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Strategic Report
Joint Chairman and CEO Statement — Redressing the wrongs of the past
Chairman's Foreword
Chief Executive Statement
Financial and Business Review
Governance
Corporate Governance
Board of Directors
Remuneration Committee Chairman's Statement
Management of Risk
Streamlined Energy & Carbon Reporting
Directors’ Report
Financial Statements
Independent Auditors’ Report to the members of Post Office Limited
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Cash Flows
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Company Financial Statements
Corporate information
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18
18
30
45
51
55
61
66
67
68
69
70
71
121
136
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Strategic Report
The Strategic Report for the Post Office comprises the Joint Statement, Chairman's Foreword, Chief Executive
Statement and Financial and Business Review.
Joint Chairman and CEO Statement — Redressing the wrongs
of the past
As Sir Wyn's Horizon IT Inquiry hears first-hand testimony from Postmasters, this is a fitting time to take stock
of Post Office's progress to secure justice for the people affected by this scandal and ensure that all lessons
have been learnt.
After the Group Litigation was concluded in December 2019, we launched a comprehensive programme to
identify any material that should be disclosed to those historically prosecuted. We soon began to understand
the sheer scale of the miscarriage of justice that had taken place, as well as the terrible consequences for those
impacted. Since then, we have worked tirelessly to remedy the historical failings highlighted by the Group
Litigation and embarked upon an ambitious and sustained programme of work to fundamentally change our
business.
First and foremost, our focus is on redressing past wrongs. Securing full, fair and final compensation for those
affected has been our immediate priority and we are making good progress. We have made provision for £502
million for compensation of overturned historical convictions and have secured funding from the Government
for up to £780 million. To date, 66 of the 73 people who have had their convictions overturned have now each
received interim compensation payments of up to £100,000 and, following Government funding announced in
July 2021, we are beginning to negotiate final settlements but we are concerned at the time it is taking and are
in discussions with Government and claimants’ legal representatives on the approach. At the same time, we
are taking determined action to assist anyone who may wish to challenge their conviction, including providing
information about how to take forward appeals and where to obtain help and legal advice. Post Office and the
Government have also agreed a package of independent outreach with the Criminal Cases Review Commission
("CCRC") and are exploring additional support measures with independent bodies.
Separately, we are paying civil compensation through the Historical Shortfall Scheme to Postmasters who have
been affected by financial discrepancies related to previous versions of Horizon. We have provided for £150
million in compensation and have recognised Government funding of £64 million as an asset as at the balance
sheet date. To date, of the 2,369 eligible applications to the scheme, 1,243 claimants have now received an
offer, and 952 of these have been accepted and paid. Offers and payments are continuing to be made every
week and 95% of applicants to the scheme should receive offers by the end of 2022 as the independent
advisory panel assessing each case accelerates its important work.
We must ensure that compensation is delivered to everyone affected. This means the unfairness for people
whose claims were settled in the Group Litigation must also be addressed. Whilst a settlement was jointly
agreed with the claimants in good faith, it was only later that we understood how little of the settlement each
of the 555 claimants received. Since then, we have publicly stated it simply is not right for Group Litigation
claimants to be disadvantaged. We therefore welcomed the Government's recent announcement to set up a
new scheme for the 555 and will work closely with the Government to ensure fair compensation for all.
The Inquiry's oral hearings, which began in February 2022, have since underscored the human cost of this
scandal - we have heard of time spent in prison by those whose convictions are now quashed, of marriages
broken, jobs lost. It is only right, then, that we have provided our continued support to Sir Wyn and his Inquiry
team; we have waived our legal professional privilege for the purposes of this inquiry to be as transparent as
possible; and we have disclosed in excess of 30,000 documents to date for the Inquiry's consideration and
review; and we continue to provide documents and witness evidence as requested by the Inquiry. We know
that, for genuine progress to be made, the full history of this scandal must be brought to light.
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But, as well as righting the wrongs of the past, we have a responsibility in the here and now to improve our
business and ensure that these events can never happen again. The oral hearings have reinforced our
determination to learn from our failings and to continue to change the Post Office for the benefit of our.
Postmasters. In doing so, by fully addressing the past, we can rebuild confidence in the Post Office; which
remains so essential to communities across the United Kingdom.
Operationally, we are delivering a programme of improvements, based on Postmaster and branch feedback, in
every part of the business — from initial contact and training through to daily transactions and accounting. For
example, we have launched a programme to replace our Horizon IT system with a new branch system that will
underpin the future of our network — built with Postmasters, for Postmasters. In the meantime, we're improving
Postmasters’ everyday user experience of Horizon, including redesigning processes to investigate
discrepancies and resolve disputes.
More widely, we are making numerous small but important changes for our Postmasters through our new
Improvement Delivery Group. For example, we have introduced Postmaster champions into our Supply Chain
depots; we have overhauled our Postmaster training and now have 16 classroom training sites that are available
for top-up training all year round with dedicated trainers, plus 40 specialist trainers around the country
delivering on-site training; we have built a Branch Performance tool so that Postmasters have their branch sales
and remuneration at their fingertips; we have published a Postmaster Support Guide that outlines our
commitments to them and the support available to them in one place; and we are continuing to improve our
online Branch Hub platform as the one-stop-shop for our Postmasters’ needs.
Culturally, we are relentlessly focused on putting our Postmasters at the heart of the business. The clearest
signal of this determination to date has been to introduce two Non-Executive Director Postmasters, elected by
other Postmasters, onto our Board to ensure the business's direction is rooted in the reality of Postmasters’
experiences. A serving Postmaster has also been appointed to a new full-time Postmaster Director role, leading
on our day-to-day engagement with Postmasters. Moreover, we are ensuring colleagues understand the
realities of working in branch, whether through our “Adopt an Area” scheme, which is designed to help our
senior leaders connect with Postmasters, or our “Week in the Life of Postmaster” training, which has been
rolled-out to all central support colleagues.
We are also embedding a range of engagement forums to ensure that Postmasters are listened to, their
feedback acted upon and their voices heard. For example, we have introduced new monthly Regional Forums
and a national Postmaster Advisory group, as well as a number of Postmaster working groups to collaborate
on key topics, from IT to marketing. In 2021, we held two national conferences and more than 100 local
engagement events with Postmasters across the country, hosted by Senior Managers at Post Office. Most
recently, we have conducted our second annual Postmaster Research programme, providing an essential
channel through which we can understand Postmasters’ needs and aspirations.
The results from this research show that our Postmasters are beginning to see the benefit of these changes on
the ground. Compared to a year ago, more Postmasters are positive about their relationship with Post Office
(+11%}; more feel supported by the business (+8%); more feel valued (+6%) and more recognise that Post
Office understands their day-to-day lives (+5%). These are modest but clear improvements and an important
start. We know that forging a strong partnership with Postmasters and rebuilding their trust will take time. This
isn’t about quick fixes or easy wins, but fundamental changes in many parts of the organisation, its processes,
procedures and policies. While our research shows there is still much to do — including making post offices more
financially attractive to run, which continues to be a priority for Postmasters — these results show we are making
progress.
Ultimately, our Postmasters must have the confidence that history will not repeat itself. They must experience
that the Post Office has changed for good, as we work together to build a successful and fairer business. Post
Office simply matters too much to today’s Postmasters, customers and communities across the UK. In short,
we must and will put this right.
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Chairman's Foreword
Having served as the Chairman or Chief Executive of several
organisations, I have seen my fair share of businesses navigate their way
through change and challenges over the years. However, I have not
witnessed such a uniquely turbulent period as the financial year of
2020/21 — for the world, for the nation and for businesses, including the
Post Office. The effect of the pandemic was sudden and far-reaching for
our Postmasters, our customers and our colleagues.
It is in this unprecedented and unpredictable context that Post Office’s
performance over the past financial year should be assessed. Due to the
impact of the pandemic, our trading profit fell by £51 million, however we
were still able to close the year with a robust trading profit of £35 million.
However, the emphasis on financial metrics that often dominates the view
of a business’ performance should be placed alongside more nuanced
measures that we know customers and citizens increasingly prize: the
value a company brings to its local communities, its social and environmental credentials and what — put simply
— it gives back.
Indeed, the pandemic brought into fresh focus how important post offices are across the UK — being open each
day in nearly every community, when high streets fell still and quiet during the pandemic, has been as vital as
it has been appreciated. However, it also reinforced the fact that without our Postmasters, there is no Post
Office. Illustrating this are countless stories of individual Postmasters going above and beyond the call of duty
- whether delivering food parcels to customers who were shielding, coordinating with local food banks for
those in.need, or even running another Post Office when a fellow Postmaster had been unable to do so. Indeed,
their hard work, resilience and service have been recognised by a myriad of Government Ministers and MPs,
bringing to the fore why resetting our relationship with Postmasters is not simply a cultural ideal, but an
operational imperative.
But even as we begin to chart our way out of the pandemic toward normality, Post Office, like every other
business in the UK, faces a tough new reality. The near meteoric rise of online shopping, the sudden demise of
many of the biggest brands on the high street and an ever-challenging retail landscape have made clear that a
history of managing a large retail chain is by no means a guarantee of its successful future. However, unlike
every other business in the UK, Post Office must face up to another, even harsher reality — the need to confront
our past and the simple fact that as an organisation we failed a large number of Postmasters.
The last year has been a year of two parts — of both pride we can feel at our role through the pandemic, and
deep humility at the historical failings we must face up to. We accept that we have been a source of deep pain
for some current and former Postmasters. We have apologised wholeheartedly for our failings and continue to
make the operational and cultural changes to ensure this cannot happen again, as indicated in our joint
statement above. In our journey to reckon with our past, the 2020/21 financial year was important in three
respects.
