100% of GHG emissions across all value chain categories. This has increased scope
3 emissions reported by 626KtCO
2
e from 76.1KtCO
2
e to 702.0KtCO
2
e. This increase is not reflective of operational changes and is entirely down to increase reporting scope. ‘Like-for-like’ our total
emissions decreased 2%, comparisons throughout this report detail the ‘like for like’ change only. Royal Mail conducts an annual review of supply chain emission categories based on a screening
approach using industry-level emission factors. This will be matured over time to a specific-supplier approach, alongside integrating carbon within in our contracts management processes for
the high-spend and/or high-emitting sectors.
4. The energy data for Royal Mail is all UK energy declared under the Streamlined Energy Consumption Regulations (SECR). All energy reported for GLS is considered offshore. In accordance with
SECR, details of energy actions taken are listed throughout this Environment section and relate directly to findings within our Phase 2 Energy Savings Opportunity Scheme report.
5. The tonnes CO
2
e per £1m revenue ratio comprises Scope 1 and Scope 2 (location-based) emissions only. This ratio provides an overview of our carbon efficiency as we continue to grow.
remained broadly consistent with the prior year, despite strong
emission savings overall.
In 2022-23 GLS’ total carbon footprint was 1,255.445 tCO
2
e. Direct
comparisons to the prior year would be misleading because GLS
reported its full scope 3 emissions for the first time in 2022-23,
including emissions related to its transport partners’ parcel and
freight distribution, which represented 85% of GLS total carbon
footprint. Year-on-year Scope 1 and 2 emissions increased due to
emissions from Rosenau and emissions from owned-transport
vehicles in GLS US and Canada also being reported for the first time
in 2022-23.
GLS emissions offsetting
GLS set a target to provide carbon neutral parcel delivery to all
European customers. This target was achieved in April 2022
bysupporting four climate offsetting projects via Climate Partner,
the compensation provider GLS works with. The projects, which
arecertified according to the highest standards (VCS/CCBS
andGold-Standard), include:
 Forest conservation – Pacajá, Brazil: Helping to prevent illegal
logging across 148,000 hectares of the Amazon rainforest.
 Forest conservation – Madre de Dios, Peru: Working with
thelocal population to help manage the land sustainably
andprotect a 100,000-hectare area in an endangered
Amazonregion.
 Solar energy – Guttigoli, India: Commissioning a 100 MW solar
power plant to improve the green energy supply and support
schools in the surrounding communities.
 Wind energy – Maliya, India: Constructing and operating
a40 MW wind farm to generate clean electricity through
windpower and the development of the community through
jobcreation.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
28
Strategic Report – ESG Review continued
Environment

These initiatives are accounted for within the income statement and
are booked as ‘other marginal costs’. No grants are received in
relation to any of the climate offsetting projects.
As outlined in our 2021-22 Annual Report, energy efficiency
isaligned with our ambition to decarbonise, focusing on
optimisation and the deployment of more efficient technology.
Initiatives to reduce energy are detailed on the following page.
Buildings
Energy used at buildings accounted for 9% of Royal Mail’s total
emission profile in the year. While electrification of Royal
Mail’s fleet and parcel growth plans are increasing energy needs,
duringthe year thebusiness achieved significant energy savings of
over 16GWh due to theongoing implementation of efficiency
improvements, including maintenance and tuning of heating,
ventilation, air conditioning and heating controls across 230 of the
business’ largest sites. These control improvements, together with
new policies for winter heating timings and temperature, have
reduced natural gas consumption by 13% and electricity use by
around 4%. These savings will roll forward into future years as part
of an energy performance contract to save 180GWh over five years.
Solar arrays have been installed at nine of the business’ sites and a
further 230 sites have been surveyed for their solar viability. The
survey concluded that 90 buildings have good potential and could
supply up to 20% of Royal Mail’s current electricity use.
A new 100% renewable electricity tariff, backed by Renewable
Energy Guarantees of Origin certificates and entered into in
April2022, has also helped reduce Royal Mail’s market-based
emissions by over 90% over two years (around 9,000 tCO
2
e saved).
In 2022-23, 99% of our electricity purchased and generated was
based on this renewable tariff and we anticipate reaching our 100%
target in 2023-24.
GLS’ total electricity consumption increased by 6%. This is primarily
due to the inclusion of Rosenau’s transport operations. Excluding
Rosenau, group-wide electricity consumption decreased by 1%.
GLS achieved its target of 80% renewable electricity across its
European operated sites in 2022.
GLS has rolled out sustainability requirements for all new
construction and is trialling and installing new sustainability
measures in existing offices, hubs and depots to decrease the
environmental impact of its buildings. To future-proof its depot
buildings, GLS is increasingly using regenerative heating systems
and solar panels to reduce carbon emissions from purchased
heating or electricity. LED lighting is being installed toreduce
overall electricity consumption together with charging infrastructure
and energy management solutions. The new GLS buildings in
Alicante and Madrid in Spain will be BREEAM certified and are being
constructed in accordance with the latest sustainability
benchmarks and charging infrastructure for electric vehicles.
Transport
Royal Mail is the largest commercial fleet operator in the UK, which
alongside air and rail emissions accounts for around 70% the total
emissions profile. Around 21% of our delivery routes are zero-
emission, undertaken by a dedicated or shared electric van or by
walking. Our electric van programme now has over 4,900 electric
vans in operation at over 154 delivery and collection units. A
financial review of 20% of these locations showed that, on average,
vehicle maintenance costs had fallen 60% and fuel costs 78%.
Factoring in the additional investment required for an electric van
and associated charging infrastructure, our electrification scheme
is anticipated to break even at around four years, making savings
over the vehicle lifecycle of nine years.
Rail accounts for 4% of Royal Mail’s domestic mail volume. At the
same time, the business remains committed to reducing its use of
domestic flights, which account for a further 5% of its domestic
distribution network. The new Daventry-based Midlands Super
Hub, opening in June 2023, has its own rail terminal, which will
enable increasing volumes ofmail to be transported by rail.
With around 85% of GLS’ emissions coming from parcel, freight and
transport services, the reduction of vehicle emissions is a key
factor to achieving the business’ decarbonisation goals. Measures
include fleet conversion, reducing first- and last-mile emissions
and converting depots to accommodate low- and zero-emission
fleet. In total, more than 2,200 charging points are already available.
GLS is continuing to expand its low- and zero-emission fleet.
Trialsto add more e-vans, light vehicles and alternative-fuel
vehicles to the delivery network are continuing. The initiatives
tobring more environmentally friendly vehicles into the fleet have
been successful and, in total, more than 3,300 vehicles are already
operational. This represents an increase of more than 1,000 zero-
and low-emission vehicles since 2022.
GLS is also implementing a range of initiatives to reduce final-mile
emissions aligned to local requirements. GLS Slovenia has installed
over 60 parcel lockers with photovoltaic cells on the roof.The parcel
lockers reduce driven kilometres and transport emissions per
delivery van, and at the same time generate green electricity with
aninstalled capacity of 700 W per parcel locker. AtGLS Germany,
parcel shipping by train is being tested in a pilot project which
hasdelivered an emission reduction of up to 80% compared
withconventional road transport.
Responsible consumption
In 2022-23 Royal Mail generated 35,703 tonnes of waste
(2021-22: 39,807 tonnes). This represents a total reduction of
11%against the base year (2020-21), and a positive step towards
thebusiness achieving its target of 25% reduction in waste volumes
by 2030. Inaddition, Royal Mail has recycled, re-used or diverted
99% of its waste, which is an improvement on 97% in the prior year.
During the year, Royal Mail’s circular plan was developed in three
key areas: operational product waste (pallets, mailbags and parcel
trolley sleeves); the design of new customer products to improve
re-use, recycled content and recyclability; and building acircular
service offering that allows customers to establish re-use loops
such as rental, return to refurb, and second hand.
Further information about Royal Mail’s waste and water
consumption is included in the Royal Mail ESG Report, which is
available at www.internationaldistributionsservices.com/en/
sustainability/reporting-and-performance.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
29

Strategic Report – ESG Review continued
Delivering economic and social benefits
Our purpose – connecting customers, countries and companies – positively impacts
society. We aim to be an integral, valued and trusted part of every community that our
service reaches. Social issues are also important to our stakeholders, including our
approach to health, safety and wellbeing, engagement, diversity and inclusion.
Creating a safe and healthy workenvironment
We want to create a safe and healthy working environment for
ourpeople. Our goal is to ensure a workplace where everyone
isfree from injury and enjoys good physical and mental health.
Royal Mail
A strong health and safety culture is key to safeguarding our
peopleand customers. We want to ensure that everyone
understands their role and how they can protect themselves and
others from harm. As we move forward, increasing the priority
given to safety through proactive leadership and management will
be essential ifRoyal Mail is to further strengthen compliance to
standards and continue toprovide a safe working environment.
In autumn 2022, Royal Mail carried out a full review of its safety
function to determine the structure and resource needed to deliver
a full audit programme for 2023-24 and maintain health and safety
support across all of its sites. The recruitment of an additional 28
team members is underway. This will double the size of the field
team and enable the business to further improve itsstandards.
Royal Mail’s Health and Safety policy, which is available at
www.internationaldistributionsservices.com/en/sustainability/
governance/policies, is implemented through the business’
integrated Safety, Health and Environment (SHE) management
system. This provides the framework for managing risk, improving
performance and maintaining a safe, healthy and environmentally
responsible workplace.
In the year, Royal Mail also took steps to ensure the continued
robustness of its safety measures, including the rollout of a
newrisk-based safety audit methodology supported by next-day
managerial coaching to ensure that actions are fully understood
and compliance is maintained. This approach reinforces the
importance of compliance to standards as a foundation for
improving safety culture and safety performance. The business
also deployed a newoff-site risk assessment system via posties’
handheld scanners to improve the management of significant
off-site risks,such as dog attacks.
Upskilling managers has remained a priority for the field safety
team. As part of a wider training programme, managers in Royal
Mail’s delivery function undertook a combination of classroom and
web-based training in key safety topics such as riskmanagement,
culture, inspection, and accident investigation.
Royal Mail continues to support the wellbeing of its people
withanextensive range of programmes and tools. Practical
guidance isprovided within the business’ three main health
andwellbeingprogrammes:
 ‘Feeling First Class’ to promote proactive health management.
 ‘Stamp Out Aches and Pains’ to raise awareness of
musculoskeletal health.
 ‘Because Healthy Minds Matter’ to reduce stigma, normalise
conversations about mental health and signpost to support.
In October 2022, Royal Mail launched Help@hand, a new confidential
wellbeing platform that provides all Royal Mail colleagues and their
immediate family with fast, free, direct access to health and wellbeing
support. This includes a remote GP service with an unlimited
number of free video consultations with private GPs 24/7, 365 days
a year. Instant employee assistance for any life, money or wellbeing
issue remains available 24/7 for all colleagues through the
business’ Employee Assistance Programme (EAP). TheEAP is free,
independent, and provides confidential helpline andonline services.
Royal Mail has also expanded its Let’s Talk Menopause campaign
through a dedicated working group that aims to help raise
awareness, listen and signpost colleagues to support while
normalising menopause conversations.
In February 2023, Royal Mail launched its new partnership with
British Heart Foundation. A key strand of the partnership will
betosupport the heart health of Royal Mail’s employees and
train100,000 colleagues in CPR. Further information about the
partnership is included in the Royal Mail ESG Report, whichis
available at www.internationaldistributionsservices.com/en/
sustainability/reporting-and-performance.
GLS
GLS’ Occupational Health and Safety (OHS) Policy is implemented
through an extensive OHS Programme that is focused on ensuring
the health and safety of its employees, its transport partners and
their drivers. The OHS programme covers management training,
regular staff briefings that raise awareness of particular workplace
hazards and specially developed transport and driver training
courses that focus on road traffic risks.
The business also operates a number of country-specific preventative
health programmes that are intended to prevent work-related
health hazards and ensure early detection of occupational illnesses.
The activities include back therapy training, nutritional advice and
testing of exoskeletons to reduce the strain of lifting and carrying.
Social
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Annual Report and Financial Statements 2022-23
30

Group health and safety performance
2022-23 2021-22 2020-21
Royal Mail GLS Royal Mail GLS Royal Mail GLS
Fatalities
1
Employees 0 0 1 1 2 0
Third parties
2
6 17 2 18 5 24
LTAFR
(per100,000hoursworked)
3
0.73 2.08 0.54 2.28 0.39 2.44
Sickness absence (%)
3
7.50 4.96 7.98 4.88 8.48 4.79
1. The total number of fatalities due to accidents that have occurred as a result of Royal Mail or GLS undertakings.
2. Third parties include contractors, third-party drivers and members of the public.
3. Refers to direct employees only.
Health and safety performance
Royal Mail and GLS strive to continuously improve their health and safety performance, and monitor and report key safety metrics
regularly to the Board and the ESG Committee.
Each business’ safety performance is set out in the table below. In 2022-23, Royal Mail’s Lost Time Accident Frequency Rate (LTAFR)
increased by 35% to 0.73 (2021-22: 0.54). Total accident frequency rate also increased by 13% to 2.56 (2021-22: 2.26). GLS’ employee LTAFR
for the same period decreased to 2.08 (2021-22: 2.28).
Royal Mail also monitors and reports its road traffic collisions
frequency rate (RTCFR) as a key safety performance metric. In
2022-23 RTCFR reduced by 2.7% compared with the previous year.
During the year, there was a strong focus on improving compliance
to vehicle checks through the launch of a simplified checklist on
posties’ handheld scanners. Royal Mail celebrated a ten-year
partnership with road safety charity Brake and again supported
thecharity’s annual road safety week ‘Safe Roads for All’ which
aims to raise drivers’ awareness of vulnerable road users.
Royal Mail is working hard to reduce the number of collisions
colleagues are involved in. All road traffic accidents are investigated
bya manager. Serious and fatal accidents are investigated by a
safety professional and these incidents have a separate protocol
which guides our investigations, reports and the actions we take.
The business liaises closely with the police where necessary and
carries out detailed investigations to establish root cause(s) and,
where possible, determine what lessons can be learned. Details
ofserious and fatal incidents and resulting investigations are also
shared with the Board.
In GLS during 2022-23, the total number of fatal accidents fell
from19 to 17 compared with the previous year. During the year
noGLS employee had a fatal accident. The total number of fatalities
related to activities of GLS transport partner companies. 16 of
these fatalities were road traffic accidents while one fatal accident
occurred on GLS premises. This accident was thoroughly investigated
and the findings have been shared with all GLS country organisations.
Drivers directly employed by GLS receive road safety training as
part of their standard training programme. To also reach drivers
employed by GLS transport partners, GLS has developed specific
initiatives within its OHS Programme, including providing training
material for transport partners and their drivers in line with local
legal requirements. Furthermore, GLS encourages and supports
transport partner companies to make practical road safety training
available to their drivers.
In 2022-23, Royal Mail’s sickness absence level was 7.50%
(2021-22: 7.98%). As part of the recent negotiators agreement with
our main union, a newapproach to pay and attendance standards
has been agreed.
In GLS, the sickness absence level increased to 4.96%, mostly due to
an alignment of the calculation method in one country.
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Annual Report and Financial Statements 2022-23
31

Employee engagement
Royal Mail’s aim to own ‘Trust at the Doorstep’ by being brilliant
forcustomers and establishing trusted relationships everywhere,
including with its employees, faced a number of challenges in
2022-23. Industrial action has significantly impacted the business
(see page 6) and it has not always provided the service its customers
and society need and expect.
Ongoing dialogue with colleagues across the Royal Mail business
has been more important than ever and employee trust check-in
surveys have continued to be conducted on a monthly basis. In
total, over 47,000 colleagues have participated in these surveys and
provided valuable feedback on a range of issues.
As at the date of this Annual Report, Royal Mail’s annual Big Trust
Survey was not yet open. The results of the survey will be published
on the Group website when available.
During the year employee satisfaction surveys were conducted
across a number of GLS’ businesses including GLS Austria,
GLSDenmark, GLS Spain, GLS Hungary and GLS Croatia. Surveys
undertaken at each of GLS’ US local sites returned an overall 85%
satisfaction rating. GLS Netherlands introduced exit employee
surveys for all leavers during the last 18 months. GLS Germany won
Kununu’s ‘Top Company to work at’ award based on employees’
satisfaction surveys and GLS Austria and GLS Poland were each
named as a ‘Great Place to Work’ based on employee surveys.
Rewarding people fairly
We believe Royal Mail provides the best terms and conditions for
workers in our industry in the UK. Fair employment conditions
arethe foundation of how Royal Mail does business. It offers
permanent employees a competitive salary, paid holiday and
agoodpension.
In 2022-23, UK postie’s basic pay was 33% more than the UK
National Living Wage (NLW) for the same period. All temporary
workers receive the NLW, with the majority receiving hourly pay
above the Real Living Wage.
Providing development opportunities
Royal Mail aims to provide the tools, knowledge and resources
forits people to have fulfilling careers, and it offers learning
anddevelopment opportunities to colleagues at all levels of the
organisation. In 2022-23, it invested £8.4 million in learning and
development equivalent to 30,000 days compared with £6 million
and 23,000 days in 2021-22.
In July 2022, Royal Mail launched The Academy, which is designed
to develop the next generation of leadership talent at every level.
Itwill equip managers with industry-leading skills to accelerate
Royal Mail’s transformation to better meet the changing demands
of its customers. One of The Academy’s key development programmes
is the Diamonds programme, which is designed to strengthen the
succession pipeline by identifying potential future leaders earlier in
their careers and support the progression of female senior leaders.
The programme is focused on equipping delegates with the
future-focused skills needed to create a high-performance culture
across Royal Mail and currently 32% ofits participants are women.
A further leadership development programme specifically tailored
to support the progression of female operational colleagues into
leadership opportunities is currently in development.
Through The Academy, the business also aims to create a new
culture of growth, innovation and learning to boost Royal Mail’s
reputation as an employer of choice. Employees can access The
Academy, both virtually and via in-person classroom learning,
which takes place at the training centre in the new Daventry-
basedMidlands Super Hub.
Further information on Royal Mail’s training and development
initiatives is included in the Royal Mail ESG Report, which is
available at www.internationaldistributionsservices.com/en/
sustainability/reporting-and-performance.
GLS also provides a range of targeted training and professional
development programmes to enhance employees’ abilities and
enable them to reach their full potential. The business’ ‘Better
Manager’ coaching programme aims to support the development
ofmanagers and help them become modern leaders. Through the
programme, each participant has access to six individual one-on-
one coaching sessions as well as team leadership and target
achievement discussions. The programme currently operates
across five of GLS subsidiaries – Poland, Germany, Austria, France
and Italy – and will be rolled out more widely in the coming year.
Each of GLS’ subsidiaries implement bespoke training programmes
for their employees. GLS US’ digital training includes over 700
learning modules, while GLS Denmark’s digital Academy provides
e-learning options and access to bespoke external courses. GLS
Austria gives employees the opportunity to get to know different
GLS locations and departments through a special rotation programme
and it runs a new employee mentoring scheme which ensures that
all new recruits have access to advice and support from day one of
their GLS career.
Working with our unions
A productive and cooperative working relationship with our unions
is a core part of our strategy. We recognise two unions: the
Communication Workers Union (CWU) and Unite/CMA. Around 91%
of our operational and administrative grade employees are
members of CWU. Around 99% of our people are covered by
agreements with these two unions.
In April 2023 we were pleased that the CWU Postal Executive
Committee ratified the Business Recovery, Transformation
andGrowth Agreement and put it to a members’ ballot with
arecommendation to approve. Details of the agreement are
included on page 16.
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32
Strategic Report – ESG Review continued
Social

Group gender diversity profile as at 26 March 2023
Male Female Total
Board
1
6 3 9
Senior leaders
2
272 65 337
Other employees
3
118,861 33,389 152,250
1. Board data is stated as at 19 May 2023 (the latest practicable date before publication of the Annual Report) and does not include Simon Thompson, who resigned from the Board on 12 May 2023.
As at 26 March 2023 there were 10 Board members, 7 of whom were male and 3 of whom were female.
2. Per the Companies Act 2006 definition (those employees who are responsible for planning, directing or controlling the activities of the Company or a strategically significant part of it). In Royal
Mail this includes employees graded levels 1 to 6 and in GLS this includes employees graded level A. It also includes directors of subsidiary undertakings included in the consolidation but does
not include Board members who would otherwise classify as senior leaders. One subsidiary director has no declared gender within the Royal Mail reporting system.
3. In the case of Royal Mail, Pension Trustees, Intersoft and eCourier, in total 220 people, are not included in the table. This is because the Pension Trustees are not classed asemployees and we do
not collect gender data for Intersoft and eCourier.
Diversity, equity and inclusion (DEI)
We strive to create an inclusive, fair, respectful and accessible
working environment across the Group. To achieve this, Royal Mail
and GLS have developed DEI strategies relevant to their respective
markets and businesses. Information about both strategies is
detailed below.
Royal Mail
Royal Mail’s DEI strategy underpins the business’ ambition to build
trust by developing a workforce that reflects the broad diversity of the
communities it serves. The business’ DEI strategic priorities are to:
 Increase diversity across Royal Mail to create a workforce
thatreflects its society.
 Transform its generational profile.
 Be a force for good by partnering with others to lead the way
insocial mobility.
 Build an environment of inclusion, fairness and accessibility
forall.
 Focus on creating vibrant and inclusive national networks open
to everyone.
To support implementation of its DEI strategy, Royal Mail has set
diversity targets as detailed below.
Royal Mail 2025 diversity targets
Position at
26March
2023
(%)
Target
position
March 2025
(%)
Female representation (all levels) 20% 25%
Female representation (levels 1-6) 26% 33%
Ethnic minority (all levels) 13% 15%
Ethnic minority representation
(levels 1-6) 7% 11%
Youth representation
(frontline below level 6) 6% 18%
During the year Royal Mail has continued to implement initiatives
toretain, develop and hire female senior leaders. These initiatives
include investment in leadership development programmes to
support theprogression of female senior leaders (see previous
page), ensuring that balanced candidate shortlists are created,
where possible, and increasing oversight of the recruitment
process todrive the best diversity outcomes.
Royal Mail’s Women’s Steering Group and the One Royal Mail DEI
Action Group are currently working together to develop a clear
roadmap for increasing female representation at all levels. Other
employee networks operate across the business and also play a
critical role in supporting the needs of colleagues and amplify the
colleague voice.
Around 13% of Royal Mail employees are from an ethnic minority
background. Royal Mail is a signatory to Business in the Community’s
(BITC) Race at Work Charter, and actively participates in BITC’s
internal and external Mentoring Circles programme. This programme
offers its ethnic minority colleagues an opportunity to maximise
their full potential through mentorships by senior colleagues within
the organisation and across multiple industries.
Royal Mail remains committed to supporting disabled applicants
and colleagues at all stages of the employee cycle. The business
provides training, career development and promotion opportunities,
and operations managers complete Disability and Reasonable
Adjustments training to ensure that they are confident and
effectivein supporting colleagues with disabilities. Support and
training are provided for colleagues with existing disabilities and
forthose whohave become disabled during their employment.
Royal Mail isproud to be part of the UK’s Disability Confident
scheme and achieve Disability Confident Employer Status.
Further information on Royal Mail’s DEI strategy and progress
made during the year is included in the Royal Mail ESG Report,
which is available at www.internationaldistributionsservices.com/
en/sustainability/reporting-and-performance.
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Annual Report and Financial Statements 2022-23
33

GLS
More than 100 different nationalities are represented across
GLS’business. Diversity and inclusion are key principles that
underpin its operations. GLS’ Diversity Statement sets out its
commitment to fully support a diverse and inclusive working
environment.
GLS promotes gender equality and works to ensure an inclusive
and welcoming working environment with equal treatment and
development opportunities for all employees. In the logistics
sector, female representation generally tends to be lower than in
other sectors and GLS’ DEI strategy is aimed at improving gender
diversity across all levels of the business. The business has
recently launched recruiting activities to encourage more women
to join GLS and strengthened its career development planning
processes. In addition, active internal recommendations are used
to highlight the pool of GLS female talent to both the business’ HR
function and GLS management.
GLS predominantly operates in the EU and therefore does not collect
ethnicity data of employees in line with EU Data Protection Law.
Gender pay gap
We believe all our people should be rewarded fairly for their
work,regardless of gender. For Royal Mail for 2022, the total
average pay for male and female employees continues to be
broadly the same, with the mean pay gap now at 1.4% and 3.1%
infavour of male employees when measured on a median basis.
Information on the Royal Mail 2022 Gender Pay Gap Report is
included on page 120 and the full report is available at
www.internationaldistributionsservices.com/en/sustainability/
reporting-and-performance.
Supporting our communities
Royal Mail seeks to be an integral, valued and trusted part of every
community in which it operates. In 2022-23, the business contributed
£3.3 million to good causes and charitable schemes. This included
match giving for colleague fundraising and the cost of its Articles
for the Blind service. In addition, Royal Mail colleagues raised
£2.17 million for charity.
Royal Mail builds on the economic and social impacts of its
operations by investing in strategic partnerships and finding
waysto use its heritage and business assets to contribute
tosociety. The business’ community investment strategy is
structured into three key areas:
 Leveraging its national scale: In February 2023, British Heart
Foundation became Royal Mail’s national charity partner. The
four-year partnership aims to raise £2 million and encourage
the business’ employees to volunteer and support British
HeartFoundation on a pro bono basis. Money raised will be
usedto fund the new Community Hearts programme, which
aims to deliver CPR training for one million young people,
fundcommunity defibrillators across the UK and develop
accessible heart health information for the nation.
 Using its local presence: As Royal Mail employees are present in
every community across the UK, the business is uniquely placed to
support the search for missing people. Since 2014, Royal Mail has
posted alerts from the charity Missing People to its posties via their
handheld scanners. This year marks the 30-year anniversary of the
charity Missing People and the business will be working with the
charity through 2023 on a number of other initiatives to celebrate
and raise awareness around this issue.
 Unlocking potential through education: Royal Mail is a supporter
of the National Literacy Trust’s Vision for Literacy pledge, which
aims to close the UK literacy gap and boost social mobility.
Royal Mail continues to support the Disasters Emergency Committee
(DEC) by providing a dedicated PO Box which enables the UK public to
respond to national appeals for overseas disasters. Ongoing appeals
include the Ukraine Crisis Appeal and, more recently, the Turkey and
Syria Earthquake Appeal. In 2022-23, the DEC directly raised a
combined total of £199 million, with 9.4% (equivalent to £18.9 million)
being received via the PO Box.
Strategic Report – ESG Review continued
Social
Our social and economic impacts on UK communities
7th
largest contribution of any UK
company to the UK economy
1
1 in 175
people employed in the UK
byRoyalMail
1
£11.8bn
of gross value added by Royal Mail
(directand indirect contributions)
1
£3.2bn
contributed through procurement
ofgoods and services
1
73,000
jobs indirectly supported by
RoyalMailinthe wider economy
1
£3.3m
contributed to good causes
andcharitable schemes
1. Cebr research, conducted by Royal Mail in May 2022, comprising direct and indirect contributions.
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Annual Report and Financial Statements 2022-23
34

GLS community support
GLS is committed to giving back to the communities it operates within.
The business supports numerous charitable projects by organising
both regional and nationwide initiatives. For example, tosupport a
‘healthy growth’ programme, GLS Poland offered free delivery of
parcels containing materials to set up home gardens toschools and
other educational institutions around the country. GLS Canada is the
official transport partner of the CURE foundation, which raises funds
for breast cancer research and education and supports its fundraising
activities. GLS Spain offers its Transporte Solidario to associations,
NGOs and non-profit entities by making donations of transport as
wellas offering discounted fees to these organisations.
In addition, the business makes financial contributions to support
numerous local charitable projects including kindergartens and
hospitals. It also contributes to national and global fundraising
campaigns, including during the year the Red Cross Ukraine
Emergency Appeal and activities to support the people affected
bythe earthquake in Turkey and Syria.
GLS’ employees regularly participate in a wide range of community
activities. For example, GLS Denmark participated in the CoolUnite
campaign, which collects money for vulnerable and sick children.
The campaign is designed as a competition between several
companies with the aim of raising as much money as possible.
Sponsorship provides another opportunity for GLS to actively be part
of the communities it operates within. At a nationwide level, GLS
Germany is the main sponsor of DLV (the German Track and Field
Association) and supports various athletes with individual
sponsoring. GLS Belgium sponsors the national football team the
‘Red Devils’ and GLS Spain sponsors women’s sport including FC
Barcelona’s women’s team.
Serving our customers
Despite working hard to minimise the disruption caused in the UK
by industrial action during the year, we have not always provided
the service our customers and society need and expect. We did not
achieve our regulatory quality of service targets largely due to the
industrial action, but also because of high levels of absence.
Improving quality is a key focus (see page 16 and 17).
Protecting human rights
We are committed to playing our part to uphold and protect human
rights in our businesses and across our supply chain globally.
Weobey the laws, rules and regulations of every country in which
we operate and implement the UN Guiding Principles on Business
and Human Rights, the UN Declaration of Human Rights and the
International Labour Organization Fundamental Conventions
withinour businesses and our supply chain. These cover freedom
of association, the abolition of forced labour, equality and the
elimination of child labour.
Building awareness of modern slavery forms part of Royal Mail’s
induction and compliance training, which is mandatory for all
managers. GLS provides online supply chain compliance training,
which also covers modern slavery. This training is mandatory for
all personnel with purchasing authority or depot supervisory
function. In addition, modern slavery issues are highlighted
duringface-to-face training with relevant GLS managers.
Royal Mail continues to focus on assessing supply chain risks
inrelation to modern slavery and human trafficking, and
isexploring options for certification of third-party suppliers
forcorrect employment standards and signposting them
tomodernday slavery training materials.
Our Modern Slavery Act Statement is available at
www.internationaldistributionsservices.com/sustainability/
reporting-and-performance.
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Annual Report and Financial Statements 2022-23
35

Governance
Operating responsibly
Maintaining stakeholders’ trust by operating with integrity is essential if we are
tosucceedand generate long-term value.
We implement policies and frameworks and businessspecific
strategies, policies and processes that are tailored to theneeds of
our Royal Mail and GLS businesses and their respective stakeholders.
Information about key policies, including the Group’s ESG Policy
Statement, is set out below andtheir implementation is described
throughout this ESG Review.The Group’s ESG Policy Statement
isavailable at www.internationaldistributionsservices.com/en/
sustainability/governance/policies.
The ESG Committee provides Board-level oversight of the
implementation of our ESG Principles (see page 26) across the
Group. Information about the ESG Committee’s activities during
2022-23 is included on pages 101 and 102.
The Royal Mail and GLS Executive Boards, supported by dedicated
ESG functions, are responsible for ensuring effective execution
oftheir respective ESG strategies and alignment of targets,
policiesand procedures with the Group’s ESG Principles and
ESGPolicy Statement.
We assess the risks and opportunities arising from social and
environmental issues relevant to the Group at least once a year and
use our risk management framework to determine their criticality.
Information about our approach to risk management is included on
pages 46 to 49, and our management of climate-related risks and
opportunities is outlined in our TCFD Statement on pages 38 to 45.
Aspart of the Group’s remuneration arrangements, relevant ESG
performance metrics are reviewed and incorporated into the
Group’s incentive plans. Further information is available on page
106.
Our ethical standards
We aim to foster a culture based on honesty, integrity and
openness. The overarching business policies that set out our
approach to responsible conduct in our business and supply
chainare outlined on the next page. Copies of the policies are
available at www.internationaldistributionsservices.com/en/
sustainability/governance/policies and www.gls-group.eu/GROUP/
en/about-us/compliance.
Royal Mail employees have access to policies and guidance via the
People App, intranet or its communications channel, MyRoyalMail.
Royal Mail operates a comprehensive ethics and compliance training
programme. All employees are required to undertake training
relevant to their role and managers are required to complete
compliance refresher training annually which includes an attestation
of the Royal Mail Business Standards. The completion rate for this
annual training for 2022-23 was 99.2%. Colleagues, contractors,
agency and casual workers, suppliers, business partners and the
public are encouraged to report any suspected policy breaches
through the business’ confidential whistleblowing process.
The Group is independently rated as a leading
responsible business by numerous international
benchmarks for sustainability, including:
Included in both World and Europe Indices for
the transportation industry, with a score of 78.
Ranked in the 85th percentile of companies.
Constituent of both FTSE4Good UK and Europe.
Rated as AA.
Scored B rating, ahead of
industryaverageof C.
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Annual Report and Financial Statements 2022-23
36
Strategic Report – ESG Review continued

GLS employees with computer access are assigned relevant
policies and guidance through an online system. Employees
without computer access can access print versions of the policies in
the depot locations. GLS’ compliance training approach consists of
online training for all white-collar employees, including employees
with purchasing or depot supervisory functions. These comprise
modern slavery awareness training and appropriate levels of
anti-corruption training.
GLS operates a dedicated Whistleblowing Helpline that is available
for reporting and investigating allegations of criminal acts or similar
serious offences. GLS encourages employees, business partners
and third parties to report, in confidence, any concerns they have.
Royal Mail’s procurement vision is to deliver value to its business
and stakeholders whilst protecting them from risks. The business
is committed to embedding high standards of social, ethical
andenvironmental conduct across its supply chain. Royal Mail’s
approach toresponsible procurement also covers the timely
payment ofsuppliers. Its latest Payment Practices report (which
was published in October 2022) showed the percentage of invoices
paidin 61 days or more was 3% (October 2021: 2%).
Policy Scope
Group ESG Policy
Statement
Sets out our ESG strategy, governance and commitments, including our support for the
UnitedNations (UN) Global Compact and Universal Declaration of Human Rights.
Royal Mail Business
Standards
Outlines the behaviours Royal Mail expects from its employees, and others working on its behalf.
Thestandards are about doing the right thing, following the law, acting honourably and treating
others with respect. They help the business’ employee to do the best job for its customers, keep
itspeople safe and protect its reputation.
GLS Code of Business
Standards (the GLS Code)
Outlines the values and behaviours GLS expects from its employees and business partners.
Itisavailable in local languages for GLS employees and business partners.
Royal Mail Ethical
Business Policy: Anti-
Bribery & Corruption,
Conflicts of Interest,
Prevention of the
Facilitation of Tax Evasion
Sets out Royal Mail’s approach to minimising the risk of bribery and corruption, and the facilitation
oftax evasion taking place in any part of our business. The business has a strict zero-tolerance policy
towards non-compliance with all applicable anti-bribery, corruption, money laundering, terrorist
financing and tax evasion laws. It requires employees to follow all internal procedures to prevent
bribery, corruption, conflicts of interest, money laundering, terrorist financing and the facilitation
oftax evasion, as well as processes for setting up new commercial arrangements with suppliers,
customers and other business partners.
Royal Mail Sustainable
Procurement Code
(the Procurement Code)
Outlines the environmental, social and ethical commitments and behaviours Royal Mail expects from
itssuppliers and aims to ensure that the business only engages suppliers that meet its standards. This
code, which is based on the UN Global Compact Principles, requires Royal Mail’s suppliers to adhere to
the UN Declaration of Human Rights, which is part of the business’ commitment to implementing the
UNGuiding Principles on Business and Human Rights. Royal Mail requires its suppliers to communicate
the Procurement Code in full to all relevant employees within their organisations.
GLS Supplier Code
of Conduct
Sets out the standards GLS expects of its suppliers and is also based on the UN Global Compact
Principles framework.
Royal Mail was targeting 50 high-risk suppliers and subcontractors
reporting self-assessments or third-party sustainability audits via
Sedex by year end 2022-23. As at 26 March 2023, 43 suppliers were
active on the system and Royal Mail is continuing to work with
Sedex to expand coverage, including launching an onboarding
support programme to identify and sign up more suppliers.
Reporting standards
We are committed to being as open and transparent as possible
about our business. Our ESG reporting meets:
 The disclosure requirement Global Reporting Initiative (GRI)
Standards (Royal Mail – Comprehensive option and GLS – Core).
 Our obligations as a signatory to the United Nations Global Compact.
We engaged Bureau Veritas to provide assurance over reported
non-financial performance indicators and related assertions.
Itsassurance covers environmental indicators and metrics
usedtomonitor culture, such as health and safety, sickness
absence and diversity. Assurance was performed in accordance
with the ISAE 3000 (Revised) and ISAE 3410 standards, and further
information, including the assurance statements, is available at
www.internationaldistributionsservices.com/en/sustainability/
reporting-and-performance.
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Annual Report and Financial Statements 2022-23
37

We recognise climate change as a key global threat, and one that poses particular
risks and opportunities for our businesses. Identifying these risks and opportunities
enables us to enhance the resilience of the businesses and take advantage of the
opportunities it may offer.
We are committed to implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
established by the Financial Stability Board. During the year we continued to make progress against these recommendations, and
have formally embedded the management of climate-related risks and opportunities into our governance and risk management
framework. However, we have further work to do to implement the guidelines in full and meet the expectations of the Financial
Reporting Council (FRC).
Statement of compliance
In accordance with Listing Rule 9.8.6R(8), this Annual Report is consistent with seven TCFD recommendations and partially consistent
with four of the recommended disclosures. In assessing our consistency we have followed the ‘Guidance for all sectors’. The areas
where we are not yet fully consistent with the recommendations are shown in the table below, while further details and the remedial
actions we are taking to achieve consistency, together with relevant timeframes, are explained in the sections that follow.
TCFD Statement
Recommended disclosures Status Page
Governance a) Board’s oversight of climate-related risks and opportunities. Consistent 39 and 40
b) Management’s role in assessing and managing climate-related
risks and opportunities.
Consistent 39 and 40
Strategy a) Climate-related risks and opportunities identified over the short,
medium, and long term.
Consistent 40 to 43
b) Impact of climate-related risks and opportunities on businesses,
strategy, and financial planning.
Partially
consistent
44
c) Resilience of strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower scenario.
Consistent 44
Risk
management
a) Processes for identifying and assessing climate-related risks. Consistent 45
b) Processes for managing climate-related risks. Partially
Consistent
45
c) How processes for identifying, assessing, and managing climate-
related risks are integrated into overall risk management.
Partially
Consistent
45
Metrics
and targets
a) Metrics used to assess climate-related risks and opportunities
inline with its strategy and risk management process.
Partially
Consistent
45
b) Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions,
andthe related risks.
Consistent 45
c) Targets used to manage climate-related risks and opportunities
and performance against targets.
Consistent 45
International Distributions Services plc
Annual Report and Financial Statements 2022-23
38
Strategic Report

Climate-related governance
Board oversight
The Board
Specific responsibilities are delegated to the Board’s Committees
Role
The Board has formal oversight of climate-related risks
andopportunities (see below for information).
Relevant experience
The Board received training on ESG-related topics in 2021, and inMarch
2023, the ESG Committee received a training session from an external
specialist on TCFD and upcoming regulatory changes to environmental
reporting. Furthermore, one Board member has specific experience with
regard to ESG, as reflected within the skills matrix on page 86.
Key focus during 2022-23
The Board, through its Committees, increased its focus on climate-related matters in the year.
 The Audit and Risk Committee (ARC) was updated on the
environmental principal risk as part of the half-year and full-year
results review, which included climate-related metrics and targets.
There was a specific ‘spotlight on risk’ in September 2022 to provide a
deeper focus on environmental risk and key remediation activity.
 The ESG Committee received four updates on the environmental
strategies of Royal Mail and GLS, including progress made against
their climate-related metrics and targets.
 The ESG Committee oversaw the TCFD implementation project and
monitored progress via three updates from the Group’s multi-
disciplinary TCFD Working Group (see below).
 The ESG Committee received one update on investor feedback on the
Group’s ESG performance, including climate-related metrics and
targets.
 By April 2023, the Group had established a formal governance
framework to reflect the TCFD recommendations. This included
changes to the ARC Terms of Reference, ESG Committee Terms of
Reference, Matters Reserved for the Board, the Group ESG Policy
Statement, and the Role of the CEOs.
Audit and Risk Committee
The ARC provides oversight of the Group’s
‘Climate Change and Environment’ principal risk
and the progress made against goals and targets
for addressing climate-related issues. The ARC is
supported by the Royal Mail Audit and Risk
Committee (Royal Mail ARC) and the GLS Audit
and Risk Committee (GLS ARC), while the
executive leadership of each business and its
respective functions monitor day-to-day
management. During the year, theARC received
environmental remediation updates, which
included climate-related metrics, risk indicators,
remediation activities and targets, from Royal
Mail ARC and GLS ARC. Starting in 2023-24, the
ARC willreceive more detailed climate-related
risk updates and use a standard risk-scoring
methodology to rank key climate risks and
opportunities, consider their probability and
potential impact, and their significance and
materiality, as part of the formal risk
management cycle.
See pages 93 to 100
ESG Committee
Oversees the Group’s ESG agenda, and
RoyalMail and GLS’ progress with regard to
environmental strategies, stewardship and
performance, including climate-related goals
and targets, including steps to tackle climate
change and becoming a net zero business. In
March 2023 the ESG Committee’s Terms of
Reference were expanded to include oversight
over the suitability of systems and processes to
manage climate-related risks and opportunities.
The ESG Committee Chair updates the Board
on key topics discussed at the ESG Committee.
See pages 101 and 102
Remuneration Committee
Determines how ESG metrics, including
environmental and climate-related issues, are
considered within the remuneration policy and
howthey will be taken into consideration in
determining the final incentive pay decisions.
See pages 103 to 136
Executive management
Executive management and their functions oversee day-to-day management
Royal Mail Executive Board and GLS Executive Board
Responsible for day-to-day assessment and management of risks and
opportunities, and the delivery of each business’ environmental strategy.
The executive leadership of each business and its respective functions
monitor day-to-day management of these risks, which are reported to the
respective ARCs each year. In addition, goals, targets and other updates
relating to the decarbonisation process being undertaken by each business
(see page 27 ) are reported via dedicated workstream sponsors, respective
ESG teams and country managers on aquarterly basis. As of April 2023, the
CEOs of each business weremade formally responsible for ensuring that
climate-related risks and opportunities are subject to effective business
controls and riskmanagement processes as part of a twice-yearly cycle.
Royal Mail ARC and GLS ARC
Responsible for overseeing the identification of environmental and
climate-related risks and overseeing progress of remediation plans.
InMarch 2023 the Royal Mail ARC and GLS ARC were made formally
responsible for embedding the review all significant climate-related
risks. Thesecommittees report to the ARC (see risk management
process onpages 46 to 49).
During the year we established a multi-disciplinary TCFD Working Group to drive the company-wide implementation of TCFD. This group comprises
representatives from Company Secretariat, Risk, Finance, Legal and the Royal Mail and GLS ESG teams and has been workingwith external
consultants to progress implementation of the TCFD recommendations. It convened four times in the year and updated theESGCommittee on its
progress twice during the year and once post the year end.
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Annual Report and Financial Statements 2022-23
39

1. Governance
(a) Board’s oversight of climate-related risks and opportunities (consistent)
In March 2023, the Board and its Committees were made formally responsible for oversight of climate-related risks and opportunities,
which they perform via the governance and risk management framework outlined on the previous page. The Board takes climate-related
transitional risks and opportunities into account during strategy development, planning and investment decision making, which has
resulted in the design and implementation of our main decarbonisation initiatives that are monitored on an ongoing basis, as well as the
launch of more environmentally friendly products and services.
(b) Management’s role in assessing and managing climate-related risks and opportunities (consistent)
The Group formalised management’s role in assessing and managing climate-related risks and opportunities for 2023-24. As part ofthis,
the management of specific climate-related risks (transitional and physical) was integrated into theGroup’srisk management framework
as a separate category, with dedicated climate-risk profiles being maintained acrossthe Group by relevant members of the RoyalMail and
GLS senior management who are responsible for their management.
2. Strategy
(a) Climate-related risks and opportunities identified over the short, medium, and long term (consistent)
The Group is aware of the climate-related transitional risks and opportunities its businesses face over the short, medium, and long term.
Itperformed an analysis in 2021 and a second risk scenario survey and workshop in March 2023. As a result of this updated analysis, we
have re-ranked our climate-related physical and transition risks and opportunities, and reassessed their variation across climate
scenarios, operational geographies and time horizons. The most material identified risks and opportunities are detailed in the tables on the
following page.
Climate transition strategies
We are committed to managing our transition to a low-carbon economy through science-based decarbonisation strategies. Royal Mail and
GLS have developed strategies that are tailored to their respective businesses and markets. They have also set relevant and realistic
targets. In particular GLS has a different business model to Royal Mail. Its subsidiaries operate in 26 countries and nation states within
Europe and North America and over 85% of its emissions are Scope 3 and stem from vehicles operated by transport partners.
Royal Mail and GLS’ environmental strategies include pathways, targets and mitigating actions that will help us achieve our ambition to
become a low-carbon business, while offering a wide range of green solutions to our customers. We are committed to achieving zero
emissions from our operations by 2045 and have continued to progress and further define the respective strategies of our businesses to
achieve this. See pages 27 to 29.
Scenario analysis and identification of risks and opportunities
Our 2022 scenario analysis used information and data scenarios from the Network for Greening the Financial System (NGFS) and is based
on the latest TCFD guidance. The scenarios selected, which are widely recognised and comparable, apply the latest NGFS economic and
climate data, model versions and policy commitments in renewable energy and mitigation technologies, and reflect new country-level
commitments to reach zero emissions. The time horizons considered for these scenarios are Short term (< 2030); Medium term (2030-
2040); and Long term (> 2040), which were selected as they align to our strategic planning and broader climate-related policies and targets
to 2030 and 2040. In our analysis, the perceived materiality of the risks was also discussed and assessed in a qualitative manner by the
TCFD Working Group.
Both of the Group’s businesses operate in the same sectors, so no sector variations have been applied in our analysis. To account for
geographic variation in our transition risks and opportunities analysis, we have considered differences across geographies (UK, US,
Canada, France, Germany, Netherlands, Denmark, Italy and Ireland) and how previous policies and operations might provide a blueprint
for responses to transition risk uncertainty. We have assessed these at a high level over these geographies, using carbon taxation as a
proxy and looking at current exposure and exposure under the 1.5°C scenario. We have also considered geographic variation of exposure
to physical risks across the US, Canada, UK and Europe, which have not been deemed sufficiently material at Group level to detail in this
statement. The final analysis is presented at Group level and therefore combines all geographic considerations into a single assessment of
the Group’s exposure.
Strategic Report
TCFD Statement continued
International Distributions Services plc
Annual Report and Financial Statements 2022-23
40

1.5°C rapid transition
(orderly)
The world takes the rapid and drastic policy measures required to meet the ambition of
the2015 Paris Agreement. Key considerations for Royal Mail and GLS are to ensure that its
environment and business strategies are aligned with or are ahead of the policy requirements.
The decarbonisation plans of both businesses will require regular review to ensure that they
remain at pace with climate science and are aligned to requirements across all areas of
operation. The potential impact of physical risks are limited in this scenario, but there is high
potential for transition risks and opportunities. Both of the Group’s businesses are committed
to reaching zero emissions before 2050 and are aligning their decarbonisation strategies in
support of the Paris Agreement to limit global warming to 1.5°C (see pages 27 to 29).
2°C steady transition
(orderly)
Climate action policies are introduced early and become gradually more stringent, though not
as high as in the 1.5°C scenario. Carbon price remains relatively low and the potential impact
ofphysical risks are relatively low, transition risks are moderate to high, and net zero CO
2
emissions are achieved before 2070. This scenario would need regular reviews of the Group’s
decarbonisation plans and business strategy to ensure that plans remain aligned across all
areas of operation. Mostsignificantly, the Group could expect a ban on new petrol/diesel
vehicles, which will increase thedemand and uptake of EVs, which would have follow-on
impacts for the Group’s distribution network. Meanwhile, physical risks would be integrated
into business continuity and businessrisk mitigation and adaptation planning.
Delayed 2°C transition
leading to notable physical
impacts (disorderly)
Social, economic and technological trends do not shift markedly from historical patterns
until2030. The delay and divergence in responses across sectors and countries results in a
disjointed transition ultimately reaching warming below 2°C. Carbon price rapidly increases.
Emission reductions need to be sharper than in the orderly scenario to limit warming to the
same target, so more severe transition risks are experienced. This scenario highlights the
increased volatility/market risks presented by a disorderly transition. The potential impact of
physical risks are significantly higher within this scenario, requiring more significant planning
for our business continuity to avoid or mitigate disruption to operations.
4°C business as usual
emissions, extreme warming
(disorderly)
Worst-case levels of global warming, with increasingly severe and frequent extreme weather
causing extensive business disruption, as well as chronic changes to seasonal weather
patterns severely damaging economic growth. The Group would be required to comply
withcurrent policy only from a regulatory perspective, but the physical impacts of climate
change would be significant, causing disruption to operations and the value chain. In this
scenario, transition risks are integrated into our business continuity and business risk
mitigation and adaptation planning.
We have applied the following three-step approach in our analysis of climate-related risks and opportunities:
i. Conducted a survey and held workshop discussions with representatives from the TCFD Working Group to discuss the risks and
opportunities in our operations, supply chain and markets.
ii. Examined the likelihood and impact of the climate risks and opportunities identified.
iii. Re-prioritised and ranked the identified risks and opportunities.
The analysis undertaken was largely qualitative, with one risk (carbon pricing) quantified for financial impact (see ‘Financial impacts’
below), and the appropriate strategic responses have been developed where possible. The analysis shows how an identified risk can be
mitigated by taking advantage of associated opportunities, while acknowledging the risks associated with each opportunity. We consider
materiality to correspond to risks and opportunities we deem to be of sufficient importance to our shareholders to include in our public
disclosures and will be considering the financial quantification of further risks going forward (see our definition of financial materiality on
page 144).
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Annual Report and Financial Statements 2022-23
41

Strategic Report
TCFD Statement continued
Transition risks and opportunities
Our transition risks are considered to be more material than physical risks due to Royal Mail and GLS’ strong reliance on fleet and
customers’ rapidly changing expectations about decarbonisation. The transition risks and opportuntities that could have an impact, which
could lead to a material financial impact, are listed in the table below.
Short term (< 2030) Medium term (2030-2040) Long term (> 2040)
Category Trend and impact
Likelihood
(risks) or effort
(opportunity) Impact Scenario Time horizon Response & resilience
Policy & legal Risk 1: The potential
impact associated
withcarbon taxes
oncommercial fleet
andlogistics activity,
which could increase
operating costs for
bothbusinesses.
High High Primary: 2°C
disorderly
Secondary: 1.5°C
Short term The Group’s businesses are transitioning
their last
- and middle-mile fleets to low or
zero-emission alternatives, whether these
are part of its own fleet (Royal Mail) or
logistics partners (GLS). Main metrics:
percentagedeployment of electric vans
and lower emissions larger trucks.
Energy source Opportunity 1: The
useoflower emissions
transport in commercial
fleet has the potential
toreduce maintenance
and fuel costs over the
life
-cycle of a vehicle.
High High 1.5°C Short term Initial Royal Mail findings suggest fleet
electrification can significantly reduce
maintenance and fuel costs over the
life- cycle of a vehicle when compared
with diesel equivalents, even after
factoring in costs associated with the
installation of charging infrastructure (see
Royal Mail ESG Report which is available at
www.internationaldistributionsservices.
com/en/sustainability/reporting-and-
performance).
Opportunity 2:
Thepotential use of
government schemes
andother subsidies
thatpromote low
-
emission vehicle
alternatives among
commercial fleets,
thereby reducing
investment and
operatingcosts.
Medium High 1.5°C Short term The Group’s businesses make use of
theseincentives where they are available.
For example, Royal Mail hasbid for the
Government’s zero-emission road freight
trials funding, which enables price parity
with diesel equivalents.
Reputation Risk 2: Increased
stakeholder pressure
toact in response to
climate-related risks
thatcauses reputational
damage to the Group’s
businesses and misses the
opportunity to gain market
share, which could result
in a loss ofrevenues.
High High 1.5°C Short term The Group’s businesses regularly engage
customers and prospects to provide
updates and details on their respective
decarbonisation actions andplans, and
broader management ofclimate-related
risks. Main metric: GHG emissions
Scopes1, 2 and 3.
Policy & legal Risk 3: Ban on the
saleofpetrol and
dieselvehicles and
theintroduction of
low-emission zones
requiring alternative
fuelvehicles could impact
costs and createliabilities.
High Medium Primary: 1.5°C
Secondary: 2°C
orderly
Short term The Group’s businesses are transitioning
their last
- and middle-mile fleets to low-
orzero-emission alternatives, such as
electric vans, to mitigate this risk. Main
metrics: percentage deployment of electric
vans and lower emissions larger trucks.
Seepage 29.
Products &
services
Opportunity 3:
Changingconsumer
demands leading to
newproducts and
services, and gains
inmarket share.
Medium High 1.5°C Short term The Group’s businesses continuously
develop their products and services
tomake them more environmentally
friendly and appealing to customers. Main
metrics: GHG emissions Scopes 1, 2and 3,
and emissions per parcel delivered.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
42

Category Trend and impact
Likelihood
(risks) or effort
(opportunity) Impact Scenario Time horizon Response & resilience
Policy & legal Risk 4: Claims by peers,
regulators, or customers
that products and
services fail to meet the
Group’s claims of green/
low-carbon credentials
could damage its
reputation, creating a loss
in revenues, and exposing
it to fines from regulators.
Medium High Primary: 2°C
orderly
Secondary: 1.5°C
Short term The Group’s businesses follow all
regulations and applicable advertising
marketing guidance with regard to their
environmental claims.
Market Opportunity 4: Joint
ventures with other
companies/energy
providers in relation to
electric vehicles could
help reduce costs and
increase revenues.
Medium High 2°C disorderly Short term The Group’s businesses consider
partnerships and joint ventures that
canfacilitate the transition of their
fleetsto electric vehicles.
Physical risks
Physical risks include risks arising from the physical effects of climate change, such as an increase in extreme weather events.
Someofthese risks are already having an impact on our businesses but are considered less materially significant than transition
risks.The physical risks that could have an impact, which could lead to a material financial impact, are listed in the table below.
Short term (< 2030) Medium term (2030-2040) Long term (> 2040)
Category Trend and impact Likelihood Impact Scenario Time horizon Resilience
Acute Risk 1: Extreme weather
events could cause
damage to data centres
and reduce connectivity to
operations, resulting in a
loss of revenues and an
increase in costs.
Low High Primary: 4°C
Secondary: 2°C
disorderly
Medium term
mainly, but
withpotential
impacts inthe
short and long
term too.
As part ofthe management of operational
sites, the Group’s businesses consider a
range of physical risks, such as flooding
and storms, and take steps to prevent and
minimise these where possible.
Chronic Risk 2: Chronic risks
might have an ongoing
impact on supplier
operations where we
havesole suppliers for
certain raw materials/
components for electric
vehicles equipment,
which could results in
increased costs.
Medium Medium 4°C Long term The Group’s businesses work with a
diverse pool of suppliers, from which
theyaim to gather more information
onclimate risk management.
Acute Risk 3: Extreme
weatherevents
impactingemployee
safety and wellbeing
could lead toanincrease
in costs andliabilities,
andloss inrevenues.
Medium Medium Primary: 4°C
Secondary: 2°C
disorderly
Short term The Group’s businesses monitor and
respond to the impact of changing weather
on their employees’ wellbeing as part of
ongoing health and safety programmes.
Acute Risk 4: Extreme
weatherevents
(e.g.storms, flooding)
could impact operations
and facilities/equipment,
resulting in aloss
ofrevenues and
anincrease in costs.
Medium Medium Primary: 4°C
Secondary: 1.5°C
Short term As part of the management of operational
sites, the Group’s businesses consider
arange of physical risks such as flooding
and storms, and take steps to prevent
andminimise these where possible.
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Annual Report and Financial Statements 2022-23
43

(b) Impact of climate-related risks and opportunities on businesses, strategy, and financial planning (partiallyconsistent)
The Group is aware of the main climate-related transitional risks and opportunities that its businesses face, and has taken these into
account during their respective strategic development and planning processes. This has resulted in the launch of more environmentally
friendly products and services, and the marketing of green credentials. It has also led to the development of our strategies for transitioning
our businesses to a low-carbon economy through science-based decarbonisation strategies, which are explained in further detail on
pages 27 to 29.
However, to be fully consistency with this recommendation, we are working to embed all newly identified sub-risks and opportunities into
ourstrategic reviews and business and budgetary planning cycles. We aim to be consistent with this recommendation by no later than 2025.
We have qualitatively described the impacts on the Group within the transition and physical risks tables on pages 42 and 43. To better
understand the potential impacts of one of our key transition risks, carbon taxes, we have undertaken a quantitative scenario analysis
which is described below.
Financial impacts
The Group has estimated the potential financial impact associated with carbon taxes on road transport and logistics activity for Royal Mail.
If the UK Government uses a carbon tax on the road transport and logistics sector as a key instrument in limiting global warming, then
Royal Mail would be estimated to experience significant increases in fuel spend unless mitigation measures were put in place. By comparison,
at GLS, the cost of these various tax schemes (e.g. carbon, road, congestion) would occur indirectly, to the extent that its logistics partners
choose to pass on their increased operational costs to GLS.
The quantitative analysis determines how a carbon tax would impact the cost of running Royal Mail’s commercial vehicle fleet in 2025
(short term), 2030 (medium term) and 2040 (long term), as shown in the table below. The risk quantified is the unmitigated impact,
withoutany of the planned changes to operations or delivery models. It was chosen to be quantified for Royal Mail as it was evaluated
aslikely to impact the business within the next five years. NGFS fuel price and carbon taxes were used to estimate how different climate
futures could drive changes in Royal Mail’s operating costs. A series of simplifying assumptions were made to complete the analysis.
1
In the case of GLS, where a comparable quantification of the direct impacts of this transition risk to its business cannot be made, we have
reviewed the differences in exposure to the additional vehicle-related transition risks across various geographies.
Going forward, the Group will continue to review the financial impact of its identified risks, and modify its assessments and mitigation
plans accordingly. For details on how our climate risks could impact the Group’s viability see page 58 and page 144 for our definition of
financial materiality.
Quantitative scenario analysis of carbon taxes¹
Scenario Key development
Fuel spend increase
(relative to FY2021-22)
1. Net Zero orderly transition (1.5°C). In a rapid transition, the high level of ambition to mitigate climate
change means high carbon and fuel prices to reduce emissions,
so total fuel spend is projected to increase substantially.
2025: £120 million (+59%)
2030: £200 million (+93%)
2040: £390 million (+183%)
2. Below 2°C orderly transition. In a steady transition, a gradual increase in climate policies
means carbon prices are kept lower than a rapid scenario, as
auxiliary policies absorb some of the decarbonisation burden.
Total fuel spend is projected to increase but not as much as in
thenet zero scenario.
2025: £20 million (+11%)
2030: £40 million(+21%)
2040: £80 million (+38%)
3. Delayed 2°C disorderly transition | fossil fuel led
economic recovery undermines climate goals and
assumes disorderly management of physical risks.
In a delayed and disorderly transition, projected fuel spend does
not increase significantly in the short-term horizon, but in the
long term, the high carbon price required to limit global warming
is projected to increase total fuel spend rapidly and substantially.
2025: -£4 million (-2%)
2030: £10 million (+4%)
2040: £420 million (+201%)
4. Current Policies, NGFS hot house world (3°C). In a business-as-usual scenario, projected total fuel spend does
not vary significantly.
Projected fuel spend does not
vary significantly
(c) Resilience of strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario
(consistent)
Our approach to conducting our qualitative and quantitative scenario analyses is described on pages 40 and 41. Our responses and
resilience as described within the transition and physical risk tables, is an indication of the overall resilience across the Group. Now that
afull set of risks and opportunities have been identified, the Group can determine that its existing responses and mitigating strategies
forits most material risks and opportunities are broadly effective at present. The Group will use its analysis to embed all climate risks
andopportunities into its strategic planning cycle with aviewtobeing consistent with this recommendation by 2025.
TCFD Statement continued
1. Risks were quantified relative to Royal Mail’s current-state business with no forward-looking assumptions about future fuel use. The cost of its current fuel demand was quantified using future-looking
fuel price and tax assumptions from NGFS. In the case of the ‘below 2°C orderly’ transition scenario, this was equal to 72.5 US$2010/t CO
2
in 2025; 96.7 US$2010/t CO
2
in 2030; and 145.0 US$2010/t CO
2
in
2040. This enabled the scale of future unmitigated costs to be estimated without introducing additional assumptions about how Royal Mail’s business could change or how mitigating activities could
impact future exposure.
Strategic Report
International Distributions Services plc
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3. Risk management
(a) Processes for identifying and assessing climate-related risks (consistent)
In March 2023, the TCFD working group performed a Group-level climate scenario analysis and re-ranked its climate-related physical and
transition risks and opportunities (in addition to the first analysis performed in 2022), and reassessed their variation across scenarios,
operational geographies and time horizons, based on the process described in Strategy paragraph (a) above. A cross-section of senior
management provided insights for this exercise. Through this collaboration, transition risks were identified as more significant to the
business than physical risks. Following this, a risk-scoring methodology has been applied to identify, rank and have ownership of climate
risks by the business going forward (see pages 39).
(b) Processes for managing climate-related risks (partially consistent)
The principal risk ‘Climate change and environmental management’ was managed through the Group’s Risk Management Framework
during 2022-23, with the executive leadership of each company and their functions overseeing its day-to-day management. The process
used by the organisation to make decisions to mitigate, transfer, accept, or control those risks is further detailed on pages 46 to 55. In
March 2023, we formally integrated climate-related risks into the Group’s Risk Management Framework, and a new risk-scoring
methodology was applied to identify and rank all key climate risks to ensure there is ownership of all risks by the businesses.
Despite this progress, we will not be fully consistent with this recommendation until we have completed the embedding of the newly
identified sub-group of climate-related risks into the Royal Mail and GLS risk management processes, and have reported these through
the ARCs. We aim to be fully consistent with this recommendation by year-end 2023-24.
(c) How processes for identifying, assessing, and managing climate-related risks are integrated into overall risk management
(partially consistent)
The principal risk ‘Climate change and environmental management’ was managed through the Group’s Risk Management Framework
during 2022-23, with the executive leadership of each company and their functions overseeing its day-to-day management. The process
used by the organisation to make decisions to mitigate, transfer, accept, or control those risks is further detailed on pages 46 to 55. In
March 2023, we formally integrated climate-related risks into the Group’s Risk Management Framework, and a new risk-scoring
methodology was applied to identify and rank all key climate risks to ensure there is ownership of all risks by the businesses.
Despite this progress, we will not be fully consistent with this recommendation until we have completed the embedding of the newly
identified sub-group of climate-related risks into the Royal Mail and GLS risk management processes, and have reported these through
the ARCs. We aim to be fully consistent with this recommendation by year-end 2023-24.
4. Metrics and targets
(a) Metrics used to assess climate-related risks and opportunities in line with its strategy and risk management process
(partially consistent)
The Group discloses key cross-industry metrics that are in line with its strategy, which include GHG emissions (see page 28). The principal
risk ‘Climate change and environmental management’ was managed through the Group’s Risk Management Framework during 2022-23
(see pages 46 to 49).
However, we will not be fully consistent with this recommendation until we have embedded all newly identified sub-group of climate-
related risks and their related metrics into the Royal Mail and GLS risk management processes, and are reporting these through the ARCs.
We aim to be fully consistent with this recommendation by year-end 2023-24.
(b) Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks (consistent)
The Group’s businesses measure and disclose their Scope 1, Scope 2 and Scope 3 GHG emissions (see page 28), and consider the related risks
associated with these. In addition, Royal Mail and GLS use other targets, including intensity metrics, to gauge the effectiveness and
progress of their respective environmental strategies to become a low-carbon business.
(c) Targets used to manage climate-related risks and opportunities and performance against targets (consistent)
The Group tracks, manages and discloses its most material climate-related targets such as those related to GHG emissions and energy
usage, in addition to metrics related to mitigation actions, such as the deployment of EVs and biofuels (see page 29). In each case, we describe
the type of targets that apply, the time frames over which it applies and how it is measured. Our progress and performance against these
targets are described in more detail on pages 27 to 29.
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Annual Report and Financial Statements 2022-23
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Through the implementation of risk management processes that promote a sound
control environment, we seek to identify, assess and manage risks that could impact
our business.
Risk management framework
Risk management processes and controls are utilised across the
Group. The Board has overall accountability for ensuring that we
operate sound risk management procedures and, on an annual
basis, assess their effectiveness (see page 82).
The Board has delegated responsibility for reviewing the effectiveness
of the Group’s risk management and internal control systems to
theGroup Audit and Risk Committee (the ARC). The ARC seeks to
ensure that the Group operates prudent and effective controls that
allow significant risks to be identified, assessed and managed. In
fulfilling its duties, the ARC is supported by the Royal Mail and GLS
Audit and Risk Committees (the Royal Mail ARC
1
and the GLS ARC).
Risk management policies and procedures are utilised across the
Group and we provide guidance and support to relevant personnel
in their application. Management teams across Royal Mail and GLS
are responsible for the management of specific operational risks
and developing actions to mitigate their impact.
Our risk management processes and controls are designed to
manage rather than eliminate risk. Taking on manageable risks
isan inherent part of the Group’s commercial activities and the
framework we operate can only provide reasonable and not
absolute assurance against misstatement or loss.
Our risk management framework
Board
Royal Mail Audit and Risk Committee
Royal Mail & GLS Executive Boards
Audit and Risk Committee
GLS Regional Management
GLS Audit and Risk Committee
Royal Mail Business Unit Leadership
Third line
 Independent assurance
by internal and external
providers over adequacy
and effectiveness of
mitigation provided
tothe Board.
Second line
 Compliance monitoring
and oversight of first
linethrough regular
reviews, assessments
and dedicated
oversightfunctions.
First line
 Primary controls
tomanage risks in
day-to-day operations.
Top down
Principal
risk management
 Review external environment.
 Set risk appetite.
 Determine strategic response.
 Identify principal risks.
 Oversee mitigation plans.
 Monitor progress towards risk appetite.
 Execution and delivery of mitigating actions.
 Report on progress towards risk appetite.
 Assess effectiveness of risk management
process and internal control systems.
 Monitor principal risks.
 Report on principal risks and uncertainties.
 Consider completeness of identified risks
andadequacy of mitigation activity.
 Consider aggregate of risks across
thebusiness.
 Report current and emerging risks.
 Identify, evaluate and mitigate risks.
 Maintain risk profiles.
Bottom up
Business unit/Regional
riskmanagement
1. Previously named the Risk Management Committee.
Risk Management
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Annual Report and Financial Statements 2022-23
46
Strategic Report

Risk appetite
The Board sets the Group’s risk appetite. This determines the target
level of risk we are prepared to take to achieve our strategic objectives
over the medium to long term and the extent of controls we need to
operate in order to mitigate the Group’s risks.
The ARC monitors the Group’s risk management activity within the
risk appetite throughout the year. Focused discussions on progress
towards target risk levels take place at the Royal Mail and GLS ARC
meetings at least twice a year.
Our Royal Mail and GLS Executive Boards and management teams
are accountable for identifying and managing risks and for delivering
the Group’s objectives in accordance with the Group’s risk appetite.
To achieve our strategic objectives, it is necessary to take on, or
accept, certain risks. In doing so, we seek to ensure that:
 We clearly understand our significant risks, their likelihood and
potential impact.
 The level of risk we take, or accept, is balanced against the
potential benefits.
Our risk appetite ranges across low, low to moderate and moderate
to high tolerance levels and is broadly mapped against three risk
categories as illustrated in the adjacent table.
1. The icons on this page and the following page are colour coded to illustrate the risks that relate to Royal Mail (red) and those that relate to GLS (blue).
Risk appetite
Moderate to high
The Group takes well-informed risks to
achieve strategic objectives if potential
benefits outweigh risks, particularly where
the external risks are less in management’s
direct control.
3
7
Low to moderate
The Group works to achieve strategic
objectives through accepting, managing and/
or reducing risk to a low to moderate level,
asappropriate.
1 2 4 5 6 8
Low
The business seeks to reduce the risk to
alow level as far as practically possible.
9 10 11 12
Strategic/
External
Operational/
Financial
Legal,
compliance
and regulatory
Risk category
Risk appetite level and link to principal risks
1
(see pages 50 to 55)
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Annual Report and Financial Statements 2022-23
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Our principal and emerging risks
Our principal risks are assessed by the Board on a bi-annual basis
and monitored by the ARC across the year. Emerging risks are
formally assessed by the ARC annually. The Board confirms that
robust risk assessments were completed during the financial year.
Our principal risks are detailed on pages 50 to 55. They are ordered
on a net risk basis which takes into account the estimated magnitude
of potential impact and likelihood of occurrence. We define a principal
risk as one which is currently or could have a significant impact on
the Group over the business planning cycle. Our principal risks are
also reflected in the key assumptions that form part of our viability
assessment process (see pages 56 to 58). The graphic below
illustrates our assessment of the likelihood of our principal risks
occurring and their estimated impact, and takes into account the
mitigating actions in place to manage each risk.
Net risks can move depending on circumstances at any time.
Movements between risk scores compared with the prior year
arehighlighted on pages 50 to 55.
Changes to our principal risks
The following new risks have been added to our principal risks
since the publication of our 2021-22 Annual Report:
 Failure to manage liquidity - (Low risk for IDS plc but a material
risk for Royal Mail Group Ltd ): This risk was added to the
principal risks at half year due to the decline in the Royal Mail
business performance which had created a potential liquidity
risk for IDS plc. Since then, IDS Group management have taken
effective action to preserve liquidity at IDS plc and reduce the
risk score to low at the Group level. There remains a material
risk over liquidity at the Royal Mail Group Ltd level.
 Failure to secure Universal Service Obligation (USO) reform
(Moderate risk): The continuing structural decline in addressed
letter volumes and broader changes in the parcels market pose
significant risks to the financial sustainability of the USO. There is
a risk that the Government, in conjunction with the regulator,
Ofcom, decides not to make a permanent change to legislation to
reduce the number of required delivery days for the letter service.
The previous ‘UK Regulatory Framework risk’ has been removed
as the framework has now been set by Ofcom for the next five
years. Significant risks associated with compliance with this
framework, including quality of service targets, are captured
withinother principal risks.
Strategic Report
Risk Management continued
Impact
Likelihood
Low Low to moderate
Moderate to high
High
3
1
5
4
8
7
12
11
10
9
Risk heatmap
Principal risks (see pages 50 to 55)
1
Industrial action
2
Failure to reduce our operational cost base
3
Economic and political environment
4
Major breach of information security, data protection
regulation and/or cyber-attack
5
Customer expectations and our responsiveness to
market changes
6
Talent: workforce for the future
7
Failure to secure USO reform (NEW)
8
Climate change and environmental management
9
Actual or suspected breaches of material law
and/or regulation
10
Business continuity and operational resilience
11
Health, safety and wellbeing
12
Failure to manage liquidity (NEW)
6
2
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Annual Report and Financial Statements 2022-23
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Strategy and objectives
Assessment
Identification
Monitoring
Risk analysis
Risk management
Impact/Likelihood
Tolerate/Mitigate/Transfer
Risk response
Description and scope
Reporting
Risk identification, analysis and response
Identification, analysis and response
The identification and assessment of individual risks is a continuous
process that takes account of the internal and external business
environment as well as the effectiveness of the risk controls we
operate. Principal risk profiles are maintained by relevant members
of the Royal Mail and GLS Executive Boards. Business unit risk
profiles are also maintained at functional levels across the Royal Mail
business. During the year GLS implemented regional-level risk
profiles across its major countries.
Gross, net and target risk scores are evaluated as a product of
potential impact and likelihood, and are represented visually on
heatmaps within risk profiles to facilitate analysis and management
focus. These risk profiles provide visibility to management over
theeffectiveness of control activities and mitigations. Each risk is
assessed considering the likelihood of the event occurring based
onmultiple factors, the range of potential impacts and their
severity should the event occur.
Monitoring and reporting
Throughout the year, Royal Mail business unit leadership
teamsreview the risk profiles covering their functional areas
ofresponsibility. Formal risk assessments are undertaken on
abi-annual basis to coincide with the Group’s full- and half-year
reporting cycle. GLS regional management reviews country-level
risks and centrally managed principal risk profiles are reviewed
bysubject matter experts, twice a year. The outcomes of these
bi-annual assessments are reviewed by the Royal Mail and GLS
ARCs and then subsequently by the ARC. In addition, for Group
principal risks, there is a periodic cadence of remediation progress
reviews by the ARC known as ‘spotlights on risk’ (see page 94). The
Royal Mail and GLS management reviews and spotlights on risk are
used to inform, determine and monitor the Group’s principal risks.
Emerging risks
We identify emerging risks through various discussions with
management and subject matter experts and other external
insights. All relevant information is captured in a horizon-scanning
analysis which serves to illustrate our potential future exposures
across a number of risk categories and helps us assess what
preparations may be required for new and potential future risks.
Emerging risk activity is considered by the Royal Mail and GLS
ARCs, taking into account both external and internal factors to
ensure that a holistic view is taken. Updates on emerging risk
activity are regularly provided to the ARC.
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Annual Report and Financial Statements 2022-23
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Strategic Report
Detailed below are the principal risks we consider could threaten our
business model, the execution of our strategy, and the preservation and
creation of sustainable value for shareholders and other stakeholders.
How we seek to mitigate these risks and the change in risk score year-on-
year is also explained below.
Risk Status Controls and actions to mitigate
1. Industrial action – High risk
There is extensive trade union representation
across our UK workforce, with strong and active
trade unions.
One or more material disagreements or disputes
could result in widespread localised or national
industrial action.
Industrial action would continue to cause
material disruption to our UK business and
would result in an immediate and potentially
ongoing significant loss of Group revenue. It
may also affect Royal Mail’s ability to restore
Quality of Service levels and meet targets
prescribed by Ofcom, which may lead to
enforcement action, fines and loss of customers.
During the course of the year, the CWU balloted its
members in July and August 2022 and February
2023 on pay, change and job security, all of which
resulted in a majority in favour of industrial action.
Between August and December 2022, there were 18
days of industrial action, which have had an
estimated adverse direct net impact on adjusted
operating profit.
In April 2023, following lengthy talks, including
facilitation by Acas and Sir Brendan Barber, a
Business Recovery, Transformation and Growth
Agreement was reached and ratified by the CWU’s
Postal Executive Committee. The CWU will now
ballot its members with a recommendation to
approve the agreement. However, there remains
a risk of industrial action until the agreement is
approved by CWU members, or if other disputes
arise in the future.
Any further industrial action would cause
significant damage to the UK business, necessitate
further job losses and make the deal unaffordable.
Going forward, there are risks over the improvement
of industrial relations to ensure effective execution
of the agreement and business transformation.
 Operational contingency plans during
industrial action.
 Joint implementation of the Business
Recovery, Transformation and Growth
Agreement.
 Rollout of a modern and collaborative
framework to allow quicker decisions, trials
and change implementation.
 Joint review of the Royal Mail / CWU
relationship supported by appropriate
expertise where required.
2. Failure to reduce our operational cost base (previously ‘Failure to reduce our cost base’) – High risk
We must become more efficient and agile
tocompete effectively in the parcel and
lettermarkets.
The successful delivery of Royal Mail and GLS’
strategies relies on the reduction of our
operational cost base whilst managing wider
economic pressures and the industrial relations
environment in Royal Mail to deliver productivity
benefits across all areas of the business.
Failure to reduce operational costs while at the
same time delivering high-quality services
could result in a loss of customers, market
share and revenue.
Royal Mail has a significant fixed cost base,
withhigh operational gearing. Further declines
inparcel and letter revenue and volumes during
theyear, due to macro-economic pressures, high
inflation, a squeeze on consumer spending and
aprolonged dispute with the CWU, has placed
further pressure on our cost base.
While the Royal Mail delivery network provides
astrong competitive position, particularly in the
combined delivery of letters and small parcels,
itis not currently optimised for the increased
demand for flexible acceptance times and larger
parcels. In addition, the high fixed labour cost
structure makes it difficult to flex the cost base
when sales volumes are down.
Effective working relationships with the CWU
andUnite/CMA are key to the delivery of our
transformation and efficiency benefits. The
dispute with the CWU (see Risk 1) significantly
impacted progress in 2022-23 on operational unit
revisions designed to right size the operation over
a three-year flight path.
While GLS’ cost structure is more flexible, we
needto ensure that the business’ networks
andprocesses continue to be optimised to
withstand inflationary cost pressures and
supportsustainable growth.
In Royal Mail, there is a five-point plan and a number
of initiatives in place to stabilise the business and
drive efficiency whilst delivering high quality
service.These include:
 Implementing short-term measures to improve
operational performance, reducing headcount
toright size the business and a programme of
revisions including dedicated parcel routes.
 Establishing parcel hubs and improving automation
in mail centres to increase throughput and reduce
costs per parcel.
 Trialling a new framework to deliver operational
improvements at a greater pace, such as removal
of letter sortation frames within delivery offices.
 Use of digital tools to align scheduled and actual
hours to match variation in workload throughout
the year and scan-in scan-out technology across
the delivery network.
 Improving network efficiency including introducing
later start times and longer spans and a strategic
review of the parcels network including optimising
synergies with Parcelforce Worldwide.
The effective implementation of the Business
Recovery, Transformation and Growth Agreement
is key in delivering operational efficiencies.
In GLS, actions include:
 Accelerating GLS’ productivity initiatives.
 Reviewing the operational efficiency of GLS’networks.
For further detail on initiatives to improve productivity
see pages 15 to 17.
Our Principal Risks and Uncertainties
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Annual Report and Financial Statements 2022-23
50

Risk Status Controls and actions to mitigate
3. Economic and political environment – High risk
Macro-economic conditions and/or the political
environment across our markets may adversely
affect the Group’s ability to control costs and
maintain and grow revenue due to reducing
volumes or by driving customers to adopt
cheaper products or formats for sending
lettersand parcels.
Recovery of the global economy post-pandemic
has been slowed by high inflation and upward
pressure on commodity prices caused by the
Russia-Ukraine war and further lockdowns in
China. Economic growth is expected to remain
low until 2024 in most of the markets acrossthe
Royal Mail and GLS businesses.
Weakening consumer confidence and demand
due to a squeeze on household incomes
anddiscretionary spending has impacted
revenuegrowth.
Prolonged fiscal tightening in Royal Mail and GLS’
markets, including national minimum wage and
tax policy revisions, including the tax treatment of
subcontractors, could increase our costs or
further impact consumer confidence, which
couldaffect parcel and letter volumes.
 Ongoing monitoring of the economic and wider
external environment across all of our markets.
 Executing a five-point plan and efficiency
programme to stabilise the Royal Mail business
and build resilience into its operating model
(see Risk 2).
 Implementing sustainable pricing/surcharge
opportunities across Royal Mail and GLS that
do not inhibit value growth.
 Reviewing the liquidity position on a regular
basis, implementing short-term measures to
conserve cash including capex reduction and
raising cash through asset disposals/leasing
arrangements (see Risk 12).
 Ongoing monitoring of the political landscape
and regular engagement with politicians and
policy makers, as appropriate.
4. Major breach of information security, data protection regulation and/or cyber-attack – High risk
Due to the nature of our business, we collect,
process and store confidential business,
operational and personal information. As
aresult, we are subject to a range of laws,
regulations and contractual obligations around
thegovernance and protection of various
classes of data to protect our customers,
employees, shareholders and suppliers.
In common with all major organisations, we
arethe potential target of cyber-attacks that
could threaten the confidentiality, integrity and
availability of data, systems and trigger material
service and/or operational interruption.
Also, a major breach of information security,
data protection laws and regulations and/or
cyber-attack could adversely impact our
reputation, resulting in financial loss,
regulatoryaction, business disruption
andlossof stakeholder confidence.
Given the evolving nature, sophistication and
prevalence of cyber threats and an increasing
reliance on technology and data for operational
and strategic purposes, this continues to be a
principal risk.
We recognise that in a business with around
153,000 people who use data and devices to
deliver our services and process large quantities
of documentation, there is a possibility of human
error in the protection of data.
Royal Mail’s International business experienced
acyber incident in January 2023 that impacted
export mail items. Upon discovery of the incident,
immediate action was taken, a comprehensive
investigation initiated and relevant authorities
were notified and engaged. The international
business products and services were restored
iteratively over several weeks. Work is ongoing to
learn lessons and improve the business’ cyber
resilience.
We continue to invest in our cyber capabilities,
recognising that an ongoing multi-year programme
that targets the highest priority areas is required to
bring this risk within the tolerance levels of the
Group’s risk appetite.
 Continually investing in cyber resilience
including enhancing our cyber control
capabilities across our technology estate
toprotect our customers, employees,
servicesand assets.
 Strengthening our preparedness to quickly
detect and respond to threats before they
become incidents, including ransomware.
 Improving assurance of organisational
andtechnical measures, including disaster
recovery and assessment of third-party
supplier controls.
 Promoting good behaviours and stressing
theimportance of maintaining vigilance
through regular communication, training
andawareness across our workforce.
 Encouraging an open and prompt reporting
culture so appropriate remedial action can
betaken as soon as possible.
 Data privacy and protection policies and
compliance framework, which includes
assessment and monitoring of data risks
andcontrols across all our operations.
Royal Mail strategy GLS strategy Change in risk score year-on-year
Customer Connect Europe Increasing risk – Low to Moderate/ Moderate to High risk
Trust
Strengthen 2C parcel market
position and lead in 2B
Decreasing risk – Moderate to Low /High to Moderate risk
Growth Inspire the market Stable risk – No significant change
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Annual Report and Financial Statements 2022-23
51