First, following the agreed settlement of Group Litigation in 2019, we established the Historical Shortfall
Scheme in May 2020 to provide redress to Postmasters for shortfalls related to previous versions of the
computer system, Horizon. Having received 2,369 eligible applications and with payments underway, this
marks an important milestone in addressing past mistakes and demonstrates the start of a more open and
transparent relationship with our Postmasters.
Second, since March 2020 the Court of Appeal Criminal Division ("CACD") and the Southwark Crown Court
have overturned 72 convictions prosecuted by the Post Office (together, “the Appeals”). As at 25 April 2022
the CACD and Southwark Crown Court will each consider 1 further appeal against convictions and the CCRC
is reviewing a further 31 applications to refer convictions for appeal. While Post Office stopped prosecutions
nearly a decade ago, these rulings are a stark reminder of the need to fully address the wrongs of the past. We
must ensure that those impacted by this scandal are fully compensated as quickly as possible and come to a
resolution that recognises the scale of our shortcomings.
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And third, an Inquiry, led by Sir Wyn Williams, was launched in November 2020 to establish a clear account of
the implementation and failings of the Horizon IT computer system over its lifetime. More recently, following
the Court of Appeal ruling, the Inquiry has shifted to a statutory footing, which is a welcome step in ensuring
that lessons are learnt. This will help ensure that the Inquiry can assess whether Post Office is changing for the
better and provide reassurance to Postmasters that Post Office has the culture and processes in place to ensure
that nothing like this can happen again.
The cost of addressing the wrongs of the past is substantial: first, in securing full and fair compensation that is
rightly due to those affected by this scandal; and second, for the complementary administration costs to ensure
there are proper legal conclusions that are satisfactory to the Postmasters affected and that stand the test of
time. However, as many businesses pore over their profits and losses over the past financial year, Post Office
should be set apart. A key determinant of our success now and in the years ahead will also be whether our
Postmasters feel certain that history will not repeat itself, whether they thrive commercially and whether they
have confidence in this business.
I conclude, first by welcoming two serving Postmasters, Saf Ismail and Elliot Jacobs, as well as Ben Tidswell
and Brian Gaunt, to the Post Office Board as our newest Non-Executive Directors. We now have serving
Postmasters on our Board for the first time in the Post Office's 360-year history and I would like to thank Saf
and Elliot for the insightful contributions they are already making. Having stood:down in January, I would also
like to thank Ken McCall for his two terms of dedicated service on the Board and wish him the best for the
future.
Second, I want to formally reiterate my gratitude on behalf of the Board to all our Postmasters, as well as
colleagues, for their tireless work — without which the pandemic would have likely been that much more
challenging for so many.
Tim Parker
Chairman
29 April 2022
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Chief Executive Statement
I have served as the Chief Executive of Post Office since September 2019,
and yet the pandemic has perhaps brought with it enough challenges to
last two decades - this is, of course, a theme that will dominate
innumerable annual reports and reflections from Chief Executives this
year.
While 2020/21 was undoubtedly a year that few would want to repeat, it
also demonstrated the difference that post offices across the UK make to
communities. During the pandemic, while the high street grew quiet and
isolation kept millions at home, we ensured communities across the UK
could continue to access critical public services; we adapted products like
Payout Now and Fast PACE for those who could not leave their homes
safely; and we repurposed our foreign exchange delivery service so that
customers could receive cash in the post the very next day. Our
designation by the Government as an essential retailer during the pandemic was fitting recognition of the vital
part we played. This is thanks entirely to the combined efforts and tireless work of our Postmasters and their
staff, colleagues in our Directly Managed Branches and Supply Chain, and wider support colleagues.
We may never be able to fully quantify or calculate the considerable value post offices brought to the UK during
the pandemic - or their role in helping the UK get back on its feet as we emerge from a succession of lockdowns.
However, independent research we commissioned in 2020 did shed some light on the essential role we play
across the UK, with post offices bringing an additional 400 million visitors to UK high streets, driving an
estimated additional £1.1 billion in revenue to the UK economy. Furthermore, the research found that two in
five small businesses would not be able to continue functioning without the Post Office for more than a few
months.
In spite of the pandemic, throughout 2020/21 and since, we have made real progress in our journey to forge a
new and enduring partnership with Postmasters, even as we address historic failures. Our joint statement
above sets these changes out in more detail, but some key milestones for me include; the establishment of our
Improvement Delivery Group to carry out a suite of operational, technological and cultural fixes across the
business; setting up the Historical Shortfall Scheme to start to atone for past mistakes; a nationwide
consultation with both Postmasters and our partners; the launch of a new programme to replace Horizon by
2025 with a modern branch IT system that will underpin the future of our network; and two serving Postmasters
joining our Board as Non-Executive Directors to ensure our future is grounded in the reality of their experiences.
This is to say nothing of the myriad of small but vital changes we are delivering to make Postmasters’ lives
easier day in, day out.
Beyond resetting our relationship with Postmasters — which is our priority as a business - there are a host of
achievements of which any business could have been proud of in a normal year, let alone during a global
pandemic. In December 2020, we signed our second Mails Agreement with Royal Mail. As well as ensuring
continuity for customers and businesses across the UK for the next decade, this marks an important milestone
in our history, in that we can now open up our network to new mails and parcels providers and evolve to meet
customers’ needs. Shortly after this, we also successfully sold our Telecommunications ("Telecoms") business
to Shell Energy Retail, in our journey to rationalise and double down in our core products and services.
Besides shoring up our core commercial pillars, we have also helped boost social, financial and digital inclusion
for customers across the UK. In February 2021, we announced the expansion of our digital identity services
offering in partnership with Yoti, combining our extensive branch network and brand presence with Yoti’s
leading identity technology. We launched a £16 million investment that will see us own and operate c.1,400
free-to use-cash ATMs across the UK ~ one of the largest investment programmes in that market by any
organisation for over a decade and a significant demonstration of our commitment to protecting access to cash.
And, of course, we have continued to expand our role in providing vital cash and banking services during a year
in which bank branch closures have only accelerated. Indeed, data from our Cash Tracker illustrates the UK's
increasing dependence on Post Office services; in fact, in 2020, Postmasters handled almost 140 million cash
transactions on behalf of bank and building society customers. Of this we can, and should, be enormously proud.
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My overall observation is that the past couple of years have, more than anything, brought into sharp focus how
many people rely on us. Our restated purpose as a business makes this clear: “We're here, in person, for the
people who rely on us”. This captures the essence of why Post Office exists and emphasises that the UK needs
the Post Office to emerge from the pandemic fighting fit. This will be challenging as we face into the significant
headwind of a tough economic outlook and the imperative, with the associated costs, to provide redress for
those affected by the Horizon IT scandal.
The Government provided a £227 million funding settlement in the one year spending review in November
2020. In April 2022, following the Comprehensive Spending Review, £335 million of funding has been allocated
for the next three years. This allocation is composed of a network subsidy which is frozen at £50 million a year
to offset some of the costs of maintaining the unprofitable parts of the network. There is also £185 million over
the next three years for investment, primarily to transform our technology. While I would, of course, have liked
amore generous settlement to be able to do more, we have to set our plans consistent with the funds we have
been allocated. These plans will be more challenging than in previous years, as trading profits will be diverted
to address the failings of the past.
We know from our Postmaster research that remuneration and their branch profitability continues to be the top
priority for our Postmasters. Therefore, we will have to work even harder to help our Postmasters navigate the
economic headwinds so that they can continue to run their post offices successfully and be the pillars of their
communities.
Needless to say, there is a huge amount still to be done — both on our journey towards sustainability and to
rebuild trust with Postmasters. We are at a critical juncture. However, I am confident that we can use this
moment of profound change in the retail landscape and across the UK as a catalyst for working with the
Government on a fundamental recasting of the Post Office for the future. We must continue to work hard to
become a business that genuinely places its Postmasters at its heart and remains relevant to the needs of the
communities it serves across the UK.
If the pandemic has shown us anything - with all its social isolation and its lockdowns - it is the value of a face-
to-face moment. Postmasters, and the face-to-face service they provide at the heart of communities, deserve
a brighter future.
Nick Read
Chief Executive Officer
29 April 2022
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Financial and Business Review
Presentation of results for 2020/21
As disclosed in the consolidated income statement of the financial statements on
page 66, we have split the results of the group of companies headed by Post }
Office Limited (“the Group”, “Post Office") between continuing and discontinued }
operations. Together these combine to present the results of the Group.
In prior years, investment funding from Government, restructuring, impairment }
and transformation costs were separately disclosed in an ‘investments’ column in
the consolidated income statement. In 2020/21, where these items exist, they
have been combined into the singular trading column format, which represents
the underlying performance of the business, with exceptional one-off items
recognised as individual line items. The 2019/20 results have been presented in
the same way for comparative purposes. The disposal of the Telecoms operation I
in 2020/21, which represented a separate line of business, is a significant event
which requires separate disclosure on the income statement, therefore a I___.
‘discontinued operation’ section has been included after the results for continuing operations for both 2019/20
and 2020/21. The operating profit in respect of the discontinued operation is included in the alternative
performance measure but the profit on disposal is excluded. See note 24 to the financial statements for further
details.
Overview
Post Office's trading profit reduced to £35 million (2020: £86 million) principally due to the significant impact
of the COVID-19 pandemic. The primary impact was on business banking and travel products however
increased Mails trading and improved prices from the new banking framework agreement helped partially offset
the impact. Despite the impact of the COVID-19 pandemic, the Group achieved a fifth consecutive year of
profitable trading. We supported an increase in Postmasters’ remuneration to £412 million (2020: £384 million)
with COVID-19 top-up payments and strong mails trading helping to offset reduced travel related
remuneration, and banking rate increases offsetting lockdown related business volume reductions. We have
maintained a positive cash and security headroom position throughout the year.
Trading profit, shown below, includes revenue and costs from the Telecoms business which was sold to Shell
Energy Retail Limited on 15 March 2021. Refer to the discontinued operations note to the financial statements
(note 21) on page 114 for further details.
2021 2020 Variance Variance
£m m £m %
Revenue 957 951 6 1
Costs* (918) (912) (6) 1
Other income 3 19 (16) (84)
Share of (loss)/profit from joint venture (7) 28 (35) (125)
Trading profit** 35 86 (51) (59)
* Excludes exceptional items and investments.
‘* Non-statutory measure which is explained further in note 24 to the financial statements.
We recognised an overall statutory loss of £597 million (2020: £305 million), see table on the next page. This
includes Historical Matters related costs of £610 million (2020: £225 million), made up of a provision of £502
million for Overturned Historical Convictions ("OHC") and related legal and running costs of £22 million, Group
Litigation Order (“GLO") costs of £1 million, a provision of £59 million in respect of Postmaster Remediation
and legal and running costs of £29 million related to the Historical Shortfall Scheme ("HSS"), offset by a
reduction in the HSS provision of £3 million. The costs are offset by the recognition of HSS funding of £64
million, detailed further on page 14. The loss also includes £124 million (2020: £130 million) of depreciation
and amortisation, from both continuing and discontinued operations.
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2021 Variance
£m £m §
Revenue 957 6
Adjusted EBITDA: operating profit before depreciation,
amortisation, exceptional items and investments (note
24)* 85 136 (51)
Trading profit: operating profit before depreciation,
amortisation, exceptional items, investments and 35 86 (51)
Network Subsidy Payment (note 24)*
Loss for the financial year (597) (305) (292)
* Non-statutory measures which are explained further in note 24 to the financial statements.
In 2019/20 the Group entered a net liability position for the first time since 2012, driven by the recognition of a
£153 million provision for HSS. In 2020/21 a corresponding asset of £64 million has been recognised in respect
of Government funding for the HSS (note 4 to the financial statements). Despite this, the Group remains in a
net liability position of £656 million (2020: £57 million) which is primarily driven by the recognition of two
additional provisions: Overturned Historical Convictions of £502 million and Postmaster Remediation of £59
million (note 16 to the financial statements).
Post year-end and prior to the signing of these financial statements, Government has agreed to provide
additional funding in respect of investments and Network Subsidy Payments for the periods 2022/23 through
to 2024/25, committed to funding the Overturned Historical Convictions, extended the term of funding for the
HSS and provided written assurances of continued Government support in respect of several significant
potential liabilities for which funding has not yet been confirmed. Given the estimation uncertainty around
several significant provisions and crystallisation of any possible future liabilities, we have set out in some detail
the material uncertainties we face within the going concern assessment in note 1 to the financial statements.
While Government funding is formalised for specific time periods and requests, we believe that Government
support remains strong and we are therefore confident that we can continue to provide our national services
for the foreseeable future. Post Office therefore remains a going concern.
Revenue
The Post Office business was organised in the period into three strategic commercial pillars, plus Telecoms,
reflecting the change in organisational structure during the year. Revenue from our subsidiary Post Office
Management Services Limited ("POMS’) is included within the PO Insurance line below. Revenue from our
subsidiary Payzone Bill Payments Limited ("Payzone’) is included within the Payment Services line below. The
divisions and their performance are detailed on the following pages.
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2021 2020 Variance
m m %
Revenue from Continuing Operations:
Mails 397 347 50 14
Retail, Lottery & Gift Cards 34 38 (4) (11)
Government Services 14 30 (16) (53)
Mails, Retail & Government Services 445 415 30 7
Banking Services & ATMs 205 165 40 24
Transactional Financial Services 58 71 (13) (18)
Payment Services 29 31 (2) (6)
Post Office Card account ("POCa") 14 21 (7) (33)
Banking, Payments & Transactional Services 306 288 18 6
Mortgages, Savings & Loans 13 31 (18) (58)
Credit Cards 5 3 2 67
PO Insurance 24 48 (24) (50)
Identity Services 10 8 2 25
Financial Services, Identity Services and
Insurance 52 90 (38) (42)
Other* 12 14 (2) (14)
Total Revenue from Continuing Operations: 815 807 8 1
Revenue from Discontinued Operation:
Telecoms** 142 144 (2) (1)
Total Revenue 957 951 6 1
* Principally relates to Supply Chain income of £9 million (2020: £10 million) predominantly for warehousing of Royal Mail stock, transport
of high value mails and release of Bank of Ireland deferred income of £2 million (2020: £3 million). The remaining £1 million (2020: £1
million) is made up of immaterial revenue balances.
** See note 21 to the financial statements for more detail
Mails
Mails includes the sale of parcel labels, special delivery and home shopping returns along with other mails
products provided by Royal Mail and Parcelforce. Underlying mails trading increased by £50 million to £397
million (2020: £347 million) with labels and special delivery increasing 26% and 12% respectively. This was a
consistent trend throughout the year as a result of enforced social distancing measures and travel bans. Home
shopping returns volumes benefitted from the closure of non-essential retail and full year revenue was 21% up
on prior year.
Retail, Lottery & Gift Cards
Revenue has decreased by £4 million to £34 million (2020: £38 million). Retail sales have declined during the
COVID-19 pandemic, as have gift card sales, reflecting the wider impact of the pandemic on department stores
and non-essential retailers. .
Government Services
Government services relates to Home Office passport applications, DVLA services and UK Visas and Immigration
residency permits. Revenue has decreased by £16 million to £14 million (2020: £30 million). Lack of international
travel caused a significant decline in passport volumes from prior year.
Banking Services & ATMs
Revenue has increased by £40 million to £205 million (2020: £165 million). As part of the Banking Framework
2 agreement, our fixed fee increased by £49 million to £90 million (2020: £41 million). Banking services revenue
was relatively flat at £100 million (2020: £98 million) as increased rates from the new agreement offset the
volume decrease in business banking caused by lockdowns. ATMs revenue has declined by £11 million, due to
a planned reduction in the ATM network size.
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Transactional Financial Services L, 7
Our Transactional Financial Services products include travel moni y,MoneyGram and Postal: Orders.’ Revenue
decreased by £13 million to £58 million (2020: £71 million). Underlying travel money revenue declined by £13
million due to COVID-19 travel restrictions, however these were partially offset by an additional £4 million of
fixed commissions.
Payment Services
Payment Services includes bill payment transactions. Resellers market decline has been substantially but not
fully offset by a full year of British Gas volumes, with revenue experiencing a slight reduction to £29 million
(2020: £31 million) as a result.
POCa
Account numbers are declining as planned migration away from Post Office Card Account continues. As such
revenue has decreased by £7 million to £14 million (2020: £21 million).
Mortgages, Savings & Loans
Revenue has decreased by £18 million to £13 million (2020: £31 million) due to lower deposit balances, on
which commission is received, and a low interest rate environment.
Credit Cards
Revenue has increased by £2 million to £5 million (2020: £3 million). Credit Card sales returned strongly in the
second half of the year with a revised credit policy and effective marketing activity.
PO Insurance
Post Office Insurance provides Travel, Life and General Insurance policy cover. Insurance revenue has declined
by £24 million to £24 million (2020: £48 million). The decrease was driven mainly by Travel Insurance, which
saw a £19 million reduction on prior year, driven by travel restrictions.
Identity Services
Identity predominantly relates to Verify services. Revenue is volume driven, boosted by HMRC's extension of the
self-assessment tax return deadline. Revenue in this area has increased by £2 million to £10 million (2020: £8
million). However, increased volumes incur higher associated Verify fees, hence there is little profit benefit.
Telecoms
Telecoms included Post Office HomePhone & Broadband and Fibre services. The business was sold to Shell
Energy Retail Limited on 15 March 2021. Eleven and half months of trading has been recognised in this financial
year for Telecoms.
Joint venture
Post Office Limited has a joint venture with the Bank of Ireland with each party holding 50% of First Rate
Exchange Services Holdings Limited ("FRESH"), whose principal activity is the supply of foreign currency
exchange in the UK to the Post Office and others. FRESH's profit in the year has been severely impacted by
travel restrictions imposed as result of the COVID-19 pandemic. As such, Post Office's share of operating loss
from the joint venture was £7 million (2020: £28 million profit).
Discontinued operation
On 1 February 2021 the Group entered into a binding agreement to sell the trade and assets of its Telecoms
business to Shell Energy Retail Limited. The transaction completed on 15 March 2021 for consideration of £65
million. The carrying value of net assets sold was £6 million and costs of £6 million were incurred to sell the
operation. The Group recognised a profit on disposal of £53 million in the year. The sale allows the Group to
focus its investment on its core business operations.
In 2019/20 the discontinued Telecoms business contributed revenue of £144 million and incurred costs of £130
million, resulting in a trading profit of £14 million from the discontinued operations. In preparing the financial
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statements for the current year, a discontinued operation note has been included. See note 21 to the financial
statements for more detail.
Costs
Trading costs increased by £6 million to £918 million (2020: £912 million). Postmaster remuneration increased
by £28 million to £412 million (2020: £384 million) as COVID-19 top-up payments and strong Mails trading
helped to offset reduced Travel related remuneration; along with the banking rate increase offsetting lockdown
related business volume reductions.