Risk Status Controls and actions to mitigate
5. Customer expectations and our responsiveness to market changes – High risk
Failure to deliver against existing and changing
customer needs and expectations (including
quality of service) could impact the demand
forour products and services.
Our success at growing new areas of business
isdependent on identifying profitable and
sustainable areas of growth and having in place
appropriate structures to support transformation.
The decline in the economic environment (see
Risk3)and the cost-of-living crisis, together
withthe impact of industrial action in Royal Mail
(see Risk 1) have impacted consumer confidence
and spending, which has adversely affected
parcels and letters revenue in Royal Mail.
This risk recognises that societal expectations
continue to change rapidly and demand is continuing
to grow for high-quality, convenient and sustainable
deliveries that are competitively priced.
We are responding to market changes and
becoming more customer centric.
Royal Mail is:
 Leveraging its UK footprint as the sole designated
Universal Service Provider and growing doorstep
services such as Parcel Collect.
 Focusing on restoring quality of service.
 Driving new product development and
simpledigital services.
 Increasing tracked services and barcoding
ofproducts.
 Moving to a 24/7 parcel service with Sunday
deliveries.
 Growing new areas of business and expanding
service offerings.
GLS is:
 Delivering sustainable growth and customer
innovation through the GLS strategy.
For further information on customer and growth
initiatives see pages 16 to 19.
6. Talent: workforce for the future – Moderate risk
Our performance, operating results and future
growth depend on our ability to attract and
retain talent with the appropriate skills and
expertise across the Group.
In Royal Mail, workforce planning could be
adversely impacted by an ageing workforce
anda reduction in available workforce
duetosocio-economic factors and
demographicchange.
A high level of employee trust and engagement
is essential if we are to deliver Royal Mail’s
transformation and growth strategy.
In order to deliver GLS’ longer-term strategy,
itis necessary to attract talent with new
skillsand retain high-quality talent across
theGLS business.
The Royal Mail transformation programme and
structural market change is changing the nature
of some roles and creating the need for new and
different skills.
In Royal Mail, there has been upward pressure on
risk in the year as a result of elevated levels of
attrition and recruitment challenges in head office
roles resulting from the decline in business
performance, the industrial action and sustained
pressure on personnel.
Longer
-term strategic workforce planning and
next generation talent also continues to be a key
area of talent risk for Royal Mail, driven by these
same factors and an already stretched and highly
competitive labour market.
This pressure has eased following the reduction
in industrial action and the Business Recovery,
Transformation and Growth Agreement being
reached and ratified by the CWU’s Postal
Executive Committee.
Royal Mail:
 Developing a Future Leader Framework that
will provide an understanding of leadership
capabilities at all levels.
 Creating a ‘Talent Ecosystem’ to enable
internalmobility, provide opportunities
forcareer progression and improve succession
planning.
 Developing an Employee Value Proposition
andemployer brand.
 Accelerating diversity, equity and inclusion
(DEI) initiatives to improve DEI across
RoyalMail’s teams.
 Implementing a future workforce plan
alignedwith the business’ strategy and
thecommercial outlook.
 Introducing next generation employee
changeinitiatives.
 Improving employee communications
throughthe use of digital tools and
increasingthe number of regular trust
andemployee engagement surveys.
GLS:
 Expanding and building HR expertise in the
corporate centre to strengthen governance
andenable best practice sharing.
 Improving employer branding, including
launching an initiative to strengthen the sense
of belonging of GLS people.
 Implementing best practice succession
planning and talent management across GLS.
Our Principal Risks and Uncertainties continued
Strategic Report
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Annual Report and Financial Statements 2022-23
52

Risk Status Controls and actions to mitigate
7. Failure to secure USO reform – Moderate risk
Without reform, the continuing structural
decline in addressed letter volumes and broader
changes in the parcels market pose significant
risks to the financial sustainability of the USO.
Royal Mail has made a request to Government to
make apermanent change to legislation to move
to afive-day letter service (Monday to Friday).
NEW
According to Ofcom, a financially sustainable
Universal Service should be able to achieve an
EBIT margin of 5-10%. Since privatisation in 2013,
the Universal Service network has only achieved
this twice. Letter volumes have declined by more
than 60% since their peak in 2004-05. Reforming
the Universal Service is essential if Royal Mail is
to have a sustainable future.
Ofcom’s 2020 User Needs research showed that
afive-day (Monday to Friday) letter service would
meet theneeds of 97% of consumers and SMEs
(in comparison to 98% of consumers and 97% of
SMEs for the current six-day service).
The previous ‘UK Regulatory Framework’ risk has
been removed as the framework has now been set
by Ofcom for the next five years.
 Work with Government, and Ofcom, on the
case for change, with support of our unions.
 Afive-day letter service would meet the needs
of the majority of consumers and SME and any
change would notsignificantly impact them.
Royal Mail is working with those most
impacted to proactively manage potential
future change.
 Run an employee engagement programme
onthe opportunities that change presents.
8. Climate change and environmental management (previously ‘Environment and sustainability’)
– Moderate risk (see also our TCFD Statement on pages 38 to 45)
Climate change is a global threat and, in
common with all major organisations, it poses
anumber of risks and opportunities. We have
identified priority physical and transition risks
that could impact our businesses.
Transition risks: As our customers and
stakeholders seek to adapt to climate change,
demand is increasing for more sustainable
products and services. The cost of operations
could increase as we adapt to government and
regulatory changes (including potential carbon
taxes) to progress towards net zero emissions
and air quality targets for towns and cities.
Physical risks: An increase in the frequency
ofextreme weather events may result in
disruption to operations and impact our ability
to meet customer expectations, the USO
orother contractual requirements. We may
alsosee cost inflation as a result of resource
scarcity, increased operational costs and
required investment to protect the business
andour people from extreme weather events.
We must also ensure that we continue to
meetall existing environmental legislation
andregulation, and prepare for emerging
requirements to avert the risk of reputational
damage, increased costs and potential fines.
Demonstrating leadership on environmental
issues, including the impact of our activities, is
the right thing to do. It is also essential if we are
toachieve competitive advantage, create value
and deliver our strategy.
Delivering a sustainable network has been
embedded in Royal Mail and GLS’ strategies for
some time and we have increased our focus in
this area. Royal Mail and GLS’ environmental
strategies will help us reduce our environmental
footprint and play our part in the transition to a
low-carbon future while offering a wide range
ofgreen solutions to our customers.
We are committed to implementing the
TCFDrecommendations and have made
progressduring the year on our ongoing TCFD
implementation project (see pages 38 to 45).
 ESG Principles are aligned to the ESG
issuesthat matter most to our businesses
andstakeholders.
 Executing environmental strategies across
Royal Mail and GLS, including accelerated
ambitions for decarbonisation to reach zero
emissions before 2050 in support of the Paris
Agreement (see pages 27 and 29).
 Investing in zero- and low-emission vehicles
and installing efficient equipment across our
property estate.
 Improving network efficiency, including
rationalising the property estate and
investment in innovative technologies to
reduce energy and fuel consumption.
 Monitoring the impact of extreme weather
events on operations and across our
propertyestate to determine suitable
preventive and precautionary measures.
 Opening new EcoHubs with renewable
energygeneration and sustainable
infrastructure across GLS’ network.
 Engaging our people in our efforts to
becomemore efficient and reduce our
useofnatural resources.
 Reducing our energy and water consumption
and reducing the amount of waste we generate.
 Monitoring compliance with environmental
legislation and regulation.
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International Distributions Services plc
Annual Report and Financial Statements 2022-23
53

Risk Status Controls and actions to mitigate
9. Actual or suspected breaches of material law and/or regulation – Moderate risk
Failure to comply with relevant material laws
and regulations that apply to our business,
including competition, anti-bribery, regulatory
conditions imposed by Ofcom (including quality
of service (QoS) targets), trade sanctions and
corporate governance. Actual or suspected
breaches could result in financial loss, fines,
regulatory enforcement action, criminal charges,
debarment and/or reputational damage
impacting our ability to operate and grow.
There continues to be a focus on controls in
relation to material laws and regulations for
which the Group must comply.
Royal Mail’s appeal against the Competition
Appeal Tribunal’s judgment to uphold Ofcom’s
decision to fine it £50 million has now concluded.
The fine and interest (c.£52 million) were paid to
Ofcom on 10 August 2022.
The stay on Whistl’s related damages claim
hasbeen lifted and initial pleadings have been
exchanged between the parties. Royal Mail
believes Whistl’s claim is without merit and
willdefend it robustly.
In December 2022, Ofcom concluded that under
the particular circumstances prevailing during the
2021-22 regulatory period, it would not be appropriate
to find Royal Mail in breach of its USO QoS targets.
Royal Mail’s current year USO QoS performance
hasbeen below Ofcom’s regulatory targets,
Management is actively engaging with Ofcom to
explain why current performance is below target
due to unprecedented circumstances.
Following publication of our USO QoS for 2022-23,
Ofcom has now opened a full investigation.
See Note 28 onpage 228 of the Financial
Statements.
 Policies, regular training and guidance
tocolleagues to raise awareness of risks,
required mitigation and expected standards
ofconduct.
 Regular assessment of risks and advice
byspecialist lawyers and compliance/
regulatory professionals.
 Horizon scanning to prepare for legislative
changes and developing policies and
processesto address them.
 Monitoring of compliance and provision
ofassurance.
 Fostering a culture where colleagues can
speak up so we can promptly address any
issues and stop them happening again.
 Engagement with Ofcom and USO
QoSmonitoring and restoration activity.
10. Business continuity and operational resilience – Moderate risk
We may fail to successfully respond to, recover
from, or reduce the impact of a major threat or
disruptive incident that could cause widespread
operational disruption and financial loss to the
Group, our customers and our supply chain. This
could also impact on the ability of Royal Mail to
meet its regulatory obligations.
Royal Mail is classified as a critical part of
national infrastructure and also has a
responsibility toprovide sustained and continued
postal services under the USO.
Lessons learned from the COVID pandemic
response have informed revisions to our crisis
management plans, which have been further
tested during the year by the industrial action
inRoyal Mail and the cyber incident earlier this
year (see Risk 4).
GLS has a growing geographical footprint and
hasan interconnected international network
across Europe and the US, which provides
mitigation in the event of operational disruption
ina specific market.
 Regularly review business continuity and
crisismanagement governance including
lessons learned.
 Deploy a strategic crisis and resilience
governance structure and response teams
toensure an integrated resilience approach.
 Implement tactical arrangements to support
operational contingency plans and incident
management.
 Plans to align crisis management with critical
IT systems and test disaster recovery plans.
 Developing business impact assessments to
map systems and interdependencies of critical
products and services.
 Developing cross
-functional business
continuity plans aligned to critical products
andservices.
 Regular horizon scanning and threat
assessments.
Our Principal Risks and Uncertainties continued
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Annual Report and Financial Statements 2022-23
54

Risk Status Controls and actions to mitigate
11. Health, safety and wellbeing – Moderate risk
A health and safety incident or global health
crisis could result in the serious injury, ill health
or death of our people, third parties (including
contractors) or members of the public. An
incident, near miss or health and safety breach
may lead to criminal prosecution or fines by the
enforcing authority or civil action by the injured
party resulting in large financial losses and/or
reputational damage.
Failure to manage the health, safety and wellbeing
of our people could lead to reputational damage,
loss of employee goodwill and financial losses
through increased sickness absence, lower
productivity, and failure to deliver the USO,
civilaction or criminal prosecution.
The health, safety and wellbeing of our people,
customers and members of the public is of
paramount importance.
We have many employees, including seasonal staff
and agency workers. We also operate a very large
fleet of vehicles, a significant real estate footprint
and employ a large number of contractors and
interact extensively with members of the public.
Alarge proportion of our people spend most of
their time working outdoors, on foot or driving,
where the environment is unpredictable and can
bemore difficult to control.
Whilst health and safety risks can be assessed
and controlled, the risk of harm to people cannot
be eradicated.
In Royal Mail, whilst rates are declining, there
continues to be high long-term employee
absence. Management, in conjunction with the
CWU, is making changes to attendance policies
and sick pay to enable a step change in performance.
 Policies, directives, procedures and systems,
supported by tailored training and awareness
programmes across all markets to embed a
compliance culture and engage our employees
in safety improvement.
 Board and ESG Committee monitoring of
health and safety performance metrics.
 Refreshed programme of focused audit
activityin Royal Mail commenced in Q4.
 Extensive employee health and wellbeing
policies and programmes to support absence
and return to workplace.
 Continuing to streamline and simplify the
various health and safety systems in place
toenhance their effectiveness.
 Deploy Group-wide measures to protect and
support our employees, ensuring necessary
safety precautions, in line with guidance and
provision of wellbeing support.
 Monitor and review measures in place to
assistin risk control and accident prevention,
including undertaking appropriate investigation
following incidents and near misses.
Further information is provided on pages 30 and 31.
12. Failure to manage liquidity – Low risk for IDS plc but represents a material risk for Royal Mail Group Ltd
There is a risk that the Group fails to secure
ongoing access to finance.
The decline in the macro-economic
environment, high inflation and impact of
industrial action has adversely affected Royal
Mail’s sales volumes and revenue. This has
driven operating losses and trading cash
outflows in that subsidiary.
As a result, there isarisk that the Royal Mail
fails to secure ongoing access to finance and/or
is unable to manage working capital andcash to
support the ongoing running of, andinvestment
in the Royal Mail business.
NEW
IDS plc management has taken effective action to
preserve Group liquidity, including the
amendment of the covenants associated with the
syndicated £925 million bank loan facility in order
to secure access to that facility in the event of
further downside risk, together with the
agreement of bridging finance to support the
refinancing of the Euro500m bond in June 2024.
The difficult trading circumstances and industrial
dispute last year have been damaging to Royal
Mail. Significant operational changes and
improvements required in Royal Mail are
fundamental to its turnaround and to restore
profitability. Approval of the CWU agreement is
fundamental to the delivery of the business plan.
The Board will keep under review whether it is
appropriate to cross subsidise in order to support
Royal Mail and has asked that Royal Mail takes all
reasonable steps to finance the necessary
transformation and turnaround from its own
resources.
Further information is provided on pages 167 to
169.
Royal Mail Group Ltd:
 Delivery of Royal Mail turnaround plan and
focus on efficiency programmes.
 Cash conservation measures and prioritisation
of capital expenditure.
 Raising of cash through real estate asset
disposals and exporting leasing options.
 Implementing sustainable pricing changes and
initiatives to recover revenue.
IDS plc:
 Ongoing monitoring of Royal Mail’s
performance.
 Royal Mail access to Group resources subject
to satisfactory progress against business plan
and/ or to meet short term working capital
requirements.
 Ongoing review of capital allocation and
priorities.
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Annual Report and Financial Statements 2022-23
55

Strategic Report
The Directors have assessed the prospects of the Group and its viability over the
longer term as part of their ongoing risk management and monitoring processes.
This Viability Statement should be read in conjunction with the Group’s business
strategy as set out in the Royal Mail and GLS strategic updates on pages 14 to 19.
Assessment period
While the Directors have no reason to believe that the Group will
not be viable over the longer term, they have assessed the viability
of the Group over a three-year period to March 2026 (the Viability
Period) taking into account the Group’s current financial position
and the potential impact of our principal risks. This time period is
considered appropriate as it is within the Group’s five-year business
planning cycle (Business Plan), where the first three years provide
for the most certainty for determining the probability and likely
impact of our principal risks, especially given the recent exceptional
trading circumstances in Royal Mail. A three-year period is also the
most appropriate time horizon over which to assess the evolving
commercial and economic environment across the Group’s letter
and parcel markets, as consumer expectations and the products
offered by competitors continue to develop rapidly since the COVID-19
pandemic restrictions. Furthermore, a three-year period most closely
aligns to the Group’s capital investment cycle and key liquidity risks.
Process, key factors and assumptions
The Group’s viability is assessed as part of our regular strategy and
budget reviews, financial forecasting, capital structure and ongoing
risk management. The assessment takes into account a number of
matters including:
 The Group’s strategic priorities and Business Plan. Financial
planning and forecasting processes covering the Group’s
profitability, cash flows and other key financial metrics
underpinthe Business Plan, which comprises a budget for
thenext financial year (based on a detailed commercial and
operational assessment) together with a projection for the
following two years.
 The large fixed cost base required to deliver the Universal
Service Obligation in its current form.
 The Group’s principal risks and the measures in place to
mitigatethose risks. (See pages 50 to 55).
 The Group’s capital structure and the allocation of capital to
support Royal Mail and GLS’ respective growth strategies (see
page 68). This includes capital investment, liquidity position
(including liquidity available from the syndicated loan facility,
debt maturity profile, credit rating and dividend policy).
The key assumptions used in relation to the Business Plan that
supports the viability assessment are as follows:
 Royal Mail suffers no further industrial disruption in 2023-24.
 The pay deal announced to CWU members on 21 April 2023 is
accepted by CWU members and the related transformational
benefits are achieved.
 Royal Mail has high single digit parcel revenue growth during
2023-24 driven by win back of revenue lost as a result of
industrial action.
 Royal Mail’s addressed letter volume (excluding elections)
decline is high single digit percentage in 2023-24 as the
structural decline in letters continues.
 GLS has low single digit revenue growth in 2023-24 and some
margin dilution linked to ongoing inflationary cost headwinds
and new investment.
 External dividends are forecast over the viability period from 2024-25.
 See Outlook statement on page 70 for further information.
Scenario modelling
The Business Plan projections were stress tested by modelling
multiple downside scenarios which have the greatest potential to
threaten the Business Plan. The scenarios, detailed on the adjacent
page, take account of the Group’s high principal risks which due to
their nature and likelihood of occurrence have been included and
analysed for their possible material financial impact over the
Viability Period. The plan does not anticipate any regulatory support
from Ofcom or Government, for example change in the scope of the
USO. Management believes modernisation of the USO is critical for
margins to be durably restored to sustainable levels (defined as
between 5 and 10 per cent EBIT margin in the regulated business by
Ofcom). Regulatory reform could materially improve the prospects
of the Royal Mail business.
The scenarios were tested in aggregate to determine whether the
Group would be able to sustain its operations over the Viability
Period, the lowest liquidity available to the Group during the period
was £0.8 billion and sufficient headroom was maintained under its
banking facilities.
The scenarios took into account:
 The levels of committed capital and expenditure required to
support Royal Mail and GLS’ respective growth strategies.
 The Group’s €500 million bond which matures in July 2024,
within the Viability Period. The Business Plan assumes this
facility would be refinanced on similar commercial terms but
incorporating the current higher market interest rates. However,
in the very unlikely event that this is not possible, to ensure that
the obligation is satisfied, the Group secured a backstop facility
of €500 million from a syndicate of banks to provide additional
flexibility on the timing for refinancing the €500 million bond
maturing in July 2024. The backstop is available until July 2024
and, if drawn to repay the bond, would be repayable by
December 2024 with an option to extend to July 2025. The
facilityremains undrawn and is subject to the same amended
covenants as the bank syndicate loan facility. Further to the
bridging facility other options could be considered, including
using the Group’s other undrawn committed facilities, capital
generated and reducing investment.
 The actions undertaken to manage and mitigate the Group’s
principal risks (see pages 50 to 55).
 Short-term cost and cash saving actions available to the Group.
Viability Statement
International Distributions Services plc
Annual Report and Financial Statements 2022-23
56

Scenarios modelled
andassumptions
Principal risks:
(see pages 50 to 55)
Scenario:  Deteriorating economic
andmarketconditions.
 Economic and political environment
 Customer expectations and our
responsiveness to market changes
 Business continuity and operational resilience
Assumptions:  Delayed revenue growth in the business
planand decline in operating margins.
Scenario:  Increased competition in the UK parcels
sector including changes in consumer
expectations and/or market disruption.
 Customer expectations and our
responsiveness to market changes
Assumptions:  Lower parcel revenues and failure
todelivernew product offerings.
Scenario:  Potential impact of industrial action
orincurring costs to avoid it.
 Industrial action
 Failure to reduce our cost base
 Customer expectations and our
responsiveness to market changes
Assumptions:  Lower operating profit as a result of
industrial relations and delay to win
backlostcustomers.
Scenario:  Delays in relation to the Royal Mail
transformation plan.
 Failure to reduce our operational cost base
Assumptions:  Delays in budgeted cost efficiencies
beingrealised.
Scenario:  Cyber-attack triggering material service
and/or operational interruption.
 Major breach of information security, data
protection regulation and/or cyber-attack
 Business continuity and operational resilience
Assumptions:  Cyber breach impacting revenue collection.
Scenario:  Increase in attrition of key roles.  Talent: workforce for the future
Assumptions:  Recruitment costs, interim resource
andhigher salaries.
Based on our best view of the severe but plausible downside
scenarios, including mitigating actions, and the outcome of the
assessments undertaken, the Directors have concluded that the
Group has reasonable expectation to remain viable supported by:
 Short-term cost and cash saving actions.
 Sufficient liquidity available to meet obligations as they fall due.
 The syndicated and backstop loan facilities.
 Continued access to the debt markets.
 Sufficient assets and future cash flows to settle all liabilities in full.
The outcome of the assessments has also confirmed the importance
of maintaining a conservative balance sheet, including a low net
debt position on a pre-IFRS 16 basis. See page 68 further information.
If outcomes are significantly worse, the Directors would need
toconsider what additional mitigating actions were needed
including assessing the value of our asset base to support liquidity.
Consequently, the Directors have concluded that to stress test a
level of increased severity (beyond the downside scenarios) which
may cast doubt on the Group’s ability to continue to be viable over
the Viability Period is not currently reasonable.
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
57

Climate change
Utilising the Group’s risk assessment process, the Board has also considered how climate risks could impact the Group’s viability.
Thekeyconclusions relating to the viability assessment were as follows:
 Royal Mail has a robust process for tracking and managing environmental policy and legislation in the UK. Royal Mail is also aiming
tomeet changing customer expectations for lower carbon alternatives. As such, the business is working to meet the UK’s climate
goalswhich are consistent with an orderly 2C transition and current/emerging policy point strongly towards this pathway between
nowand 2025-26.
 The unmitigated risk for carbon taxation to 2025-26 is £20 million with the opportunity to reduce this to £10 million by delivering
a25%reduction in fossil fuel use across our vehicles and estate by FY2025-26 (from 2020-21).
 The current net risk position based on current decarbonisation performance (approximately 14% reduction), along with additional
mitigating actions to reach the 25% reduction target, would mean there is not expected to be a material financial impact over the
viability period. As such, the risk has been excluded from the scenario modelling outlined above.
Viability Statement continued
Going Concern Statement
The consolidated Financial Statements have been prepared
on a going concern basis. The financial performance and
position of the Group, its cash flows and its approach to
capital management are set out in the Financial Review.
TheBoard reviewed the Group’s projections for the next
16 months in conjunction with the downside scenarios used
to stress test the Viability Period. There was no significant
doubt in relation to the Group’s ability to continue as a going
concern. Accordingly, the Board concluded that it was
appropriate to continue to adopt the going concern basis of
accounting. For further information, see Note 1 to the
consolidated Financial Statements on pages 167 to 180.
Viability Statement
Based on the results of their analysis, including a number of
severe but plausible scenarios assessed in aggregate, the
Directors have a reasonable expectation that the Group will
be able to continue in operation, meet and settle in full its
liabilities as they fall due, retain sufficient available cash
andnot breach any covenants under any drawn or undrawn
facility over the three financial years to March 2026.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
58

Summary results (£m)
1
Reported
52 weeks
March
2023
Specific
items and
pension
adjustment
Adjusted
2
52 weeks
March
2023
Reported
52 weeks
March
2022
Specific
itemsand
pension
adjustment
Adjusted
2
52 weeks
March
2022
Revenue 12,044 – 12,044 12,712 – 12,712
Royal Mail 7,411 – 7,411 8,514 – 8,514
GLS 4,650 – 4,650 4,219 – 4,219
Intragroup revenue
3
(17) – (17) (21) – (21)
Operating costs (12,248) (133) (12,115) (12,128) (174) (11,954)
Royal Mail (7,963) (133) (7,830) (8,272) (174) (8,098)
GLS (4,302) – (4,302) (3,877) – (3,877)
Intragroup costs
3
17 – 17 21 – 21
Operating (loss)/profit before specific items (204) (133) (71) 584 (174) 758
Operating specific items (544) (544) – (7) (7) –
Operating (loss)/profit (748) (677) (71) 577 (181) 758
Operating (loss)/profit margin (6.2%) – (0.6%) 4.5% – 6.0%
Royal Mail (1,044) (625) (419) 250 (166) 416
Royal Mail Operating (loss)/profit margin (14.1%) – (5.7%) 2.9% – 4.9%
GLS 296 (52) 348 327 (15) 342
GLS Operating profit margin 6.4% – 7.5% 7.8% – 8.1%
Profit/(loss) on disposal of property, plant and equipment
(non-operating specific item) 6 6 – 72 72 –
Net finance costs (39) – (39) (51) – (51)
Net pension interest (non-operating specific item) 105 105 – 64 64 –
(Loss)/profit before tax (676) (566) (110) 662 (45) 707
Tax credit/(charge) (197) (111) (86) (50) 62 (112)
(Loss)/profit after tax (873) (677) (196) 612 17 595
(Loss)/Earnings per share (basic) – pence (91.3p) (70.8p) (20.5p) 61.7p 1.7p 60.0p
In-year trading cash flow (34) – (34) 519 – 519
Royal Mail (306) – (306) 280 – 280
GLS 272 – 272 239 – 239
Pre-IFRS 16 in-year trading cash flow⁴ (213) 353
Royal Mail (410) 178
GLS 197 175
Gross capital expenditure (407) – (407) (603) – (603)
Royal Mail (255) - (255) (441) – (441)
GLS (152) – (152) (162) – (162)
Net debt (1,500) – (1,500) (985) – (985)
1. Reported results are prepared in accordance with International Financial Reporting Standards (IFRS). In addition, the Group’s performance is explained through the use of Alternative
Performance Measures (APMs) that are not defined under IFRS. Management is of the view that these measures provide a more meaningful basis on which to analyse business performance.
They are also consistent with the way financial performance is measured by management and reported to the Board. The APMs used are explained on pages 238 to 242 and reconciliations to the
closest measure prescribed under IFRS (and in the case of GLS reconciliations between the Group’ functional currency of Sterling and Euro) are provided where appropriate.
2. The Group makes adjustments to reported results under IFRS to exclude specific items and the IAS 19 pension charge to cash difference adjustment. A full reconciliation of reported to adjusted
results is explained on pages 238 to 242.
3. Intragroup revenue and costs represent trading between Royal Mail and GLS, principally a result of Parcelforce Worldwide operating as GLS’ partner in the UK.
4. Pre-IFRS16 in-year trading cash flow is a non-GAAP measure.
Mick Jeavons
Group Chief Financial Officer
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Annual Report and Financial Statements 2022-23
59
Financial Review

52 weeks ending March % change* % change*
Revenue (£m) 2023 2022 2020 2023 vs 2022 2023 vs 2020
Group
4
12,044 12,712 10,840 (5.3%) 11.1%
Royal Mail 7,411 8,514 7,720 (13.0%) (4.0%)
Total Parcels 3,910 4,800 3,702 (18.5%) 5.6%
Domestic Parcels (excluding international)
5
3,226 4,021 2,831 (19.8%) 14.0%
International Parcels
6
684 779 871 (12.2%) (21.5%)
Letters 3,501 3,714 4,018 (5.7%) (12.9%)
GLS 4,650 4,219 3,161 10.2% 47.1%
52 weeks ending March % change* % change*
Volume (m units) 2023 2022 2020 2023 vs 2022 2023 vs 2020
Royal Mail
Total Parcels 1,205 1,517 1,312 (21%) (8%)
Domestic Parcels (excluding international)
5
1,064 1,365 1,039 (22%) 2%
International Parcels
6
141 152 273 (7%) (48%)
Addressed letters (excluding elections) 7,280 7,961 9,703 (9%) (25%)
GLS 862 870 667 (1%) 29%
4. Royal Mail and GLS revenue does not equal Group revenue due to the elimination of intragroup trading (2022-23: £17 million, 2021-22: £21 million).
5. Domestic Parcels excludes import and export for both Royal Mail and Parcelforce Worldwide.
6. International includes import and export for Royal Mail and Parcelforce Worldwide.
* All percentage changes reflect the movement between figures as presented, unless otherwise stated.
Group results
Group and Royal Mail results are for the 52-week period to
26 March2023. GLS financial performance is presented for
the12 months to 31 March 2023.
Year-on-year Group revenue declined £668 million (5.3%). Royal Mail
decreased by £1,103 million and GLS increased by £431 million.
During the prior year, both businesses benefited from COVID
restrictions, which resulted in bolstered parcel volumes as well
aselevated test kit volumes in Royal Mail. During 2022-23, both
GLSand Royal Mail have been adversely impacted by challenging
macro-economic conditions. In addition, Royal Mail has been
negatively impacted by 18 days of industrial action in 2022-23. GLS
revenues were boosted byacquisitions, including Rosenau (year-on-
year revenue increase of £104 million) as well as pricing actions.
Reported Group people costs were down 1.4% year-on-year. Adjusted
Group people costs were down 0.8% year-on-year. In Royal Mail,
adjusted people costs reduced by £174 million year-on-year but GLS
costs increased by £123 million. Given the level of revenue reduction in
Royal Mail, we would have expected a higher decrease in variable
people costs, but we were unable to reduce full time equivalents
(FTE’s) quickly enough in response to lower volumes in H1. The
situation improved in H2 with strong controls put in place to reduce
variable FTE costs. Royal Mail people costs were also impacted by
industrial action. Pay was negated on industrial action days due to pay
abatements, however additional agency costs were incurred in order
to prepare for and recover from the industrial action that took place. In
GLS, the people cost base has been affected by wage inflation in most
markets, particularly Germany. More detail can be found in the “People
costs” sections within this Financial Review.
Group non-people costs increased by 3.9%. Royal Mail non-people
costs reduced by £94 million (3.7%) but this was more than offset by
GLS increases of £302 million (10.2%). More detail can be found in the
“Non-people costs” sections within this Financial Review.
Reported operating loss before specific items was £204 million
(2021-22: £584 million profit), £788 million lower than the prior year.
Operating specific items were a cost of £544 million (2021-22: cost
of £7 million). 2022-23 includes an impairment charge in relation to
Royal Mail of £539 million (2021-22 £nil). Further details are
included in Notes 6 and 13 to the Financial Statements.
On a reported basis the Group operating loss margin was 6.2%
(2021-22: 4.5% profit margin). Adjusted Group operating loss was
£71 million (2021-22: £758 million profit). Adjusted Group operating
loss margin was 0.6%, a significant decline on the prior period
(2021-22: 6% operating profit margin). The decline was primarily
due to Royal Mail operating losses. GLS’ performance was broadly
in line with the prior period including the effect of the Rosenau
acquisition. Excluding Rosenau, GLS’ adjusted operating profit
wasdown £14 million (4.1%).
Royal Mail’s margin deteriorated significantly from a 4.9% adjusted
profit margin to a 5.7% adjusted loss margin. This was driven by the
challenging trading environment as a result of the macro-economic
conditions, industrial action and the inability to reduce FTE costs
quickly enough in H1. GLS experienced a fall of 60 bps in adjusted
operating margin, primarily due to the economic environment as
well as cost and wage inflation which created, as expected, margin
compression. For both businesses, the comparative also benefitted
from increased volumes during COVID lockdowns.
Non-operating specific items were a credit of £111 million
(2021-22:credit of £136 million). Further details are provided
belowin thesection entitled “specific items and pension charge
tocash difference adjustment”.
Reported loss before tax of £676 million (2021-22: £662 million profit)
comprised a £951 million loss in Royal Mail (2021-22: £346 million
profit) and a £275 million profit in GLS (2021-22: £316 million profit).
Basic reported earnings per share decreased to (91.3 pence loss
per share (2021-22: 61.7 pence profitper share).
Total Group parcel revenue fell 5.3% year-on-year. Parcel revenue accounted for 71% of total revenue (2021-22: 71%).
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Annual Report and Financial Statements 2022-23
60
Financial Review continued

Segment – Royal Mail
Reported operating loss was £1,044 million (2021-22: £250 million
profit). Royal Mail adjusted operating loss was £419 million
(2021-22: £416 million profit) which included £33 million of
voluntaryredundancy costs. This is in line with guidance provided
on 26 January 2023. Reported results were heavily impacted an
impairment charge of £539 million (2021-22: £nil) and by 18 days of
industrial action in the period. Revenue was lower, driven by a
combination of the macro-economic environment impacting
customers’ disposable spend and the impact of industrial action.
The prior year also benefited from higher test kit revenue (test kits
were c. 7% of total parcel volumes in 2021-22 whereas they were c.
1% of volumes in 2022-23). During H1, the cost base was slow to
adjust to lower volumes as we were unable to reduce our FTE costs
quickly enough. However, H2 saw strong performance in reducing
variable FTE resource and managing levels of attrition. As a result,
frontline FTE’s were 111.3k at the end of the year, down 10.1k (8%)
from 121.4k at the end of 2021-22.
Revenue
Total revenue reduced £1,103 million (13.0%) versus the prior year.
Revenue was impacted through a combination of 18 days of
industrial action, economic downturn, weakening retail trends
anda return to the structural decline in letters. The prior year
alsobenefitted from elevated test kit volumes as well as some
COVID restrictions being in place for part of year, which bolstered
parcel volumes.
Total revenue mix moved slightly in the year with parcels representing
53% of total Royal Mail revenue compared to 56% in the prior year.
The change in mix was partially driven by a reduction inCOVID test
kits versus 2021-22.
Parcels
Total parcel revenue was £3,910 million, down 18.5% year-on-year.
The prior year included periods when COVID restrictions were in
place. As a result, comparative revenues and volumes benefitted as
consumers sent more parcels and e-commerce sales were higher.
This year, consumers’ disposable income has reducedas a result
ofthe uncertainty in the macro-economic environment leading to
areduction in parcel volumes. Furthermore, industrial action has
adversely impacted revenueas customers moved volumes away
from our network. These factors led to a decline in the revenue and
volumes inalmost allparcel revenue streams.
Domestic parcel revenues (excluding RM International and
Parcelforce Worldwide import and export) were down 19.8%
year-on-year, with volumes down 22%.
Within domestic parcels, account parcel revenues decreased by
23.5% on the prior year, partially due to COVID test kits, as the
requirement for testing in the UK ceased in H1. Test kits represented
c. 7% of parcel volumes in 2021-22 versus c. 1% in 2022-23. In addition,
during the peak Christmas period (November and December 2022),
we experienced ten days of national industrial action. This meant
large account customers such as retailers usedother parcel carriers
to deliver their online sales. This was compounded by a reduction in
consumer online spending driven by both the industrial action (which
caused the public to return to the UK high street) and the economic
environment which caused reduced levels of public spending.
Domestic parcels include Royal Mail’s premium products, Tracked
24®/48® and Tracked Returns® which experienced volume declines
of 21% year-on-year (2021-22 growth of 17%). As well as the factors
outlined above the reduction in test kit traffic also impacted this
revenue stream.
RM International services (which exclude Parcelforce Worldwide
import and export) were adversely impacted by the global
economic downturn and the cyber incident which temporarily
disrupted service in H2. International revenues were down 12.2%
with volumes down 7%.
Revenue in Parcelforce Worldwide was down year-on-year, with
revenues down 12.9% and volumes down 12%.
Letters
Total letter revenue fell £213 million (5.7%) to £3,501 million,
reflecting a return to structural decline in the letters market. In
addition, the impact of a slowing economy and rising inflation was
compounded by 18 days of industrial action. The prior year saw a
5.6% increase when letter volumes partially recovered from the
impact of COVID in the previous year.
In 2022-23, volume decline of addressed letters excluding elections
reverted to its long-term trend, falling 9%. The decline was driven
by sharply declining volumes for international import and export
letters, and by a significant drop-off in Consumer & Small Business
letters of 21% – this reflects the impact of a large contraction in
Stamped Letters volumes over the year. December isa pivotal
month for stamp sales, but this year sales were badly affected by
industrial action which necessitated the final posting dates for
Christmas being brought forward.
Declines in advertising mail volumes (down 8%) were less marked,
but still significant. The continued downturn in advertising mail
volumes was driven by a combination of advertisers facing budget
constraints in the face of significantly higher print and production
costs, plus industrial action leading some advertisers to either
delay or cancel mailing activity.
Business mail volumes declined 5% on 2021-22. However, price
increases introduced during the year led to year-on-year revenue
growth of 4.6% which more than counteracted the volume decline.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
61

Adjusted operating costs
2
(£m)
Adjusted
52weeks
March
2023
Adjusted
52weeks
March
2022 % change
People costs (5,409) (5,583) (3.1%)
People costs excluding
voluntary redundancy (5,376) (5,502) (2.3%)
Voluntary redundancy costs (33) (81) (59.3%)
Non-people costs (2,421) (2,515) (3.7%)
Distribution and
conveyancecosts (891) (971) (8.2%)
Infrastructure costs (868) (802) 8.2%
Other operating costs (662) (742) (10.8%)
Total (7,830) (8,098) (3.3%)
2. The Group makes adjustments to reported results under IFRS to exclude specific items and the
IAS 19 pension charge to cash difference adjustment. A full reconciliation of reported to
adjusted results is explained on pages 238 to 242.
Total adjusted operating costs decreased 3.3% year-on-year. Key
reasons for the movements are explained in the “People costs”
and“Non -people costs” sections below.
People costs
Total people costs reduced by £174 million (3.1%). This included
areduction in year-on-year voluntary redundancy charges of
£48 million. The prior year included a voluntary redundancy
charges of £81 million, ofwhich £70 million was in relation to a
restructuring programme in operations, focused on streamlining
operational management andimproving focus on performance at
alocal level. In the current year, FTE reductions have been
managed by focusing on variable costs and through natural
attrition.
Excluding voluntary redundancy charges, people costs decreased
by £126 million (2.3%), however given the level of volume reduction,
wewould have expected the reduction to have been higher.
The industrial relations environment has had several impacts on
people costs:
 We did not undertake planned revisions in delivery or processing
during H1. However, revision activity increased in H2, but the
delays meant that productivity fell 3.6%.
 Though we saw pay annulments on industrial action days
themselves, these were partially offset by the costs incurred in
preparing for and recovering from each day of industrial action.
Last month (April 2023), after lengthy negotiations, we were
pleased that the CWU’s Postal Executive Committee ratified the
Business Recovery, Transformation and Growth Agreement (see
page 16) and that it will put it to a ballot of its members with a
recommendation to approve. Total people costs include the 2% pay
award for frontline staff that has already been paid, plus the costs of
a one off payment of £500 per person, estimated to cost c. £61m. This
represents our best estimate of the costs required for 2022-23 to
settle the agreement based on our offer at the balance sheet date of
26 March 2023. This offer remains subject to ratification by CWU
members.
People costs also include a number of other 2022-23 inflationary
pay pressures such as the flow through impacts of the one hour
reduction in the working week implemented in 2021-22, managerial
pay deals and increases due to changes in the NationalInsurance
social care levy.
There are no residual COVID costs (2021-22: £62 million) however
the level of absence remains higher than before COVID. In the
current period the average total sick absence rate was 7.5%
compared with 8.0% in the prior period. In 2019-20 (excluding any
COVID related absence) average total sick absence was 5-6%.
The people cost headwinds outlined above were more than offset
by volume related savings associated with revenue decline and
sustainable savings delivered through the prior year restructuring
programme focused on streamlining operational management
andimproving focus on performance at a local level.
Non-people costs
Non-people costs reduced by £94 million (3.7%) year-on-year.
Within non-people costs, distribution and conveyance costs were
down £80 million (8.2%). Volume related savings from reduced
testkit volumes and lower volumes generally outweighed cost
pressures related to industrial action preparation (such as
third-party haulier contracts) and inflation. Total diesel and jet fuel
costsdecreased to £163 million (2021-22: £191 million) driven by a
decrease in the volume of diesel used as a result of the introduction
of more electric vehicles and other fuel efficiency initiatives. In
addition, the benefit of the reduction in fuel duty and a stronger
hedge position limited exposure to the spot market.
Infrastructure costs were up £66 million (8.2%) year-on-year. Cost
pressures included the impact of inflation, particularly on electricity,
as well the cost of the cyber incident. Depreciation and amortisation
costs (which form part of infrastructure costs) were up £36 million
year-on-year, driven mainly by an impairment of £17 million on our
Resource Scheduling asset and £10 million accelerated
depreciation associated with a property asset. Excluding these,
depreciation and amortisation was up c.£9 million, driven largely by
the impact of new asset additions such as the North West Super
Hub.
Other operating costs reduced £80 million (10.8%) year-on-year.
Over half of this was linked to volume related savings, for example
in relation to the Post Office Limited (POL) contract. We also saw
reduction in non-people related transformation costs.
Royal Mail’s performance in 2022-23 against its Universal Service
products’ Quality of Service measure is below Ofcom’s regulatory
targets. Management is actively engaging with Ofcom, explaining
why current performance is below target due to unprecedented
circumstances. Following publication of our Universal Service
Obligation Quality of Service for 2022-23, Ofcom has now opened a
full investigation, the outcome of which cannot be determined at
this time. Consequently, the financial results for 2022-23 do not
include any accrual for potential fine.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
62
Financial Review continued

Segment – GLS⁷
Summary results⁸ (£m)
12 months
to
31 March
2023
12 months
to
31 March
2022 % change
Revenue 4,650 4,219 10.2%
Operating costs (4,302) (3,877) 11.0%
Operating profit before
specificitems⁸ 348 342 1.8%
(€m)
Revenue 5,384 4,959 8.6%
Operating costs (4,981) (4,557) 9.3%
Operating profit before
specificitems⁸ 403 402 0.2%
7. The results for 2022-23 include a full year of contribution from the acquisition of Rosenau
Transport (£20 million operating profit before specific items). The prior year only includes four
months of contribution following the acquisition on 1 December 2021, worth £4 million.
8. The Group makes adjustments to reported results under IFRS to exclude specific items and the
IAS 19 pension charge to cash difference adjustment as set out in the section entitled ‘Specific
items and pension charge to cash difference adjustment’. As the pension charge to cash
difference is not applicable to GLS, the operating profit before specific items is the same on a
reported and adjusted basis, and thus no separate adjusted measures have been presented.
In Sterling terms, reported operating profit was £296 million
(2021-22: £327 million). Operating profit before specific items was
£348 million (2021-22: £342 million). Foreign exchange movements
favourably impacted revenue by £69 million and adversely impacted
costs by £64 million resulting in a net increase to operating profit
of£5 million.
Adjusted operating profit before specific items in Euro terms
increased by €1 million. Adjusted operating margin deteriorated by
60 bps, to 7.5%, due to operational cost pressures including general
inflation and driver shortages across most markets.
Revenue
Revenue increased by 10.2% in Sterling terms (8.6% in Euro terms).
Excluding acquisitions, revenue was up 7.7% in Sterling terms,
driven by better pricing. Revenue growth was achieved in almost all
markets despite a reduction in volumes resulting from a
deterioration in the global economic environment and the cost of
living crisis. GLS’ European markets represented 87.3% of total
revenue (2021-22: 89.6%), with the North American market
contributing 12.7% (2021-22: 10.4%).
Overall volumes decreased by 1% impacted by the unwinding of
temporary benefits from COVID lockdown restrictions in theprior
year and the general deterioration in the economic environment.
B2Cvolume share at 55% was in line with the prioryear.
Operating costs
(£m)
Reported
12 months
to
31 March
2023
Reported
12 months
to
31 March
2022 % change
People costs (1,031) (908) 13.5%
Non-people costs (3,271) (2,969) 10.2%
Distribution and conveyance
costs (2,847) (2,606) 9.2%
Infrastructure costs (310) (257) 20.6%
Other operating costs (114) (106) 7.5%
Total (4,302) (3,877) 11.0%
Total reported operating costs in Sterling terms increased by
11.0%,or 8.7% excluding acquisitions.
Costs were impacted by significant inflationary pressures.
Acombination of higher fuel costs and wage inflation (for example
higher minimum wages in Germany), contributed to increases in
subcontractor costs for collection, delivery and line-haul services.
The reported increase in costs in Euro terms is presented below.
(€m)
Reported
12 months
to
31 March
2023
Reported
12 months
to
31 March
2022 % change
People costs (1,194) (1,067) 11.9%
Non-people costs (3,787) (3,490) 8.5%
Distribution and conveyance
costs (3,296) (3,064) 7.6%
Infrastructure costs (359) (302) 18.9%
Other operating costs (132) (124) 6.5%
Total (4,981) (4,557) 9.3%
People costs
In Euro terms people costs increased by 11.9%, or 7.7% excluding
acquisitions. Wage inflation in all markets contributed to the
increase, including the effect from a significant increase in the
minimum wage level in Germany during 2022.
Non-people costs
Non-people costs increased by 8.5%, or 7.0% excluding acquisitions.
Distribution and conveyance costs were up 7.6%, or6.5% higher
excluding acquisitions, driven by higher subcontractor rates resulting
from wage inflation and increased fuel costs. Line-haul costs in
particular were impacted significantly by the higher cost of diesel
during the year. Infrastructure and other operating costs increased by
18.9% and 6.5% respectively (13.1% and 4.4% respectively excluding
acquisitions), principally due to higher depreciation, higher utilities
costs and higher rent and rates.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
63

Other Group financial performance measures
Specific items and pension charge to cash differenceadjustment
(£m)
52weeks
March
2023
52weeks
March
2022
Pension charge to cash difference
adjustment (within people costs) (133) (174)
Operating specific items
GLS VAT adjustments (33) –
GLS amortisation of intangible assets in
acquisitions (19) (16)
RM excl. Parcelforce Worldwide impairment (539) –
RM damages award 35 –
RM legacy/other items 12 9
Total operating specific items (544) (7)
Non-operating specific items
Profit on disposal of property, plant and
equipment 6 72
Net pension interest 105 64
Total non-operating specific items 111 136
Total specific items and pensions
adjustment before tax (566) (45)
Total tax (charge)/credit on specific items
and pensions adjustment (111) 62
The pension charge to cash difference adjustment largely
comprises the difference between the IAS 19 income statement
pension charge rate of 22.9% (2021-22: 24.6%) for the Defined
Benefit Cash Balance Section (DBCBS) from 28 March 2022 and
theactual cash contribution rate agreed with the Trustee of
15.6%(2021-22: 15.6%). The charge was £133 million in the
period(2021-22: £174 million). The decrease in the IAS 19
pensioncharge rate is due to the increase in the net discount
rate(versus CPI) between March 2021 and March 2022.
The specific item of £33 million (€39 million) (2021-22: £nil) in GLS
relates to the settlement of VAT in Italy, covering the years2016 to 2021.
Amortisation of acquired intangible assets of £19 million
(2021-22: £16 million) largely relates to acquisitions made by GLS
inCanada, Spain, USA and Italy.
As a result of the poor trading performance of the Royal Mail
business, exacerbated by industrial action, an impairment
assessment was performed in relation to the RM Cash Generating
Unit (CGU), which excludes Parcelforce Worldwide. In assessing
whether the CGU was impaired, the carrying value of the CGU of
£1,439 million (2021-22: £1,412 million) was compared to its
recoverable amount, using the higher of a Value in Use (VIU), or Fair
Value less cost to Dispose (FVLCD) methodology. The VIU
methodology would have resulted in the CGU being fully impaired
while FVLCD methodology resulted in an impairment charge of
£539 million. See Note 13 for further details.
The £35 million (2021-22: £nil) damages award follows a claim by
Royal Mail against DAF Trucks Limited (DAF) in December 2016 in
respect of vehicles sold to Royal Mail between 1997 and 2011. The
UK Competition Appeal Tribunal issued a judgment on 7 February
2023 awarding damages (including interest to the date of payment)
of £35 million payable by DAF to Royal Mail.
Country overview
The following individual market summaries detail revenue growth
inEuro terms, unless otherwise stated.
In Germany, the largest GLS market by revenue, revenue grew
by5.1% despite lower volumes. Revenue growth benefitted from
strong price increases implemented in response to the higher
German minimum wage and its consequent impact on the cost
base, together with other inflationary effects. Operating profit
declined due to the combination of lower volumes and higher
unitcosts which could not be fully mitigated by better pricing.
GLS Italy revenue grew by 5.6%, driven by better pricing and higher
volumes. Operating profit increased compared with the prior year,
benefitting from strong growth in international volumes.
Revenues in GLS Spain grew by 4.3%, driven by better pricing while
volumes were broadly in line with the prior year. Operating profit
was below the prior period as higher operational costs could not be
fully offset through improved pricing. A new hub was opened in
Madrid during the year, providing significant additional capacity
which will support volume development in the coming years.
GLS France reported a good improvement in operating profit during
the year, reaching a break-even result. This was achieved despite
the difficult economic conditions. Revenue grew by 5.2%, benefiting
from better pricing and very good cost control which mitigated a
decline in volumes. The business continues on a good trajectory.
Financial performance in the US was disappointing. Revenues
declined by 3.4% in USD terms. The combination of weak revenue
development and stronginflationary effects on the cost base
resulted in higher losses compared with the prior year. Initiatives to
turnaround thebusinessare in progress, with a headcount
reduction programme completed before the year end. Sales
activities arebeing intensified to secure higher volumes and grow
revenues,which together with further measures to lower
unitcostsrepresent the pathway to improved profitability.
Strong performance in Canada underpinned by the Rosenau
acquisition, which is performing ahead of plan. GLS Canada
revenue increased by 18.2% in Euro terms (11.5% in CAD terms)
onan organic basis, driven by higher yield, including the benefit
from higher fuel surcharges. The focus for the coming year
willbeto secure further synergies between Rosenau and the
pre-existing GLS Canada operations, to further grow revenues
andreduce unit costs.
Revenue growth in GLS’ other developed European markets
was6.6% driven by better pricing and slightly higher volumes.
Other developing markets saw a slow-down in volume growth
dueto impact from war in Ukraine and the cost of living crisis.
Revenues were up 7.6% but reported operating profit declined.
Revenue growth and operating profit was negatively impacted
byaweakening of currencies, in particular the Hungarian Forint.
Inorder to protect market position and reduce final mile costs,
investments in parcel lockers were scaled-up during the year.
Further investments are planned in the coming years.
Strategic Report
International Distributions Services plc
Annual Report and Financial Statements 2022-23
64
Financial Review continued

Legacy other items mainly comprise a £10 million credit in respect
of Industrial Diseases claims as a result of an increase in the
discount rate versus the prior period due to an increase in gilt
yieldsat the year-end date. The prior year credit of £9 million
largelyrelates to the same item.
The profit on disposal of property, plant and equipment of £6 million
primarily relates to the sale of a number of Royal Mail properties.
The prior year profit of £72 million primarily relates to the sale of
Plots E, F and G at the Nine Elms development site.
Net pension interest credit of £105 million (2021-22: £64 million) is
calculated by reference to the net pension surplus at the start of the
financial year. The increase in the year of £41 million is as a result of
a higher overall pension surplus and higher discount rate used at
27 March 2022, compared with 28 March 2021.
The tax charge of £111 million (2021-22: £62 million credit) includes
a charge of £115 million (2021-22: Nil) in relation to the
derecognition of the UK net deferred tax asset, a net credit of
£4 million (2021-22: £30 million) in relation to the tax effect of
certain specific items and the pension charge to cash difference and
a net credit of £Nil (2021-22: £32 million) in relation to the
remeasurement of certain UK deferred tax assets and liabilities at
the future UK corporation tax rate of 25%.
Net finance costs
Reported net finance costs of £39 million (2021-22: £51 million)
comprise interest on leases of £32 million (2021-22: £29 million),
interest on bonds (including cross-currency swaps) of £24 million
(2021-22: £24 million), interest/fees on the bank syndicate loan
facility of £2 million (2021-22: £2 million), and other net interest
payable of £2 million (2021-22: £2 million). This was offset by
interest income of £21 million (2021-22: £6 million) which
increasedas aresult of higher interest rates.
The blended interest rate on gross debt, including leases for
2022-23, is approximately 3%. The impact of retranslating the
€500 million and €550 million bonds is accounted for in equity.
Taxation
The Group recognised a reported tax charge of £197 million
(2021-22: £50 million charge) which consists of a tax charge of
£119 million (2021-22: £24 million credit) in Royal Mail and a tax
charge of £78 million (2021-22: £74 million) in GLS.
The GLS reported effective tax rate of 28.4% (2021-22: 23.3%) is
higher than the UK statutory rate mainly due to the settlement of
VAT in Italy for which there is no tax credit; the effect of losses in the
US for which no deferred tax credit is recognised and higher rates
of tax in some of the countries in which it operates.
The GLS adjusted effective tax rate of 25.2% (2021-22: 23.6%) is
lower than the reported effective tax rate as it does not include the
effect of VAT adjustments in Italy which is treated as a specific item.
The Royal Mail reported tax charge of £119 million
(2021-22: £24 million credit) arose on a loss of £951 million
(2021-22: £346 million profit). The tax charge arises mainly as a result
of the derecognition of the brought forward net deferred tax asset,
which has been treated as a specific item. The Adjusted tax charge of
£4 million (2021-22 £34 million) is significantly impacted by the
non-recognition of a deferred tax asset on the current year loss.
Earnings per share (EPS)
Reported basic EPS was a loss of 91.3 pence per share
(2021-22: 61.7 pence profit per share) and adjusted basic EPS was a
loss of 20.5 pence per share (2021-22: 60.0 pence profit per share).
In-year trading cash flow
1
52 weeks ending March 2023 52 weeks ending March 2022
(£m) Royal Mail GLS Group Royal Mail GLS Group
Adjusted operating (loss)/profit (419) 348 (71) 416 342 758
Depreciation and amortisation 433 169 602 397 143 540
Adjusted EBITDA 14 517 531 813 485 1,298
Trading working capital movements (70) 18 (52) (36) 12 (24)
Share-based awards (LTIP and DSBP) charge adjustment 2 – 2 3 – 3
Gross capital expenditure (255) (152) (407) (441) (162) (603)
Estate Upgrade Programme
9
(14) – (14) – – –
Net finance costs paid (22) (19) (41) (41) (11) (52)
Dividend received from associate undertaking – – – 5 – 5
Income tax received/(paid) 39 (92) (53) (23) (85) (108)
In-year trading cash flow (306) 272 (34) 280 239 519
Capital element of operating lease repayments
10
(104) (75) (179) (102) (64) (166)
Pre-IFRS 16 in-year trading cash flow (410) 197 (213) 178 175 353
1. Reported results are prepared in accordance with International Financial Reporting Standards (IFRS). In addition, the Group’s performance is explained through the use of Alternative
Performance Measures (APMs) that are not defined under IFRS. Management is of the view that these measures provide a more meaningful basis on which to analyse business performance.
They are also consistent with the way financial performance is measured by management and reported to the Board. The APMs used are explained on pages 238 to 242 and reconciliations to the
closest measure prescribed under IFRS (and in the case of GLS reconciliations between the Group’ functional currency of Sterling and Euro) are provided where appropriate.
9. Capital expenditure on the properties in this programme is funded via the disposal of other properties. The disposal proceeds are recognised outside of in-year trading cash flow.
10. The capital element of lease payments of £202 million (2021-22: £192 million) shown in the statutory cash flow is made up of the capital element of operating lease payments of £179 million
(2021-22: £166 million) and the capital element of finance lease payments of £23 million (2021-22: £26 million).
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Annual Report and Financial Statements 2022-23
65

In-year trading cash flow
Group in-year trading cash outflow was £34 million, compared
with£519 million inflow in the prior period. This decrease was
predominantly driven by the decline in the trading performance in
Royal Mail offset by a reduction in Royal Mail capex of £186 million.
Royal Mail trading working capital cash flow decreased by
£34 million year-on-year. This was driven by a number of
factorsincluding working capital outflows related to the voluntary
redundancy programmes that took place in the prior year.
GLS trading working capital movements improved by £6 million.
GLS in-year trading cash flow increased by £33 million year-on-
year due to higher EBITDA, improved trading working capital and
lower capital expenditure, partially offset by interest and income tax
payments.
Total gross capital expenditure was £407 million
(2021-22: £603 million), of which GLS spend was £152 million
(2021-22: £162 million). Royal Mail capital expenditure was
£255 million (2021-22: £441 million), of which £127 million
(2021-22: £205 million) was transformational spend.
Transformational spend predominantly relates to our investment
inparcel hubs and automation. Royal Mail maintenance spend
was£128 million (2021-22: £236 million). The decrease is as a
resultof less capital expenditure on new vehicles and on personal
digital assistants (PDA’s), which were subject to extensive
investment in the prior year.
Income tax paid decreased by £55 million. Royal Mail income
taxreceived of £39 million mainly relates to a receipt following
HMRC’s agreement of the patent box claims and other repayments
in respect of prior years. GLS income tax paid of £92 million was
£7 million higher than the prior year due to increased tax payments
on account following the Rosenau Transport acquisition and the
timing of payments across other jurisdictions.
The capital element of operating lease repayments of £179 million
(2021-22: £166 million) reflects the net impact on in-year trading
cash flow as a result of adopting IFRS 16. The increase is due to
newleases in the current and prior year. Adjusting for the capital
element of operating lease repayments, pre-IFRS 16 in-year
tradingcash flow would have been £213 million outflow
(2021-22: £353 million inflow).
Net debt¹
A reconciliation of net debt is set out below.
(£m)
52 weeks
March
2023
52 weeks
March
2022
Net debt brought forward at
28 March 2022 and 29 March 2021 (985) (457)
Free cash flow (89) 420
In-year trading cash flow (34) 519
Cash cost of operating specific items (53) (4)
Proceeds from disposal of property
(excluding Estate Upgrade Programme
11
and London Development Portfolio)
plant and equipment 3 10
Proceeds from disposal of property relating
to the Estate Upgrade Programme¹¹ 8 –
Acquisition of business interests (7) (204)
Cash flows relating to
London Development Portfolio (6) 99
Purchase of escrow investments¹⁵ (13) –
Purchase of own shares – (17)
Movement in GLS client cash
12
(2) (5)
New or increased lease obligations (non-
cash) (204) (380)
New asset finance (non cash) (27) –
Foreign currency exchange impact (53) 21
Share buyback – (201)
Dividends paid to equity holders
of the Parent Company (127) (366)
Net debt carried forward (1,500) (985)
Operating leases
13
1,319 1,292
Pre-IFRS 16 net (debt)/cash
14
(181) 307
1. Reported results are prepared in accordance with International Financial Reporting Standards
(IFRS). In addition, the Group’s performance is explained through the use of Alternative Performance
Measures (APMs) that are not defined under IFRS. Management is of the view that these measures
provide a more meaningful basis on which to analyse business performance. They are also
consistent with the way financial performance is measured by management and reported to the
Board. The APMs used are explained on pages 238 to 242 and reconciliations to the closest measure
prescribed under IFRS (and in the case of GLS reconciliations between the Group’ functional
currency of Sterling and Euro) are provided where appropriate.
11. Capital expenditure on the properties in this programme is funded via the disposal of other
properties, the capital expenditure is presented within in-year trading cash flow.
12. GLS client cash movements are presented as part of the working capital movements line in the
statutory cashflow. The movement in the period excluding foreign currency exchange impacts
is£2 million outflow (2021-22: £5 million outflow). The foreign currency movement on GLS client
cash in the period was a gain of £2 million (2021-22: £nil) which is included in the £53 million foreign
currency exchange outflow line in the table (2021-22: £21 million inflow).
13. This amount represents leases that would not have been recognised on the Balance Sheet prior
tothe adoption of IFRS 16.
14. This measure is considered as the Group’s banking covenants are calculated on a pre-IFRS 16 basis.
15. Net release of pension escrow investments (£8 million) in the consolidated statement of cash
flows consists of £21 million release of RMSEPP pension escrow investments net of £13 million
investment in RMCPP pension escrow (2021-22: £nil movements).
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Annual Report and Financial Statements 2022-23
66
Financial Review continued

The cash cost of operating specific items was an outflow of
£53 million (2021-22: £4 million outflow) consisting mainly of
theOfcom regulatory fine payment of £52 million and Industrial
Diseases claims of £3 million as well as £33 million relating to GLS
settlement of VAT adjustments in Italy covering 2016-2021 offset
by£35 million receipt of damages awarded following settlement of
a court case. The prior year consisted mainly Industrial Diseases
claims and National Insurance payments for Employee Shares.
Acquisition of business interests of £7 million outflow relates
mainly to the acquisition of Tousfacteurs (£5 million) and payment
of deferred consideration on other GLS acquisitions (£3 million)
offset by a purchase price refund in respect of the acquisition of
Rosenau Transport in the previous year. The outflow of £204 million
inthe prior year relates mainly to the acquisition of Rosenau
Transport by GLS.
The net cash outflows relating to the London Development Portfolio
were £6 million (2021-22: £99 million inflow). Further details
areprovided in the London Development Portfolio section below.
The amount of GLS client cash held at 26 March 2023 was
£36 million (2021-22: £36 million).
New or increased lease obligations of £204 million
(2021-22: £380 million) relate to additional lease commitments
thatwereentered into during the year. Property lease additions,
modifications and acquisitions totalled £139 million
(2021-22: £335 million).
New asset finance of £27 million (2021-22: £nil) represents
borrowings to fund the purchase of tangible fixed assets in GLS.
Net Debt (£m)
2022-23
RM
2022-23
GLS
2022-23
Corporate
Centre
2022-23
Group
Bonds – – (922) (922)
Asset finance – (25) – (25)
Financial leases (32) (11) – (43)
Cash and cash equivalent investments
16
445 326 2 773
Client cash – 36 – 36
Inter-business loans (616) (191) 807 –
Net Debt pre-IFRS 16 (203) 135 (113) (181)
Operating leases (897) (422) – (1,319)
Net debt (1,100) (287) (113) (1,500)
16. Cash and cash equivalents includes bank overdrafts of £89 million at 26 March 2023 that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an
integral part of the Group’s cash management.
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Annual Report and Financial Statements 2022-23
67

Approach to capital management
Due to the current issues regarding profitability in Royal Mail and the unresolved industrial dispute, the Group capital allocation
framework, including future dividend policy, is currently under review.
The Group capital allocation framework until now has been to: invest in our business to support growth, maintain our investment grade rating,
pay a sustainable dividend and retain flexibility for selective acquisitions. Due to the high operational leverage in our business, we continue to
keep low levels of financial leverage. The net debt position (pre-IFRS 16) at 26 March 2023 was £181 million (2021-22: net cash £307 million). GLS
is cash generative and we believe Royal Mail has the potential to be an independently cash generative business. In line with this framework, the
Group’s key 2022-23 capital management objectives are detailed below together with a progress update.
Objectives Enablers 2022-23 update
Meet the
Group’s
obligations as
they fall due.
Maintaining sufficient cash
reserves and committed
facilities to:
 Meet all obligations,
including pensions.
 Manage future
risks,including the
principal risks.
At 26 March 2023, the Group had available resources of £1,698 million (2021-22: £2,096 million)
made up of cash and cash equivalents of £773 million (2021-22: £1,101 million), current asset
investments of £nil (2021-22: £70 million) and undrawn committed bank syndicate loan facilities
of £925 million (2021-22: £925 million).
At 26 March 2023, the Group met the loan covenants (which were amended on 24 March 2023
to replace Group EBITDA in the calculations with GLS EBITDA) and other obligations for its
bank syndicate loan facility and €500 million and €550 million bonds.
On 9 May 2023, the Group secured a backstop facility of €500 million from a syndicate of
banks to provide additional flexibility on the timing for refinancing the €500 million bond
maturing in July 2024.
As set out in the Viability Statement, the Directors have a reasonable expectation that the
Group will continue to meet its obligations as they fall due.
Support a
progressive
dividend policy.
Generate sufficient in-year
trading cash flow to cover
the ordinary dividend.
Maintain sufficient
distributable reserves
tosustain the Group’s
dividend policy.
The Group reported £34 million of in-year trading cash outflow (2021-22: £519 million inflow),
consequently no full year ordinary dividend is proposed (2021-22: 20.0 pence per share).
Capital managed by the Group, excluding the pension scheme surplus net of withholding
tax, is £1,845 million at 26 March 2023 (2021-22: £2,611 million).
The Group had retained earnings of £3,761 million at 26 March 2023 (2021-22: £5,248
million). The Group considers it has a maximum level of distributable reserves of around c.
£2 billion (2021-22: £2 billion), which excludes the impact of the pension surplus on retained
earnings, more than sufficient to cover the dividend.
Reduce the
costof capital
forthe Group.
Target investment grade
standard credit metrics
i.e.no lower than BBB-
under Standard & Poor’s
rating methodology.
During the year, the Group maintained a credit rating of BBB with Standard & Poor’s but the
outlook was revised from positive to negative.
Retain
sufficient
flexibility to
invest in the
future of the
business.
Funded by retained cash
flows and manageable
levels of debt consistent
with our target credit rating.
During the year, the Group made total gross capital investments of £407 million
(2021-22:£603 million) and acquisition of business interests of £7 million
(2021-22: £204million) while retaining sufficient capital headroom. The gross
capitalinvestments of Royal Mail were £255 million (2021-22: £441 million), this
reductionwas undertaken as part of the five-point stabilisation plan for Royal Mail.
The gross capital investments of GLS were £152 million (2021-22: £162 million).
Maintain
suitable
financial
leverage
Retain sufficient leverage,
commensurate with the
Board’s assessment of
therisk environment
In November 2021, the Directors stated that they expect to move towards a net £nil cash
position (pre-IFRS 16) over the next two years from a net cash position at 26 September
2021 of £685 million.
During the year, the Group made dividend payments of £127 million (2021-22 £366 million
including a special dividend of £199 million).
The net debt position (pre-IFRS 16) at 26 March 2023 was £181 million (2021-22: net cash of £307
million).
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Annual Report and Financial Statements 2022-23
68
Financial Review continued

Financial risks and related hedging
The Group is exposed to commodity price and currency risk.
Royal Mail operates a three-year layered rolling hedging strategy
for fuel and energy. Royal Mail has hedges in place for 87% of total
underlying commodity costs for 2022-23; as a result, a further 10%
increase in underlying commodity costs would reduce operating
profit by just £2 million. However, a 10% increase in fuel duty/other
additional costs would reduce operating profit by £15 million.
Without hedging, diesel and jet fuel costs for 2023-24 would be
around £30 million higher, while gas and electricity costs would be
around £19 million higher, based upon closing commodity prices at
26 March 2023.
GLS generally out-sources its collection, delivery and line-haul
activities to subcontractors, and therefore is not significantly
directly exposed to higher fuel costs. Nevertheless, there is an
indirect exposure, as increasing fuel costs for subcontractors lead
to higher rates for their services as they seek to pass on the higher
fuel costs incurred.
GLS has very limited direct exposure to diesel costs. GLS does not
hedge exposure to energy costs, a further 10% increase in energy
costs would increase energy costs by £4 million.
The Group is exposed to foreign currency exchange risk in relation
tointerest payments on the €500 million bond, certain obligations
under Euro denominated finance leases, trading with overseas postal
administrations and various purchase contracts denominated in
foreign currency. GLS’ functional currency is largely the Euro, which
results in translational foreign currency exchange risk to revenue,
costs and operating profit. The €550 million bond, issued in October
2019, is fully hedged by a cross-currency interest rate swap with no
residual exposure to foreign currency or interest rate risk.
The average exchange rate between Sterling and the Euro
was£1:€1.16 (2021-22: £1:€1.18). This resulted in a £5 million
increase in GLS’ reported operating profit before tax in 2022-23
(2021-22: £16 million decrease). The net impact on Group
operatingprofit before tax was a £5 million increase
(2021-22: £16 million decrease).
The Group manages its interest rate risk through a combination
offixed rate loans and leasing, floating rate loans/facilities and
floating rate financial investments. At 26 March 2023, all the gross
debt (excluding bank overdrafts which were part of a cash pool) of
£2,309 million (2021-22: £2,213 million) was at fixed rates.
London Development Portfolio
In total we have invested £6 million in the period on works to
separate the retained operational sites from the development
plotsat Mount Pleasant and infrastructure works at Nine Elms.
1) Mount Pleasant
This site was sold to Taylor Wimpey in 2017 subject to completion of
separation works. These works were completed in 2021, with
£115 million received as at 26 March 2023 with the remainder of the
cash due to be received through a stage payment in 2023-24
(£66 million) and a final payment in 2024-25 (£9 million).
2) Nine Elms
This 13.9 acre site with planning consent to develop 1,911 residential
units, was split into various plots and sold. As at 26 March 2023 the
sale proceeds received are £244 million. Further receipts of
(£27 million) are expected in 2023-24.
Further investment by Royal Mail will be required in relation to
infrastructure obligations.
Pensions
Royal Mail makes contributions to two main schemes in the UK;
theRoyal Mail Defined Contribution Plan (RMDCP) and the DBCBS
of the Royal Mail Pension Plan (RMPP).
The Group also operates two additional UK defined benefit schemes
which are closed to future accrual, the legacy section of the RMPP
and the Royal Mail Senior Executives Pension Plan (RMSEPP).
The buy-out of the RMSEPP was completed in June 2022, when the
bulk annuity policies held were exchanged for individual policies
between the insurers and all remaining members.
The Group’s obligations under the RMSEPP have now been fully
extinguished and the Group expects to proceed to wind up the plan
in the coming months. The scheme still holds residual assets of
£8 million which are expected to be returned to the Group following
the wind up of the scheme subject to the payment of any remaining
closure expenses and the deduction of withholding tax.
Royal Mail also aims to introduce a new pension scheme, the Royal
Mail Collective Pension Plan (RMCPP) which will replace the existing
DBCBS and the RMDCP for future accrual and will comprise a
Defined Benefit Lump Sum Section (DBLS), similar to the existing
DBCBS, and a Collective Defined Contribution (CDC) Section. The
Trustee’s application to the Pensions Regulator for authorisation
has been approved.
The CDC Section will be accounted for as a defined contribution
scheme and the DBLS as a defined benefit scheme with the
accounting treatment expected to be similar to the DBCBS.
Thenewarrangements will have fixed employer contributions
of13.6%, plus an additional 1.0% for employees who choose to
savefor an additional lump sum payment. Standard employee
contributions will be 6.0%.
Cash pension costs
The Group’s cash pension costs in respect of all UK pension
schemes were £376 million in the year, excluding Pension
SalaryExchange (PSE).
When the design of the RMCPP was agreed in 2018, the fixed
employer contribution rate of 13.6% of pensionable pay was designed
to be affordable and sustainable for Royal Mail. The expected cost of
RMCPP based on pensionable payroll at that time was approximately
the same as the cost of the existing schemes, ataround £400 million
per year. The new RMCPP is expected to increase cash payroll costs
by c.£30-35 million per annum, when itis introduced. The main
reason for the increase is that although the estimated cost of the
RMCPP as a percentage of pensionable pay will remain broadly the
same as in 2018, payroll costs have increased. In addition, since the
RMPP closed to accrual in 2018, thecost of existing plans has been
reducing over time relative to overall pay costs, as DBCBS members
leave and are replaced by new employees who join the RMDCP, at a
lower employer contribution rate.
Defined benefit schemes – balance sheet position
An IAS 19 deficit of £145 million (27 March 2022: £390 million) is
shown on the balance sheet in respect of the DBCBS; however, the
scheme is not in funding deficit and it is not anticipated that deficit
payments will be required. The significant decrease in the deficit
inthe year is largely due to a considerable increase in the ‘real’
discount rate (the difference between RPI and the discount rate
based on corporate bond yields), as a result of a large increase in
corporate bond yields at the balance sheet date, versus the year
end which has had the effect of significantly reducing liabilities.
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Annual Report and Financial Statements 2022-23
69

The RMPP scheme closed to future accrual in its previous form from
31 March 2018. The pre-withholding tax accounting surplus ofthe
legacy section of the RMPP at 26 March 2023 was £3,003 million
(27 March 2022: £4,182 million). The pre-withholding tax accounting
surplus has decreased by £1,179 million in the period. This was the
result of a significant increase in index-linked gilt yields, against
which the RMPP liabilities are hedged, driving a large proportion of
the £3,538 million reduction in the value of thissection’s assets. This
movement was however to a large degree offset by a significant
increase in the ‘real’ discount rate driving a large proportion of an
overall £2,359 million reduction tothe value of the RMPP’s calculated
liabilities versus the prior year end. Although the surplus has
decreased in absolute terms, the funding level on an accounting
basis (assets as a proportion of liabilities) has improved since the
year end as a result of the significant decrease in liabilities.
Further details of all the Group’s pension arrangements can
befound in Note 11 to the Consolidated Financial Statements.
Dividends
A final dividend for 2021-22 of 13.3 pence per share was paid
on6 September 2022.
Given the performance of Royal Mail in 2022-23, and increased
investment in GLS, the Board has decided not to pay a final dividend
in respect of 2022-23.
Outlook 2023-24
The trading environment continues to be uncertain for both Royal
Mail and GLS. All of our markets are impacted by a challenging
global economy, including high levels of inflation and expectations
of lower future economic growth. Against that backdrop, we are
targeting a Group adjusted operating profit in 2023-24.
Royal Mail
2022-23 adjusted operating profit was in line with guidance for the
year, although revenue trading in the final quarter was slightly
weaker than had been anticipated, offset by some one-off cost
credits. The weaker revenue trajectory runs into 2023-24 as the time
taken to resolve the industrial dispute and improve the reliability of
service quality is prolonged.
Looking forwards, we are targeting to restore profitability in Royal
Mail over the two remaining years of the recommended pay deal,
with a return to adjusted operating profit (before voluntary
redundancy costs) in 2024-25.
The key bridging items that explain the two-year turnaround
include some items already known, plus a number of
improvements that are planned.
Items currently quantifiable (subject to ratification of the CWU deal):
 CWU pay costs will increase by 8% (6% in 2023-24 and a further
2% in 2024-25). This will increase annual costs by c.£350 million.
 We have secured a reduction in FTEs of c.10,000 on exit from
2022-23. This equates to an annualised run rate saving of
c.£300 million.
 2022-23 included pay abatements during the days of strike action
totalling c.£150 million. These are not expected to repeat.
Other planned improvements include:
 Recovery of revenues lost during the industrial action in
2022-23. We will target the recovery of c.80% of the customer
revenue lost.
 Revenue growth from other initiatives, including from new
andimproved service offerings following the opening of the
Midlands Super Hub.
 Cost efficiencies from the changes planned in the operation
andother initiatives to control operating expenditure.
 Benefits of CWU agreement offset by pay costs over 2 years.
The revenue growth initiatives are reliant on quality of service
improvement. A number of the operational efficiency initiatives are
directed also at improving service to customers.
It is anticipated that the above will enable Royal Mail to return to
profitability, excluding voluntary redundancy charges.
The current financial year, 2023-24 is expected to be another
challenging one. In the first half, a combination of the 6% pay
increase in April 2023 and the currently weaker revenue trajectory
are expected to combine to mean the adjusted operating loss in H1
is expected to be higher year on year. H2 is expected to see
significant year on year improvement, as we lap the main impacts
of industrial disruption in the prior year and as revenue recovery
and new efficiency initiatives contribute to the turnaround. The
extent to which progress is made in 2023-24 will be dependent on
our ability to improve service quality and the extent to which we are
able to make progress on change in operations. which we must do,
with or without a deal.
Our target is to offset in year trading cash outflows with proceeds
from real estate disposals.
GLS
In 2023-24, we expect macro-headwinds to continue, especially in
the first half, and a return to volume growth, whilst further pricing
actions, supported by our ongoing investments in digitalisation and
automation, should partially offset inflationary pressure.
GLS has the right strategy and business model, and will now
increase investments in strategic areas which offer opportunities
togrow and deliver good returns: parcel lockers, geographical
expansion (e.g. Serbia) fulfilment and 2-person handling. GLS
already has a leading position inlockers in Hungary and Slovenia,
and further investment will enhance its position in a number of
European markets. Serbia represents an attractive market and will
further strengthen GLS’position in Eastern Europe.
Year-on-year revenue growth in Euros is expected to be in the 3%
to 5% range. The impact from the initiatives above, taken together
with adverse working day effects, is expected to result in an
adjusted operating profit in the range €350 to €370 million.
Underlying adjusted operating profit, excluding strategic
investments and working day effects, is expected to be in the range
of €380 to €400 million - only slightly below the 2022-23 outturn
– despite challenging macro-economic conditions.
Capex is expected to increase to support growth opportunities, to
around 5% of revenue, although should converge to the previous
guidance range (3-4% of revenues) within 2 to 3 years.
In the medium term, GLS is targeting €500 million operating profit
in 2026-27.
Strategic Report
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Annual Report and Financial Statements 2022-23
70
Financial Review continued

In accordance with sections 414CA and 414CB of the Companies Act 2006, the table below sets out where information can
be found in this Annual Report relating to non-financial matters, including our commitment and approach to responsibly
managing our relationships with our people, customers, communities and the environment. It also highlights, where
relevant, the policies to support our performance in these areas, how we monitor their effectiveness and their outcomes.
Environment
Material policies How we monitor effectiveness
ESG Policy Statement (Group)
Environment and Energy Policy (Royal Mail)
Environmental Standard (GLS)
Outline our commitments to responsible management of natural resources, climate
change mitigation and adaptation, pollution prevention and protection of
theenvironment. Includes engagement with our people, customers and suppliers.
 Monitor the scores and rankings in sustainability benchmarks and indices.
 Measure performance against key environmental metrics.
 Regular audits against our environment management systems.
 Include environmental criteria in supplier selection frameworks and
monitorsuppliers’ performance (Royal Mail).
 Board oversight of performance by the ESG Committee. Pages 101 and 102.
Outcomes Risk management
 Our environment strategies, approach and policy outcomes. Pages 27 to 29.
 Environmental performance against key metrics including carbon emissions
andwaste generation (pages 27 and 29).
 The Board factors the impact of the Group’s operations on the community andthe
environment into its decision making. Pages 24 and 25.
 Principal risk: Climate change and environmental management. Page 53.
 Implementation of TCFD recommendations. Pages 38 to 45.
Employees
Material policies How we monitor effectiveness
ESG Policy Statement (Group)
Our Business Standards (Royal Mail)
Code of Business Standards (GLS)
Page 37.
People Policy (Royal Mail)
A single policy statement which sets out our overarching commitment to colleagues
throughout their employment with Royal Mail.
Royal Mail and GLS Speak Up (Reporting) policies
Our commitments to investigating suspected wrongdoing, including the system for
raising concerns and our respect for whistleblower confidentiality.
Royal Mail and GLS Health and Safety policies
Our commitments to managing health and safety risks, removing or reducing
thelikelihood of injury or harm to its employees or others.
Equality, Diversity and Inclusion Statement (Royal Mail)
Diversity Statement (GLS)
Our commitments to ensure that equality, diversity and inclusion are at the heart
ofour business values, policies, processes and everyday practices.
Pages 33 and 34.
 Monitor health and safety performance metrics and undertake regular
auditsagainst our SHE management systems. Pages 30 and 31.
 Regular employee engagement forums and surveys allow us to monitor
culture and engagement. Page 22 and 32.
 Track workforce diversity (in GLS gender only) across job levels and different
business areas against targets. Page 33 and 34.
 Monitor the contact across our whistleblowing channels and investigate
concerns/incidents raised. Pages 36 and 37.
 Designated Non-Executive Director for engagement with the workforce.
Page 84.
 Board oversight of performance by the ESG Committee. Pages 101 and 102.
Outcomes Risk management
 Our people strategies, approach and policy outcomes. Pages 30 to 34.
 Our health, safety and wellbeing performance. Page 30 and 31.
 Our gender diversity profile. Pages 33 and 34.
 Feedback from employee engagement activities and surveys. Pages 17 and 32.
 The Board factors the interests of our employees into its decision making. Pages
24 and 25.
 Principal risks: Industrial action, Talent: workforce for the future, Actual or
suspected breaches of material law and/or regulation and Health, safety and
wellbeing. Pages 50, 54 and 55.
Social and community
Material policies How we monitor effectiveness
ESG Policy Statement (Group)
Page 37.
Sustainable Procurement Code of Conduct (Royal Mail)
Supplier Code of Conduct (GLS)
Page 37.
 Research in relation to Royal Mail’s socio-economic impact in the UK to
understand thelevel of benefit we deliver to the communities we serve.
Page34.
 Monitor the scores and rankings in sustainability benchmarks and indices.
 Monitor customer feedback. Page 22.
 Monitor service performance. Page 22.
 Investigating breaches to our supplier codes, plus effective monitoring
andauditing of high-risk suppliers (Royal Mail).
 Monitor payment practices (Royal Mail).
 Board oversight of performance by the ESG Committee. Pages 101 and 102.
Outcomes Risk management
 Our customer-centric strategy, service performance and customer feedback
scores. Pages 16 and 17 and page 22.
 Our community investment approach and policy outcomes including UK
socialand economic contribution. Pages 34 and 35.
 Our supply chain approach and policy outcomes including monitoring of suppliers
(monitoring for Royal Mail only). Page 37.
 Payment practices, available at www.gov.uk/check-when-businesses-pay-
invoices (Royal Mail).
 The Board factors the interests of suppliers, customers and other stakeholders
into its decision making. Pages 24 and 25.
 Principal risks: Customer expectations and our responsiveness to market
changes, Climate change and environmental management and Business
continuity and operational resilience. Pages 52, 53 and 54.
Non-Financial Information Statement
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
71