People costs decreased by £8 million to £163 million (2020: £171 million) reflecting efficiency savings following
organisational effectiveness activities during the year.
Average headcount reduced from 4,027 in 2019/20 to 3,556 in 2020/21 reflecting the aforementioned efficiency
savings and the effect of the Network and Directly Managed Branch ("DMB") transformation programmes. Closing
headcount for the year was 3,449 (2020: 3,663).
Other trading costs, excluding Postmaster and people costs, have decreased by £10 million to £346 million.
Exceptional items
Exceptional costs are significant, one off items which require disclosure on their own in the income statement
due to their material size and nature. Exceptional costs of £626 million (2020: £232 million) were recognised in
the year. This includes Historical Matters related costs of £610 million (2020: £225 million), £7 million (2020:
£7 million) in relation to other legal costs and £9 million (2020: £nil) in relation to COVID-19 pandemic related
costs to ensure safety in the branch network. The increase in Historical Matters related costs is primarily due to
recognition of both the Overturned Historical Convictions provision and the provision for historical suspension
pay, which are described on pages 14 and 15 respectively. The Historical Matters related costs are broken
down in more detail in note 4 to the financial statements.
Group Litigation Order
On 11 April 2016 a High Court claim was issued on behalf of a number of Postmasters against Post Office in
relation to various legal, technical and operational matters (the “Group Litigation Order", “Group Litigation”,
“GLO").
On 10 December 2019 the parties reached a comprehensive resolution of the Group Litigation. This included a
settlement payment of £52 million which was recognised within exceptional items in 2019/20, in addition to a
payment of £6 million made for claimant legal costs and disbursements in June 2019, which was recognised in
exceptional items in 2018/19.
Post Office incurred a further £1 million of legal costs in the year (2020: £20 million). The total amount
recognised within exceptional items in respect of the Group Litigation is £1 million (2020: £72 million). These
costs were funded by Post Office through operational cashflows.
Historical Shortfall Scheme
As part of the settlement reached with the claimants in the Post Office Group Litigation (see above), Post Office
agreed to establish a remediation scheme open to Postmasters who had not participated in the Group Litigation
but who had experienced similar issues relating to shortfalls indicated by previous versions of the Horizon
system, known as the HSS. The agreement to establish this scheme in December 2019 was deemed to be a
triggering event on which to recognise a provision.
The HSS launched on 1 May 2020 and officially closed for applications on 14 August 2020 (although late
applications have been accepted in exceptional circumstances). As at 25 April 2022, the HSS had received
2,369 eligible applications from current and former Postmasters. Of these, 434 are quantified, 1,601 are partly
quantified and 334 are unquantified claims, representing an increase in the number of quantified claims in the
year. HSS is now closed to new applications.
A provision of £150 million (2020: £153 million) has been retained in respect of the HSS, with the reduction on
prior year being driven by payments made in year and changes in management estimates following
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assessments made by the independent panel which makes recommendations on claims made to the scheme.
This represents management's latest and best estimate of the potential future payments associated with the
claims received. The provision requires a number of significant estimates and assumptions by management,
with the level of estimation risk increased as a result of the volume and range of claims received and the
relatively early stage of the settlement process, with 952 claims settled to date since the scheme opened.
The HSS payments will be partially funded by Government, with Government having agreed in March 2021 to
provide sufficient financial support to Post Office to ensure that the scheme can proceed. An asset of £64 million
(2020: £nil) has been recognised in the year in respect of the portion of the HSS provision which will be funded
by Government. The difference between the provision and asset values will be funded by Post Office through
its trading cashflows and cashflows from the sale of the Telecoms business. As guaranteed funding was in
place at the balance sheet date the accounting requirements for asset recognition were met.
Further details regarding the HSS and the estimates made by management in deriving the provision value are
included in the critical accounting estimates section in note 1 to the financial statements.
Overturned Historical Convictions
In March 2020, following two High Court judgments which were handed down in March 2019 and December
2019, the Criminal Cases Review Commission (“CCRC”) announced its decision to refer a number of historical
convictions of Postmasters, branch managers and/or branch assistants (collectively “Postmasters”) to the
relevant appeal courts to decide if these convictions should be overturned on the grounds of abuse of process.
Since the CCRC’s announcement in March 2020, the Court of Appeal Criminal Division ("CACD") and the
Southwark Crown Court have overturned 72 convictions prosecuted by the Post Office (together, “the
Appeals"). As at 25 April 2022, the CACD and Southwark Crown Court will each consider 1 further appeal
against convictions and the CCRC is reviewing a further 31 applications to refer convictions for appeal.
In accordance with its duties as a former prosecutor, Post Office has made or is seeking to offer post-conviction
disclosure to 706 Postmasters who have historical convictions, prosecuted by Post Office, to enable them to
decide whether they wish to appeal their convictions. Disclosure has to date been made for 269 Postmasters.
Itis not known how many additional Postmasters will seek to appeal their convictions in due course. Post Office
is also liaising with other prosecution agencies to offer assistance in cases that were not prosecuted by Post
Office but where evidence from Horizon may have been relied upon.
Since 11 December 2020, when the Southwark Crown Court overturned the convictions of the first 6
Postmasters, Post Office has received correspondence on behalf of individuals intimating their intention to seek
civil compensation. Post Office is committed to compensating Postmasters fairly and expeditiously and its legal
representatives have been in continued dialogue with the professional advisors representing the interests of
those who have been acquitted. To date no civil proceedings have been issued in the courts by former
Postmasters.
Management's view is that liabilities arising from any future civil claims or requests for compensation arising
out of the overturned convictions to date represent a probable obligation arising from past events. Post Office
making its decision in 2020/21 not to oppose a number of appeals was deemed to be the triggering event for
liability recognition. The triggering event is deemed to apply to the full population of claimants or potential
claimants, and not only those who have or are currently appealing convictions.
As such, a provision of £502 million (2020: £nil) has been recognised in respect of the Overturned Historical
Convictions ("OHC"). This represents management's latest and best estimate of the potential future payments
associated with civil claims which may be received, assessed across the whole population of potential claimants.
The provision requires a number of significant estimates and assumptions by management, principally relating
to the potential number of claimants and the potential settlement amounts. The level of estimation risk increased
as a result of the early stage of the proceedings.
Government has confirmed it will provide funding in respect of future payments arising as part of the OHC, see
the going concern section of note 1 to the financial statements for further details. An asset has not been
recognised in respect of Government funding, as guaranteed funding was not formally in place at the balance
sheet date and thus the accounting requirements for asset recognition were not met.
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Postmaster Remediation
Historically, before March 2019, Postmasters did not receive remuneration during the period of any contract
suspension. Post Office has subsequently changed this policy, resulting in Postmasters being remunerated
during a period of suspension. In the year, a decision was taken by the Directors to provide redress to those
Postmasters historically impacted. The means by which redress will be provided is still being determined.
Liabilities arising from any future redress represent a probable obligation arising from past events.
A provision. of £59 million (2020: £nil) has been recognised, representing management's best estimate of
potential future payments to be made to Postmasters for retrospective suspension remuneration. The provision
requires a number of significant estimates and assumptions by management, with the level of estimation risk
increased as a result of the period of time for which the previous policy was in operation and because the means
of any remediation is to be determined. Further details regarding the provision estimate can be found in note 1
to the financial statements.
As part of ongoing internal reviews into historical operational processes it is possible that other historical
policies and processes may be identified that may previously have led to some Postmasters being financially
impacted. Until such historical policies and processes are identified and any associated financial impact is
confirmed, we are unable to determine whether any liability that could arise in the future will have a material
adverse impact on the consolidated position of the Group. While no provision or contingent liability has been
recognised, as there is no triggering event for recognition, the Directors are including this statement for
transparency to stakeholders and continue to keep this under close review.
COVID-19
As a result of the COVID-19 pandemic, additional one-off costs were incurred during 2020/21 amounting to
£9 million (2020: £nil). The majority of costs related to ensuring our branch network complied with health and
safety standards, as our Postmasters, where possible, kept branches open to serve their communities. This
included purchase and distribution of personal protective equipment, cleaning supplies, screens and signage.
Other
The remaining exceptional costs of £7 million (2020: £7 million) relate to costs associated with defending an
Employment Tribunal claim, for which a contingent liability was disclosed in prior years but has since been
derecognised, see note 20 to the financial statements for further details.
Investments and capital spend
Investment funding and costs included in the consolidated income statement are shown below:
2021 2020
£m £m
Investment funding - 42
Restructuring:
Business transformation (6) (10)
Network programmes 5 (66)
IT transformation (12) (2)
Severance (16) (7)
Total restructuring costs (29) (85)
Impairment (8) (27)
Unwinding of discount on provisions - (1)
Discontinued operation* (6) (6)
Total investment charge (43) (77)
* Relates to costs in respect of the discontinued operation, see note 21 to the financial statements for more detail
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Investment funding of £42 million was received from the Department for Business, Energy and Industrial
Strategy (BEIS") for transformation activities in 2019/20. No investment funding was received from BEIS in
2020/21.
Total restructuring costs excluding discontinued operations reduced from £85 million to £29 million, with the
majority of spend being severance in relation to ongoing programmes to transform the business, driving Post
Office toward commercial sustainability.
In the year, following the impact of the COVID-19 pandemic on trading, it was deemed prudent to impair the
carrying value of the goodwill and the investment held in Payzone Bill Payments Limited. An impairment of £8
million (2020: £27 million, in relation to £17 million goodwill held in Post Office Management Services Limited
and £10 million of Post Office Limited software assets) was recognised in relation to goodwill in the Group
accounts. An impairment of £14 million (2020: £17 million) has been recognised in the Post Office Limited
Company accounts in relation to investments held in subsidiaries for Payzone (2020: Post Office Management
Services), see note 5 in the Company financial statements on page 131. The Group still recognises the value
that Payzone brings, through joint contracts, increased footfall and technology sharing amongst other items.
In addition, we have incurred £53 million (2020: £90 million) of capital spend, which includes right-of-use
assets, primarily on IT transformation projects, as disclosed in notes 9 and 10 to the Group financial statements.
Total profit
The continuing operations and discontinued operations results combine to give a loss after tax of £597 million
(2020: loss of £305 million).
Full results are set out on page 66 and further commentary on key aspects are outlined below.
Net liabilities
The Group ended the year with net liabilities of £656 million (2020: £57 million). This £505 million increase in
net liabilities was driven primarily by the recognition of the £502 million provision for Overturned Historical
Convictions and the Postmaster Remediation provision of £59 million. In addition, total investment costs of £43
million (2020: £119 million) were incurred with no investment funding received from Government in 2020/21.
The impact of being in a net liabilities position has been assessed and considered as part of the going concern
review in note 1 to the financial statements.
Cash flow
Cash and cash equivalents amounted to £365 million (2020: £462 million) at the year-end. There was a net
cash outflow during the year of £97 million (2020: £110 million).
Operating activities resulted in a net cash inflow of £66 million (2020: outflow of £63 million) which was driven
primarily by favourable working capital movements.
Post Office Limited seeks to minimise the amount drawn down on the loan from BEIS in order to reduce its
interest cost. The facility is limited to a maximum of £950 million, the unused facility at the end of the year was
£524 million (2020: £333 million). The maximum drawn down under the facility during the year was £637
million in April 2020.
A covenant, known as security headroom, exists within the facility. This covenant is in place to ensure there is
sufficient collateral in the form of cash and other assets to cover the borrowings under the facility. At year-end
headroom sat at £224 million (2020: £64 million), the increase driven by improved trading when compared
with March 2020, which saw a decline in cash transactions as a result of the COVID-19 pandemic. No breaches
in headroom occurred in the year.
The facility was renewed in 2021, with a 3-year term to 31 March 2024 being agreed. This renewed facility is
available at one day's notice.
Post Office Limited's borrowing facility from Government limits the purposes for which the facility can be used
and, together with borrowing limits contained in the Articles of Association, imposes constraints on the
availability of external borrowing.
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The Bank of England Note Circulation Scheme
~ The continued participation in the Note Circulation Scheme ("NCS") assures that Post’ Office’ Limited has an
adequate supply of banknotes to meet customer demand across its network and provides a mechanism which
enables Post Office Limited to hold Bank of England owned notes. At the end of the year £240 million (2020:
£276 million) of Bank of England owned notes were held, See note 23 to the financial statements for further
details on the NCS.
During the year, Post Office also had an arrangement in Scotland with a commercial banking ‘partner whereby
surplus Scottish notes are sold to the partner overnight for repurchase the next day. This arrangement came to
an end in December 2020 and therefore no balance was outstanding at year-end (2020: £11 million).
Pensions
Post Office Limited is the principal employer of the Post Office Section of the Royal Mail Pension Plan ("RMPP"),
which is independent of the Royal Mail section of the RMPP. Royal Mail Group Limited is the principal employer
of the Royal Mail Senior Executives Pension Plan ("RMSEPP") and Post Office Limited is a participating
employer within RMSEPP. RMPP and RMSEPP are both defined benefit plans. Both defined benefit plans are
closed to new members and closed to future accrual. The history of these schemes can be found in note 18 to
the financial statements. The Post Office operates a defined contribution scheme — the Post Office Pension
Plan.
The deficit payments into RMSEPP were historically agreed with the pension trustees and payments were made
in accordance with the agreements. Net cash payments made in 2020/21 amounted to £18 million (2020: £19
million) and related to regular pension contributions.
The income statement charge for the year in relation to the defined contribution scheme was £11 million (2020:
£12 million). The income statement charge for the year in relation to the defined benefit schemes was £2 million
(2020: £1 million). Further detail on Post Office's pension schemes can be found in note 18 to the financial
statements.
Section 172(1) Statement
The disclosure of the $172 statement is included within the Governance section on pages 28 and 29.
Alisdair Cameron
Group Chief Finance Officer
29 April 2022
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Governance
Corporate Governance
Legal Ownership and Structure
Post Office Limited ("the Company”), is wholly owned by BEIS, who hold a special share in the Company, the
rights of which are enshrined within the Post ‘Office Limited Articles of Association
(http://corporate.postoffice.co.uk/).
BEIS does not have day-to-day involvement in the running of the Company but monitors performance,
particularly the Company's compliance with the minimum network access criteria and the provision of specified
services, through UK Government Investments ("UKGI").
The Framework Document introduced in April 2020 describes certain parameters within which Post Office is
expected to operate, certain obligations with which Post Office is expected to comply, and certain aspects of
the relationship between the Special Shareholder, the Shareholder's Representative (UKGI) and Post Office and
how it is expected that these parties will interact with each other.
Corporate Governance Overview 2020/21
The Company maintains standards of corporate governance appropriate for our ownership structure,
commitment to social purpose and strategy to achieve commercial sustainability. We review our corporate
governance arrangements to ensure they remain appropriate for our developing business needs and relevant
legal and regulatory advances. Post Office Limited is not a listed company, but we seek to comply with the
requirements of the 2018 UK Corporate Governance Code (“UKCGC") and the Corporate Governance Code for
Central Government Departments, where these are relevant to us as a limited company with a Government
owner. The departures from either Code are where the provision does not apply to Post Office Limited because
it is not a listed company and it is not a central Government department or an arms’ length body and it does
not sensibly apply to it, for example the annual re-election of Directors, whose appointments are approved by
the Shareholder. In addition, the Non-Executive Director (Tom Cooper) who is the Shareholder Representative
serves as a member of the Audit, Risk and Compliance Committee and the Remuneration Committee but is not
an independent Non-Executive Director. Since Post Office Limited has a single shareholder, the involvement of
the Shareholder Representative on the Board and its principal Committees is seen as important to the provision
of assurance to the Shareholder and therefore we have elected not to comply with provision 24 and 32 of the
2018 UKCGC which stipulate that only independent Non-Executive Directors should be members of the Audit
and Remuneration Committees respectively.
Board of Directors
The Board is responsible for setting the business’ strategic aims, putting in place the leadership to deliver them,
maintaining appropriate oversight of the management of the business, reporting to the Shareholder and
determining the Company's vision, values and organisational culture.
During 2020/21 the Board comprised a Non-Executive Chairman, the Group Chief Executive Officer, the Group
Chief Finance Officer, the shareholder appointed Non-Executive Director and four independent Non-Executive
Directors (one of whom is designated the Senior Independent Director). Non-Executive Directors are not
employees of Post Office Limited but provide services under the terms of an individual letter of appointment,
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signed at the commencement of their directorship. Since year-end, Saf Ismail and Elliot Jacobs, two serving
Postmasters, joined the Board on 3 June 2021, Ben Tidswell joined the Board on 27 July 2021 and Brian Gaunt
joined the Board on 25 January 2022. Ken McCall stepped down from the Board on 25 January 2022 having-~
served two terms as a Non-Executive Director and as the Senior Independent Director. Board members during. _
the year ended 28 March 2021 and up to the point of signing are shown below.
I Tim Parker
Chairman, Chairman of the Nominations
Committee and member of the
Remuneration Committee
Joined the Board 1 October 2015
Ken McCall
Senior Independent Director, Chairman of
the Remuneration Committee and member
of the Audit, Risk and Compliance and
Nominations Committees
Joined the Board 21 January 2016
Stood down from the Board 25 January
2022
Tom Cooper
Non-Executive Director, and member of
the Audit, Risk and Compliance,
Remuneration and Nominations
Committees
Joined the Board 27 March 2018
Carla Stent
Non-Executive Director and Chair of the
Audit, Risk and Compliance Committee
Joined the Board 21 January 2016
Zarin Patel
Senior Independent Director (from 26
January 2022) and member of the Audit
Risk and Compliance Committee.
Joined the Board 26 November 2019
Lisa Harrington
Non-Executive Director, Chair of the
Remuneration Committee (from 26
January 2022) and member of the
Nominations Committees.
Joined the Board 8 April 2020
GRO
Saf Ismail
Non-Executive Director and Postmaster
Joined the Board 3 June 2021
‘GRO
Elliot Jacobs
Non-Executive Director and Postmaster
Joined the Board 3 June 2021
Ben Tidswell
Non-Executive Director and Chair of the
Historical Remediation Committee.
Joined the Board 27 July 2021
Brian Gaunt
Non-Executive Director
Joined the Board on 25 January 2022
Nick Read
Group Chief Executive Officer
iJoined the Board 16 September 2019
Alisdair Cameron
Group Chief Finance Officer
Joined the Board 28 January 2015
Veronica Branton
Company Secretary
Appointed as Company Secretary 26
! July 2019 and left Post Office on 21
March 2022
Rachel Scarrabelotti
Interim Company Secretary
Appointed as Company Secretary 12 April
2022
Post Office Limited
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Non-Executive Directors are usually appointed for an initial term of three years with the scope to renew for a
second term, subject to Board appréval and the approval of BEIS. As the Shareholder Representative, Tom
Cooper's appointment period is determined -by the Secretary of State for BEIS. Biographies of all current
members of the Board can be found on the Post Office website. ~
Board
Role and responsibilities
The Board is accountable to BEIS, as the sole shareholder, for the performance of the Company and is required
to seek consent for certain matters, as included in the Articles of Association. The Shareholder is briefed
regularly on the performance of the business and the progress made towards delivering the strategy, including
at quarterly accountability meetings. A Shareholder Relationship Framework Document sets out the
responsibilities of each party.