Respect for human rights
Material policies How we monitor effectiveness
ESG Policy Statement (Group)
Page 37.
Equality, Diversity and Inclusion Statement (Royal Mail)
Diversity Statement (GLS)
Pages 33 and 34.
People Policy (Royal Mail)
Modern Slavery Act Statement
Sustainable Procurement Code of Conduct (Royal Mail)
Supplier Code of Conduct (GLS)
Page 37.
 Embed human rights risks into our compliance risk monitoring programme.
 Monitor high-risk supplier categories for evidence of breaches to
ourstandards.
 Operate strict resourcing controls that govern the onboarding of new
permanent, temporary and contract staff to ensure compliance with
vettingstandards (Royal Mail).
 Board oversight and review of Modern Slavery Act Statement by the
ESGCommittee.
Outcomes Risk management
 Human rights approach and policy outcomes. Page 35.
 Number of high-risk suppliers signed up to Sedex. Page 37.
 Our risk management framework governs how we identify, assess and
manage such risks. The risk appetite determines the level of risk we are
prepared to accept. Pages 46 to 49.
 Our Modern Slavery Act Statement is available at
www.internationaldistributionsservices.com/en/sustainability/reporting-
and-performance.
Anti-bribery and corruption
Material policies How we monitor effectiveness
Ethical Business Conduct Policy (Prevention of Bribery, Corruption, Conflicts
of Interest, Money Laundering, Terrorist Financing and the Facilitation of Tax
Evasion) (RoyalMail)
Page 37.
Our Business Standards (Royal Mail)
Code of Business Standards (GLS)
Page 37.
Sustainable Procurement Code of Conduct (Royal Mail)
Supplier Code of Conduct (GLS)
Page 37.
Royal Mail and GLS Speak Up (Reporting) policies
Pages 36 and 37.
 Provision of mandatory compliance training for employees. Pages 36 and 37.
 Require annual manager attestations to maintain the Royal Mail Business
Standards. Page 36.
 Country Manager attestations as part of Quarterly Compliance Reporting (GLS).
 Regular screening of suppliers to check for instances of corruption.
 Monitoring the number of contacts made across our whistleblowing
channels. Page 80.
Outcomes Risk management
 Our approach to ethics and compliance and policy outcomes. Pages 36 and 37.
 Completion rate of compliance training against target. Page 36.
Our risk management framework governs how we identify, assess and manage
such risks. The risk appetite determines the level of risk we are prepared to
accept. Pages 46 to 49.
Principal risks: Actual or suspected breaches of material law and/or regulation.
Page 54.
Other non-financial information
Page
Our Business Model 12 and 13
Measuring Our Performance (non-financial KPIs) 20 and 21
ESG Review 26 to 37
Most of the policies and procedures referred to above are available at www.internationaldistributionsservices.com/sustainability/
governance/policies and www.gls-group.eu/GROUP/en/about-us/compliance.
Non-Financial Information Statement continued
This Strategic Report was approved by the Board on 22 May 2023 and signed on its behalf by:
Keith Williams Mick Jeavons
Non-Executive Chair Group Chief Financial Officer
Strategic Report
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Annual Report and Financial Statements 2022-23
72

Corporate Governance
74 Chair’s introduction
76 Board of Directors
78 Application of the Code
79 Board leadership and company purpose
85 Division of responsibilities
86 Composition, succession and evaluation
89 Nomination Committee Report
93 Audit and Risk Committee Report
101 Environmental, Social and Governance
Committee Report
103 Directors’ Remuneration Report
137 Directors’ Report
141 Statement of Directors’ Responsibilities
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
73
Strategic Report Corporate Governance

Dear Shareholder,
On behalf of the Board, I am pleased to present this year’s
Corporate Governance Report.
As explained in my letter on pages 4 and 5, this has been an
extremely challenging year. Both of our businesses have faced
significant external headwinds. While GLS has adapted well,
RoyalMail has not.
The industrial dispute with the CWU, including 18 days of strike
action, has had a significant impact on Royal Mail and the Group.
Agreat deal of the Board’s time during the year has been focused
on the Royal Mail business and, in particular, the steps being taken
to secure its long-term survival and the measures being implemented
to mitigate the impact of industrial action on our customers. This
has not been easy.
Last month, after lengthy negotiations, we were pleased that the
CWU’s Postal Executive Committee ratified the Business Recovery,
Transformation and Growth Agreement (see page 16) and that it will
put it toa ballot of its members with a recommendation to approve.
Board and Committee changes
As announced on 12 May 2023 Simon Thompson informed the
Board of his intention to step down as CEO Royal Mail. The
appointment of his successor is in advanced stages and in the
meantime myself and fellow Board members will provide additional
oversight and support to the Royal Mail business.
There were a number of other Board and Committee changes
during theyear. Jourik Hooghe joined the Board with effect from
1 June 2022 andbecame a member of the Nomination and Audit
and Risk Committees. Biographical information about Jourik is
included onpage 77.
As previously announced, Rita Griffin stepped down from the Board
following our AGM in July 2022. Lynne Peacock succeeded Rita as
Chair of the ESG Committee. At the same time, Lynne stepped down
as Chair of the Remuneration Committee, but remains a member.
Maria da Cunha, who was an existing member of the Remuneration
Committee, succeeded Lynne as Chair of this Committee. Maria
continues in her role as Designated Non-Executive Director for
engagement with the workforce.
In addition, on 18 May 2023, we announced the appointment of
Ingrid Ebner. Ingrid will join the Board and the Nomination
Committee with effect from 1 July 2023.
Purpose, culture and values
Our purpose – connecting customers, companies and countries –
and the unique contribution our businesses make to society, remain
as important and relevant as ever. However, we fully acknowledge
that during the past year we have not always provided the service
our customers and society need and expect.
Our culture, which is shaped by our values, is a key enabling factor
in delivering our purpose, good service and our strategic ambitions.
It is the Board’s responsibility to review and monitor culture across
our businesses. Further information on the mechanisms used to
assess culture, the insight gained and the outcome of that insight
isincluded on pages 79 and 80.
Key priorities
 Monitoring Royal Mail’s dispute with the CWU, including
theimpact of industrial action on the business and the
effectiveness of contingency measures to mitigate the
impacton our customers.
 Overseeing the development of Royal Mail’s five-point plan to
stabilise the business and monitoring its implementation
through weekly meetings with the Royal Mail Executive Board.
 Overseeing Royal Mail’s engagement with Ofcom and
Government in relation to the USO reform proposals.
 Ensuring the safety of our people and customers.
 Overseeing the execution of GLS’ strategy.
 Ensuring that the highest levels of governance continue
tooperate across the Group, including effective risk
management measures and controls.
Keith Williams
Non-Executive Chair
Compliance with the 2018 UK Corporate
Governance Code
1
(the Code)
The Board confirms that for the year ended 26 March 2023
the Company complied with all relevant Provisions in the
Code. This governance section explains how we have
applied the Code’s Principles during the year.
1. The Code is available at www.frc.org.uk.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
74
Corporate Governance
Chair’s Introduction

The Board continues to receive valuable feedback from our
workforce from Maria da Cunha, our Designated Non-Executive
Director for engagement with the workforce. See page 84 for
further detail.
Stakeholders
Our purpose demonstrates the importance we place on our
stakeholder relationships. Each member of the Board is fully aware
of their duties under section 172 of the Companies Act 2006 and
received Directors’ duties refresher training, provided by Slaughter
and May, during the year. Examples of how the Board factored
stakeholder views and interests into its deliberations and decision-
making process during the year are included on pages 24 and 25.
We are aware that the AGM is a key forum for the Board to engage
with shareholders and, after being unable to welcome shareholders
in person to our 2021 AGM, we were pleased to host a hybrid AGM in
2022 with all Directors attending in person.
Name change
During the year the Board considered and approved the Company’s
name change from Royal Mail plc to International Distributions
Services plc. This change was made to better reflect the Group
structure of two separate companies (Royal Mail and GLS), as well
as the increased importance of GLS to the Group, our strength in
markets outside the UK and our position in the wider logistics and
distribution markets. This change took place on 3 October 2022.
Environmental, social and governance
The ESG Committee continues to monitor the application of our
Group ESG Principles, including the implementation of Royal Mail
and GLS’ environmental strategies and the progress made against
their respective targets (see pages 26 to 37).
We recognise climate change is a key global threat, and one that
poses particular risks and opportunities for our businesses. During
the year the ESG Committee oversaw the development of, and
monitored progress against, the Company’s TCFD implementation
project. In March 2023, in line with the TCFD recommendations,
theBoard formally adopted oversight of climate-related risks and
opportunities into its governance framework, and will embed this
into its operating processes during 2023-24. See pages 38 to 45 for
our TCFD Statement.
Dividend
As a result of the ongoing uncertainty in Royal Mail and to conserve
the balance sheet position, the Board took the decision not to pay
an interim dividend during the year. Given the performance of Royal
Mail in 2022-23, and increased investment in GLS, the Board has
decided not to pay a final dividend in respect of 2022-23.
Diversity, equity and inclusion (DEI)
To effectively fulfil our purpose and deliver long-term value for our
stakeholders, we must foster an inclusive culture, employ people
with different viewpoints and promote diversity in its broadest
sense, including professional, educational, skills, age, gender and
ethnicity. Our gender diversity profile and information on Royal Mail
and GLS’ respective DEI strategies is set out on pages 33 and 34.
During the year, we updated our Board Diversity Policy to
incorporate the targets set by the FTSE Women Leaders Review
(FWLR) and the Financial Conduct Authority’s (FCA) Listing Rules.
Whilst we already meet the targets for at least one of the senior
Board positions to be held by a woman and for at least one Board
member to be from an ethnic minority background, the proportion
of women on our Board and in our Group Leadership Team
1
needs
to increase to meet the 40% female representation targets. As at
19 May 2023, the proportion of women on our Board was 33% and
the proportion of women in our Group Leadership Team was 35%.
Further information can be found on pages 90 and 91.
We are also committed to increasing ethnic representation and are
pleased to report that the composition of the Board complies with
the Parker Review target for FTSE 250 boards to have at least one
director from an ethnic minority background by 2024. Information
on the progress made against Royal Mail’s ethnic diversity targets
is included on page 33.
Board evaluation
To ensure that it sets the correct tone and continues to operate
effectively, we are committed to annually reviewing the Board’s
performance. In light of the challenges the Group has faced during
the year, the Board took the decision to conduct its 2022-23
evaluation internally. While the overall outcome of the evaluation
was positive, to ensure continuous improvement, the Board agreed
that a number of actions should be implemented. Full details of the
evaluation, including the methodology and actions arising, are set
out on page 88.
Conclusion
I hope that you find this report useful and I look forward toengaging
with shareholders at our forthcoming AGM on20 July2023.
Keith Williams
Non-Executive Chair
22 May 2023
1. The Group Leadership Team includes the Group CFO, the Group Company Secretary, the CEO Royal Mail and the CEO GLS and their direct reports.
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
75
Strategic Report Corporate Governance

Lynne Peacock
E
A R N
Independent Non-Executive Director
Appointed to the Board
1 November 2019
Skills and experience
 Significant board and executive experience,
having served as the CEO of National Australia
Bank Europe Limited (NAB) and the CEO of
Woolwich plc. Lynne was formerly a Non-
Executive Director at Standard Life Aberdeen plc,
Scottish Water, Jardine Lloyd Thompson Group
plc and Nationwide Building Society.
 Transactional experience gained through her
involvement in Woolwich plc’s IPO and FTSE 100
listing and its sale to Barclays, the disinvestment
of NAB’s Irish operations and the integration of
Clydesdale and Yorkshire Banks.
Significant external appointments
 Senior Independent Director of Serco Group plc
 Non-Executive Director of TSB Banking Group plc
 Senior Independent Director of TSB Bank plc (a
subsidiary of TSB Banking Group plc)
Keith Williams
N
R
Independent Non-Executive Chair
Appointed to the Board
Non-Executive Director on 1 January 2018
Non-Executive Deputy Chair on 7 November 2018
Non-Executive Chair on 22 May 2019
Interim Executive Chair on 15 May 2020
Non-Executive Chair on 1 February 2021
Skills and experience
 Proven business leader with significant chair
and board leadership experience. Keith spent 18
years at British Airways, including five years as
CFO, three years as CEO and two years as
Executive Chair, during which time he led the
transformation of British Airways. Formerly a
Non-Executive Director and Deputy Chairman of
the John Lewis Partnership, a Non-Executive
Director of Aviva plc and an Executive Board
member and Chair of the Audit Committee at
Transport for London.
 Extensive industrial relations, operational and
customer service experience.
 Chartered accountant.
Significant external appointments
 Chair of Halfords Group plc
Martin Seidenberg
Chief Executive Officer of GLS
Appointed to the Board
1 April 2021
Skills and experience
 Significant international and logistics
experience. Martin spent 15 years with Deutsche
Post DHL in a variety of senior logistics,
parcel-related and strategic roles including CEO
of the DACH region at DHL Supply Chain.
 Deep knowledge of GLS, having joined in 2015 as
Chairman of GLS Germany, becoming GLS CEO
in June 2020.
Significant external appointments
 None
Maria da Cunha
R
E N
Independent Non-Executive Director
Designated Non-Executive Director for
engagement with the workforce
Appointed to the Board
22 May 2019
Skills and experience
 Extensive experience in industrial relations,
transformation programmes and employee
engagement gained through her 18-year career at
British Airways, where Maria was the Director of
People, Legal and Government and Industry
Affairs, and the Director of People and Legal.
Maria was formerly a Non-Executive Director of
De La Rue plc.
 Qualified solicitor with significant risk,
compliance and legal knowledge, having held
various positions with Hogan Lovells, Lloyds of
London and Law College of Europe.
Significant external appointments
 Panel Member of the Competition and Markets
Authority
Michael Findlay
A
N R
Independent Non-Executive Director
Appointed to the Board
22 May 2019
Skills and experience
 Extensive strategy, finance and M&A experience.
Michael spent 27 years in investment banking at
Robert Fleming & Co, UBS and most recently
Bank of America Merrill Lynch, where he was
Co-Head of Investment Banking and Corporate
Broking for the UK and Ireland.
 Significant knowledge of the letters and parcel
sector. He is a former Non-Executive Director of
UK Mail Group plc, where he was also the Senior
Independent Director, Chair of the Remuneration
Committee and a member of the Audit
Committee.
Significant external appointments
 Chair of Morgan Sindall Group plc
 Chair of London Stock Exchange plc (a subsidiary
of London Stock Exchange Group plc)
Mick Jeavons
Group Chief Financial Officer
Appointed to the Board
11 January 2021
Skills and experience
 Significant financial, logistics and industrial
relations experience. Mick joined Royal Mail in
1993 and has held various senior roles, including
Corporate Finance Director at the time of the IPO
in 2013 and Chief of Staff to the then CEO.
 Chartered accountant.
Significant external appointments
 None
International Distributions Services plc
Annual Report and Financial Statements 2022-23
76
Corporate Governance
Board of Directors

Baroness Hogg
A E N
Senior Independent Non-Executive Director
Appointed to the Board
1 October 2019
Skills and experience
 Extensive board and governance experience,
having served as Chair of 3i Group plc and as a
Non-Executive Director of several companies,
including BG Group and GKN plc. Baroness Hogg
won the Sunday Times Lifetime Achievement
Award for Non-Executive Directors in 2017.
 Significant political and regulatory experience
through her former roles as Lead Independent
Non-Executive Director of HM Treasury, Chair of
the Financial Reporting Council and Head of the
Prime Minister’s Policy Unit under John Major.
She was granted a life peerage in 1995 and sits in
the House of Lords as a crossbencher.
Significant external appointments
 None
Committee membership key
A
Audit and Risk
E
ESG
N
Nomination
R
Remuneration
Committee Chair
Shashi Verma
E N
Independent Non-Executive Director
Appointed to the Board
29 September 2021
Skills and experience
 Proven business leader with extensive experience
in developing innovative technology. Shashi is the
Director of Strategy and Chief Technology Officer
at Transport for London (TfL), a role in which he is
responsible for the operation of TfL’s revenue
collection system. He also led the development
and implementation of contactless payments on
TfL’s systems.
 Significant customer service experience gained
through his responsibility for integrating TfL’s
customer-facing activities and for running its
customer service operations.
Significant external appointments
 None
Jourik Hooghe
A N
Independent Non-Executive Director
Appointed to the Board
1 June 2022
Skills and experience
 Extensive financial, accounting, operations and
strategy experience in consumer goods and retail
businesses. Jourik is Chief Financial Officer of
Swissport International AG, and his
responsibilities cover group finance, including
controlling, accounting, M&A, IR, tax and
procurement.
 Jourik was previously Executive Vice President
and Group Chief Financial Officer of Wizz Air
Holdings plc. Prior to that he spent 18 years at
Procter & Gamble in various finance roles,
including Head of Global Strategy and Regional
CFO, in businesses across Europe, India, China,
the Middle East and Africa. Jourik also spent time
at Adecco Group, where he transformed the
finance and accounting function into a data and
technology-driven organisation.
Significant external appointments
 None
Mark Amsden
Group General Counsel and Company Secretary
Appointed
1 May 2019
Skills and experience
 Significant legal and company secretarial
experience. Mark was the former General
Counsel and Company Secretary of Wm Morrison
Supermarkets plc and the interim Company
Secretary of Yorkshire Water. Formerly a partner
at Addleshaw Goddard LLP, where he specialised
in corporate litigation and headed up the national
IT litigation practice.
 Data and technological experience. Mark helped
oversee Morrisons move online with Ocado and
then Amazon, and dealt with the response to
Morrisons’ employee data theft in 2014.
Significant external appointments
 None
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
77
Strategic Report Corporate Governance

Information about how we have applied the Code’s Principles during the year ended
26 March 2023 can be found as indicated below.
Code Principle
Page
1. Board leadership and company purpose
A. Effective leadership, promotion of long-term success, value generation and social contribution 24 and 25
76 and 77
79 to 84
B. Purpose, values, strategy and cultural alignment 2
14 to 19
79 and 80
C. Resources and controls 38 to 55
82
99 and100
D. Stakeholder engagement 22 to 25
84
E. Policies and practices and mechanisms to raise workforce concerns 36 and 37
80
2. Division of responsibility
F. Role of the Chair 85
G. Composition of the Board 86
H. Role and time commitment of the Non-Executive Directors 85
85 and 92
I. Effective and efficient Board 82 and 85
3. Composition, succession and evaluation
J. Appointments to the Board and succession planning 89 to 92
K. Skills, experience and knowledge of the Board 76 and 77
86
L. Board evaluation 87 and 88
4. Audit, risk and internal control
M. Internal and external audit 98 to100
N. Fair, balanced and understandable 95
O. Risk management and internal control framework 46 to 55
99 and 100
5. Remuneration
P. Remuneration policies and practices 108
110 to118
Q. Executive remuneration 123 to136
R. Remuneration outcomes and independent judgement 103 to106
International Distributions Services plc
Annual Report and Financial Statements 2022-23
78
Corporate Governance
Application of Code Principles

An effective Board
As outlined on pages 76, 77 and 86, our Directors have proven capabilities and the right balance of skills and expertise to oversee the
delivery of the Royal Mail and GLS strategies and the Group’s long-term success. In particular, their different backgrounds and experience
ensure diversity of thought, constructive debate, due consideration of all relevant stakeholders and an effective decision-making process.
Purpose, values and culture
If we are to achieve long-term success, it is essential that the culture that is fostered across the Royal Mail and GLS businesses, and the
values which shape it, are aligned with our purpose and each business’ respective strategy. We aim to foster a trusting and inclusive
culture. In addition, given our societal role and the strategic importance of strong customer relations, it is vital that customer-centricity
underpins everything we do. The Board endorses Royal Mail and GLS’ values, which are described on page 2, and regularly monitors each
business’ culture using several mechanisms. Through its monitoring this year, the Board was satisfied that GLS continues to operate a
supportive and inclusive culture. Within the Royal Mail business, the Board recognised the need to drive a stronger culture and several
initiatives have been implemented to address this. See below for further detail.
How the Board and/or its Committees monitored and assessed culture
Activity Insight gained Outcome
Board and ESG Committee
review of employee
surveyfeedback
Detailed understanding of the views and issues that are
important to our workforce.
Findings of Royal Mail’s 2022 Big Trust Survey indicated
thatthe trust and engagement scores across the business’
operational management community had decreased. In
addition, whilst too few employees reported that they had
seen action taken as a result of their feedback, the findings
indicated that when action is taken, trust increases.
Findings of Royal Mail’s trust check-in survey programme,
which ran from September 2022 to January 2023, indicated
that the business could do more to look after its people.
Findings of surveys conducted across various GLS countries
(Austria, Hungary, Spain and Croatia) generally indicated
highlevels of employee satisfaction, though some country-
specific improvements were suggested, including enhancing
benefits, making communications between departments
more effective, and further developing talent and performance
management processes.
In response to the decline in trust and engagement scores
across Royal Mail’s operational management community,
focus groups were held in each regional area to better
understand operational managers’ concerns. The trust
check-in survey programme showed the overall trust
score for operational managers had increased.
In addition, to ensure that action was taken to address the
findings of the 2022 Big Trust Survey results, Royal Mail’s
HR team worked with local teams to ensure that a robust
local trust action plan was embedded in their day-to-day
operations. The trust check-in survey programme showed
the number of employees who agreed that action had been
taken to address feedback provided by the previous trust
survey in their area steadily increased up to December
2022, but significantly dropped in January 2023. Please see
pages 17 and 32.
On Royal Mail doing more to look after its people, the
business is dialling up its wellbeing offering, starting with
embedding its core proposition that includes giving all
colleagues access to an online GP, physiotherapy support
and mental health consultations, as well as increasing
awareness of the Employee Assistance Programme and
increasing the number of wellbeing ambassadors.
In response to GLS’ survey findings, action plans were
implemented in relevant countries. Outcomes included
theintroduction of additional colleague benefits, regular
meetings between department heads to optimise processes
and improve coordination, and people development initiatives.
ESG Committee review
ofRoyal Mail and GLS
sickness absence levels
Information on Royal Mail frontline sickness absence rates,
which had improved but were above target.
Information on GLS’ sickness absence rates, which had
increased slightly due to an alignment of the calculation
method in one country.
Initiatives to improve Royal Mail’s frontline sickness
absence rates were introduced. These included regular and
consistent messaging from Royal Mail’s Chief Operating
Officer and Regional Operations Directors (RODs) and daily
ROD-led calls with the sites with the highest sickness
absence rates to reset performance and expectations.
While frontline sickness absence rates are declining, Royal
Mail is seeking to make changes to its attendance policies
and sick pay arrangements through its talks with the CWU
to enable a step change in performance.
The ESG Committee willcontinue to monitor sickness
absence rates for both Royal Mail and GLS.
ESG Committee review of
Royal Mail bullying and
harassment cases
The number of reported bullying and harassment cases at
Royal Mail increased during the year as a result of more open
channels of communication being available to colleagues to
raise concerns. Information provided to the ESG Committee
highlighted that employees in Processing raised bullying and
harassment concerns at a higher rate than those in delivery.
In Processing, certain local areas also recorded a higher rate
of cases than average.
Royal Mail management will work with unions to improve
the approach to bullying and harassment. For local areas
with high rates of Processing employees raising bullying
and harassment cases, Royal Mail’s HR team will discuss
with the relevant Processing managers appropriate
support intervention measures.
The ESG Committee will continue to monitor the volume
ofreported bullying and harassment cases.
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
79
Strategic Report Corporate Governance
Board Leadership and Company Purpose

Activity Insight gained Outcome
Board and ESG Committee
regular updates from the
Designated Non-Executive
Director for engagement
with the workforce
Direct and immediate feedback from our people and an
opportunity to see our operations first-hand.
Observations arising from dialogue with GLS colleagues
thisyear included evidence of an agile and collaborative culture
and a supportive and inclusive work environment. Colleagues
suggested information sharing between departments and
between GLS group entities couldbe improved.
Feedback arising from dialogue with Royal Mail colleagues
this year included concerns aboutalack of diversity on the
frontline and suggestions that communications on the
proposed organisational changes and what they specifically
meant for frontline employees lackedgranularity. In addition,
whilst there was recognition that Royal Mail had operating
systems and policies, colleagues suggested that those
policies were not applied fairly, resulting in widely varying
individual daily work demands.
Feedback from GLS colleagues serves to inform decision
making at GLS group level and within GLS countries.
The ESG Committee will continue to track progress
againstthe female, ethnic and youth representation
targetsthat form part of Royal Mail’s diversity, equity
andinclusion strategy.
Further information on the proposed organisational
changes was posted on Workplace, Royal Mail’s employee
engagement platform, and leaflets explaining the specific
impact of the changes on affected employees were
distributed across all local offices.
To ensure fair allocation of daily tasks, various initiatives
have been implemented across the Royal Mail business,
including a comprehensive process of revisions in delivery
offices, and a programme to equalise performance.
ESG Committee and Board
meeting health and safety
updates at each meeting
Information on Royal Mail’s health and safety performance
showed that six fatalities had occurred during the year and
the lost time accident frequency rate (LTAFR) had increased
significantly. In addition, there was a need to improve health
and safety culture across the business.
Information on GLS’ health and safety performance showed
that 17 fatalities (related to activities of GLS transport
partners) had occurred during the year and the LTAFR
haddecreased.
Initiatives to improve health and safety culture and accident
rates across the Royal Mail business were discussed and
implemented. These included the deployment of off-site
risk assessments, the recruitment of additional resource
into the safety team and increasing the health and safety
competence of customer operations managers via the
Royal Mail Academy.
The ESG Committee and the Board will continue to monitor
Royal Mail and GLS’ health and safety performance, and
the progress made against their respective health and
safety programmes.
ARC ‘spotlight’ discussion
on talent risk
The net risk position of principal risk ‘Talent: workforce for
the future’ (see page 52) had regressed. Retention and
recruitment within Royal Mail’s corporate centre has become
more challenging and the pool of next generation frontline
talent has decreased due to the Group’s declining performance,
the industrial relations environment and sustained periods of
pressure on personnel.
A number of initiatives have been launched to retain and
recruit Royal Mail colleagues, including the Diamonds
programme, leadership development, reinvention of the
graduate programme and next generation initiatives. In
addition, interim resource was added across critical
transformation roles to bolster capacity and reduce the risk
of burnout.
ARC reviews of Royal Mail
whistleblowing reports
While the total number of whistleblowing reports registered
quarterly within the Royal Mail business had dropped compared
with 2021-22, overall levels remained high.
Anonymous reporting rates, while also decreasing, still
remained high, suggesting that fears around retaliation
andconfidentiality remain.
Updates on key cases and actions being taken to address
issues raised.
Further initiatives have been implemented to help reduce
thepercentage of anonymous reporting further and build
greater trust in the whistleblowing process, including
highlighting the confidentiality of the process through
regular posts on Workplace.
ARC and Board reviews of
Royal Mail and GLS
whistleblowing processes
The end-to-end process of Royal Mail and GLS’ whistleblowing
processes demonstrate that both businesses continue to
operate robust and effective systems that enable employees
to raise issues of concern.
Summary of material whistleblowing reports for Royal Mail
and GLS.
The Board will continue to monitor the effectiveness of
thewhistleblowing processes on a bi-annual basis.
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80
Corporate Governance
Board Leadership and Company Purpose continued

Nomination
Committee
Committee Chair:
Keith Williams
 Reviews the balance and
composition of the Board
andits Committees
includingin relation to skills,
knowledge, independence,
diversity and experience.
 Ensures a progressive renewal
of Board membership through
orderly succession planning.
 Considers talent reviews and
succession planning for the
Board of Directors and
RoyalMail and GLS’
ExecutiveBoards.
 Oversees progress against
the Board’s Diversity Policy.
See pages 89 to 92.
Audit and Risk
Committee
Committee Chair:
Michael Findlay
 Reviews, and recommends
for the Board’s approval, all
Financial Statements and
associated disclosures.
 Advises the Board on the
Group’s overall risk appetite,
tolerance and strategy, and
reviews the policies and
processes for identifying and
assessing the risks to which
the Group is exposed and the
management of those risks.
 Reviews reports received
from the Internal Audit
function, the effectiveness
ofinternal controls and risk
management processes
more generally, including
theGroup’s whistleblowing
arrangements, and monitors
actions to improve their
effectiveness.
 Oversees the financial
performance of the Group.
 Oversees the relationship
with the external auditor,
ensuring the effectiveness
ofthe external audit process.
See pages 93 to 100.
Remuneration
Committee
Committee Chair:
Maria da Cunha
 Determines, and
recommends for the Board’s
approval, the Group’s
remuneration framework.
 Determines, and
recommends for the Board’s
approval, the individual
remuneration arrangements
for the Chair, the Executive
Directors, the Executive
Board of Royal Mail and
GLSand the Group
CompanySecretary.
 Agrees targets for any
performance-related
incentive schemes.
See pages 103 to 136.
Environmental, Social and
Governance Committee
Committee Chair:
Lynne Peacock
 Oversees Royal Mail and GLS’
performance in relation to
ESG matters and standards
to ensure that they are in
alignment with their
respective strategies.
 Reviews, and recommends
for the Board’s approval,
theGroup’s ESG Policy
Statement, and approves
relevant Royal Mail and GLS
ESG policies and reports.
 Focuses its efforts on the
ESG issues that are of most
importance to the Group
andits stakeholders and
remains attuned to the
changing needs and
expectations of society.
 Monitors Royal Mail and
GLS’culture.
 Monitors Royal Mail and
GLS’health and safety
arrangements.
 Monitors Royal Mail and
GLS’community efforts
andits help for vulnerable
customers.
See pages 101 to 102.
Governance framework
Our governance framework, which is set out below, assists us in the exercise of our duties and responsibilities, including setting
andmonitoring the Group’s strategic direction and creating long-term value for our shareholders and other stakeholders.
Governance framework
The Board
 Responsible for the stewardship of the Group and its long-term success.
 Sets Royal Mail and GLS’ values and standards, making sure that
theyalign with the respective business’ strategic aims and the
desiredbusiness culture.
 Oversees and has accountability for stakeholders’ interests.
 Sets the objectives and strategy, and monitors performance
andriskmanagement.
 Approves major contracts, investments, internal controls
andkeypolicies.
Matters reserved for the Board’s approval and the responsibilities the Board has delegated to its Committees are available at
www.internationaldistributionsservices.com/about-us/management-and-committees.
Board and Committee agendas
The Board’s forward planner is designed to ensure that enough time is allocated to address all necessary matters, and meeting agendas are adjusted
toprioritise relevant issues and ensure focused consideration of strategic priorities.
Committee meeting agendas are informed by a forward planner which is developed from each Committee’s Terms of Reference and reviewed and
updated regularly to reflect areas identified by Committee members for additional focus.
Financial Statements Additional Information
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81
Strategic Report Corporate Governance

Board meetings and attendance
The Board met on 10 scheduled occasions during the year in
addition to a number of ad hoc meetings. Each Director has
committed to attending all scheduled Board meetings and only
failsto do so in exceptional circumstances. Similarly, every effort is
made by Directors to attend ad hoc meetings. On the rare occasion
that a Director cannot attend a meeting, they are provided with the
papers in advance of the meeting and are given the opportunity to
provide comments to the Chair. The table below shows the number
of scheduled Board meetings each Director attended and the
number of meetings they were entitled to attend during the year
ended 26 March 2023.
Director Joined
Attendance
(scheduled
meetings)
Keith Williams Chair
10/10
Baroness Hogg Senior Independent Director (SID)
10/10
Michael Findlay Non-Executive Director
10/10
Maria da Cunha Non-Executive Director
10/10
Lynne Peacock Non-Executive Director
10/10
Shashi Verma Non-Executive Director
10/10
Mick Jeavons Group Chief Financial Officer
10/10
Simon Thompson CEO Royal Mail
10/10
Martin Seidenberg CEO GLS
10/10
Jourik Hooghe
1
Non-Executive Director
6/7
Rita Griffin
2
Non-Executive Director
4/4
1. Jourik Hooghe joined the Board as a Non-Executive Director on 1 June 2022. Jourik was
unable to attend one meeting due to illness; he was provided with all papers before the
meeting and received a debrief after from the Chair.
2. Rita Griffin stood down from the Board on 20 July 2022.
Board activities
The specific areas the Board focused on during the year and up until
21 May 2023 are outlined on pages 83 and 84. In addition, at every
Board meeting, a number of standing items are reviewed, including
health and safety, regulatory and investor relations updates. Also,
at every Board meeting, Committee Chairs update the Board on the
recent work of their Committee. Individuals from relevant business
areas, as appropriate, present on key items, which enables the
Board to debate and challenge management’s proposed initiatives
and plans and meet key individuals from the businesses. During the
year, over 60 senior managers from Royal Mail and GLS presented
at or attended one or more Board or Committee meeting.
Effectiveness of risk management and internal control
The Board has overall accountability for the Group’s risk management
and internal control systems and has delegated to the ARC a
number of activities, including objectives related to oversight
ofrisk management, governance, financial control and statutory
reporting. Information about the ARC’s activities is included on
pages 93 to 100.
During the year, the Board reviewed the Group’s risk management
and internal control systems, covering financial, operational and
compliance principal risks, and determined that whilst they were
generally effective in the year, there is a recognition of the
continued need to improve its effectiveness.
The Board also determined the Group’s risk appetite and carried
out a robust assessment of the Group’s principal and emerging
risks. Information about the Group’s principal risks is included
onpages 46 to 55.
Conflicts of interest
The Group operates a policy to identify and, where appropriate,
manage Directors’ potential conflicts of interest. Any potential
conflict must be notified to and authorised by the Board. Each
Director abstains from approving their own potential conflicts.
Directors also have an ongoing obligation to advise the Board
ofany related party transactions involving themselves or their
connected persons, and that these are conducted on an arm’s
length basis.
In addition to formal Board meetings, since August 2022, the Board
has held weekly meetings with the Royal Mail Executive Board, to
closely monitor Royal Mail’s performance and transformation,
which is essential for the business’ long-term survival.
The Non-Executive Directors and the Chair meet regularly without
the Executive Directors present. These meetings are an important
way to develop working relationships between the Non-Executive
Directors and to assess the performance of senior management.
The Non-Executive Directors also meet regularly with senior
management, and spend time increasing their understanding of
thebusiness. These meetings also enable senior management to
benefit from the Non-Executive Director skill set and experience
and help to ‘open out’ discussions, enabling formal Board meetings
to be more focused. It also helps the Non-Executive Directors
recognise that attendance at Board meetings is only one part
oftheir role.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
82
Corporate Governance
Board Leadership and Company Purpose continued

Board activities
Matter considered Activity
Strategy and
business plan
Strategy  Dedicated a significant amount of time to discussing, monitoring and reviewing the implementation of
RoyalMail and GLS’ respective strategies, including participating in a dedicated strategy day.
 Received regular updates on Royal Mail’s transformation including ‘spotlights’ on key transformation initiatives.
 Considered and approved GLS’ acquisitions of Tousfacteurs SAS, iLogistic and Pesaro.
 Received updates on Royal Mail’s pricing strategy.
 Reviewed and discussed a Group strategy presentation from Accenture.
Business plans  Oversaw the development of Royal Mail’s five-point business plan to stabilise the business and monitored
itsimplementation through weekly meetings with the Royal Mail Executive Board.
 Reviewed and approved Royal Mail and GLS’ business plans and budgets.
 Monitored progress against the annual budgets and the Group’s financial targets.
Leadership
Board composition  Considered and approved the appointments of Jourik Hooghe and Ingrid Ebner as new Non-Executive
Directors.
Organisational
change
 Considered and approved headcount reduction targets for Royal Mail.
 Reviewed and discussed the Group structure, including how best to protect shareholder value.
 Considered and approved changing the Group’s holding company name from ‘Royal Mail plc’ to ‘International
Distributions Services plc’.
 Reviewed and discussed potential preparatory steps for a separation of Royal Mail and GLS were such a
decision to be made.
Stakeholders  Regularly reviewed the Directors’ section 172 duties and responsibilities.
 Reviewed feedback from Royal Mail’s 2022 Big Trust Survey.
 Received updates from the Designated Non-Executive Director for engagement with the workforce on
Employee Voice Forums.
 Received regular updates on shareholder sentiment and the Group’s investor relations programme.
 Received regular updates on Royal Mail’s dispute with the CWU and industrial action.
 Considered and approved serving notice on Agenda for Growth protections and other union agreements.
 Received regular updates on Royal Mail’s engagement with Ofcom and Government in relation to USO reform.
 Received regular updates on the Business, Energy and Industrial Strategy review (under the National Security
and Investment Act 2021) in relation to VESA Equity Investment S.à r.l. seeking to increase its shareholding to
more than 25%.
Operational  Reviewed and discussed operating performance reports prepared by the CEOs of Royal Mail and GLS.
 Received regular detailed updates during weekly meetings with Royal Mail Executive Board about contingency
plans to mitigate the impact of industrial action on customers.
 Received an update on Royal Mail’s plan for the Christmas peak.
 Received updates on aspects of the Group’s property portfolio and approved an extension to Royal Mail’s
National Distribution Centre lease.
Financial
Performance  Regularly discussed and considered the Group’s financial performance.
 Regularly reviewed the cost-control initiatives being implemented across the Group.
Investment  Reviewed and approved investment to upgrade the GLS Neuenstein hub.
Dividend  Considered and approved the decision to not pay an interim dividend or a final dividend for 2022-23.
Reporting  Considered and approved the Group’s full-year results, interim results and trading updates.
 Considered and approved this Annual Report, including the going concern and viability statements on page 58.
Risk and/or internal controls
Health and safety  Received updates on health and safety within Royal Mail and GLS.
 Received a health and safety training session led by the Royal Mail Safety Director.
Principal and
emerging risks
 Received an update on the Group’s principal and emerging risks.
 Reviewed the Group’s risk appetite position.
Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
83
Strategic Report Corporate Governance

Board activities continued
Matter considered Activity
Cyber security  Received updates on the cyber incident at Royal Mail International, and the Group’s preparedness for similar
threats.
Whistleblowing  Reviewed Royal Mail and GLS’ whistleblowing processes and material cases raised.
Material litigation  Reviewed reports in relation to Royal Mail and GLS’ material litigation.
Insurance  Reviewed and approved Royal Mail’s insurance renewal approach.
Pensions  Reviewed and recommended to the Board of Royal Mail Group Limited that it execute the trust deed and rules
for the new Royal Mail Collective Pension Plan.
Governance  Considered findings of the 2022-23 Board evaluation and agreed actions to improve and enhance a number
ofareas (see page 88).
 Reviewed progress against the 2021-22 Board evaluation actions (see page 87).
 Reviewed and approved changes to the Matters Reserved for the Board, the Committees’ Terms of Reference
andthe Role of the CEOs, including changes to formalise oversight and management of climate-related risks
andopportunities.
 Reviewed and approved changes to the Role of the Company Secretary and the Group Communications Policy.
 Reviewed and approved, upon recommendation from the relevant Committee, the Group’s Modern Slavery
ActStatement, the Board Diversity Policy, the Group ESG Policy Statement, the Royal Mail ESG Report,
theRoyal Mail Health and Safety Policy and the Royal Mail Speak Up (Reporting) Policy.
 Received Directors’ duties training, provided by Slaughter and May.
 Received a Corporate Governance update.
 Received updates on AGM planning.
Remuneration  Conducted a detailed review of the Remuneration Policy, taking into account the views of shareholders, the
strategic objectives of the Group, the remuneration of the wider workforce, as well as current best practice.
 Discussed shareholder feedback on the proposed changes to the Remuneration Policy.
The Board’s engagement with stakeholders
To deliver our strategy and create long-term sustainable value,
weneed to build constructive relationships with our stakeholders.
By understanding their issues and concerns, we can factor their
views into our Boardroom discussions to help drive our long-term
success as well as assess the potential impact our decisions have
on our various stakeholders.
Our stakeholders and the channels we use to engage with them
atGroup and Board level are described on pages 22 and 23.
Oursection 172 statement is on pages 24 and 25 together with
examples of principal decisions and how the Board considered
thesection 172 matters.
Engagement with our workforce
Many of the decisions we make could impact our colleagues and
itis therefore important that we engage with them and understand
their views. As our people are pivotal to our long-term success, it
isalso important that they understand our strategy and objectives,
and have an opportunity to share their insights, particularly about
our customers, who they engage with daily. The Board was therefore
pleased to be able to resume site visits this year. In April 2023, the
Board visited GLS’ Madrid hub and met with GLS employees, who
shared their thoughts on working at GLS. Maria da Cunha, the
Designated Non-Executive Director for engagement with the
workforce, also held an Employee Voice Forum during the visit
andwas able to conduct the session in Spanish, which greatly
facilitated engagement on the day.
In addition, throughout the year, several Board members undertook
individual site visits, including the CEO Royal Mail and CEO GLS,
who visited multiple sites across their respective businesses and
updated the Board on their engagement with employees during
those visits.
The role of the Designated Non-Executive Director for engagement
with the workforce provides the Board with valuable feedback on
the views of our workforce. Maria da Cunha has held this role since
January 2021. During the year, Maria held five Employee Voice
Forums with GLS colleagues across Poland, Canada, Romania,
Germany and France, and four Employee Voice Forums with Royal
Mail colleagues. Colleagues from operational and central functions,
including marketing, finance, IT, sales, customer service, processing,
delivery, fleet and HR, participated in these forums. Maria periodically
reports to the Board and ESG Committee on key observations and
themes arising from her discussions. See page 80 for insight
gained through her dialogue this year.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
84
Corporate Governance
Board Leadership and Company Purpose continued

Chair
 Responsible for the leadership and management of the Board and for
promoting high ethical and governance standards.
 Ensures an effective and complementary Board, including appropriate
contribution and sufficient challenge from the Directors.
 Ensures that the Board determines the nature and extent of the significant
risksthat the Group is willing to accept in implementing its strategy.
 With support from the Group Company Secretary, promotes the highest
standards in corporate governance and provides all new Directors with
athorough and tailored induction programme.
 Ensures effective relationships exist between all Directors, driving a culture
that supports constructive discussion, challenge and debate.
 Maintains effective communications with shareholders, ensuring that their
views are understood and considered appropriately during Board discussions.
Senior Independent Director
 Acts as a sounding board for the Chair and serves as a trusted intermediary
for the other Directors.
 Leads the annual appraisal of the Chair’s performance.
 Available to meet with shareholders, should they have issues or concerns.
Independent Non-Executive Directors
 Responsible for contributing sound judgement and objectivity to
theBoard’sdeliberations and overall decision-making process.
 Provide constructive challenge and monitor the Executive Directors’
deliveryof the strategy within the Group’s risk and governance structure.
 Provide independent insight and support based on relevant experience.
 Satisfy themselves of the integrity of the Group’s financial information and
ofthe effectiveness of financial controls and risk management systems.
 Determine the appropriate level of remuneration for Executive Directors
andensure that there is appropriate succession planning in place at both
Executive and Board level.
 Engage with internal and external stakeholders and feedback insights
astotheir views in relation to Royal Mail and GLS’ culture.
Designated Non-Executive Director forengagement with the workforce
 Represents the Board in engagement with the workforce.
 Develops a thorough understanding of the workforce’s views and Royal Mail
and GLS’ culture.
 Develops, implements and feeds back on employee engagement initiatives
inconjunction with management.
 Provides an employee voice in the Boardroom by raising relevant matters
onissues raised.
 Communicates to the workforce the outcomes and developments made
bythe Board on specific matters.
Group Chief Financial Officer
 Responsible for providing strategic financial leadership of the Group
andtheday-to-day management of the Group finance function.
 Develops and monitors the control systems designed to preserve Group
assets and report accurate financial results.
 Ensures commercial focus across all business activities.
 Supports and advises the CEOs and CFOs of both Royal Mail and GLS.
 Oversees the Group’s treasury, investor relations, tax, insurance and
pensionarrangements and monitors regulation.
 Provides advice to Board members, particularly in relation to corporate
governance practices, induction training and personal development.
 Ensures that Board procedures are complied with, applicable rules
arefollowed and that good information flows exist to the Board and
betweenits Committees.
 Communicates with shareholders as appropriate and ensures that
dueregardis paid to their interests.
 Ensures that the Board has high-quality information, adequate time
andappropriate resources in order to function effectively and efficiently.
 Considers Board effectiveness in conjunction with the Chair and provides
support to the Chair as required.
 Considers the appropriateness of risk management across the Group.
 Ensures that relevant policies of the Group, Royal Mail and GLS are reviewed
by the Board or the relevant Board Committee on an annual basis.
Chief Executive Officer – Royal Mail
 Responsible for the executive leadership and day-to-day management
ofRoyal Mail.
 Leads the Royal Mail Executive Board.
 Responsible for implementing the delivery of the Royal Mail strategy
andcommercial objectives as agreed by the Board in accordance with
theGroup’s risk appetite and business plans and with respect to
climate-related risks and opportunities.
 Responsible for promoting Royal Mail’s culture, values and behaviours
andengagement with employees and key stakeholders.
 Provides support to the Chair and Group CFO with shareholder relationships.
Chief Executive Officer – GLS
 Responsible for the executive leadership and day-to-day management of GLS.
 Leads the GLS Executive Board.
 Responsible for implementing the delivery of the GLS strategy and
commercial objectives as agreed by the Board in accordance with the
Group’s risk appetite and business plans and with respect to climate-
related risks and opportunities.
 Responsible for promoting GLS’ culture, values and behaviours and
engagement with employees and key stakeholders.
 Provides support to the Chair and Group CFO with shareholder relationships.
The role of each Director, which is summarised below, ensures a clear division of responsibility between executive and non-executive
Board members, which supports the integrity of the Board’s operations.
Non-Executive
Executive
Group Company Secretary
Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
85
Strategic Report Corporate Governance
Division of Responsibilities

Board composition
The delivery of the Group’s strategy and long-term success
depends on attracting and retaining the right skills across the
Group. This starts with the Board. The Board comprises six
independent Non-Executive Directors, an independent Non-
Executive Chair and two Executive Directors. They have wide-
ranging backgrounds and relevant and complementary skills
andexperience. Biographical information for each Director is
included on pages 76 and 77.
Board terms of appointment
Copies of the Executive Directors’ service contracts and the
Non-Executive Directors’ letters of appointment are available
forinspection by appointment at the Company’s registered office
during normal office hours and at the AGM.
Board induction programme
We develop a tailored and comprehensive induction programme
for each externally appointed Director which aims to ensure that
new appointees are equipped to fulfil their role and participate
inBoard discussions as quickly as possible. The programme
includes one-to-one meetings with the Chair, the Group CFO, the
CEO Royal Mail, the CEO GLS, the Group Company Secretary and
the Non-Executive Directors. It also includes various meetings
with senior management, visits to key operational sites and postie
walks. Jourik Hooghe joined the Board in June 2022. His induction
programme, which ran from July to September, included the following:
 Individual meetings with the Group CFO, the CEO GLS and
various members of the Royal Mail Executive Board.
 Site visit to GLS Budapest hub with the CEO GLS, the CFO GLS
andGLS Group Area MD Europe East.
 Participation in an external Non-Executive Directors’
trainingprogramme.
 Overview of health and safety at Royal Mail and GLS provided
bythe Royal Mail Safety Director, GLS’ Compliance and
Directives Officer and the Director for Corporate Compliance
andData Protection.
 Overview of other key areas provided by relevant
personnelincluding:
 Royal Mail’s ESG programme (Head of ESG, Royal Mail).
 Regulation (Director of Regulation, Royal Mail).
 Pensions (Head of Corporate Pensions, Royal Mail).
 Remuneration (Reward and Performance Director).
 Competition law (Assistant General Counsel of Competition,
Regulation and Data, Royal Mail).
Board key skills and experience
Industrial relations/employee engagement
5
Customer
5
Transformation
5
Finance
3
Regulated industries
8
Corporate governance
7
Audit, risk management and compliance
5
ESG and sustainability
1
Board appointments
The Nomination Committee leads the process for Board
appointments and seeks to construct an effective, robust, well-
balanced and complementary Board, with the appropriate balance
of skills, experience, independence and knowledge of the Group to
enable duties and responsibilities to be discharged appropriately.
The Board and the Nomination Committee actively consider the
structure, size and composition of the Board and its Committees
when considering new appointments and succession planning.
They also take account of a range of diversity factors together with
the need to balance the composition of the Board and Committees
and refresh them over time to meet the changing needs of the
Group. Further details on the Nomination Committee’s work in
thisarea are included on pages 89 to 92.
Board tenure
6
0-2 years 2
2-5 years
6
5+ years
1
2
1
Board gender balance
6
Male 6
Female
3
3
Board ethnicity
8
British or other White 8
Asian/British Asian
1
1
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86
Corporate Governance
Composition, Succession and Evaluation

2021-22 Board evaluation progress report
During 2021-22, the Board’s performance and effectiveness were evaluated internally. Details of how the evaluation was conducted
canbefound in the Annual Report and Financial Statements 2021-22. The key actions arising from the evaluation and progress to
dateareset out below.
Actions Progress
Strategy
 Revisit the wider Company strategy,
ensuring more regular discussions
take place.
 Ensure that Royal Mail develops, in
conjunction with its stakeholders,
aclear, longer
-term plan for its
transformation.
 Reconsider the key KPIs used in
bothbusinesses, to determine that
they remain appropriate in current
market conditions, and especially
with Royal Mail’s move to being
amore balanced business.
 The Company engaged Accenture during the year to assist with developing a
widerGroup strategy and a presentation was shared with the Board in July 2022.
Further discussion on Group strategy is pending.
 The Board spent a considerable amount of time overseeing the development
ofRoyal Mail’s three-year business plan during the year and is now closely
monitoring its transformation via weekly meetings with the Royal Mail Executive
Board. Having engaged with stakeholders, the Board believes that shareholders,
regulators, unions, and many of Royal Mail’s employees understand the need
fortransformation.
 Royal Mail and GLS both developed dashboards to help monitor performance,
which have been used in regular updates to the Board.
Workforce and unions
 Be cognisant of the views of our
workforce and of the negotiations
with our unions.
 Increase the time spent on employee
engagement, particularly within
GLSnow that international travel
hasbecome easier.
 The Board has received regular updates on union negotiations and has factored
these, and the views of our workforce, into its discussions, while at the same time
recognising that Royal Mail must transform into a more balanced business to
ensure its long-term survival.
 Maria da Cunha continues in her role as Designated Non-Executive Director for
engagement with the workforce and updates the Board on the output of Employee
Voice Forums. During the year, she held nine Employee Voice Forums, five of which
were with GLS colleagues (see page 84).
 The Board was pleased to resume site visits this year, with its first site visit taking
place in April 2023 at the GLS Madrid hub. Several Board members also undertook
individual site visits during the year, including Jourik Hooghe, who visited GLS’
Budapest hub as part of his induction programme.
Reporting
 Develop more standardised and
consistent ways for reporting
totheBoard.
 Further improve the quality
ofpapers, particularly the
executivesummaries.
 New dashboards and reports have been developed and are now a key element
ofthe CEO Royal Mail and CEO GLS’ respective updates.
 A ‘Guide to Better Board Reporting’ was circulated to members of management
who regularly submit papers to the Board. The Board will continue to monitor
thequality of papers and will consider further training if required.
Composition
 Recruit two additional Non-
Executive Directors, preferably
onewith audit and finance
experience and one with
international logistics experience.
 Jourik Hooghe joined the Board in June 2022. He has strong international and finance
experience, and is currently Chief Financial Officer of Swissport International AG.
Previously Jourik served as the Executive Vice President and Group Chief Financial
Officer of Wizz Air Holdings Plc.
 Ingrid Ebner will join the Board on 1 July 2023. She has strong international logistics
experience and is currently Vice President, Global Fulfilled by Maersk Standards and
Regional Delivery IMEA & LAM of A.P Moller-Maersk.
Financial Statements Additional Information
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2022-23 Board and Committee evaluation
In early 2023, the performance and effectiveness of the Board and its Committees were evaluated internally through the process detailed
below, which was facilitated by the Senior Independent Director (SID).
Individual Director performance
Individual Director performance was considered by the SID
andChair as part of the Board evaluation. The findings, in
combination with the individual skills and time commitment
ofeachDirector, confirmed that all Directors are considered
tocontribute effectively, and support the proposal for those
Directors to stand for re-appointment at the 2023 AGM.
Chair performance
The performance of the Chair was evaluated by the SID, with
feedback also provided by the rest of the Board. The feedback
confirmed that Keith Williams provided strong leadership to the
Board throughout the year, facilitated constructive and inclusive
Board discussions, and helped to call on individual Non-Executive
Director experiences to support the Executive as appropriate.
Italso confirmed that he devoted sufficient time to the role.
2022-23 evaluation process
Priority actions for 2023-24 arising from 2022-23 evaluation
 Recruit an additional Non-Executive Director with accountancyexperience.
 Increase focus on talent retention as a key risk, by both the ARC and Remuneration Committee.
 Nomination Committee to consider Non-Executive Director succession planning (taking note of Committee needs)
andtalentmanagement.
 As far as possible, Committee Chairs to ensure that topics are considered by only one Committee and/or the Board
tominimise overlap and ensure effective management of issues.
Stage 1
Evaluation development
The SID, with support from the Group
Company Secretary, developed a
framework of questions.
Stage 3
Actions agreed
The report was presented, and
actions agreed by the Board,
inFebruary 2023.
The priority actions agreed for
2023-24 are detailed below.
Stage 2
Evaluation process and review
The questions framework was
shared with Board members ahead
of one-to-one discussions between
the SID and each Board member plus
the Group Company Secretary, which
took place during January 2023.
TheSID then prepared a draft report
of the findings for discussion and
shared it with the Chair for feedback.
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Corporate Governance
Composition, Succession and Evaluation continued

Dear Shareholder,
I am pleased to update you on the Committee’s activity for the year
ended 26 March 2023.
Committee composition and meetings
The table in the adjacent column contains information about the
Committee’s membership and the number of scheduled meetings
each Director attended and was entitled to attend during the year
ended 26 March 2023.
The composition of the Committee changed during the year following
changes to the Board’s membership. Rita Griffin stepped down as
amember of the Committee at the conclusion of the 2022 AGM and
Iwould like to thank her for the valuable contribution and support
she provided during the past four years. In June 2022, following his
appointment to the Board, Jourik Hooghe joined the Committee.
Committee meetings were attended by the Group Company
Secretary, the Royal Mail Chief People Officer and other members
of senior management, where relevant. In line with our Conflicts of
Interest Policy, Directors are asked to absent themselves from any
discussions regarding their own re-appointment or succession.
The Committee is supported by the Group Company Secretary.
Role of the Committee
The Committee’s role and responsibilities are summarised on page 81.
Committee activity
The key activities of the Committee during 2022-23 are set out
inthe adjacent column.
Board composition
During the year, the Committee reviewed Board composition,
assessing the tenure, experience, skills, knowledge, re-appointment
and independence of each Director. In response to the findings of the
2021-22 Board evaluation (see page 87), the Committee oversaw
theexternal search for two new Non-Executive Directors. As a result,
the Committee recommended to the Board the appointment of Jourik
Hooghe, which was subsequently approved by the Board and
announced on 19 May 2022. In addition, the Committee recommended
to the Board the appointment of Ingrid Ebner, which was subsequently
approved by the Board and announced on 18 May 2023.
CEO Royal Mail succession
As explained on page 5 the process to appoint a new CEO Royal Mail
is in advanced stages and an announcement will be made when the
process concludes.
Non-Executive Director succession and re-appointments
The Committee monitors the tenure of Non-Executive Directors to
ensure that it plans sufficiently in advance of retirements from the
Board to ensure orderly succession of Non-Executive Directors.
All Directors are required to stand for appointment or re-appointment
at each AGM. Ahead of the 2023 AGM, the Committee considered
the performance and effectiveness of each Director as well as their
skills and time commitment. The Committee concluded that all
Directors were valuable members of the Board and subsequently
recommended to the Board that all Directors should stand for
re-appointment at our forthcoming AGM. Biographical information
for each Director is included on pages 76 and 77. Ingrid Ebner, who
will join the Board on 1 July 2023, will also stand for re-
appointment at the AGM. Biographical information for Ingrid is
included in our Notice of AGM.
Main objectives for 2022-23
 Review talent capability and development, and succession planning
withinRoyal Mail and GLS, particularly with a view to longer-range
succession planning.
 Consider succession plans for the CEO Royal Mail, CEO GLS and Group CFO.
 Recruit up to two additional Non-Executive Directors, preferably one with
audit and finance experience and one with international logistics experience.
Key activities in 2022-23
 Concluded extensive external searches leading to the appointment of
Jourik Hooghe as a Non-Executive Director in June 2022 and the
appointment of Ingrid Ebner, who will join the Board on 1 July 2023.
 Reviewed talent capability and development, and succession planning
within Royal Mail and GLS.
2023-24 priorities
 Finalise the appointment of a new Royal Mail CEO.
 Monitor talent capability and development and succession planning within
Royal Mail and GLS.
 Consider succession plans for the Non-Executive Directors, the CEO
RoyalMail, the CEO GLS and the Group CFO.
 Recruit one additional Non-Executive Director with accountancy
experience.
Committee membership and attendance
Director Joined
Attendance
(scheduled
meetings)
2
Keith Williams
(Chair since 22 May 2019)
19 April 2018 2/2
Maria da Cunha 25 September 2019 2/2
Michael Findlay 25 September 2019 2/2
Baroness Hogg 1 October 2019 2/2
Lynne Peacock 1 November 2019 2/2
Shashi Verma 29 September 2021 2/2
Jourik Hooghe 1 June 2022 1/1
Rita Griffin
1
19 April 2018 1/1
1. Rita Griffin stood down from the Board and as a member of the Committee on 20 July 2022.
2. In addition a number of ad hoc meetings took place during the year to address specific issues.
Keith Williams
Non-Executive Chair
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Nomination Committee Report

The Committee also considered the outputs from a succession
mapping exercise undertaken across Royal Mail’s Executive Board
and senior leaders, and identified a need to improve the pipeline.
Inresponse, the Committee noted that Royal Mail had launched
theDiamonds programme (see page 32), which is designed to
strengthen the succession pipeline by identifying potential future
leaders earlier in their careers.
GLS
The Committee considered the findings of a succession mapping
exercise across GLS’ leadership team and the outputs from a talent
review which assessed GLS’ key leaders’ talents against several
competencies including vision and strategy, ensuring tactical
success, relationship and communication, motivation, business
acumen, fit to situation and fit for future. The talent review
confirmed that GLS had a strong leadership team with the skills
and experience required to deliver the business’ strategy and
growth ambitions. However, the Committee noted that the team
was not sufficiently diverse. To further strengthen its talent pool,
GLS has established a new group HR function which will focus on
attracting and retaining the best talent and addressing diversity
challenges. In addition, to support the development and leadership
skills of its middle managers, GLS continued to roll out its individual
coaching programme ‘Better Manager’ (see page 32).
DEI
We recognise the importance of fostering a diverse and inclusive
culture across the Group. To fulfil our purpose and support the
delivery of Royal Mail and GLS’ growth strategies, it is essential
that our workforce reflects the broad diversity of the customers
and communities we serve. We must offer an inclusive, fair and
accessible workplace where all our people can grow, develop and
succeed. Further information on Royal Mail and GLS’ progress in
this important area is included on pages 33 and 34.
Our Non-Executive service agreements cover a term to expire at
the end of the third AGM after their appointment. Baroness Hogg
and Lynne Peacock will complete their first term at the conclusion
of our 2023 AGM. Following their confirmation that they were
willing to continue to serve, the Committee considered and
recommended to the Board that their respective terms be extended
for a further three years, subject to annual re-appointment by
shareholders at the 2023 AGM.
Talent and succession planning
During the year the Committee spent a significant proportion of its
time considering talent capability and development, and succession
planning within senior levels of Royal Mail and GLS.
Royal Mail
Acknowledging Royal Mail’s financial and operational performance
and the impact of industrial action, the Committee considered the
significant pressure this has had on Royal Mail’s senior leadership
population, which has resulted in increased attrition and challenges
in recruiting external senior leader talent. To mitigate key talent flight
risks, retention programmes were put in place during the year and
additional interim resource was added across critical transformation
roles to bolster capacity and reduce the risk of burnout.
Against a challenging backdrop, the Committee was pleased that
progress was made against Royal Mail’s success profile, which sets
out the competencies, experiences, traits and drivers the business’
‘leaders of the future’ should possess. This profile was developed
in2020-21, in conjunction with Korn Ferry, as part of the senior
leaders’ development programme. During the year, all dimensions
in the experiences and competencies categories saw improvement.
Within the traits and drivers categories, some dimensions improved,
but a few ‘watch out’ areas emerged.
Board Diversity Policy objectives Implementation and results
Endeavour to achieve 40% female representation on the Board. Female representation on the Board as at 19 May 2023 was 33%.
See page 91.
Endeavour to have at least one woman in a senior Board role
(Chair, Senior Independent Director, Chief Executive or Chief
Financial Officer)
Our Senior Independent Director is a woman. See page 77.
Encourage management to achieve 40% women’s representation
in the Group’s Leadership Team
1
.
Female representation in the Group Leadership Team as at 19
May was 35%. See page 91.
Place emphasis on development of diversity within the Group and
commit to further pursuing diversity, as appropriate and on merit,
within the senior leaders of the Group.
See pages 33 and 34.
Endeavour to have at least one Director on the Board from an
ethnic minority background.
A member of our Board is from an ethnic minority background.
See page 91.
Only engage executive search firms who are signatories of
theVoluntary Code of Conduct for Executive Search Firms.
See page 92.
When recruiting Non-Executive Directors, ensure that the
Board’sDiversity Policy’s objectives are considered.
See page 91.
Consider candidates for appointment as Non-Executive
Directorsfrom a wider pool.
See page 91.
1. The Group Leadership Team includes the Group CFO, the Group Company Secretary, the CEO Royal Mail and the CEO GLS and their direct reports. This cohort aligns with the FWLR definition
of‘leadership teams’ and the Code’s definition of ‘senior management’ and their direct reports.
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90
Corporate Governance
Nomination Committee Report continued

Our Board Diversity Policy aims to ensure that the Board has
theappropriate balance of skills, experience and background to
deliver stakeholder value. During the year, we updated the policy to
incorporate the targets set by the FWLR and the FCA’s Listing Rules.
A copy is available at www.internationaldistributionsservices.com/
about-us/governance.
The table on the previous page sets out the policy’s current
objectives, how the Committee has implemented them and
theoutcomes as at the date of this Annual Report.
Our primary objective when appointing members to Board
Committees is to ensure that the Committee members have
thecorrect skills and experience necessary for the particular
Committee. Notwithstanding this, we have successfully applied our
Board diversity objectives collectively across our Board Committees.
Statement on compliance against regulatory targets
ongender and ethnicity
The Board confirms that as at 19 May 2023 (being the reference
date selected by the Board for the purposes of this disclosure),
theCompany complied with the following regulatory targets:
 One of our senior Board positions (Chair, CEO, SID or CFO)
isheldby a woman.
 One member of our Board is from a non-white ethnic
minoritybackground.
As at 19 May 2023, the proportion of women on our Board was 33%.
Whilst we have not met the target for at least 40% of our Board to
be women, female representation on the Board has been at or
above the 40% target in the two prior years (FY2021: 50%;
FY2022: 40%) and we are committed to achieving 40% by the end of
2025.
The data required in relation to this statement and the Board
andExecutive Management diversity table below are based
oninformation contained within our payroll systems.
Group Leadership Team diversity
As at 19 May 2023, the gender balance of our Group Leadership
Team was 35% female and 65% male. Female representation
increased by 7% on last year, putting us on track to meet the
40%target by the end of 2025.
Board and Executive Management
1
diversity as at 19 May 2023
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
Management
Percentage of
Executive
Management
Men 6 67% 3 4 100%
Women 3 33% 1 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
Executive
Management
Percentage of
Executive
Management
White British or other White (including minority-white
groups)
8 89% 4 4 100%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 1 11% 0 0 0%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
1. Executive Management includes the Group CFO, the Group Company Secretary, the CEO Royal Mail and the CEO GLS. This cohort aligns with the FCA’s Listing Rules definition of Executive Management.
Financial Statements Additional Information
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Recruitment process
In response to the 2021-22 Board evaluation (see page 87), the
Committee oversaw two external searches for up to two additional
Non-Executive Directors during the year.
The Committee agreed the candidate specifications and engaged
twoexternal search agencies, Audeliss and Korn Ferry, to
undertake the searches onbehalf of the Committee. The Audeliss
search took place at the start of the year. The Korn Ferry search
concluded in May 2023. Audeliss has specialist expertise
insourcing candidates from diverse backgrounds. Korn Ferry have
assisted the Company since 2021/22 in assessing and improving its
executive talent requirements and is also a leading search agency
for Non-Executive Director recruitment. The Committee
determined that both firms had the relevant skills andexperience
to successfully undertake the briefs. Botharesignatories to the
Voluntary Code of Conduct for Executive Search Firms, which
promotes gender diversity and best practicefor corporate board
recruitment searches. Neither hasanyother connection to the
Group or any of its Directors.
With Audeliss, a longlist of candidates was prepared and compared
against theCommittee’s latest Board composition, diversity and
skill set review. Due consideration was given to the Board Diversity
Policy.
A shortlist of candidates was then prepared and those shortlisted
attended interviews with the Chair and the Directors.
Following those interviews, feedback was gathered and Jourik
Hooghe was identified as the preferred candidate for audit
experience due to his extensive financial, accounting, operations
and strategy experience in consumer goods and logistics.
Biographicalinformation about Jourik is included on page 77 and
details about his induction programme are set out on page 86.
Following successful completion of background checks
andreferences, the Committee considered Jourik’s time
commitments and potential conflicts of interest and confirmed that,
in their opinion, Jourik would be able to devote sufficient time to the
Company and did not have any current conflicts of interest.
Following a recommendation from the Committee, the Board approved
the appointment of Jourik, and it was announced on 19 May 2022.
Jourik was re-appointed by shareholders at the 2022 AGM.
Korn Ferry assisted with the search for an international logistics
expert. In May 2023 Ingrid Ebner was identified as the preferred
candidate and the Board considered, including in light of time
commitments and conflicts, and approved her appointment as
announced on 18 May 2023. Ingrid has strong international logistics
experience and is currently Vice President, Global Fulfilled by
Maersk Standards and Regional Delivery IMEA & LAM of A.P
Moller-Maersk.
Time commitments
The terms of appointment of each Non-Executive Director require
them to devote, on average, a minimum of two days a month to
theGroup’s business. In practice, they tend to devote considerably
more time than this, supporting projects where their areas of
expertise contribute to specific initiatives.
The Committee has reviewed the time each of the Non-Executive
Directors has spent discharging their duties to the Company and
confirms that each has demonstrated that they have sufficient
timeto fulfil their role properly.
Each Non-Executive Director is required to declare any significant
outside commitments prior to their appointment with an indication
of the time commitment involved. Any new external appointments
which may impact existing time commitments will be considered
bythe Chair and agreed by the Board in advance.
Committee evaluation
The Committee’s annual evaluation of its performance was undertaken
as part of the Board effectiveness evaluation (see page 88).
Keith Williams
Chair of the Nomination Committee
22 May 2023
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92
Corporate Governance
Nomination Committee Report continued

Main objectives for 2022-23
 Ensure the accuracy of the Group’s financial and risk reporting, and
recommend for approval to the Board the Group’s trading announcements.
 Focus on strengthening and monitoring financial reporting controls.
 Continue to enhance the quality of financial reporting, including the
application of accounting judgements.
 Enhance the effectiveness of actions in place to mitigate all principal
riskswith a particular emphasis on cyber security risk.
 Monitor progress against Risk Assurance’s three-year strategy.
 Establish a regional risk management process within GLS and integrate
itwithin the Group Framework.
 Develop a framework to provide further clarity and more effective
management of key fraud risks.
 Monitor developments in relation to the Business, Energy and Industrial
Strategy White Paper ‘Restoring trust in audit and corporate governance’
(the BEIS White Paper).
Key activities in 2022-23
 Approved the Group’s trading statements for recommendation to the Board.
 Monitored the Group’s pension developments, including moves to implement
a collective pension plan.
 Oversaw progress against a programme to improve the effectiveness of the
Group’s financial reporting controls.
 Monitored progress made against Risk Assurance’s three-year strategy.
 Monitored and reviewed the Group’s principal and emerging risks through an
enhanced ‘spotlight on risk’ process and dashboards, which cover mitigations/
controls in place and status update on key actions. See page 94 for risks
covered during the year.
 Held two cyber security ‘spotlight on risk’ discussions and received regular
updates on the cyber incident at Royal Mail International.
 Received updates on the establishment of regional risk management and
principal risk profiles within GLS.
 Reviewed progress on the fraud risk management project.
 Formalised the Committee’s role in reviewing climate-related risks.
 Reviewed the draft Royal Mail assurance map.
 Reviewed the BEIS ‘Response Statement to the Restoring trust in audit and
corporate governance consultation’ (the BEIS Response Statement) issued in
May 2022 and Financial Reporting Council position paper issued in July 2022.
Set up a working group to review the proposals in detail and oversee the
Group’s response to topics covered including effectiveness of internal
controls, audit and assurance policy, fraud reporting and resilience statement.
2023-24 priorities
 Ensure the accuracy of the Group’s trading statements, including discussing
with the external auditor the carrying value of Royal Mail, given its current
financial situation.
 Increase focus on principal risks, with particular emphasis on climate
change, cyber security and talent across the Group as well as cost
reductions specifically in Royal Mail.
 Oversee progress against the Group’s risk management agenda and
internal control system improvement, including the financial reporting
controls programme.
 Continue to monitor the progress of the Risk Assurance three-year strategy.
 Oversee the implementation of a fraud risk management framework.
 Review the rollout of assurance mapping to the GLS business and the
development of an Audit & Assurance policy for the Group.
 Oversee the BEIS working group and review any guidance issued by the
Financial Reporting Council and/or the Auditing, Reporting and
Governance Authority in relation to the BEIS Response Statement.
Dear Shareholder,
I am pleased to update you on the Committee’s activity for the year
ended 26 March 2023.
Committee composition and meetings
The table below contains information about the Committee’s
membership and the number of scheduled meetings each
Directorattended and was entitled to attend during the year
ended26 March 2023.
Director Joined
Attendance
(scheduled meetings)
Michael Findlay
(Chair since 30 May 2019)
30 May 2019 5/5
Baroness Hogg 1 October 2019 5/5
Lynne Peacock 1 November 2019 5/5
Jourik Hooghe 1 June 2022 4/4
Additional meetings were held in October and November 2022 and
March 2023 to consider matters in relation to the half-year results
announcement and remediation proposals in relation to certain of
the Group’s principal risks. The Committee also attended several
other meetings to receive training updates on issues relevant to the
Committee’s activities.
The Board considers that I have recent and relevant financial
experience, having spent nearly 30 years in investment banking.
Iwas also previously a Non-Executive Director of UK Mail Group plc
and a member of its audit committee. To further strengthen the
Committee, Jourik Hooghe was appointed on 1 June 2022. Jourik
has extensive financial and accounting experience (see page 77).
The Board considers that the Committee, as a whole, has the
competence relevant to the Group’s businesses (see pages 76, 77
and86).
Committee meetings were routinely attended by the Non-Executive
Chair, the CEO Royal Mail, the CEO GLS, the Group CFO, the Royal Mail
CFO, the Global Director of Risk Assurance, the Director of Financial
Control, the Group General Counsel and Company Secretary, and
representatives from the external auditor, KPMG. Other non-
members were invited to attend certain meetings as appropriate.
The Committee meets regularly with the external auditor and the
Global Director of Risk Assurance, independent of the Executive
Directors, to ensure that reporting, forecasting and risk management
processes are subject to rigorous review throughout the year.
Role of the Committee and its advisers
The Committee’s role and responsibilities are summarised
onpage81.
To support the Committee in carrying out its responsibilities, it
receives independent assurance from the Risk Assurance and
Compliance functions. The Committee is also supported by the Royal
Mail Audit and Risk Committee (Royal Mail ARC), the GLS Audit and
Risk Committee (GLS ARC), the Group General Counsel and Company
Secretary, and the Group CFO. I regularly attend the GLS ARC along
with the Global Director of Risk Assurance, the Group General
Counsel and Company Secretary, and the Group CFO.
Michael Findlay
Chair
Financial Statements Additional Information
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Strategic Report Corporate Governance
Audit and Risk Committee Report

The Committee is also supported by the Group’s actuary, Willis
Towers Watson Limited, which provides expert opinion and
long-term assumption advice with respect to pension accounting,
and Aon Limited, which provides similar expertise in relation to
other long-term liabilities.
The Committee receives regular reports from the external auditor
across a wide range of issues related to its oversight responsibilities.
Committee activity
The key activities of the Committee during 2022-23 are set out in the table below.
Matter considered Activity
Financial Reporting
Half-year and full-year results
Significant matters
andjudgements
 Reviewed and satisfied itself on the integrity of the half-year and full-year results, including consideration of the
significantaccounting judgements, legal claims, contingent liabilities and contingent assets, the policies being applied,
and the statutory audit findings.
Fair, balanced and
understandable
 Reviewed and assessed the Annual Report and Financial Statements to be fair, balanced and understandable
(seepage95).
Going concern and
viabilitystatements
 Considered the going concern basis of preparation of the Financial Statements (see page 95).
 Considered the Viability Statement (see pages 56 to 58).
Impairment assessment  Considered an impairment assessment of the Royal Mail business excluding Parcelforce Worldwide cash generating
unitand the respective investments in subsidiaries in the legal entity companies impacted for the half-year and full-year
financial statements.
Pension assumptions  Reviewed the Group’s key pension assumptions for the half-year and full-year financial statements.
Covenant compliance  Reviewed covenant compliance at the half-year, and at full-year both covenant compliance and the amendment to the
revolving credit facility covenant, agreed on 24 March 2023.
Regulatory accounts  Reviewed and approved the regulatory financial statements 2021-22.
External Auditor
Re-appointment  Recommended to the Board the re-appointment of KPMG as external auditor.
 Reviewed and approved the external auditor’s engagement letter.
 Reviewed and recommended to the Board the approval of the external auditor’s letter of representation.
KPMG reports  Reviewed KPMG’s control findings and audit findings, including significant judgements, the audit opinion for the full-year
results and its review for the half-year results.
 Reviewed and approved KPMG’s audit plan and strategy.
Effectiveness  Conducted a review of the effectiveness of the external audit process (see page 98).
Independence and objectivity  Reviewed the independence and objectivity of the external auditor (see page 98).
Audit and non-audit
services and fees
 Reviewed and approved the external audit fee, as well as the review and pre-approval of fees in relation to non-audit services.
Audit cycle  Reviewed the external audit cycle and identified improvements for future audits.
Internal Control and Risk Management
Financial control  Received regular updates on internal financial reporting controls and the Group’s programme of activity to enhance
thecontrols environment.
Royal Mail and
GLSARCmeetings
 Received regular updates on the proceedings of the Royal Mail and GLS ARC meetings.
Risk appetite  Discussed, made recommendations to the Board and monitored the Group’s risk appetite.
Principal and emerging risks  Assessed the risks that might impact the achievement of the Group’s strategy, including consideration of whether these
should be categorised as a principal risk to the business.
 Reviewed the principal risks and uncertainties statement for inclusion in the Annual Report and Financial Statements.
 Discussed new and emerging risks and the interrelationships between the principal risks.
Risk profile / spotlights on risk  Reviewed changes to the Group’s risk profile and progress towards target on a bi-annual basis.
 Held spotlight discussions on the Group’s principal risk areas, including major breach of information security, data
protection regulation and/or cyber attack, health, safety and wellbeing, environment and climate (now called climate
change and environmental management) and talent: workforce for the future for both Royal Mail and GLS, and customer
expectations and our responsiveness to market changes, failure to reduce our operational cost base, business continuity
and operational resilience, and actual or suspected breached of material law and/or regulation for Royal Mail. See pages
50 to 55 for further detail.
Cyber security  Received regular cyber security updates, including on the cyber incident at Royal Mail International.
 Held two ’spotlight on risk’ discussions on cyber security and GDPR.
 Reviewed the status of the control environment around cyber security and strategic remediation plans, including
investments to build a sustainable cyber team.
Effectiveness  Reviewed the effectiveness of the risk management and internal control systems (see page 99).
BEIS Response Statement  Discussed the BEIS Response Statement and any changes to the Company’s impact assessment of the BEIS White Paper.
Royal Mail assurance map  Reviewed the assurance map that assessed the adequacy of the second lines of defence in place over Royal Mail’s
principal risks and improvement actions required.
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Corporate Governance
Audit and Risk Committee Report continued