The Board is also responsible for oversight of legal and regulatory compliance, delivery of the strategy,
providing constructive challenge to the Group Executive and communicating with all stakeholders. The Board
has a schedule of matters reserved for its decision and has approved Terms of Reference for its committees,
which are available on the Post Office website.
The Board reviews the strategy and approves the annual budget and business plan required to deliver the
strategic objectives for that year. The Board regularly reviews reports on performance against that plan and
receives periodic business reports from Senior Management. Directors are briefed on matters to be discussed
at Board and Committee meetings by papers distributed in advance of meetings, as well as management
presentations.
In setting the risk appetite for Post Office Limited the Board has established a framework to manage and
mitigate risk. The Board takes guidance from its Audit, Risk and Compliance Committee, and has oversight of
risk management. This Committee receives reports from the Compliance Director, the Head of Risk and the
Legal Director as well from operational management and the Internal and External Audit teams. Further detailed
information on the Management of Risk within Post Office Limited, together with identification of enterprise
risks, their impacts and mitigation can be found in the Management of Risk section on pages 45 to 50.
Key focus and developments in 2020/21
During the year to 28 March 2021, the Board continued to oversee Post Office Limited's strategic plan to deliver
and develop services across its network, meet its access criteria and promote commercial sustainability.
At the end of the 2019/20 financial year, the impact of the COVID-19 pandemic had started to emerge and the
Board oversaw Post Office's response through two workstreams: one focusing on the initial response
(protecting the work force and Postmasters, serving our elderly and vulnerable customers, keeping branches
open and the supply chain moving) and the other on the longer-term aim of ensuring Post Office's future
resilience. The Board approved a 100% remuneration guarantee for non-multiple branches in April 2020, a
90% guarantee for May 2020 and a 15% top up to variable pay in June 2020; this was in addition to an earlier
guarantee that fixed pay would continue, and the approval of funding to supply personal protective equipment
to branches. Regular updates on the response to the COVID-19 pandemic were provided to the Board during
the year. Over 90% of the branch network remained open during 2020/21.
The Board monitored the trading position carefully throughout the year, received advice where appropriate,
received updates on discussions with major creditors and sought and received waivers in relation to security
headroom and branch network numbers from the Shareholder on two occasions during the year. A baseline
plan for 2020/21 and a four-year outlook were agreed in May 2020 but with considerable uncertainties around
trading it was recognised that these figures would need to be monitored closely and revisited during the year.
A reforecast budget for 2020/21 was approved by the Board in September 2020 and at year-end a trading
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profit of £35 million was achieved. The Board submitted its draft funding proposal for 2021-24 to BEIS for
consideration and review in July 2020 and agreed a revised four-year plan in August 2020. Government
announced in November 2020 that there would be a one-year funding settlement for 2021/22 rather than a
three-year funding settlement. The Treasury approvals associated with the funding arrangements for Post
Office were agreed by the Board in January and March 2021. The Board discussed the draft budget for 2021/22
in January and March 2021.
In April 2021 the Board approved a strategy to replace the Bank of Ireland ATM network with a network of
ATMs owned and operated by Post Office Limited under a new commercial and financial framework. This
followed the Bank of Ireland's decision not to continue providing the service after March 2022. Post Office
Limited sees the provision of cash to its customers and on behalf of its Banking Framework clients as a core
Post Office service which it delivers through counter services and ATMs.
Following discussions during the year, the Board approved the main terms of the second Mails Distribution
Agreement ("MDA2") with the Royal Mail Group (“RMG") in November 2020 and it delegated authority to the
Chief Executive Officer and Group Chief Commercial Officer to finalise the contract. The new 10-year
agreement came into force in March 2021, changing from volume-based remuneration to value-based
remuneration. Whenever Royal Mail puts up customer prices, Postmasters will see the benefit reflected in their
remuneration. MDA2 also introduces new flexibility to innovate in mails and allows us to open our UK-wide
branch network to other carriers. The Board supported the development of Pick Up and Drop Off ("PUDO")
services and in 2021 contracts were signed with Amazon and DPD.
The Board agreed that Post Office Limited should enter exclusive negotiations with Shell Energy on the sale of
its Telecoms business in December 2020 and the sale was completed in March 2021. The sale of the business
aligned with the strategy of focusing on core product offerings.
Work continued during the year on plans to move Post Office Limited's IT system from data centres to a new
cloud-based system, on an incremental basis, and the Board approved funding for this in July 2020 and in
January 2021. The Board also agreed an extension to the contract with Fujitsu to provide support for any
elements of the Horizon system remaining in 2023/24 where services had not migrated to the new cloud-based
system. During the autumn and spring of 2020/21, a Business Transformation Unit was set up to support the
New Branch IT programme through which a cloud based IT system will be delivered.
The Board approved the 2019/20 Network Report in September 2020; this confirmed compliance with the
Entrustment Letter and Funding Agreement for provision of the agreed access criteria, such as the number of
Post Office branches, as at March 2020. In that month, the Board also approved the Modern Slavery Act
Transparency Statement for 2020/21 and the proposed actions to evaluate suppliers, introduce mandatory
training to raise awareness of modern slavery and produce guidelines on reporting suspicions. The Board
approved its Risk Policy in January 2021.
Post Office Limited entered into a settlement agreement on 10 December 2019 with the 555 Postmasters who
had brought a High Court claim against the company, which was managed by the Court through a Group
Litigation Order (“GLO”). A public apology was made to the Postmasters with whom the settlement was
reached for the serious historical failings. In addition to the financial settlement it was agreed that Post Office
Limited would set up a scheme to seek to compensate any Postmaster who had suffered a historical shortfall.
The HSS was subsequently set up in May 2020. A Stamps Reconciliation Scheme was also set up in July 2020.
An independent advisory panel assesses and makes recommendations to Post Office on fair outcomes for HSS
applications, while the Board has oversight of the overall management of the HSS. The Board approved the
submission of a funding proposal to BEIS for the HSS in November 2020 as the volume and potential quantum
of claims meant that Post Office Limited would not be able to fund the costs without Government support. The
Board approved interim payments being made under the HSS in distress cases in October 2020, and the
commencement of payments from January 2021, once the Company had secured associated Government
funding.
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In March 2020 the Criminal Cases Review Commission (“CCRC”) referred the first cases prosecuted by Post
Office Limited to the Court of Appeal Criminal Division (“CACD") for appeal. As at 25 April 2022, 72 convictions
have been set aside, 38 convictions have been upheld or had unsuccessful appeals, 1 further appeal is being
considered and the CCRC is reviewing a further 31 applications to refer convictions for appeal. Where Post
Office Limited was the prosecutor, it has a duty to respond to each appeal setting out its stance on them. The
Board reviewed all the appeals and supported the overturning of those cases where it recognised and accepted
that the individuals could not have received a fair trial. On 23 April 2021 the CACD delivered a judgment
allowing 39 appeals and dismissing 3, concluding that Post Office Limited's failures to investigate and disclose
problems with or concerns about Horizon were so egregious as to make the prosecution of any “Horizon case”
an affront to the conscience of the court. Post Office Limited apologised to all those whose convictions are
overturned, and recognises that many individuals had been fighting for justice for a considerable length of time
and not all had lived to see their convictions quashed. Post Office Limited continues to respond to appeals by
applying the CACD'’s guidance. Further details can be found in the disclosures surrounding Overturned
Historical Convictions on page 14.
The Board has also overseen a Post-Conviction Disclosure Exercise (“PCDE") which reviewed more than 3.8
million documents to identify the generic and case specific information to be disclosed to those who have
appealed or may wish to appeal a historic prosecution brought by Post Office Limited. Steps have been and
continue to be taken to contact all those who Post Office Limited prosecuted historically and that may have
relied on evidence from the Horizon system so that disclosure can also be made to them.
Extensive programmes of work were undertaken during the year and have continued into the 2021/22 financial
year to make sure that Post Office Limited not only complies with the findings of the Common Issues Judgement
("CI") and Horizon Issues Judgement ("HU"), but goes beyond these, to develop a successful modern franchise
that runs in partnership with Postmasters and other partners. This entails cultural change, not just changes to
systems and processes. The Board made a number of decisions to support this change with a particular focus
on Postmaster engagement and support, including:
. Launching a Postmaster consultation in September 2020, which included questions on Postmaster
participation in decision-making, one result of which was the appointment of two Postmasters to the
Board. Saf Ismail and Elliot Jacobs joined the Board in June 2021 following an independent appointment
process, with the Postmaster community voting for the shortlisted candidates;
. Issuing a Postmaster Support Guide in July 2020 which set out the changes Post Office had made to
reflect the Common Issues Judgment;
. Revising the Operations Manual, to make this clearer and easier to use as a document which Postmasters
need to refer to regularly;
* External assurance reports were commissioned by the Board to test conformance with the findings of
the Common Issues and Horizon Issues judgments; and
. BranchHub was further developed as a source of information and support for Postmasters.
Conflicts of Interest and Independence
In accordance with the Companies Act 2006, the Articles of Association give the Directors power to authorise
conflicts of interest. During the period, none of the Directors had a material interest in any contract of
significance with Post Office Limited or any of its subsidiaries.