Matter considered Activity
Internal Audit
Internal Audit  Reviewed and approved the Internal Audit plan.
 Received reports and regular updates on Internal Audit activity.
Effectiveness and strategy  Oversaw progress against Risk Assurance’s three-year strategy (see page 100).
 Reviewed the effectiveness of the Internal Audit function.
Risk Assurance Charter  Reviewed and approved changes to the Risk Assurance Charter.
Independence and objectivity  Reviewed the independence and objectivity of Internal Audit.
Treasury and Taxation
Treasury Policy  Reviewed the Group’s Treasury Policy and made recommendations to the management team.
Tax strategy and risk  Reviewed and recommended to the Board the approval of the 2023-24 tax strategy.
 Reviewed bi-annually the Group’s tax risks.
Pensions
Pensions Committee  Received Pensions Committee meeting updates.
Pension schemes  Received updates on the progress for the launch of the proposed Royal Mail Collective Pension Plan.
Whistleblowing, Compliance and Fraud
Whistleblowing  Reviewed regular whistleblowing reports.
 Reviewed the Royal Mail Speak Up (Reporting) Policy in relation to whistleblowing.
Compliance  Received regular Royal Mail compliance updates.
Fraud  Reviewed the output of the fraud risk identification workshops held at Royal Mail and GLS, and next steps towards
implementing a formalised fraud risk management framework.
Ethics and Business Conduct  Reviewed and approved the Royal Mail Ethical Business Conduct Policy (Prevention of Bribery, Corruption,
ConflictsofInterest, Money Laundering, Terrorist Financing and the Facilitation of Tax Evasion).
Governance
Forward planner  Reviewed the Committee’s 2023 forward planner.
Terms of Reference  Reviewed and recommended the Board approve changes to the Committee’s Terms of Reference.
 Approved changes to the Terms of Reference for the Royal Mail ARC, the GLS ARC and the Pensions Committee.
Risk management  Reviewed and approved changes to the Group Risk Management Policy.
Payment practices  Received an update on duty to report payment practices and performance for the half-year and full-year.
ARC report  Approved the Committee’s report for the Annual Report and Financial Statements 2022-23.
Evaluation  Received updates on the status of actions identified in the 2021-22 Committee evaluation.
Fair, balanced and understandable
At the request of the Board, the Committee assessed whether
theAnnual Report and Financial Statements 2022-23, taken as
awhole, were fair, balanced and understandable, and provide
theinformation necessary for shareholders to assess the
Group’sposition, performance, business model and strategy. The
Committee’s assessment took into account the disclosures, as well
as the processes and controls underlying its production, including:
 Internal verification of factual content.
 Comprehensive reviews undertaken by the Group’s legal team
and key members of the senior management team.
 Consistency checks against the Group’s market disclosures
andstrategy.
 External reviews undertaken by advisers and the external
auditor.
The Committee concluded that the Annual Report and Financial
Statements 2022-23 were fair, balanced and understandable, and
the Board confirmed this view. The Board’s statement is contained
on page 141.
Going concern and viability statements
The Board’s going concern and viability statements are set out on
page 58.
The Committee considered the basis of preparation of the Financial
Statements as a going concern, as set out in Note 1 to the Financial
Statements. The Committee also reviewed the form and basis of
conclusion underlying the long-term Viability Statement.
In undertaking these assessments, the Committee reviewed the
business plan, taking account of the Group’s principal risks (see
pages 50 to 55), capital structure and the severe but plausible
downside scenarios (see pages 56 and 57). The Committee
reviewed and challenged the appropriateness of the scenarios
modelled, the mitigating factors, and the three-year viability
assessment period reflecting the Group’s outlook and the effects
ofthe macro-economic uncertainties faced by the Group.
As a result of the procedures performed, and the responses
received from management on the challenges raised, the
Committee satisfied itself that the going concern basis of
preparation is appropriate and that the Group is commercially
viable over the duration of its assessment period.
Financial Statements Additional Information
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Significant matters and application of judgements
During the year, the Committee considered and discussed a number of significant matters and/or judgements made by management.
Thetable below details the key issues discussed and the actions taken.
Matter Action taken by the Committee
Deferred revenue – advance customer payments
The Group recognises advance customer payments on its
balance sheet, predominantly relating to stamps and meter
credits purchased by customers but not used at the balance
sheet date. The majority of the balance is made up of stamps
sold to the general public. Consistent with the previous
reporting period, management has used a number of different
data sources to calculate the estimated deferred revenue
liability. These data sources include: revenue data related to
stamp sales through the Post Office network, historic trends of
deferred revenue balances, changes to the number of working
days during the period, price rises and adjustments to reflect
posting patterns around key events close to the reporting year
end, e.g. Mothering Sunday and Easter.
Management uses judgement in applying a weighting to the
components of the data sources. This judgement impacts
revenue, profit and net assets.
At 26 March 2023 the Group recognised £140 million
(March2022: £160 million) of deferred revenue in respect
ofstamps sold to the general public but not used at the
balancesheet date.
The Committee examined a report from management
summarising the deferred revenue calculation and compared
this against the level of deferred revenue recognised by
management ateach reporting date to ensure a consistent
approach.
Separately, the external auditor reviewed the statistical
processes and assessed the assumptions made.
The Committee concluded that the level of deferred revenue
remained appropriate.
Royal Mail has now introduced barcoded stamps to replace
non-barcoded stamps. A Stamp Swap Out scheme was
launched on 31 March 2022 where non-barcoded stamps can
be swapped for stamps with barcodes. The Committee has
reviewed with management the impact on the Stamps in the
Hands of the Public (SITHOP) balance of both the swap out
andcustomers using up their existing stamp stocks. In
addition, the Committee received an update from
management in relation to the proposed new methodology to
calculate the deferred revenue balance in relation to stamps
sold to the general public, and in particular, that once this new
methodology is implemented in 2023-24, it could result in a
deferred revenue balance that is materially different to the
current balance.
Pensions – defined benefit obligations
The valuation of the defined benefit pension plan obligations
relies on the estimation of long-term assumptions, i.e. discount
rate, inflation, mortality and pension increases. Small movements
in these assumptions can lead to material impacts on the
balance sheet.
The valuation of certain unquoted pension scheme assets also
includes a high degree of estimation uncertainty.
In view of the complexity of accounting for pension schemes,
significant focus is required on the associated disclosure to
ensure that it is fair, balanced and understandable.
Key long-term assumptions were prepared by the Group’s
actuary, Willis Towers Watson Limited, and benchmarked
against prevailing economic indicators and other large
pension schemes. All of these assumptions are disclosed in
Note 11 (pages 192 to 202) to the Financial Statements.
Changes in the assumptions were summarised for the
Committee, including changes in demographic assumptions
resulting from mortality studies undertaken for the recent
triennial valuation, and explanations were provided for the
movements in returns on scheme assets, particularly as a
result of the liability hedging strategy. The results of the
assumption benchmarking were also discussed.
The external auditor used its own independent actuarial
experts to confirm that the assumptions used were
reasonable and appropriate.
The Committee was also satisfied with the approach taken
toverify third-party valuations for unquoted scheme assets
and the associated disclosures.
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Matter Action taken by the Committee
Impairment testing
During the year an impairment test was carried out in respect of:
Royal Mail CGU
Royal Mail UK has significant non-current assets both tangible
and non tangible that form part of the Royal Mail UK (excluding
Parcelfore Worldwide) cash generating unit (CGU). Judgement
is exercised in reviewing the carrying value in respect of
possible impairment. As a result of the poor trading
performance of the Royal Mail UK business, exacerbated by
industrial action, management identified an indicator of
impairment, and as a result performed an impairment
assessment. In assessing whether the CGU was impaired, the
carrying value of the CGU of £1,439m (2021-22: £1,412m) was
compared to its recoverable amount. Management assessed
the recoverability of the CGU using the higher of a Value in Use
(VIU), or Fair Value less cost to Dispose (FVLCD). The FVLCD
methodology resulted in a higher recoverable amount. The
FVLCD considers a discounted cash flow modelling from the
perspective of a ‘market participant’. The model includes a
number of assumptions in relation to trading expectations,
execution risk associated with realising the transformational
benefits in the business plan, long-term growth rate, and
discount rate.
The Committee reviewed and challenged the methodology
and results of the impairment review, including the
appropriateness of key assumptions and data points used.
This included review and challenge over the growth rates, risk
associated with the transformational benefits and the
discount rate used. Particular focus and challenge was given
to the risk and opportunities associated with the cashflows,
the wider economic environment and the impact of the
industrial relations landscape. The Committee also
considered the sensitivity of the proposed impairment charge
and the wide range of possible outcomes. The Committee
satisfied itself that the assumptions used within the CGU
impairment model, together with the resulting impairment
charge, were reasonable. The Committee also reviewed the
allocation of the impairment charge and the associated
disclosure for inclusion within the Financial Statements.
Parent Company, IDS plc (see pages 234 to 236)
The carrying amount of the Parent Company’s investments in,
and amounts due from, subsidiaries represents 83% (2021-22:
83%) and 17% (2021-22: 17%) of the Parent Company’s total
assets respectively. Their recoverability is not at a high risk of
significant misstatement or subject to significant judgement.
However, due to the materiality in the context of the Parent
Company Financial Statements, this is considered to be the
area that has the greatest effect on the Parent Company
balance sheet.
The Committee received confirmation from management that
it had adequately assessed the recoverability of investments
in subsidiaries and intercompany indebtedness, by assessing
and confirming that the net assets of the relevant subsidiaries
(being an approximation of their minimum recoverable amount)
were in excess of their carrying value at the balance sheet date.
Provisions for liabilities
The Group has significant provisions totalling £208 million,
including £61 million in respect of the frontline pay award; £12
million in relation to voluntary redundancy (£15 million has
been reclassified as accruals - see Note 25 on pages 226 and
227) which relates mainly to the rightsizing of the operational
frontline; £44million industrial diseases claims; £50 million in
relation tolitigation claims; and £25 million property
decommissioning costs. Judgement is exercised in making
these assumptions that form the basis of the provisions
calculations (see Notes 1 and 25 to the Financial Statements on
pages 167 to 180 and pages 226 and 227 respectively).
The Committee reviewed the methodology and key assumptions
used in determining significant provisions, including the
basisfor any release of provisions. The Committee considered
the past utilisation of each provision, when reviewing the
appropriateness of the provision. The Committee concluded
that the amounts recorded in respect of provisions were
appropriate, represented the current best estimate of each
liability, and that associated disclosures were appropriate.
Financial Statements Additional Information
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Assessment and safeguarding the independence and
objectivity of the external auditor
The Committee considered the independence and objectivity of the
external auditor through:
 Assurances provided by the external auditor on the safeguards
in place to maintain independence.
 Oversight of the Non-Audit Services Policy (see below).
 Reviewing the external auditor’s non-audit services and fees
(see below).
 Oversight of the Ex-Auditor Employment Policy.
The Committee considered two reported breaches of auditor
independence in the year in relation to a spouse of an employee of
KPMG holding a small shareholding in the Group during July 2022;
and the provision of accounts preparation assistance services by a
KPMG member firm to a GLS subsidiary. The Committee do not
consider these breaches to impair the independence of the Group
auditor.
Non-Audit Services Policy
Our Non-Audit Services Policy governs the process for approving
certain non-audit services provided by the external auditor. The
purpose of the Policy is to ensure that the level of fees earned from
non-audit services and the type of services provided do not impair
the external auditor’s independence and objectivity. The Policy is
overseen and was reviewed by the Committee during the year to
ensure that it remained fit for purpose.
In general, the external auditor is not approached to perform
non-audit work. The Committee does, however, currently permit
the external auditor to provide non-audit-related services, insofar
as permitted by auditor independence rules, and the external
auditor may be engaged to perform such non-audit services if it
isuniquely placed to undertake them, or if the performance of the
non-audit services will support a future statutory audit (including
the provision of buyer assist due diligence) and would not compromise
the auditor’s independence. The engagement may follow a competitive
tender process. The Committee has delegated authority to the
Group CFO to pre-approve assignments up to £25,000, with an
annual limit of £500,000.
During both the current and prior years, the Committee permitted
the auditor to provide non-audit services in relation to the half-year
review and the regulatory audit required by Ofcom, as the auditor
was uniquely placed to complete them and the Committee was
comfortable that these services did not compromise its
independence.
External auditor fees
The Committee keeps under review the services and fees incurred
by the external auditor. Total fees for audit and audit-related
workduring the year amounted to £4,416,000, and total fees for
non-audit services during the year amounted to £705,000, which
represented around 16% of the external audit fee. Non-audit
services primarily related to the Financial Statements, regulatory
audit, the half year Condensed Consolidated Financial Statements
and other non-audit services relating to regulatory reporting. The
Committee was satisfied that the non-audit work was best handled
by the external auditor because of its knowledge of the Group, and
that undertaking the work did not put under threat the
independence of the external auditor. All non-audit services were
approved in accordance with the Non-Audit Services Policy.
External auditor
KPMG was appointed by shareholders as the Group’s statutory
auditor at the 2015 AGM following a formal tender process
undertaken in 2014. The firm’s re-appointment was confirmed
byshareholders at the 2022 AGM. The current lead audit partner
isAndrew Bradshaw, who was appointed at the beginning of the
2022-23 audit process. The external audit contract will be put out
totender at least every ten years in line with the provisions of the
UK Competition and Markets Authority’s Statutory Audit Services
for Large Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee Responsibilities)
Order 2014 (the CMA Order). The Committee therefore considers
that it would be appropriate to conduct an external audit tender
byno later than the 2025-26 reporting year, by which time KPMG
will have been the Group’s external auditor for ten years.
We have complied in all material respects throughout the year
withthe CMA Order.
Effectiveness of the external audit process
The Committee is responsible for the relationship with the external
auditor, including examining the effectiveness of the audit process.
At its meeting in May 2023, the Committee carried out its annual
review of the external auditor’s performance and the effectiveness
of the external audit process, taking into account:
 The terms and scope of the external auditor’s engagement,
asset out in its engagement letter.
 The audit work plan for the financial year 2022-23.
 The effectiveness of the working relationship and interactions
with the Committee.
 The quality of the audit, the handling of significant judgements
by the external auditor and responses to questions from the
Committee.
 A report from KPMG on its own internal quality procedures.
 Feedback from the Committee evaluation process which
confirmed that KPMG’s performance during the year was good.
 Feedback from the external auditor effectiveness survey, which
was completed by key stakeholders involved in the external
audit process and confirmed that the KPMG audit team had
sufficient experience and technical and industry knowledge,
waswell resourced with sufficient continuity of people within
the team, communicated clearly and constructively, and
displayed adequate professional scepticism.
Based on its review, the Committee concluded that the external
audit process had been completed effectively, that KPMG’s
engagement had been managed well and that there had been
anappropriate level of challenge from the audit team. To ensure
acontinuous improvement in the audit process, the Committee
identified a number of areas which could be enhanced, including the
provision of more insight and added value in terms of communicating
future potential business risks and more proactive engagement
with Committee members. These matters will be discussed with
KPMG and addressed as part of the overall 2023-24 audit planning.
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Audit and Risk Committee Report continued

The evaluation process is ongoing throughout the year. An annual
paper is presented to the Committee and Board providing a summary
of risk and assurance activity to support their annual assessment.
The assessment included consideration of the following:
 Status of principal risks and the assurance activity undertaken
in relation to them in accordance with the Group’s risk
management framework (see page 46).
 ’Spotlights’ on risks sessions led by relevant Executive Board
member risk owners that take place throughout the year and
focus on existing controls and additional remediation required.
 Assurance map for the Royal Mail principal risks, assessing
theadequacy of second-line controls and actions required
toimprove them.
 Quarterly reporting from Compliance and Ethics on the
operating effectiveness of compliance controls.
 Progress made against the Internal Audit plan and the
conclusions provided by the internal audit reports issuedinthe
year.
 Timeliness of implementation of actions agreed to mitigate
anyrisk and control gaps identified during internal audits.
 Year-end finance letters to the Group CFO to confirm
completeness of key risks impacting the Group, compliance
withrelevant legislation, any known fraud instances, financial
reporting and controls requirements.
 Testing of key controls over the higher-risk processes/and
balances in the preparation of the Financial Statements.
 Reports from the Finance team on the progress and status
ofthefinancial reporting control programme.
 The opinion and reports of the external auditor.
Whilst the Committee considered the system of risk management
and internal control across the Group to be generally effective in the
year, in light of the increasing risks facing the Royal Mail business
as it transforms, there is a recognition of the continued need to
improve its effectiveness. Key activity underway and scheduled for
2023-24 includes:
 Continued focus on formalising, systemising and remediating
our financial reporting controls, with a particular focus on
remeditating IT controls, controls over payment processes and
outsource suppliers.
 Further improving our cyber security controls to address
identified control weaknesses in response to increasing external
threats and lessons learned from recent incidents.
 Developing a formalised Audit & Assurance policy across the
Group’s principal risks and external reporting.
 Continue to enhance risk management across the Group,
particularly risks pertaining to reducing costs and enabling
transformation of the Royal Mail business.
In addition to the fees earned from the Company, KPMG has been
engaged by the respective Pension Trustee as external auditor of
the Royal Mail Pension Plan, the Royal Mail Defined Contribution
Plan and Royal Mail Trustees Limited, the fees for which were
£181,900 in 2022-23.
Re-appointment of external auditor
The Committee concluded that it is satisfied with the independence
and objectivity of KPMG. This, together with the findings that the
external audit process was effective, supports the Committee’s
recommendation to the Board that it seeks shareholder approval
atthe 2023 AGM for the re-appointment of KPMG as the external
auditor for the year ending 31 March 2024.
Business combination disclosures
In 2022, the Company’s 2021-22 Annual Report and Financial
Statements was subject to a thematic review of business
combination disclosures by the FRC. Its objective was to assess
thequality of these disclosures and to identify good practice. As a
result of its review, the FRC did not wish to raise any questions or
queries, however, noted the omission of some information required
in relation to certain aspects of the Group’s acquisitions.
Management has considered the points raised and as a result has
included additional disclosure on page 203. In making its comments
to us, the FRC provided no assurance that the Company’s 2021-22
Annual Report and Financial Statements was correct in all material
respects; the FRC’s role is not to verify the information provided but
to consider compliance with reporting requirements.
Risk management and internal control
The Board believes that effective risk management and a sound
internal control environment are fundamental to the Group’s
success. It has established a risk management framework that
seeks to identify, assess and manage risks that could impact our
businesses (see pages 46 to 49) and reviews the effectiveness of
this framework annually. The Committee supports the Board
through its ongoing review of the Group’s principal and emerging
risks (see pages 50 to 55) and by advising the Board on the Group’s
overall risk appetite and the effectiveness of risk management and
internal control systems.
In relation to the Group’s financial reporting process, the
Committee relies on a number of specific internal control
mechanisms to ensure that the Group provides accurate,
timelyfinancial results and implements accounting standards
andjudgements effectively, including in relation to going concern
and viability. The Committee receives:
 Regular updates on the evolving regulatory environment,
including FRC advice, best practice guidance and the
requirements of the Code and the Disclosure Guidance and
Transparency Rules. The Committee also receives reports
onproposed changes to legislation and regulatory reviews
andthe potential impacts.
 Management reports, including analysis of results, forecasts
and comparisons against last year’s results.
 Reports from the external auditor, including management
letters on controls.
Review of risk management and internal control systems
The Committee has reviewed the effectiveness of the Group’s risk
management and internal control systems. This covered financial,
operational and compliance principal risks.
Financial Statements Additional Information
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Effectiveness of Risk Assurance
During FY22, in accordance with the Chartered Institute of Internal
Auditors Standards (CIIA Standards), Deloitte, on behalf of the
Committee, conducted an independent external quality assessment
(EQA) on the effectiveness of Royal Mail and GLS’ respective Internal
Audit functions. CIIA’s Standards recommend that an external
assessment must be conducted at least once every five years by
aqualified, independent external assessor or assessment team.
The Committee therefore considers that it would be appropriate
toconduct the next EQA no later than the 2026-27 reporting year.
During the year the Committee reviewed the effectiveness of
RiskAssurance, including a review of the implementation of the
recommendations of last year’s EQA. In particular, it was noted
thatthe following progress had been made:
 Royal Mail Internal Audit digital and IT skills developed through
the implementation of a number of digital tools and practices,
including data analytics and more modern audit software and
the recruitment of specialist technology audit and data analytics
managers.
 Mapping assurance activity across Royal Mail’s principal risks
tobetter understand second-line assurance activity that can be
leveraged in its internal audits.
 Developing a true independent, third-line assurance function in
GLS focused on the principal risks of that business, improving
thequality of assurance activity through recruitment and training,
and integrating within the Global Risk Assurance framework.
Committee evaluation
The Committee’s annual evaluation of its performance was undertaken
as part of the Board effectiveness evaluation (see page88).
Michael Findlay
Chair of the Audit and Risk Committee
22 May 2023
Internal audit
Internal Audit provides independent assurance to the Committee
and the Board on the effectiveness of the internal control systems
and elements of the risk management process through its Internal
Audit projects. Internal Audit sits within the Risk Assurance function,
which is led by the Global Director of Risk Assurance, who has
direct access to me and the Board Chair, which ensures the
independence of the function.
At each Committee meeting, an update on Internal Audit activity
isprovided, including an overview of audits completed in the
period, with a focus on unsatisfactory audits; progress made
against the Internal Audit plan; and the status of actions arising
from completed audits.
An Internal Audit plan aligned to the Group’s principal risks is
developed annually and updated for changes in risks and priorities
with the Committee’s approval. Prior to the start of the new
financial year, the Committee reviewed and approved the Internal
Audit plan for the next financial year, which incorporates risk-based
audits that encompass both the Royal Mail and GLS businesses.
During the year, the Committee also oversaw progress against Risk
Assurance’s three-year strategy. The Committee noted that good
progress had been made in relation to several strategic pillars,
including integrating risk management and audit globally, talent
development, digital and technology auditing, and assurance mapping.
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Corporate Governance
Audit and Risk Committee Report continued

Lynne Peacock
Chair
Main objectives for 2022-23
 Monitor implementation and progress against Royal Mail and GLS’
environmental strategies and targets.
 Oversee the development of a TCFD implementation project.
 Monitor Royal Mail and GLS’ health, safety and wellbeing performance.
 Monitor Royal Mail and GLS’ culture and DEI strategies.
 Review Royal Mail and GLS’ supply chain engagement on ESG issues.
Key activities for 2022-23
 Received updates on the implementation and progress against Royal Mail
and GLS’ environmental strategies and targets.
 Oversaw the development of, and progress against, the Company’s TCFD
implementation project and formalised the Committee’s role in ensuring
that the Group has suitable systems and processes in place to manage
climate-related risks and opportunities.
 Introduced ‘safety moments’ at each Committee meeting, alongside regular
updates on Royal Mail and GLS’ health, safety and wellbeing performance.
 Received regular updates on culture metrics and reviewed output from
Employee Voice Forums and employee surveys.
 Reviewed Royal Mail and GLS’ DEI strategies and monitored progress
against diversity targets.
 Reviewed Royal Mail and GLS’ supply chain engagement on ESG issues.
 Reviewed Royal Mail and GLS’ engagement with society, vulnerable
customers and the communities they serve.
2023-24 priorities
 Monitor implementation and progress against Royal Mail and GLS’
environmental strategies and targets.
 Monitor the Company’s alignment with TCFD, including reviewing
RoyalMail and GLS’ systems and processes to manage climate-related
risks and opportunities.
 Monitor Royal Mail and GLS’ health, safety and wellbeing performance.
 Monitor Royal Mail and GLS’ culture and DEI strategies, including
progress against diversity targets.
 Review Royal Mail’s strategy for implementing processes, systems and
resource in its supply chains to achieve its long-term ESG ambitions.
 Monitor Royal Mail and GLS’ engagement with society, vulnerable
customers and the communities they serve.
 Review Royal Mail and GLS’ systems to manage and review labour
andhuman rights in their respective businesses and supply chain.
Committee membership and attendance
Director Joined
Attendance
(scheduled
meetings)
Lynne Peacock
(Chair since 20 July 2022)
1 February 2022 4/4
Rita Griffin
1
25 September 2019 2/2
Maria da Cunha 25 September 2019 4/4
Baroness Hogg 4 February 2021 4/4
Shashi Verma 29 September 2021 4/4
1. Rita Griffin stood down from the Board and as a member and Chair of the Committee on
20 July 2022.
Dear Shareholder,
I am pleased to update you on the Committee’s activity for the year
ended 26 March 2023. I became Chair on 20 July 2022, when Rita
Griffin stepped down from the Board. I would like to thank Rita for
leading the Committee since it was established in 2019 and for her
support during the transition period.
Information about the Group’s ESG Principles and Royal Mail and
GLS’ respective ESG programmes and performance during the year
is included on pages 26 to 37.
Committee composition and meetings
The table in the adjacent column contains information about the
Committee’s membership and the number of scheduled meetings
each Director attended and was entitled to attend during the year
ended 26 March 2023.
Committee meetings were routinely attended by the Non-Executive
Chair, the CEO Royal Mail, the CEO GLS, the Group CFO and the
Group Company Secretary. Other members of senior management
were invited to attend certain meetings as appropriate. The
Committee is supported by the Group Company Secretary and
members of the Royal Mail and GLS ESG teams.
Role of the Committee
The Committee’s role and responsibilities are summarised on
page81.
Committee activity
The key activities of the Committee during 2022-23 are set out
inthe adjacent column.
At its meetings, the Committee also reviews an ESG horizon
scanner as well as the ESG performance of Royal Mail and GLS,
covering performance across key areas, including health and
safety, people and environment.
Environment
During the year the Committee received updates on the
implementation of Royal Mail and GLS’ environmental strategies
and progress against their respective carbon reduction targets
(seepage 27). The Committee also held a spotlight discussion
onRoyal Mail’s fleet and the role it plays in delivering Royal Mail’s
carbon reduction targets.
The Committee also oversaw the development of, and progress
against, the Company’s TCFD implementation project. As a result,
the Committee updated its Terms of Reference to formalise its role
in ensuring that the Group has suitable systems and processes
inplace to manage climate-related risks and opportunities.
Seepages 38 to 45 for our TCFD Statement.
In addition, in March 2023, the Committee received a training
session from an external adviser on key ESG trends and upcoming
regulatory changestoenvironmental reporting.
Health, safety and wellbeing
The health and safety of our workforce, and those impacted by our
operations, is of the utmost importance to the Board. Reflecting
this, each Committee meeting begins with a ‘safety moment’ from
either the CEO Royal Mail or the CEO GLS, during which they cover a
topical safety matter from their respective business. The Committee
also monitors key health, safety and wellbeing metrics within Royal
Mail and GLS and receives a standing update on health and safety
performance across the two businesses at every meeting.
Financial Statements Additional Information
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Society, vulnerable customers and community engagement
The Committee held a spotlight discussion on Royal Mail and
GLS’engagement with societal issues, vulnerable customers
andcommunities.
In relation to Royal Mail, the Committee discussed the launch
ofthebusiness’ four-year charity partnership with British Heart
Foundation and made suggestions on how to use Royal Mail’s
scaleto improve heart health amongst its employees and in the
communities it serves (see page 34).
In relation to GLS, the Committee discussed plans to enhance
thereporting and sharing of activities and knowledge between
countries through GLS’ ESG coordinators.
Committee evaluation
The Committee’s annual evaluation of its performance was undertaken
as part of the Board effectiveness evaluation (see page 88).
Lynne Peacock
Chair of the Environmental, Social and Governance Committee
22 May 2023
In relation to Royal Mail, the Committee focused on the need
todrive a stronger safety culture within the business and in
thisrespect discussed and monitored progress against several
actions to improve safety culture. The Committee also reviewed
and suggested changes to the Royal Mail Health and Safety Policy
during the year, and received an update on how the Policy is
deployed in practice.
In relation to GLS, the Committee continued to monitor the rollout
of the Occupational Health and Safety (OHS) awareness programme,
which comprises ten individual projects, all aimed at creating
sustainable, long-term change in GLS’ safety culture.
Culture
The Committee is responsible for monitoring Royal Mail and GLS’
culture. The data which the Committee used to monitor culture
throughout the year, as well as the insight gained and the outcomes
of that insight, is included on pages 79 and 80.
DEI
The Committee receives regular updates on a number of DEI metrics.
For Royal Mail, this includes youth recruitment and attrition, frontline
employees under 30, overall female and ethnic minority employees,
and female and ethnic minority senior leaders. For GLS, this includes
administrative and operational female employees.
During the year the Committee held a spotlight discussion on DEI
within Royal Mail and GLS.
In relation to Royal Mail, the Committee discussed the progress
thebusiness had made against its 2025 diversity targets (see page
33), with a specific focus on increasing female representation at
senior leadership level.
In relation to GLS, the Committee discussed the launch of the
business’ DEI strategy, including the activities planned for 2023-24
in relation to increasing gender diversity within GLS (see page 34).
Supply chain
During the year the Committee discussed Royal Mail and GLS’
engagement with their respective supply chains on ESG issues
toenable a positive impact on society and the environment.
In relation to Royal Mail, the Committee discussed the findings
ofareview conducted by Accenture on Royal Mail’s responsible
sourcing, which identified where Royal Mail needed to implement
new processes, systems and resource to achieve its long-term ESG
ambitions. In the coming year Royal Mail will present its strategy
for dealing with this to the Committee.
In relation to GLS, the Committee noted the business had accelerated
efforts in its supply chain to support transport partners to switch
their fleet to zero- and low-emissions vehicles through various
incentives, including free charging at GLS depots, financing charging
infrastructure at subcontractor depots, remuneration for electric
vehicles, bonuses for electric van purchases and leasing or organising
trials for subcontractors to test new zero-emission vehicles.
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2023-24 priorities
Specific priorities for the Remuneration Committee in the forthcoming year,
in addition to its usual scheduled activities, will include:
 Review of the ongoing pay considerations for the wider Royal Mail
workforce as we re-engage and re-focus employees following the recent
industrial dispute.
 Review of the Group’s pay for performance opportunities to align
rewardwith the short-term objectives, namely continuing to grow
GLSand the turnaround of Royal Mail.
 Continue to explore opportunities to provide more transparency
andconsultation with various employee groups in the development
andapplication of the executive remuneration policy.
 Monitor and ensure the alignment of future incentive plans with Royal
Mail and GLS environmental strategies.
Committee membership, meetings and attendance
The table below shows the number of scheduled meetings each Director
attended, and the number of meetings they were entitled to attend during
theyear ended 26 March 2023.
Director Joined
Attendance
(scheduled
meetings)
Maria da Cunha
(Chair since 1 July 2022)
25 September 2019 6/6
Lynne Peacock
(Chair until 1July 2022)
1 November 2019 6/6
Michael Findlay 25 September 2019 6/6
Keith Williams 4 February 2021 6/6
Dear Shareholder,
On behalf of the Board, I am pleased to present our 2022-23
Directors Remuneration Report, my first as Chair of the
Remuneration Committee. As announced in January 2022, Lynne
Peacock steppeddown as Committee Chair in July 2022 when she
became Chair of the ESG Committee. I would like to extend my
thanks to Lynne for her hard work and commitment that built
astrong foundation for me to inherit. I am pleased that Lynne
hasagreed to remain as a Remuneration Committee member
andcontinue to provide her counsel.
2022-23 has been a challenging year, with post-pandemic macro-
economic turbulence remaining across the supply chain and retail
sectors, which has impacted letter and parcel volumes across the
UK, continental Europe and in the US. Furthermore, nationally the
UK has seen levels of industrial action unparalleled for decades.
High inflation has placed significant pressure on household budgets
which has impacted consumer behaviour as well as creating
significant cost pressure forour own workforce and the Group as a
whole.
Review of the Remuneration Policy for 2023-24
We have undertaken a review of our Directors’ Remuneration Policy
in accordance with the normal three-year review cycle. Our
proposed policy will apply from 2023-24 if supported by
shareholders. I have set out below details of the context and
findings of the policy review, and how the policy will support both
the growth opportunities at GLS and the turnaround needed at Royal
Mail in order to create value for shareholders.
The Committee considered the current policy in the context of
thediffering dual requirements of both our businesses and decided
that inthe most part it remains fit for purpose, but that a small
number of changes are needed, as set out below:
 The current policy restricts deferral to one third of any bonus
earned in all circumstances. It is proposed that this becomes the
minimum level of deferral, to provide flexibility for the Committee
to defer a greater portion of the bonus, where it considers that
this will further increase alignment with shareholders, taking
into account such factors as the Committee deems appropriate,
forexample, the profitability of the relevant business in the year.
 The current policy requires a minimum level of earnings before
any bonus is paid. Whilst earnings are a critical measure of
success, the Committee felt there may be other measures that
better represent successful performance during different stages
of growth or turnaround of our businesses. It is therefore proposed
that this provision is changed to allow the Committee to select
from a broader range of financial or non-financial measures as
underpins across the Group and/or an appropriate business unit.
 It is proposed that the benefits policy is updated to allow for
international relocation benefits when a current member of
theleadership relocates at the request of the Group.
In early 2023 we consulted with our 15 largest shareholders
onthese proposed minor changes to our policy. Shareholders who
commented were supportive of our proposals and no adverse
comments were received.
Maria da Cunha
Chair
Financial Statements Additional Information
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Directors’ Remuneration Report

revenue (2021-22: 56%). Adjusted operating loss was
£419 million (2021-22: £416 million profit) and adjusted operating
loss margin was 5.7%.
2022-23 remuneration outcomes
Short-term incentive plan (STIP)
When assessing the performance of the STIP measures against
thetargets set for Executive Directors, the Committee considered
broader aspects of the Company’s performance during the year,
including the outcomes for shareholders and customers as
described above.
For the Royal Mail STIP scorecard, financial measures account
for75% of the potential payout. As a result of prolonged industrial
action and a downturn in parcel volumes against expectations, a
loss was realised in the year for STIP purposes of £419 million. This
disappointing loss resulted in no payout under this element of the
scorecard for the CEO Royal Mail and Group CFO, asa profit was not
achieved in the year. Revenue performance in the year wasalso
behind threshold performance, resulting in no outcome forthis
component of the STIP.
Threshold performance was not achieved under either the Quality
of Service measure which was also impacted by industrial action
and higher than expected absence levels, or against the health and
safety measure resulting in no pay out for both of these measures.
Despite progress being made against Royal Mail’s environmental
targets, the overall financial performance during the year was
below expectations and as a consequence the overall STIP
outcome for Royal Mail was 0%.
Financial performance at GLS was good and there was strong
progress against the non-financial measures (which had a 25%
weighting). This resulted in a payout between target and maximum
under the scorecard for the CEO GLS.
The Group CFO has a Group STIP scorecard with a combination of
GLS and Royal Mail financial measures (amounting to 75% of the
scorecard). Non-financial measures (ESG and strategic priorities)
made up the balance of the scorecard.
This means that the respective awards for 2022-23 are:
Executive Director Scorecard
STIP payout
(asa%ofmaximum)
Mick Jeavons –
GroupCFO
Group 38.5%
Martin Seidenberg –
CEO GLS
GLS 85.5%
Simon Thompson –
CEORoyal Mail
Royal Mail 0.0%
Setting the scene and the context within which
remuneration decisions have been made
In continental Europe, GLS saw softer retail sales, resulting in
adecline of 1% in volumes in the year with beneficial pricing helping
to minimise the financial disruption. Since 2019-20 volumes remain
up 29% as households continue to shop online and send more
parcels worldwide.
The lengthy pay and change talks between Royal Mail and the
Communication and Workers Union and the resulting 18 days of
strike action resulted in significant disruption in the year, which our
managers worked hard to mitigate. After almost a year of talks a
deal has been reached that will provide Royal Mail employees with
a pay rise and allow the business to make the changes needed to
meet evolving customer needs and secure the long term survival of
the organisation. The Committee is conscious of the important role
of our services for our customers and the wider communities that we
operate in and the fact that disruption to the delivery of these
services has a negative impact on all of our stakeholders.
 We took action to mitigate the impact of strikes, and despite
seven days of industrial action in December 2022, robust
contingency planning meant that more than 110 million parcels
and 600 million addressed letters were delivered. Up to c.12,500
CWU grade employees returned to work on strike days.
 In January 2023, the Royal Mail International postal service was
the target of a cyber incident which prevented customers
posting letters and parcels overseas. Whilst the business was
disrupted, overseas services resumed after necessary checks
were made to ensure the ongoing safety of our customers
personal details.
 Quality of Service levels at Royal Mail have remained a
considerable challenge within the UK.
 Right sizing the UK workforce based upon the reduction in
volumes experienced post pandemic has been undertaken. This
necessary adjustment tothe overall fixed cost of the business
has seen a reduction of approximately 10,000 FTE, achieved
through natural attrition, a reduction in the use of third-party
agency staff and tighter controls on the use of variable pay.
Group performance
As detailed elsewhere in this Annual Report and Financial
Statements, it has been a challenging year with contrasting
performance across the Group:
 Group adjusted operating profit decreased 109.4% year on year
to £71 million. Group revenue decreased 5.3% to £12.04 billion,
with parcels making up 71% of Group revenue.
 GLS continued to deliver and perform, driven by a combination
of better pricing and acquisition effects (principally the full-year
effect from Rosenau), which offset a decline in parcel volumes.
Year-on-year revenue increased by 10.2% (8.6% in Euro terms)
to £4.7 billion (2021-22: £4.2 billion), with revenue in Germany,
the largest GLS market by revenue, growing by 5.1% in Euro
terms. Despite the good revenue growth, inflationary cost
pressures resulted in a decline in adjusted operating profit
margin by 60 basis points to 7.5%. GLS adjusted operating profit
was £348 million, up 1.8% on 2021-22 (0.2% higher in Euro terms
including the benefit from acquisitions).
 Royal Mail revenue decreased 13.0% to £7.4 billion. This was
driven by a 21% decline in parcel volumes following the surge in
home shopping during the pandemic as well as industrial action.
Revenue from parcels accounted for 53% of total Royal Mail
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Wider Employee Context
 Within GLS, we awarded pay rises between 3.3% and 8.6%
toreflect varying local pay inflation in the countries that we
operate in.
 For Royal Mail middle managers we reached an agreement with
Unite which saw a 5.5% pay award from 1 September 2023.
 A 2% interim pay rise for CWU grade employees was awarded,
with a further rise delayed because of prolonged pay and change
talks. Resolution reached with CWU in April 2023 for a multi-
year pay deal equivalent to 10% over three years plus a £500
lump sum. This pay award will be payable once the deal is
ratified by the membership.
 A simplified new starter contract was launched in December
2022, providing a variation of terms e.g. shift patterns over
seven days, location flexibility, monthly paid and competitive
pay and overtime rates.
 A new profit share scheme for CWU grade employees will
commence for the financial year 2023-24 providing 20% of net
operating profit as a bonus pool, subject to acceptance of the
proposal by union members.
 To support the physical and mental wellbeing of our employees,
Royal Mail implemented a virtual GP service which provides
unlimited 24/7 access to a GP.
2023-24 executive remuneration
Executive Director salary changes
The Committee reviewed the salaries of its Executive Directors
inthe context of increases for the wider workforce.
The Committee decided to apply no increases for UK-based
Executive Directors, effective 1 April 2023 in light of the current
financial position.
In respect of GLS, the Committee decided that STIP payments
should be made to its Executive Board in light of the goodfinancial
performance during 2022-23: each of the area managing directors
in GLS have STIP scorecards which are alignedto their individual
areas of geographical responsibility.
Long-term incentive plan (LTIP)
The performance period for the 2020 Royal Mail LTIP concluded at
the end of March 2023. Following an assessment of the performance
conditions and in accordance with the mandatory reporting
regulations, the estimated aggregate level of awards vesting is
60%, broken down as follows:
 Relative Total Shareholder Return (TSR): 40% vesting
(40%weighting).
 Group EBITDA: 0% vesting (40% weighting).
 Group parcel revenue: 20% vesting (20% weighting).
The 2020 LTIP has a vesting date of November 2023, the Committee
will continue to monitor the financial performance of the
organisation ahead of the final vesting date.
The value delivered by the estimated 60% vesting outcome and
included in the single total figure of remuneration is based on a
share price of £2.279 (the 13-week average to 26 March 2023)
compared with the share price at grant in 2020 of £3.044.
Martin Seidenberg was granted cash and share-based GLS LTIP
awards prior to his appointment as an Executive Director. These
aresubject to GLS financial performance and in respect of the
performance period ending 31 March 2023 the awards vested in
full. The Committee felt this outcome fair and appropriate in the
context of the GLS’ good performance over recent years. More
information is set out on page 126.
Total remuneration
Based on the above STIP and LTIP, each Executive Director’s
2022-23 remuneration is shown below. The Committee believes
therespective single figures of total remuneration are appropriate
in the context of the wider stakeholder experience.
2021 LTIP grants
As outlined in the 2021-22 Annual Report, the Committee delayed
the grant of the 2022 LTIP awards until August 2022. Due to the
uncertainty created by the operational disruption, the Committee
did not feel able to set long-term financial targets. Ultimately, the
Committee decided to replace the Royal Mail measures for this
award with an increased weighting on relative TSR. The measures
and targets were confirmed at the time of grant via a stock exchange
announcement and full details of the targets are set out in this
report. The terms ofthese awards also provide the Committee with
the ability to review the outcome at vesting, taking into account the
underlying performance of the Group.
Group CFO
M
ick Jeavons
£
’000s
Total
936
LTIP
175
STIP
251
Pensions/benefits
75
Salary
435
C
EO GLS
M
artin Seidenberg
£
’000s
Total
1,484
LTIP
189
STIP
678
Pensions/benefits
89
Salary
528
C
EO Royal Mail
S
imon Thompson
£
’000s
Total
634
LTIP
STIP
0
0
Pensions/benefits
90
Salary
544
Financial Statements Additional Information
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Consideration of the wider workforce views
In addition to its primary role of reviewing Executive Directors’
remuneration and the remuneration of other executives in GLS
andRoyal Mail, the Committee, and the Board more generally,
continue to exercise oversight of other colleagues’ remuneration.
The Committee takes into consideration pay policy and pay
settlements across the wider workforce as part of its decision
making on executive remuneration.
This year, in response to feedback from the workforce on the lack
of opportunity for CWU represented employees to share directly in
the financial success of Royal Mail, the Board has committed, as
part of the pay deal negotiated with the CWU, to introducing a profit
share plan for CWU employees for 2023-24 and 2024-25.
As in previous years, the Committee reviewed the gender pay gap
reporting and remuneration practices across the Group. In 2022-23
the ARC discussed the ongoing challenges of recruiting, retaining
and engaging key talent (all Committee members were invited to
this session).
Further information on our workforce engagement is included on
pages 22, 32 and 84.
Board changes and implications for remuneration
On 12 May 2023 it was announced that Simon Thompson was
stepping down as CEO Royal Mail. Details of the treatment of his
remuneration on his departure were disclosed at the time of the
announcement and are set out on page 131 of this report.
Summary
The Committee has sought to make fair and balanced decisions on
remuneration outcomes that reflect the differing performance of its
two operating entities in the year. Going forward we will continue to
focus on ensuring our incentive structures support the turnaround
required at Royal Mail and promoting growth at GLS
I trust that you find the Remuneration Report clear and informative.
We hope that you will support our Remuneration Report and
Remuneration Policy at the forthcoming AGM.
Maria da Cunha
Chair of the Remuneration Committee
22 May 2023
Anincrease of 6.6% was agreed in respect of the CEO GLS, Martin
Seidenberg, who is based in continental Europe (the Netherlands)
and oversees GLS operations throughout Europe and North
America. This is below the budgeted annual salary increase for
employees inthe Netherlands of 7.7%.
Pension arrangements
All Executive Directors receive a pension of 13.6% of salary, which
is aligned with the benefit that will be provided to all eligible employees
under the proposed Royal Mail Collective Pension Plan which will
be launched after all the relevant enabling regulations have been
passed and The Pensions Regulator has authorised the plan. The
13.6% is less than the 15.6% of salary benefit currently received
bythe majority of Royal Mail colleagues in the UK.
Changes to the 2023-24 STIP
ESG-related measures are included within the STIP scorecard. Ten
percent of the scorecard for the CEOs of Royal Mail and GLS is
based on environmental metrics. Health and safety is animportant
priority for the Group and it has been a key measure inRoyal Mail’s
incentive plans for number of years across the broader UK
management population.
For the 2023-24 STIP, the Health and Safety performance will
become an underpin in the STIP. If performance against a range of
identified Health and Safety metrics is not in line with expectations,
the Committee will have the ability to reduce the level of STIP
earned.
During recent months. the Committee reviewed the emerging best
practice in relation to the use of ESG performance measures in
incentive plans and considered whether to adapt or extend the use
of ESG measures to long term incentive plans, with specific
environmental quantitative targets.
GLS and Royal Mail continued to develop their respective ESG
strategies to achieve their zero emission goals. The Committee will
conduct further work to consider including ESG measures in the
LTIP as the environmental strategies develop.
2023 LTIP awards
The measures that will apply to the 2023 LTIP awards are set out
onpage 133. These measures, broadly replicate the previous
structure that applied prior to 2022 and are designed to ensure that
the Executive Directors are incentivised to deliver the key long-
term priorities relevant for their role, with 40% of the award based
on Group TSR to ensure alignment with overall Group performance.
The associated targets will be reaffirmed at the time of grant via a
stock exchange announcement. The grant of the 2023-24 LTIP
awards is likely to be made, no later than 6 weeks post publication
of the 2022-23 annual report.
At closure on Friday 24 March 2023, the Company’s share price
was230.4 pence, which compares with the 2022 LTIP grant price
of272.6pence: a decrease of 15.48%. However, over the last two
financial years until 26 March 2023, the share price has been as
lowas 183.2 pence and the average share price during this period
was 371.0 pence, and therefore the current share price is within
therange over this period. As the stock markets remain unsettled
in light of the ongoing economic environment, the Committee will
monitor share price performance up to the point of grant of the
2023 LTIP toensure that award levels are appropriate. As in
previous years, the Committee will retain the discretion to review
vesting outcomes toensure that these are reflective of the
underlying performance during the period.
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Directors’ Remuneration Report continued

2023-24 Executive Directors’ remuneration structure
The table below summarises the implementation of the Policy for Executive Directors in 2023-24.
Financial year 2023-24 2024-25 2025-26 2026-27 2027-28 Implementation for 2023–24
Salary
Salaries for 2023-24 are to be as follows:
 Mick Jeavons – £435,000 (no increase).
 Martin Seidenberg – €653,510 (6.6% increase).
 Simon Thompson – £543,750 (no increase).
 Martin’s salary increase for 2023-24 is set
below the rate of the wider workforce in his
local Netherlands market of 7.7%. Workforce
increases across GLS’ largest markets are
up to 13.8%.
 Salaries may be reviewed during the year.
Benefits
 No change in how Remuneration Policy
isintended to operate.
 Pension contribution and/or allowance 13.6%
in line with the wider workforce.
 Other benefits may include healthcare
andcar allowance (or car).
STIP
Performance
period
Deferral period
Malus and clawbackprovisions apply
 Maximum 150% of salary (at least one third
of any award will deferred into shares for
three years).
 Target 75% of salary.
 Measures 75% financial and 25% ESG or
other strategic priorities.
LTIP
Performance period
Malus provisions apply
Holding period
Clawbackprovisions apply
 Maximum 150% of salary.
 Shares vest after three years subject
toperformance, with a further two-year
holdingperiod.
 Relative TSR 40% and financial measures 60%.
On 12 May 2023 it was announced that Simon Thompson was stepping down as CEO Royal Mail. Details of the treatment of his
remuneration on departure were disclosed at the time and are provided on page 131.
Financial Statements Additional Information
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Our Remuneration at a Glance (unaudited)

The Committee believes that its executive remuneration policies and practices support the respective strategies in Royal Mail andGLS
andpromote long-term sustainable success, with reward linked to the successful delivery of such long-term strategy. Theremuneration,
including incentive arrangements for the respective executive teams, is aligned to our purpose and values (seepage 2), with a focus on
customers and other stakeholders an integral part of our executive remuneration approach.
Executive Directors’ variable remuneration in 2022-23
As a result of the Company’s 2022-23 performance (against financial, ESG and strategic measures), STIP awards are payable to some of
the Executive Directors as shown below. The Committee considered that these outcomes were appropriate in the context of the Group,
GLSand Royal Mail’s overall performance and that of the Executive Directors during the year.
The performance period for the 2020 RM LTIP concluded at the end of March 2023. The outcome is shown below and more details on
theprogress against individual measures is shown on page 126.
M Jeavons M Seidenberg S Thompson
2022-23 RM STIP (% of salary) 57.8% 128.3% 0.0%
2020 RM LTIP vesting (% of maximum) 60.0% n/a n/a
Executive Directors’ total single figure of remuneration M Jeavons M Seidenberg S Thompson
2022-23 total remuneration (£’000s) 936 1,484 634
Aligning our remuneration approach to businessstrategyand stakeholder interests
To generate value for stakeholders, we are focused on building a more balanced and diverse international business. Recognising that Royal
Mail and GLS have different market positions, strengths and opportunities, we have developed separate strategies todrive sustainable
growth in each business and at all times meet changing customer needs.
Our remuneration approach is aligned to our strategy, thereby incentivising, as appropriate, great customer service and the creation
oflong-term value for all of our stakeholders.
The following table provides a summary of how our incentive framework in 2023-24 is aligned with our business strategy andtheresults
that it delivers. Many of the incentive measures arekey performance indicators (KPIs) (see pages 20 and 21).
Financial measure ESG measure Other measure
RM Operating
profit (loss)/
GLSEBITA RM cashflow GLS cashflow
RM service
quality Environmental
Relative
TSR
Individual
priorities
Short-term incentiveplan
     
Long-term incentiveplan
   
Link to strategy
Royal Mail
GLS
Cash flow is defined as in-year trading cash flow post IFRS16 (STIP only).
Strategic icon key
Royal Mail GLS
Customer Connect Europe
Trust
Strengthen 2C parcel market
position and lead in 2B
Growth Inspire the market
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Our Remuneration at a Glance (unaudited) continued

Additional information Percentage/Ratio
UK CEO (and other Executive Directors) shareholding requirement (% of salary) 200%
Mean gender pay gap +1.4%
Mean gender bonus pay gap -14.4%
CEO pay ratio 19:1
How does our Directors’ Remuneration Policy address the key features set out in the UK Corporate Governance Code?
The table below details how the Committee addressed Provision 40 of the Code in respect of Directors’ remuneration:
Provision Approach
Clarity
 The Committee consults annually with shareholders to seek their views on the operation of the Policy in the year.
 Information on how remuneration is structured for all employees and how it is aligned to Directors’ remuneration is included in the
Directors’ Remuneration Report.
Simplicity
 The Policy consists of a) fixed remuneration and b) variable remuneration comprising one Short-Term Incentive and one Long-Term
Incentive only. The objective of each element, as well as how they operate, is included in the Policy.
Risk
 The combination of reward for short-term business performance, paid partly in cash and partly in deferred shares, and long-term
performance, with incentive measures covering shareholder returns, financial and non-financial elements, ensures that the
incentives drive the right behaviours for the Group, its shareholders, employees and customers. Incentive plans include non-
financial risks such as health and safety and environmental protection.
 Our incentive plans are also subject to malus and clawback provisions.
Predictability
 Threshold, target and maximum pay scenarios are set out in the Remuneration Report section.
 Maximum variable remuneration award levels are capped. Other than vesting levels, which are driven by performance outcomes,
theonly source of variation in final payouts is the fact that part of the variable remuneration is awarded in shares and so is linked
tothe share price.
Proportionality
 There is a clear and direct link between business performance and individual rewards through our incentive plans.
 The Committee retains the discretion to adjust formulaic outcomes of incentive plans if they do not reflect the underlying
performanceof the Group.
Alignment
withculture
 The Committee has worked hard to design the Remuneration Policy that directly supports our strategic priorities, and aligns our
Directors and wider management to these outcomes.
 Our incentive plans include both financial measures and ESG measures. These ESG measures focus on our customers, health
andsafety and environment.
 All Royal Mail managers’ individual performance is considered against Royal Mail’s values: be positive, be brilliant, be part of it.
Therefore, we assess our managers against not only what they have achieved, but also how they do things.
In accordance with Code Provision 41, the Directors’ Remuneration Report describes the work of the Committee, including those areas
mentioned in that Provision. The table below highlights some of those areas:
Provision Approach
Operation
ofPolicy
 The Committee believes that the Remuneration Policy operates as intended in terms of Company performance and the quantum
ofremuneration delivered.
Shareholder
engagement
 We undertook substantial engagement with our shareholders as part of the development of the new Remuneration Policy in 2023,
andour intended operation of the Policy for 2023-24. We are grateful for this feedback and input received over the last 36 months
thathas shaped our thinking and decision making.
Workforce
engagement
 An outline of our approach to workforce engagement in set out on pages 22, 32 and 84.
 The Committee will be exploring in the coming years how such engagement can be further strengthened in relation to the
development ofexecutive remuneration policy.
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The Company’s existing Directors’ Remuneration Policy was approved by 99.3% of shareholders at the AGM on 8 September 2020.
Underthe normal three-year renewal process, the Company is proposing a new Directors’ Remuneration Policy, as set out below.
Subjectto shareholder approval at the AGM to be held 20 July 2023, this Remuneration Policy will take effect from the date of the
2023AGM and, ifapproved, will apply for up to three years.
The Board and Remuneration Committee conducted a detailed review of the Remuneration Policy during 2022-23 and considered
theviewsof shareholders, strategic objectives of the Group, the remuneration of the wider workforce, market benchmarking and
elements of best practice. As part of this process ahead of the 2023 AGM, the Chair of the Remuneration Committee consulted with
theCompany’s largest shareholders and proxy agencies to discuss the proposed changes to the Remuneration Policy. The Committee
greatlyvalues feedback from our shareholders and considered their views when finalising proposals.
Following the review and consultation, the Remuneration Committee concluded that the existing remuneration structure for
ExecutiveDirectors across IDS, GLS and Royal Mail, which has been strongly supported by shareholders in the past three years,
remainsappropriate and consistent with best practice. We are therefore proposing only minor changes to the Policy, which aim
tosupportour developing strategy.
Overview of the changes to the Remuneration Policy
Area of Remuneration Policy Description of change
STIP
(performance measures)
The proposed Policy updates the current earnings gateway to include selected
gateways from a broader range of financial and/or non-financial measures
STIP
(deferral)
The proposed Policy is for at least one third of any bonus earned to be deferred
intoshares in all circumstances, allowing for higher levels of deferral where the
Committee considers that this is appropriate and where further increases align with
shareholders’ interests.
Benefits The proposed Policy related to relocation allowances has been updated to recognise
the Company has a leadership team spread across different jurisdictions and who
may need to relocate at the request of the business.
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Corporate Governance
New Directors’ Remuneration Policy (unaudited)

Proposed Remuneration Policy
Executive Director Fixed Remuneration
At a glance – maximum opportunity Operation
Base salary
Purpose and link to strategy
Reflects the scope and responsibility of the role, while taking account of the skills and experience of the individual. Used to attract
and retain talented executives to deliver the business strategy.
Salaries for 2023-24
willbeasfollows:
M Jeavons (Group CFO) –
£435,000
M Seidenberg (CEO GLS) –
€653,510
Salary levels for the Executive Directors are normally reviewed annually. The Committee takes
into account factors such as the performance of the Company, the performance of the Executive
Director, any changes in role and responsibility, assessment against relevant comparator
groups, internal relativities and the level of increase being offered to our frontline employees.
Increases will normally be in line with the broader employee population. Increases may be made
above this level to take account of changing circumstances, such as a change in responsibility,
progression in the role, individual performance or a significant increase in the scale or size of the role.
Benefits
Purpose and link to strategy
To support the attraction and retention of talented executives by providing a competitive offering.
The value of the benefits stated
is the maximum cost to the
Company of providing them
Benefits currently include the provision of a company car and health insurance, or the cash
equivalent of these benefits. Life assurance and health screening are also provided. Additional
benefits may be offered such as financial advice and relocation allowances.
UK based Executive Directors are entitled to participate in any Share Incentive Plan (SIP) or
SaveAs You Earn (SAYE) schemes currently available to employees.
Where an Executive Director is based outside the UK, but is required to travel to the UK to fulfil
the responsibilities of their role and to attend Board meetings, they may be subject to tax on their
business travel expenses to and from the UK and on the provision of any accommodation in the
UK. Although in reality it represents a business expense, the tax treatment requires that their
travel and accommodation expenses are then included as benefits. Because of the business
context, the tax liabilities will be covered by the Company on a grossed-up basis.
Pension
Purpose and link to strategy
To provide a competitive post-retirement income.
All Executive Directors
currently receive a pension
of13.6% of salary, which is
aligned with the majority
oftheworkforce.
For newly appointed Executive
Directors, the pension
allowance will be in line with
employer contribution for the
majority ofthe workforce.
Company contribution to a defined contribution pension scheme and/or a cash supplement
(inlieu of pension).
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Executive Director Variable Remuneration
At a glance – maximum opportunity Operation Performance measures
Short-Term Incentive Plan (or annual bonus)
Purpose and link to strategy
Designed to reward achievement of key strategic, financial and operational priorities for the year to deliver strong performance in
service of longer-term strategic goals and creation of long-term shareholder value. Part of the total annual incentive opportunity
isa deferred share award encouraging a long-term view, providing alignment with shareholders’ interests.
Maximum total annual incentive
opportunity of 150% of salary,
with a target opportunity of
75%of salary.
Normally at least one third of any bonus
earned is deferred into shares in the
Company which are normally released
afterthree years.
Deferred share awards will be granted
toExecutive Directors in the form of a
conditional share award. The Committee
will normally award dividend equivalents
ondeferred shares to plan participants
tothe extent that they vest.
Malus and clawback provisions will apply
toboth elements of the award.
Annual performance measures and weightings
willbe selected at the start of each financial
yeartoalign with the key strategic, financial
andoperational priorities of the business. The
measures themselves may change on an annual
basis as financial and operational priorities of
thebusiness change.
In addition, the Committee will select an underpin
or underpins that must be achieved (which may
beat a Group or an appropriate business unit
level)before any bonus is payable to an Executive
Director. Financial and/or non-financial measures
can be used as underpin measures.
The Committee may use its discretion to:
 Change the performance measures and targets, and the weighting attached to the performance measures and targets part way
through a performance year if there is a significant and material event which causes the Committee to believe that the original
measures, weightings and targets are no longer appropriate.
 Make downward or upward movements to the amount of bonus earned resulting from the application of the performance
measures, if the Committee believes that the bonus outcomes are not a fair and accurate reflection of business performance.
Long-Term Incentive Plan
Purpose and link to strategy
Supports executive recruitment and retention, with an appropriate balance between short-term performance and the creation
oflong-term, sustainable shareholder value.
Maximum award level
of150%of salary.
Awards are granted annually to Executive
Directors in the form of a conditional
shareaward.
These will vest at the end of a three-year
period subject to:
 The Executive Director’s continued
employment at the date of vesting.
 The satisfaction of the performance
conditions.
The Committee will normally award
dividend equivalents on those shares to
theextent that they vest. Following the
vesting, there is a holding period of two
years when Executive Directors cannot
sellthe vested shares other than to pay tax.
Malus provisions apply over the
performance period. Clawback will
applyover the holding period.
Performance measures and/or weightings
reflectthe business strategy at the time and
aremeasured over or at the end of three years.
TheCommittee may change the balance of the
measures, or use different measures for
subsequent awards, as appropriate.
The underlying performance of the business
willalso be taken into account when determining
the vesting.
In exceptional circumstances the Committee retains the discretion to vary or waive the performance conditions applying to
LTIPawards, if the Board considers it appropriate and the new performance conditions are deemed reasonable and are not
materially more or less difficult to satisfy than the original conditions.
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New Directors’ Remuneration Policy (unaudited) continued

Application of malus and clawback
At a glance – maximum opportunity Operation
Malus and clawback may
beapplied by the Committee
inthe event of:
i. Discovery of a material misstatement resulting in an adjustment in the Company’s accounts.
ii. Discovery that the grant or vesting of an award was based on error or inaccurate or
misleading information.
iii. Conduct by an Executive Director that amounts to fraud or gross misconduct.
iv. Conduct by an Executive Director that results, or could result, in serious reputational
damageto the Group.
v. Conduct by an Executive Director that has caused a material failure of risk management.
vi. The Company enters involuntary administration or insolvency process.
vii. An Executive Director breaching any restrictive covenants or confidentiality obligations
thatapply after the termination of their employment.
Events iv) to vii) only apply to awards granted after 1 April 2019.
Shareholding guidelines – during employment
Purpose and link to strategy
To ensure alignment between remuneration and long-term shareholder value creation.
Shareholding guideline
of200%of salary
Executive Directors are expected to keep any shares they already own and any shares released
under the LTIP and the Deferred Share Bonus Plan (DSBP) (except for those sold to cover any tax
and social security obligations) until this is achieved.
Shareholding guidelines – post cessation
Purpose and link to strategy
To ensure continued alignment of Executive Directors with shareholders as they transition out of the business.
200% of salary to be held
ingranted shares for two
yearsafter leaving.
On cessation, Executive Directors are required to maintain their shareholding guideline for two
years. The number of shares to be held will be based on the shares vested under executive share
schemes only (including the shares from any DSBP award that are yet to vest, based on a net
calculation) and will be determined by the share price on the date of cessation. If an Executive
Director has not yet reached the 200% of salary guideline at the point of departure, they will be
required to hold any shares granted under executive share schemes for two years. The post
cessation shareholding requirement will be included in Settlement Agreements for Executive
Directors on leaving the business.
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Approach to recruitment remuneration
Element Policy
Salary Salaries for new Executive Directors appointed to the Board will be set in accordance with the
terms of the approved Remuneration Policy in force at the time of appointment. In particular,
they will take account of the appointee’s skills and experience as well as the scope and market
rate for the role.
Benefits Benefits consistent with those offered to other Executive Directors under the approved Remuneration
Policy in force at the time of appointment will be offered, including the discretion to offer additional
benefits including but not limited to a) relocation allowance on recruitment and b) covering
additional tax incurred by a non UK based Executive Director when performing their duties
outside their home country (such as visiting the UK for Board or other meetings) to ensure
thatthey are not subject to a greater tax burden as a result.
Pension allowance The pension allowance paid to any newly appointed Executive Director will be aligned to the
wider workforce pension arrangements as outlined in the Remuneration Policy.
Incentives Incentive arrangements will be in accordance with the approved Remuneration Policy in force at
the time of appointment to the role. Under the Remuneration Policy:
 Maximum total annual incentive opportunity award in any year would be 150% of salary.
 Maximum LTIP award would be 150% of salary (with the ability to offer up to 300% of salary
forthe year of starting the role).
For an externally appointed Executive Director, the Company may offer additional cash or
share-based payments that it considers necessary to buy out current entitlements from the
former employer that will be forfeited on recruitment. Any such arrangements would reflect
thetype of award (for example, cash or shares); time horizons; and levels of conditionality of
theremuneration foregone. In order to facilitate buy-out arrangements, existing incentive
schemes will be used to the extent possible, and the Committee will retain discretion on the
application of holding periods, performance conditions and performance periods.
For an internally appointed Executive Director, any outstanding variable pay element, such
asanLTIP awarded in respect of the prior role, will continue on its original terms.
Other The Committee always seeks to use its judgement to ensure that any remuneration package
isset such that the Company is able to attract the right calibre of individual required, whilst
maintaining a responsible attitude to executive compensation.
The terms and conditions for any new Executive Director contract as outlined in this Policy
shallalways be subject to local laws in any applicable jurisdiction and be amended to ensure
compliance with such local laws where necessary.
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New Directors’ Remuneration Policy (unaudited) continued

Policy on payment for loss of office
The Committee reserves the right to make any other payments in connection with an Executive Director’s cessation of office
oremployment where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages
forbreach of such an obligation) or by way of compromise or settlement of any claim arising in connection with the cessation
ofaDirector’s office or employment. Any such payments may include but are not limited to paying any fees for outplacement
assistanceand/or the Director’s legal and/or professional advice fees in connection with his cessation of office or employment.
The Company may meet ancillary costs, such as outplacement consultancy and/or reasonable legal costs, if the Company
terminates the Executive Director’s service contract.
Element Policy
Payment in
lieu of notice
The Company may terminate the contract by making a payment in lieu of any unexpired notice period (unless
dictated by applicable law). The payment in lieu of notice is limited to a maximum of 12 months’ base salary (unless
dictated by applicable law). Service contracts for Executive Directors will expressly provide for the use of monthly
phased payments (unless dictated by applicable law) in the event of a payment in lieu of notice with a reduction in
amounts paid if the executive obtains alternative paid employment.
Other
payments
Payment in lieu of accrued holiday, incidental expenses, outplacement services and payments relating to post-
termination restrictions may be paid/provided for as appropriate. Any statutory entitlements or sums to settle or
compromise claims in connection with a termination (including, at the discretion of the Committee, reimbursement
for legal advice) would be paid as the Committee considers necessary.
Post-
cessation
shareholding
Executive Directors will be required to maintain their shareholding guideline for two years. The number of shares to
be held will be based on the shares granted under executive share schemes only and will be determined by the share
price on the date of cessation. If an Executive Director has not yet reached the 200% of salary guideline at the point of
departure, they will be required to hold any shares, granted under executive shares schemes for two years.
The following table sets out the position under the incentive plans on cessation of employment:
Element Good leaver reason
1
Other reason
2
Committee discretion
Annual bonus
(cash)
Performance conditions
will be measured at the
bonus measurement date.
Bonus will normally be
pro-rated.
No bonus
payable for
year of
cessation.
 To determine that an executive is a good leaver.
 To determine whether to pro-rate the bonus to time.
The normal approach is that bonus will be pro-rated provided that
where any discretion is exercised there is an appropriate business
case which will be explained to shareholders.
Annual bonus
(deferred)
All subsisting deferred
share awards will
normallyvest on the
normal vesting date.
Lapse of any
unvested
deferred
shareawards.
 To determine that an executive is a good leaver.
 To vest deferred shares at the date of cessation of employment.
 To determine whether to pro-rate the award to time.
The normal approach for existing awards is that they will not be
pro-rated provided that where any discretion is exercised there
isanappropriate business case which will be explained in full to
shareholders. In respect of the year of cessation, discretion may
beexercised to provide a pro-rated deferred share award based
onachievement of performance conditions as measured at the
bonus measurement date.
LTIP Pro-rated to time and
performance in respect of
each LTIP award. Awards
will vest on the normal
vesting date and the
holding period will apply,
except in the case of
deathwhen awards will
vest on date of cessation
ofemployment (and no
holding period will apply).
Lapse of any
unvested LTIP
awards.
 To determine that an executive is a good leaver.
 To measure performance over the original performance
periodor at the date of cessation of employment.
 To vest the shares on date of cessation of employment.
 To determine whether to pro-rate the award to time.
The normal approach is that awards will be pro-rated and to
disapply the holding period provided that where any discretion
isexercised there is an appropriate business case which will be
explained in full to shareholders.
1. A good leaver reason is defined as cessation in the following circumstances: death; injury, ill health or disability, as established to the satisfaction of the Committee; redundancy with the
agreement of the Committee; retirement with the agreement of the Committee; the company employing the executive ceasing to be a member of the Group; the business or part of the business
to which the executive’s office or employment relates being transferred to a person who is not a member of the Group; or any other reason where the Committee in its discretion so permits.
2. Cessation of employment in circumstances other than those set out above is cessation for other reasons.
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Policy on a takeover or other corporate events
The Committee’s Policy on the vesting incentives on a change of control is summarised below.
Element Take-over Committee discretion
Annual bonus (cash) Pro-rated to time and performance
tothedateof the takeover.
The Committee’s normal approach is that
itwillpro-rate the bonus for time. It is the
Committee’s intention to use its discretion to
not pro-rate in circumstances only where there
is an appropriate business case which will be
explained in full to shareholders.
Annual bonus (deferred) Subsisting deferred share awards
mayvestona takeover.
The Committee has discretion regarding
whether to pro-rate the award to time. The
Committee’s normal approach is that it will not
pro-rate awards for time. The Committee will
make this determination depending on the
circumstances of the takeover.
LTIP Subsisting LTIP awards may vest on a takeover,
pro-rated to time and performance.
The Committee will determine the proportion of
the LTIP award which vests taking into account,
among other factors, the period of time the
LTIP award has been held by the participant and
the extent to which any applicable performance
conditions have been satisfied at that time.
In the event of a demerger, the Committee has wide flexibility as to what should happen to awards, including whether all or part of
anaward should vest and on what terms, or whether an award should continue on amended terms.
Legacy commitments
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions
available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out in this report where the
terms of the payment were agreed (i) before 8 September 2020 AGM (the date of the previous shareholder-approved Directors’ Remuneration
report came into effect); (ii) before this Policy came into effect, provided that the terms of the payment were consistent with the shareholder-
approved Directors’ Remuneration policy in force at the time they were agreed; or at a time when the relevant individual was not an Executive
Director ofthe Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming an
Executive Director of the Company. For these purposes, ‘payments’ includes the Committee satisfying awards of variable remuneration
and, inrelation to an award over shares, the terms of the payment are‘agreed’ at the time the award is granted.
This policy applies equally to any individual who is required to be treated as an Executive Director under the applicable regulations.
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New Directors’ Remuneration Policy (unaudited) continued

Executive Directors’ Remuneration opportunity underthenew Policy
The following charts set out the remuneration scenarios under thePolicy for the Executive Directors in 2023-24.
It should be noted that there is no change to the target or maximum incentive opportunities receivable for the Executive Directors,
compared with the previous Policy scenarios.
No chart has been provided for Simon Thompson following the announcement on 12 May 2023 that he will step down as CEO Royal Mail.
Illustrative remuneration scenarios (£’000s)
Mick Jeavons
3,000
2,500
2,000
1,500
1,000
500
0
Fixed On target Max Max
(with share
price growth)
100%
£671
£1,534
£2,397
£2,828
44%
28%
28%
28%
36%
36%
23%
31%
31%
15%
Fixed On target Max Max
(with share
price growth)
100%
£510
£1,162
£1,815
£2,141
44%
28%
28%
28%
36%
36%
23%
31%
31%
15%
Share price growth
LTIPSTIPFixed
Martin Seidenberg
Assumptions
Fixed remuneration: Includes current salary, pension allowance at13.6% and, in the case of the Group CFO, abenefits value of c.£16,000
and, in the case of the CEO GLS, abenefits value of c.£17,000 (including company car and grossed up taxes).
On target: STIP is 75% of salary (including the deferred element) and LTIP is 75% of salary.
Maximum: STIP is 150% of salary (including the deferred element) and LTIP is 150% of salary under the Policy.
Maximum with 50% share price appreciation: The share price embedded in the LTIP calculation for the ‘maximum with share price
growth’ bar chart is assumed to increase by 50% over the performance period.
No dividend equivalents on share-based incentives have been applied in any of the above scenarios.
Martin Seidenberg’s remuneration converted using a year end average exchange rate of £1: €1.136 for the purposes of this illustration.
Financial Statements Additional Information
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Remuneration Policy for Non-Executive Directors (including the Chair of the Board)
At a glance Operation
Purpose and link to strategy
Provides a level of fees to support recruitment and retention of Non-Executive Directors and a Chair of the Board with the necessary
experience to fulfil the leadership role required of them.
Non-Executive Directors
arepaid an annual fee and
additional fees for being Chair
ofa Committee or a member
ofa Committee and, if
appropriate, other additional
time commitments.
The Chair of the Board does not
receive any additional fees for
membership of Committees.
The Board is responsible for setting the remuneration of the Non-Executive Directors.
TheRemuneration Committee is responsible for setting the Chair of the Board’s fees.
The fees for Non-Executive Directors and the Chair of the Board are set at broadly the median of the
comparator group. Fees are reviewed annually based on equivalent roles in the comparator group
used to review salaries paid to the Executive Directors. In general, the level of fee increase for the
Non-Executive Directors and the Chair of the Board will be set taking account of any change in
responsibility and will take into account the general rise in salaries across the UK workforce.
The Company will pay reasonable expenses incurred by the Non-Executive Directors and the Chair
of the Board and may settle any tax incurred in relation to these. Non-Executive Directors and the
Chair of the Board do not participate in any variable remuneration or benefits arrangements.
Service contracts and letters of appointment
The Company’s policy is that the Executive Directors are employed
under service contracts. The contracts have an indefinite term and
are normally terminated by the Executive Director with six months’
written notice and by the Company with 12 months’ notice. Copies
of the Executive Directors’ service contracts will be available for
inspection at our forthcoming AGM.
Subject to Board approval, it is the Company’s policy to allow
eachExecutive Director to accept one Non-Executive Director
position on the board of another listed company. The fees for
suchappointments are retained by the Executive Directors and,
asappropriate, are disclosed in the Remuneration Report.
The Non-Executive Directors (including the Non-Executive Chair
ofthe Board) are appointed by rolling letters of appointment.
TheNon-Executive Directors are appointed for up to three years,
subject to annual review and re-appointment. The fees for new
Non-Executive Directors appointed will be set in accordance with
the terms of the approved Remuneration Policy in force at the time
of appointment. One month’s notice is required by either party
(fourmonths’ notice in the case of the Chair of the Board).
Consideration of employment conditions elsewhere
intheGroup
In developing the 2023 Remuneration Policy, the Committee
carefully considered the remuneration arrangements across the
Group. The Committee receives information on wider workforce
demographics and remuneration on a regular basis, to ensure
thatthe Committee has a good understanding of the structure
andapplication of reward policies throughout the Group.
The Committee has agreed a set of Guiding People Principles for
IDS plc, against which it can assess the Company’s reward
arrangements. Across the Group, we are working towards reward
arrangements that:
 Deliver both value for our people and a return on investment
forthe business.
 Incentivise and recognise high performance.
 Are aligned with the markets in which we operate and compete.
 Drive efficiencies by taking a consistent cross-business approach.
 Are well communicated, holistic and understood by our people.
When making decisions about executive remuneration, the
Committee ensures, for example, that pay review budgets for
RoyalMail executives are typically set at levels which mirror
thosebeing applied for managerial populations, which in turn are
set in the context of pay levels agreed with our trade unions for
employees whose pay is collectively bargained. In addition, the
different incentive and commission plans in operation across Royal
Mail support the delivery of the Company-wide priorities which are
part of the STIP, through which the Executive Directors are
incentivised. The broader workforce did not have direct input into
the Policy, but its application is heavily influenced by remuneration
arrangements for all employees. As well as being Committee Chair,
Maria da Cunha is also the Designated Non-Executive Director for
engagement with the workforce, which allows any keythemes
from employee engagement activity to be fed into Committee
discussions. Further information about our workforce engagement
activities is set out on pages 22, 32 and 84.
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New Directors’ Remuneration Policy (unaudited) continued

The Committee is directly responsible for the remuneration of the Executive Directors and respective Royal Mail and GLS Executive
Boards. The Committee is also given regular updates and, as required, takes key decisions on incentive plans that cascade through the
organisation. The Committee takes changes in workforce remuneration into account when making decisions on executive remuneration.
A summary of remuneration across the Royal Mail business is set out below.
The chart shows an indicative summary of the relationship between fixed and variable pay across Royal Mail. There is no discretionary
performance-related pay for operational roles. Colleagues at this level influence their remuneration through workingadditional, or
antisocial, hours.
All our managers have an element of performance-related pay – with Executive Directors having the highest proportion of theirpayat risk.
Operational Managers Senior managers Senior leaders
Salary Based on role, location
andservice, progression
typically based on service.
Salary increases negotiated
with the CWU and applied
to the pay scales. No
personal or performance-
related element.
Middle and junior
managers typically have a
similar fixed pay structure
to operational colleagues,
with pay scales that they
progress through based
onservice.
Pay based on the role
andan individual’s
experience and skills,
within broad bands.
Pay based on the role and
an individual’s experience
and skills, and external
market positioning.
Allowances
andovertime
Eligible for allowances
(including functional, shift
and legacy allowances),
overtime and scheduled
attendance (a form of
planned overtime).
Some roles at this level
arealso eligible for
shiftpay, overtime
andallowances.
Not eligible. Not eligible.
Pension The majority of employees are members of the Royal Mail Defined Benefit Cash
Balance Scheme (DBCBS), with a Royal Mail contribution at 15.6% of salary, into
which participants transferred after the closure of the final salary pension plan.
New hires are eligible for the Royal Mail Defined Contribution Plan (DCP), with
Company contributions up to 10% of salary.
However, on the launch of the new Royal Mail Collective Pension Plan, all eligible
colleagues will participate in this plan (rather than the current DBCBS and DCP).
Company contributions will be up to 13.6% of salary.
Option of cash allowance
in lieu of Company
contributions.
Benefits Employee paid for flexible benefits (e.g. childcare
vouchers, cycle to work scheme, car leasing,
insurances, season ticket loans) and all employee
shareplans.
Car allowance and healthcare, in addition to employee
paid for flexible benefits and all employee share plans.
Short-term
incentive
(STIP)/bonuses
Eligible for a ‘Christmas
Supplement’ reflecting
their huge effort and
impact during our busiest
period. Not linked to
personal performance.
Managers are eligible for a management STIP
basedoncorporate and personal performance.
Eligible for annual
management STIP with
acash and deferred
shareelement based
oncorporate and
personalperformance.
LTIP Not eligible. Not eligible. Not eligible. Royal Mail Executive
Board eligible.
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All Employee Remuneration (unaudited)

0% 100%90%
Variable (at target)Fixed
80%70%60%50%40%30%
43.1%
20%10%
Illustration of typical split of fixed and variable remuneration
Executive
Director
Senior leader
Senior manager
Manager
Operational
99.1%
91.7%
85.9%
65.4%
56.9%
0.9%
8.3%
14.1%
34.6%
Transforming company car provision
Royal Mail announced in July 2021 its 2025 roadmap for the
decarbonisation of its company car and business mileage
allowances policies. These changes are part of Royal Mail’s
commitment to reduce its environmental impact and achieve
netzero by 2040 and should ensure that we deliver an all-electric
company car fleet by 2030.
The roadmap consists of three key dates:
 1 October 2021: from this date, the 1,500 senior managers have
only been able to order EVs through MyDrive.
 1 January 2023: from this date, the 1,500 senior managers have
only been reimbursed for business travel (in private company
cars) at an EV rate.
 1 April 2025: from this date, only EVs will be available to order
through MyDrive. Business mileage reimbursed for all employees
(in a private orcompany car) will only be available at appropriate
EV rates.
We are delighted with the uptake since the announcement
lastsummer. Colleagues are able to acquire a company car (leased
with our partner, Zenith) through our salary sacrifice arrangement.
As at March 2023, there were 2,829 company cars in the fleet, of
which 1,294 were EV. Of the orders placed between October 2022
and March 2023, 80% were EV.
Gender pay gap reporting
The Company’s 2022 Gender Pay Gap Report, published during
2022-23, continues to show that average pay for men and women is
broadly the same. On a median basis, our gender pay gap is 3.1% (a
nominal increase of 0.1% from the prior year). This compares with a
national average gender pay gap on a median basis of 14.9% across
all industries, calculated by the Office of National Statistics (ONS) in
2022. On a mean basis, the pay gap has remained the same at 1.4%.
We expect to see small changes in the total pay gap each year due
to changes in the composition of the workforce, and the payment of
allowances and shift pay, which can vary between men and women
year on year as shown below.
Gender pay gap – multi-year view
Royal Mail and national average (ONS survey)
18.00%
10.00%
12.00%
14.00%
16.00%
0.00%
2020 2021 2022
1.90%
1.40%
1.40%
2.60%
3.00%
3.10%
15.50%
15.40%
14.90%
2.00%
4.00%
6.00%
8.00%
National average pay gap (ONS)
Royal Mail mean pay gap
Royal Mail median pay gap
In 2022, 97% of men and 96% of women received bonuses (in 2021, this was 98% for both men and women). Those who are ineligible have
typically not reached the minimum service requirement or not obtained a minimum personal performance threshold, in the year to qualify.
In 2022, the median bonus gap was in favour of women at -1.9% and -14.4% on a mean basis.
Our mean Bonus Gap remains in favour of women due to the higher proportion of women in our management population.
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Corporate Governance
All Employee Remuneration (unaudited) continued

Illustrative pay ratios based on different remuneration outcomes for the CEO Royal Mail
Median employee pay
versus UK CEO’s 2022-23
fixed remuneration
Median employee pay
versus UK CEO’s actual
2022-23 remuneration
Median employee pay
versus UK CEO’s 2022-23
target remuneration
Median employee pay
versus UK CEO’s 2022-23
maximum remuneration
0% 80%60%40%20% 70%50%30%10%
68
44
19
19
The table below sets out the salary, full pay and benefits value
received by UK employees identified at the 25th, 50th and 75th
percentiles, during 2022-23. There are over 81,783 operational
colleagues on the salary of £24,361 on a full-time equivalent basis
across the business. The difference in total pay and benefits is due
to the different allowances, overtime, shift payments and pension
arrangements received by these employees during 2022-23.
2022-23 25th percentile 50th percentile 75th percentile
Salary £24,361 £24,361 £25,311
Total pay and
benefits £29,622 £33,193 £38,851
The material decrease in the pay ratio between 2022-23 and
2022-21 is essentially driven by the STIP outcome for the CEO Royal
Mail as a result of financial performance.
The headline amount of fixed remuneration for the CEO Royal Mail
is broadly unchanged year on year. However, he received an STIP
payment in respect of 2021-22 in contrast to 2022-23 where no STIP
is payable.
The Committee is satisfied that the individuals identified within
each relevant percentile appropriately reflect the employee pay
profiles at those quartiles and that the overall picture presented by
the ratios is consistent with our pay, reward and progression
policies.
Pay relativities are just one of many factors that we take into
consideration in developing a fair remuneration framework in
RoyalMail.
We have also detailed the potential ratios based on the CEO Royal
Mail’s theoretical fixed, target and maximum pay as set out in the
Policy. It is important to note that a high proportion of the CEO Royal
Mail’s pay is based on performance against the short- and long-
term incentive plans, and that payouts can vary significantly year on
year, affecting the ratio going forward.
2022
Total
pay gap
Bonus
gap
Mean 1.4% -14.4%
Median 3.1% -1.9%
A negative percentage means the gap is in favour of females
whereas a positive percentage means a gap in favour of males.
While we are pleased that our gender pay gap reporting shows
thatthe Company has no significant pay gap, we continue to
focuson improving the representation of women at all levels of the
organisation. Our gender strategy focuses on attracting, retaining
and developing female talent at all levels of the organisation. We
have female representation and recruitment targets for operational
roles, as well as a wide range of initiatives in place to achieve them.
CEO pay ratio
The CEO pay ratio is set out below, as required under the Large
andMedium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (Regulations), with the required explanation,
andfurther contextual information in relation to methodology
andassumptions used. The CEO pay ratio for 2019 and 2020 is
based on the remuneration of the former Group CEO. Since 2021
ithas been based on the remuneration of the CEO Royal Mail.
Year Method
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
2023 Option A 21:1 19:1 16:1
2022 Option A 26:1 23:1 20:1
2021 Option A 22:1 20:1 17:1
2020 Option A 31:1 28:1 24:1
2019 Option A 28:1 26:1 22:1
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Strategic Report Corporate Governance

How we have calculated our pay ratios
Under the Regulations, companies are required to identify the employee with pay and benefits at the 25th, 50th and 75th percentiles of all
UK employees for the relevant financial year and compare with the total remuneration of the CEO as set out in the single figure of total
remuneration table.
The Company has chosen to use Option A to identify the employees at the 25th, 50th and 75th percentiles and their respective pay and
benefits, as it is recognised that this is the most accurate approach. All UK employees as at year end have been included in the reporting,
with employees ranked based on their 2022-23 remuneration. The data assumptions included in our reporting are set out below:
Element Description
Base salary The Regulations require that full-time equivalent salaries are used to identify P25, P50 and P75 in order to
ensure comparability across Royal Mail. At Royal Mail, over 47,000 colleagues work part-time, primarily in
operational roles, and may have working hours changes through the year. We have, therefore, used the
full-time equivalent salary, as at year end, as the salary figure to rank our employees.
Allowances
andovertime
This includes a range of functional, shift, location, role-based allowances, and overtime, included on an actual
basis (not pro-rated for part-time colleagues, or annualised for new starters).
Taxable benefits Taxable benefits included are car allowance and healthcare.
Employer pension
contributions
Actual employer pension contributions have been included (not pro-rated for part-time colleagues or
annualised for new starters).
Incentives The Regulations require that incentives relating to the relevant financial year are included. In some cases,
thedecision on the level of bonuses and LTIP vesting is not made until after the publication of this report.
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Corporate Governance
All Employee Remuneration (unaudited) continued

This part of the Directors’ Remuneration Report sets out how the Policy has been applied for 2022-23. This detailed information, set out
below, has been audited by the Company’s independent auditor, KPMG LLP.
Single figure table – Executive Directors (audited)
£’000 Salary
2
Benefits
3
Pension
5,
Total fixed
Short-term
incentive
6,
Long-term
incentive
7,8,9,10
Total variable
,9,10
Total
9,10
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Mick Jeavons
9
435 420 16 15 59 57 510 492 251 306 175 379 426 685 936 1,177
Martin Seidenberg
1,4,10
528 493 17 13 72 67 617 573 678 703 189 315 867 1,018 1,484 1,591
Simon Thompson 544 525 16 15 74 71 634 611 - 142 – – - 142 634 753
Notes
1. Martin Seidenberg’s remuneration is set in Euros. The values above have been converted to British Pounds using the following exchange rate £1: €1.16.
2. As disclosed in last year’s report, the Committee reviewed the Executive Directors’ salaries for 2022-23 and decided to apply a 3.6% increase for UK based Executive Directors, effective 1 April
2022 in line with the 3.6% effective increase in 2021-22 for frontline Royal Mail colleagues represented by the CWU. An increase of 5.7% was agreed in respect of the CEO GLS, Martin Seidenberg
equal to the weighted average salary increase in GLS’ eight largest markets.
3. Benefits in the case of UK-based Executive Directors include healthcare provision with notional annual premium of up to £2,309 and the cash allowance of £13,160 which can be used to fund
(under a salary sacrifice arrangement) the lease of an electric company car. Martin Seidenberg is based in Netherlands and has elected to take a company car, which had an annual cost of
€18,260.
4. Under the Remuneration Policy the Company may provide to Executive Directors, in certain circumstances, additional benefits, including covering additional tax incurred by a non-UK-based
Executive Director when performing their duties outside their home country (such as visiting the UK for Board or other meetings) to ensure that they are not subject to a greater tax burden as a
result. At the time of this report, Martin Seidenberg’s relevant country tax returns covering the period to 31 March 2023 had not been finalised. If the Company has to make additional payments
in respect of related tax liabilities for this period, details will be disclosed in next year’s Annual Report.
5. For 2022-23, the pension amount shown for Mick Jeavons and Martin Seidenberg was paid as a cash allowance in lieu of pension. For Simon Thompson, up to £4,000 (on an annualised basis)
was paid into the Royal Mail Defined Contribution Plan, with the balance paid as a cash allowance.
6. Any STIP has at least one third deferred into shares subject to continued employment for three years. No further performance conditions are attached. Details of the 2022-23 STIP outturn are
set out on pages 124 to 126.
7. Mick Jeavons’ RM 2020 LTIP has an estimated 60% performance vesting outcome (see page 123 for more detail). Based on a share price of £2.279, the 13-week average to 26 March 2023, the
estimated value of the 2020 LTIP to be delivered to Mick Jeavons is £175,175. As the grant price was £3.0443, there has been no share appreciation. The final value will be restated in the 2023-24
Directors’ Remuneration Report.
8. The 2022 LTIP figure shown for Martin Seidenberg relates to historic grants under the GLS LTIP with performance period(s) ending in 2022-23. More information on the GLS LTIP is shown on
page 126. Part of the 2020 LTIP is delivered in shares. Based on a grant price of £1.8002 and a 13-week average price of £2.279, the amount relating to share price appreciation is £18,661, i.e.
206% (see below).
9. The 2022 long-term Incentive figure for Mick Jeavons has been restated with the actual value on vesting of his 2019 LTIP award, based on a share price of £2.702 on 08 August 2022 inclusive of
dividend equivalents.
10. The 2022 long term incentive figure for Martin Seidenberg has been restated (tranche 2 shares) using a 13 week average share price of £2.279.
LTIP vesting and share appreciation
Recipient Mick Jeavons Martin Seidenberg
Award 2020 RM LTIP 2020 GLS LTIP (shares)
Value at award £390,000 £70,161
Value lapses £156,000 –
Adjusted value at award £234,000 £70,161
Share price growth - £18,661
Current estimated value £175,175 £88,822
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Annual Report on Directors’ Remuneration (audited)

represented challenging but realistic targets, and that significant
out-performance of internal reference points at the time they were
set would be required to achieve a maximum payout.
4. Review broader business performance and finalise awards:
The Committee can make an upwards or downwards adjustment
tothe scorecard outcome for broader performance. In line with
theprovisions of the Code, the Committee carefully considered
whether the respective formulaic outcome could be justified in
thecontext of Royal Mail and GLS’ overall performance. In so
doingthe Committee reviewed the following:
 Business performance during 2022-23, including progress
against operational and strategic goals.
 The quality of underlying earnings and whether any significant
one-off factors influenced the results.
 The experience of our shareholders and customers over the year.
2022-23 short-term incentive outcome (unaudited)
The Committee followed a four-step process for determining
STIPawards.
1. Assess the earnings (financial) gateway: The Committee
concluded that a minimum level of financial performance had
beenattained at GLS, but not at Royal Mail.
2. Consider eligibility: The Committee considered if each
Executive Director had exhibited an appropriate level of personal
performance and conduct and was deemed to have met the
gateway requirement to be eligible for an incentive.
3. Evaluate performance against the relevant business
scorecard for the Executive Director: Details of the scorecard
outcomes can be seen below. Setting STIP targets at the outset of
2022-23 was challenging in the context of an uncertain and fluid
outlook. Notwithstanding this, the Committee set targets at the
outset of the year, considering internal and external forecasts. The
Committee was satisfied that the ranges set out in the table below
2022-23 STIP scorecards
Measure Weighting Targets Assessment Outcome
CEO Royal Mail – Simon Thompson
Adjusted
RoyalMail UK
operating profit
1
37.5% Threshold – £252m
Target – £316m
Maximum – £379m
(£419m) 0.0/37.5
Royal Mail UK
revenue
37.5% Threshold – £8,055m
Target – £8,304m
Maximum – £8,553m
£7,411m 0.0/37.5
Health and safety 10.0% Threshold – No outstanding P1 CAR’s,
Target – No outstanding P1 or P2 CAR’s
Maximum – No outstanding P1, P2 or P3 CAR’s
Outstanding P1 CAR’s 0.0/10.0
First Class Quality
of Service
5% Improved service levels. Aim to achieve
regulatory minimum by 30 September 2022
butmonitor ongoing performance and
appropriateness of the target in the context
oftheOfcom review
Service not to the high standards
that we would expect
0.0/7.5
Environment 5% Committee assessment of progress around
theexecution of a strategy on the sustainable
impact of our business and in-year progress
towards environment commitments
Targets exceeded at stretch, although outcome is
not directly correlated with the financial gateway
not being met.
0/5
Strategic
Priorities
5% Committee assessment of progress around
theexecution of a strategy (financial and
non-financial) from increased best practice
0/5
1. Alternative performance measures are not defined under IFRS. The APMs used to describe the Group’s performance, including a reconciliation to reported results, are explained on pages 238
to 242.
In terms of the Royal Mail STIP, scorecard financial measures account for 75% of the potential payout. Operating loss for STIP purposes
was £419m. As a result, there was no payout under the STIP as the overall financial gateway had not been met.
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Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

2022-23 STIP scorecards (continued)
Measure Weighting Targets Assessment Outcome
CEO GLS – Martin Seidenberg
Adjusted
GLSEBITA
1
75% Threshold – €362m
Target – €390m
Maximum – €418m
€403.67m 62.0/75.0
Health and safety 10% Reduction of Lost Time Accident Frequency Rate
between 2% (threshold) and 6% maximum.
(LTAFR) and strengthening the group-wide Health
& Safety programme.
LTAFR reduced by more than 7% 10.0/10.0
Environmental 7.5% Committee assessment of the roll out of the GLS
environment programme.
Installation of charging infrastructure,
implementation of low and zero emission vehicles
and sustainable building solutions
6.75/7.5
Strategic
Priorities
7.5% Committee assessment of :
 Progress to optimise the benefits (financial
and non-financial) from increased best
practice and knowledge-sharing between
Royal Mail and GLS.
 Progress against the main pillars of the Vision
2031 strategy, digitalisation, geographic
expansion, moving into adjacent segments and
development of global cross boarder
New start up company established in Serbia, a
number of M&A initiatives in-flight and global
cross boarder initiatives enhanced
6.75/7.5
Group CFO – Mick Jeavons
Adjusted
RoyalMail UK
operating profit
1
37.5% Threshold – £252m
Target – £316m
Maximum – £379m
See above 0.0/37.5
Adjusted
GLSEBITA
1
37.5% Threshold – €362m
Target – €390m
Maximum – €418m
See above 31.0/37.5
Health and safety 10% Threshold – No outstanding P1 CARs
Target – No outstanding P1 or P2 CARs
Maximum – No outstanding P1, P2 or P3 CARs
See above 0.0/10.0
Strategic priorities 15% Committee assessment of:
 Progress to optimise the benefits (financial
and non-financial) from increased best
practice and knowledge-sharing between
Royal Mail and GLS.
 Progress against Royal Mail transformational
milestones.
 Continuing to optimise a) financial
management and reporting to drive benefits
across the Group and b) tax and treasury
management for cashflow benefit
Strong progress across Royal Mail transformation
and financial management.
7.5/15.0
Notes
1. Alternative performance measures are not defined under IFRS. The APMs used to describe the Group’s performance, including a reconciliation to reported results, are explained on pages 238 to 242.
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Royal Mail LTIP (audited)
2020 LTIP outcomes
The 2020 LTIP was based on performance against a relative TSR measure, with a performance period from 1 April 2020 to 31 March 2023
and financial performance, as set out below:
Performance vesting
Measure Weighting Threshold Maximum Achievement
TSR vs FTSE 50-150
(excluding mining and financial companies)
40% Median
10%
Top quartile
40%
80th percentile
40/40
Group EBITDA
1,2
40% £1.07bn
10%
£1.38bn
40%
£524m
0/40
Group parcels revenue 20% £7.65bn
5%
£8.45bn
20%
£8.54bn
20/20
Total vesting 60/100
The Committee agreed that the estimated level of vesting (60%) is a reasonable outcome against the associated performance measures,
having reviewed Royal Mail’s wider performance and the share price performance over the three-year period. The Committee concluded
that the level of vesting will be reviewed at the end of November 2023 prior to vesting.
GLS LTIP outcomes
Martin Seidenberg was granted cash and share-based GLS LTIP awards prior to his appointment as an Executive Director. These awards
continue to vest on their normal schedule. Since 2021, Martin Seidenberg has been eligible for the Royal Mail LTIP and has not received any
further grants under the GLS LTIP. Under the GLS LTIP, the maximum possible award was 98% of salary.
The performance conditions are based on adjusted GLS profit performance with a separate target set for each of the three financial years
of the vesting period: 25% of the award is based on achievement in year one; with 37.5% based on achievement in years two and three
respectively. Although performance is assessed annually, awards vest after three years subject to continued employment.
The single figure table includes the third tranche of Martin Seidenberg’s 2020 GLS LTIP award, for which the performance period ends in
FY2022-23. The 2020 award vests in July 2023, subject to continued employment.
Award
Outcome
(% of max)
Value vesting
(€)
Shares
vesting
Value
vesting (£)
1,2
2020 GLS LTIP – tranche 3 (cash) 100% 115,763 – 99,796
2020 GLS LTIP - tranche 3 (shares) 100% - 38,974 88,822
1. Cash awards converted for reporting purposes using the average exchange rate of £1:€ 1.16.
2. Share awards converted for reporting purposes using the average 13-week share price to 26 March 2023 £2.279.
2022-23 STIP outturn
M Jeavons M Seidenberg S Thompson
Maximum award (% of salary) 150% 150% 150%
Salary £435,000 € 613,050 £543,750
Committee assessment on performance under the relevant scorecard 38.5% 85.5% 0%
Discretion applied (+/- % pts) 0.0% 0.0% 0.0%
Final outcome for 2022-23
– as a % of maximum 38.5% 85.5% 0%
– as a % of salary 57.8% 128.3% 0%
– as an amount £251,430 € 786,543 £0
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Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

Other outstanding LTIP awards (unaudited)
The following grants under the 2021 and 2022 Royal Mail LTIP remain outstanding at 26 March 2023. The performance conditions are set
out below.
As disclosed in last year’s Remuneration Report, target setting for the 2022 LTIP award was delayed due to continuing uncertainty around
the long-term business environment resulting from the geopolitical uncertainty in Europe and the status of pandemic restrictions in our
market. After careful consideration, the Committee concluded that it would not set three-year Royal Mail operating profit and parcel
revenue targets, and instead would replace these elements of the performance framework with TSR. The Committee consulted with
shareholders at the time and was grateful for the input from shareholders on this matter.
Threshold Maximum
Measure Weighting Performance
Vesting
(%ofaward) Performance
Vesting
(%ofaward)
2021 RM LTIP
TSR vs FTSE 51-150
(excluding mining and financials) comparator group
40% Median 10% Upper
quartile
40%
Adjusted Royal Mail
UKoperatingprofit
Mick Jeavons 20% £656.1m 5% £801.9m 20%
Royal Mail UK
parcels revenue
Mick Jeavons 10% £5,344.7m 2.5% £5,907.3m 10%
Adjusted GLS EBITA Martin Seidenberg 40%
€410m
10%
€449.9m
40%
Mick Jeavons 20% 5% 20%
GLS cash flow Martin Seidenberg 20%
€281.2m
5%
€310.8m
20%
Mick Jeavons 10% 2.5% 10%
2022 RM LTIP
TSR vs FTSE51-150
(excluding mining
andfinancials)
comparatorgroup
Median Upper quartile
Martin Seidenberg 40% 10% 40%
Mick Jeavons 70% 17.5% 70%
GLS EBITDA Martin Seidenberg 40%
€420m
10%
€500m
40%
Mick Jeavons 20% 5% 20%
GLS cash flow Martin Seidenberg 20%
€283m
5%
€343m
20%
Mick Jeavons 10% 2.5% 10%
Total 100% 25%
The amount of the LTIP share awards outstanding for each of the Executive Directors is shown in the following table, as at 26 March 2023.
The Committee is aware of the impact of ongoing stock market volatility and, as disclosed in previous years, will retain the discretion to
review vesting outcomes to ensure that these are reflective of the underlying performance during the period.
Award
Max value of
award at grant
(% of salary)
Max value of
award at grant
(£’000)
% vesting
atthreshold
performance
(%of salary)
Final year of
performance
period
Number
ofshares
atgrant
Mick Jeavons
2020 RM LTIP
1
150% 390 37.5% 2022-23 128,108
2021 RM LTIP
2
150% 630 37.5% 2023-24 125,831
2022 RM LTIP
3
150% 652 37.5% 2024-25 239,361
Martin Seidenberg
2020 GLS LTIP (cash)
4
– 266 – 2022-23 –
2020 GLS LTIP (shares)
4
– – – 2022-23 103,929
2021 RM LTIP
2
150% 736 37.5% 2023-24 147,098
2022 RM LTIP
3
150% 788 37.5% 2024-25 288,888
Simon Thompson
2021 RM LTIP
2
150% 788 37.5% 2023-24 157,289
2022 RM LTIP
3
150% 816 37.5% 2024-25 299,202
1. The 2020 RM LTIP award was granted on 27 November 2020 at a price of £3.0443 per share.
2. The 2021 RM LTIP award was granted on 12 August 2021 at a price of £5.0067 per share.
3. The 2022 RM LTIP was granted on 1 September 2022 at a price of £2.726 per share.
4. The 2020 GLS LTIP, granted on 24 July 2020, comprises a cash-based award and a share-based award. The maximum cash award value of the 2020 LTIP is €308,700. The values in the table above
have been converted using an illustrative FX rate of £1: €1.16.
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Shareholder dilution
All awards vesting under the Group’s share plans are satisfied by the transfer of existing shares or, where appropriate, the issuance
ofnewshares. The Group’s share plans contain limits that govern the amount of shares that may be issued to satisfy any subsequent
exercise of awards. These limits are in line with those stated in the Investment Association’s Principles of Remuneration. The Group
operates employee benefit trusts that are administered by independent trustees and which hold shares to meet various obligations
underthe Group’s share plans. As each Executive Director is within the class of beneficiary of these trusts, they are deemed, for the
purposes of the Companies Act 2006, to have an interest in the trusts’ shares.
Shareholding levels (audited)
Directors’ shareholdings
The table below sets out details of the shareholdings of the Directors as at 26 March 2023 (except where noted below). There has been
nochange in the Directors’ interests in the Company’s ordinary share capital between 26 March 2023 and 19 May 2023 (being the latest
practicable date prior to the publication of this Annual Report) except as noted below. Executive Directors are required to retain any share
based awards, until they achieve 200% of salary. Other PDMRs are required to retain a shareholding equivalent to 100% of salary.
Number
of shares
owned on
26/03/23
1
Number
of shares
owned on
27/03/22
Policy
shareholding
requirement
Current
shareholding
(asa %
of salary)
2
Share awards
not subject to
performance
Share awards
subject to
performance
(LTIP 2020,
2021, 2022)
Chair of the Board
Keith Williams 56,800 56,800 – – – –
Executive Directors
Mick Jeavons 149,605 62,693 200% 34.4 35,096 493,300
Martin Seidenberg 9,800 9,800 200% 1.8 79,870 539,915
Simon Thompson 20,982 20,982 200% 3.8 16,254 456,491
Non-Executive Directors
Maria da Cunha 15,000 15,000 – – – –
Michael Findlay 16,690 16,690 – – – –
Sarah Hogg 12,000 12,000 – – – –
Lynne Peacock 11,309 11,309 – – – –
Shashi Verma 0 – – – – –
Jourik Hooghe 0 -
1. For Directors who have stepped down from the Board, the number of shares owned is shown as at the date they stepped down. The number of shares is based on beneficial shareholdings,
excludes any unvested share awards and includes (if appropriate) any shares held by persons closely associated with the Directors.
2. Value of beneficial shareholding based on the average share price during 2022-23 (371 pence) and where required converted using an illustrative FX rate of £1:€1.16. Values include any vested
LTIP shares subject to a holding period but exclude any unvested DSBP awards. Mick Jeavons, Martin Seidenberg and Simon Thompson were appointed Executive Directors on 11 January 2021,
1 April 2021 and 11 January 2021 respectively. Each is expected to build their shareholding over time. As at 26 March 2023, none have met their shareholding requirement.
Executive Director fees from external positions (unaudited)
The Executive Directors are entitled to receive fees from
externalappointments.
Mick Jeavons, Martin Seidenberg and Simon Thompson did not
holdany external appointments at other listed companies for the
last reported financial year during the period they were appointed
to the Board.
Executive Director terms of employment (unaudited)
The Executive Directors are employed under service contracts
withan indefinite term.
Date of contract
Notice period
from RMG
(months)
Notice period
from
employee
(months)
Mick Jeavons 10 January 2021 12 6
Martin Seidenberg 25 June 2020 12 6
Simon Thompson 10 January 2021 12 6
Copies of the Executive Directors’ service contracts will be
available for inspection at our forthcoming AGM.
Relative importance of spend on pay (unaudited)
The table below shows the percentage change in ordinary dividends
and overall expenditure on people compared with the previous
financial year. The Company considers overall expenditure on
colleague remuneration in the context of its general finances. For
reference, revenue has also been included because this measure
represents the income the Company received during the year and
provides a clear illustration of the ratio of people costs to income.
2022-23 2021-22 % change
Ordinary dividend
per share (pps) –
paid in theyear
0.0 16.7 (100)
People costs (£m)
1
6,440 6,491 (0.8)
Group revenue (£m) 12,044 12,712 (5.3)
1 Group adjusted people costs include £68 million transformation costs, of which
£33 million relates to voluntary redundancy (2021-22: £115 million, of which £81 million
relates to voluntary redundancy costs). Excludes any pension adjustments. See page
62 and pages 183 to185.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
128
Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

Comparison of change in Directors’ remuneration versus employee remuneration (unaudited)
We monitor year-on-year changes between the movement in remuneration for executives between performance years compared with
thewider workforce. The relevant disclosure requirement is for this comparison to be made against the employees of the Parent Company.
On the basis that International Distributions Services plc (the Parent Company) does not employee any staff, we have voluntarily disclosed
the comparisons against a UK managerial population (internally graded level 2-9) as the Committee considers this provides a
representative comparison (with remuneration that is structured similarly, e.g. all managers are eligible for annual bonuses and are
eligible for employee benefits). The table below sets out the year-on-year percentage change in salary, benefits and annual incentives for
the Directors of the Board against anaverage full-time equivalent UK manager.
Salary/fee
% change
Benefits
% change
STIP
% change
22-23 vs
21-22
21-22 vs
20-21
20-21 vs
19-20
22-23 vs
21-22
21-22 vs
20-21
20-21 vs
19-20
22-23 vs
21-22
21-22 vs
20-21
20-21 vs
19-20
Executive Directors
Mick Jeavons 3.6 346.8 n/a – 351.0 n/a -18.0 n/a n/a
Martin Seidenberg 7.1 n/a – 8.5 n/a – -3.6 n/a –
Simon Thompson 3.6 348.7 n/a 6.5 359.1 n/a -100 n/a n/a
Company Chair and Non-Executive Directors
Keith Williams 3.7 – 11.9 – – – – – –
Maria da Cunha – 16.9 27.5 – – – – – –
Michael Findlay – – 33.9 – – – – – –
Rita Griffin – 7.8 -1.5 – – – – – –
Sarah Hogg – 6.9 87.1 – – – – – –
Jourik Hooghe n/a – - – – – – – –
Lynne Peacock 10.7 1.3 141.9 – – – – –
Shashi Verma 106.7 n/a n/a – – n/a – – n/a
Royal Mail managers 5.9 4.6 -0.1 0.7 -6.2 4.2 8.8 -22.9 0.2
Executive Directors
Percentage change figures for 2021-22 to 2022-23 are calculated using the respective figures in the single total figure for the remuneration.
Non-Executive Directors
Fee levels were unchanged between 2021-22 and 2022-23. The percentage increases in the above table reflect changes in responsibilities, e.g.
Committee memberships, or that the individual was not a Director for the whole year.
Royal Mail managers
Employee data is based on full-time equivalent Royal Mail managers as at the relevant March year end, with calculations on a mean basis.
As the manager population will change yearly and the mean average (as opposed to median) considers the full range of data, it is expected
that this will provide a more consistent year-on-year comparison.
The salary percentage change calculation considers the full-time equivalent mean employee annual salary at March year end plus
allowances, such as for temporary promotions, paid during the respective years.
Employee benefits are calculated on a per capita basis covering the car allowance or a cash equivalent and value of the medical cover.
Changes in the percentage will primarily be caused by two factors: changes in population and changes in employee benefit choices
(including more electric company cars being selected which have a lower taxable benefit value). The increase in the average benefit
valuein 2022-23 also reflects changes in the operation of benefits including the removal of cash alternative allowance, a move which
wasintroduced to promote take up of the medical cover.
For the 2022-23 STIP, no outcome has been included, however other performance linked incentives have been included for the purposes of the
average manager pay comparison.
Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
129
Strategic Report Corporate Governance

CEO pay over the last ten years (unaudited)
The total remuneration figure for the Group CEO and/or CEO Royal Mail over the last ten years is shown in the table below. The STIP payout
and the LTIP vesting level as a percentage of the maximum opportunity are also shown.
Chief Executive Officer Financial year
Single figure
oftotal
remuneration
(£’000)
STIP awarded
as% of
maximum
Royal Mail
LTIPvesting
as% of
maximum
Simon Thompson 2022-23 634 0% n/a
2021-22 753 18% n/a
Rico Back
2020-21
94 n/a n/a
Stuart Simpson 462 0% 0%
Simon Thompson 136 n/a n/a
Rico Back 2019-20 868 0% n/a
Moya Greene
2018-19
647 n/a 0%
Rico Back 235 0% 0%
Moya Greene 2017-18 1,790 71% 43%
2016-17 1,901 80% 46%
2015-16 1,529 82% 59%
2014-15 1,522 85% 69%
2013-14 1,360 77% 100%
TSR comparison (unaudited)
TSR is the measure of the returns that a company has generated for its shareholders, reflecting both movement in the share price and
dividends, which are assumed to be reinvested over a period of time. The graph shows the Company’s TSR, since the date of the first
dayoftrading. During the performance period, the Company has been a constituent of both the FTSE 100 Index and the FTSE 250 Index,
therefore both indices are shownfor comparison.
TSR chart
11 Oct 13
Total Shareholder Return (rebased)
50
100
100
104
109
171
140
119
112
157
119
104
193
146
127
140
148
92
165
158
113
174
168
161
140
111
58
145
130
139
150
200
250
26 Mar 2327 Mar 2227 Mar 16 26 Mar 17 25 Mar 18 31 Mar 19 29 Mar 2029 Mar 1530 Mar 14
FTSE 250FTSE 100IDS
225
118
175
28 Mar 21
International Distributions Services plc
Annual Report and Financial Statements 2022-23
130
Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

Changes to Board 2023-24
It was announced on 12 May 2023 that Simon Thompson had stepped down as Chief Executive of Royal Mail. As outlined in the stock exchange
announcement on the same date, Simon will remain an employee of the business until 31 0ctober 2023 as part of the agreed transition.
Chairman of IDS, Keith Williams, will be providing additional oversight and support alongside his Board colleagues through thisperiod.
The Committee determined that the following termination arrangements were fair and reasonable, consistent with the Directors’
Remuneration Policy and in line with Simon’s contractual entitlements.
 Simon will continue to receive his normal salary and benefits until 31 October 2023.
 Following this, Simon will receive seven monthly instalments, totalling £289,415.32, which represents six months and twelve days pay
in lieu of notice. These payments will be reduced by any alternative paid employment that Simon Thompson receives.
 Simon will be eligible for any 2023-24 bonus under the Short Term Incentive Plan for 2023-24 , time prorated for active service. Any bonus
would be at the discretion of the Remuneration Committee including their assessment of UK performance at the end of the financial year.
 Simon will be conferred eligible leaver status in relation to one unvested Deferred Share Bonus Plan (DSBP) award, awarded in July
2022 (16,254 shares), relating to performance year 2021-22 and due to vest in July 2025.
 Simon’s unvested Royal Mail Long-Term Incentive Plan (LTIP) awards will lapse.
 Consistent with the Group Directors’ Remuneration Policy, there will be a requirement to hold shares (worth up to two times salary)
fortwo years following termination. The holding requirement will apply to shares that subsequently vest under his DSBP award.
 Simon will receive a capped contribution of up to £17,500 (plus VAT) towards legal fees incurred in connection with his departure
andacapped contribution of up to £50,000 (plus VAT) towards outplacement support.
 There are no further payments in connection with his cessation as a director or payments for loss of office.
Policy implementation in 2023-24 (unaudited)
The following table sets out how the Committee proposes to operate the Policy for Executive Directors next year:
Element Implementation of Policy in 2023-24
Base salary No change in approach. We will continue to review the salary of each Executive Director annually
and will do the same in 2023-24. Salaries effective from 1 April 2023 shall be as follows:
CEO GLS (Martin Seidenberg) €653,510, an increase of 6.6%
Group CFO (Mick Jeavons) £435,000, no increase
Martin’s salary increase for 2023-24, is set below the rate of the wider workforce of his local
Netherlandsmarket of 7.7%. Workforce increases across GLS’ largest markets are up to 13.8%.
Benefits No change in approach to benefit provision for 2023-24.
Pension allowance No change in approach and pension allowance remains 13.6% of salary. This is lower than the current
employer contribution rate for the majority of the UK workforce (which is 15.6% of salary). However,
itisinline with the anticipated contribution rate under the new Proposed Collective Pension Plan.
Short-Term
IncentivePlan
No change in maximum STIP opportunity of 150% of salary, with a minimum of one third of any award being
deferred into shares. Target opportunity remains 75% of salary.
A minimum of 75% of the targets shall be financial, based on the performance of the business for which the
executive is responsible, with the remainder including robust operational KPIs and strategic objectives.
The measures are set out below. Targets for these measures will be disclosed retrospectively in next year’s
AnnualReport.
Long-Term
IncentivePlan
No change in maximum award of 150% of salary. Awards are granted annually to Executive Directors in the
formofa conditional share award. These will vest at the end of a three-year period subject to:
 The Executive Director’s continued employment at the date of vesting.
 The satisfaction of the performance conditions.
Threshold performance will equate to no more than 25% of the award vesting. The Committee has reviewed
the performance measures for the LTIP award and is comfortable with returning to a balance of relative TSR
and long-term financial performance. The measures (and approach to targets) are set out below.
The Committee will evaluate the positioning of the share price when it comes to grant the 2023 LTIP awards.
Intheevent that the share price is significantly below the 2022 LTIP grant price, the Committee will consider
theappropriate course of action (such as scaling back the 2023 LTIP awards or an adjustment on vesting).
Asappropriate, details will be included in a stock exchange announcement at the time of grant. As in previous
years, the Committee will retain the discretion to review vesting outcomes to ensure that these are reflective
of the underlying performance during the period.
Shareholding
guideline
200% of salary for Executive Directors.
Post-cessation requirement: 200% of salary (or holding at the point of departure) to be held in granted
shares for two years after leaving.
Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
131
Strategic Report Corporate Governance

Incentive measures 2023-24
Since 2020-21, the Committee has set separate incentive scorecards for each of the Executive Directors, reflecting their areas of
responsibility (i.e. Group, Royal Mail or GLS). Details of the measures and targets (where not considered commercially sensitive)
setfor2023-24 awards are provided below.
2023-24 Short-Term Incentive Plan: measures and weightings
The 2023-24 scorecard reflects our strategic priorities. The targets are set annually by the Committee considering the relevant business’
annual financial plan, strategy and its priorities for the next few years within the context of the economic environment. The Committee
considers financial and operational targets to be commercially sensitive and that it would be detrimental to the Group’s interests to
disclose them before the end of the financial year. Financial measures make up 75% of each Executive Director’s scorecard. Non-financial
and strategic measures are assessed by the Committee using a combination of quantitative and qualitative assessment.
As in previous years, the Committee will, prior to reviewing scorecard performance assess whether an earnings gateway has been met
and that the payment of STIP awards is affordable.
All STIP awards will be subject to a health and safety (H&S) underpin; whereby the Committee will assess whether or not there has been
demonstrable progress on the overall H&S agenda.
Measure Weighting Measure type Targets
CEO GLS – Martin Seidenberg
Adjusted GLS EBITA 37.5% Financial Disclosed retrospectively.
GLS Cashflow 37.5% Financial Disclosed retrospectively.
Environmental 10.0% ESG Committee assessment of demonstrable year on year
progress of the environmental agenda.
Strategic priorities 15.0% Strategic
priority
Committee assessment of:
 Ensuring the delivery of the GLS Business Plan for
2023-24, as well as the focus on the delivery towards
the strategic targets.
 Increased performance of the US business, in terms of
how it should be structured.
 Continued enhancement of customer experience.
 Maximise opportunities for working together with
Royal Mail.
 Progression on Health & Safety governance (including
controls).
Group CFO – Mick Jeavons
Group Cashflow 25.0% Financial Disclosed retrospectively.
Adjusted Royal Mail UK operating profit 25.0% Financial Disclosed retrospectively.
Adjusted GLS EBITA 25.0% Financial Per CEO GLS scorecard.
RM UK & GLS Environmental 10.0% ESG Average of GLS and Royal Mail outcomes
Strategic priorities 15.0% Strategic
priority
Committee assessment of:
 Ensuring group capital structure and allocation of
capital.
 Maintaining group liquidity.
 Ensuring performance in line with Group and
subsidiary business plans.
 Ensuring development towards a sustainable USO.
 Development of a control environment across the
group, with a particular focus on UK SOX.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
132
Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

2023 Long-Term Incentive Plan (unaudited)
The measures that will apply to the 2023 LTIP awards are set out below.
Threshold Maximum
2023 LTIP measure Weighting Performance
Vesting
(%ofaward) Performance
Vesting
(%ofaward)
TSR vs FTSE 51-150
(excluding mining and financials) comparator group
1
40% Median 10% Upper
quartile
40%
Adjusted Royal Mail UK operating
profit
Mick Jeavons 20% 5% 20%
UK Cashflow Mick Jeavons 10% 2.5% 10%
Adjusted GLS EBITA Martin Seidenberg 40% 10% 40%
Mick Jeavons 20% 5% 20%
GLS Cashflow Martin Seidenberg 20% 5% 20%
Mick Jeavons 10% 2.5% 10%
Total 100% 25% 100%
1. TSR will be measured using a three-month averaging (at the start and end) over a three-year measurement period. Threshold vesting will occur for median ranked performance, rising on a
straight-line basis to full vesting for upper quartile performance or above.
Single figure table – Non-Executive Directors (audited)
Fees Other Total
£’000 2023 2022 2023 2022 2023 2022
Keith Williams 311 300 0 0 311 300
Maria da Cunha 85 76 0 0 85 76
Michael Findlay 78 75 0 0 78 75
Sarah Hogg 79 76 0 0 79 76
Jourik Hooghe
1
52 – 0 – 52 –
Lynne Peacock 84 76 0 0 84 76
Shashi Verma
2
62 30 0 0 62 30
Rita Griffin
3
22 69 0 0 22 69
1. Jourik Hooghe was appointed a Non-Executive Director from 1 June 2022 and his fees in the table above for 2023 reflect the period from that date.
2. Shashi Verma was appointed a Non-Executive Director from 29 September 2021 and his fees in the table above for 2022 reflect the period from that date.
3. Rita Griffin was appointed as a Non-Executive Director until 20 July 2022 and her fees are reflected in the above table until this date.
Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
133
Strategic Report Corporate Governance

Non-Executive Director fee levels (unaudited)
Non-Executive Directors are paid an annual fee and additional fees for being Chair or a member of Board Committees and, if appropriate,
other additional time commitments. During 2022-23, the Chair of the Board did not receive any additional fees for membership of Board
Committees. The fees remained unchanged during 2022-23 and are set out below, and will remain at this level from 1 April 2023.
Non-Executive Director fees
Chair of the Board £310,800
Base fee £51,800
Senior Independent Director £10,360
Designated Non-Executive Director for engagement with the workforce £10,360
Committee fees
Audit and Risk Committee Chair £15,540
Membership £6,216
Remuneration Committee Chair £15,540
Membership £6,216
Nomination Committee Chair £0
Membership £4,144
Environmental, Social and
Governance Committee
Chair £15,540
Membership £6,216
Non-Executive Chair of the Board and Non-Executive Director terms of appointment (unaudited)
The Non-Executive Directors are appointed by rolling letters of appointment. The Non-Executive Directors are appointed for up to three
years, subject to annual review and re-appointment. The fees for new Non-Executive Directors appointed will be set in accordance with
the terms of the approved Remuneration Policy in force at the time of appointment.
One month’s notice to terminate the appointment is required by either party, with the exception of the Non-Executive Chair for whom the
notice period is four months. The dates of the Non-Executive Chair of the Board’s and Non-Executive Directors’ letters of appointment are
set out in the following table:
Date of contract Unexpired term at 27 March 2022 (months)
Keith Williams 18 November 2022 28
Maria da Cunha 23 November 2022 28
Michael Findlay 23 November 2022 28
Sarah Hogg 9 August 2019 4
Jourik Hooghe 18 May 2022 28
Lynne Peacock 16 September 2019 4
Shashi Verma 13 October 2021 28
International Distributions Services plc
Annual Report and Financial Statements 2022-23
134
Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

Remuneration Committee (unaudited)
Remuneration Committee members and meetings
The members of the Committee and their attendance at meetings during FY2022-23 is shown on page 103.
Role and focus of the Remuneration Committee
The Committee is responsible for recommending to the Board the Remuneration Policy for Executive Directors and senior management,
and for setting the remuneration packages for Executive Directors and members of the respective GLS and Royal Mail Executive Boards.
Committee activities in the year May July Aug Oct Jan Mar
Directors’ remuneration
Review of the Directors’ Remuneration Policy and implementation
 
Review of fixed and variable remuneration
 
Senior management remuneration
Contractual terms, recruitment and termination

Review of fixed and variable remuneration
    
All employee remuneration
Group-wide discretionary incentives
   
Annual salary review approach

Incentive performance measures, targets and outcomes
   
Frontline reward (including recognition) in Royal Mail
 
Deep dives: European remuneration, Share Incentive Plan,
Managerremuneration
 
Reward policies and rules review
  
Reward governance
Review regulatory, investor and market developments
 
Remuneration disclosures (such as DRR and gender pay gap)
  
Review shareholder feedback

Terms of Reference, Committee evaluation, advisers
  
In addition, the Committee met in April and May 2023 to consider (and, where appropriate, approve):
 The draft Directors’ Remuneration Report.
 Salary and fixed remuneration for Executive Directors and other executives.
 The extent to which any 2022-23 STIP performance measures had been satisfied, together with individual award levels.
 The measures and associated targets for the 2023-24 STIP and 2023 LTIP.
 Outcomes from the Committee evaluation process.
Advice to the Remuneration Committee
The Committee takes information and advice from inside and outside the Group. Internal support was provided by the Chief People Officer,
the Director of Reward and Performance, and the Group General Counsel and Company Secretary, and other senior leadership
asappropriate. No individual was present when matters relating to their own remuneration were discussed.
The Committee seeks advice from independent external advisers as appropriate. During 2022-23 the Committee undertook a competitive
tender process for the role of its independent adviser. As a result of this exercise, the Committee re-appointed Deloitte LLP with a refreshed
advisory team. Deloitte provided information to the Committee regarding external market trends and other Committee matters during
2022-23. The total fees paid to Deloitte in respect of this advice were £53,125 (2021-22: £26,145). Deloitte also provided tax, technology,
internal audit, strategy and business consulting services to the Group during the financial year.
Financial Statements Additional Information
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135
Strategic Report Corporate Governance

Deloitte is a signatory to the Remuneration Consultants Group Code of Conduct, was appointed by the Committee and reports directly
tothe Committee Chair. The Committee Chair can meet with advisers without management present. The Committee is satisfied that
theadvice it receives is objective and independent. There are no connections between Deloitte and individual Directors to be disclosed.
Management’s advice to the Committee was also supported by the provision of market insights and data from Deloitte, FIT Remuneration
Consultants and Willis Towers Watson, and legal advice from Addleshaw Goddard.
Remuneration Committee evaluation
The Committee’s effectiveness and performance was evaluated as part of the process described on page 88. The evaluation noted that the
Committee and its chair were functioning well. Members of the Committee had noted that internal support for the Remuneration
Committee should be enhanced. The key actions for 2023-24 are to:
 Implementation of the profit share plan for applicable personnel, subject to the proposal being accepted by union members.
 Increased focus on the retention of talent at all levels.
 Ensuring that the variable pay awards create a motivating and achievable vehicle to drive growth and transformation.
Shareholder voting and consideration of shareholder views
We remain committed to ongoing dialogue with our shareholders and have engaged with shareholders during 2022-23 to gather their
views on the proposed changes to the Policy and our intended implementation of remuneration in 2023-24. We also look forward to
engaging with shareholders in the run up to our Policy’s renewal in 2023. In the meantime, the Committee Chair and Chair of the Board will
continue to maintain contact as required with the Company’s key shareholders about relevant remuneration issues.
At the 2022 AGM on 20 July 2022, shareholders approved the Directors’ Remuneration Report published in the 2021-22 Annual Report and
Financial Statements, receiving a strong vote in favour. The most recent vote on the Remuneration Policy, which was effective from the
date of the 2020 AGM for up to three years, also received shareholder support in excess of 99%.
Recent votes on the Directors’ Remuneration Report
For Against
2019 AGM 97.63% 2.37%
2020 AGM 99.09% 0.91%
2021 AGM 99.78% 0.12%
2022 AGM (see below) 99.44% 0.56%
Directors’ Remuneration Report (2022 AGM)
Number of
votes % of votes
Votes for 674,645,605 99.44%
Votes against 3,827,683 0.56%
Votes withheld 19,970,089
Recent votes on the Directors’ Remuneration Policy
For Against
2019 AGM 99.94% 0.36%
2020 AGM 99.28% 0.72%
Directors’ Remuneration Policy (2020 AGM)
Number of
votes % of votes
Votes for 642,589,878 99.28%
Votes against 4,659,090 0.72%
Votes withheld 48,823,734
Maria da Cunha
Chair of the Remuneration Committee
22 May 2023
International Distributions Services plc
Annual Report and Financial Statements 2022-23
136
Corporate Governance
Annual Report on Directors’ Remuneration (audited) continued

The Directors present their Report, together with audited
Financial Statements for the year ended 26 March 2023.
This Directors’ Report, together with the Strategic Report on
pages 2 to 72 form the Management Report for the purpose
ofDisclosure Guidance and Transparency Rule (DTR) 4.1.5R
andDTR 4.1.8R.
Information incorporated by reference
The following information is incorporated in the Directors’
Report by reference and can be found on the pages of this
Annual Report as indicated in the table below:
Page
Business model 12 and 13
Strategy for delivering objectives 14 to 19
Results 59 to 70
Financial assets and liabilities 216 to 225
Principal risks and uncertainties 50 to 55
Environmental, Social and Governance 26 to 37
Greenhouse gas emissions
andenergyreporting
27 to 29
38 to 45
Disabled employees 33
Our people 32 to 34
Diversity 33 and 34
Going concern and viability statements 56 to 58
Dividend 5
Corporate Governance Report 73 to 136
Future developments 14 to 19
Statement of Directors’ Responsibilities 141
Employee share schemes 210 and 211
Research and development 11
The location of information required to be disclosed in this
Annual Report under Listing Rule 9.8.4R is as follows:
Listing Rule 9.8.4R disclosures
Page
Statement of the amount of interest capitalised 186, 203 to
206 and 209
Dividend waivers 137
Unaudited financial information 7 and 8
Dividend waivers
The Trustee of the Royal Mail Share Incentive Plan (Plan) will
notreceive any dividends on Free Shares which it has not
beenpossible to award to, or which have been forfeited by,
participants in the Plan.
Capital
Purchase of own shares by the Company
At the 2022 AGM, the Company was authorised by its shareholders
to purchase up to a maximum of 10% of its ordinary shares. This
authority was valid at the end of the Company’s financial year and
will remain in place until the 2023 AGM, when the Directors will
seek a similar authority. During 2022-23 the Company has not
utilised this authority to purchase any of its own shares.
Share capital
As at 26 March 2023, the Company’s issued share capital comprised
956,193,475 ordinary shares of one penny each as set out in Note 26
to the accounts on page 227.
Ordinary shareholders have the right to receive notice of, attend,
vote and speak at general meetings (whether in person or by
proxy). A holder of ordinary shares is entitled to one vote per
ordinary share held when a vote is taken on a poll. Shareholders
also have the right to receive a dividend, if recommended and
declared. Shareholders may transfer all or any of their certificated
or uncertificated shares in the Company. All such rights are subject
to certain exceptions and restrictions provided in the Company’s
Articles of Association (the Articles) and in any applicable
legislation. These include where rights are suspended for non-
disclosure of an interest in shares, where share transfers do not
comply with specific requirements, and where any amounts on
shares owing by a shareholder to the Company are overdue.
Mark Amsden
Group General Counsel
and Company Secretary
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
137
Strategic Report Corporate Governance
Directors’ Report

The rights and obligations of members, and restrictions on transfer,
are set out in full in the Articles, which can be found on the Company’s
website. The Company is not aware of any agreements between
shareholders that may result in restrictions on the transfer of
securities and/or voting rights.
Employees allocated Free Shares under the Free Shares Offer,
orwho participate in the Partnership and Matching Plan, whose
shares are held in trust by the Trustee of the Royal Mail Share
Incentive Plan, are entitled to exercise any voting rights in
respectof such shares by instructing the Trustee how to
voteontheir behalf.
Authority of the Directors to allot shares
At the 2022 AGM, the Company obtained shareholder consent
toallot ordinary shares in the Company and to grant rights
tosubscribe for, or to convert any security into, shares in the
Company up to a maximum nominal amount of £6,374,623
(representing approximately two thirds of the Company’s issued
share capital at that time), of which one half may be allotted or
made the subject of rights in any circumstances and the other
halfmay be allotted or made the subject of rights pursuant
toarights issue. As at the date of this Directors’ Report, no
newshares have been allotted pursuant to the 2022 allotment
authority. The Directors will be seeking powers to allot shares
atthe 2023 AGM, although the Company has no current plans
toexercise such authority if given.
At the 2022 AGM, the Directors were also empowered to allot
shares for cash (and/or to sell any treasury shares) on a non-pre-
emptive basis in connection with pre-emptive offers and, otherwise
than in connection with such offers, up to a maximum aggregate
nominal amount of £478,097 (representing approximately 5% of
theCompany’s issued share capital at that time). The Directors
were also given an additional power to allot shares for cash (and/or
to sell any treasury shares) on a non-pre-emptive basis up to a
maximum aggregate nominal amount of £478,097 (representing
approximately 5% of the Company’s issued share capital at that
time) for use in connection with acquisitions and/or specified capital
investments. The Directors will be seeking powers to allot shares
for cash (and/or to sell any treasury shares) on a non-pre-emptive
basis at the 2023 AGM.
Directors
Details of the current Directors are included on pages 76 and 77 and
information about changes to the membership of the Board during
the year is included on page 74.
Appointment and replacement of Directors
The Articles provide that the Company may by ordinary resolution
at a general meeting elect any person to act as a Director, provided
that, if he or she has not been recommended by the Board, written
notice of the proposed appointment is given to the Company in
accordance with the Articles and that the Company receives written
confirmation of that person’s willingness to act as a Director. The
Articles also provide that the Board may at any time appoint as
aDirector any person who is willing to act as such. Unless the
Company decides otherwise, the maximum number of Directors
permitted is 15.
At every AGM, each person who is a Director on the date of the
notice of that AGM shall retire from office and may offer himself
orherself for re-appointment by the members.
In addition to any power of removal conferred by the Companies Act
2006, the Company may by special resolution remove any Director
before the expiration of his or her period of office and may (subject
to the Articles) by ordinary resolution appoint another person who
is willing to act as a Director in his or her place. The Articles also
set out the circumstances in which a Director shall vacate office.
Directors’ powers
The business of the Company is managed by the Board, which
mayexercise all the powers of the Company, subject to the
provisions of the Articles, the Companies Act 2006 and any
resolution of the Company.
Directors’ interests
Details of the Directors’ share interests and, where applicable,
theirconnected persons are set out in the Directors’ Remuneration
Report on page 128.
Directors’ and officers’ insurance
The Company maintains directors’ and officers’ liability insurance
which provides appropriate cover for legal action brought against
its Directors. This is reviewed annually. Qualifying pension scheme
indemnity provisions were in force during the course of the financial
year ended 26 March 2023 for the benefit of the Trustees of Royal
Mail UK’s pension schemes, and such indemnity provisions are in
force at the date of approval of this report.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
138
Corporate Governance
Directors’ Report continued

Substantial shareholding
As at 26 March 2023, the Company had been notified, in accordance with DTR 5, of the following interests in the Company’s issued share
capital. The information provided below was correct at the date of notification; however, the notification may not have been received during
2022-23. It should also be noted that some shareholdings are likely to have changed since the date of notification but the Company will not
be notified of a change until the next notifiable threshold is crossed.
During the period between 26 March 2023 and 19 May 2023, being the latest practicable date prior to publication of this Annual Report,
theCompany received the following notification in accordance with DTR 5.
 The €500 million bond issued by the Company in July 2014
contains provisions such that, on a change of control that
iscombined with a credit rating downgrade in certain
circumstances, the noteholders may require the Company
toredeem or, at the Company’s option, purchase the notes
fortheir principal amount, together with interest accrued
to(butexcluding) the date of redemption or repurchase.
 The €550 million bond issued by the Company in October 2019
contains provisions such that, on a change of control that is
combined with a credit rating downgrade in certain circumstances,
the noteholders may require the Company to redeem or, at
theCompany’s option, purchase the notes for their principal
amount, together with interest accrued to (but excluding) the
date of redemption or repurchase.
The Company does not have agreements with any Director or
employee that would provide compensation for loss of office or
employment resulting from a takeover except that provisions of
theCompany’s share schemes and plans may cause options and
awards granted to employees under such schemes and plans to
vest on a takeover.
Special rights
There are no persons holding securities that carry special rights
with regard to the control of the Group.
Employee Benefit Trust (EBT)
As at 26 March 2023, a total of 263,566 shares (2021-22: 2,265,008
shares) were held by the EBT on behalf of the Company. The EBT
will not receive any dividends payable on shares which it holds at
the relevant time.
Change of control
The following material agreements contain provisions permitting
exercise oftermination or other rights in the event of a change of
control ofthe Company:
 The Mails Distribution Agreement with Post Office Limited
provides for the supply of certain services to the Group and
allows for a request for renegotiation of terms in the event of a
change of control of either party where such change of control
islikely to have a material adverse effect on the party not
undergoing the change of control.
 The Syndicated Loan Facility with various financial institutions
provides the Group with a revolving credit facility for general
corporate and working capital purposes. The agreement
contains provision on a change of control of the Group for
negotiation of the continuation of the agreement or cancellation
by a lender.
Shareholder Number of voting rights
% voting rights disclosed
at time of notification
% of voting rights as at
26 March 2023
1
Vesa Equity Investment 229,828,112 24.04 n/a
RWC Partners 66,201,803 6.6 6.9
UBS Asset Management 60,235,232 6.0 6.3
BlackRock Inc. 47,826,774 5.0
2
n/a
Schroder Investment Management 50,587,637 5.1 5.3
Aberdeen Standard Investments 46,196,278 4.6 4.8
Vanguard Group 39,784,696 4.0 4.2
Columbia Threadneedle Investments 30,386,690 3.0 3.2
1. As a result of the 2021-22 share buy-back programme and the resulting reduction in the Company’s share capital, the percentage figures for some shareholders have been recalculated to
provide a more accurate picture. This only applies to shareholders for whom we have not received any notification in accordance with DTR 5 since completion of the share buy-back programme.
2 Disclosed on 3 March 2023. A further disclosure was received on 16 March 2023 notifying the Company that BlackRock’s holding had decreased below the 5% notifiable threshold, which did not
state the new position.
Shareholder Number of shares % voting rights
Vesa Equity Investment 239,279,363 25.02
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
139
Strategic Report Corporate Governance

Stakeholders
Engagement with UK employees, suppliers and customers
Disclosure on how the Company communicates with its employees,
encourages their involvement and achieves a common awareness
on the part of all employees of the financial and economic factors
affecting the performance of the Company is included on pages 22,
32 and 84.
Information on how the Company engages with its employees,
customers and suppliers, how the Directors have regard to their
interests, and the effect of that regard is set out on pages 22 to 25
and 79 and 80.
Payment practices
Royal Mail’s Sustainable Procurement Code of Conduct sets
outhow Royal Mail works with its suppliers and is available at
www.internationaldistributionsservices.com/sustainability/
governance/policies. GLS’ Supplier Code of Conduct sets out
thestandards GLS expects of its suppliers and is available at
www.gls-group.com/GROUP/en/about-us/compliance. We
publishkey statistics and other information on our payment
practices in line with the Duty to Report on Payment Practices
andPerformance on the Government’s website. Information
ispublished on a six-monthly basis.
ESG
Greenhouse gas emissions and energy reporting
Information regarding the Group’s greenhouse gas emissions, energy
consumption and energy efficiency action required tobedisclosed
inthis Directors’ Report can be found on pages27 to 29.
TCFD disclosures
The Group’s TCFD statement and associated disclosures
aresetouton pages 38 to 45.
Other disclosures
Company’s Articles
Any amendments to the Articles may be made in
accordancewiththe Companies Act 2006 by way of a
specialresolution. Ourcurrent Articles are available at
www.internationaldistributionsservices.com/about-us/governance.
Branches
As a global group, our interests and activities are held or
operatedthrough subsidiaries, branches, joint arrangements
orassociates and subject to the laws and regulations of the
relevant jurisdictions in which they operate. Further information
isincluded in Note 31 on pages 230 to 233
Political donations and expenditure
No form of political donation, or expenditure, was made during
theyear. The Company intends to continue this policy for the
foreseeable future.
Financial instruments
The Group’s financial risk management objectives and policies in
relation to its financial instruments are summarised in Note 24
onpages 216 to 225 .
Post balance sheet events
On 21 April 2023 the Company announced that it had reached
agreement with the CWU and that the CWU’s Postal Executive
Committee had ratified the Business Recovery, Transformation
andGrowth Agreement and that it will put it to a ballot of its
members with arecommendation to approve (see page 16).
By Order of the Board
Mark Amsden
Group General Counsel and Company Secretary
22 May 2023
International Distributions Services plc
Annual Report and Financial Statements 2022-23
140
Corporate Governance
Directors’ Report continued

Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
inother jurisdictions.
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the Financial Statements will form part of the annual
financial report prepared using the single electronic reporting
format under the TD ESEF Regulation. The auditor’s report on these
Financial Statements provides no assurance over the ESEF format.
Responsibility statement of the Directors in respect
oftheannual financial report
We confirm that to the best of our knowledge:
 the Financial Statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of
theCompany and the undertakings included in the consolidation
taken as a whole; and
 the Directors’ Report and Strategic Report includes a fair review
of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description
ofthe principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
This responsibility statement was approved by the Board
ofDirectors and is signed on its behalf by:
Keith Williams
Non-Executive Chair
Mick Jeavons
Group Chief Financial Officer
22 May 2023
The Directors are responsible for preparing the Annual Report and
the Group and Parent Company Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company Financial statements for each financial year. Under that
law they are required to prepare the Group Financial Statements
inaccordance with UK-adopted international accounting standards
and applicable law and have elected to prepare the Parent
CompanyFinancial Statements in accordance with UK
accountingstandards and applicable law, including FRS 101
Reduced Disclosure Framework.
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 Parent Company and of
the Group’s profit or loss for that period. In preparing each of the
Group and Parent Company Financial Statements, the Directors are
required to:
 select suitable accounting policies and then apply
themconsistently;
 make judgements and estimates that are reasonable, relevant,
reliable and prudent;
 for the Group Financial Statements, state whether they have
been prepared in accordance with UK-adopted international
accounting standards;
 for the Parent Company Financial Statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the Parent
Company Financial Statements;
 assess the Group and Parent Company’s ability to continue
asagoing concern, disclosing, as applicable, matters related
togoing concern; and
 use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Parent Company and enable
them to ensure that its Financial Statements comply with the
Companies Act 2006. They are responsible for such internal
controlas they determine is necessary to enable the preparation
ofFinancial Statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
theassets of the Group and to prevent and detect fraud and
otherirregularities.
Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
141
Strategic Report Corporate Governance
Statement of Directors’ Responsibilities in respect
oftheAnnualReport and Financial Statements

KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc
1 Our opinion is unmodified
In our opinion:
– the financial statements of International Distributions Services
plc give a true and fair view of the state of the Group’s and of
theParent Company’s affairs as at 26 March 2023, and of the
Group’s loss for the 52 week period then ended;
– the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
– the Parent Company financial statements have been properly
prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework; and
– the Group and Parent Company financial statements have
beenprepared in accordance with the requirements of the
Companies Act 2006.
What our opinion covers
We have audited the Group and Parent Company financial statements of International Distributions Services plc (“the Company”)
forthe52 week period ended 26 March 2023 (FY2022-23) included in the Annual Report, which comprise:
Overview
Group (International Distributions Services plc and its subsidiaries) Parent Company (International Distributions Services plc)
The Consolidated Income Statement, the Consolidated Statement
of Comprehensive Income, the Consolidated Balance Sheet, the
Consolidated Statements of Changes in Equity, the Consolidated
Statement of Cash Flows and notes 1 to 31 to the Group financial
statements, including the accounting policies in note 1.
Balance Sheet, Statement of Changes in Equity and notes 1 to 10
tothe Parent Company financial statements, including the
accounting policies in note 1.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that the
auditevidence we have obtained is a sufficient and appropriate
basis for our opinion. Our audit opinion and matters included
inthis report are consistent with those discussed and included
inour reporting to the Audit and Risk Committee.
We have fulfilled our ethical responsibilities under, and we
remainindependent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to
listed public interest entities.
2. Overview of our audit
Factors driving
ourview of risks
Our audit plan for FY2022-23 has been predominantly
driven by the impact of deteriorating performance
seen in the UK business driven by ongoing industrial
action and disputes with the Communication Workers
Union (CWU). This has resulted in losses both at a
group level and at a UK CGU level. As a consequence,
two new key audit matters havebeen identified in
the year:
– going concern; and
– the recoverability of the carrying amount of the
Royal Mail excluding Parcelforce Worldwide CGU.
Key Audit Matters Vs FY2021-22 Item
Recoverability of the carrying
amount of the Royal Mail excluding
Parcelforce worldwide CGU
NEW 4.1
Going Concern NEW 4.2
Deferred revenue associated with
advance customer payments
arising from stamps sold
4.3
Valuation of pension
schemeobligations
4.4
Valuation of certain unquoted
pensionscheme assets
4.5
Recoverability of the Parent
Company’s investment in
subsidiaries and debt due
fromgroup entities
4.6
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
142

Audit committee
interaction
During the year, the Audit and Risk Committee met for five scheduled meetings and three adhoc meetings.
KPMG are invited to attend all scheduled Audit and Risk Committee meetings and are provided with an
opportunity to meet with the Audit and Risk Committee in private sessions without the Executive Directors
beingpresent. For each Key Audit Matter, we have set out communications with the Audit and Risk Committee
insection 4, including matters that required particular judgement for each.
The matters included in the Audit and Risk Committee report on pages 94 and 95 are materially consistent with
our observations of those meetings.
Our
independence
We have fulfilled our ethical responsibilities and
remain independent of the Group in accordance with
UK ethical requirements, including the FRC Ethical
Standard as applied to listed public interest entities.
Apart from the matter noted below, we have not
performed any non-audit services during the year
ended 26 March 2023 or subsequently which are
prohibited by the FRC Ethical Standard.
During 2023, we identified that a KPMG member
firm had provided preparation of localGAAP
financial statement services during the periods
ended 29 March 2020 to 26 March 2023 to an entity
in scope for the group audit. The services, which
have been terminated, were administrative in nature
and did not involve any management decision-making
orbookkeeping. The work in each case was undertaken
after the group audit opinion was signed by KPMG
LLP for each of the impacted financial years and had
no direct or indirect effect on International Distributions
Services’ consolidated financial statements.
In our professional judgement, we confirm that based
on our assessment of the breach, our integrity and
objectivity as auditor has not been compromised and
we believe that an objective, reasonable and informed
third party would conclude that the provision of this
service would not impair our integrity or objectivity
forany ofthe impacted financial years. The audit
committee haveconcurred with this view.
Total audit fee £3,711,000
Audit related fees
(includinginterimreview)
£555,000
Other services £150,000
Non-audit fee as a percentage of
total auditand audit related fees
16%
Date first appointed 52 week period ended
27 March 2016
Uninterrupted audit tenure 8 years
Next financial period
whichrequiresa tender
2026
Tenure of Group engagement partner 1 year
Average tenure of component
signing partners
1 year
Additional InformationFinancial StatementsStrategic Report Corporate Governance
International Distributions Services plc
Annual Report and Financial Statements 2022-23
143

Our
independence
continued
We were first appointed as auditor by theshareholders
for the 52 week period ended 27 March 2016. The
period of total uninterrupted engagement is for
theeight financial periods ended 26 March 2023.
The group engagement partner is requiredto
rotateevery five years. As theseare the first set
oftheGroup’s financial statements signed by
Andrew Bradshaw, he will be required to rotate
offafter theFY2026-27 audit.
The average tenure of partners responsible for
component audits as set out in section 7 below is
one year, with the shortest being one year and the
longest being one.
Materiality
(Item 6 below)
The scope of our work is influenced by our
viewofmateriality and our assessed risk
ofmaterial misstatement.
We have determined overall materiality for the
Group Financial Statements as a whole at £25m
(FY2021-22: £25m) and for the Parent Company
financial statements as awhole at £4.2m
(FY2021-22: £4.2m).
A key judgement in determining materiality was the
most relevant metric to select as the benchmark,
by considering which metrics have the greatest
bearing on shareholder decisions.
We determined that Total Revenue is the benchmark
for the Group as it remains consistent year on year
and does not suffer from the volatility observed at a
profit before tax level. As such, we based our group
materiality on total revenue, of which it represents
0.21% (FY2021-22: 0.20%).
Materiality for the Parent Company financial
statements was determined withreference to
abenchmark of Parent Company net assets of
which it represents 0.16% (FY2021-22: 0.15%).
Materiality levels used in our audit
Group Group Materiality
GPM Group Performance Materiality
HCM Highest Component Materiality
PLC Parent Company Materiality
LCM Lowest Component Materiality
AMPT Audit Misstatement Posting Threshold
FY2022-23 £m FY2021-22 £m
25.0
25.0
18.7
18.7
20.0
20.0
4.2
4.2
4.2
4.2
1.25
1.25
Group
GPM
HCM
PLC
AMPT
LCM
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
144
KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

Group scope
(Item 7 below)
We have performed risk assessment and planning
procedures to determine which ofthe Group’s
components are likely to include risks of material
misstatement to the Group Financial Statements,
the type ofprocedures to be performed at these
components and the extent of involvement required
from our component auditors around the world.
Of the Group’s 21 (FY2021-22: 21) reporting
components, we subjected 3 (FY2021-22: 3) to full
scope audits for Group purposes and 0 (FY2021-22: 1)
to specified risk-focused audit procedures.
The components within the scope of our work
accounted for the percentages illustrated opposite.
In addition, we have performed Group level analysis
on the remaining components to determine whether
further risks of material misstatement exist in
those components.
We consider the scope of our audit, as communicated
to the Audit and Risk Committee, to be an appropriate
basis forour audit opinion.
81%
19%
Coverage of Group financial statements
Profit before tax
99%
1%
Total assets
98.7%
1.3%
Revenue
Full scope audits
Remaining components
The impact of
climate change
onour audit
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its
Financial Statements. The Group has set out to reduce its emissions to zero by 2045. The majority of the Group’s
carbon emissions are in the domestic and international transport network, and the Group continues to develop
itsassessment of climate change. Climate change initiatives impact the Group in a variety of ways including
opportunities and risks relating to operational and supply chain decarbonisation and the emerging regulatory
requirements such as carbon taxes.
During the year, the Group has prepared quantitative scenario analysis of these emerging carbon taxes on road
transport and the impact this would have on future fuel spend. Further information is provided on pages 38 to 45.
The Group considered the impact of climate change and the Group’s targets in the preparation of the Financial
Statements, in particular on the forecast cash flow assumptions as part of the impairment test of the Royal Mail
excluding Parcelforce Worldwide CGU. The Group has concluded that the impact of climate change, and the Group’s
internal climate related targets, did not have a material effect on the consolidated Financial Statements.
As part of our audit, we have performed a risk assessment to determine if the potential impacts of climate change
may materially affect the financial statements and our audit. We did this by making enquiries of management in
order to independently assess the climate-related risks and their potential impact. We held discussions with our
own climate change professionals to challenge our risk assessment.
The most likely potential impact of climate risk on these financial statements would be on the useful economic
lives of property, plant and equipment. Taking into account the expected remaining useful lives of property, plant
and equipment, we assessed that there is not a significant impact on our audit for this financial year. There was no
significant impact of climate on our key audit matters.
We have also read the Group’s disclosure of climate related information in the front half of the annual report as set out
on pages 38 to 45 and considered consistency with the Financial Statements and our audit knowledge.
Additional InformationFinancial StatementsStrategic Report Corporate Governance
International Distributions Services plc
Annual Report and Financial Statements 2022-23
145

3. Going concern, viability and principal risks and uncertainties
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or
theParent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s financial
position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant
doubt over their ability to continue as a going concern from the date of approval of the financial statements until 30 September 2024
(“the going concern period”).
Going concern
An explanation of how we evaluated management’s assessment of going concern is set out in the
related key audit matter in section 4.2 of this report.
Our conclusions
Our conclusions based on those procedures described in section 4.12 of this report are:
– we consider that the Directors’ use of the going concern basis of accounting in the preparation
ofthe financial statements is appropriate;
– we have not identified, and concur with the Directors’ assessment that there is not, a material
uncertainty related to events or conditions that, individually or collectively, may cast significant
doubt on the Group’s or Parent Company’s ability to continue as a going concern for the going
concern period;
– we have nothing material to add or draw attention to in relation to the Directors’ statement in note
1 to the financial statements on the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and Parent Company’s use of that
basis for the going concern period; and
– The related statement under the Listing Rules set out on page 58 is materially consistent withthe
financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may
resultin outcomes that are inconsistent with judgements that were reasonable at the time they
weremade, the above conclusions are not a guarantee that the Group or the Parent Company
willcontinue in operation.
Summary of our conclusions
We found the Directors’ use
of the going concern basis
ofaccounting without any
material uncertainty for the
Group and Parent Company
to be acceptable.
Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the Directors’ disclosures in respect of emerging and principal risks and the viability statement, and
the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:
– the Directors’ confirmation within the risk management statement that they have carried out
arobust assessment of the emerging and principal risks facing the Group, including those that
would threaten its business model, future performance, solvency and liquidity;
– the Our Principal and Emerging Risks disclosures describing these risks and how emerging
risksare identified and explaining how they are being managed and mitigated; and
– the Directors’ explanation in the Risk Management statement of how they have assessed the
prospects of the Group, over what period they have done so and why they considered that period
tobe appropriate, and their statement as to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they fall due over the period
oftheir assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the viability statement set out on pages 56 to 58 under the Listing
Rules.
Our work is limited to assessing these matters in the context of only the knowledge acquired
duringour financial statements audit. As we cannot predict all future events or conditions and
assubsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of anything to report on these statements
isnota guarantee as to the Group’s and Parent Company’s longer-term viability.
Our reporting
We have nothing material to
add or draw attention to in
relation to these disclosures.
We have concluded that
these disclosures are
materially consistent with
the financial statements
andour audit knowledge.
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
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KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

4. Key audit matters
What we mean
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified
byus,including those which had the greatest effect on:
– the overall audit strategy;
– the allocation of resources in the audit; and
– directing the efforts of the engagement team.
We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to address
those matters and our results from those procedures. These matters were addressed, and our results are based on procedures
undertaken, for the purpose of our audit of the financial statements as a whole. We do not provide a separate opinion on these matters.
4.1 Recoverability of the carrying amount of the Royal Mail excluding Parcelforce Worldwide CGU (GROUP)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
FY2022-23 FY2021-22
Carrying amount of the Royal
Mail excluding Parcelforce
worldwide CGU (Group)
£900m £1,412m
Impairment charge £539m £nil
NEW
This has been identified as
anew key audit matter in the
year,due to the performance
ofthe CGU and the ongoing
industrial action.
FY2022-23: Acceptable
Description of the Key Audit Matter Our response to the risk
Forecast-based valuation
The carrying amount of the CGU is significant
withrespect to the total assets of the Group and
itssensitivity to key assumptions, particularly in
lightofrecent performance and industrial action.
The estimated recoverable amount is subjective due to
the inherent uncertainty of forecasting fair value less
costs of disposal from a market participant perspective.
The effect of these matters is that, as part of our risk
assessment, we determined that the recoverable
amount of the CGU has a high degree of estimation
uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the financial
statements as a whole, and many times that amount.
We performed the tests below rather than seeking to rely on any of
theGroup’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our procedures to address the risk included:
– Valuation expertise: We engaged internal valuation specialist to
challenge the appropriateness of key assumptions underlying the
CGUvaluation, particularly discount rate, terminal growth rate and
costof disposal. We also benchmarked the recoverable amount of the
CGU using implied earnings multiples to comparative companies and
historic transactions within the industry as well as considering the
latestmarket conditions.
– Benchmarking assumptions: Assessing and challenging projected
revenue and volume growth rates, including long-term growth rates,
against externally derived publically available data.
– Historical Comparisons: Performed a retrospective review, comparing
historical budgets and volumes to actual performance to assess
historical forecasting accuracy.
– Sensitivity analysis: We considered the sensitivity of the carrying
valueto reasonably possible changes in assumptions and focused our
attention to those assumptions which we considered the most critical
tothe valuation.
– Assessing transparency: Assessing whether the Group’s disclosures
about the sensitivity of the outcome of the impairment assessment to
changes in key assumptions reflected the risks inherent in the fair value
less costs of disposal of the CGU. Assessing whether the disclosure of
key assumptions was complete and consistent with the assumptions
used.
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4.1 Recoverability of the carrying amount of the Royal Mail excluding Parcelforce Worldwide CGU (GROUP) (continued)
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our approach to the audit of the recoverable amount of the CGU, including the use of Valuation specialists.
– Our conclusions on the recoverable amount of the CGU and the adequacy of the disclosures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:
– The underlying assumptions within the modelled cash flows
– The discount rate used within the fair value model
Our results
We found the Group’s conclusion over the recoverable amount of the CGU and subsequent impairment charge to be acceptable.
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 97 for details on how
theAudit Committee considered the Recoverability of the carrying amount of the Royal Mail excluding Parcelforce CGU as an area
ofsignificant attention, page 171 for the accounting policy on the Recoverability of the carrying amount of the Royal Mail excluding
Parcelforce CGU and note 13 for the financial disclosures.
4.2 Going Concern (Group And Parent Company)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
Going concern disclosures with no material uncertainties –
note 1 to the group financial statements
New
This has been identified as a
new key audit matter in the
year due to our assessment is
that the risk is more severe in
the current year due to ongoing
industrial disputes, and the
related performance of the UK
business creating an uncertain
outlook for the UK operations.
FY2022-23: Acceptable
Description of the Key Audit Matter Our response to the risk
Disclosure quality
The financial statements explain how the Board has
formed a judgement that it is appropriate to adopt
thegoing concern basis of preparation for the Group
and Parent Company.
That judgement is based on an evaluation of the
inherent risks to the Group’s and Company’s business
model and how those risks might affect the Group’s
and Company’s financial resources or ability to
continue operations from the date of approval of the
financial statements until 30 September 2024.
The risks most likely to adversely affect the
Group’sand Company’s available financial
resourcesand/or metrics relevant to debt
covenantsover this period were:
– Industrial action with the CWU leading to
strikeaction;
– Reducing parcel and letter volume across the
UKbusiness;
– Delays in achieving Royal Mail plans.
We considered whether these risks could plausibly affect the liquidity
orcovenant compliance in the going concern period by assessing the
Directors’ sensitivities over the level of available financial resources
andcovenant thresholds indicated by the Group’s financial forecasts
takingaccount of severe, but plausible, adverse effects that could
arisefrom these risks individually and collectively.
Our procedures also included:
Funding assessment:
– Inspecting the confirmation from the lender of the level of committed
financing, and the associated covenants requirements. Considerations
ofthe adjustment to required covenants over the period September 2024.
Historical comparisons:
– Comparing past budgets to actual results to assess the Directors’
historical accuracy of budgeting.
Key dependency assessment:
Critically assessing assumptions in the Directors’ base case and severe
butplausible downside scenarios relevant to liquidity and covenant
metrics, considering the forecasted operating levels and how these
relateto historic performance.
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KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

Description of the Key Audit Matter Our response to the risk
There are also less predictable but realistic second
order impacts, such as the inability to secure
refinancing of the term loan repayable in 2024
anddeclining performance of the GLS group due
tomacro-economic downturns across Europe.
The risk for our audit was whether or not those
riskswere such that they amounted to a material
uncertainty that may have cast significant doubt
aboutthe ability to continue as a going concern.
Had they been such, then that fact would have
beenrequired to have been disclosed.
Sensitivity analysis:
Considering sensitivities over the level of available financial resources
indicated by the Group’s financial forecasts taking account of plausible
(butnot unrealistic) adverse effects that could arise from these risks
individually and collectively;
– Performed stress testing over the going concern forecast, modelling
further strike days in FY2023-24 and significantly declining market
conditions across Europe.
Benchmarking assumptions:
We evaluated forecast volume, revenue and cost assumptions with
reference to historic performance and market data.
Evaluating director’s intent:
– evaluating the achievability of the actions the Directors consider they
would take to improve the position should the risks materialise, which
included lowering capital expenditure, reducing discretionary bonus spend
and management of pricing in the short term, including, consideration of
the Directors’ ability to influence timing of such matters.
– Inquired with the Directors over the risk appetite and intent should the
above mitigations be required.
Assessing transparency:
– Considering whether the going concern disclosure in note 1 to the
financial statements gives a full and accurate description of the
Directors’assessment of going concern, including the identified
risks,dependencies, and related sensitivities.
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our assessment of the funding available over the going concern period and ability to meet covenants.
– Assessment of key assumptions in management’s base and downside business plan.
– The forecast compliance with covenant requirements.
– The adequacy of the basis of preparation.
Areas of particular auditor judgement
We identified the following as the area of particular auditor judgement:
– The plausibility and achievability of the transformation plans modelled throughout the going concern period
– The assessment of the appropriateness of the severe but plausible downside scenario used by management
Our results
We found the going concern disclosure in note 1 without any material uncertainty to be acceptable.
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 95 for details on how the
Audit Committee considered Going concern as an area of significant attention, page 167 for the accounting policy on Going Concern, and
note 1 for the financial disclosures.
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4.3 Deferred revenue associated with advance customer payments arising from stamps sold (Group)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
FY2022-23 FY2021-22
Stamps in the hands of
thepublic (SITHOP) –
Deferred revenue
£140m £160m
Our assessment is that the level
ofrisk is similar to FY2021-22.
Whilst the introduction of barcoded
stamps provides an opportunity
toreduce the risk over time,
insufficient data has been collected
in FY22-23 to change the Group’s
estimation methodology.
FY2022-23: Acceptable
FY2021-22: Acceptable
Description of the Key Audit Matter Our response to the risk
Subjective estimate
Revenue is recognised on delivery of letters, not at
thepoint stamps are sold to customers. There can
bea considerable delay because stamps held by
customers remain valid indefinitely. Therefore, the
Group estimates the value of advance customer
payments and defers revenue to reflect the value
ofservices still to be performed.
As the Group is unable to track individual stamps
accurately, the calculation and methodology of the
advanced customer payments balance is inherently
subjective. The calculation is derived from a combination
of data sources including current sales, volume trends
and historic ratios between sales and deferred revenue
arising from statistical survey results.
The methodology allows for adjustments for unusual
trends identified where deemed required.
As part of our risk assessment, we determined that the
stamps in the hands of the public balance has a high
degree of estimation uncertainty, with a potential range
of reasonable outcomes greater than our materiality for
the Financial Statements as a whole, and possibly many
times that amount and could be subject to manipulation.
A fully substantive approach was taken due to the nature of the balance and that
we would expect to obtain audit evidence primarily through detailed procedures
described below and not through reliance on a management review control.
Our procedures to address the risk included:
– Methodology choice: We challenged the Group on the appropriateness of the
methodology in place for performing the calculation, including benchmarking
the approach against that taken by other global postal service providers.
– Methodology implementation: We assessed whether the methodology
hadbeen correctly applied and we challenged the need for any adjustments
through consideration of possible alternatives.
– Independent re-performance: We tested the individual inputs used in the
Group’s calculation to check the accuracy of the balance.
– Challenge of the outcome: We challenged the Group’s estimate by
considering a range of plausible outcomes using alternative data points, and
alternative methods of calculating the estimate. An alternative method
considered, was the change in methodology to be implemented in FY2023-24,
based on barcoded stamp data. We assessed and evaluated this methodology
and compared the outcomes, based on limited data collected to date, to
assess the appropriateness of the estimate made. We have assessed the
estimate for indicators of management bias.
– Assessing transparency: We considered the adequacy of the Group’s
disclosures in respect of deferred revenue associated with advance customer
payments arising from stamps sold, particularly in relation to the degree of
estimation uncertainly.
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our approach to the audit of the stamps in the hands of the public estimate, including our planned substantive procedures
andtheextent of our control reliance.
– Our conclusions on the appropriateness of the methodology and key assumptions used.
– The adequacy of the disclosures, particularly as they relate to a significant estimate.
Areas of particular auditor judgement
We identified the following as the area of particular auditor judgement:
– the appropriateness of the methodology; and
– the key assumptions used to calculate the deferral..
Our results
We found the estimate of deferred revenue to be acceptable (FY2021-22: acceptable)
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 96 for details on how the
Audit Committee considered Deferred revenue associated with advance customer payments arising from stamps sold as an area of
significant attention, page 170 for the accounting policy on Deferred revenue associated with advance customer payments arising from
stamps sold and note 1 for the financial disclosures.
Financial Statements
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150
KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

4.4 valuation of pension scheme obligations (group)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
FY2022-23 FY2021-22
Royal Mail Pension Plan
Defined Benefit Obligation
£4,601m £6,960m
Defined Benefit Cash Balance
Scheme Defined Benefit
Obligation
£1,797m £1,926m
Our assessment is that the level of
risk is higher than in FY2021-22,
given that there have been significant
increases in interest rates leading
to higher discount rate uncertainty.
FY2022-23: Acceptable
FY2021-22: Acceptable
Description of the Key Audit Matter Our response to the risk
Subjective valuation:
Significant estimates are made in valuing the Group’s post
retirement defined benefit plan obligations including in
particular the discount rate, the inflation, pre-retirement
pension increases and mortality assumptions.
Small changes in the assumptions and estimates used
tovalue the Group’s pension obligations would have a
significant effect on the financial position of the Group.
As part of our risk assessment, we determined that
thevaluation of the Group’s pension scheme obligations
include a high degree of estimation uncertainty, with
apotential range of reasonable outcomes greater than
our materiality for the Financial Statements as a whole,
and possibly many times that amount. The Financial
Statements (Note 11) disclose the sensitivity of the
liabilities to key assumptions estimated by the Group.
We performed the tests below rather than seeking to rely on any of the Group’s
controls because the nature of the balance is such that we would expect to obtain
audit evidence primarily through the detailed procedures described.
Our procedures to address the risk included:
– Benchmarking assumptions: We challenged the key assumptions applied
inthe calculation of the obligation, including the discount rate, inflation rate,
pre-retirement pension increases and mortality with the support of our
ownactuarial specialists to compare key assumptions against market data.
– Actuary’s credentials: We assessed the competence, independence and
integrity of the Group’s actuarial expert.
– Assessing transparency: We considered the adequacy of the Group’s
disclosures in respect of the sensitivity of the obligation to key assumptions.
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our approach to the audit of the defined benefit obligations, including the use of specialist actuaries.
– Our conclusions on the valuation of the defined benefit obligations and the adequacy of the disclosures.
Areas of particular auditor judgement
We identified the following as the area of particular auditor judgement:
– The actuarial assumptions included with management’s IAS 19 model, specifically the discount rate, inflationary adjustments,
pre-retirement pension increases, and mortality rate used.
Our results
We found the valuation of defined benefit obligations to be acceptable (FY2021-22: acceptable)
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 96 for details on how
theAudit Committee considered the Valuation of Pension Scheme Obligations as an area of significant attention, page 170 for the
accounting policy on the Valuation of Pension Scheme Obligations and note 11 for the financial disclosures.
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4.5 Valuation of certain unquoted pension scheme assets (group)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
FY2022-23 FY2021-22
Unquoted pension assets* £1,799m £3,014m
Our assessment is that the level
ofrisk is similar to FY2021-22.
FY2022-23: Acceptable
FY2021-22: Acceptable
Description of the Key Audit Matter Our response to the risk
Subjective valuation:
Significant estimates are made in valuing certain
unquoted pension schemes assets (which comprise
properties, equity funds, mutual funds and private fixed
income bonds), which are hard to value and make up a
significant portion of unquoted pension scheme assets
reported on page 198. Small changes in the estimates
used to value these assets would have a significant effect
on the financial position of the Group.
As part of our risk assessment, we determined that the
valuation of certain unquoted pension scheme assets
include a high degree of estimation uncertainty, with
apotential range of reasonable outcomes greater than
our materiality for the Financial Statements as a whole,
and possibly many times that amount.
*As reported on page 198. Included within the unquoted
pension assets balance (FY2022-23: £1,799m
FY2021-22: £3,014m) are a portion that are considered as
hard to value for purposes of testing.
We performed the tests below rather than seeking to rely on any of the Group’s
controls because the nature of the balance is such that we would expect to obtain
audit evidence primarily through the detailed procedures described.
– Tests of details: We obtained third party valuation confirmations directly from
fund managers. We compared those confirmations with unaudited net asset
value statements and tested the ability of fund managers to prepare accurate
valuations by performing a retrospective review comparing a sample of the
net asset value statements to historical audited Financial Statements.
– Actuary’s credentials: We obtained third party valuations and used our
internal valuation specialists to assess the valuation methodology and
challenge key assumptions.
– Assessing transparency: We considered the adequacy of the Group’s
unquoted plan assets disclosures in respect of valuation techniques
andaccuracy of the asset split by category.
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our approach to the audit of the unquoted assets, including the use of valuation specialists.
– Our conclusions on the valuation of the assets and the adequacy of the disclosures.
Areas of particular auditor judgement
We identified the following as the area of particular auditor judgement:
– The appropriateness of methodology used for calculating fair value of plan assets;
– use of RICS valuation standardsfor fair value of directly held properties;
– use of latest available unaudited NAV statements for fair value of unquotedpooled investment funds.
Our results
We found the valuation of the unquoted pensions scheme assets to be acceptable (FY2021-22: acceptable)
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 96 for details on how the
Audit Committee considered the Valuation of certain unquoted pension scheme assets as an area of significant attention, page 170
forthe accounting policy on the Valuation of certain unquoted pension scheme assets and note 11 for the financial disclosures.
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
152
KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

4.6 Recoverability of parent company’s investment in subsidiaries and debt due from group entities (parent company)
Financial Statement Elements Our assessment of risk vs FY2022-23 Our results
FY2022-23 FY2021-22
Investments £2,914m £2,912m
Debt due from Group entities £613m £611m
The level ofrisk is higher compared
to FY2021-22 due to poor
performance across the UK
business.
FY2022-23: Acceptable
FY2021-22: Acceptable
Description of the Key Audit Matter Our response to the risk
Low risk, high value:The carrying amount of the Parent
Company’s investments in subsidiaries and intra-group
debtor balances balances represent 100% (FY2021-22:
100%) of the Company’s total assets.
Their recoverability is not at a high risk of significant
misstatement. However dueto their materiality in the
context of the Parent Company Financial Statements,
this is considered to be the area that had the greatest
effect on our overall Parent Company audit.
We performed the tests below rather than seeking to rely on any of
theCompany’s controls because the nature of the balance is such that
wewould expect to obtain audit evidence primarily through the detailed
procedures described
Our procedures to address the risk included:
– Tests of detail: Compared the carrying amount of the investments and
intragroup debtor balances with the relevant subsidiary’s balance sheet, along
with consideration of the impairment of the Royal Mail excluding Parcelforce
Worldwide CGU to identify whether their net assets, being an approximation of
their minimum recoverable amount, were in excess of their carrying amount
and assessing whether those subsidiaries have historically been profit-
making.
– Comparing valuations: We compared the carrying amount of the Parent
Company’s investments to the Group’s market capitalisation.
Communications with the International Distributions Services plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
– Our approach to the audit of the investment in subsidiaries line and debt due from group entities.
– Our conclusions on valuation of investment in subsidiaries and debt due from group entities and the adequacy of the disclosures.
Our results
We found the recoverability of the Parent Company’s investment in subsidiaries and debt due from group entities to be acceptable
(FY2021-22: acceptable)
Further information in the Annual Report and Accounts: See the Audit and Risk Committee Report on page 97 for details on how the
Audit Committee considered the Recoverability of Parent Company’s investment in Subsidiaries and debt due from group entities as an
area of significant attention, page 235 for the accounting policy on the recoverability of Parent Company’s investment in Subsidiaries
and debt due from group entities and note 6 in the Parent Company for the financial disclosures.
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Annual Report and Financial Statements 2022-23
153

5. Our ability to detect irregularities, and our response
Fraud – identifying and responding to risks of material misstatement due to fraud
Fraud risk assessment To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or
conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
– Enquiring of Directors, the Audit and Risk Committee, Internal Audit and Risk Management, and
inspection of policy documentation as to the Group’s high-level policies and procedures to prevent
and detect fraud, including the internal audit function, and the Group’s channel for ‘whistleblowing’,
as well as whether they have knowledge of any actual, suspected or alleged fraud.
– Reading Board, Audit and Risk Committee, Nomination Committee and Remuneration
Committee minutes.
– Considering remuneration incentive schemes (Royal Mail LTIP and Deferred Share Bonus Plan)
and performance targets for Management and Directors.
– Using analytical procedures to identify any unusual or unexpected relationships.
Risk communications We communicated identified fraud risks throughout the audit team and remained alert to any
indications of fraud throughout the audit. This included communication from the Group audit
teamto full scope component audit teams of relevant fraud risks identified at the Group level
andrequest to full scope component audit teams to report to the Group audit team any instances
of fraud that could give rise to a material misstatement at the Group level.
Fraud risks As required by auditing standards, and taking into account possible pressures to meet profit
targets, we perform procedures to address the risk of management override of controls, in
particular the risk that Group management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements. We determined that these
risks would most likely manifest themselves in two key areas being:
- deferred revenue in relation to advance customer payments; and
- Management fees in the recoverability of the carrying value of the RoyalMail excluding Parcelforce
Worldwide CGU arising from possible external pressures to realise value.
Link to kams Further detail in respect of the above fraud risks is set out in the key audit matter disclosures in
section 4 of this report.
Procedures to
addressfraudrisks
We performed procedures including:
– Identifying journal entries and other adjustments to test for all full scope components, based on
risk criteria and comparing the identified entries to supporting documentation. These included
those posted to seldom used accounts, round sum journals posted in period 12, post close
journals and unusual journals posted to revenue, cash and borrowing accounts.
– Evaluated the business purpose of significant unusual transactions.
– Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias, including assessing the estimate of deferred revenue associated with advance
customer payments for bias.
Actual or suspected
frauddiscussed with
auditand riskcommittee
We discussed with the Audit and Risk Committee and those charged with governance matters
related to actual or suspected fraud, for which disclosure is not necessary, and considered any
implications for our audit.
Financial Statements
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Annual Report and Financial Statements 2022-23
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KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