At all times during the periods of their appointments in 2020/21, the independent Non-Executive Directors met
the criteria for independence set by the Board.
Post Office Limited has arranged appropriate insurance cover in respect of legal action against Directors of Post
Office Limited and its subsidiaries.
Tim Parker, Chairman of Post Office Limited was independent at appointment. Ken McCall, Carla Stent, Zarin
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Patel and Lisa Harrington are considered independent Non-Executive Directors. Tom Cooper is not an
independent Non-Executive Director as he is a shareholder representative. Nick Read and Alisdair Cameron
held executive roles throughout the financial year, and as such were not independent Directors. Saf Ismail and
Elliot Jacobs joined the Board on 3 June 2021, after the end of the reporting period, and as serving Postmasters
are not independent Non-Executive Directors. Ben Tidswell joined the Board on 27 July 2021, after the end of
the reporting period, and is considered an independent Non-Executive Director. Brian Gaunt joined the Board
on 25 January 2022, after the end of the reporting period, and is considered an independent Non-Executive
Director.
Board Meetings
During 2020/21 the Board met 52 times (including additional meetings held either in person or virtually). A
record of Directors’ attendance (attended/eligible to attend) at the Board and its Committees is set out in the
table below:
Director Board Board Audit, Risk & Nominations Remuneration
(additional) Compliance Committee Committee
Committee
Chairman
Tim Parker 10/10 42/42 718 5/5 77
Executive Directors
Nick Read 10/10 41/42 5/8 = 6/7
Alisdair Cameron 10/10 35/42 8/8 “ =
Non-Executive Directors
Ken McCall (Senior 9/10 38/42 718 5/5 6/7
Independent Director)
Tom Cooper (note 1) 10/10 42/42 8/8 vi 77
Lisa Harrington (note 2) 10/10 36/41 - 5/5 77
Zarin Patel 10/10 41/42 8/8 - -
Carla Stent 10/10 35/42 8/8 . -
Note 1: Tom Cooper was appointed as a member of the Nominations Committee on 30 March 2021.
Note 2: Lisa Harrington was appointed as a Non-Executive Director on 08 April 2020.
All Board and Committee meetings were quorate, with a majority of independent Non-Executives present.
Committees
To assist in the execution of its corporate governance responsibilities, the Board has established three
committees which deal with specific topics requiring independent oversight. The Audit, Risk and Compliance;
Nominations; and Remuneration Committees are each chaired by an independent Non-Executive Director. In
August 2021, after the end of the reporting period, the Board established a Historical Remediation Committee
to oversee the ongoing work to compensate Postmasters whose cases have been overturned by the Court of
Appeal, to approve Respondent's Notice in relation to new appeals and to oversee the running of the Historical
Shortfall Scheme.
The Board retains overall oversight but delegates responsibilities and authorities to its committees to operate
within the Terms of Reference approved by the Board. The Terms of Reference for all committees are reviewed
annually to assess that each Committee discharged its duties effectively in accordance with the Terms of
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Reference. The reviews conducted in February and April 2021 raised no material issues.
Terms of Reference for the committees are available on the Post Office Limited website.
Nominations Committee
Role and Membership
The duties and responsibilities of the Nominations Committee are included in the Terms of Reference, which
are available on the Post Office Limited website.
The Committee is chaired by Tim Parker, Chairman, and the other members during the year were Ken McCall,
Senior Independent Director, and Lisa Harrington, Non-Executive Director, who was appointed to the
Committee on 8 April 2020. Tom Cooper, Non-Executive Director, was appointed to the Committee on 30 _
March 2021, after the year-end.
The Group Chief Executive Officer ("CEO") and Group Chief People Officer also attend meetings at the invitation
of the Committee Chairman.
Work of the Committee in 2020/21
During the year the Committee considered the recommendations from the 2019/20 annual Board and
Committee review and reviewed progress in implementing these in September 2020 following which a number
of additional board briefing sessions were scheduled. The Committee reviewed the s172 Statement for the
2019/20 Annual Report and Accounts.
Succession planning requirements for the Board were considered in February 2021 and the appointment
process and role description for a new Non-Executive Director were approved. The Committee re-appointed
the Chair of Post Office Insurance for a three-year term starting in March 2021.
The appointment process and brief for an external facilitator for the 2020/21 Board and Committee reviews
were approved in September 2020. The Committee met with the shortlisted firms and in December 2020
appointed Independent Audit Limited to carry out the review.
The Committee approved a number of appointments to the Group Executive. The annual review of terms of
reference was carried out in February 2021.
Remuneration Committee
Role and Membership
The duties and responsibilities of the Remuneration Committee are included in the Terms of Reference which
are available on the Post Office Limited website.
The Committee was chaired by Ken McCall, Senior Independent Director, during the reporting period, and the
other members during the year were Tom Cooper, Non-Executive Director, Tim Parker, Chairman of Post Office
Limited and Lisa Harrington, Non-Executive Director, who joined the Committee on 8 April 2020. Lisa
Harrington became Chair of the Committee on 26 January 2022 after Ken McCall stepped down after
completing his second term of office.
In accordance with the Terms of Reference, the CEO may attend meetings, at the invitation of the Committee
Chairman, to discuss matters relating to the remuneration of the Group Chief Finance Officer ("CFO") and other
members of the Group Executive. However, the Committee recognises the need to manage any potential
conflicts of interest and upholds the principle that no individual may be involved in discussions concerning their
own remuneration. The Shareholder approves the remuneration of the Executive Directors and determines fees
for Non-Executive Directors. The Group Chief People Officer also attends Remuneration Committee meetings
at the invitation of the Chairman.
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Work of the Committee in 2020/21
During the year the Committee reviewed the performance ratings for the Group Executive proposed by the CEO
and approved the calculation methodology for the 2019/20 STIP and the 2017-20 LTIP. A 50% reduction was
applied to the Executive Directors’ payments, which are subject to Shareholder approval, and a 20% reduction
to the Senior Leadership Population. These payments were deferred until the Annual Report and Accounts for
2019/20 had been approved for signing. No payments were made under the 2019/20 Post Office Insurance
STIP because the gateway criteria were not met.
The Committee decided that an STIP scheme would not be launched in 2020/21 or an LTIP scheme for 2020-
23 at the start of the year given the trading uncertainties and consequent difficulties in setting budget
assumptions. In November 2020 it was agreed that no 2020/21 STIP or 2020-23 LTIP would be launched but
a Transformation Scheme covering the period from April 2020 to January 2022 would be launched.
The Committee discussed and approved the Directors’ Remuneration Report (“DRR") for the 2019/20 Annual
Report and Accounts and discussed the DRR for 2020/21 which would include the CEO pay ratio.
Willis Towers Watson were appointed as remuneration advisers to the Committee in September 2020.
The Committee approved changes to the STIP and LTIP schemes rules following a review to benchmark these
against best practice, including the provisions on malus and clawback and a revision to the definition of “good
leaver".
The Committee approved remuneration packages for a number of members of the Group Executive. The
objectives for the CEO in 2020/21 were approved.
Updates were received on people matters, including people engagement and Post Office Limited employee
engagement activities during the COVID-19 pandemic and the employee engagement plans post COVID-19.
The Committee also received regular updates on Postmaster engagement.
The annual review of terms of reference was carried out in February 2021. No changes were proposed, as the
terms of reference had been revised in April 2020 in line with the adoption of the new Post Office Limited
Articles of Association and UKGI Framework Document.
Audit, Risk and Compliance Committee
Role and Membership
The duties and responsibilities of the Audit, Risk and Compliance Committee are included in the Terms of
Reference which are available on the Post Office Limited website.
The Committee is chaired by Carla Stent, Non-Executive Director, and the other members during the year were
Ken McCall, Senior Independent Director, Tom Cooper, Non-Executive Director, and Zarin Patel, Non-Executive
Director.
The Board considers that the Committee's members have broad commercial knowledge and extensive business
leadership experience, in addition to which Carla Stent, Tom Cooper and Zarin Patel are qualified chartered
accountants, which it believes constitutes an appropriate mix of business and financial experience and expertise.
The CEO, CFO, General Counsel, Compliance Director, Head of Risk and Head of Internal Audit, or nominated
deputy, attended all of the meetings of the Committee. The Committee Chair held regular meetings with each
of these individuals during the year. The external auditor was invited to, and attended, all meetings of the
Committee.
The Audit Risk and Compliance Committee members held separate meetings with the Head of Internal Audit
and with the external auditors without management present during the year.
Further detailed information on the management of risk within Post Office Limited, together with identification
of principal risks, their impacts and mitigation, can be found in the Management of Risk section on pages 45 to
50.
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Work of the Committee in 2020/21 .
With the onset of the COVID-19 pandemic, the Committee agreed a re-prioritised internal audit plan in May
2020, which focused on the areas of greatest risk. It also considered Post Office's changed risk profile in light
of the COVID-19. pandemic and the implications as a result of historical matters, recognising the immediate
financial, commercial and people risks. Updates were also received from Post Office Management Services
Limited, including on its decision to suspend the sale of travel insurance in March 2020 and refunds for existing
~ customers.
The revised 2020/21 internal audit programme provided for significant focus on Postmaster processes and
the Postmaster agenda. The following Postmaster-focused audits were approved by the ARC in May 2020
and were all delivered during the financial year:
. Three reviews focusing on Post-GLO improvement activities (set-up of the new Historical Matters
Unit, CU and Hu).
. Validation of Postmaster data used by the Historical Shortfall Scheme.