Laws and regulations – identifying and responding to risks of material misstatement relating to compliance with laws and regulations
Laws and regulations risk
assessment
– We identified areas of laws and regulations that could reasonably be expected to have
amaterialeffect on the Financial Statements from our general commercial and sector
experience. We held discussion with the Directors and other management (as required
byauditing standards), and from inspection of the Group’s regulatory and legal correspondence
and discussed with the Directors and other management the policies and procedures regarding
compliance with laws and regulations. As the Group is regulated, our assessment of risks
involved gaining an understanding of the control environment including the entity’s procedures
for complying with regulatory requirements and inquiry of the UK business’ regulator, Ofcom.
Risk communications We communicated identified laws and regulations throughout our team and remained alert
toanyindications of non-compliance throughout the audit. This included communication from
thegroup audit team to full-scope component audit teams of relevant laws and regulations
identified at the group level, and a request for full scope component auditors to report to the group
audit team any instances of non-compliance with laws and regulations that could give riseto a
material misstatement at the group level.
Direct laws context
andlinkto audit
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the Financial Statements
including financial reporting legislation (including related companies’ legislation), distributable
profits legislation, taxation legislation, and pensions legislation and we assessed the extent of
compliance with these laws and regulations as part of our procedures on the related financial
statement items.
Most significant indirect
law/ regulation areas
Secondly, the Group is subject to many other laws and regulations where the consequences
ofnon-compliance could have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or litigation or the loss of the Group’s
license to operate. We identified the following areas as those most likely to have such an effect:
GDPR compliance, health and safety, anti-bribery and corruption, employment law, PCI compliance,
money laundering, foreign corrupt practices, environmental protection, export control, consumer
rights act, misrepresentation act, contract law, distance selling regulations, competition legislation
and price fixing, and the postal services act as enforced by Ofcom, in recognising the nature of the
Group’s activities.
Auditing standards limit the required audit procedures to identify non-compliance with these laws
and regulations to enquiry of the Directors and other management and inspection of regulatory
and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed
to us or evident from relevant correspondence, an audit will not detect that breach.
Known actual or
suspectedmatters
For the Whistl follow on claim discussed in note 28 we assessed disclosures against our
understanding from legal correspondence.
Context
Context of the ability
oftheaudit to detect
fraudorbreaches of
laworregulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have
detected some material misstatements in the financial statements, even though we have properly
planned and performed our audit in accordance with auditing standards. For example, the further
removed non-compliance with laws and regulations is from the events and transactions reflected
in the financial statements, the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
controls. Our audit procedures are designed to detect material misstatement. We are not
responsible for preventing non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
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155

6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative
considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating
theeffect of misstatements, both individually and in the aggregate, on the financial statements as a whole.
£25m
(FY2021-22:
£25m)
Materiality
forthegroup
financial
statements
asawhole
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied
Materiality for the Group financial statements as a whole was set at £25m (FY2021-22: £25m). This was determined
with reference to a benchmark of Group total revenues.
We consider group total revenue to be the main benchmark for the Group as it provides a more stable measure year
on year than group profit before tax because of both the loss seen in period and historic fluctuations in profit before
tax. The benchmark in the previous period was normalised profit before tax averaged over the past three years.
This was changed to be group total revenues in the current period because of the significant decrease in profit before
tax caused by the poor trading performance of the UK business.
Our group materiality of £25m was determined by applying a percentage to the group total revenue. When using
abenchmark of total revenue to determine overall materiality, KPMG’s approach for listed entities considers a
guideline range 0.5% – 3% of the measure. In setting overall group materiality, we applied a percentage of 0.21%
(FY2021-22: 0.20%) to the benchmark.
This percentage is below the bottom end of the guideline percentage range. This reflects the importance of group total
assets and Group loss before tax and continuing operations, of which the determined materiality represents 0.28%
and 3.70% respectively, to the users of the financial statements.
Materiality for the Parent Company financial statements as a whole was set at £4.2m (FY2021-22: £4.2m), determined
with reference to a benchmark of parent company net assets, of which it represents 0.16% (FY2021-22: 0.15%).
£18.7M
(FY2021-22:
£18.7m)
Performance
materiality
What we mean
Our procedures on individual account balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial statements as a whole.
Basis for determining materiality and judgements applied
We have considered performance materiality at a level of 75% (FY2021-22: 75%) of materiality for International
Distributions Services Plc Group financial statements as a whole to be appropriate.
The Parent Company performance materiality was set at £3.2m (FY2021-22: £3.2m), which equates to 75%
(FY2021-22: 75%) of materiality for the Parent Company financial statements as a whole.
We applied this percentage in our determination of performance materiality because we did not identify any
factors indicating an elevated level of risk.
£1.25M
(FY2021-22:
£1.25m)
Audit
misstatement
posting threshold
What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative
point of view. We may become aware of misstatements below this threshold which could alter the nature, timing
and scope of our audit procedures, for example if we identify smaller misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are communicated to International
Distributions Services plc’s Audit Committee.
Basis for determining materiality and judgements applied
We set our audit misstatement posting threshold at 5% (FY2021-22: 5%) of our materiality for the Group financial
statements. We also report to the Audit Committee any other identified misstatements that warrant reporting on
qualitative grounds.
The overall materiality for the Group financial statements of £25m (FY2021-22: £25m) compares as follows to the main financial
statement caption amounts:
Total Group Revenue Group profit/loss before tax Total Group Assets
FY2022-23 FY2021-22 FY2022-23 FY2021-22 FY2022-23 FY2021-22
Financial statement Caption £12,044m £12,712m £-676m £662m £8,816m £10,741m
Group Materiality as a percentage of caption 0.21% 0.20% 3.70% 3.78% 0.28% 0.23%
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
156
KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

7. The scope of our audit
Group scope What we mean
How the Group audit team determined the procedures to be performed across the Group.
The Group has 21 (FY2021-22: 21) reporting components. In order to determine the work performed at the reporting
component level, we identified those components which we considered to be of individual financial significance, those
which were significant due to risk and those remaining components on which we required procedures to be performed
toprovide us with the evidence we required in order to conclude on the group financial statements as a whole.
We determined individually financially significant components as those contributing at least 10% (FY2021-22: 10%) of
total revenue or total assets. We selected total revenue and total assets because these are the most representative
ofthe relative size of the components. We identified 3 (FY2022-23: 3) components as individually financially significant
components and performed full scope audits on these components.
The components within the scope of our work accounted for the following percentages of the Group’s results, with the
prior year comparatives indicated in brackets:
Scope
Number of
components
Range of
materiality
applied Group Revenue
Total profits and
losses
that made up
group PBT
Group total
assets
Full scope audit 3 (3) £4.2m – £20m 98.7% (99.7%) 80.7% (83.0%) 98.7% (99.0%)
Audit of one or more account balances 0 (1) N/A 0.0% (0.0%) 0% (10.1%) 0.0% (0.3%)
In addition, we have performed Group level analysis on the remaining components to determine whether
further risks of material misstatement exist in those components.
The scope of the audit work performed was predominately substantive as we placed limited reliance upon
theGroup’s internal control over financial reporting.
The work on 1 of the 3 components (FY2021-22: 1 of the 4 components) was performed by component auditors
and the rest, including the audit of the Parent Company, was performed by the group team. The group team
instructed component auditors as to the significant areas to be covered, including the relevant risks detailed
above and the information to be reported back.
Group audit
teamoversight
What we mean
The extent of the group audit team’s involvement in component audits.
The Group team visited 2 (FY2021-22: 0) component locations in Canada and the Netherlands to assess the audit
risk and strategy. Video and telephone conference meetings were also held with the component auditors and
certain others that were not physically visited. At these visits and meetings, the findings reported to the group
audit team were discussed in more detail, and any further work required by the group audit team was then
performed by the component auditor.
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Annual Report and Financial Statements 2022-23
157

8. Other information in the annual report
The Directors are responsible for the other information presented in the Annual Report together with the Financial Statements.
Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion thereon.
All other information
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether, based
on our financial statements audit work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Our reporting
Based solely on that work we have not
identified material misstatements or
inconsistencies in the other information.
Strategic report and Directors’ report
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as follows:
– we have not identified material misstatements in the strategic report and the directors’ report;
– in our opinion the information given in those reports for the financial year is consistent
with the financial statements; and
– in our opinion those reports have been prepared in accordance with the Companies Act 2006.
Directors’ Remuneration Report
Our responsibility
We are required to form an opinion as to whether the part of the Directors’ Remuneration
Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Our reporting
In our opinion the part of the Directors’
Remuneration Report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
Corporate governance disclosures
Our responsibility
We are required to perform procedures to identify whether there is a material
inconsistency between the financial statements and our audit knowledge, and:
– the directors’ statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable, and provides
theinformation necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
– the section of the annual report describing the work of the Audit Committee, including
thesignificant issues that the Audit Committee considered in relation to the financial
statements, and how these issues were addressed; and
– the section of the annual report that describes the review of the effectiveness of the
Group’s risk management and internal control systems.
Our reporting
Based on those procedures, we have
concluded that each of these disclosures
is materially consistent with the financial
statements and our audit knowledge.
We are also required to review the part of the Corporate Governance Statement relating to
the Group’s compliance with the provisions of the UK Corporate Governance Code specified
by the Listing Rules for our review.
We have nothing to report in this respect.
Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
– adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
– the Parent Company financial statements and the part of the Directors’ Remuneration
Report to be audited are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report in these respects.
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
158
KPMG LLP’s Independent Auditor’s Report
To the members of International Distributions Services plc continued

9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 141, the Directors are responsible for: the preparation of the Financial
Statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group
and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using
thegoing concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations,
orhave no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but
does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared using the single electronic
reporting format specified in the TD ESEF Regulation. This auditor’s report provides no assurance over whether the annual financial
report has been prepared in accordance with that format.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
themin an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we
haveformed.
Andrew Bradshaw (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London
E14 5GL
22 May 2023
Additional InformationFinancial StatementsStrategic Report Corporate Governance
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Annual Report and Financial Statements 2022-23
159

International Distributions Services plc
Annual Report and Financial Statements 2022-23
160
Consolidated Income Statement
For the 52 weeks ended 26 March 2023 and 52 weeks ended 27 March 2022
Notes
Reported
52 weeks 2023
£m
Reported
52 weeks 2022
£m
Continuing operations
Revenue 2/3 12,044 12,712
Operating costs
1
4/5 (12,248) (12,128)
People costs (6,573) (6,665)
Distribution and conveyance costs (3,721) (3,556)
Infrastructure costs (1,178) (1,059)
Other operating costs (776) (848)
Operating (loss)/profit before specific items
2
(204) 584
Operating specific items 6/25 (544) (7)
Operating (loss)/profit (748) 577
Profit on disposal of property, plant and equipment (non-operating specific item)
2
6 6 72
(Loss)/profit before interest and tax (742) 649
Finance costs 7 (60) (57)
Finance income 7 21 6
Net pension interest (non-operating specific item)
2
6/11 105 64
(Loss)/profit before tax (676) 662
Tax charge 8 (197) (50)
(Loss)/profit for the year (873) 612
Earnings per share
Basic 9 (91.3) 61.7p
Diluted 9 (91.3) 61.4p
1 Operating costs are stated before operating specific items.
2 For further details on APMs used, see pages 238 to 242.
Financial Statements

International Distributions Services plc
Annual Report and Financial Statements 2022-23
161
Consolidated Statement of Comprehensive Income
For the 52 weeks ended 26 March 2023 and 52 weeks ended 27 March 2022
Notes
Reported
52 weeks 2023
£m
Reported
52 weeks 2022
£m
(Loss)/profit for the year (873) 612
Other comprehensive (expense)/income for the year from continuing operations:
Items that will not be subsequently reclassified to profit or loss:
Amounts relating to pensions accounting (488) 414
Withholding tax receivable/(payable) on distribution of RMPP and RMSEPP surplus 11 413 (181)
Remeasurement (losses)/gains of the defined benefit surplus in RMPP and RMSEPP 11(c) (1,285) 457
Remeasurement gains of the defined benefit deficit in DBCBS 11(d) 378 172
Deferred tax associated with DBCBS 8 6 (34)
Items that may be subsequently reclassified to profit or loss:
Foreign exchange translation differences 25 –
Exchange differences on translation of foreign operations (GLS) 50 (12)
Net (loss)/gain on hedge of a net investment (€500 million bond) (24) 11
Net (loss)/gain on hedge of a net investment (Euro-denominated lease payables) (1) 1
Designated cash flow hedges (70) 83
(Losses)/gains on cash flow hedges deferred into equity (2) 117
Gains on cash flow hedges released from equity to income (85) (24)
Losses released from equity to the carrying value of non-financial assets 2 2
Gain on cross-currency swap cash flow hedge deferred into equity 22 2
(Gain)/loss on cross-currency swap cash flow hedge released from equity to income
– interest payable (26) 8
Gain on cost of hedging deferred into equity 2 –
Gain on cost of hedging released from equity to income – interest payable (1) (1)
Tax on above items 8 18 (21)
Total other comprehensive (expense)/income for the year (533) 497
Total comprehensive (expense)/income for the year (1,406) 1,109
Strategic Report Corporate Governance Financial Statements Additional Information

International Distributions Services plc
Annual Report and Financial Statements 2022-23
162
Consolidated Balance Sheet
At 26 March 2023 and 27 March 2022
Notes
Reported at
26 March 2023
£m
Re-presented
Reported at
27 March 2022
£m
Non-current assets
Property, plant and equipment 13 3,298 3,571
Goodwill 15 445 428
Intangible assets 16 304 488
Investments in associates 17 1 1
Financial assets
Pension escrow investments 24 208 213
Derivatives 24 3 30
RMPP/RMSEPP retirement benefit surplus – net of withholding tax payable 11 1,957 2,723
Other receivables 20 13 94
Deferred tax assets 8 10 116
6,239 7,664
Assets held for sale 19 4 –
Current assets
Inventories 42 34
Trade and other receivables 20 1,590 1,659
Income tax receivable 20 41
Financial assets
Investments 24 – 70
Derivatives 24 23 74
Cash and cash equivalents 21/24 898 1,199
2,573 3,077
Total assets 8,816 10,741
Current liabilities
Trade and other payables 22 (2,144) (2,332)
Financial liabilities
Interest-bearing loans and borrowings 23/24 (3) –
Lease liabilities 14/24 (220) (213)
Derivatives 24 (13) (8)
Income tax payable (5) (10)
Provisions 25 (129) (176)
Bank overdrafts 21/24 (89) (62)
(2,603) (2,801)
Financial Statements

International Distributions Services plc
Annual Report and Financial Statements 2022-23
163
Notes
Reported at
26 March 2023
£m
Re-presented
Reported at
27 March 2022
£m
Non-current liabilities
Financial liabilities
Interest-bearing loans and borrowings 23/24 (944) (872)
Lease liabilities 14/24 (1,142) (1,128)
Derivatives 24 (22) (36)
DBCBS retirement benefit deficit 11 (145) (390)
Provisions 25 (79) (94)
Other payables (24) (32)
Deferred tax liabilities 8 (55) (54)
(2,411) (2,606)
Total liabilities (5,014) (5,407)
Net assets 3,802 5,334
Equity
Share capital 26 10 10
Retained earnings 3,761 5,248
Other reserves 31 76
Total equity 3,802 5,334
1 Cash and cash equivalents have been re-presented - see Note 1 for further details.
The Financial Statements were approved and authorised for issue by the Board of Directors on 22 May 2023 and were signed on its
behalfby:
Keith Williams Mick Jeavons
Non-Executive Chair Group Chief Financial Officer
Consolidated Balance Sheet continued
At 26 March 2023 and 27 March 2022
Strategic Report Corporate Governance Financial Statements Additional Information

International Distributions Services plc
Annual Report and Financial Statements 2022-23
164
Consolidated Statement of Changes in Equity
For the 52 weeks ended 26 March 2023 and 52 weeks ended 27 March 2022
Share
capital
£m
Retained
earnings
£m
Foreign currency
translation
reserve
£m
Hedging
reserve
£m
Total
equity
£m
Reported at 28 March 2021 10 4,802 7 (14) 4,805
Profit for the year – 612 – – 612
Other comprehensive income for the year – 414 – 83 497
Total comprehensive income for the year – 1,026 – 83 1,109
Transactions with owners of the Company,
recogniseddirectly in equity
Purchase of own shares – (17) – – (17)
Share buyback – (201) – – (201)
Dividend paid to equity holders of the Parent Company – (366) – – (366)
Share-based payments (see Note 18)
Employee Free Shares issue – 1 – – 1
Long Term Incentive Plan (LTIP) – 2 – – 2
Deferred Share Bonus Plan (DSBP) – 1 – – 1
Reported at 27 March 2022 10 5,248 7 69 5,334
Loss for the year – (873) – – (873)
Other comprehensive (expense)/income for the year – (488) 25 (70) (533)
Total comprehensive (expense)/income for the year (1,361) 25 (70) (1,406)
Transactions with owners of the Company,
recogniseddirectly in equity
Dividend paid to equity holders of the Parent Company – (127) – – (127)
Share-based payments (see Note 18)
Employee Free Shares issue – 1 – – 1
LTIP – 1 – – 1
Tax charge on share-based payments – (1) – – (1)
Reported at 26 March 2023 10 3,761 32 (1) 3,802
A description of the reserves in the above table is included in Note 26.
Financial Statements

International Distributions Services plc
Annual Report and Financial Statements 2022-23
165
Consolidated Statement of Cash Flows
For the 52 weeks ended 26 March 2023 and 52 weeks ended 27 March 2022
Notes
Reported
52 weeks 2023
£m
Reported
52 weeks 2022
£m
Cash flow from operating activities
(Loss)/profit before tax (676) 662
Adjustment for:
Net pension interest (non-operating specific item) 11 (105) (64)
Net finance costs 7 39 51
Profit on disposal of property, plant and equipment (non-operating specific item) 6 (6) (72)
Specific items (operating) 6 544 7
Operating (loss)/profit before specific items¹ (204) 584
Adjustment for:
Depreciation and amortisation 602 540
EBITDA before specific items¹ 398 1,124
Working capital movements (54) (29)
Increase in inventories (8) (14)
(Decrease)/increase in receivables 180 (16)
Decrease in payables (237) (54)
Net decrease in derivative assets 7 3
Increase in provisions (non-specific items) 4 52
Pension charge to cash difference adjustment 6/11 133 174
Share-based awards (LTIP and DSBP) charge 2 3
Cash cost of operating specific items 6 (53) (4)
Cash inflow from operations 426 1,268
Income tax paid (53) (108)
Net cash inflow from operating activities 373 1,160
Cash flow from investing activities
Dividend received from associate undertaking 17 – 5
Finance income received 20 4
Proceeds from disposal of property (excluding London Development Portfolio), plant and
equipment (non-operating specific item) 11 10
London Development Portfolio net (costs)/proceeds (non-operating specific item) (6) 99
Purchase of property, plant and equipment (328) (519)
Acquisition of business interests, net of cash acquired (7) (204)
Purchase of intangible assets (software) (93) (84)
Net release of pension escrow investments 8 –
Sale/(purchase) of financial asset investments 70 (70)
Net cash outflow from investing activities (325) (759)
Net cash inflow before financing activities 48 401
Strategic Report Corporate Governance Financial Statements Additional Information

International Distributions Services plc
Annual Report and Financial Statements 2022-23
166
Notes
Reported
52 weeks 2023
£m
Reported
52 weeks 2022
£m
Cash flow from financing activities
Finance costs paid (61) (56)
Share buyback – (201)
Purchase of own shares – (17)
Payment of capital element of obligations under lease contracts (202) (192)
Payment of capital element of asset finance (2) –
Dividends paid to equity holders of the Parent Company 10 (127) (366)
Net cash outflow from financing activities (392) (832)
Net decrease in cash and cash equivalents (344) (431)
Effect of foreign currency exchange rates on cash and cash equivalents 16 (5)
Cash and cash equivalents at the beginning of the year 1,137 1,573
Cash and cash equivalents at the end of the year 21 809 1,137
1 For further details on APMs used, see pages 238 to 242.
2 Items comprise total gross capital expenditure within ‘in-year trading cash flow’ measure (see Financial Review).
Financial Statements

1. Basis of preparation and accounting policies
General information
International Distributions Services plc (the Company) is incorporated in the United Kingdom (UK). The Consolidated Financial Statements
have been produced in accordance with UK-adopted international accounting standards (UK-adopted IFRS).
The Consolidated Financial Statements of the Company for the 52 weeks ended 26 March 2023 (2021-22: 52 weeks ended 27 March 2022)
comprise the Company and its subsidiaries (together referred to as ‘the Group’) and the Group’s interest in its associate undertakings.
The Consolidated Financial Statements for the 52 weeks ended 26 March 2023 were authorised for issue by the Board on 22 May 2023.
Basis of preparation and accounting
The Consolidated Financial Statements are presented in Sterling (£) as that is the currency of the primary economic environment in which
the Group operates. All values are rounded to the nearest whole £million except where otherwise indicated. The Consolidated Financial
Statements have been prepared on an historic cost basis, except for pension assets, derivative financial instruments and the assets and
liabilities relating to the acquisition of businesses, which are measured at fair value .
The Group’s financial reporting year ends on the last Sunday in March and, accordingly, these Financial Statements are prepared for the
52we52 weeks ended 26 March 2023 (2021-22: 52 weeks ended 27 March 2022). GLS’ reporting year-end date is 31 March each year. There were
no significant transactions between the respective reporting dates that required adjustment in the Financial Statements.
Presentation of results and accounting policies
As stated above, the Consolidated Financial Statements have been produced in accordance with UK-adopted IFRS, i.e. on a ‘reported’
basis. In some instances, APMs are used by the Group to provide ‘adjusted’ results. This is because management is of the view that these
APMs provide a useful basis on which to analyse underlying business performance and is consistent with the way that financial performance
is measured by management and reported to the Board. Details of the APMs used by the Group are explained on pages 238 to 242.
Going concern
In assessing the going concern status of the Group, the Directors are required to look forward a minimum of 12 months from the date of
approval of these financial statements to consider whether it is appropriate to prepare the financial statements on a going concern basis.
The Directors have reviewed business activities, together with factors likely to affect its future development and performance, as well the
as the Group’s principal risks and uncertainties.
The Board has concluded that it is appropriate to adopt the going concern basis having undertaken a rigorous assessment of the financial
forecasts, with specific consideration of the trading position of the Group in the context of the current global economic environment, and
the industrial relations landscape in relation to the UK business, for the reasons as set out below.
At 26 March 2023 the Group had net current liabilities of £30 million and net assets of £1.6 billion (excluding defined benefit scheme
surpluses and pension escrow investments). Liquidity available as at the reporting date was £1.7 billion (excluding GLS client cash), made
up of cash and cash equivalents of £773 million and a committed and undrawn bank syndicate loan facility of £925 million - available until
September 2026. The bank syndicate loan facility contains financial covenants, which were amended on 24 March 2023. The amendment,
which is relevant for the measurement periods from March 23 to March 24, will be calculated by reference to the EBITDA of General
Logistics Systems (GLS) B.V. and its subsidiaries rather than the consolidated EBTIDA of the Group.
In their assessment of going concern, the Directors have deemed it appropriate to extend the minimum assessment period to cover the
period from 22 May 2023 to 30 September 2024 (the ‘going concern period’). The Directors have considered the Group’s key liquidity events
and covenant measurement periods and extended the assessment period in order to cover the maturity of the Group’s €500 million bond in
July 2024 and the covenant measurement period where the covenant reverts back to being measured by reference to the consolidated
EBITDA of the Group. The Group has modelled two scenarios referred to below as the Base Case and the Downside Case. The GLS Base
Case aligns with the adjusted Accelerate strategy, reflecting some delay in achieving the EBIT target. The Royal Mail Base Case takes into
account the Board’s and management’s views on the anticipated impact and recovery from industrial action in relation to Royal Mail,
across the going concern period.
The key inputs and assumptions underlying the Base Case include the economic impact driven by the ongoing macro-economic headwinds
in both Royal Mail and GLS but does not assume any further industrial action taking place in Royal Mail. It also assumes the costs and
associated benefits from the activity required to transform Royal Mail into a more efficient operation that meets customers’ changing
needs. The Base Case also assumes no dividend payment over the going concern period, although there is sufficient headroom to
introduce a final dividend financed by earnings in GLS for 2023-24. The €500 million bond, with a maturity date of July 2024, is assumed to
be refinanced, but at a higher cost reflecting current market conditions. There are material real estate asset disposal proceeds included in
the Royal Mail business plan, but the sale of the properties are uncommitted at the approval date of the financial statements, as such they
have not been included in management’s going concern assessment of its Base Case and Downside Case.
On 9 May 2023, the Group secured a backstop facility of €500 million from a syndicate of banks to provide additional flexibility on the timing
for refinancing the €500 million bond maturing in July 2024. The backstop is available until July 2024 and, if drawn to repay the bond, would
be repayable by December 2024 with an option to extend to July 2025. The facility remains undrawn and is subject to the same amended
covenants as the bank syndicate loan facility.
Notes to the Consolidated Financial Statements
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1. Basis of preparation and accounting policies
In the Base Case it is projected that the Group will have sufficient cash and liquidity. The £925 million bank syndicate loan facility and
€500 million backstop facility would remain available as covenants would not be breached.
The Downside Case applies further stress to the Base Case to model further deteriorating economic and market conditions impacting both
Royal Mail and GLS and further industrial action in the event that the pay deal agreed with the CWU in April 2023 does not receive
ratification by employees.
Further details of the scenario modelled are as follows;
Scenario: Deteriorating economic and market conditions.
Assumptions: Delayed revenue growth in the business plan and decline in operating margins.
Scenario: Increased competition in the UK parcels sector including changes in consumer expectations and/or market disruption.
Assumptions: Lower parcel revenues and failure to deliver new product offerings.
Scenario: Potential impact of industrial action or incurring costs to avoid it.
Assumptions: Lower operating profit as a result of industrial relations and delay to win back lost customers.
Scenario: Delays in relation to the Royal Mail transformation plan.
Assumptions: Delays in budgeted cost efficiencies being realised.
Scenario: Cyber-attack triggering material service and/or operational interruption.
Assumptions: Cyber breach impacting revenue collection.
Scenario: Increase in attrition of key roles.
Assumptions: Recruitment costs, interim resource and higher salaries.
Although we consider the risk of further industrial action has significantly decreased following agreement with the CWU, this is still
plausible since the agreement has still to be ratified in a vote of members. The Directors believe that the downside is a severe but plausible
scenario, recognising that the Base Case already anticipates significant negative impacts from the weak economy and flow through impact
from industrial action that has already taken place. The gross liquidity impact of the Downside Case to 30 September 2024, including
further industrial action, is approximately £0.9 billion. The majority of the Downside Case impact relates to Royal Mail, which if it can be
further mitigated, could reduce the risk and potential impact to the Group.
The Board remains concerned about the financial situation in Royal Mail. The difficult trading circumstances of the last year have been
damaging to Royal Mail, with early resolution of the industrial dispute through the upcoming ballot fundamental to the delivery of the
business plan. The operational changes and improvements required in Royal Mail are fundamental to its turnaround and to restore
profitability in that business.
The Board has for some time maintained that it will not cross-subsidise in order to support Royal Mail. In this regard the Board has asked
that Royal Mail takes all reasonable steps to finance the necessary transformation and turnaround from its own resources. This will
include, for example, the disposal of some real estate assets.
It is essential that Royal Mail now makes the required progress in modernising its business and in delivering the changes proposed in its
business plan. Subject to appropriate progress with the business plan, the Board will provide access to Group resources in order to meet
short-term working capital needs or to cover unavoidable delays in realising asset disposal proceeds.
If the severe but plausible scenario were to materialise, the Directors would be required to take mitigating actions to preserve cash and
maintain liquidity by building covenant headroom. The Directors have identified a number of mitigations, all within management’s control,
to reduce costs and optimise the Group’s cash flow, liquidity and covenant headroom.
Whilst the Group is already undertaking actions to conserve cash, including reduction in capital expenditure, reduction in discretionary
expenditure and working capital initiatives, a number of the mitigations would only be triggered in the event of the severe but plausible
downside scenario materialising. The total impact of the mitigating actions is approximately £0.6 billion, which include:
ƽ reducing capital and investment expenditure through postponing or pausing projects and change activity;
ƽ deferring or cancelling discretionary spend
ƽ delaying implementation of the new pension scheme which has a higher cost to the Group;
ƽ and should the current pay offer not be ratified in June 2023, the pay offer would be revoked.
In the event the business plan is not fulfilled and / or the financial outlook for Royal Mail deteriorates along the trajectory of the Downside
Case, the Board will periodically consider whether providing further access to the Group’s resources is appropriate, taking into account
relevant circumstances at the time, which may include the progress of Royal Mail’s mitigating actions, the availability of other sources of
liquidity and management’s plan. Should the Board consider it appropriate not to provide further access to the Group’s resources this
could lead to significant liquidity issues for Royal Mail, though such a decision would only be taken in order to leave the Group liquidity and
financial position in a better long term situation.
Notes to the Consolidated Financial Statements continued
Financial Statements
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1. Basis of preparation and accounting policies (continued)
Notwithstanding the above, the Directors have assessed the Group’s financial commitments and consider that in the Downside Case, after
taking into account mitigations and cash generated from operations and existing facilities, the Group is forecast to have sufficient cash and
liquidity. The Group is not projected to breach the financial covenants under its committed credit facilities under Downside Case, with the
lowest EBITDA headroom during the financial year 2023-24 being above £0.1 billion, increasing to approximately £0.2 billion by
30 September 2024. Whilst covenant headroom given the scale of the Group would not be very significant over the going concern period,
the covenant would not breach, ensuring access to the Group’s committed credit facilities. Excluding the backstop facility, the lowest total
available liquidity modelled under the Downside Case was £1.1 billion at 30 September 2024. As such, the Group has sufficient liquidity to
continue to operate and to discharge its liabilities as they fall due over the going concern assessment period.
Having reviewed the Base Case, and Downside Case, the Directors have a reasonable expectation that the Group has sufficient liquidity to
continue in operational existence over the going concern assessment period and hence continue to adopt the going concern basis in
preparing the Financial Statements.
Consequently, the Directors are satisfied that the Group will have sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the Financial Statements and therefore have prepared the Financial Statements on a going
concern basis.
Basis of consolidation
The Consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiary undertakings. The Financial
Statements of the major subsidiaries are for the periods as explained in the ‘Basis of preparation and accounting’ section above, using
consistent accounting policies.
All intragroup balances and transactions, including unrealised profits arising from intragroup transactions, have been eliminated in full.
Transfer prices between business segments are set at arm’s length/fair value on the basis of charges reached through negotiation with
therespective respective businesses.
Subsidiaries are consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which
control is no longer held by the Group. Where the Group ceases to hold control of a subsidiary, the Consolidated Financial Statements
include the results for the part of the reporting year during which the Group held control.
Changes in accounting policy and disclosures
The accounting policies applied in the preparation of these Consolidated Financial Statements are consistent with those in the Annual
Report and Financial Statements for the 52 weeks ended 27 March 2022, along with the adoption of new and amended accounting
standards with effect from 28 March 2022 as detailed below:
New and amended accounting standards adopted in 2022-23
Annual improvements to IFRS 2018-2020
IAS 16 (Amended) – Property, Plant and Equipment: Proceeds Before Intended Use
This amendment requires that sales proceeds recognised before the related item of property, plant and equipment (PPE) is available for
use are recognised in profit or loss together with the costs associated with the items sold, rather than by adjusting the cost of the item of
PPE. This amendment is not expected to have a material impact on the Group.
IAS 37 (Amended) – Onerous Contracts – Cost of Fulfilling a Contract
This amendment clarifies that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both
the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. This amendment is
not expected to have a material impact on the Group.
IFRS 3 (Amended) – Reference to Conceptual Framework
The amendments update a reference to the Conceptual Framework for Financial Reporting without changing the accounting requirements
for business combinations. Further, the amendments add an exception to the recognition principle for liabilities and contingent liabilities
within the scope of IAS 37 or IFRIC 21. The amendments also clarify existing guidance for contingent assets. The Group is ensuring that the
accounting business combinations takes account of this improved guidance.
Accounting standards issued but not yet applied
The following new and amended accounting standards are relevant to the Group and are in issue but were not effective at the balance
sheet date:
IAS 1 (Amended) – Classification of Liabilities as Current or Non-current
IAS 1 (Amended) – Disclosure of Accounting Policies
IAS 8 (Amended) – Definition of Accounting Estimates
IAS 12 (Amended) – Deferred Tax Related to Assets and Liabilities Arising From a Single Transaction
IFRS 17 – Insurance Contracts
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1. Basis of preparation and accounting policies (continued)
The Directors do not expect that the adoption of the amendments, interpretations and annual improvements listed above (which the
Groupdup does not expect to early adopt) will have a material impact on the financial performance or position of the Group in future periods.
Cash and cash equivalents - balance sheet re-presentation at 27 March 2022
Cash and cash equivalents have been re-presented in the balance sheet in recognition of there being no intention, or no legal right of offset
available on overdraft balances totalling £62 million. These overdraft balances, previously presented net in cash and cash equivalents
within current assets, are now presented gross in current liabilities.
The overdraft balances, which are part of a cash pool for the UK companies within the Group, are an integral part of the Group’s cash
management and are presented net within cash and cash equivalents at the beginning and end of the year in the statement of cash flows.
Sources of estimation uncertainty
The preparation of Consolidated Financial Statements necessarily requires management to make certain estimates and judgements
thatcat can have a significant impact on the Financial Statements. These estimates and judgements are continually evaluated and are
basedoed on historical experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The areas involving a higher degree of judgement or complexity, or areas where there is thought to be a significant risk
ofamof a material adjustment to the Consolidated Financial Statements within the next financial year as a result of the estimation uncertainty
are disclosed below.
Significant accounting estimates
Pensions
The value of defined benefit pension plan liabilities and assessment of pension plan costs are determined by long-term actuarial
assumptions. These assumptions include discount rates (which are based on the long-term yield of high-quality corporate bonds),
inflation rates and mortality rates. Differences arising from actual experience or changes in assumptions will be reflected in the Group’s
consolidated statement of comprehensive income. The Group exercises its judgement in determining the assumptions to be adopted,
afterder discussion with a qualified actuary. Details of the key actuarial assumptions used and of the sensitivity of these assumptions for
theRMPe RMPP and DBCBS pension plans are included within Note 11.
Defined benefit pension plan assets are measured at fair value. Where these assets cannot be valued directly from quoted market prices,
the Group applies judgement in selecting an appropriate valuation method, after discussion with an expert fund manager. For the main
classes of assets:
ƽ Equities listed on recognised stock exchanges are valued at the closing bid price, or the last traded price, depending on the convention
oftof the stock exchange on which they are quoted.
ƽ Bonds are measured using a combination of broker quotes and pricing models making assumptions for credit risk, market risk and
market yield curves.
ƽ Pooled investment vehicles are valued using published prices or the latest information from investment managers, which includes
anynny necessary fair value adjustments.
ƽ Properties are valued on the basis of open market value as at the year-end date, in accordance with Royal Institute of Chartered Surveyors
(RICS) Valuations Standards (under ‘Red Book’ guidelines) adjusted for any capital expenditure and impairments since that valuation.
ƽ For exchange-traded derivatives that are assets, fair value is based on bid prices. For exchange-traded derivatives that are liabilities,
fair value is based on offer prices.
Non-exchange traded derivatives are valued as follows:
ƽ Open forward foreign currency contracts at the balance sheet date are over the counter contracts and are valued using forward
currency rates at that point. The unrealised appreciation or depreciation of open foreign currency contracts is calculated by the
difference between the contracted rate and the rate to close out the contract.
ƽ Interest rate swaps are over the counter contracts and fair value is the current value of the future expected net cash flows, taking into
account the time value of money and market data at the year end.
The value of the RMSEPP insurance policies held by the Group is equal to the accounting defined benefit obligation of the scheme
asat27 Ms at 27 March 2022.
The assumptions used in valuing unquoted investments are affected by current market conditions and trends, which could result in
changes to the fair value after the measurement date. Details of the carrying value of the unquoted pension plan asset classes can be
found in Note 11.
Deferred revenue
The Group recognises advance customer payments on its balance sheet, predominantly relating to stamps and meter credits purchased
bycby customers but not used at the balance sheet date (see Note 22).
The majority of this balance is made up of stamps sold to the general public. Management utilises a number of different data sources to
calculate the estimated deferred revenue liability given that stamps can be held and used for varying time periods. Royal Mail has now
introduced barcoded stamps to replace non-barcoded stamps. A Stamp Swap Out scheme was launched on 31 March 2022 where
non-barcoded stamps can be swapped for stamps with barcodes. Management has considered the impact on the SITHOP balance of both
the swap out and customers using up their existing stamp stocks.
Notes to the Consolidated Financial Statements continued
Financial Statements
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1. Basis of preparation and accounting policies (continued)
Since the official introduction of barcoded stamps in February 2022, Royal Mail has been developing a new methodology to calculate the
deferred revenue balance in relation to stamps sold to the general public. One of the primary data inputs for this new methodology is
barcoding stamp scan data, which is used to create a profile of when stamps are used after sale. The new methodology is reliant on having
sufficient scan data history and therefore the new methodology will be used to calculate the deferred revenue balance in 2023-24 once
sufficient data is available. This new methodology, once implemented in 2023-24, could result in a deferred revenue balance that is
materially different to the current balance.
At 26 March 2023, the Group recognised £140 million (2021-22: £160 million) deferred revenue in respect of stamps sold to the general
public but not used at the balance sheet date. In 2022-23, the volume of stamp sales declined faster than the number of items posted
(operational volumes) which means that some of the build-up in holdings seen in 2021-22 was utilised. The primary sources of data used
to derive this estimate are as follows:
ƽ Revenue data related to stamp sales through the Post Office network.
ƽ Historic trends of deferred revenue balances.
ƽ Changes in the number of working days during the period.
ƽ Price rises.
ƽ Adjustments to reflect posting patterns around key events close to the reporting year end, e.g. Mothering Sunday, Easter.
Stamp holding days implied by applying the above methodology, increased year on year to 33 days (2021-22: 31 days).
Royal Mail excluding Parcelforce Worldwide CGU impairment test
In line with the Group’s accounting policy, management must assess the recoverable amount of each CGU when testing for impairment.
This requires estimation of the present value of future cash flows expected to arise from the continuing operation of the CGU.
These estimates require assumptions over future revenue performance, future costs and long-term growth rates, as well as
theae application of an appropriate discount rate. Were there to be significant changes in these estimations, the amount charged as
impairment during the year could be materially impacted. Details of the impairment assessment of the CGU are provided in Note 13.
Other estimates
Provisions – industrial diseases
The Group has a potential liability for industrial diseases claims relating to individuals who were employed in the General Post Office
Telecommunications division and whose employment ceased prior to October 1981.
There is considerable uncertainty associated with estimating the future reporting of latent disease claims, over future decades.
Consistent with the approach last year, our external actuarial consultant has leveraged the updated scenarios provided by the Institute and
Faculty of Actuaries (UK Asbestos Working Party (AWP)). The AWP’s model was released in late 2021.
The provision requires estimates to be made of the likely volume and cost of future claims, as well as the discount rate to be applied to
these, and is based on the best information available at the year-end date.
In view of the above, management has applied a consistent approach to that of previous years and recognised a provision at 26 March 2023
between the medium and high estimates provided by the actuarial consultant. This has resulted in a release of £10 million (2021-22: £11 million),
recognised in the income statement as an operating specific item. The closing provision balance at 26 March 2023 was £44 million
(2021-22: £56 million) (see Notes 6 and 25).
A 50 bps decrease to the 3.86% discount rate used at 26 March 2023 would result in a £2 million increase in the overall provision.
Any income statement movements arising from a change in accounting estimate are disclosed as an operating specific item.
Significant accounting judgements
Deferred tax assets derecognition
The Group assesses the recoverability of deferred tax assets at each reporting date. In order to recognise a deferred tax asset, it must be
probable that future taxable profits will be available against which the deductible temporary differences and unused tax losses can be
utilised. Given the loss incurred by Royal Mail during the period, there is increased uncertainty that future taxable profits will be generated.
Management use judgement to determine whether it is probable that there will be future taxable profits. The calculation of future taxable
profits is based on the forecast profits as per the Board approved Business Plan, which is the same forecast used in the calculation of
impairment losses and therefore the same risks and uncertainties included in the impairment charge (see Note 13) apply to the assessment
ofpof probability of future taxable profits.
IAS 12 does not define a time period over which an assessment of expected taxable profits should be made although it is acknowledged
that reliability decreases the further out into the future the forecast extends. Whilst the Board approved Business Plan covers five years,
the normal planning cycle for Royal Mail is three years. Taxable profits have been calculated based on the Board approved Business Plan
and for the next three years there are no forecast taxable profits. As a result, it is no longer probable that there will be sufficient forecast
taxable profits to utilise the deferred tax asset and so management have not recognised any deferred tax asset in respect of the Royal Mail
losses incurred in the year and has derecognised £106 million in respect of the brought forward net deferred tax asset at 27 March 2022.
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1. Basis of preparation and accounting policies (continued)
Frontline employees pay offer
A provision of £61 million has been recognised in the financial statements in respect of a one off payment of £500 per person to frontline
employees (see Note 25). The provision has been recognised based on management’s judgement that it relates to work performed in
2022-23 (past service) and a constructive obligation existed at 26 March 2023. A valid expectation had therefore been set in respect of this
payment through the best and final offer communicated to employees in November 2022 and through the negotiator’s agreement reached
with the CWU, but still subject to ballot by members at the balance sheet date.
As an accurate estimate of the payment amount can be made, based on known FTEs in place, a past service has been provided by the eligible
employees (IAS 19), and an outflow of resources is considered highlyliky likely, the conditions required to recognise a provision are therefore
considered by management to have been met.
Other accounting policies
Climate change
When preparing the financial statements, the Directors consider the impact of climate change, particularly in the context of risks identified
in the TCFD disclosure on pages 38 to 45. No material impact on the financial reporting judgements and estimates has been identified.
The Directors consider the impact of climate change with regards to:
ƽ going concern and viability of the Group over the next three years;
ƽ cash flow forecasts used in the impairment assessments of non-current assets including goodwill and infrastructure
investmentassetent assets;
ƽ carrying value and useful economic lives of property, plant and equipment; and
ƽ the valuation of assets held with the Group’s pension scheme
The Directors are aware of the ever-changing risks attached to climate change and will regularly assess these risks against judgements
and estimates made in preparation of the Group’s financial statements.
Revenue
Revenue relates principally to the delivery of letters and parcels for a wide range of public and private customers. In the majority of cases
contracts contain a single service performance obligation, which is satisfied at the point of delivery. Transaction prices for services
rendered are typically fixed and agreed in advance with the price being allocated in full to the single delivery performance obligation.
Revenue relating to public, retail and business stamp and meter sales is recognised when the sale is made, adjusted to reflect a value
ofsof stamp and meter credits held but not used by the customer. Further details on this deferred revenue adjustment are provided in the
‘Keysoy sources of estimation uncertainty’ section above.
In some cases, payment for services may be received in advance for a service that is due to be performed over a longer period of time,
forexar example a 12-month redirection service. In these cases, the payment is initially recognised on the balance sheet as a contract liability
(deferred revenue), with revenue recognised on a straight-line basis over the life of the contract, in line with the performance of the service.
Where products are sold through third-party agents, such as the Post Office, but the responsibility to fulfil the service lies with the Group,
the revenue receivable is recognised gross with any commission payments being charged to operating costs. Where sales are known to
have occurred through a third-party vendor at the balance sheet date, and the proceeds are yet to be received, revenue for the sale is
recognised, with the amount still to be received recognised as a contract asset (accrued revenue).
Further details of the major revenue streams in each operating segment are provided below:
Royal Mail
Revenue from direct sales of products or services is recognised when services are rendered, goods are delivered and the amount of
revenue that will flow to the Group can be measured reliably. Where payments are received for a service to be provided over a specified
length of time, payments received are recognised as deferred revenue and released to the income statement over the period that the
service is performed.
Account revenue is derived from specific contracts and recognised when the delivery of an item is complete. Contracted services that
havebve been paid for, but not yet rendered at the balance sheet date, are designated as deferred revenue. Revenue derived from Network
Access agreements is recognised when the delivery of the related items is complete.
GLS
Revenue is derived from specific parcel contracts and is recognised when the delivery of an item is complete.
Costs
The following costs are recognised in the financial statements on an accruals basis of accounting.
People costs
Note that the cost categories defined below are recognised in the financial statements on an accruals basis of accounting.
These are costs incurred in respect of the Group’s employees and comprise wages and salaries, pensions and social security costs.
These costs are disclosed separately on the face of the income statement.
Notes to the Consolidated Financial Statements continued
Financial Statements
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1. Basis of preparation and accounting policies (continued)
Distribution and conveyance costs
Distribution and conveyance costs relate to non-people costs incurred in transporting and delivering mail. These include conveyance
byrby rail, road, sea and air, together with costs incurred by international mail carriers, Parcelforce Worldwide delivery operators and GLS
subcontractor costs. These costs are disclosed separately on the face of the income statement.
Infrastructure costs
These are costs primarily relating to the day-to-day operation of the delivery network and include depreciation/amortisation, IT and
property facilities management costs. These costs are disclosed separately on the face of the income statement.
Other operating costs
These are any operating costs which do not fall into the categories of people costs, distribution and conveyance costs or infrastructure
costs, including for example, Post Office Limited agency costs and consumables. Non-people costs relating to projects are also included.
Other operating costs exclude operating specific items.
Pension charge to cash difference adjustment
This adjustment represents the difference between the IAS 19 income statement pension charge rate of 22.9% (2021-22: 24.6%) for the
DBCBS pension plan and the cash contribution rate agreed with the Trustee of 15.6%. Management is of the view that this adjustment is
appropriate in order to eliminate the volatility of the IAS 19 accounting charge and to include only the cash cost of the pension plans ints in the
adjusted operating profit of the Group (see Note 6 and Note 11).
Operating specific items
These are recurring or non-recurring items of income or expense of a particular size and/or nature relating to the operations of the
business that, in management’s opinion, require separate identification. Management does not consider them to be reflective of year-on-
year operating performance. These include items that have resulted from events that are non-recurring in nature, even though related
income/expense can be recognised in subsequent periods.
Legacy/other items
Legacy items are unavoidable ongoing costs or credits arising from historical events, e.g. industrial diseases provision movements.
Amortisation of intangible assets in acquisitions
These charges, which arise as a direct consequence of the application of IFRS 3 ‘Business Combinations’, are separately identified as
management does not consider these costs to be representative of the trading performance of the Group.
Non-operating specific items
These are recurring or non-recurring items of income or expense of a particular size and/or nature which do not form part of the Group’s
trading activity and, in management’s opinion, require separate identification.
Profit/loss on disposal of property, plant and equipment (PP&E)
Management separately identifies recurring profit/loss on disposal of PP&E as these disposals are not part of the Group’s trading activity
and are driven primarily by the business’ operations strategy.
Net pension interest
Management separately identifies pension interest income as this is not part of the Group’s trading activity and is driven by actuarial
calculations and assumptions which fluctuate each year.
Share-based payments
The Group operates a number of equity-settled, share-based compensation schemes under which the Group receives services from employees
as consideration for equity instruments (shares) of the Company. These include the HMRC-approved (Employee Free Shares) Share Incentive
Plan. The scheme is based on non-market conditions and does not vest until the employee completes a specific period of service. Share-based
payments awarded as part of long-term incentive plans vest based on a combination of non-market and market conditions.
Share-based payments awarded as part of the Deferred Share Bonus Plan is a deferred share award, granted to Executive Directors at
theene end of the annual performance period, the grant being of equal value to the Annual Bonus, and subject to continued employment over a
three year vesting period. The fair value of the employee services received in exchange for the grant of the shares is recognised as an expense
in the income statement, with a corresponding credit entry in equity, as per the requirements of IFRS 2 ‘Share-based Payment’. The total
amount expensed is determined by reference to the fair value of the equity instruments at the date on which they are granted. The fair value
ofeof each award is measured with reference to the share price upon issue and using the Monte-Carlo simulation model where appropriate.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be
satisfied. No expense is recognised for awards that do not ultimately vest. At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting period has expired and management’s best estimate of the
achievement or otherwise of service conditions and of the number of equity instruments that will ultimately vest.
The movement in cumulative expense since the previous balance sheet date is recognised in the income statement, with a corresponding
entry in equity. The social security contributions payable in connection with the grant of shares is considered an integral part of the grant
itself, and the charge is treated as a cash-settled transaction.
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173

1. Basis of preparation and accounting policies (continued)
Income tax and deferred tax
The charge for current income tax is based on the results for the reporting year as adjusted for items that are non-assessable or
disallowed. It is calculated using rates that have been substantively enacted at the balance sheet date.
Deferred income tax assets and liabilities are recognised for all taxable and deductible temporary differences and unused tax assets
andlnd losses except the following:
ƽ Initial recognition of goodwill.
ƽ Initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects
neither the accounting profit nor taxable profit and loss.
ƽ Taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the
temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
ƽ Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which they can
beube utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date, against internal forecasts of future profits against
which those assets may be utilised and increased or reduced, to the extent that it is probable that sufficient taxable profit will be available
to allow them to be utilised.
Where tax returns remain subject to audit with the relevant tax authorities in the various jurisdictions in which the Group operates,
apra provision is made for uncertain tax items where the agreed amount could differ materially from management’s estimates. Any such
provisions are included within the relevant current and deferred tax carrying amount.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the tax asset is realised
ortor the liability is settled, based on tax rates (and tax laws) that have been substantively enacted at the balance sheet date. Deferred tax
balances are not discounted.
Current and deferred tax is charged or credited directly to equity if it relates to items that are charged or credited directly to equity,
otherwise it is recognised in the income statement.
Where tax credits are claimed against eligible research and development costs, these amounts are credited against the relevant expense
or capitalised asset to match the accounting treatment applied to the original expenditure.
Earnings per share
Basic EPS from continuing operations is calculated by dividing the profit/loss from continuing operations by the weighted average number
of ordinary shares in issue.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares arising from share-based payment schemes. These potential shares are treated as dilutive only when
their conversion to ordinary shares would decrease EPS from continuing operations.
Cash Generating Units (CGUs) of the Group
The Group consists of a number of CGUs, each possessing largely independent cash inflows. The UK network, through which millions
oflof letters and parcels pass each day, is considered by management to comprise two separate CGUs due to their distinct, individually
identifiable cash flows. These CGUs for impairment testing purposes are Royal Mail excluding Parcelforce Worldwide and Parcelforce
Worldwide. Certain other non-core entities are considered to be separate CGUs, albeit these are not material at a Group level.
In GLS, management considers each country’s operations to represent a separate CGU. In relation to the testing of goodwill for impairment,
however, the operating and financial synergies arising on new business combinations within GLS are felt by management to primarily
benefit contiguous parts of the GLS network. For this reason, goodwill arising on new business acquisitions has typically been allocated to
one of the major networks designated as CGUs, i.e. mainland Europe; US Freight (previously known as Mountain Valley Express); US
excluding US Freight; and, in Canada, Dicom. At the balance sheet date, the Rosenau business, acquired in 2021-22 was not considered to be
sufficiently integrated with the existing GLS Canada (Dicom) business. The two businesses are still operating independently, with general
coordination performed by the management of GLS Canada. Also, Rosenau’s operations and performance is still being reviewed separately
by GLS Group management and contracts with existing and new clients in Canada are still managed at a separate business level.
Impairment test for goodwill and CGUs
In assessing whether there has been an impairment of goodwill, a CGU or, in some instances a specific asset, management determines
whether the carrying value is higher than the recoverable amount. The recoverable amount is the higher of a CGU or asset’s fair value
lesscoss costs to sell (realisable value) and value in use. The value in use of the CGU/asset is calculated based on its discounted cash flows.
Details of the impairment review of the GLS CGUs are included in Note 15.
Royal Mail excluding Parcelforce Worldwide CGU
An impairment review of the Royal Mail excluding Parcelforce Worldwide CGUwGU was undertaken in the current reporting year. Further details
can be found in the ‘other estimates’ section within the ‘key sources of estimation uncertainty’ above, and in Note 6 and Note 13.
Notes to the Consolidated Financial Statements continued
Financial Statements
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1. Basis of preparation and accounting policies (continued)
Parcelforce Worldwide CGU
As a result of delays in the transformation of the Parcelforce Worldwide business, an impairment review of the Parcelforce Worldwide
CGUwaU was undertaken in the 2019-20 reporting year. This review identified that the carrying value of the CGU was in excess of its recoverable
amount, which resulted in all non-monetary assets being written off and a £91 million impairment charge being reported asasd as a specific item
in the income statement within the Royal Mail segment. For this reporting year, management considers that it is not appropriate to reverse
the impairment charge, as the business has still to establish a sustainable financial performance.
Segment information
The Group’s operating segments are organised and managed separately according to the nature of the products and services provided,
with each segment representing an operating unit that offers different products and serves largely different markets.
The Board monitors the operating results of its main operating units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on the ‘operating profit before specific items’ measure.
The reportable operating segments are made up of business units based in the UK – within the Royal Mail segment, along with other parts of
Continental Europe, the US and Canada, which are the constituent parts of the GLS segment. There is no aggregation of operating
segments.
Segment revenues have been attributed to the respective countries based on the primary location of the service performed. Transfer
prices between segments are set at arm’s length/fair value on the basis of charges reached through negotiation between the relevant
business units that form part of the segments.
There are no differences in the measurement of the respective segments’ reported profit/loss and the Consolidated Financial Statements
prepared under IFRS.
Property, plant and equipment
Property, plant and equipment is recognised at cost, including directly attributable costs in bringing the asset into working condition for its
intended use. Depreciation of property, plant and equipment is provided on a straight-line basis by reference to cost, the useful economic
lives of assets and their estimated residual values. The useful lives and residual values are reviewed annually and adjustments, where
applicable, are made on a prospective basis.
The lives assigned to major categories of property, plant and equipment are:
Land and buildings:
Freehold land Not depreciated
Freehold buildings Up to 50 years
Leasehold buildings The shorter of the period of the lease, or the estimated remaining useful life
Plant and machinery 3 to 15 years
Motor vehicles 2 to 12 years
Fixtures and equipment 2 to 15 years
All subsequent expenditure on property, plant and equipment is capitalised if it meets the recognition criteria, and the carrying amount of those
parts replaced is derecognised. All other expenditure, including repairs and maintenance is expensed in the income statement as incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use.
Any gain or loss arising at derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is recognised in the income statement (non-operating specific item) in the year that the asset is derecognised.
Gains or losses from the disposal of assets are recognised in the income statement at the point that all significant risks and rewards
ofowof ownership are transferred.
Business combinations and goodwill
Business combinations are accounted for under IFRS 3 ‘Business Combinations’ using the purchase method. Any excess of the cost of
thebue business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at
thedae date of acquisition is recognised in the balance sheet as goodwill and is not amortised.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses. Goodwill arising from business combinations
is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired. For the purpose of such impairment reviews, goodwill is allocated to the relevant CGUs, or groups of CGUs, which are expected
to benefit from synergies of the combination.
A goodwill impairment loss is recognised in the income statement for the amount by which the carrying value of the related CGU, or group
of CGUs, exceeds the recoverable amount, which is the higher of a CGU’s net realisable value and its value in use. Goodwill arising on the
acquisition of equity-accounted entities is included in the cost of those entities and therefore not reported on the balance sheet as goodwill.
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1. Basis of preparation and accounting policies (continued)
Intangible assets
Intangible assets acquired as part of a business combination are capitalised separately from goodwill if the fair value can be measured
reliably on initial recognition. Intangible assets acquired separately or development costs that meet the criteria to be capitalised are
initially recognised at cost and are assessed to have a finite useful life, with key strategic assets generally having the longest lives.
Those assets with a finite life are amortised over their useful life but are reviewed for impairment annually or more frequently if events
orcor changes in circumstances indicate that the carrying value may be impaired. An impairment loss is recognised in the income statement
for the amount by which the carrying value of the intangible asset exceeds its recoverable amount, which is the higher of an asset’s net
realisable value and its value in use. Development costs capitalised and included as an asset within the Financial Statements have not
been treated as a realised loss for the purpose of determining distributable reserves.
Amortisation of intangible assets with finite lives is charged annually to the income statement on a straight-line basis as follows:
Customer listings 3 to 10 years
Software 3 to 10 years
Brands 1 to 10 years
Investments in associates
The Group’s investments in its associate companies are accounted for under the equity method of accounting. Under the equity method,
aninvn investment is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of the net assets of the associate,
less any impairment in value. The income statement reflects the Group’s share of annual post-tax profits from the associates (currently
netted off other operating costs as the values are not material enough for separate disclosure).
Any goodwill arising on acquisition of an associate, representing the excess of the cost of the investment compared with the Group’s
shareof te of the net fair value of the identifiable assets, liabilities and contingent liabilities acquired, is included in the carrying amount and
notanot amortised.
Borrowing costs
Interest on borrowings related to the construction or development of qualifying assets is capitalised, until such time as the assets are
substantially ready for their intended use. Borrowing costs capitalised are deducted in determining taxable profit in the reporting year
inwin which they are incurred.
Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction,
ratherter than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for
immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition
as a completed sale within one year from the date of classification. Following their classification as held for sale, the assets (including
those in a disposal group) cease to be depreciated.
Leases
Under IFRS 16 a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. Under IFRS 16, the Group recognises a right of use asset and a lease liability at the lease commencement
date for the majority of leases.
The right of use asset is measured initially at cost and is subsequently adjusted for any accumulated depreciation, impairment losses or
certain remeasurements of the lease liability.
The lease liability is measured initially at the commencement date at the present value of future lease payments discounted at the
rateiate inherent in the lease (for leases previously classed as finance leases) or, where this is not readily determinable, an appropriate
incremental borrowing rate (IBR). In practice, the majority of the lease calculations are performed using an IBR. The lease liability is
subsequently increased by the interest cost and decreased by payments made. Lease interest is shown within finance costs in the
statement of cash flows. The lease liability is remeasured as a result of market rent reviews and for changes in the assessment of future
extensions or terminations which result in a significant change of circumstances in respect of the lease and is within the Group’s control.
The Group has elected to apply the exemption from recognising leases for low value assets in line with existing Group policy, or short-term
leases (with a lease term of under 12 months) on the balance sheet. The Group continues to recognise lease expenses for these assets on
asta straight-line basis in the income statement over the lease term.
Where possible, the Group allocates the consideration in each contract between any lease and non-lease components, however, where
this is not possible, the Group has elected to apply the practical expedient of including all of the contract costs in the calculation of the
lease asset and liability recognised as a single lease component.
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
176

1. Basis of preparation and accounting policies (continued)
The Group has lease break options in place for a majority of its property lease agreements. These options provide the Group with greater
flexibility in managing the UK estate. These break options have in the main, historically, not been exercised due to ongoing operational
requirements. Management has therefore made the decision that the reasonably certain length of the lease is the full lease term, assuming
the break option will not be exercised. In only exceptional cases, when reasonably certain that it will enact the break, are leases recognised
to the break date only. The unrecognised non-discounted cash flows in relation to these leases are £10 million (2021-22: £7 million).
The Group adopts a practice of not including extension options in its leases. Where such clauses exist, they are not material.
IFRS 16 – incremental borrowing rates
The rate inherent in the lease is not readily determinable for the majority of leases previously classed as operating leases under IAS 17
andsnd so an IBR is used. These leases primarily relate to property and motor vehicles.
The IBR is the rate of interest that a lessee would have to pay to borrow, over a similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment.
In considering the appropriate IBR to apply, the Group has adopted a three-step approach. This approach begins with an appropriate
risk-free base rate; adjusts this rate to reflect the cost of company-specific unsecured borrowing; and, finally, considers the need to
adjusttst the rate determined to reflect the underlying leased asset acting as collateral.
From the evidence obtained, management has concluded that for the Royal Mail business, lenders do not make adjustments to the
borrowing rates offered on lending, based upon the underlying asset to be obtained. The key factors in the borrowing rates available
toRoyto Royal Mail are judged to be the current credit rating of the Group (BBB) and the length of the borrowing term required.
On the basis of the work performed, Royal Mail has treated assets being held for a similar length of time as having a similarly calculated
IBR, with assets being grouped according to lease length, both at transition and in the future. By grouping assets in this way, a rate card
has been produced, to be updated periodically, which can be applied to all future leases requiring an IBR. Royal Mail has based IBR rates
onUK Bon UK BBB corporate bond yields, adjusted to reflect the different payment profile between a bond and a lease.
The GLS business has followed a similar methodology and grouping by lease length, to that used in Royal Mail. However, instead of basing
the yields on corporate bond yield curves, which are not readily obtainable for all GLS currencies, a sovereign bond yield curve for the
relevant country has been used as the starting point and an appropriate margin applied to this based upon consideration of consolidated
GLS quantitative and qualitative information.
Trade receivables
Trade receivables are recognised and carried at the original invoice amount less an allowance for any non-collectable amounts.
This lossas allowance is calculated by first creating an allowance for identified trade receivables where collection of the full amount is
nolno longer probable, and then applying lifetime expected credit loss (ECL) rates to the remaining unprovided balance. ECL rates have
beensen set by ageing category based on historical loss rates, with adjustments made to reflect forward-looking information where
material.In t. In the current year and prior year, considerations around COVID-19 and the macro-economic situation have resulted in an
increaseto ee to expected credit losses above our standard provisioning rate. The below rates have been applied to the Royal Mail debt.
In GLS,ra, rates are country specific to reflect the economic conditions of individual countries.
2022-23
%
2021-22
%
Not yet overdue 0.18 0.21
Past due not more than one month 1.73 1.96
Past due more than one month and not more than two months 10.56 12.57
Past due more than two months 52.71 57.69
Movements in the loss allowance are recognised in the income statement within other operating costs. At the point that a debt is
considered unrecoverable, it is written off against the allowance for trade receivables. Subsequent recoveries of amounts previously
written off are credited against other operating costs in the income statement.
Inventories
Inventories are valued on a weighted average cost basis and carried at the lower of cost and net realisable value. Cost includes all direct
expenditure and other costs attributable in bringing inventories to their present location and condition.
Trade payables
Trade payables are recorded initially at fair value and subsequently measured at amortised cost. Generally, this results in their recognition
at their nominal value.
The Group operates a supply chain finance arrangement for small and medium suppliers. This form of reverse financing allows suppliers
to obtain early access to funding. Suppliers may choose to access payment as soon as their invoices are processed rather than the standard
payment terms by paying a financing fee to the scheme provider. The Group pays the provider of the scheme on the due date oftte of the invoices.
This scheme does not therefore assist the Group in the management of working capital.
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1. Basis of preparation and accounting policies (continued)
As the scheme has not led to a substantial modification in the terms of the financial liability, the Group continues to treat the amounts
owed within trade payables. All cash flows associated with the programme are included within operating cash flows as they continue
tobto bepae part of the normal operating cycle of the Group. There is no impact on net debt, as amounts owed continue to be reported within
trade payables.
The balance owed on the facility at 26 March 2023 was £37 million (27 March 2022: £66 million).
Capital management
The Group has established five key objectives for capital management. Details of these objectives are included in the Financial Review.
Financial instruments
Financial assets within the scope of IFRS 9 ‘Financial Instruments’ are classified as financial assets at: fair value through the profit andlod loss
(FVTPL) if they are not part of an effective hedge designation (held for trading); amortised cost: or fair value through other comprehensive
income (FVOCI) as appropriate. Financial liabilities within the scope of IFRS 9 are classified as either financial liabilities at FVTPL or
financial liabilities measured at amortised cost.
The Group determines the classification of its financial instruments at initial recognition and re-evaluates this designation at each reporting
date. When financial instruments are recognised initially, they are measured at fair value, being the transaction price plus, in the case of
financial instruments not at FVTPL, any directly attributable transactional costs. The Group only has financial assets and liabilities measured
at amortised cost or measured at FVTPL along with derivative assets and liabilities measured at FVTPL, if they are not part of an effective
hedge designation. The subsequent measurement of financial instruments depends on their classification as follows:
Financial assets measured at amortised cost
These are non-derivative financial assets which are held for the purpose of collecting contractual cash flows (held to collect), including
interest. These assets are carried at amortised cost with finance income recognised in the income statement using the effective interest
rate method. Any gains or losses are recognised in the income statement when the assets are derecognised or impaired.
Financial liabilities measured at amortised cost
All non-derivative financial liabilities are classified as financial liabilities measured at amortised cost. These liabilities are measured
ataat amortised cost with finance costs recognised in the income statement using the effective interest method. Any gains or losses are
recognised in the income statement when the liabilities are derecognised or impaired.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits (cash equivalents) with anorn original
maturity date of three months or less. In addition, the Group invests surplus cash in money market funds which hold baskets ofcf cash, cash
equivalent and high-credit-rating debt-based securities with short-term maturity. These funds are highly liquid and investments can be
redeemed either the same day or within a week, so are categorised as cash equivalents on the basis they are a readily available source of
cash. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
bank overdrafts. Money market funds and pension escrow investments are designated as FVTPL, all other cash equivalents are classified as
financial assets at amortised cost.
Bank overdrafts (in a cash pool)
Bank overdrafts represent the gross overdrawn balances within the Group that generally form part of a net £nil cash pool. These form an
integral part of the Group’s cash management. They are included within cash and cash equivalents in the statement of cash flows along
with the offsetting equivalent balances of cash at bank in the cash pool that are in credit and which are included within cash and cash
equivalents.
Financial assets – pension escrow investments
Pension escrow investments comprise a Royal Mail Senior Executives Pension Plan money market fund investment and a Royal Mail
Pension Plan money market fund investment. See Note 11 to the Financial Statements for further details.
Financial assets – other investments
Other investments comprise short-term deposits (other investments) with banks with an original maturity of more than three months.
Short-term deposits are classified as financial assets at amortised cost.
Financial liabilities – interest-bearing loans and borrowings
All loans and borrowings are classified as financial liabilities measured at amortised cost. The €500 million and €550 million bonds are
measured at amortised cost in Euro and converted to Sterling at the closing spot Sterling/Euro exchange rate .
Derivative financial instruments and hedging programmes
The Group uses derivative instruments such as foreign currency contracts in order to manage the risk profile of any underlying risk exposure
of the Group, in line with the Group’s treasury management policies. Such derivative financial instruments are initially stated at fair value.
For the purpose of hedge accounting, hedges are classified as cash flow hedges where they hedge exposure to variability in cash flows
that is attributable either to a particular risk associated with a recognised asset or liability, or to a highly probable forecast transaction.
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
178

1. Basis of preparation and accounting policies (continued)
In relation to cash flow hedges to hedge the interest rate, foreign exchange or commodity price risk of firm commitments that meet the
conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to relate to an effective hedge
is recognised directly in equity and the ineffective portion is recognised in the income statement.
When the hedged firm commitment results in the recognition of a non-financial asset or non-financial liability, then at the time the asset or
liability is recognised, the associated gains or losses that had previously been recognised in equity are included in the initial measurement
of the acquisition cost or other carrying amount of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised
in equity are transferred to the income statement in the same reporting year in which the hedged firm commitment affects the net profit/
loss, for example when the hedged transaction actually occurs.
Derivatives that do not qualify for hedge accounting are classified as FVTPL and any gains or losses arising from changes in fair value are taken
directly to the income statement in the year. Derivatives are valued by using quoted forward prices for the underlying commodity/currency and
discounted using quoted interest rates (both as at the close of business on the balance sheet date). Hence derivative assets and liabilities are
within Level 2 of the fair value hierarchy as defined within IFRS 13 ‘Fair Value Measurement’ (see details of the fair value hierarchy below).
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge
accounting. At that point, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast
transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is
transferred to the income statement in the reporting year.
Fair value measurement of financial instruments
All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised within the fair value
hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date.
Where there is no active market, fair value is determined using valuation techniques. These include using recent arm’s length market
transactions; reference to the current market value of another instrument which is substantially the same; and discounted cash flow
analysis and pricing models.
The Group determines whether any transfers have occurred between levels in the hierarchy by reassessing categorisation at the end ofeaf each
reporting year. For the purposes of disclosing the Level 2 fair value of investments held at amortised cost in the balance sheet, intt, in the absence
of quoted market prices, fair values are calculated by discounting the future cash flows of the financial instrument using quoted equivalent
interest rates as at close of business on the balance sheet date. For the €500 million bond and the €550 million bond, thedhe disclosed fair values
are calculated as the closing market bond prices converted to Sterling using the closing spot Sterling/Euro exchange rate.
For the purposes of comparing carrying amounts with fair value, fair values have been calculated using current market prices (bond price,
interest rates, forward exchange rates and commodity prices) and discounted using appropriate discount rates.
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outn outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at an appropriate
pre-tax rate. Accounting estimates used in calculating the provisions are explained further in the ‘Other estimates’ section ofthf this Note.
Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or present obligations
where the outflows of resources are uncertain or cannot be measured reliably. Contingent liabilities are not recognised in the Financial
Statements but are disclosed unless an outflow of resources is considered to be remote.
Contingent assets
Contingent assets are possible assets whose existence will be confirmed by the occurrence or non-occurrence of uncertain future events
that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed when it is more likely than
not that an inflow of benefits will occur. However, when the inflow of benefits is virtually certain, an asset is recognised on the balance
sheet, because the asset is no longer considered to be contingent.
Dividends
Distributions to owners of the Company are not recognised in the income statement under IFRS, but are disclosed as a component of the
movement in shareholders’ equity. A liability is recorded for a dividend when the dividend is approved by the Company’s shareholders but
not paid at the year end. Interim dividends are recognised as a distribution when paid.
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179

1. Basis of preparation and accounting policies (continued)
Pensions and other post-retirement benefits
Defined benefit pension plan assets are measured at fair value. Listed securities are valued at bid price or the last traded price, depending
on the convention of the stock exchange on which they are quoted. Unquoted securities and other pooled investment vehicles are valued
using published prices, the latest information from investment managers, or at cost less any necessary provisions for impairment. Direct
property held is valued in the basis of open market value at the year-end date, in accordance with RICS valuation standards. Further details
on the measurement of pension assets are included within the ‘Key sources of estimation uncertainty’ section above. Liabilities are measured
on an actuarial basis using the projected unit credit method and discounted at a rate equivalent to the current rate of return on a high-
quality corporate bond of equivalent currency and term. The resulting defined benefit asset or liability is presented separately on the
faceof te of the balance sheet. The amount of any pension surplus that can be recognised is limited to the economic benefits unconditionally
available in the form of refunds or reductions in future contributions.
Where the economic benefit to be obtained is in the form of a refund, this is recognised less tax expense, in line with IFRIC 14. The Group
considers this tax to be a tax other than income tax, i.e. ‘withholding tax’, and the pension surplus is presented net of this tax on the
balance sheet.
Full actuarial/cash funding valuations are carried out at intervals not normally exceeding three years as determined by the Trustee and,
with appropriate updates and accounting adjustments at each balance sheet date, form the basis of the surplus disclosed.
For defined benefit plans, the amounts charged to operating profit are the current service costs and any gains and losses arising from
settlements, curtailments and past service costs. The amount resulting from applying the plan’s discount rate (for liabilities) to the pension
surplus at the beginning of the reporting year is recognised as net pension interest in the income statement. Remeasurement gains and
losses are recognised immediately in the statement of comprehensive income. Any deferred tax movement associated with the remeasurement
gains and losses is recognised immediately in the statement of comprehensive income. The Group recognises a constructive obligation to
provide future increases to benefits under the lump sum DBCBS. This is charged to current service costs in the income statement. Further
details on the constructive obligation are included within Note 11 to the Financial Statements.
For defined contribution plans, the Group’s contributions are charged to operating profit (within people costs) in the year to which the
contributions relate. Overseas subsidiaries make separate arrangements for the provision of pensions and other post-retirement benefits.
Foreign currencies
The functional and presentational currency of International Distributions Services plc is Sterling (£). The functional currency of the
overseas subsidiaries in Europe is mainly the Euro (€), in the US it is the Dollar (US$) and in Canada it is the Canadian Dollar (CAD).
The assets and liabilities of foreign operations are translated at the rate of exchange ruling at the balance sheet date. The trading results
offof foreign operations are translated at the average rates of exchange for the reporting year, being a reasonable approximation to the actual
transaction rate. The exchange rate differences arising on the translation, since the date of transition to IFRS, are taken directly to the
foreign currency translation reserve in equity.
Foreign currency exchange differences arising from translation of the €500 million bond and the Euro-denominated leases (designated as
hedges of the net investment in GLS) to closing Sterling/Euro exchange rates are deferred to the foreign currency translation reserve in
equity. These exchange differences would be released from equity to the income statement as part of the gain or loss, only if GLS was sold.
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling during the
month of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
rate of exchange ruling at the balance sheet date. Other than the €500 million bond and the Euro-denominated leases mentioned above,
currently, hedge accounting is not claimed for any other monetary assets and liabilities except the €550 million bond, which is hedged
byacby a cross-currency swap. All differences are therefore taken to the income statement, except for differences on monetary assets and
liabilities that form part of the Group’s net investment in a foreign operation. These are taken directly to equity until the disposal of the
netint investment occurs, at which time they are recognised in profit or loss.
Non-monetary items that are measured in terms of their historical cost in a foreign currency are translated using the exchange rates as
attat the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value is determined.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
180

2. Segment information
The Group’s operating segments are based on geographic business units whose primary services and products relate to the delivery of
parcels and letters. These segments are evaluated regularly by the International Distributions Services plc Board – the Chief Operating
Decision Maker (CODM) as defined by IFRS 8 ‘Operating Segments’ – in deciding how to allocate resources and assess performance.
A key measure of segment performance is operating profit before specific items. This measure of performance is disclosed on an
‘adjusted’ basis, a non-IFRS measure, excluding specific items and the pension charge to cash difference adjustment (see pages 238
to24to 242). This is consistent with how financial performance is measured internally and reported to the CODM.
Transfer prices between segments are set at an arm’s length/fair value on the basis of charges reached through negotiation between
theree relevant business units that form part of the segments.
52 weeks 2023 Adjusted
Specific items - and pension
adjustment in people costs Reported
Continuing operations
Royal Mail
(UK
operations)
£m
GLS
(Non-UK
operations)
£m
Eliminations
1
£m
Adjusted
Group
£m
Royal Mail
(UK operations)
£m
GLS
(Non-UK
operations)
£m
Group
£m
Revenue 7,411 4,650 (17) 12,044 – – 12,044
People costs (5,409) (1,031) – (6,440) (133) – (6,573)
Non-people costs (2,421) (3,271) 17 (5,675) – – (5,675)
Operating (loss)/profit beforespecific before specific
items (419) 348 – (71) (133) – (204)
Operating specific items – – – – (492) (52) (544)
Operating (loss)/profit (419) 348 – (71) (625) (52) (748)
Profit on disposal of property, plant and
equipment (non-operating specific item) – – – – 5 1 6
(Loss)/profit before interestandtest and tax (419) 348 – (71) (620) (51) (742)
Finance costs (49) (28) 17 (60) – – (60)
Finance income 32 6 (17) 21 – – 21
Net pension interest (non-operating
specific item) – – – – 105 – 105
(Loss)/profit before tax (436) 326 – (110) (515) (51) (676)
Tax (charge)/credit (4) (82) – (86) (115) 4 (197)
(Loss)/profit after tax (440) 244 – (196) (630) (47) (873)
52 weeks 2022 Adjusted
Specific items - and pension
adjustment in people costs Reported
Continuing operations
Royal Mail
(UK operations)
£m
GLS
(Non-UK
operations)
£m
Eliminations
1
£m
Adjusted
Group
£m
Royal Mail
(UK operations)
£m
GLS
(Non-UK
operations)
£m
Group
£m
Revenue 8,514 4,219 (21) 12,712 – – 12,712
People costs (5,583) (908) – (6,491) (174) – (6,665)
Non-people costs (2,515) (2,969) 21 (5,463) – – (5,463)
Operating profit beforespore specific items 416 342 – 758 (174) – 584
Operating specific items – – – – 8 (15) (7)
Operating profit 416 342 – 758 (166) (15) 577
Profit on disposal of property, plant and
equipment (non-operating specific item) – – – – 71 1 72
Profit before interestare interest andtaxnd tax 416 342 – 758 (95) (14) 649
Finance costs (49) (15) 7 (57) – – (57)
Finance income 10 3 (7) 6 – – 6
Net pension interest (non-operating
specific item) – – – – 64 – 64
Profit before tax 377 330 – 707 (31) (14) 662
Tax (charge)/credit (34) (78) – (112) 58 4 (50)
Profit after tax 343 252 – 595 27 (10) 612
1 Revenue and non-people costs eliminations relate to intragroup trading between Royal Mail and GLS, due to Parcelforce Worldwide being GLS’ partner in the UK. Finance costs/income eliminations
relate to intragroup loans between Royal Mail and GLS.
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Annual Report and Financial Statements 2022-23
181

2. Segment information (continued)
The depreciation and amortisation costs shown below are included within ‘operating profit before specific items’ in the income statement.
The non-current assets below exclude financial assets, retirement benefit surplus and deferred tax, and are included within non-current
assets on the balance sheet.
52 weeks 2023
Royal Mail
(UK operations)
£m
GLS
(Non-UK
Operations)
£m
Eliminations²
£m
Total
£m
Depreciation (326) (159) – (485)
Amortisation of intangible assets (mainly software) (107) (10) – (117)
Non-current assets 2,169 1,892 – 4,061
Total assets 6,054 2,953 (191) 8,816
Total liabilities (3,651) (1,554) 191 (5,014)
52 weeks 2022
Royal Mail
(UK operations)
£m
GLS
(Non-UK
Operations)
£m
Eliminations2
£m
Total
£m
Depreciation (309) (132) – (441)
Amortisation of intangible assets (mainly software) (88) (11) – (99)
Non-current assets 2,879 1,703 – 4,582¹
Total assets 8,366 2,658 (283) 10,741
Total liabilities (4,214) (1,476) 283 (5,407)
The Company is domiciled in the UK. The split of revenue from external customers and non-current assets (excluding financial assets,
retirement benefit surplus and deferred tax) between the UK and GLS’ presence in Continental Europe and North America is shown below.
52 weeks 2023
UK
£m
Continental
Europe
£m
North America
£m
Eliminations
2
£m
Total
£m
Revenue 7,411 4,043 607 (17) 12,044
Non-current assets 2,169 1,379 513 – 4,061
52 weeks 2022
UK
£m
Continental
Europe
£m
North America
£m
Eliminations
2
£m
Total
£m
Revenue 8,514 3,776 443 (21) 12,712
Non-current assets 2,879 1,165 538 – 4,582
2 Eliminations in respect of revenue and assets relate to intragroup balances between Royal Mail and GLS.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
182

3. Revenue
52 weeks 2023
Royal Mail
£m
GLS
£m
Intragroup
revenue
1
£m
Group
£m
Parcels 3,910 4,650 (17) 8,543
Letters 3,501 – – 3,501
Total 7,411 4,650 (17) 12,044
52 weeks 2022
Royal Mail
£m
GLS
£m
Intragroup
revenue
1
£m
Group
£m
Parcels 4,800 4,219 (21) 8,998
Letters 3,714 – – 3,714
Total 8,514 4,219 (21) 12,712
1 Eliminations relate to intragroup revenue from trading between Royal Mail and GLS. This is due to Parcelforce Worldwide being GLS’ partner in the UK.
During the year, around £250 million (2021-22: £300 million) of revenue was recognised which was previously held as a deferred revenue
balance at 27 March 2022 (2021-22: 28 March 2021). This balance largely relates to stamps held and not yet used by customers and is
recognised as ‘advance customer payments’ within ‘current trade and other payables’ (see Note 22).
4. Operating costs
Operating (loss)/profit before specific items is stated after charging the following operating costs:
52 weeks
2023
£m
52 weeks
2022
£m
People costs (see Note 5) (6,573) (6,665)
Distribution and conveyance costs
Charges from overseas postal administrations (266) (271)
Fuel costs (159) (198)
Infrastructure costs
Depreciation, amortisation and impairment (602) (540)
Charge for property, plant and equipment (see Note 13) (485) (441)
Charge for intangible assets (see Note 16)
1
(117) (99)
Other operating costs
Post Office Limited charges (317) (361)
Inventory expensed (46) (36)
1 Excludes £19 million (2021-22: £16 million) amortisation of intangible assets in acquisitions, presented as an operating specific item in the income statement.
Regulatory body costs
The following disclosure is relevant in understanding the extent of ongoing compliance costs in relation to the regulation of the Group:
52 weeks
2023
£m
52 weeks
2022
£m
Ofcom administrative charge (6) (6)
Citizens Advice/Citizens Advice Scotland/Consumer Council for Northern Ireland (1) (1)
Total (7) (7)
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
183

4. Operating costs (continued)
Auditor’s fees
52 weeks
2023
£’000
52 weeks
2022
£’000
Audit of Group statutory Financial Statements (1,828) (1,420)
Other fees to auditor:
Audit of the accounts of subsidiaries (1,883) (1,613)
Review of the interim financial information (394) (265)
Regulatory audit (158) (144)
Other assurance (3) (7)
Other non-audit services (150) (4)
Total (4,416) (3,453)
The 2022-23 fees relate to the services of the Group’s appointed auditor KPMG LLP. In addition to the above amounts, KPMG LLP was paid
by the respective Trustees £138,925 for the audit of the Royal Mail Pension Plan (2021-22: £127,000), £37,725 for the audit of the Royal Mail
Defined Contribution Plan (2021-22: £34,500) and £5,250 for the audit of the Royal Mail Pension Trustees Limited accounts
(2021-22: £5,000).
5. People information
52 weeks
2023
£m
52 weeks
2022
£m
Wages and salaries (5,359) (5,398)
Royal Mail
1
(4,437) (4,587)
GLS (922) (811)
Pensions (see Note 11) (692) (747)
Defined benefit UK (385) (441)
Defined contribution UK (124) (116)
Defined benefit and defined contribution Pension Salary Exchange UK (174) (181)
GLS (9) (9)
Social security (522) (520)
Royal Mail (422) (432)
GLS (100) (88)
Total people costs (6,573) (6,665)
1 People costs include £47 million (2021-22: £81 million) charged in respect of voluntary redundancies.
Defined benefit pension plan rates:
Income statement – DBCBS 22.9% 24.6%
Cash flow – DBCBS 15.6% 15.6%
Defined contribution pension plan average rate:
Income statement and cash flow² 8.9% 8.9%
2 Employer contribution rates are 4% for employees in the entry level category and 10% for the majority of those employees in the standard level category.
People numbers
The number of people employed, expressed as both full-time equivalents and headcount, during the reporting year was as follows:
Full-time equivalents
3
Headcount
4
Year end Average Year end Average
52 weeks
2023
52 weeks
2022
52 weeks
2023
52 weeks
2022
52 weeks
2023
52 weeks
2022
52 weeks
2023
52 weeks
2022
Royal Mail 143,553 155,011 147,593 155,598 130,393 140,035 136,390 138,645
GLS 21,776 21,808 21,571 18,887 22,399 22,325 22,440 22,706
Total 165,329 176,819 169,164 174,485 152,792 162,360 158,830 161,351
3 For Royal Mail, these people numbers relate to the total number of paid hours (including part-time, full-time and agency hours) divided by the number of standard full-time working hours in the
same year. Prior year average numbers have been re-presented to include 12 month averages, not 11 month averages as previously stated.
4 These people numbers represent permanent employees. Prior year average numbers have been re-presented to include 12 month averages, not 11 month averages as previously reported.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
184

5. People information (continued)
Directors’ remuneration
52 weeks
2023
£’000
52 weeks
2022
£’000
Directors’ remuneration
5
(3,463) (3,530)
Amounts earned under Long Term Incentive Plans (364) (934)
Number of Directors accruing benefits under defined contribution plans 1 1
5 These amounts include any cash supplements received in lieu of pension. Details of the pension contributions are included in the single figure table of the Directors’ Remuneration Report on page
123. The highest paid Director details are included in the single figure table of the Directors’ Remuneration Report on page 123.
6. Specific items and pension charge to cash difference adjustment
52 weeks
2023
£m
52 weeks
2022
£m
Pension charge to cash difference adjustment (within People costs) (133) (174)
Operating specific items:
Impairment of Royal Mail excluding Parcelforce Worldwide (539) –
GLS VAT Adjustments (33) –
Amortisation of intangible assets in GLS acquisitions (19) (16)
Royal Mail damages award 35 –
Royal Mail legacy/other items 12 9
Total operating specific items (544) (7)
Non-operating specific items:
Profit on disposal of property, plant and equipment 6 72
Net pension interest 105 64
Total non-operating specific items 111 136
Total specific items (433) 129
Tax (charge)/credit on certain specific items and the pension charge to cash difference (111) 62
The difference between the pension charge and cash cost (pension charge to cash difference adjustment) largely comprises the difference
between the IAS 19 income statement pension charge rate of 22.9% (2021-22: 24.6%) of pensionable pay for the DBCBS from 28 March 2022
and the cash contribution rate agreed with the Trustee of 15.6%.
As a result of the poor trading performance of the Royal Mail business, exacerbated by industrial action, an impairment assessment was
performed in relation to the Royal Mail Cash Generating Unit (CGU), which excludes Parcelforce Worldwide. In assessing whether the CGU
was impaired, the carrying value of the CGU of £1,439 million (2021-22: £1,412 million) was compared to its recoverable amount, using the
higher of a Value in Use (VIU), or Fair Value less cost to Dispose (FVLCD) methodology. The VIU methodology would have resulted in the
CGU being fully impaired while FVLCD methodology resulted in an impairment charge of £539 million. See note 13 for further details.
The £33 million (2021-22: £nil) in GLS relates to the settlement of VAT adjustments in Italy, covering the years 2016 to 2021.
The £35 million (2021-22: £nil) damages award follows a claim by Royal Mail against DAF Trucks Ltd. (‘DAF’) in December 2016 in respect
ofveof vehicles sold to Royal Mail between 1997 and 2011. The UK Competition Appeal Tribunal issued a judgment on 7 February 2023 awarding
damages (including interest to the date of payment) of £35 million payable by DAF to Royal Mail.
Legacy/other items mainly comprise a £10 million release (2021-22: £11 million release) of the industrial diseases provision due to
asia significant increase in the rate at which liabilities are discounted (see Note 25).
The cash cost of operating specific items of £53 million comprises a payment of £52 million to Ofcom (2021-22: £nil) (see Note 25), a
£33 million payment to the Italian tax authorities (2021-22: £nil) (see above) and £3 million payments in relation to industrial diseases
claims (2021-22: £3 million), offset by a £35 million receipt from DAF (2021-22: £nil) (see above). The additional £1 million in the prior year
related to payments in respect of Employee Free Shares.
The tax charge of £111 million (2021-22: £62 million credit) includes a charge of £115 million (2021-22: £nil) in relation to the derecognition of
the UK net deferred tax asset, a net credit of £4 million (2021-22: £30 million) in relation to the tax effect of certain specific items and the
pension charge to cash difference and a net credit of £nil (2021-22: £32 million) in relation to the remeasurement of certain UK deferred tax
assets and liabilities at the future UK corporation tax rate of 25%.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
185

7. Net finance costs
52 weeks
2023
£m
52 weeks
2022
£m
Unwinding of discount relating to industrial diseases claims provision (1) (1)
Other interest payable (59) (56)
Bank syndicate loan facility
Unused facility fees (1) (1)
Arrangement fees (1) (1)
€500 million and €550 million bonds (17) (17)
Interest rate swap costs on €550 million bond (7) (7)
Leases (32) (29)
Capitalisation of borrowing costs on specific qualifying assets 3 3
Other finance costs (4) (4)
Total finance costs (60) (57)
Total finance income – interest receivable on financial assets 21 6
Total net finance costs (39) (51)
8. Taxation
52 weeks
2023
£m
52 weeks
2022
£m
Tax charged in the income statement
Current income tax:
Current UK income tax charge – (11)
Foreign tax (81) (81)
Current income tax charge (81) (92)
Amounts over-provided in previous years 8 19
Total current income tax charge (73) (73)
Deferred income tax:
Effect of change in tax rates – 32
Derecognition of deferred tax asset (115) –
Relating to origination and reversal of temporary differences 5 (17)
Amounts (under)/over-provided in previous years (14) 8
Total deferred income tax (charge)/credit (124) 23
Tax charge in the consolidated income statement (197) (50)
Tax credited/(charged) to other comprehensive income
Deferred tax:
Tax credit/(charge) in relation to remeasurement gains of the defined benefit pension schemes 6 (34)
Tax credit/(charge) on revaluation of cash flow hedges 18 (21)
Total deferred income tax credit/(charge) 24 (55)
Total tax credit/(charge) in the consolidated statement of other comprehensive income 24 (55)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
186

8. Taxation (continued)
In addition to the amount (charged)/credited to the income statement and other comprehensive income, the following amount relating to
tax has been recognised directly in equity:
52 weeks
2023
£m
52 weeks
2022
£m
Deferred tax:
Change in estimated excess tax deductions related to share-based payments (1) (1)
Tax credit for loss arising on share-based payments – 1
Total deferred income tax charge recognised directly in equity (1) –
Reconciliation of the total tax charge
A reconciliation of the tax charge in the income statement and the UK rate of corporation tax applied to accounting profit for the 52 weeks
ended 26 March 2023 and 52 weeks ended 27 March 2022 is shown below.
52 weeks
2023
£m
52 weeks
2022
£m
(Loss)/profit before tax (676) 662
At UK statutory rate of corporation tax of 19% (2021-22: 19%) 128 (126)
Effect of different tax rates on non-UK profits and losses (7) (10)
Tax (under)/over-provided in previous years¹ (6) 27
Non-deductible expenses (2) (9)
GLS VAT adjustments (9) –
Tax reliefs and incentives 5 5
Uncertain tax positions – (1)
Tax effect of property disposals 1 10
Tax effect of closure of RMPP to future accrual (2) (3)
Net pension interest credit 22 14
Derecognition of brought forward deferred tax assets (115) –
Net increase in tax charge resulting from non-recognition of certain deferred tax assets and liabilities (219) (3)
Super-deduction enhanced capital allowances 7 14
Effect of change in tax rates – 32
Tax charge in the consolidated income statement (197) (50)
1 Tax (under)/over-provided in previous years in 2021-22 includes a £23 million credit relating to a reduced uncertain tax provision against prior year claims under the patent box regime.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
187

8. Taxation (continued)
Deferred tax
Deferred tax by balancesheece sheetcatet category
52 weeks 2023
At
27 March
2022
£m
Credited/
(charged) to
income
statement
£m
Credited
to other
comprehensive
income
£m
Charged
directly in
equity
£m
Acquisition of
subsidiaries
£m
(Charged)/
credited to
foreign
exchange
reserve
£m
Jurisdictional
right of offset
£m
At
26 March
2023
£m
Liabilities
Accelerated capital allowances (34) 5 – – – – – (29)
Intangible assets (51) 3 – – (5) (2) – (55)
Hedging derivative temporary
differences (18) – 18 – – – – –
(103) 8 18 – (5) (2) – (84)
Jurisdictional right of offset 49 – – – – – (20) 29
Deferred tax liabilities (54) 8 18 – (5) (2) (20) (55)
Assets
Deferred capital allowances 1 – – – – – – 1
Pensions temporary differences 100 (106) 6 – – – – –
Provisions and other 27 (10) – – – 1 – 18
Employee share schemes 2 (1) – (1) – – – –
Losses available for offset
against future taxable income 34 (14) – – – – – 20
R&D expenditure credit 1 (1) – – – – – –
165 (132) 6 (1) – 1 – 39
Jurisdictional right of offset (49) – – – – – 20 (29)
Deferred tax assets 116 (132) 6 (1) – 1 20 10
Net deferred tax asset/
(liability) 62 (124) 24 (1) (5) (1) – (45)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
188

8. Taxation (continued)
Deferred tax by
balancese sheetcat category
52 weeks 2022
At
29 March
2021
£m
(Charged)/
credited to income
statement
£m
Charged
to other
comprehensive
income
£m
(Charged)/
credited directly in
equity
£m
Acquisition of
subsidiaries
£m
Jurisdictional
right of offset
£m
At
27 March
2022
£m
Liabilities
Accelerated capital
allowances (7) (17) – – (10) – (34)
Intangible assets (50) – – – (1) – (51)
Hedging derivative temporary
differences – – (18) – – – (18)
(57) (17) (18) – (11) – (103)
Jurisdictional right of offset 9 – – – – 40 49
Deferred tax liabilities (48) (17) (18) – (11) 40 (54)
Assets
Deferred capital allowances 33 (32) – – – – 1
Pensions temporary
differences 75 59 (34) – – – 100
Provisions and other 32 (5) – – – – 27
Employee share schemes 3 – – (1) – – 2
Losses available for offset
against future taxable income 15 18 – 1 – – 34
R&D expenditure credit 1 – – – – – 1
Hedging derivative temporary
differences 3 – (3) – – – –
162 40 (37) – – – 165
Jurisdictional right of offset (9) – – – – (40) (49)
Deferred tax assets 153 40 (37) – – (40) 116
Net deferred tax asset 105 23 (55) – (11) – 62
Deferred tax assets and liabilities are offset within the same jurisdiction where the Group has a legally enforceable right to do so. Below is
an analysis of the deferred tax balances (after offset) for balance sheet presentation purposes.
Deferred tax – balance sheet presentation
At
26 March
2023
£m
At
27 March
2022
£m
Liabilities
GLS group (55) (54)
Deferred tax liabilities (55) (54)
Assets
GLS group 10 10
Net UK position – 106
Deferred tax assets 10 116
Net deferred tax (liability)/asset (45) 62
In order to recognise a deferred tax asset it must be probable that future taxable profits will be available against which the deductible
temporary differences and unused tax losses can be utilised. The Group assesses the recoverability of deferred tax assets at each reporting
date. Given the loss incurred by Royal Mail during the period, there is increased uncertainty that future taxable profits will be generated.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
189

8. Taxation (continued)
IAS 12 does not define a time period over which an assessment of expected taxable profits should be made although it is acknowledged
that reliability decreases the further out into the future the forecast extends. Whilst the Board approved Business Plan covers five years,
the normal planning cycle for Royal Mail is three years. Taxable profits have been calculated based on the Board approved Business Plan
and for the next three years there are no forecast taxable profits. As a result, management has not recognised any deferred tax asset in
respect of the Royal Mail losses incurred in the year and has derecognised £106 million in respect of the brought forward net deferred tax
asset as at 27 March 2022.
GLS has deferred tax assets and liabilities in various jurisdictions which cannot be offset against one another. The main elements of the
liability relate to goodwill and intangible assets in GLS Germany, for which the Group has already taken tax deductions, and fixed assets
and intangible assets in relation to acquisitions in Canada.
Unrecognised temporary differences
At 26 March 2023, the Group had the following unrecognised tax losses and temporary differences:
At 26 March 2023
£m
At 27 March 2022
£m
Unused losses
and deductible
temporary
differences Tax value
Unused losses
and deductible
temporary
differences Tax value
Royal Mail
Losses available for offset against future taxable income 691 173 7 2
Deferred capital allowances 308 77 – –
Pensions temporary differences 159 40 – –
Provisions and other 29 7 – –
GLS
Losses available for offset against future taxable income 224 54 244 72
Provisions and other 58 16 5 1
1,469 367 256 75
The Group has not recognised these deferred tax assets on the basis that there is not sufficient certainty of its capacity to utilise them in
the future. The Royal Mail and GLS losses available for offset against future taxable income have no expiry date.
The Group also has temporary differences of £174 million (2021-22: £177 million) in respect of capital losses, the tax effect of which is
£44 million (2021-22: £44 million) in respect of assets previously qualifying for industrial buildings allowances, that would arise if the
assets were sold at net book value. Further temporary differences exist in relation to £419 million (2021-22: £444 million) of gains for
which rollover relief has been claimed, the tax effect of which is £105 million (2021-22: £111 million). No tax liability would be expected to
crystallise on the basis that, were the assets (into which the gains have been rolled over) to be sold at their residual values, no capital gain
would arise.
Tax developments
UK legislation in respect of the OECD Pillar 2 (Global Minimum Tax) rules was released on 23 March 2023 and is currently proceeding
through parliament. The Group is reviewing the extent to which it will be impacted by these rules.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
190

9. Earnings per share
52 weeks 2023 52 weeks 2022
Reported
Specific items
and pension
adjustment
1
Adjusted Reported
Specific items and
pension
adjustment
1
Adjusted
(Loss)/profit for the year (£ million) (873) (677) (196) 612 17 595
Weighted average number
ofsof sharesiss issued(md (million) 956 n/a 956 992 n/a 992
Basic earnings per share (pence) (91.3) n/a (20.5) 61.7 n/a 60.0
Diluted earnings per share (pence) (91.3) n/a (20.5) 61.4 n/a 59.7
1 Further details of the specific items and pension adjustment total can be found in the Financial Review on page 64.
The diluted earnings per share for the year ended 26 March 2023 is calculated in line with basic earnings per share on account of the
ordinarily dilutive instruments being anti-dilutive in the period. The diluted EPS for the year ended 27 March 2022 was based on a weighted
average number of shares of 996,495,404 to take account of the potential issue of 2,087,313 ordinary shares resulting from the Deferred
Share Bonus Plans and 2,304,879 ordinary shares resulting from the Long-Term Incentive Plans. These plans are for certain senior
management and are disclosed in more detail in Note 18.
The 263,566 (2021-22: 2,265,008) shares held in an Employee Benefit Trust for the settlement of options and awards to current and
formeremr employees are treated as treasury shares for accounting purposes (see Note 26). The Company, however, does not hold any
sharesin trs in treasury.
10. Dividends
Dividends on ordinary shares
52 weeks
2023
Pence per share
52 weeks
2022
Pence per share
52 weeks
2023
£m
52 weeks
2022
£m
Final dividend paid 13.3 10.0 127 100
Interim dividend paid – 6.7 – 67
Special dividend paid – 20.0 – 199
Total dividends paid 13.3 36.7 127 366
Given the performance of Royal Mail in 2022-23, and increased investment in GLS, the Board has decided not to pay a final dividend in
respect of 2022-23 (2021-22: 13.3 pence final dividend).
Some shares are held by the Trustee of the Royal Mail Share Incentive Plan on behalf of the Company to satisfy future share awards. The
Trustee does not receive any dividends on the shares it holds, hence the value of dividends paid being lower than the number of shares in
issue multiplied by the pence per share. Some shares are held by the Trustee of the Royal Mail Share Incentive Plan on behalf of the
Company to satisfy future share awards. The Trustee does not receive any dividends on the shares it holds, hence the value of dividends
paid being lower than the number of shares in issue multiplied by the pence per share.
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191

11. Retirement benefit plans
Summary pension information
52 weeks
2023
£m
52 weeks
2022
£m
Ongoing UK pension service costs
UK defined benefit plans (including administration costs)
1
(385) (441)
UK defined contribution plan (124) (116)
UK defined benefit and defined contribution plans’ Pension Salary Exchange employer contributions
2
(174) (181)
Total UK ongoing pension service costs (683) (738)
GLS pension costs accounted for on a defined contribution basis (9) (9)
Total Group ongoing pension service costs (692) (747)
Cash pension service costs
3
UK defined benefit plan’s employer contributions
4
(252) (267)
Defined contribution plans’ employer contributions (133) (125)
UK defined benefit and defined contribution plans’ PSE employer contributions (174) (181)
Total Group cash flows relating to ongoing pension service costs (559) (573)
Pension charge to cash difference adjustment (133) (174)
At 26 March
2023
’000
At 27 March
2022
’000
UK pension plans – active members
UK defined benefit plan 65 71
UK defined contribution plan 57 61
Total 122 132
1 These pension service costs are charged to the income statement. They represent the cost (as a percentage of pensionable payroll – 22.9% (2021-22: 24.6%)) of the increase in the defined benefit
obligation due to members earning one more years’ worth of pension benefits. They are calculated in accordance with IAS 19 and are based on market yields (high-quality corporate bonds and inflation)
at the beginning of the reporting year. Also included are pensions administration costs for the RMPP of £11 million (2021-22: £9 million) and the DBCBS of £5 million (2021-22: £5 million) and, in the prior
year, a £6 million past service cost in respect of the estimated liability for historic Guaranteed Minimum Pension (GMP) costs in RMPP that arose in the year. Further details are provided under the
heading ‘Guaranteed Minimum Pensions’ below.
2 Eligible employees who are enrolled into PSE opt out of making employee contributions to their pension and the Group makes additional contributions in return for a reduction in basic pay.
3 These values exclude the impact of any timing differences in pension payments and represent the equivalent cash costs of the amounts charged to the income statement in the period.
4 The employer contribution cash flow rate of 15.6% is paid in respect of the DBCBS (2021-22: 15.6%). These contribution rates are fixed, with actuarial funding valuations carried out every three years to
determine whether additional deficit contributions are required. These actuarial valuations are required to be carried out on assumptions determined by theTrhe Trustee and agreed by Royal Mail. The most
recent triennial valuation at 31 March 2021 was completed in May 2022 and no additional contributions were required.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
192

11. Retirement benefit plans (continued)
In the period, the Group operated the following plans:
UK defined contribution plan
Royal Mail Group Limited, the Group’s main UK operating subsidiary, operates the Royal Mail Defined Contribution Plan (RMDCP). This
planwan was launched in April 2009 and is open to employees who joined the Group from 31 March 2008, following closure of the RMPP to
newnew members.
Ongoing UK defined contribution plan costs (excluding PSE) have increased from £116 million in 2021-22 to £124 million due to a significant
increase in RMDCP membership in the year. The average employer’s contribution rate is 8.9% which has stayed consistent with 2021-22 at 8.9%.
UK defined benefit plans
Royal Mail Pension Plan (RMPP)
5
and Defined Benefit Cash Balance Section (DBCBS)
The legacy section of the Royal Mail Pension Plan, the RMPP, closed to future accrual in its previous form from 31 March 2018, and was
replaced in201n 2018 by a new section of the scheme, the DBCBS.
The legacy RMPP includes sections A, B and C, each with different terms and conditions.
Section A Section B Section C
Joining date for
members (or
beneficiaries
ofmembers members)
Before 1 December 1971 On or after 1 December 1971
andbnd before1 Ape 1 April 1987
or
for members of Section A whocho chose
to receive SectionBbn B benefits.
On or after 1 April 1987
andbnd before1 Ape 1 April 2008
Terms Pension of 1/80th of pensionable salary plus a tax-free lumpsup sumofm of
3/80thsohs of pensionable salary for each year ofpr of pensionablesee service,
until 31 March 2018.
Pension of 1/60th of pensionable salary
for each yearoar of pensionable service,
until31 Matil 31 March 2018.
Members wishing to take atke a taxfax free
lump sum on retirement do so in
exchange fora ror a reduced pension.
5 Any references to the RMPP relate to the scheme’s defined pension liabilities built up to 31 March 2018. From 1 April 2018 members began building up DBCBS benefits.
The DBCBS has been in place since 1 April 2018, when the RMPP closed. This is a transitional arrangement until the proposed Royal Mail
Collective Pension Plan (RMCPP) commences.
DBCBS members build up a guaranteed lump sum benefit of 19.6% of their pensionable pay each year. Although there are no guaranteed
increases to this lump sum, the aim is to provide above inflation increases and the Trustee invests the scheme assets accordingly. If the
value of the DBCBS assets were to fall below the value of the members’ guaranteed lump sum benefits, then no increases would be
awarded until asset values had recovered. The Group would be obligated to make the necessary contributions to ensure that members
received at least the guaranteed lump sum amount. From an assessment of announcements and internal communications made to
members of the scheme to date and taking into account the increases granted to date, management is however of the view that there is a
requirement to recognise a constructive obligation to provide an increase to the lump sum for accounting purposes. The increase awarded
from 1 April 2023 is CPI (at 10.1%) plus 1.2%. The liabilities of the scheme have been calculated assuming future increases of CPI plus 2.0%,
although the nature of the scheme means that actual increases could be lower or higher than this amount.
The Group signed an updated Schedule of Contributions on 17 May 2022. This covers a period of five years from the date of certification of
the schedule, i.e. until May 2027. In accordance with this schedule, the Group is required to make payments totalling 15.6% of pensionable
payroll in respect of DBCBS.
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193

11. Retirement benefit plans (continued)
Pensions governance and management
Royal Mail Pensions Trustees Limited acts as the corporate Trustee to the Royal Mail Pension Plan (comprising the RMPP and DBCB
Sections). There are currently eight Trustee Directors that sit on the Trustee Board. There is one vacancy for an employer-nominated
Trustee Director. The Trustee Board is supported by an executive team of pension management professionals. They provide day-to-day
Plan management, advise the Trustee Board on its responsibilities and ensure that decisions are fully implemented.
The Trustee Board is responsible for:
Monitoring the covenant of
theparticipating employersthe participating employers
To help protect benefits, the Trustee Board monitors the financial strength of the participating employers.
Investing contributions The Trustee Board invests the member and employer contributions in a mix of equities, bonds,
property and other investments including derivatives. It holds the contributions and investments
onbon behalf of the members.
Keeping members informed The Trustee Board sends active members an annual benefit illustration together with a summary
oftof the RMPP’s annual report and accounts.
Acting in the best interests
ofaof allRMll RMPP beneficiaries
The Trustee Board must pay all benefits as they fall due under the Trust Deed and Rules.
An agreement has been made with the Pension Trustee to ringfence certain employer contributions in an escrow arrangement. These
contributions are not considered to be Plan assets as the Trustee does not have control over the assets. This balance is included within
non-current financial assets. See Note 24 to the Financial Statements for further details.
Royal Mail Senior Executives Pension Plan (RMSEPP)
This scheme for executives closed in December 2012 to future accrual, therefore the Group makes no regular future service contributions.
In September 2018 an insurance policy was purchased in respect of all remaining pensioners and deferred members, following which it
was decided to proceed to buy out and wind up the plan.
The wind-up of RMSEPP had previously been expected to complete in 2020-21, but it was delayed by the need for further clarity over the
approach to GMP equalisation. This has now been resolved and the buy-out of this scheme was completed in June 2022, with the bulk
annuity policies being exchanged for individual policies between the insurers and all remaining members. All the Group’s obligations
underter the plan have now been fully extinguished and the Group has therefore de-recognised all liabilities under the scheme as well as
thecoe corresponding assets that had previously represented the value of the bulk annuity policies.
The Group expects to proceed to wind up the plan in the coming months. The scheme still holds residual assets which are expected to be
returned to the Group following the wind up of the scheme, following the payment of any remaining closure expenses. This refund however
will be subject to a withholding tax deduction of 35%, hence the surplus is presented on the balance sheet net of a £3 million adjustment
which represents the tax that would be withheld on the surplus amount.
When wind-up was triggered in August 2021, the Schedule of Contributions ceased and no further contributions were payable.
Unfunded pension
A liability of £1 million (2021-22: £2 million) has been recognised for future payment of pension benefits to a past Director.
Accounting and actuarial funding surplus position (RMPP, RMSEPP and DBCBS)
In addition to the accounting valuations calculated in accordance with IAS 19, actuarial funding valuations are carried out every three
yearsby as by actuaries commissioned by the Trustee for the purposes of calculating contributions and funding requirements. For the RMPP,
themae main difference between the accounting and actuarial funding valuations is that different rates are used to discount the projected
scheme liabilities. The accounting valuation uses yields on high quality corporate bonds and the actuarial funding valuation uses gilt
yields.As. As the accounting discount rate is higher than the actuarial funding discount rate, this leads to a lower computed liability.
The difference between the funding and accounting valuations for the DBCBS arises from the different financial assumptions used for the
calculations of each, in particular the discount rates used and the assumptions for discretionary increases to the lump sum benefits. The
discount rate used for funding purposes is higher than that used for accounting purposes. In addition, as described above, under IAS 19
theGroe Group recognises a constructive obligation for a set increase to benefits, currently CPI plus 2.0%, for accounting purposes, however
forfur funding purposes the increases are set based on the level of the available assets. This results in the accounting liabilities for the
DBCBSbeS being higher than the funding liabilities.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
194

11. Retirement benefit plans (continued)
The updated triennial valuation for RMPP and the first triennial valuation for the DBCBS at 31 March 2021 were approved in May 2022. Since
the liabilities under the RMSEPP scheme have now been fully bought out, the Trustee did not carry out a full triennial valuation at 31 March
2021. The estimated funding positions for the RMPP and DBCBS are shown below.
RMPP DBCBS
Date of valuation 31 March 2021 (agreed on 17 May 2022) The first full valuation was performed as at 31 March 2021
and was agreed on 17 May 2022.
Valuation The triennial valuation was calculated on a self-
sufficiency basis. The surplus calculated for the
purposes of the March 2021 triennial valuation was
£661mil1 million. Based on a set of assumptions which
formthm the basis for the March 2021 valuation and then
rolled forward, the actuarial surplus at 31 March 2023
was estimated to be around £1,100 million.
A draft funding position at 31 March 2023 has been
calculated based on the assumption that the funding
surplus is equal to the amount held in respect of the risk
reserve. Under this method, the DBCBS actuarial surplus
was estimated to be around £40 million at 31 March 2023.
Below is a summary of the combined plans’ assets and liabilities on an accounting (IAS 19) basis.
DBCBS RMPP RMSEPP
At
26 March
2023
£m
At
27 March
2022
£m
At
26 March
2023
£m
At
27 March
2022
£m
At
26 March
2023
£m
At
27 March
2022
£m
Fair value of plans’ assets (11(b) below) 1,652 1,536 7,604 11,142 8 320
Present value of plans’ liabilities (1,797) (1,926) (4,601) (6,960) – (312)
(Deficit)/surplus in plans
(pre-withholding tax payable)7 (145) (390) 3,003 4,182 8 8
Withholding tax payable
6
n/a n/a (1,051) (1,464) (3) (3)
(Deficit)/surplus in plans (145) (390) 1,952 2,718 5 5
6 Any reference to a withholding tax adjustment relates to withholding tax payable on distribution of a pension surplus.
Having taken legal advice with regard to the rights of the Group under the Trust deeds and rules, the Directors believe there is an obligation to
recognise a pension surplus for the RMPP on an accounting basis. The surplus on an accounting basis will be different to the scheme’s funding
position. Under IAS 19 and IFRIC 14, it must recognise the economic benefit it considers to arise from either a reduction to its future
contributions or a refund of the surplus at some point in the future, using current long-term accounting assumptions at the reporting date.
This is a technical adjustment made on an accounting basis only.
This surplus is presented on the balance sheet net of a withholding tax adjustment of £1,051 million (at 27 March 2022: £1,464 million)
inrin respect of the RMPP, which represents the tax that would be withheld on the surplus amount. Any actuarial surplus will remain in the
RMPP for the benefit of members until the point at which all benefits have been paid out or secured.
Under the terms of the DBCBS, any surplus would be awarded to members and therefore if this section was found to be in surplus the
defined benefit liabilities would increase to equal the asset value under IAS 19.
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
195

11. Retirement benefit plans (continued)
Guaranteed Minimum Pensions
Pension schemes are now under an obligation to address the issue of unequal Guaranteed Minimum Pensions (GMP’s). The transfer
ofRMPof RMPP’s historical pension liabilities to HM Government in 2012, in accordance with the Postal Services Act 2011, included all of the
RMPP’s accrued GMP liabilities for members. The requirement to remove the inequality in former RMPP benefits deriving from GMP’s
forthr those members therefore rests with HM Government. Following the decision by the High Court in Lloyds Banking Group Pensions
Trustees Limited versus Lloyds Bank plc (2020), however, which determined that schemes are also obliged to equalise GMP’s by topping
up payments for any past members who have transferred out of a scheme since May 1990, the Trustee sought legal advice as to whether
this decision also applies in the case when liabilities transferred to another scheme before April 2012. The Trustee considers that the
Lloyds judgment is likely to give rise to a residual liability for statutory transfers out which included GMP benefits between May 1990 and
March 2012 and expects that this will require top up payments to be made for affected former members. The Trustee is still reviewing
historic data to calculate the exact expected impact, which will take some time to complete, but the Group’s Corporate Actuary provisionally
estimated the cost to be c.£6 million, based on historic values of transfers out of the scheme. This was charged to the income statement in
the prior year as a past service cost. This cost will be funded from the RMPP assets and no additional employer contributions are expected
to be required.
All GMP liabilities relating to RMSEPP members (both past and present) have now been settled and, following the transfer of the liabilities
under this Scheme to insurers, its liabilities have been extinguished.
The following disclosures relate to the major assumptions, sensitivities, assets and liabilities in the RMPP, RMSEPP and DBCBS.
a) Major long-term assumptions used for accounting (IAS 19) purposes – RMPP, RMSEPP and DBCBS
IAS 19 assumptions will be derived separately for the legacy RMPP and DBCBS, in particular taking into account the different weighted
durations of the future benefit payments. The assumptions derived for RMSEPP in the prior year were the same as those derived for the
legacy RMPP. No assumptions have been derived for RMSEPP at 26 March 2023 since the scheme has now been fully bought out and the
liabilities extinguished.
The major assumptions used to calculate the accounting position of the pension plans are as follows:
At 26 March
2023
At 27 March
2022
Retail Price Index (RPI) – RMPP/RMSEPP
7,11
3.2% 3.5%
Retail Price Index (RPI) – DBCBS
11
3.2% 3.8%
Consumer Price Index (CPI) – RMPP/RMSEPP
7,11
2.9% 3.2%
Consumer Price Index (CPI) – DBCBS
11
2.8% 3.4%
Discount rate – RMPP/RMSEPP
7,8
– nominal 4.7% 2.8%
– real (nominal less RPI) 1.5% (0.7%)
Discount rate – DBCBS
9
– nominal 4.7% 2.8%
– real (nominal less RPI) 1.5% (1.0%)
Rate of increase in pensionable salaries
10
RPI – 0.1% RPI – 0.1%
Rate of increase for deferred pensions – RMPP CPI CPI
Rate of pension increases – RMPP Sections A/B CPI CPI
Rate of pension increases – RMPP Section C
10
RPI – 0.1% RPI – 0.1%
Rate of pension increases – RMSEPP members transferred from Section A or B of RMPP
7
– CPI
Rate of pension increases – RMSEPP all other members
7,10
– RPI – 0.1%
Rate of pension increases – DBCBS benefits CPI + 2.0% CPI + 2.0%
Life expectancy from age 60 – for a current 40/60 year old male RMPP member 27/25 years 27/25 years
Life expectancy from age 60 – for a current 40/60 year old female RMPP member 29/27 years 29/27 years
7 2 6 March 2023 assumptions are derived for RMPP and DBCBS only since the RMSEPP scheme has been fully bought out in the year. 27 March 2022 assumptions were derived for RMPP, RMSEPP and DBCBS
8 The discount rate reflects the average duration of the RMPP benefits of around 20 years (2021-22: 24 years). The reduction in duration is primarily due to the increase in the liability discount rate.
9 The discount rate reflects the average duration of the DBCBS benefits of 13 years (2021-22: 15 years). The pension service cost applicable from 28 March 2022 is based on 28 March 2022 assumptions.
The reduction in duration is primarily due to the increase in the discount rate.
10 The rate of increase in salaries, and the rate of pension increase for Section C members (who joined the RMPP on or after April 1987) and RMSEPP ‘all other members’, is capped at 5.0%, which results
intin the average long-term pension increase assumption being 10 basis points lower than the RPI long-term assumption.
11 This is a measure of long term inflation expectations so while short term inflation expectations have increased over the period, in the long term they are expected to be lower.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
196

11. Retirement benefit plans (continued)
Mortality
As part of the actuarial valuation as at 31 March 2021, the Scheme Actuary carried out an updated mortality experience analysis in respect
of the legacy RMPP. As a result of that analysis, the RMPP assumptions are based on the latest Self-Administered Pension Scheme (SAPS)
S3 mortality tables with appropriate scaling factors (96% for male pensioners and 113% for female pensioners). Future improvements for
accounting purposes use the parameters identified from that analysis but for the year end have been based on the most up to date CMI
2021 core projections (smoothing factor 7.5 with a long-term trend of 1.5% per annum). No adjustments have been made to mortality
assumptions at year end to reflect the potential effects of COVID-19, as it is still considered too soon to make a judgement on the impact
oftof the pandemic on future mortality improvements.
Cash commutation allowance
In previous periods a 15% allowance had been made for active members of Section C of RMPP commuting their pension upon retirement.
Recent commutation experience and expectations for the future, taking into account that most members will now have the benefit of a
cash lump sum upon retirement under the DBCBS, suggest that commutations are likely to be far smaller in the future. As a result, for
the2021e 2021-22 year end this allowance was reduced to £nil and this has been retained.
Sensitivity analysis for RMPP and DBCBS liabilities
The RMPP and DBCBS liabilities are sensitive to changes in key assumptions. The potential impact of the largest sensitivities on the RMPP
and DBCBS liabilities is as follows:
Key assumption change
At 26 March 2023 At 27 March 2022
Potential
increase in
DBCBS liabilities
£m
Potential
increase in
RMPP liabilities
£m
Potential
increaseise in
DBCBS liabilities
£m
Potential
increaseise in
RMPP liabilities
£m
Additional one year of life expectancy – 140 – 280
Increase in inflation rate (both RPI and CPI simultaneously) of 0.1% per annum 20 90 30 170
Decrease in discount rate of 0.1% per annum 20 90 30 170
Increase in CPI assumption (assuming RPI remains constant) of 0.1% per annum 20 20 30 40
Increase in constructive obligation of 0.1% per annum 20 – 30 –
Increase in inflation rate (both RPI and CPI simultaneously) of 0.5% per annum 110 480 130 880
Decrease in discount rate of 0.5% per annum 100 420 130 770
Increase in CPI assumption (assuming RPI remains constant) of 0.5% per annum 110 110 130 200
Increase in constructive obligation of 0.5% per annum 110 – 130 –
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
197

11. Retirement benefit plans (continued)
This sensitivity analysis has been determined based on a method that assesses the impact on the defined benefit obligation, resulting from
reasonable changes in key assumptions occurring at the end of the reporting year. The discount rate and RPI sensitivities are calculated
using the mean term of the relevant section to derive the impact of a 0.1% and 0.5% change in assumption. For the RPI/CPI gap, the approach
is the same for DBCBS, but for legacy RMPP, the liabilities as at 26 March 2023 are considered to derive an accurate impact in percentage
terms. This percentage is then applied to the liabilities at March 2023. This approach is unchanged from the prior year, although any
change in mean terms will impact the sensitivities. Changes inverse to those in the table (e.g. an increase in discount rate) would have the
opposite approximate effect on liabilities.
b) RMPP, RMSEPP and DBCBS assets
At 26 March 2023 At 27 March 2022
Quoted
£m
Unquoted
£m
Total
£m
Quoted
£m
Unquoted
£m
Total
£m
Equities
UK 1 – 1 1 19 20
Overseas 17 10 27 23 32 55
Bonds
Fixed interest – UK 130 51 181 416 96 512
– Overseas 485 163 648 496 304 800
Pooled investments
Absolute return – 382 382 – 477 477
Equity 261 – 261 347 – 347
Private equity – 51 51 – 62 62
Fixed interest 172 106 278 21 575 596
Private debt – 504 504 – 451 451
Property – 51 51 – 63 63
Liability-driven investments
12
5,977 (42) 5,935 8,277 42 8,319
Property (UK) – 533 533 – 626 626
Cash and cash equivalents 422 – 422 403 – 403
Other – (5) (5) – (52) (52)
Derivatives – (5) (5) – 7 7
RMSEPP buy-in annuity policies – – – – 312 312
Total plans’ assets 7,465 1,799 9,264 9,984 3,014 12,998
12 This portfolio comprises gilt and swap contracts that are designed to hedge the majority of the interest rate and inflation risk associated with the plans’ obligations. At 26 March 2023 it included
£5,452 million (27 March 2022: £8,401 million) of index-linked gilts, £708 million (27 March 2022: £691 million) of bonds, £555 million (27 March 2022: £145 million) in short-term money market funds
and£6nd £68 million (27 March 2022: £44 million asset) in cash and similar instruments, offset by negative fair value investments of £758 million (27 March 2022: £900 million) in repurchase agreements and
£90 million of swaps (27 March 2022: £26 million).
Included within the Group’s defined benefit pension scheme assets are assets with a fair value estimated to be £215 million that are based
on non-observable inputs at 26 March 2023. Estimates of the fair value of these assets have been performed using the latest available
statements of each of the funds that make up this balance updated for any subsequent cash movements between the statement date and
the year-end reporting date.
There were no open equity futures or options derivatives within this portfolio at 26 March 2023 (27 March 2022: £nil). £5.4 billion
(27 March2022: £h 2022: £8.4 billion) of HM Government bonds are primarily included in the liability-driven investments balance above.
Thephe plans’as’ assets do not include property or other assets used by the Group or shares of International Distributions Services plc at
26 March 2023 (27 March 2022: £nil).
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
198

11. Retirement benefit plans (continued)
Risk exposure and investment strategy
The Group’s defined benefit schemes face similar risks to other UK defined benefit schemes. Some of the key financial risks and mitigating
actions are set out in the table below.
Investment
market
movements
The risks inherent in the investment markets are partially mitigated by pursuing a widely diversified approach across
asset classes and investment managers. The RMPP uses derivatives (such as swaps, forwards and options), from
time to time to manage risks whilst maintaining expected investment returns.
Interest rates and
inflation changes
The legacy RMPP section’s liabilities and assets are impacted by movements in interest rates and inflation. In order
toreto reduce the risk of movements in these rates driving the RMPP into a funding deficit, the RMPP Trustee has hedged
the liabilities. It has done this predominantly through investment in index-linked gilts and derivatives.
The nature of the risks and their mitigation are similar for the DBCBS, although the level of hedging is less than
theRMPe RMPP.
In the RMPP section, many of the inflation linked increases that apply are restricted to a maximum increase of 5%
inain any year. The scheme’s rules therefore give some protection from the risk of significantly high levels of inflation.
Equity exposure The equity exposure of the legacy RMPP section was reduced previously by means of a short Total Return Swap (TRS).
The TRS and underlying listed equity exposure it backed were removed in late September 2022 and had a market
value as at 26 March 2023 of £nil. However, there were (tactical) equity holdings totalling £61m at 26 March 2023
within other mandates held at the discretion of the relevant investment managers under the terms of their mandates.
Changes in life
expectancy
The RMPP’s liabilities could be impacted by longer than expected life expectancy, resulting in higher than expected
payout levels.
Although this risk is not hedged, mortality studies are undertaken as part of actuarial funding valuations and where
appropriate updated assumptions are adopted for accounting valuations.
Changes in
corporate and
Government
bondynd yields
A fall in yields on AA rated corporate bonds, used to set the IAS 19 discount rates, has led to an increase in the
IAS1S 19l9 liabilities.
The legacy RMPP’s assets include corporate bonds, HM Government bonds and interest rate derivatives partly offset
the impact of movements in the discount rate. The RMPP section is hedged against gilt movements to limit the impact
on funding (and therefore cash) but, to the extent that gilts move differently to corporate bonds, the accounting
liability is more exposed.
Further details on ‘key sources of estimation uncertainty’ relating to pension assets can be found in Note 1, including details of how the
assets have been valued.
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
199

11. Retirement benefit plans (continued)
c) Movement in RMPP assets, liabilities and net position
Changes in the value of the defined benefit pension liabilities, the fair value of the plans’ assets and the net defined benefit surplus are
analysed as follows:
Defined benefit asset Defined benefit liability Net defined benefit surplus
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
Retirement benefit surplus
(beforewitore withholding tax payable)
at28Marcat 28 March 2022 and 29 March 2021 11,142 11,441 (6,960) (7,775) 4,182 3,666
Amounts included in the income statement:
Ongoing UK defined benefit pension
planan andand administration costs
(includedinpd in peoplecose costs) (11) (9) – – (11) (9)
Pension interest income/(cost)
13
311 228 (194) (155) 117 73
Total included in profit before tax 300 219 (194) (155) 106 64
Amounts included in other comprehensive
income – remeasurement (losses)/gains
Actuarial (loss)/gain arising from:
Financial assumptions – – 2,668 871 2,668 871
Demographic assumptions – – – 85 – 85
Experience assumptions – – (196) (50) (196) (50)
Return on plans’ assets
(excludinging interestist income) (3,757) (448) – – (3,757) (448)
Total remeasurement (losses)/gains
ofthe thedefi defined benefit surplus (3,757) (448) 2,472 906 (1,285) 458
Other
Employer contributions – – – – – –
Past service cost – – – (6) – (6)
Benefits paid (81) (70) 81 70 – –
Total other movements (81) (70) 81 64 – (6)
Retirement benefit surplus
(beforewitore withholding tax payable)
at26March 2023 aat 26 March 2023 and 27 March 2022 7,604 11,142 (4,601) (6,960) 3,003 4,182
Withholding tax payable n/a n/a n/a n/a (1,051) (1,464)
Retirement benefit surplus
(netofwith(net of withholding tax payable)
at26March 2023 aat 26 March 2023 and 27 March 2022 n/a n/a n/a n/a 1,952 2,718
13 Pension interest income for the current year results from applying the plans’ discount rate at 27 March 2022 to the plans’ assets at that date. Similarly, the pension interest cost results from applying the
plans’ discount rate as at 27 March 2022 to the plans’ liabilities at that date.
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
200

11. Retirement benefit plans (continued)
c) Movement in RMSEPP assets, liabilities and net position
Changes in the value of the defined benefit pension liabilities, the fair value of the plans’ assets and the net defined benefit surplus are
analysed as follows:
Defined benefit asset Defined benefit liability Net defined benefit surplus
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
Retirement benefit surplus
(beforewitore withholding tax payable)
at28Marcat 28 March 2022 and 29 March 2021 320 373 (312) (364) 8 9
Amounts included in the income statement:
Ongoing UK defined benefit pension
planan andand administration costs
(includedinpd in peoplecose costs) – – – – – –
Pension interest income/(cost)
13
2 7 (2) (7) – –
Total included in profit before tax 2 7 (2) (7) – –
Amounts included in other comprehensive
income – remeasurement (losses)/gains
Actuarial (loss)/gain arising from:
Financial assumptions – – 64 34 64 34
Demographic assumptions – – – 9 – 9
Experience assumptions – – – – – –
Return on plans’ assets
(excludinging interestist income) (64) (44) – – (64) (44)
Total remeasurement (losses)/gains
ofthe thedefi defined benefit surplus (64) (44) 64 43 – (1)
Other
Employer contributions – – – – – –
Transfer to insurer (242) – 242 – – –
Benefits paid (8) (16) 8 16 – –
Total other movements (250) (16) 250 16 – –
Retirement benefit surplus
(beforewitore withholding tax payable)
at26March 2023 aat 26 March 2023 and 27 March 2022 8 320 – (312) 8 8
Withholding tax payable n/a n/a n/a n/a (3) (3)
Retirement benefit surplus
(netofwith(net of withholding tax payable)
at26March 2023 aat 26 March 2023 and 27 March 2022 n/a n/a n/a n/a 5 5
13 Pension interest income for the current year results from applying the plans’ discount rate at 27 March 2022 to the plans’ assets at that date. Similarly, the pension interest cost results from applying the
plans’ discount rate as at 27 March 2022 to the plans’ liabilities at that date.
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11. Retirement benefit plans (continued)
d) Movement in DBCBS assets, liabilities and net position
Changes in the value of the defined benefit pension liabilities, the fair value of the plans’ assets and the net defined benefit deficit during the
reporting year are analysed as follows:
Defined benefit asset Defined benefit liability Net defined benefit deficit
2023
£m
2022
£m
2023
£m
2022
£m
2023
£m
2022
£m
Retirement benefit deficit at
28 March 2022 and 29 March 2021 1,536 1,192 (1,926) (1,586) (390) (394)
Amounts included in the incomese income statement:
Ongoing UK defined benefit pension
plansen service cost includingang administration
costs (includedinpd in people costs) (5) (5) (451) (515) (456) (520)
Pension interest income/(cost)
14
45 26 (57) (35) (12) (9)
Total included in profit before tax 40 21 (508) (550) (468) (529)
Amounts included in other comprehensive
income – remeasurement gains/(losses)
Actuarial gain/(loss) arising from:
Financial assumptions – – 662 107 662 107
Experience assumptions – – (89) 51 (89) 51
Return on plan assets (195) 14 – – (195) 14
Total remeasurement gains/(losses)
ofthe thedefi defined benefit deficit (195) 14 573 158 378 172
Other
Employer contributions
15
335 361 – – 335 361
Employee contributions 10 3 (10) (3) – –
Benefits paid (74) (55) 74 55 – –
Total other movements 271 309 64 52 335 361
Retirement benefit deficit at
26 March 2023 and 27 March 2022 1,652 1,536 (1,797) (1,926) (145) (390)
14 Pension interest income results from applying the plans’ discount rate at 27 March 2022 to the plans’ assets at that date. Similarly, the pension interest cost results from applying the plans’ discount
rate as at 27 March 2022 to the plans’ liabilities at that date.
15 Includes PSE contributions of £88 million (2021-22: £99 million).
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
202

12. Acquisition of businesses
2022-23 acquisitions
During the year, two small acquisitions, Tousfacteurs and Pesaro were completed by GLS in France and Italy respectively, with a combined
net assets value of £10 million, including £9 million of goodwill which is tax deductible and which represents the fact that these acquisitions
will complement the existing networks in their respective countries, adding value through improved service offering and quality, thereby
supporting the retention of existing and winning of new customers.
2021-22 acquisitions
Rosenau Transport (‘Rosenau’)
Following the acquisition of Rosenau in December 2021, GLS management have reviewed the original fair values assigned to the assets and
liabilities of the business during the measurement period and have considered the adjustments to fair values (including £1 million increase in
goodwill to £47 million in total) to be not material, and have therefore not restated the 2021-22 closing balance sheet for these adjustments.
In undertaking the review of the fair values of the acquired assets and liabilities of the business, in relation to the £47 million goodwill
recognised (subsequently reduced to £27 million as a result of a reallocation of £20 million to the GLS Dicom Canada CGU), management
has reaffirmed its view that this reflects that Rosenau has immediately created an effective continental network stretching across Canada
and along the US West Coast. The business model allows GLS to introduce parcel services in western Canada using the Rosenau network
with limited investment. This unlocks significant revenue opportunities by allowing GLS to target national accounts as well as cross border
customers. In addition, current GLS freight activity to the West (currently served through partnerships) can be insourced to realise
synergies. GLS and Rosenau share a close strategic and cultural fit, with a strong focus on quality, reliability and customer service.
13. Property, plant and equipment
Land and
buildings
£m
Plant and
machinery
£m
Motor vehicles
£m
Fixtures and
equipment
£m
Total
£m
Cost
At 28 March 2022 4,630 1,467 1,112 495 7,704
Exchange rate movements 50 25 6 8 89
Reclassification 2 (2) – (3) (3)
Modifications 42 – 2 – 44
Additions 233 170 65 49 517
Disposals (52) (51) (36) (62) (201)
Reclassification to non-current assets held for sale (11) – – – (11)
At 26 March 2023 4,894 1,609 1,149 487 8,139
Depreciation and impairment
At 28 March 2022 2,282 968 537 346 4,133
Exchange rate movements 17 12 3 5 37
Reclassification 1 (2) – – (1)
Depreciation charge 257 78 110 40 485
Impairment charge (see Note 1 and Note 6) – 141 199 50 390
Disposals (54) (51) (33) (62) (200)
Reclassification to non-current assets held for sale (3) – – – (3)
At 26 March 2023 2,500 1,146 816 379 4,841
Net book value:
At 26 March 2023 2,394 463 333 108 3,298
At 27 March 2022 2,348 499 575 149 3,571
Royal Mail excluding Parcelforce Worldwide Cash Generating Unit (CGU)
In accordance with IAS 36, management performs an impairment assessment of the Royal Mail excluding Parcelforce Worldwide CGU
(‘the CGU’) at least annually or whenever events or circumstances indicate that the value of the balance sheet may not be recoverable.
In assessing whether the CGU was impaired, the carrying value of the CGU of £1,439 million was compared to its recoverable amount. The
recoverable amount is the higher of its value in use (VIU) and its fair value less costs of disposal (FVLCD).
Royal Mail’s strategy to transform the business into a more efficient operation that meets customers’ changing needs and the future cash
flows in the five-year business plan reflects both the costs and benefits associated with this transformation. As required by IAS 36, under
the VIU calculation, estimates of future cash flows shall not include cash inflows or outflows that are expected to arise from a future
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203

13. Property, plant and equipment (continued)
restructuring or improving or enhancing the assets to which an entity is not yet committed, at the balance sheet date. The VIU approach,
after adjusting for the restructuring and transformational cashflows, resulted in a full impairment.
Management therefore assessed the recoverability of the CGU using the alternative FVLCD methodology. The FVLCD considers the
valuation from a ‘market participant’ perspective. Deriving a market participant valuation would typically be through a multiple of
earnings methodology. However, management do not believe this methodology would be appropriate in the current circumstances, as the
significant transformation required in the business means that there is not a normalised level of profits against which to apply a multiple
until the outer years of the plan. In addition given the unique nature of the Royal Mail business as the universal service provider in the UK,
and a heavily unionised workforce, there is lack of an exact comparator in order to determine an appropriate multiple. Consequently,
management have calculated a valuation using a discounted cash flow model from the perspective of a market participant i.e. a buyer
transacting in the principal market for an asset of this type.
The Board have used the approved five-year business plan as the base of the discounted cash flows in the FVLCD model. They then
considered their assumptions in the context of information that would be available to a market participant, making minor adjustment as
necessary to arrive at a assumptions that represent a market participant’s view.
The key assumptions in the impairment assessment are:
Expected revenue and operating margin performance
Forecast cash flows for the five-year period are based on the Board approved business plan.
1 The plan assumes that Royal Mail suffers no further industrial disruption in 2023-24.
1 The pay deal announced to CWU members on 21 April 2023 is accepted by CWU members and the related transformational benefits are
achieved.
1 A return to market growth, driven by win back of revenue lost as a result of industrial action, pricing adjustments and other commercial
initiatives designed to grow revenue. The plan assumes growth in parcel volumes but a reduction in letter volume. Revenue growth
initiatives are reliant on quality-of-service improvement.
1 Operating margin reflects the current pay deal announced and benefits realisation from productivity improvements, including through
lower absence, new T&Cs for new joiners and delivery gap closure.
1 The plan does not anticipate any regulatory support from Ofcom or Government, for example, change in the scope of the Universal
Service Obligation.
1 Royal Mail has a robust process for tracking and managing environmental policy and legislation in the UK, and is aiming to meet
changing customer expectations for lower carbon alternatives. As such, management have considered the implications for the forecast
cash flows in the five-year period, and the assumptions in the business plan reflect management’s current climate strategy.
The difficult trading circumstances of the last year have been damaging to Royal Mail, with early resolution of the industrial dispute
through the upcoming ballot and the required operational changes and improvements in Royal Mail fundamental to its turnaround and to
restore profitability.
Discount rates
The discount rate is based on the UK-specific post tax discount rate of 11.25%, which reflects a risk premium a market participant would
apply in order to reflect uncertainty in terms of ability to deliver revenue growth and improved operating margin. In deriving the risk
premium a market participant would consider past performance in terms of delivering transformational change, the industrial dispute
with CWU that still has to be finally resolved, and the significant change and efficiency programme to be delivered.
Long-term growth rates
A long-term growth rate of 0.5% has been used for cash flows subsequent to the five-year plan period. This long-term growth rate is
considered by management to be the best estimate towards the lower end of the range when benchmarked against comparative industry
peers.
In accordance with the financial reporting standards, the recoverable amount is the higher of the VIU and FVLCD. The FVLCD approach
resulted in a recoverable amount of £900 million
1
and a partial impairment position at the year-end, and therefore an impairment loss of
£539 million is recognised in the financial statements at the balance sheet date.
Notes to the Consolidated Financial Statements continued
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Annual Report and Financial Statements 2022-23
204

13. Property, plant and equipment (continued)
Sensitivity to changes in assumptions
The valuation of the CGU is dependent upon a number of estimates used in arriving at revenue growth, operating margin, terminal growth
rates and the discount rate.
An evaluation of sensitivities to the FVLCD calculation illustrates that there are both risks and opportunities. The operational changes and
improvements required in Royal Mail are fundamental to its turnaround to restore profitability. Given past performance of delivering
transformational change, the industrial dispute with CWU that has still to be finally resolved, and the significant change and efficiency
programme to be delivered, there is execution risk in delivering the plan which could lead to further impairment. However, there is also
significant opportunity and subject to progress being made in transforming the business and evolution of the letters and parcels markets,
there is reasonably possible potential in the future for the business to be restored to its full carrying value.
Market: For example, if parcel growth rates are 1% per annum more positive than has been assumed in the valuation, this would result in a
valuation of £1.8 billion, but if parcel growth reduced by 1% it would result in a full impairment. If letter growth rates are 1% per annum
less than has been assumed, this would also result in a full impairment.
Regulation: The plan does not anticipate any regulatory support from Ofcom or Government, for example change in the scope of the USO.
Management believes modernisation of the USO is critical for margins to be durably restored to sustainable levels (defined as between 5
and 10 per cent EBIT margin in the regulated business by Ofcom). Regulatory reform could materially improve the prospects and valuation
of the business.
Discount rate: There is a risk that the planned change programmes are unable to progress at the rate targeted in the business plan, and
therefore an increase in the discount rate by 100 bps, reflecting increased uncertainty, would result in a valuation of £787 million.
Terminal growth rate: An increase in the terminal growth rate to 1% to reflect the higher end of the range of comparative peers, would
result in a valuation of £958 million.
Combined sensitivities: An 11.0% discount rate and 1.0% terminal growth rate would result in a valuation of £993 million. In order for
there to be no impairment charge the discount rate would need to reduce by 175 bps and the terminal growth rate would need to increase
to 2.0%.
The impairment charge of £539 million has been allocated to the various Group asset categories as set out below.
Plant and
machinery
(seea(see above)
£m
Motor vehicles
(see above)
£m
Fixtures and
equipment
(seea(see above)
£m
Goodwill
(Note 15)
£m
Software assets
(Note 16)
£m
Total
£m
Carrying value at 26 March 2023
³
beforeire impairment 604 532 158 449 349 2,092
Impairment charge
2
(141) (199) (50) (4) (145) (539)
Carrying value at 26 March 2023
³
afterier impairment 463 333 108 445 204 1,553
1 This valuation is within Level 3 of the fair value hierarchy as defined within IFRS 13 ‘Fair Value Measurement’.
2 Includes charge against right of use (ROU) assets for plant and machinery £11 million and motor vehicles £73 million (see Note 14).
3 The carrying values represent the position of the Group, not just the Royal Mail excluding Parcelforce Worldwide CGU.
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205

13. Property, plant and equipment (continued)
Land and
buildings
£m
Plant and
machinery
£m
Motor vehicles
£m
Fixtures and
equipment
£m
Total
£m
Cost
At 29 March 2021 4,242 1,278 991 423 6,934
Exchange rate movements (15) (10) 2 (3) (26)
Reclassification – (1) 1 2 2
Modifications 41 – – – 41
Additions 427 203 125 99 854
Disposals (160) (7) (34) (27) (228)
Acquisition of subsidiary 122 4 27 1 154
Reclassification to non-current assets held for sale (27) – – – (27)
At 27 March 2022 4,630 1,467 1,112 495 7,704
Depreciation and impairment
At 29 March 2021 2,222 907 465 333 3,927
Exchange rate movements (6) (5) 1 (2) (12)
Reclassification – – 1 2 3
Modifications (1) – – – (1)
Depreciation charge 228 73 101 39 441
Disposals (160) (7) (31) (26) (224)
Reclassification to non-current assets held for sale (1) – – – (1)
At 27 March 2022 2,282 968 537 346 4,133
Net book value:
At 27 March 2022 2,348 499 575 149 3,571
At 28 March 2021 2,020 371 526 90 3,007
Depreciation rates are disclosed within Note 1. No depreciation is provided on land, which represents £290 million (2021-22: £279 million)
of the total cost of property assets.
The net book value of the Group’s property, plant and equipment includes £250 million (2021-22: £292 million) in respect of assets in the
course of construction. The net book value of the Group’s land and buildings includes £286 million (2021-22: £290 million) in respect of
building fit-out.
The £517 million (2021-22: £854 million) additions include £3 million (2021-22: £2 million) borrowing costs capitalised at a rate of 2.67%
(2021-22: 2.65%) in relation to specific qualifying assets.
14. Leases
The Group primarily leases office buildings and letter and parcel processing facilities. At 26 March 2023, the Group held approximately
2,297 land and building leases (2021-22: 1,150). The Group also has leases for some of its vehicle fleet and plant and equipment used in
operations. Leases are negotiated on an individual basis and may include extension or termination options.
The lease liabilities are reported as follows in the balance sheet:
Lease liabilities
At 26 March
2023
At 27 March
2022
Present value of
lease payments
£m
Present value of
lease payments
£m
Current liabilities
Lease liabilities due within one year (220) (213)
Non-current liabilities
Lease liabilities due between one and five years (669) (631)
Lease liabilities due beyond five years (473) (497)
Notes to the Consolidated Financial Statements continued
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Annual Report and Financial Statements 2022-23
206

14. Leases (continued)
The right of use assets resulting from lease agreements are detailed below:
Right of use assets
Land and
buildings
£m
Plant and
machinery
£m
Motor vehicles
£m
Fixtures and
equipment
£m
Total
£m
At 26 March 2023
Cost 1,627 178 547 8 2,360
of which additions 100 20 45 1 166
Accumulated depreciation and impairment (518) (141) (420) (5) (1,084)
Depreciation charge (169) (10) (51) (1) (231)
Impairment charge (see Note 1 and Note 6) – (11) (73) – (84)
Total 1,109 37 127 3 1,276
Right of use assets
Land and
buildings
£m
Plant and
machinery
£m
Motor vehicles
£m
Fixtures and
equipment
£m
Total
£m
At 27 March 2022
Cost 1,489 159 519 7 2,174
of which additions 268 10 31 2 311
Accumulated depreciation and impairment (368) (122) (315) (4) (809)
Depreciation charge (146) (15) (52) (1) (214)
Total 1,121 37 204 3 1,365
Leases in the income statement
Leases are recognised in the income statement as detailed below:
52 weeks
2023
£m
52 weeks
2022
£m
Other operating income
Sublease income 4 4
Material expenses
Expenses from short-term/low-value leases (57) (50)
Depreciation
Depreciation of right of use assets (231) (214)
Net finance costs
Interest expense on lease liabilities (32) (29)
The Group enters into sale and leaseback transactions for plant and machinery and vehicles. Cash received from these transactions in the
year was £nil (2021-22: £nil).
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Annual Report and Financial Statements 2022-23
207

15. Goodwill
2023
£m
2022
£m
Cost
At 28 March 2022 and 29 March 2021 850 809
Exchange rate movements 36 (8)
Disposal of business – –
Acquisition of business 9 49
At 26 March 2023 and 27 March 2022 895 850
Impairment
At 28 March 2022 and 29 March 2021 422 431
Impairment charge (see Note 1 and Note 6) 4 –
Exchange rate movements 24 (9)
Disposal of business – –
At 26 March 2023 and 27 March 2022 450 422
Net book value:
At 26 March 2023 and 27 March 2022 445 428
At 27 March 2022 and 28 March 2021 428 378
GLS Europe
The carrying value of goodwill of £445 million (2021-22: £428 million) at the balance sheet date includes £278 million (2021-22: £254 million) in
relation to GLS’ European network (GLS Europe CGU). The carrying value of the GLS European network is £908 million (2021-22: £791 million).
The CGU has been assessed for impairment by comparing the carrying value of the CGU with its recoverable amount, being the CGU’s
value in use. The value in use has been calculated by discounting cash flows for a five-year period, with the period beyond five years
assumed to have a perpetuity growth rate of 1.5% (2021-22: 0.4%). All cash flows of the CGU have been discounted to present value at the
CGU’s post-tax discount rate of 9.1% (2021-22: 9.0%) which reflects current market assessments of the time value of money and the risks
specific to the asset or CGU. The pre-tax discount rate is 12.2% (2021-22: 12.1%). The recoverable amount was deemed to be significantly
inein excess of the carrying value of the CGU.
GLS US excluding US Freight
The GLS US businesses represent two separate CGUs, comprising the US West Coast operations (General Logistics Systems US Inc.
(GLSUS) – pS US) – previously known as GSO and Postal Express Inc. (PEX)), and US Freight. In 2018-19, all the goodwill in the GLS US/PEX CGU
was fully impaired, along with other tangible and intangible fixed assets.
US Freight
The carrying value of goodwill in relation to US Freight (previously known as Mountain Valley Express) is £1 million (2021-22: £1 million).
Animn impairment review has been performed comparing the carrying amount of the US Freight CGU of £18 million (2021-22: £22 million), with its
recoverable amount. The recoverable amount has been calculated by discounting cash flows for a five-year period with the period beyond five
years assumed to have a perpetuity growth rate of 1.4% (2021-22: 0.7%). All cash flows of the CGU have been discounted to present value at
the CGU’s post-tax discount rate of 11.1% (2021-22: 13.0%) which reflects current market assessments of the time value of money and the
risks specific to the asset or CGU. The pre-tax discount rate is 15.2% (2021-22: 18.0%). This impairment assessment identified that the CGU’s
recoverable amount exceeds its carrying value by £16 million (2021-22: £12 million). Sensitivity analysis has been performed on each of the
key assumptions, which did not identify any plausible outcomes that would require the CGU to be impaired.
GLS Dicom Canada
The value of the goodwill in respect of GLS Dicom Canada at 26 March 2023 is £130 million (2021-22: £132 million). The carrying value of
this CGU is £197 million (2021-22: £219 million). To assess the CGU for impairment, the carrying amount has been compared with itsvs value
in use, which has been calculated by discounting cash flows covering a period of five years, with the period beyond five years assumed to
have a perpetuity growth rate of 1.7% (2021-22: 1.7%). All cash flows have been discounted to present value using a post-tax discount rate
of 9.9% (2021-22: 9.1%). The pre-tax discount rate is 13.5% (2021-22: 12.4%). Based on these assumptions, the value in use wasdes deemed to
be significantly in excess of the carrying value. Sensitivity analysis has been performed on each of the key assumptions, which did not
identify any plausible outcomes that would require the CGU to be impaired.
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
208

15. Goodwill (continued)
GLS Rosenau Transport Canada (‘Rosenau’)
The value of goodwill in relation to Rosenau is £27 million (2021-22 £28 million). An impairment review has been performed comparing
thece carrying amount of the Rosenau Transport CGU, of £191 million (2021-22: £205 million), with its recoverable amount. Theree recoverable
amount has been calculated by discounting cash flows for a five-year period with the period beyond five years assumed tohad to have a perpetuity
growth rate of 1.7% (2021-22: 1.7%). All cash flows of the CGU have been discounted to present value at the CGU’s post-tax discount rate of
9.9% (2021-22: 9.1%), which reflects current market assessments of the time value of money and the risks specificto tc to the asset or CGU. The
pre-tax discount rate is 13.5% (2021-22: 12.4%). Based on these assumptions, the value in use wasds deemed to be significantly in excess of
the carrying value. Sensitivity analysis has been performed on each of the keyasy assumptions, which did not identify any plausible outcomes
that would require the CGU to be impaired.
Other Group goodwill
The remaining goodwill of £9 million (2021-22: £13 million) arising from small business acquisitions, each being a separate CGU,
issis supportable but not material in the context of the Group’s total goodwill.
16. Intangible assets
2023 2022
Master
franchise
licences
£m
Customer
listings
£m
Software
£m
Brands
£m
Total
£m
Master
franchise
licences
£m
Customer
listings
£m
Software
£m
Brands
£m
Total
£m
Cost
At 28 March 2022
and 29 March 2021 22 171 1,183 37 1,413 23 127 1,117 27 1,294
Exchange rate movements 1 – 8 1 10 (1) 5 (2) 1 3
Additions – – 93 – 93 – – 83 – 83
Disposals – – (25) – (25) – – (10) – (10)
Reclassification – – 2 – 2 – – (5) – (5)
Acquisition of business – 1 – – 1 – 39 – 9 48
At 26 March 2023
and 27 March 2022 23 172 1,261 38 1,494 22 171 1,183 37 1,413
Amortisation
andimpaand impairment
At 28 March 2022
and 29 March 2021 22 66 814 23 925 23 52 730 21 826
Exchange rate movements 1 1 6 1 9 (1) 1 (1) 1 –
Amortisation charge
1
– 17 117 2 136 – 13 101 1 115
Impairment charge (see Note
1 and Note 6) – – 145 – 145 – – – – –
Reclassification – – – – – – – (6) – (6)
Disposals – – (25) – (25) – – (10) – (10)
At 26 March 2023
and 27 March 2022 23 84 1,057 26 1,190 22 66 814 23 925
Net book value:
At 26 March 2023
and 27 March 2022 – 88 204 12 304 – 105 369 14 488
At 27 March 2022
and 28 March 2021 – 105 369 14 488 – 75 387 6 468
1 Includes £17 million (2021-22: £nil) impairment recognised in amortisation in the income statement in relation to the resource scheduling asset.
The intangible assets detailed above have finite lives and are being written down on a straight-line basis. The net book value of the
Group’ssoup’s software assets includes £60 million (2021-22: £62 million) in respect of assets in the course of construction. The £93 million
(2021-22: £83 million) additions include £nil (2021-22: £1 million) of borrowing costs capitalised at a rate of 2.67% (2021-22: 2.65%)
inrin relation to specific qualifying assets.
The Group holds individually material intangible assets totalling £88 million (2021-22: £111 million). These assets relate to various IT
initiatives taking place across the business and are tested annually for impairment. They have an average remaining useful life of four
years(2 (2021-22: five years).
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Annual Report and Financial Statements 2022-23
209

17. Investments in associates
Details of the associates of the Group are listed below. To ensure that the reported share of the results of these companies aligns with the
Group’s reporting year ended 26 March 2023 (2021-22: 27 March 2022), information provided by each of the respective companies is
analysed and an estimate of profit/loss accrued as appropriate.
Principal activities Country of incorporation Reporting date
%
ownership
2023
%
ownership
2022
Associate company
JICMAIL Limited Market research UK 31 March 20.0 20.0
Quadrant Catering Limited Catering services UK 30 September – 51.0
Market Engine Global Pty Limited Software development Australia 30 June – 34.5
Charac Limited Digital pharmacy
prescription services
UK 31 March 32.9 33.3
Quadrant ceased trading with effect from 30 September 2020 and was dissolved on 16 September 2022.
On 25 April 2022, Market Engine Global Pty Limited was officially deregistered by the Australian Securities and Investments Commission.
The investment in Charac Limited was diluted during the year, due to the Group not participating in the latest funding round.
Movements in interests in associates
2023
£m
2022
£m
Cost
At 28 March 2022 and 29 March 2021 1 5
Acquisition – 1
Dividend received – (5)
At 26 March 2023 and 27 March 2022 1 1
There are no significant restrictions on the ability of the associates to transfer funds to the Group in the form of cash dividends or
repayment of loans and advances.
18. Share-based payments
Employee Free Shares
Employee Free Shares are held on behalf of employees in a tax-advantaged Share Incentive Plan (SIP).
The shares are held in a Trust administered by Equiniti Share Plan Trustees Limited (Equiniti) and may only be distributed to, or for the
benefit of, eligible employees. The Trust is funded by the Company and has therefore been consolidated within these Financial Statements.
Partnership and Matching Shares
Beginning in October 2018, a Partnership and Matching Share scheme was introduced for eligible employees. Under the terms of the
scheme, employees may elect to purchase a limited number of International Distributions Services plc shares through monthly payroll
deductions at the current market price (Partnership Shares). For every five Partnership Shares purchased, the employee receives one
unallocated SIP share (Matching Shares), up to a maximum of two Matching Shares per month, free of charge.
At 26 March 2023, there had been 54 (2021-22: 42) such monthly awards and a total of 1,709,034 (2021-22: 1,309,873) Matching Shares had
been awarded to eligible staff members at a weighted average market price of 300.7 pence (2021-22: 314.4 pence). The vesting period for
each award is three years from the award date, with all allocated shares to be equity-settled.
A charge to the income statement of £1 million (including a £nil National Insurance charge) has been made for the year ended 26 March 2023
(2021-22: £2 million charge including a £1 million National Insurance charge) for all SIP allocations.
A reconciliation of the ordinary shares held in the SIP at 26 March 2023 and 27 March 2022 is shown below.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
210

18. Share-based payments (continued)
A reconciliation of the ordinary shares held in the SIP at 26 March 2023 and 27 March 2022 is shown below.
Number
of shares
2022-23
Number
of shares
2021-22
Total shares remaining in SIP at 28 March 2022 and 29 March 2021 40,417,904 53,789,835
Shares sold/transferred out of SIP during the reporting year (fully vested) (1,907,577) (7,906,372)
Shares transferred out of SIP during the reporting year (‘good leavers’)
1
(909,503) (5,465,559)
Total shares remaining in SIP at 26 March 2023 and 27 March 2022 37,600,824 40,417,904
1 ‘Good leavers’ refers to former employees whose shares vested under specific circumstances, in accordance with the rules of the scheme.
Of the total shares remaining in the scheme, 36,114,161 (2021-22: 38,596,514) have been allocated to current employees. The remaining
1,486,663 (2021-22: 1,821,390) shares are unallocated and have arisen as a result of forfeitures.
Award of shares under the Long Term Incentive Plan
Award year Grant date Shares vest from
Fair value/share (pence)
Monte-Carlo simulation
Maximum
number of
potential shares
to vest
Market-based
conditions
Non-market-
based conditions
2020 27/11/2020 27/11/2023 272.3 309.3 662,124
2021 12/08/2021 12/08/2024 305.6 500.7 683,098
2022 01/09/2022 01/09/2025 100.1 272.6 1,452,528
A charge to the income statement of £1 million (including £nil National Insurance) has been made for the year ended 26 March 2023 in
relation to all LTIP schemes (2021-22: £2 million, including £nil for National Insurance).
Award of shares under the Deferred Share Bonus Plan
Award year Grant date Shares vest from
Fair value/share
(pence)
Maximum
number of
potential shares
to vest
2020 24/07/2020 24/07/2023 180.0 445,756
2021 01/12/2021 01/12/2023 502.4 42,596
2022 29/03/2022 29/03/2025 358.6 107,816
2022 28/07/2022 28/07/2024 290.2 216,143
2022 28/07/2022 28/07/2025 290.2 193,759
A charge to the income statement of £nil (including £nil National Insurance) has been recognised for the year ended 26 March 2023 in
relation to all DSBP schemes (2021-22: £2 million, including £1 million for National Insurance).
19. Non-current assets held for sale
The balance sheet values of the assets held for sale during the reporting year are shown below.
At
26 March
2023
£m
At
27 March
2022
£m
Property assets held for sale 4 –
Total 4 –
Property assets with a carrying value of £8 million (2021-22: £26 million) were reclassified as held for sale in the year, of which £4 million
(2021-22: £26 million) were subsequently sold before the balance sheet date. The £4 million property assets held for sale at the balance
sheet date mainly comprise the remaining plot at the Nine Elms site and the Parcelforce Worldwide depot at Royal College Street,
Camden,Lo, London. These properties are expected to be sold within the next 12 months.
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International Distributions Services plc
Annual Report and Financial Statements 2022-23
211

20. Trade and other receivables
Current trade and other receivables
At
26 March
2023
£m
At
27 March
2022
£m
Trade receivables 1,391 1,507
Accrued income 32 46
Prepayments 167 106
Total 1,590 1,659
Movements in the loss allowance for bad and doubtful debts are shown below.
2023
£m
2022
£m
At 28 March 2022 and 29 March 2021 (51) (79)
Receivables provided for during the year (19) (12)
Release of allowance 18 34
Utilisation of allowance 9 9
Reclassification – (2)
Exchange differences – (1)
At 26 March 2023 and 27 March 2022 (43) (51)
The Group’s approach to loss allowance for bad and doubtful debts is explained in the accounting policies in Note 1.
The age profile of the trade receivables balance is shown below.
At
26 March
2023
£m
At
27 March
2022
£m
Not yet overdue 1,289 1,350
Past due not more than one month 83 112
Past due more than one month and not more than two months 4 18
Past due more than two months 15 27
Total 1,391 1,507
Non-current other receivables
At
26 March
2023
£m
At
27 March
2022
£m
Other receivables 13 94
Total 13 94
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
212

21. Cash and cash equivalents
At
26 March
2023
£m
Re-presented2
At
27 March
2022
£m
Cash at bank and in hand 431 338
Client cash 36 36
Cash equivalent investments: Short-term bank and money market fund investments
1
431 825
Total cash and cash equivalents in the balance sheet 898 1,199
Bank overdrafts (part of a cash pool)
1
(89) (62)
Total cash and cash equivalents in the statement of cash flows 809 1,137
1 Cash and cash equivalents includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an
integral part of the Group’s cash management. These were previously presented net in the comparative year 2021-22.
Cash and cash equivalents comprise amounts held physically in cash, bank balances available on demand and deposits for three months
or less, dependent on the immediate cash requirements of the Group. Where interest is earned, this is either at floating or short-term fixed
rates based upon bank deposit rates.
Client cash is cash collected from consignees by GLS on behalf of its posting customers. It is maintained in separate bank accounts to the
cash of the business and allocated to a separate payables account in the balance sheet so it can be tracked and reconciled.
Bank overdrafts are included within the statement of cash flows net, alongside equivalent offsetting balances of cash at bank in the cash
pool. The overdraft balances, which are part of a cash pool for the UK companies within the Group, are an integral part of the Group’s cash
management and are presented net within cash and cash equivalents at the beginning and end of the year in the statement of cash flows.
22. Current trade and other payables
At
26 March
2023
£m
At
27 March
2022
£m
Trade payables and accruals (1,695) (1,870)
Advance customer payments (including stamps held, not yet used by customers) (250) (254)
Social security (110) (121)
Client creditors (52) (36)
Capital expenditure payables (27) (41)
Other (10) (10)
Total (2,144) (2,332)
The fair value of trade and other payables is not materially different from the carrying value. The average credit period taken for trade
purchases is 42 days (2021-22: 38 days).
The Group operates a supply chain finance arrangement for small and medium suppliers. This form of reverse financing allows suppliers
to obtain early access to funding. Suppliers may choose to access payment as soon as their invoices are processed, rather than adhere to
Royal Mail standard payment terms, by paying a financing fee to the scheme provider. The Group pays the provider of the scheme on the
due date of the invoices, therefore this scheme does not assist the Group in the management of working capital.
As the scheme has not led to a substantial modification in the terms of the financial liability, the Group continues to treat the amounts
owed within trade payables. All cash flows associated with the programme are included within operating cash flows as they continue
tobto bepae part oftt of the normal operating cycle of the Group. There is no impact on net debt, as amounts owed continue to be reported within
tradepe payables.
The balance owed on the facility at 26 March 2023 was £37 million (27 March 2022: £66 million).
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Annual Report and Financial Statements 2022-23
213

23. Loans and borrowings
At 26 March 2023
Loans and
borrowings
¹
£m
Further
committed
facility
£m
Total facility
£m
Average interest
rate of loan
drawn down
%
Basis of interest
rate chargeable
Average
maturity date of
loan drawn down
Year
Average
maturity date of
loan facility
Year
Bank syndicate loan facility – 925 925 n/a
SONIA+CAS
+0.475%
2
n/a 2026
€500 million bond – 2.375%
Senior Fixed Rate Notes 440 – 440 2.5
Fixed at
2.5% 2024 2024
€550 million bond – 1.25%
Senior Fixed Rate Notes 482 – 482 2.7
Fixed at
2.7% 2026 2026
Asset finance 25 – 25 2.1
Fixed at
2.6% 2031 2031
Total 947 925 1,872 2.6 2025 2026
At 27 March 2022
Loans and
borrowings
£m
Further
committed facility
£m
Total facility
£m
Average interest
rate of loan drawn
down
%
Basis of interest
rate chargeable
Average maturity
date of loan drawn
down
Year
Average maturity
date of loan
facility
Year
Bank syndicate loan facility – 925 925 n/a
SONIA+CAS
+0.475%
2
n/a 2026
€500 million bond – 2.375%
Senior Fixed Rate Notes 416 – 416 2.5 Fixed at 2.5% 2024 2024
€550 million bond – 1.25%
Senior Fixed Rate Notes 456 – 456 2.7 Fixed at 2.7% 2026 2026
Total 872 925 1,797 2.6 2025 2026
1 Asset finance of £25 million (2021-22: £nil) consists of £3 million current and £22 million non-current (2021-22: £nil). Other loans and borrowings of £922 million
(2021-22: £872 million) are non-current.
2 The total margin over Sterling OverNight Indexed Average (SONIA) consists of a 0.40% margin, a credit adjustment spread (CAS) and a utilisation fee of 0.075%
(fordor drawings less than one third of the total facility). Interest is compounded daily and a CAS of between 0.0% and 0.3% is added using the International Swaps
andDnd Derivatives Association (ISDA) published five-year historical mean on fixing date (5 March 2021).
The €500 million bond, issued in July 2014, is shown net of issue discount and fees and at a closing spot rate of £1/€1.136
(2021-22: £1/€1.201). The effective interest rate on the bond of 2.5% (2021-22: 2.5%) consists of the interest coupon of 2.375%
(2021-22: 2.375%) plus the unwinding of the discount and fees on issuing the bond of 0.08% (2021-22: 0.08%). The bond is designated as a
hedge of the net investment in GLS, which has a very significant balance of Euro-denominated assets. During the year, a loss of £24 million
(2021-22: £11 million gain) on the retranslation of this borrowing was taken to other comprehensive income, which offsets the losses on
translation of an equivalent amount of the Euro-denominated assets in GLS. There was no hedge ineffectiveness in the current or
comparative reporting years.
On 8 October 2019, Royal Mail plc issued a €550 million bond with coupon of 1.25% and maturity date of 8 October 2026. To hedge the
foreign exchange risk, Royal Mail chose to take out a cross-currency swap perfectly mirroring the terms of the Bond. The combined
interest rate of the coupon and the cross-currency swap is 2.7% (2021-22: 2.7%). The €550 million bond is shown net of issue discount and
fees and at a closing spot rate of £1/€1.136 (2021-22: £1/€1.201). The effective interest rate on the bond plus the cross-currency swap (2.7%)
consists of the interest coupon of 1.25% (2021-22: 1.25%) plus the effects of the cross-currency swap of 1.00% (2021-22: 1.00%) and the
unwinding of the discount and fees on issuing the bond of 0.4% (2021-22: 0.4%). The revaluation of the bond is hedged by the cross-
currency swap. During the year, effective hedge reserve was transferred from other comprehensive income to Profit and loss for
£26 million (2021-22: £12 million gain) to match the equivalent loss on retranslation of this borrowing. There was no hedge ineffectiveness
in the current or comparative reporting years.
The bank syndicate loan facility can be cancelled and any loans drawn under the facility can become repayable immediately on the
occurrence of an event of default under the loan agreements.
Such events of default include non-payment, insolvency and breach of covenants. On 24 March 2023, a covenant amendment was agreed
that amended the financial covenants to use GLS EBITDA instead of Group EBITDA in the covenant calculations until September 2024 at
which point, the facility reverts to the previous covenants. It is not anticipated that the Group is at risk of breaching any of these amended
covenants.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
214

23. Loans and borrowings (continued)
The financial covenants require the Group to maintain the (leverage) ratio of adjusted net debt to EBITDA below 3.5:1 and EBITDA to interest
above 3.5:1. For the measurement periods of March 2023, September 2023 and March 2024, GLS EBITDA will be used in these calculations,
after which date it reverts to Group EBITDA. The covenant ratios are calculated on an IAS 17 basis for leases. Adjusted net debt consists of
netdet debt less leases capitalised under IFRS 16, plus Letters of Credit (contingent liabilities in respect of the Royal Mail insurance
programme, where the possibility of an outflow of economic benefits is considered remote), plus bank guarantees provided to HMRC (in
order to facilitate the movement of parcels from Europe efficiently through to our network, where the possibility of an outflow of economic
benefits is considered remote) and is adjusted for exchange rate movements during the year. EBITDA is adjusted to deduct operating lease
expense on leases capitalised under IFRS 16 (£82 million for GLS for 2022-23, 2021-22 not applicable) and to remove transformation costs
and certain specific items (the pension charge to cash difference is not removed). Interest is adjusted to remove interest on leases
capitalised under IFRS 16. The Group’s leverage ratio at 26 March 2023 under the amended covenants is (using GLS EBITDA) 0.7:1 (2021-22:
not applicable). The Group’s ratio of EBITDA to interest at 26 March 2023 under the amended covenants is (using GLS EBITDA) 48.3:1
(2021-22: not applicable). Accordingly, the Group comfortably meets the covenants tests within its bank syndicate loan facility agreement.
The Group’s leverage ratio at 26th March 2023 under the unamended calculations (using Group EBITDA) at 26 March 2023 is 1.0:1 (2021-22:
-0.2:1). The Group’s ratio of EBITDA to interest at 26 March 2023 is 32.3:1 (2021-22: 46.3:1). Asares a result, the margin charged on any drawings
under the bank syndicate loan facility will increase from 0.40% to 0.50% during 2023-24.
The interest rate chargeable on the bank syndicate loan facility would increase if more than one third of the facility was drawn and also if
the Group’s leverage ratio increased further. Under the loan agreement, the maximum interest rate chargeable would be compounding
SONIA plus 2.35%. The €500 million bond and the €550 million bond become repayable immediately on the occurrence of an event of
default under the bond agreements. These events of default include non-payment and insolvency. It is not anticipated that the Group is at
risk of breaching any of these obligations.
The undrawn committed facilities, in respect of which all conditions precedent had been met at the balance sheet date, were £925 million
maturing in September 2026 (2021-22: £925 million maturing in September 2026).
There is no security in place under the bank syndicate loan facility or the bonds.
The bank syndicate loan facility contains provision on a change of control of the Company for negotiation of the continuation of the
agreement orcar cancellation by a lender. The €500 million bond and the €550 million bond both contain provisions such that, on a change of
control that is combined with a credit rating downgrade in certain circumstances, the noteholders may require the Company to redeem or,
at the Company’s option, purchase the notes for their principal amount, together with interest accrued to (but excluding) the date of
redemption or repurchase.
On 9 May 2023, IDS plc secured a backstop facility of €500 million from a syndicate of banks to provide additional flexibility on the timing
for refinancing the €500 million bond maturing in July 2024. The backstop is available until July 2024 and, if drawn to repay the bond, would
be repayable by December 2024 with an option to extend to July 2025. At the balance sheet date, this facility was undrawn. The facility is
subject to the same covenants as the bank syndicate loan facility.
During the year, GLS used asset finance to fund the purchase of tangible fixed assets.
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Annual Report and Financial Statements 2022-23
215

24. Financial assets and liabilities and risk management
The following disclosures are included in this Note:
a) Classification, carrying amount and fair value of financial assets and liabilities – Carrying amounts and fair value of each category of
financial assets and liabilities.
b) Movement in liabilities arising from financing activities – A reconciliation of the opening and closing balances of liabilities arising from
financing activities.
c) Foreign currency risk management – How management addresses the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in foreign exchange rates.
d) Commodity price risk management – How management addresses the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices.
e) Interest rate risk management – How management addresses the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates.
f) Liquidity risk management – How management addresses the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities that are settled by delivering cash or another financial asset.
g) Credit risk management – How management addresses the risk that one party to a financial instrument will cause a financial loss for
the other party by failing to discharge an obligation.
h) Sensitivity analysis – How the income statement and balance sheet would have been affected by changes in commodity prices and
exchange rates in the reporting year.
i) Additional derivative and hedge analysis – A detailed breakdown of derivative balances and hedge movements
a) Classification, carrying amount and fair value of financial assets and liabilities
The following table shows the classification, carrying amount and fair value of the Group’s financial assets:
Level Classification
At
26 March
2023
Carrying amount
£m
At
26 March
2023
Fair value
£m
Re-presented1
at
27 March
2022
Carrying amount
£m
Re-presented1
at
27 March
2022
Fair value
£m
Financial assets
Cash 1 467 467 374 374
Cash held within cash pool 89 89 62 62
All other cash 378 378 312 312
Cash equivalent investments 1 431 431 825 825
Money market funds FVTPL 349 349 725 725
Short-term deposits – bank Amortised cost 82 82 100 100
Cash and cash equivalents 1 898 898 1,199 1,199
Current asset investments –
short-term deposits – bank 1 Amortised cost – – 70 70
Pension escrow investments 1 FVTPL 208 208 213 213
Trade and other receivables
2
2 Amortised cost 1,423 1,423 1,553 1,553
Derivative assets (current) 2 FVTPL 23 23 74 74
Derivative assets (non-current) 2 FVTPL 3 3 30 30
Total financial assets 2,555 2,555 3,139 3,139
1 Cash and cash equivalents includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash
management. These were previously presented net in the comparative year 2021-22.
2 Trade and other receivables excludes prepayments of £167 million (2021-22: £106 million)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
216

24. Financial assets and liabilities and risk management (continued)
The following table shows the classification, carrying amount and fair value of the Group’s financial liabilities:
Level Classification
At
26 March
2023
Carrying Amount
£m
At
26 March
2023
Fair
Value
£m
Re-presented1
at
27 March
2022
Carrying amount
£m
Re-presented1
at
27 March
2022
Fair value
£m
Financial liabilities
Bank overdrafts (in a cash pool) 1 (89) (89) (62) (62)
Obligations under leases (current) 2 Amortised cost (220) (220) (213) (213)
Asset finance (current) 2 Amortised cost (3) (3) – –
€500 million bond 2 Amortised cost (440) (432) (416) (429)
€550 million bond 2 Amortised cost (482) (441) (456) (453)
Asset finance (non-current) 2 Amortised cost (22) (21) – –
Obligations under leases (non-current) 2 Amortised cost (1,142) (1,022) (1,128) (1,110)
Trade and other payables
3
2 Amortised cost (1,894) (1,894) (2,078) (2,078)
Derivative liabilities (current) 2 FVTPL (13) (13) (8) (8)
Derivative liabilities (non-current) 2 FVTPL (22) (22) (36) (36)
Total financial liabilities (4,327) (4,157) (4,397) (4,389)
Net total financial liabilities (1,772) (1,602) (1,258) (1,250)
1 Cash and cash equivalents includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash
management. These were previously presented net in the comparative year 2021-22.
3 Trade and other payables excludes advance customer payments of £250 million (2021-22: £254 million)
Derivatives that do not qualify for hedge accounting are classified as fair value through profit and loss and any gains or losses arising from
changes in fair value are taken directly to the income statement in the year. The ‘Level’ classification in the above table is explained in the
‘Fair value measurement of financial instruments’ section of Note 1.
The main purpose of these financial instruments is to raise finance and manage the liquidity needs of the business’ operations.
No speculative trading in financial instruments has been undertaken during the current or comparative reporting years, in line with
Grouppup policy.
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Annual Report and Financial Statements 2022-23
217

24. Financial assets and liabilities and risk management (continued)
b) Movement in liabilities arising from financing activities
The following table reconciles the opening and closing balances of liabilities arising from financing activities:
Bank overdrafts
(in a cash pool)
£m
Interest-bearing
loans and
borrowings
(current)
£m
Interest-bearing
loans and
borrowings
(non-current)
£m
Obligations
under leases
(current)
£m
Obligations
under leases
(non-current)
£m
Total
£m
At 28 March 2022 (62) – (872) (213) (1,128) (2,275)
Movements through income statement:
Interest payable on financial liabilities – – (19) – (32) (51)
Movements through cash flow:
Finance costs paid
4
– – 19 – 32 51
Payment of capital element of lease contracts – – 2 202 – 204
Other movements:
Reclassification between categories – – – (209) 209 –
Increase in gross cash pool overdraft (27) – – – – (27)
Increase in lease obligations – – – – (204) (204)
New asset finance – (3) (24) – – (27)
Effect of foreign currency exchange rates – – (50) – (19) (69)
At 26 March 2023 (89) (3) (944) (220) (1,142) (2,398)
4 Finance costs paid of £61 million in the statement of cash flows also includes £7 million interest on cross-currency swaps and £3 million other finance costs.
Bank overdrafts¹
(in a cash pool)
£m
Interest-bearing
loans and
borrowings
(non-current)
£m
Obligations under
leases (current)
£m
Obligations under
leases
(non-current)
£m
Re-presented2
Total
£m
At 29 March 2021 (36) (895) (197) (959) (2,087)
Movements through income statement:
Interest payable on financial liabilities – (19) – (29) (48)
Movements through cash flow:
Finance costs paid
6
– 19 – 29 48
Payment of capital element of lease contracts – – 192 – 192
Other movements:
Reclassification between categories – – (208) 208 –
Increase in gross cash pool overdraft (26) – – – (26)
Increase in lease obligations – – – (380) (380)
Effect of foreign currency exchange rates – 23 – 3 26
At 28 March 2022 (62) (872) (213) (1,128) (2,275)
1 Cash and cash equivalents includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash
management. These were previously presented net in the comparative year 2021-22.
5 Bank overdrafts are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash management. These were previously
presented net in cash and cash equivalents in the comparative year 2021-22.
6 Finance costs paid of £56 million in the statement of cash flows also includes £7 million interest on cross-currency swaps and £1 million other finance costs.
c) Foreign currency risk management
Foreign currency transaction risk
Royal Mail is exposed to foreign currency risk due to interest payments on the €500 million and €550 million bonds, certain obligations
under Euro-denominated leases, trading with overseas postal administrations and various purchase contracts denominated in foreign
currency. GLS’ main currency exposure is the Euro. It also has some exposure to non-Euro currencies, principally in emerging European
markets, to the US Dollar and the Canadian Dollar.
Where possible, exposures are netted internally. Any remaining exposure is hedged using a combination of external spot and forward
purchase and sale contracts. Hedging will not normally be considered for exposures of less than £1 million. Hedging is normally confined
to 80% of the forecast exposure, where forecast cash flows are highly probable. But will be increased to 100% in certain circumstances
where there is more certainty (e.g. for capital programmes where there is contractual liability).
Notes to the Consolidated Financial Statements continued
Financial Statements
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Annual Report and Financial Statements 2022-23
218

24. Financial assets and liabilities and risk management (continued)
The following table shows, for each hedge programme, the risk and the percentage hedged of the next 12 months’ exposure:
Hedge programme Risk
Percentage of next 12 months’
exposure that has been hedged
At
26 March
2023
At
27 March
2022
Capital programmes €/£ exchange rate movements 100% 100%
Overseas postal administrations SDR/£ exchange rate movements 59% 38%
Royal Mail’s obligation to settle with overseas postal administrations is denominated in Special Drawing Rights (SDR) – a basket of
currencies which comprise US Dollar, Japanese Yen, Chinese Renminbi, Sterling and Euro. The next 12 months’ exposure is calculated as
the combination of the cost of settling liabilities during the next 12 months and the cost of revaluing unsettled liabilities at the end of
12 months.
Foreign currency translational risk
The Group’s presentational currency is Sterling (£). GLS profits in Euro, US Dollar, Canadian Dollars and other currencies are converted to
Sterling at the average exchange rate for the year which can result in reported growth or decline that does not relate to underlying
performance. GLS’ balance sheet is converted at year-end exchange rates and movements related to foreign currency translation are
taken to equity.
The €500 million bond issued in July 2014 acts as a hedge of part of the translation exposure created by the net assets of GLS. At 26 March
2023, Royal Mail had €9 million of Euro-denominated lease payables outstanding (2021-22: €24 million). This similarly acts as a hedge of
the net assets of GLS. The remaining net assets of GLS in excess of the €500 million bond and lease payables are not hedged. Foreign
currency exchange differences arising from the translation of the net assets of GLS, the €500 million bond and the Royal Mail Euro-
denominated lease payables, at closing Sterling/Euro exchange rates, are recognised in the statement of comprehensive income.
Theseexce exchange differences would be released to the income statement as part of the gain or loss if GLS was sold.
The €550 million bond issued in October 2019 is perfectly hedged for foreign currency risk by a cross-currency swap.
The net total financial assets and liabilities are held in various different currencies as summarised in the table below. The majority of the
non-Sterling financial assets and liabilities (other than the €500 million and €550 million bonds and £441 million of leases and asset
finance) are held within cash or derivatives.
Sterling
£m
US$
£m
Euro
£m
Other
£m
Total
£m
Net total financial liabilities at 26 March 2023 (485) (27) (1,189) (71) (1,772)
Net total financial liabilities at 27 March 2022 (94) (24) (1,126) (14) (1,258)
d) Commodity price risk management
Royal Mail is exposed to fuel price risk arising from operating one of the largest vehicle fleets in Europe – which consumes around
140 million litres of fuel per year – and a jet fuel price risk arising from purchasing air freight services. The Group’s fuel risk management
strategy aims to reduce uncertainty created by the movements in the oil and foreign currency markets. The strategy uses forward
commodity price swaps to mitigate this risk by entering into a combination of US Dollar and forward currency purchase or Sterling
contracts to manage these exposures as it sees fit.
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Annual Report and Financial Statements 2022-23
219

24. Financial assets and liabilities and risk management (continued)
In addition, the Group is exposed to the commodity price risk via its requirement to purchasing electricity and gas. The Group’s risk
management strategy aims to reduce uncertainty created by the movements in the electricity and gas markets. These exposures are
managed by locking into fixed price contracts with suppliers and using forward commodity price swaps in Sterling.
As the GLS business relies generally on the use of subcontractors, who are responsible for purchasing their own fuel, GLS has no direct
exposure to diesel costs. The only other significant commodity exposure within GLS relates to electricity and gas, which is fragmented
across its European bases. In view of the other highly hedged positions, the Group takes the view that the unhedged exposure arising from
the commodities in GLS does not add significant risk to the Group.
e) Interest rate risk management
The Group’s policy is to manage its net interest expense using an appropriate mix of fixed and floating rate financial instruments, combined
with external hedging of interest rate risk, as appropriate, to keep a high percentage of its gross debt fixed. At 26 March 2023, there was no
external hedge of interest rate risk (2021-22: none). Interest on financial instruments classified as floating rate is re-priced at intervals of
less than one year. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument.
The analysis below sets out the carrying amount of the Group’s financial instruments that are exposed to interest rate risk.
At 26 March 2023
Average
effective interest
rate
%
Within
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Total
£m
Fixed rate
€500 million bond 2.5 – (440) – – (440)
€550 million bond 2.7 – – (482) – (482)
Asset finance 2.1 (3) (4) (11) (7) (25)
Lease obligations 2.6 (220) (203) (466) (473) (1,362)
Total (223) (647) (959) (480) (2,309)
Floating rate
Cash at bank 1.7 218 – – – 218
Cash equivalent investments –
moneymy marketfket funds 3.9 349 – – – 349
Cash equivalent investments – bank deposits 2.7 82 – – – 82
Financial assets – pension escrow
investments (non-current) 1.4 – – – 208 208
Total 649 – – 208 857
Non-interest bearing
Cash at bank or in hand 249 – – – 249
Bank overdrafts (in a cash pool) (89) (89)
Trade and other receivables 1,423 – – – 1,423
Trade and other payables (1,894) – – – (1,894)
Derivative assets 23 3 – – 26
Derivative liabilities (13) (12) (10) – (35)
Total (301) (9) (10) – (320)
Total financial assets 2,344 3 – 208 2,555
Total financial liabilities (2,219) (659) (969) (480) (4,327)
Net total financial assets/(liabilities) 125 (656) (969) (272) (1,772)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
220

24. Financial assets and liabilities and risk management (continued)
Re-presented1
at 27 March 2022
Average effective
interest rate
%
Within
one year
£m
One to
two years
£m
Two to
five years
£m
More than
five years
£m
Total
£m
Fixed rate
Cash equivalent investments – bank deposits 0.6 30 – – – 30
Current asset investment –
short-termdm deposits – bank 0.4 70 – – – 70
Financial liabilities
€500 million bond 2.5 – – (416) – (416)
€550 million bond 2.7 – – (456) – (456)
Lease obligations 2.3 (213) (191) (440) (497) (1,341)
Total (113) (191) (1,312) (497) (2,113)
Floating rate
Cash at bank 0.0 151 – – – 151
Cash equivalent investments –
moneymy marketfket funds 0.3 725 – – – 725
Cash equivalent investments – bank deposits 0.8 70 – – – 70
Financial assets – pension escrow
investments (non-current) 0.9 – 21 – 192 213
Total 946 21 – 192 1,159
Non-interest bearing
Cash at bank or in hand 223 – – – 223
Bank overdrafts (in a cash pool) (62) – – – (62)
Trade and other receivables 1,553 – – – 1,553
Trade and other payables (2,078) – – – (2,078)
Derivative assets 74 27 3 – 104
Derivative liabilities (8) (5) (31) – (44)
Total (298) 22 (28) – (304)
Total financial assets 2,834 48 3 192 3,077
Total financial liabilities (2,299) (196) (1,343) (497) (4,335)
Net total financial assets/(liabilities) 535 (148) (1,340) (305) (1,258)
1 Cash and cash equivalents includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash
management. These were previously presented net in the comparative year 2021-22.
Drawings under the bank syndicate loan facility are at fixed rate to maturity (which must be six months or less). At 26 March 2023, there
were no drawings (2021-22: £nil). The total interest-bearing financial assets of the Group (excluding the RMPP and RMCPP/RMSEPP
pension escrow investments) of £649 million (2021-22: £1,046 million), which consist of the fixed and floating rate cash and cash equivalent
investments, plus current financial asset investments, are at short-dated fixed or variable interest rates with an average maturity of one
day (2021-22: an average maturity of eight days). These short-dated financial instruments are primarily used for liquidity but within that
they are maturity-managed to obtain the best value out of the interest yield curve.
Obligations under leases are either unsecured or secured on the leased assets. The average interest rate is 2.6% (2021-22: 2.3%).
Theahe average maturity date is more than five years (2021-22: more than five years).
Net debt excludes £208 million (2021-22: £192 million) of pension escrow investments on the balance sheet in respect of the RMPP and
RMCPP pension schemes, which are not considered to fall within the definition of net debt.
The RMPP pension escrow investment of £195 million (2021-22: £192 million) represents a money market fund investment, established
with the agreement of the Pension Trustee for the benefit of members. The RMPP escrow agreement specifies that the funds must be
usedfor td for the benefit of members, on a basis to be agreed between the Plan Trustee and the Company. The funds are therefore not available
to management for corporate purposes (outside of pension arrangements) and so the RMPP escrow is excluded from net debt.
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Annual Report and Financial Statements 2022-23
221

24. Financial assets and liabilities and risk management (continued)
The opening RMSEPP pension escrow investment of £21 million was released to the Royal Mail during the year. The RMCPP pension
escrow investment of £13 million (2021-22 £nil) was established during the year to provide security to the RMCPP. Whilst the funds may be
returned to Royal Mail at some point in the future, the timing of this is uncertain and unlikely to be within the next five years, so the RMCPP
escrow is excluded from net debt.
f) Liquidity risk management
The Group’s primary objective is to ensure that it has sufficient funds available to meet its financial obligations as they fall due. This is
achieved by aligning short-term investments and borrowing facilities with forecast cash flows. Borrowing facilities are regularly reviewed
to ensure continuity of funding. In October 2021, the bank syndicate loan facility was extended by one year to September 2026. There are
nofno further extension options in the agreement. The unused committed facilities of the Group of £925 million expire in 2026
(2021-22: £925 million expiring in 2026).
Below is a summary of the gross (undiscounted) contractual cash flows of the Group’s financial liabilities. The cash flows for the
€500 million and €550 million bonds and non-Sterling-denominated leases, represent the undiscounted total amounts payable (interest
and nominal repayment) which have been converted to Sterling at 26 March 2023 market forward exchange rates. For derivatives that are
settled gross (including the cross-currency swap), these cash flows represent the undiscounted gross payment due and do not reflect the
accompanying cash inflow. For derivatives that are settled net, these cash flows represent the undiscounted forecast cash outflow.
At 26 March 2023
Bank
overdrafts (in a
cash pool)
£m
Gross loans
and borrowings
commitments
£m
Gross lease
instalments
£m
Gross trade
and other
payables
£m
Sub-total
£m
Gross
payments on
derivatives
settled gross
£m
Gross
payments on
derivatives
settled net
£m
Total
£m
Amounts falling due in:
One year or less or on
demand(cud (current) (89) (20) (219) (1,894) (2,222) (96) (9) (2,327)
More than one year
(non-current) – (1,000) (1,400) – (2,400) (530) (9) (2,939)
More than one year but
notmnot more than two years – (468) (205) – (673) (13) (8) (694)
More than two years but
not more than five years – (525) (493) – (1,018) (517) (1) (1,536)
More than five years – (7) (702) – (709) – – (709)
Total (89) (1,020) (1,619) (1,894) (4,622) (626) (18) (5,266)
Less interest – 46 257 – 303 n/a n/a n/a
Less exchange
rateaate adjustment – 27 – – 27 n/a n/a n/a
Net total (89) (947) (1,362) (1,894) (4,292) n/a n/a n/a
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
222

24. Financial assets and liabilities and risk management (continued)
Re-presented2
At 27 March 2022
Bank overdrafts
(in a cash pool)
£m
Gross loans and
borrowings
commitments
£m
Gross lease
instalments
£m
Gross trade and
other payables
£m
Sub-total
£m
Gross payments
on derivatives
settled gross
£m
Gross payments
on derivatives
settled net
£m
Total
£m
Amounts falling due in:
One year or less or on
demand (current) (62) (16) (222) (2,078) (2,378) (133) – (2,511)
More than one year
(non-current) – (964) (1,407) – (2,371) (558) – (2,929)
More than one year but
notmnot more than two years – (16) (200) – (216) (28) – (244)
More than two years but
not more than five years – (948) (477) – (1,425) (530) – (1,955)
More than five years – – (730) – (730) – – (730)
Total (62) (980) (1,629) (2,078) (4,749) (691) – (5,440)
Less interest – 61 288 – 349 n/a n/a n/a
Less exchange
rateaate adjustment – 47 – – 47 n/a n/a n/a
Net total (62) (872) (1,341) (2,078) (4,353) n/a n/a n/a
5 Bank overdrafts are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group’s cash management. These were
previously presented net in cash and cash equivalents in the comparative year 2021-22.
g) Credit risk management
The level of credit granted to customers is based on a customer’s risk profile, assessed by an independent credit referencing agent. The
credit policy is applied rigidly within the regulated products area to ensure that Royal Mail is not in breach of compliance legislation.
Assessment of credit for non-regulated products is based on commercial factors, commensurate with the Group’s appetite for risk. An
analysis of aged debt is included within Note 20.
The Group’s exposure to credit risk from other financial assets arises from default of the counterparty, with a maximum exposure equal to
the carrying amount of these instruments. At 26 March 2023, 84% (2021-22: 77%) of financial assets were held with AA or above rated
counterparties.
GLS operates a decentralised credit management model, with each country responsible for managing the credit risk associated with its
customers. Where appropriate, external credit checks are performed for new and existing customers, taking into account the customer
profile, expected volume of business and consequent risk to the respective GLS companies.
Other than trade and other receivables, which are disclosed within Note 20, none of the financial assets is either past due or considered to
be impaired .
h) Sensitivity analysis
As a result of the mix of fixed and variable rate financial instruments and the currency and commodity hedge programmes in place, the
Group has no material exposure to 2022-23 profit from interest rate risk or commodity price risk (2021-22: £nil risk). Further details of the
Group’s exposure to commodity price risk can be found in the Financial Review.
The Group has an exposure to the exchange rate risk on translating GLS profits; on trading with overseas postal administrations; on
various purchase contracts; and on the interest on the €500 million bond and Royal Mail Euro-denominated leases. The impact of a 10%
strengthening of Sterling across all currencies on forecast profits/trade during 2022-23 would be to reduce the Group operating profit by
£20 million (2021-22: £24 million). However, changes in exchange rates could also cause other impacts on operating profit, including a
change in import/export volumes.
The Group has an exposure to the exchange rate risk on translating GLS net assets into Sterling on consolidation. This is partially offset by
an exposure on translating the €500 million bond and Euro-denominated leases into Sterling at each balance sheet date. The impact of a
10% strengthening of Sterling against all currencies at 26 March 2023 would have been to reduce the Group net assets by £75 million
(2021-22: £55 million).
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
223

24. Financial assets and liabilities and risk management (continued)
i) Additional derivative and hedge analysis
The following tables provide further detail on the derivative balances and hedge movements
Cash flow hedges – derivatives
At 26 March 2023
Nominal
amount
Nominal
value
£m
Derivative
non-current
assets
£m
Derivative
current
assets
£m
Derivative
current
liabilities
£m
Derivative
non-current
liabilities
£m
Diesel 201m litres 90 2 16 (4) (4)
Jet 27m litres 11 – 2 – –
Gas 19m therms 29 1 5 (5) (5)
Conveyance costs 19m US$ 15 – – – –
Capex 38m Euro 35 – – (1) –
€550m Bond cross currency swap 550m Euro 491 – – (3) (13)
Total 3 23 (13) (22)
At 27 March 2022
Nominal
amount
Nominal
value
£m
Derivative
non-current
assets
£m
Derivative
current
assets
£m
Derivative
current
liabilities
£m
Derivative
non-current
liabilities
£m
Diesel 285m litres 103 19 45 – –
Jet 39m litres 14 2 6 – –
Gas 24m therms 10 9 23 – –
Conveyance costs 15m US$ 11 – – – –
Capex 84m Euro 76 – – (5) (1)
€550m Bond cross currency swap 550m Euro 456 – – (3) (35)
Total 30 74 (8) (36)
Cash flow hedges – changes in fair value
52 weeks 2023
Change in fair value during year – gain/(loss) Gains/(losses) reclassified during year
Cash flow hedges
deferred to
reserves
£m
Cost of hedging
deferred to
reserves
£m
Ineffectiveness
taken to other
operating costs
£m
Distribution and
conveyance costs
£m
Infrastructure
costs
£m
Finance
costs
£m
Initial carrying
value of fixed
asset
£m
Diesel 8 – 3 62 – – –
Jet 2 – – 8 – – –
Gas (15) – (4) – 14 – –
Conveyance costs 1 – – 1 – – –
Capex 2 – – – – – (2)
€550m Bond cross currency swap (12) 2 – – – (7) –
Total (14) 2 (1) 71 14 (7) (2)
52 weeks 2022
Change in fair value during year – gain/(loss) Gains/(losses) reclassified during year
Cash flow hedges
deferred to
reserves
£m
Cost of hedging
deferred to
reserves
£m
Ineffectiveness
taken to other
operating costs
£m
Distribution and
conveyance costs
£m
Infrastructure
costs
£m
Finance
costs
£m
Initial carrying
value of fixed
asset
£m
Diesel 71 – – 9 – – –
Jet 9 – – 1 – – –
Gas 39 – 4 – 14 – –
Conveyance costs – – – – – – –
Capex (2) – – – – – (2)
€550m Bond cross currency swap 2 – – – – (7) –
Total 119 – 4 10 14 (7) (2)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
224

24. Financial assets and liabilities and risk management (continued)
Net Investment hedges
At 26 March 2023
Nominal
amount
Carrying
value
£m
Line item
in the statement
of financial position
where the hedging
instrument is included
Change in fair
value of hedge
instrument during
year – gains/
(losses) in OCI
£m
Change in fair
value of hedged
item during year
– gains/(losses) in
OCI
£m
Ineffectiveness
– gains/(losses)
recognised in
other operating
income
£m
€500m Bond 500m Euro 440
Interest-bearing loans
and borrowings –
non-current (24) 24 –
Euro-denominated lease payables 9m Euro 8 Lease liabilities (1) 1 –
Total (25) 25 –
At 27 March 2022
Nominal
amount
Carrying
value
£m
Line item
in the statement
of financial position
where the hedging
instrument is included
Change in fair value
of hedge instrument
during year – gains/
(losses) in OCI
£m
Change in fair value
of hedged item
during year – gains/
(losses) in OCI
£m
Ineffectiveness
– gains/(losses)
recognised in other
operating income
£m
€500m Bond 500m Euro 416
Interest-bearing loans
and borrowings –
non-current 11 (11) –
Euro-denominated lease payables 24m Euro 20 Lease liabilities 1 (1) –
Total 12 (12) –
Reserves reconciliation
Cash flow
hedge
reserve
2023
£m
Cost of
hedging
reserve
2023
£m
Total
hedging
reserve
2023
£m
Cash flow
hedge
reserve
2022
£m
Cost of
hedging
reserve
2022
£m
Total
hedging
reserve
2022
£m
Opening Balance 68 1 69 (16) 2 (14)
Changes in fair value – cash flow hedges
Diesel 8 – 8 71 – 71
Jet 2 – 2 9 – 9
Gas (15) – (15) 39 – 39
Conveyance costs 1 – 1 – – –
Capex 2 – 2 (2) – (2)
€550m Bond cross currency swap 22 2 24 2 – 2
Amounts reclassified to Income statement
Diesel (62) – (62) (9) – (9)
Jet (8) – (8) (1) – (1)
Gas (14) – (14) (14) – (14)
Conveyance costs (1) – (1) – – –
€550m Bond cross currency swap (26) (1) (27) 8 (1) 7
Amounts reclassified to non-financial assets
Capex 2 – 2 2 – 2
Tax on movements on reserves in the year 18 – 18 (21) – (21)
Closing Balance (3) 2 (1) 68 1 69
There are no balances in cash flow hedge reserves or foreign currency translation reserve relating to hedging relationships for which
hedge accounting is no longer applied (2021-22: none)
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
225

25. Provisions
Charged as specific items Charged in operating costs
Total
£m
Industrial
diseases
£m
Regulatory
fine
£m
Other
£m
Voluntary
redundancy
£m
Property
decommissioning
£m
Litigation
claims
£m
Other
£m
At 28 March 2022 (56) (52) (6) (70) (20) (53) (13) (270)
Released/(charged) 10 – 3 (33) (7) (27) (64) (118)
Utilised 3 52 – 76 2 30 4 167
Reclassifications – – – 15 – – – 15
Forex Adjustment – – – – – – (1) (1)
Unwinding of
discount (1) – – – – – – (1)
At 26 March 2023 (44) – (3) (12) (25) (50) (74) (208)
Disclosed as:
Current (10) – – (12) (3) (38) (66) (129)
Non-current (34) – (3) – (22) (12) (8) (79)
At 26 March 2023 (44) – (3) (12) (25) (50) (74) (208)
Disclosed as:
Current (8) (52) – (70) (5) (39) (2) (176)
Non-current (48) – (6) – (15) (14) (11) (94)
At 27 March 2022 (56) (52) (6) (70) (20) (53) (13) (270)
Specific items provisions
Industrial diseases
The Group has a potential liability for industrial diseases claims relating to individuals who were employed in the General Post Office
Telecommunications division and whose employment ceased prior to October 1981. The provision is derived using estimates and ranges
calculated by its external actuarial consultant, based on current experience of claims, and an assessment of potential future claims, the
majority of which are expected to be received over the next 25 to 35 years.
There is considerable uncertainty associated with estimating the future reporting of latent disease claims, over future decades. Consistent
with the approach last year, our advisor has leveraged the updated scenarios provided by Asbestos Working Party (AWP). The AWP model
was released in late 2021.
The AWP collects industry data each year which helps it understand how the existing models are performing against actual experience
and helps inform any adjustments to the model. The projections for 2022-23 and later years are based on recent levels of reporting, net of
estimated levels of repudiation in more recent historical periods.
Benchmark projections have been adopted and it is assumed that no more claims will arise after 2060. The cut-off date for reporting of
claims is one of the sources of uncertainty in the projections.
The Group has a rigorous process for ensuring that only valid claims areare accepted. During the year, the rate by which liabilities are
discounted increased by 209 bps to 3.86%, which resulted in a £10 million release of the provision at 26 March 2023 (see Note 6).
Regulatory fine
Royal Mail’s appeal against the Competition Appeal Tribunal’s judgment to uphold Ofcom’s decision to fine it £50 million was rejected by
the Court of Appeal (CoA) on 7 May 2021. On 7 June 2022, the Supreme Court refused Royal Mail permission to appeal the CoA judgment,
meaning the appeal process has now concluded. The fine and interest (£52 million) was paid to Ofcom on 10 August 2022.
Operating costs provisions
In January 2022, Royal Mail announced a management restructure affecting over 3,000 managerial level employees, mainly within its
operational function. The new management structure went live at the end of May 2022, with the majority of voluntary redundancies taking
place in May and June 2022. In October 2022 a further voluntary redundancy exercise was announced as part of a plan to rightsize the
operational frontline, with the expectation of reducing full time equivalents by c.10,000 by the end of August 2023 (on a rolling 12 month
basis). This project, along with other small ad-hoc projects, resulted in an overall charge of £47 million for voluntary redundancy for the
full year. £15 million of the original provision was reclassified as accruals during the year due to more certainty and timing of the liability.
Other provisions mainly comprises £61 million in relation to the costs of a one off payment of £500 per person to frontline employees. This
represents our best estimate of the costs to settle that part of the pay agreement, based on our offer at the balance sheet date of 26 March
2023.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
226

25. Provisions (continued)
Property decommissioning obligations represent an estimate of the costs of removing fixtures and fittings and restoring the leased
property to its original condition.
Provisions for litigation claims, based on best estimates as advised by external legal experts, mainly comprise outstanding liabilities in
relation to road traffic accident and personal injury claims.
Below is a summary of the ageing profile of the provisions.
At 26 March 2023 At 27 March 2022
Expected period of settlement Expected period of settlement
Within one
year
£m
One to two
years
£m
Two to five
years
£m
After five
years
£m
Total
£m
Within one
year
£m
One to two
years
£m
Two to five
years
£m
After five
years
£m
Total
£m
Specific items
Industrial disease
claims (10) (2) (6) (26) (44) (8) (3) (9) (36) (56)
Employee Free Shares
– NI – – – – – – – – – –
Legacy property costs – – – (3) (3) – – – (6) (6)
Regulatory fine – – – – – (52) – – – (52)
Total (10) (2) (6) (29) (47) (60) (3) (9) (42) (114)
Operating costs
Voluntary redundancy (12) – – – (12) (70) – – – (70)
Property
decommissioning (3) (2) (12) (8) (25) (5) (4) (5) (6) (20)
Litigation claims (38) (11) – (1) (50) (39) (11) (3) – (53)
LTIP – NI – – – – – – (1) – – (1)
Employee benefits (2) (1) (1) (4) (8) (1) (1) (1) (6) (9)
Other (64) (1) – (1) (66) (1) – (1) (1) (3)
Total (119) (15) (13) (14) (161) (116) (17) (10) (13) (156)
26. Share capital and reserves
Authorised and issued
At 26 March
2023
£m
At 27 March
2022
£m
956,193,475 (2021-22: 956,193,475) ordinary shares of £0.01 each 10 10
Total 10 10
Of the issued ordinary shares, a total of 263,566 (2021-22: 2,265,008) shares are held by an Employee Benefit Trust (EBT) administered
bySby Sanne Fiduciary Services Limited. These shares are treated as treasury shares for accounting purposes in accordance with IAS 32
‘Financial Instruments: Presentation’. The Company, however, does not hold any shares in treasury. The EBT is funded by the Company
andhnd has been consolidated within these Financial Statements.
Reserves included in the consolidated statement of changes in equity
Foreign currency translation reserve
The foreign currency translation reserve is used to record the gains and losses arising on translation of assets and liabilities of subsidiaries
denominated in currencies other than the reporting currency.
Hedging reserve
The hedging reserve is used to record gains and losses arising from cash flow hedges.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
227

27. Commitments
Capital commitments
The Group has commitments of £54 million (2021-22: £123 million) for property, plant and equipment, £nil (2021-22: £59 million) for vehicles
and £5 million (2021-22: £6 million) for intangible assets, which are contracted for but not provided for in the Financial Statements.
Lease commitments
The Group has £142 million of lease commitments (2021-22: £7 million) relating to leases that have been signed but not yet commenced
attat the year-end date. These commitments have not been provided for in the Financial Statements.
28. Contingent liabilities and contingent assets
The probability of the following contingent liabilities resulting in an outflow of benefits and their financial impact cannot be estimated
reliably due to the nature of the cases and respective legal processes. The outcomes are not, however, expected to fundamentally impact
the operations or financial performance of the Group.
Contingent liabilities
2022-23 Regulated Quality of Service
Our performance in 2022-23 for our Universal Service products’ Quality of Service was below Ofcom’s regulatory targets. We have been
actively engaging with Ofcom, explaining why performance is below target. Our 2022-23 USO Quality of Service results were published on
15 May 2023 and Ofcom has opened an investigation. Any regulatory action, as a result of the quality of service levels, would be at the
discretion of Ofcom with no mechanism to calculate any potential liability. Given the unique circumstances of industrial action and high
sickness levels it is not possible to reliably estimate the outcome of Ofcom’s investigation. We will fully co-operate with Ofcom’s investigation.
Whistl Damages Claim
In October 2018, Whistl filed a damages claim against Royal Mail at the High Court relating to Ofcom’s decision of 14 August 2018, which
found that Royal Mail had abused its dominant position. Whistl’s High Court claim was paused until after the completion of the appeal by
Royal Mail against the Ofcom decision. Following the exhaustion of Royal Mail’s appeal against the Ofcom decision, the stay on Whistl’s
related damages claim has been lifted and, in March 2023, the proceedings were transferred from the High Court to the Competition Appeal
Tribunal. The parties have now exchanged their initial pleadings, but the case is in its early stages. Royal Mail believes Whistl’s claim is
without merit and will defend it robustly.
DAF Trucks Ltd damages award
In relation to Royal Mail’s damages claim against DAF Trucks Limited (‘DAF’), the UK Competition Appeal Tribunal (‘CAT’) passed judgment
in favour of Royal Mail on 7 February 2023 and subsequently ordered DAF to pay Royal Mail £35 million in damages and interest. Royal Mail
has received this amount in full (see Note 6). On 16 May 2023, the CAT issued a ruling granting DAF permission to appeal to the Court of
Appeal (‘CoA’) on one of five grounds of appeal raised by DAF and refusing DAF to appeal on the remaining four grounds. DAF may decide
to apply directly to the CoA, to widen the scope of appeal, and depending on the success of that application, and the outcome of the appeal,
there is a risk that the CoA may decide to reduce the award by the CAT, which may result in Royal Mail having to return some of the
£35 million to DAF.
Contingent asset
DAF Trucks Ltd damages award
Royal Mail has also sought a contribution from DAF for the substantial legal and expert costs that it has incurred in pursuing the claim
before the CAT. Royal Mail expects to receive at least 50% of the costs and potentially considerably more.
29. Related party information
Related party transactions
During the reporting year, the Group entered into transactions with related parties as follows:
52 weeks
2023
£m
52 weeks
2022
£m
Recharges to:
RMPP – Defined benefit pension plan (administration and investment service recharge) 7 6
Balances outstanding at the reporting year end are unsecured, interest free and settlement is made by cash.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
228

29. Related party information (continued)
Key management compensation
52 weeks
2023
£’000
52 weeks
2022
£’000
Short-term employee benefits (3,907) (4,094)
Post-employment benefits (5) (5)
Other long-term benefits (170) (346)
Share-based payments (1,504) (1,008)
Total (5,586) (5,453)
Key management are considered to be the Executive and Non-Executive Directors of International Distributions Services plc, plus a specific
population of Persons Discharging Managerial Responsibilities. Remuneration relates to the period for which they are key management.
The ultimate parent and principal subsidiaries
International Distributions Services plc is the ultimate Parent Company of the Group. The Consolidated Financial Statements include the
financial results of Royal Mail Group Limited and the other principal subsidiaries listed below. The reporting year end for these entities is
26 March 2023 unless otherwise indicated.
Company Principal activities Country of incorporation
% equity
interest
2023
% equity
interest
2022
General Logistics Systems B.V.
1
Parcel services holding company Netherlands 100 100
Royal Mail Estates Limited Property holdings UK 100 100
RMGLS Holdco Limited Holding company UK 100 100
RM Property and Facilities Solutions Limited Facilities management UK 100 100
1 GLS’ reporting year-end date is 31 March each year. There were no significant transactions in GLS between this date and the Group’s financial reporting year end date of 26 March 2023.
The Company has complied with section 409 of the Companies Act 2006 by including, in these Financial Statements, a schedule of interests
in all undertakings (see Note 31).
30. Events after the balance sheet date
Agreement reached with Communication Workers Union
On 21 April 2023, IDS plc announced that the Business Recovery, Transformation and Growth Agreement has been ratified by CWU’s Postal
Executive Committee and that it would be put to a ballot of the union’s membership with a recommendation to approve.
The agreement provides a platform for the next phase of stabilising the business whilst continuing to drive efficiency and change. The
operational changes in the agreement are designed to improve competitiveness, particularly in next day parcels, reduce cost and
environmental impact, and improve quality of service for our customers. A three year pay deal will provide certainty for our employees and
ensure Royal Mail remains the industry leader on pay, terms and conditions.
Further details can be found in the Strategic Report.
GLS acquisition in Germany
On 29 April 2023, GLS acquired 100% of the share capital of Versandmanufaktur GmbH, a German e-fulfilment business.
The initial purchase price was c.€9 million with further consideration payable depending on future performance. Acquisition costs were
c.€0.3 million.
DAF Trucks Ltd damages award
On 16 May 2023, the CAT ordered DAF: (i) to pay Royal Mail’s costs of the proceedings (the final amount of those costs to be determined by
court assessment or to be agreed with DAF); and (ii) to make an interim payment on account to Royal Mail in respect of its costs of c.
£9 million, which is c.70% of Royal Mail’s incurred costs as at 27 February 2023. Costs ultimately recovered from DAF could also depend on
the outcome of DAF’s appeal.
Strategic Report Corporate Governance Financial Statements Additional Information
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Annual Report and Financial Statements 2022-23
229

31. Related undertakings of International Distributions Services plc
In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country of incorporation, registered office
address and the effective percentage of equity owned, as at 26 March 2023, is disclosed below. Unless otherwise stated, the share capital
disclosed comprises ordinary or common shares which are held by subsidiaries of International Distributions Services plc.
Subsidiary undertakings included in the consolidation
Company name Share class % held by Group
Austria
Traunuferstrasse 105a, 4052 Ansfelden, Austria
General Logistics Systems Austria GmbH €1,090,092.51 Ordinary shares 100.000
Belgium
Humaniteitslaan 233, 1620 Drogenbos, Belgium
General Logistics Systems Belgium N.V. €100.00 Ordinary shares 100.000
GLS Belgium Distribution S.A/N.V. Ordinary shares, no par value 100.000
Canada
10500 Ryan Avenue, Dorval, Quebec, H9P 2T7
Dicom Dedicated Fleet, Inc.
1
Common shares, no par value 100.000
1055, Hastings Street West, Suite 1700, Vancouver (British Columbia), V6E 2E9
GLS Logistics Systems Canada Ltd. Common shares, no par value 100.000
3400 7th Avenue SW, #350, Edmonton, Alberta, T2P 3N9
A-Crop-Olis Warehousing Inc Class A Common shares 100.000
Medicine Hat Express Inc Class A Common shares 100.000
Mid-Nite Sun Transportation Ltd Class A Common shares 100.000
Rosenau Transport Ltd Class A Common shares 100.000
Wheels Transport Ltd Class A Common shares 100.000
China
Suite 2447, within Suite 2401, 24F, No.77, Jian Guo Rd, Chao Yang District, Beijing
EBP Consultancy (Beijing) Co. Ltd – 100.000
Croatia
Stupničke Šipkovine 22, 10255 Donji Stupnik, Croatia
General Logistics Systems Croatia d.o.o €100,869.33 Ordinary shares 100.000
Czech Republic
Průmyslová 5619/1, 58601 Jihlava, Czech Republic
General Logistics Systems Czech Republic s.r.o CZK2,970,000.00 Ordinary shares
CZK30,000.00 Ordinary shares
100.000
100.000
Denmark
Kokmose 3, 6000 Kolding, Denmark
General Logistics Systems Denmark A/S DKK100.00 Ordinary shares 100.000
General Logistics Systems Express A/S DKK1,000.00 Ordinary shares 100.000
Finland
Rydöntie 6, 20360 Turku, Finland
General Logistics Systems Finland 0y €50.00 Ordinary shares 100.000
France
14 Rue Michel Labrousse, CS 93730, 31037 Toulouse Cedex 01, France
General Logistics Systems France S.A.S €50.00 Ordinary shares 100.000
GLS Invest France S.A.S €12.71 Ordinary shares 100.000
1 Company dissolved on 30 March 2023
2 Branch of GLS Belgium. No shares are issued or held.
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
230

31. Related undertakings of International Distributions Services plc (continued)
Company name Share class % held by Group
6 Rue des Bateliers, 92110 Clichy, France
Tousfacteurs S.A.S €1.00 Ordinary shares 100.000
Germany
Dörrwiese 2, 36286 Neuenstein, Germany
Der Kurier Beteiligungsgesellschaft GmbH €25,000.00 Ordinary shares 100.000
Der Kurier GmbH & Co. KG €2,561,572.32 Cash contribution 100.000
GLS Germany-Str. 1-7, 36286 Neuenstein, Germany
General Logistics Systems Germany GmbH & Co. OHG €47,968,004.75 Cash contribution 100.000
GLS IT Services GmbH €127,822.97 Ordinary shares 100.000
GLS Beteiligungs GmbH €7,720,507.41 Ordinary shares 100.000
GLS Verwaltungs-und Service GmbH €153,387.56 Ordinary shares 100.000
GLS eCom Lab GmbH €100,000.00 Ordinary shares 100.000
GLS Mobility Solutions GmbH €100,000.00 Ordinary shares 100.000
Wendenstraße 349, 20537 Hamburg, Germany
OverNight Express & Logistics GmbH (previously Overnight Services GmbH
Vermittlung üeberregionaler Kurierdienste)
€25,565.00 Ordinary shares 100.000
Guernsey
PO BOX 160, Dixcart House, St Peter Port, GY1 4EY, Guernsey
Postcap (Guernsey) Limited £1.00 Ordinary shares 100.000
Hungary
GLS Európa utca 2, 2351 Alsónémedi, Hungary
GLS General Logistics Systems Hungary Csomag-Logisztikai Kft. HUF30,000,000.00 Ordinary shares 100.000
Ireland
Unit 200 Northwest Business Park, Ballycoolin, Dublin D11 DK24, Ireland
RM Financing Operations Limited €1.00 Ordinary shares
€1.00 Redeemable preference shares
100.000
100.000
General Logistics Systems Ireland Limited €1.269738 Ordinary shares 100.000
Italy
Via Basento No. 19, 20098 San Giuliano Milanese, Italy
Agone S.r.L €10,400.00 Ordinary shares 100.000
General Logistics Systems Enterprise S.r.L €1,018,000.00 Ordinary shares 100.000
General Logistics Systems Italy S.p.A. €0.52 Ordinary shares 100.000
Gruppo Executive Societa Consortile a.r.l €0.51 Ordinary shares 84.22
Luxembourg
Zae Op Zaemer 24, 4950 Bascharage, Luxembourg
General Logistics Systems Belgium S.A. Succursale de Luxembourg
2
– –
Morocco
Place Roudani, Rue La Sena Résidence Beethoven II – 3ème étage, No. 82, 90000
Tanger, Morocco
Tousfacteurs MA S.A.R.L.A.U. MAD1,000.00 Ordinary shares 100.000
The Netherlands
Breguetlaan 28-30, 1438 BC Oude Meer, The Netherlands
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
231

Company name Share class % held by Group
General Logistics Systems B.V. €100.00 Common shares 100.000
Proostwetering 40, 3543 AG Utrecht, The Netherlands
General Logistics Systems Netherlands B.V. €50.00 Ordinary shares 100.000
GLS Netherlands Holding B.V. €50.00 Ordinary shares 100.000
GLS Netherlands Services B.V. €50.00 Ordinary shares 100.000
Poland
Ul. Tęczowa 10, Gluchowo, 62-052 Komorniki, Poland
General Logistics Systems Poland Spolka zo.o PLN1,721.00 100.000
Portugal
Rua da Bica, No. 10, 2669-608 Venda do Pinheiro, Portugal
General Logistics Systems Portugal Lda €102,000.00 quota
€97,900.00 quota
€100.00 quota
100.000
Romania
3, Str. Stefan cel Mare, Parcul Industrial Selimbar, 557260 Selimbar, Romania
GLS General Logistics Systems Srl RON100.00 Ordinary shares 100.000
Serbia
27 Marta 11, Beograd – Palilula, Beograd
General Logistics Systems Beograd d.o.o. RSD11,738,000.00 Ordinary shares 100.000
Slovakia
Budča 1039, 962 33 Budča, Slovakia
GLS General Logistics Systems Slovakia s.r.o SK98,604.00 Ordinary shares
SK996.00 Ordinary shares
100.000
100.000
Slovenia
Cesta v Prod 84, 1000 Ljubljana, Slovenia
General Logistics Systems, logisticne storitve, d.o.o. €751,127.00 Ordinary shares 100.000
Spain
Avenida Fuentemar 18, 28823 Coslada, Madrid, Spain
Distribuidora de Electrodomésticos Aceval, S.A. €0.42 Ordinary shares 100.000
General Logistics Systems Spain S.A €60.10 Ordinary shares 100.000
UK
185 Farringdon Road, London, EC1A 1AA
Angard Staffing Solutions Limited £1.00 Ordinary shares 100.000
RM 2022 Limited £1.00 Ordinary shares 100.000
Intersoft Systems & Programming Limited £1.00 Ordinary shares 100.000
Nine Elms Parkside Estate Management Company Limited
3
£1.00 Ordinary shares 100.000
Parcelforce Limited £1.00 Ordinary shares 100.000
Revisecatch Limited £0.01 Ordinary shares 100.000
RMCPP Trustees Limited £1.00 Ordinary shares 100.000
RM (International) Limited £1.00 Ordinary shares 100.000
RMSEPP Pensions Trustees (2050) Limited
4
£1.00 Ordinary shares 100.000
3 Limited by guarantee.
4 Member managed company.
31. Related undertakings of International Distributions Services plc (continued)
Notes to the Consolidated Financial Statements continued
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
232

Company name Share class % held by Group
Royal Mail Courier Services Ltd £1.00 Ordinary shares 100.000
Royal Mail Enterprises Limited £1.00 Ordinary shares 100.000
Royal Mail Estates Limited £1.00 Ordinary shares 100.000
Royal Mail Group Limited £1.00 Ordinary shares 100.000
Royal Mail Innovations Limited £1.00 Ordinary shares 100.000
RMGLS Holdco Limited £1.00 Ordinary shares 100.000
RM Finance CAD Ltd £1.00 Ordinary shares
CAD1.00 Ordinary shares
100.000
100.000
Storefeeder Ltd £1.00 Ordinary shares 100.000
Highbank House, Exchange Street, Stockport, Cheshire, SK3 0ET, United Kingdom
RM Property and Facilities Solutions Limited (formerly Romec Limited) £1.00 Ordinary shares
£1.00 B shares
£1.00 C shares
98.040
0.980
0.980
Romec Enterprises Limited £1.00 Ordinary shares 100.000
11 Ironmonger Lane, London, EC2V 8EY, United Kingdom
Royal Mail Pensions Trustees Limited £1.00 Ordinary shares 100.000
US
Registered Agent Solutions Inc.
838 Walker Road, Suite 21-2 Dover, Delaware 19904, US
General Logistics Systems North America Inc. USD 0.001 Common stock 100.000
6750 South Longe Street, Suite 100 Stockton, CA 95206, USA
General Logistics Systems US Interim, Inc USD 1.00 Common stock 100.000
General Logistics Systems US, Inc Common stock, no par value 100.000
GLS US Freight, Inc. (previously Mountain Valley Express Co, Inc.) Common stock, no par value 100.000
GLS Solutions, Inc. (previously MVE Supply Chain Solutions, Inc.)
5
Common stock, no par value 100.000
Postal Express, Inc. Common stock, no par value 100.000
9 East Loockerman Street, Suite 311, Dover, Delaware 19901, USA
Dicom JD, LLC.
3
100 Shares, no par value 100.000
Associate undertakings
Company name Share class % held by Group
Associates
United Kingdom
March Studios Peills Yard, Bromley, Kent, BR1 9NS, United Kingdom
Charac Limited B Ordinary shares 33.300
Lynton House, 7-12 Tavistock Square, London, WC1H 9LT, United Kingdom
JICMAIL Limited
3
– 20.000
Investments
Company name Share class % held by Group
Investments
United Kingdom
Aviva, Wellington Row, York, North Yorkshire, YO90,1WR
Voyager Park South Management Company Limited
3
Ordinary shares 5.500
31. Related undertakings of International Distributions Services plc (continued)
5 Trades under the name Mountain Valley Freight Solutions.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
233

Balance sheet
At 26 March 2023 and 27 March 2022
Registered number: 08680755
Notes
At 26 March
2023
£m
At 27 March
2022
£m
Non-current assets
Investment in subsidiaries 6 2,914 2,912
Intergroup and other receivables 7 615 611
Total non-current assets 3,529 3,523
Current liabilities
Intergroup and other payables 8 (12) (49)
Net current liabilities (12) (49)
Interest-bearing loans and borrowings 9 (922) (872)
Net assets 2,595 2,602
Equity
Share capital 10 10 10
Retained earnings 2,585 2,592
Total equity 2,595 2,602
The balance sheet was approved and authorised for issue by the Board of Directors on 22 May 2023 and signed on its behalf by:
Mick Jeavons
Chief Financial Officer
Statement of changes in equity
For the 52 weeks ended 26 March 2023 and 52 weeks ended 27 March 2022
Share capital
£m
Retained
earnings
£m
Total equity
£m
At 28 March 2021 10 2,074 2,084
Profit for the year – 1,098 1,098
Share buyback – (201) (201)
Purchase of own shares – (17) (17)
Share-based payments – 4 4
Dividend paid – (366) (366)
At 27 March 2022 10 2,592 2,602
Profit for the year – 118 118
Share-based payments – 2 2
Dividend paid – (127) (127)
At 26 March 2023 10 2,585 2,595
International Distributions Services plc
Parent Company Financial Statements
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
234

1. Parent Company accounting policies
Accounting reference date
The financial reporting year ends on the last Sunday in March and, accordingly, these Financial Statements are prepared for the 52 weeks
ended 26 March 2023 (2021-22: 52 weeks ended 27 March 2022).
Authorisation of Financial Statements and statement of compliance with FRS 101
The Financial Statements of the Company for the year ended 26 March 2023 were authorised for issue by the Board of Directors on
22 May2023. The Company is incorporated and domiciled in England and Wales.
These Financial Statements were prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’
(FRS101) and in accordance with applicable accounting standards.
The Company has not presented its own income statement, as permitted by section 408 of the Companies Act 2006. However, the results
of the Company are presented in Note 4 to these Parent Company Financial Statements.
Basis of preparation
The Financial Statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(‘FRS101’). In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements
ofUK-adopted international accounting standards (‘UK-adopted IFRS’) in conformity with the requirements of the Companies Act 2006,
butmakes amendments where necessary in order to comply with Companies Act 2006, and has set out below where advantage of the
FRS101 disclosure exemptions has been taken:
(a) The requirements of IFRS 7 ‘Financial Instruments: Disclosures’
1
.
(b) The requirements of paragraphs 91-99 of IFRS 13 ‘Fair Value Measurement’ (disclosure of valuation techniques and inputs used for
fairvalue measurement of assets and liabilities)
1
.
(c) The requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of
IFRS15 ‘Revenue from Contracts with Customers’.
(d) The requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of:
(i)paragraph 79(a)(iv) of IAS 1 (reconciliation of shares outstanding).
(e) The requirements of paragraphs 10(d), 10(f), 16, 38A, 38B-D, 40A-D, 111 and 134-136 of IAS 1 ‘Presentation of Financial Statements’.
(f) The requirements of IAS 7 ‘Statement of Cash Flows’.
(g) The requirements of paragraphs 17 and 18(a) of IAS 24 ‘Related Party Disclosures’ (details of key management compensation and
related party transaction amounts).
(h) The requirements in IAS 24 ‘Related Party Disclosures’ to disclose related party transactions entered into between two or more
members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member.
(i) The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’.
Accounting policies
The accounting policies are consistent with those of the previous year except for an additional policy statement regarding intergroup
receivables (see below).
Key sources of estimation uncertainty and critical accounting judgements
The carrying amount of the Parent Company’s investments in, and amounts due from, subsidiaries are significant balances. The recoverability of the
investments has been considered by management by reviewing the net assets of the relevant subsidiary (being an approximation of their minimum
recoverable amount) and confirmed that they were in excess of the carrying value of the Parent Company’s investment in that subsidiary at 26 March
2023 (see Note 6 below).
Investment in subsidiaries
The investment in subsidiaries is stated at cost, and includes deemed capital contributions arising from share-based payment
transactions, less any accumulated impairment losses.
Intergroup receivables
Whilst they are repayable on demand, the interest-bearing intergroup loans are deemed to be non current assets for the year ended
26 March 2023, as the Company’s intention at the balance sheet date is that the loans will not be settled by Royal Mail Group Limited or
RMGLS Holdco Limited within the next 12 months. After consideration of the financial position and future prospects of the counterparties,
management have determined they are not in default and that any expected credit loss is not significant and therefore no provision has
been recognised.
2. Directors’ remuneration
The Directors of the Company are not paid any fees by the Company for their services as Directors of the Company. The Directors are paid
fees by other companies of the Group. This remuneration is disclosed in the Group Consolidated Financial Statements (see Note 5) and in
the Group Directors’ Remuneration Report on pages 103 to 136.
Strategic Report Corporate Governance Financial Statements Additional Information
International Distributions Services plc
Annual Report and Financial Statements 2022-23
235

3. Auditor’s remuneration
The auditor of the Company is not paid fees by the Company. The auditor of the Company is paid fees by other companies of the Group.
This remuneration is disclosed in the Group Consolidated Financial Statements (see Note 4).
1 Exemption taken as equivalent disclosures are included within the Consolidated Financial Statements of International Distributions Services plc.
4. Income statement
The Company is a non-trading company. The profit for the year of £118 million (2021-22: profit of £1,098 million) is primarily the net sum
of:a £nil dividend (2021-22: £781 million) received from Royal Mail Group Limited; a £127 million dividend received from RMGLS Holdco
Limited (2021-22: £324 million); management charges to and from Royal Mail Group Limited; and net interest on the €500 million bond,
the€550 million bond and intercompany balances with Royal Mail Group Limited. A loss of £50 million (2021-22: profit of £23 million)
onretranslation of the bond liabilities and a profit of £50 million (2021-22: loss of £23 million) on the retranslation of intercompany balances
with Royal Mail Group Limited has also been recognised in the year.
5. Taxation
There is no tax charge/credit for the year.
6. Investment in subsidiaries
At 26 March
2023
£m
At 27 March
2022
£m
Investment in RMGLS Holdco at 28 March 2022 and 29 March 2021 2,912 2,127
Distribution of RMGLS Holdco Limited to Royal Mail plc by Royal Mail Group Limited – 781
Transfer of investment in Royal Mail Group Limited to RMGLS Holdco Limited – (2,127)
Issue of shares by RMGLS Holdco Limited to RM plc – settlement of Royal Mail Group Limited transfer – 2,127
Charge for Employee Free Shares/LTIP/DSBP 2 4
Investment in RMGLS Holdco at 26 March 2023 and 27 March 2022 2,914 2,912
As a result of the impairment of the Royal Mail excluding Parcelforce Worldwide CGU, management has tested the Parent Company’s
investment in RMGLS Holdco and has determined that its recoverable amount is in excess of its carrying amount at 26 March 2023.
7. Intergroup and other receivables
This balance consists of intergroup loans of £483 million to Royal Mail Group Limited amounting to the proceeds from the issue of the
€550 million bond (see note 9) and intergroup loans of £130 million to RMGLS Holdco Limited related to the proceeds from the issue of the
€500 million bond (see note 9) offset by RMGLS Holdco limited funding the historic dividends and the share buyback programme in excess
of dividends received by International Distributions Services plc. An additional £2 million (2021-22: £nil) relates to other receivables.
8. Intergroup and other payables
This balance comprises £nil (2021-22: £40 million) intergroup payables with Royal Mail Group Limited, £10 million (2021-22: £9 million)
external interest payable and £2 million (2021-22: £nil) other payables.
9. Interest-bearing loans and borrowings
In July 2014, the Company issued €500 million 2.375% Senior Fixed Rate Notes due July 2024 with a fixed annual interest coupon of 2.375%.
In October 2019, the Company issued €550 million 1.25% Senior Fixed Rate Notes due October 2026 with a fixed annual interest coupon of
1.25%.
10. Share capital
At 26 March
2023
£m
At 27 March
2022
£m
Authorised and issued
956,193,475 (2021-22; 956,193,475) ordinary shares of £0.01 each 10 10
Total 10 10
Of the issued ordinary shares, a total of 263,566 (2021-22: 2,265,008 ) are held by an Employee Benefit Trustee (EBT) administered by
Sanne Fiduciary Services Limited. These shares are treated as treasury shares for accounting purposes in accordance with IAS 32
‘Financial Instruments: Presentation’. The Company, however, does not hold any shares in treasury.
The EBT is funded by the Company and has been treated as an extension of the Company for accounting purposes within these
FinancialStatements.
Financial Statements
International Distributions Services plc
Annual Report and Financial Statements 2022-23
236
International Distributions Services plc
Parent Company Financial Statements continued

Annual General Meeting
The 2023 AGM will be held on Thursday 20 July 2023. Full
detailsofthe business to be considered at the meeting will
beincluded in the Notice of Annual General Meeting that
willbesenttoshareholders and published on our website at
www.internationaldistributionsservices.com/investors/annual-
general-meetings.
Final dividend
Given the performance of Royal Mail in 2022-23, and increased
investment in GLS, the Board has decided not to pay a final dividend
in respect of 2022-23.
Managing your shares online
Shareholders can register through Shareview, via a platform provided
by the Company’s registrars, to access shareholder information online
at www.shareview.co.uk. This service allows you to:
 Manage your shares online.
 Receive notifications of new shareholder information by e-mail.
 Arrange dividend payments.
 Update personal records.
When registering, you will need to have your shareholder reference
number which can be found on your share certificate, dividend
voucher or AGM voting documents.
Be scam smart
Investment scams are designed to look like genuine investments.
Spot the warning signs
Have you been:
 Contacted out of the blue?
 Promised tempting returns and told the investment is safe?
 Called repeatedly?
 Told the offer is only available for a limited time?
If so, you might have been contacted by fraudsters.
Avoid investment fraud
Reject cold calls
If you have received unsolicited contact about aninvestment
opportunity, the chances are it is a high-risk investment or
ascam.You should treat the call with extreme caution.
Thesafestthing to do is to hang up.
Check the FCA Warning List
The FCA Warning List is a list of firms the FCA has identified
asoperating without its authorisation.
Get impartial advice
Think about getting impartial financial advice before you hand
overany money. Seek advice from someone unconnected to
thefirm that has approached you.
Report a scam
If you suspect that you have been approached by fraudsters,
pleasetell the FCA using the reporting form at www.fca.org.uk/
consumers/report-scam-us. You can also call the FCA Consumer
Helpline on 0800 111 6768.
If you have lost money to investment fraud, you should report it to
Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk.
Find out more at www.fca.org.uk/scamsmart.
Remember: if it sounds too good to be true, it probably is.
Information for investors
Our website provides information for investors, such as trading
updates, share price information, AGM and dividend information,
shareholder FAQs and results and reports. The website can be
accessed via www.internationaldistributionsservices.com/investors.
If you have any queries relating to your shareholding,
youcanalsoemail shareholderquestions@royalmail.com.
Company contact details
Registered office
International Distributions Services plc
185 Farringdon Road
London
EC1A 1AA
Registered in England and Wales
Company number 08680755
Investor Relations
investorrelations@royalmail.com
Director of Investor Relations – John Crosse
Company Secretariat
cosec@royalmail.com
Group Company Secretary – Mark Amsden
Company advisers
Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
www.shareview.co.uk
Tel: 0371 384 2656 (from outside the UK: +44 (0)121 415 7086).
Linesare open 8:30am to 5:30pm UK time, Monday to Friday,
excluding public holidays in England and Wales.
Independent auditor
KPMG LLP
Corporate brokers
Bank of America
Barclays Bank plc
International Distributions Services plc
Annual Report and Financial Statements 2022-23
237
Strategic Report Corporate Governance Financial Statements Additional Information
237
Shareholder Information

Presentation of results and alternative performance measures (APMs)
The Group uses certain APMs in its financial reporting that are
not defined under IFRS, the Generally Accepted Accounting
Principles (GAAP) under which the Group produces its statutory
financial information.
These APMs are not a substitute for, or superior to, any IFRS
measures of performance. They are used by Management,
whoconsiders them to be an important means of comparing
performance period-on-period and are key measures used
withinthe business for assessing performance.
APMs should not be considered in isolation from, or as a substitute
for, financial information presented in compliance with GAAP.
Where appropriate, reconciliations to the nearest GAAP measure
have been provided. The APMs used may not be directly comparable
with similarly titled APMs used by other companies.
A full list of APMs used are set out in the section entitled ‘Alternative
Performance Measures’.
Reported to adjusted results
The Group makes adjustments to results reported under IFRS
toexclude specific items and the IAS 19 pension charge to cash
difference adjustment. Management believes this is a useful
basisupon which to analyse the business’ underlying performance
(in particular given the volatile nature of the IAS 19 charge) and
isconsistent with the way financial performance is reported to
theBoard.
Further details on specific items excluded from adjusted operating
profit are included in the paragraph ‘Specific items and pension
charge to cash difference adjustment’ in the Financial Review.
Areconciliation showing the adjustments made between reported
and adjusted Group results can be found in the section headed
‘Consolidated reported and adjusted results’.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
238
Additional Information
238
Glossary of Alternative Performance Measures

Presentation of results
Consolidated reported and adjusted results
The following table reconciles the consolidated reported results, prepared in accordance with IFRS, to the consolidated 52 week adjustedresults:
52 weeks March 2023 52 weeks March 2022
Group (£m) Reported
Specific
items and
pension
adjustment
1
Adjusted Reported
Specific
itemsand
pension
adjustment
1
Adjusted
Revenue 12,044 – 12,044 12,712 – 12,712
Operating costs (12,248) (133) (12,115) (12,128) (174) (11,954)
People costs (6,573) (133) (6,440) (6,665) (174) (6,491)
Non-people costs (5,675) – (5,675) (5,463) – (5,463)
Distribution and conveyance costs (3,721) – (3,721) (3,556) – (3,556)
Infrastructure costs (1,178) – (1,178) (1,059) – (1,059)
Other operating costs (776) – (776) (848) – (848)
Operating profit before specific items (204) (133) (71) 584 (174) 758
Operating specific items
1
:
GLS VAT adjustments (33) (33) – – – –
Amortisation of intangible assets in acquisitions (19) (19) – (16) (16) –
Impairment charge (539) (539) – – – –
Damages claim 35 35 – – – –
Legacy/other items 12 12 – 9 9 –
Operating profit (748) (677) (71) 577 (181) 758
Profit on disposal of property, plant and equipment
(non-operating specific item)
1
6 6 – 72 72 –
(Loss)/profit before interest and tax (742) (671) (71) 649 (109) 758
Finance costs (60) – (60) (57) – (57)
Finance income 21 – 21 6 – 6
Net pension interest (non-operating specific item)
1
105 105 – 64 64 –
(Loss)/profit before tax (676) (566) (110) 662 (45) 707
Tax credit/(charge) (197) (111) (86) (50) 62 (112)
(Loss)/profit for the period (873) (677) (196) 612 17 595
(Loss)/Earnings per share (pence)
Basic (91.3p) - (20.5p) 61.7p 1.7p 60.0p
Diluted (91.3p) - (20.5p) 61.4p 1.7p 59.7p
1. Details of specific items and the pension adjustment can be found under ‘Specific items and pension charge to cash difference adjustment’ in the Financial Review.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
239
Strategic Report Corporate Governance Financial Statements Additional Information
239

Segmental reported results
The following table presents the segmental reported results, prepared in accordance with IFRS:
52 weeks March 2023 52 weeks March 2022
Group (£m) Royal Mail GLS
Intragroup
eliminations Group Royal Mail GLS
Intragroup
eliminations Group
Revenue 7,411 4,650 (17) 12,044 8,514 4,219 (21) 12,712
People costs (5,542) (1,031) – (6,573) (5,757) (908) – (6,665)
Non-people costs (2,421) (3,271) 17 (5,675) (2,515) (2,969) 21 (5,463)
Operating (loss)/profit before specific items (552) 348 – (204) 242 342 – 584
Operating specific items
1
(492) (52) – (544) 8 (15) – (7)
Operating (loss)/profit (1,044) 296 – (748) 250 327 – 577
Profit/(loss) on disposal of property, plant
and equipment (non-operating specific item)
1
5 1 – 6 71 1 – 72
Earnings before interest and tax (1,039) 297 – (742) 321 328 – 649
Net finance costs (17) (22) – (39) (39) (12) – (51)
Net pension interest
(non-operatingspecificitem)
1
105 – – 105 64 – – 64
(Loss)/profit before tax (951) 275 – (676) 346 316 – 662
Tax credit/(charge) (119) (78) – (197) 24 (74) – (50)
(Loss)/profit for the period (1,070) 197 – (873) 370 242 – 612
1. Details of specific items and the pension adjustment can be found under ‘Specific items and pension charge to cash difference adjustment’ in the Financial Review.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
240
Additional Information
240
Glossary of Alternative Performance Measures continued

This section lists the definitions of the various APMs disclosed
throughout the Annual Report and Financial Statements. They are
used by management, who considers them to be an important
means of comparing performance year-on-year and are key
measures used within the business for assessing performance.
Adjusted operating (loss)/profit
This measure is based on reported operating profit excluding the
pension charge to cash difference adjustment and operating
specific items, which Management considers to be key adjustments
in understanding the underlying profit of the Group at this level.
These adjusted measures are reconciled to the reported results in
the table in the paragraph ‘Consolidated reported and adjusted
results’. Definitions of the pension charge to cash difference
adjustment, and operating specific items are provided below.
Adjusted operating (loss)/profit margin
This is a measure of performance that management uses to
understand the efficiency of the business in generating profit.
Itcalculates ‘adjusted operating profit’ as a proportion of revenue
inpercentage terms.
Earnings before interest, tax, depreciation and
amortisation (EBITDA) before specific items
EBITDA is a widely used profit measure, not defined by IFRS, being
earnings before interest, taxation, depreciation and amortisation.
EBITDA is reported operating profit before specific items with
depreciation and amortisation added back. Adjusted EBITDA is
EBITDA before specific items with the pension charge to cash
difference adjustment added back.
(£m)
52weeks
ended
March
2023
52weeks
ended
March
2022
Operating (loss)/profit (748) 577
Add back specific items 544 7
Reported operating (loss)/profit before
specific items (204) 584
Depreciation and amortisation 602 540
EBITDA before specific items 398 1,124
Pension charge to cash difference adjustment 133 174
Adjusted EBITDA 531 1,298
Adjusted earnings per share
Adjusted earnings per share is reported basic earnings per share,
excluding operating and non-operating specific items and the
pension charge to cash difference adjustment. A reconciliation of
this number to reported basic earnings per share is included in the
adjusted results table in the section ‘Presentation of results’.
Adjusted people costs
These are costs incurred in respect of the Group’s employees and
comprise wages and salaries, temporary resource, pensions,
bonus and social security costs. People costs relating to projects
and voluntary redundancy costs are also included.
Pension charge to cash difference adjustment
This adjustment represents the difference between the IAS 19 income
statement pension charge and the actual cash payments. Management
reviews the performance of the business based on the cash cost of the
pension plans in the adjusted operating loss/profit of the Group. For the
DBCBS this represents the difference between the IAS 19 income
statement pension charge rate of 22.9% (2021-22: 24.6%) for the
DBCBS pension plan.
Operating specific items
These are recurring or non-recurring items of income or expense
of a particular size and/or nature relating to the operations of the
business that, in management’s opinion, require separate
identification. Management does not consider them to be reflective
of year-on-year operating performance. These include items that
have resulted from events that are non-recurring in nature,
eventhough related income/expense can be recognised in
subsequent periods.
Amortisation of intangible assets in acquisitions
These charges, which arise as a direct consequence of IFRS
business combination accounting requirements, are separately
identified as management does not consider these costs to be
directly related to the trading performance of the Group.
Legacy/other items
These costs/credits relate either to unavoidable ongoing costs
arising from historic events (such as the industrial diseases
provision) or historic provisions not utilised. They also include any
adjustments arising from asset impairment.
Non-operating specific items
These are recurring or non-recurring items of income or expense
of a particular size and/or nature which do not form part of the
Group’s trading activity and in management’s opinion require
separate identification.
Profit/loss on disposal of property, plant and equipment
Management separately identifies the profit/loss on disposal of
PP&E as these disposals are not part of the Group’s trading activity
and are driven primarily by business strategy.
Free cash flow
Free cash flow (FCF) is calculated as statutory (reported) net cash
flow before financing activities, adjusted to include finance costs
paid and exclude net cash from the purchase/sale of financial asset
investments and GLS client cash movements. FCF represents the
cash that the Group generates after spending the money required
to maintain or expand its asset base, thus is useful for Management
in assessing liquidity. FCF is also shown on a pre-IFRS 16 basis as it
is used to support dividend cover analysis, taking into account all
cash flows related to the operating businesses including the capital
element of operating lease repayments.
The following table reconciles free cash flow to the nearest IFRS
measure ‘net cash inflow before financing activities’.
(£m)
Reported
52weeks
March
2023
Reported
52weeks
March
2022
Net cash inflow before financing activities 48 401
Adjustments for:
Finance costs paid (61) (56)
Movement in GLS client cash
1
2 5
Net release of pension escrow investments (8) –
(Sale)/purchase of financial asset investments (70) 70
Free cash flow (89) 420
Capital element of operating lease
repayments
2
(179) (166)
Pre-IFRS 16 free cash flow (268) 254
1. The movement in GLS client cash is shown excluding foreign currency exchange gain of
£2 million (2021-22: £nil).
2. The capital element of lease payments of £202 million (2021-22: £192 million) shown in the statutory cash
flow is made up of the capital element of operating lease payments of £179 million (2021-22: £166 million)
and the capital element of finance lease payments of £23 million (2021-22: £26 million.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
241
Strategic Report Corporate Governance Financial Statements Additional Information
241
Alternative Performance Measures

In-year trading cash flow
In-year trading cash flow reflects the cash generated from the
trading activities of the Group. It is based on reported net cash
inflow from operating activities, adjusted to exclude movements in
GLS client cash and the cash cost of operating specific items and to
include the cash cost of property, plant and equipment and
intangible asset acquisitions, net finance payments and dividends
received from associates. The prior period has been re-presented
to reflect the re-allocation of deferred revenue (including SITHOP)
into trading working capital (included within net cash inflow from
operating activities). These balances were previously excluded
from in-year trading cash flow as part of other working capital
movements. In-year trading cash flow is used primarily by
management to show cash being generated by operations less
cash investment. In-year trading cash flow is also shown on a
pre-IFRS 16 basis as it is used to support dividend cover analysis,
taking into account all cash flows related to the operating businesses.
The following table reconciles in-year trading cash flow to the
nearest IFRS measure ‘net cash inflow from operating activities’.
(£m)
Reported
52weeks
ended March
2023
Reported
52weeks
ended March
2022
Net cash (outflow)/inflow from operating
activities 373 1,160
Adjustments for:
Movement in GLS client cash
1
2 5
Cash cost of operating specific items 53 4
Purchase of property, plant and equipment (328) (519)
Purchase of intangible assets (93) (84)
Dividends received from associates – 5
Net finance costs paid (41) (52)
In-year trading cash flow (34) 519
Capital element of operating lease
repayments
2
(179) (166)
Pre-IFRS 16 in-year trading cash flow (213) 353
1. The movement in GLS client cash is shown excluding foreign currency exchange gain of
£2 million (H1 2021-22: £nil).
2. The capital element of lease payments of £202 million (2021-22: £192 million) shown in
thestatutory cash flow is made up of the capital element of operating lease payments
of£179 million (2021-22: £166 million) and the capital element of finance lease payments
of£23 million (2021-22: £26 million).
Net debt
Net debt is calculated by netting the value of financial liabilities
(excluding derivatives) against cash and other liquid assets. It is a
measure of the Group’s net indebtedness that provides an indicator
of the overall balance sheet strength. It is also a single measure
that can be used to assess the combined impact of the Group’s
indebtedness and its cash position. The use of the term net debt
does not necessarily mean that the cash included in the net debt
calculation is available to settle the liabilities included in this
measure. Details of the borrowing facilities in place and the
amounts drawn can be found in Note 23 of the 2022-23 Annual
Report and Financial Statements. Net debt is also shown on a
pre-IFRS 16 basis as the banking covenants are calculated on a
pre-IFRS 16 basis.
(£m)
At
26March
2023
At
27 March
2022
Loans/bonds (922) (872)
Asset finance (25) -
Leases (1,362) (1,341)
Cash and cash equivalents
1
773 1,101
Investments – 70
GLS Client cash 36 36
Pension escrow (RMSEPP) – 21
Net debt (1,500) (985)
Operating leases
2
1,319 1,292
Pre-IFRS 16 net (debt)/cash (181) 307
1. Cash and cash equivalents includes bank overdrafts of £89 million at 26 March 2023 and
£62 million at 27 March 2022 that are part of a cash pool for the UK companies which generally
has a net £nilbalance across the Group and forms an integral part of the Group’s cash
management
2. This amount represents leases that would not have been recognised on the Balance Sheet
priorto the adoption of IFRS 16.
Loans and bonds increased by £50 million, largely as a result of
exchange rate movements on the value of bonds.
Cash and cash equivalents and Investments (net of bank overdrafts
which are part of a cash pool) decreased by £398 million, largely as
a result of free cash outflow of £89 million (2021-22: £420 million inflow),
the payment of £127 million in external dividends (2021-22: £366 million)
and by the capital element of lease repayments of £204 million
(2021-22: £192 million). In 2021-22 there were also outflows relating
to the share buyback (£201 million) and purchase of own shares for
awards schemes (£17 million).
Net debt excludes £208 million (2021-22: £192 million) related to
theRMPP and RMCPP. Pension escrow investments on the balance
sheet which are not considered to fall within the definition of net debt.
Adjusted effective tax rate
The adjusted effective tax rate is the adjusted tax charge or credit
for the year expressed as a proportion of adjusted profit before tax.
The adjusted effective tax rate is considered to be a useful measure
of the tax impact for the year. It approximates to the tax rate on the
underlying trading business through the exclusion of specific items,
including the pension charge to cash difference adjustment.
GLS performance presented in Euro
IDS plc financial statements are presented in Sterling, being the
Group functional currency. However, given GLS strategic targets
are set using Euros, GLS financial performance is presented
inEuroas well as Sterling in order to aid transparency.
The reconciliation between the Group functional currency
ofSterling and Euro are set out below
52 weeks 2021-22 52 weeks 2021-22
GLS
performance
in Sterling
GLS
performance
in Euro
GLS
performance
in Sterling
GLS
performance
in Euro
Revenue 4,650 5,384 4,219 4,959
People costs (1,031) (1,194) (908) (1,067)
Non-people costs (3,271) (3,787) (2,969) (3,490)
Operating profit 348 403 342 402
GLS performance has been translated using an average exchange
rate between Sterling and Euro of £1:€1.16 (2021-22: £1:€1.18). This
has resulted in a £5 million increase in GLS reported operating
profit before tax in 2022-23 (2021-22: £16 million decrease).
International Distributions Services plc
Annual Report and Financial Statements 2022-23
242
Additional Information
242
Alternative Performance Measures continued

Disclaimers
This document contains certain forward-looking statements
concerning the Group’s business, financial condition, results
ofoperations and certain of the Group’s plans, objectives,
assumptions, projections, expectations or beliefs with respect to
these items. Forward-looking statements are sometimes, but not
always, identified by their use of a date in the future or such words
as ‘anticipates’, ‘aims’, ‘due’,‘could’, ‘may’, ‘will’, ‘should’, ‘expects’,
‘believes’, ‘intends’, ‘plans’, ‘potential’, ‘targets’, ‘goal’ or ‘estimates’.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Group’s
actual financial condition, performance and results to differ
materially from the plans, goals, objectives and expectations set
out in the forward-looking statements included in this document.
Accordingly, readers are cautioned not to place undue reliance
onforward-lookingstatements.
By their nature, forward-looking statements relate to events
anddepend on circumstances that will occur in the future and are
inherently unpredictable. Such forward-looking statements should,
therefore, be considered in light of various important factors that
could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking
statements. These factorsinclude, among other things: changes in
the economies and markets in which the Group operates; changes
inthe regulatory regime within which the Group operates; changes
ininterest and exchange rates; the impact of competitive products
and pricing; the occurrence of major operational problems; the
lossof major customers; undertakings and guarantees relating
topension funds; contingent liabilities; theimpact of legal or other
proceedings against, or which otherwise affect, the Group; and
risks associated withtheGroup’s overseasoperations.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to the
Group oranypersons acting on their behalf are expressly qualified in
their entirety by the factors referred to above. No assurance canbe
given thatthe forward-looking statements in this document will be
realised; actual events or results may differ materially asaresult
ofrisks and uncertainties facing the Group. Subject tocompliance
with applicable law and regulation, the Company does not intend to
update theforward-looking statements in this document to reflect
events or circumstances after the date of thisdocument, and does
not undertake any obligation to do so.
International Distributions Services plc
Annual Report and Financial Statements 2022-23
243
Forward-Looking Statements

International Distributions Services plc
Annual Report and Financial Statements 2022-23
244244
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