. An audit of Postmaster Reporting, which assessed the provision of management information to
Postmasters.
. A review of the improvements to Postmaster processes overseen by the Improvement Delivery Group
("IDG").
. A review of the BranchHub programme which will provide improved service and support to
Postmasters.
In March 2021, the ARC approved the internal audit programme for 2021/22, which included the following
Postmaster focused reviews (delivery of the audit programme was on track at the time of writing this report):
. Three reviews to assess progress with the Post-GLO improvement programme overseen by the IDG.
. A review of the HJ improvement programme.
. Two reviews of Postmaster compensation schemes.
. Postmaster Remuneration Process.
. Postmaster On-boarding Process.
In the lead up to signing the 2019/20 Annual Report and Accounts (“ARA"), the Committee maintained
oversight over critical accounting estimates and judgements, as well as considering the principal and strategic
risks, going concern assumptions and provisions for the HSS. The ARA 2019/20 was recommended to the
Board for approval to sign following an additional meeting of the Committee on 26 February 2021.
The Committee approved the annual Audit Plan 2020/21 for the internal and external auditors and approved
the Internal Audit Charter.
During the course of the year the Committee reviewed and approved the following policies: Anti-Corruption
and Bribery Policy; Co-operation with Law Enforcement Agencies and Addressing Suspected Criminal
Misconduct Policy (for recommendation to the Board); Whistleblowing Policy; Financial Crime Policy; Anti-
Money Laundering and Counter Terrorist Financing Policy; Document Retention Policy; Business Continuity
Policy; Procurement Policy; Contract Execution Policy; Vulnerable Customer Policy; Physical Security Policy;
HMRC Fit and Proper Policy; Business Change Management Policy; Conflicts of Interest Policy; Protecting
Personal Data Policy; Freedom of Information Policy; Investigations Policy; Subsidiary Policy Mandate; Cyber
and Information Security Policy; Employee Vetting Requirements Policy; Postmaster and Assistants Vetting
Requirements Policy; Postmaster Account Support Policy; Postmaster Accounting Dispute Resolution Policy;
and, the Network Monitoring and Audit Support Policy.
The Committee received updates on the Contract Management Framework and the proposed approach to
training for contract managers.
The Modern Slavery Act Transparency Statement was approved for recommendation to the Board.
The Committee received an update on tax matters and approved the annual review of tax strategy.
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Reports were provided at each of its scheduled meetings on compliance, risk, IT, change and security
programmes, such as cyber security and disaster recovery testing. A separate annual report was received on
legal risks. The Committee received a report from the Chair of the Post Office Management Services Limited
Audit and Risk Committee at each scheduled meeting.
In addition, reports were received on data controls, an immaterial historical pension data discrepancy and the
Anti-Money Laundering Annual Report. A deep dive was done on Post Office Limited's use of SuccessFactors,
its human resources and payroll system. KPMG was commissioned to produce a report on Post Office Limited's
historical operation of suspense accounts and the Committee reviewed the report and agreed that it should be
provided for the Inquiry and for the Post-Conviction Disclosure Exercise ("PCDE"), which reviewed what
information Post Office Limited held that might be relevant all Postmasters prosecuted historically where
Horizon evidence may have been relied upon.
The Committee approved the renewal of the Insurance Policies for the period 1 November 2020 to 31 October
2021.
The Committee approved the Risk Policy, including the proposed approach to Risk Appetite and Key Risk
Indicators for recommendation to the Board.
The recommendations from the Committee effectiveness review were discussed and approved in May 2020
and the annual review of the Committee's terms of reference was carried out in March 2021.
Board and Committee Effectiveness Review
Post Office Limited undertakes an annual review of its Board and Committees and the Senior Independent
Director facilitates a discussion on the Chairman's performance. An externally facilitated review typically takes
place every third year. The Board review for 2020/21 was facilitated by Independent Audit Limited, who were
appointed by the Nominations Committee in December 2020 following a competitive process whereby the
contract for evaluation was put out to tender and Independent Audit Limited were chosen based on their
experience in reviewing a wide range of private and public-sector boards. Prior to the review, Independent
Audit Limited had no connection to Post Office Limited or its Directors.
Independent Audit Limited's review involved a review of board and committee papers, observation of board
and committee meetings and interviews with board members and managers who interact regularly with the
Board; their report and recommendations were presented to the Board on 30 March 2021. The primary aim of
the review was to provide suggestions for how the Board and its committees could develop their effectiveness
in future. Independent Audit Limited did not evaluate the effectiveness of the Board's work in assessing the
ongoing litigation or in formulating a response to historical matters. The report highlighted a number of current
Board strengths including:
The Non-Executive Directors and Executive Directors share a common goal of creating a sustainable
and competitive Post Office for all stakeholders, while maintaining a strong social mission, with a
particular focus on Postmasters;
* The Board is made up of committed and hard-working Executive and Non-Executive Directors who
bring a range of relevant and complimentary skills, including expertise of mails and financial services,
IT transformation and turnaround skills and experience of liaising with Government;
«The CEO is rated highly by all for his drive, communication skills and strategic vision. The refreshed
Senior Leadership team is unanimously commended for their openness, transparency and readiness to
consider challenge and input. This underpins the work of the Board and gives a good basis for
strengthening of governance more generally;
The Chairman and CEO are felt by all to work well together, and relationships between Non-Executive
Directors more generally are constructive; and
«The Board has adapted well to not being able to meet in person and exhibits good virtual meeting
practices.
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The report noted the Board's focus during the year on historical matters. The main suggestions from the report
related to focus and balance; composition, succession and dynamics; maintaining an effective management
team; cultural transformation; risks, controls and grounded trust. As it moves forward, the Board needs to:
« Determine where it plans to spend its time with a clear forward agenda given the competing demands
of historical matters, business as usual and strategy;
«Plan in advance for how it will address succession challenges, including making time to discuss the
executive team with the Chief Executive and put in place a timely plan to manage the succession of
some long-standing board members and to integrate new members, including the two new Postmaster
Non-Executive Directors;.
* Hold regular private sessions of the Non-Executive Directors without the executives and make more
use of the external advisers at the Remuneration Committee;
* Allocate sufficient time to consider culture and create a face-to-face engagement plan for the Non-
Executive Directors once this becomes possible as lockdown restrictions lifted; and
«Develop further the approach to Risk Management from an emphasis on risk processes and structures
to allow more focus on impact and value.
In July 2021, after the reporting period, the Board discussed the report's recommendations further and adopted
these with an implementation plan that will be reviewed during the year. Initial steps have included producing
a Board governance map; discussions on succession planning; holding additional Non-Executive Director only
sessions; involving the external adviser to the Remuneration Committee in all of its discussions and receiving a
market overview at each meetings; agreeing the approach for an engagement place; and, further discussions
on our approach to risk.
In addition to the annual board and committee reviews, the Board receives an annual governance report to
review the matters reserved to the Board, delegated authorities, the register of interests and the reviews of
performance against committees’ terms of reference.
$172(1) Statement
Directors’ statutory duties are set out in the Companies Act 2006. The primary duty of the Directors is to
promote the success of the Company for the benefit of its Government shareholder and the wider stakeholder
community.
The Board has sought to pay regard to its key stakeholders and to promote the long-term success of the
Company when taking decisions, as required under $172 of the Companies Act 2006. The Company is owned
by Government and strives to be commercially sustainable while delivering a social purpose. It seeks to do this
formally through meeting a number of measures agreed with the Shareholder, including the provision of core
services across the network, such as access to cash and mails.
The Shareholder has appointed a Non-Executive Director as the Shareholder Representative on the Board. The
Chairman and CEO meet regularly with the Minister who has responsibility for the Post Office and with senior
officials at BEIS and UKGI. The Senior Independent Director during the reporting period was also the designated
Non-Executive Director for employee engagement and other Directors have attended employee events to
support initiatives such as the conferences Post Office held on International Women's Day in 2020 and 2021.
The COVID-19 pandemic has meant that the Board and the business have needed to adapt quickly to new
working practices, changes in risks and the implementation of measures needed to help keep the network open
to provide vital services to customers. Over 90% of the network operated through the period and support for
vulnerable customers continued. The extensive branch network, including outreach services, meant that
journeys that might otherwise be made by customers could be avoided through use of a local Post Office.
The Business seeks to build and maintain strong working relationships with its suppliers, and adhered to the
Payment Practices requirements, paying 85% of its invoices within 30 days in the first half of the financial year,
and 95% of its invoices within 30 days in the second half of the financial year.
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The Board considered and approved funding to support Postmasters in keeping their branches open, including
a 100% remuneration guarantee for non-multiple branches in April 2020, a 90% guarantee for May 2020 and
a 15% top-up to variable pay in June 2020 based on May trading figures. Steps were taken to keep Post Office
services running while protecting colleagues and customers through additional hygiene measures, the supply
of personal protective equipment, social distancing in branches and alteration to some branch opening hours.
Post Office also set up additional services to allow more vulnerable or self-isolating customers who could not
collect cash in branch to nominate a friend to do so, as well as providing a special home delivery service
supporting Department of Work & Pensions benefit payments direct to their customers. A hardship payment
scheme was announced in May 2020 to which independent Postmasters experiencing severe financial issues
caused by the impact of the COVID-19 pandemic on trading could apply. No employees were furloughed during
2020/21 and those who needed to shield and could not work from home received full pay. Colleagues’ views
were sought through surveys at regular intervals and feedback factored into decisions taken on matters such
as the provision of office space for those for whom working from home was very difficult, and on the best
approach to returning to some measure of office working. Additional prominence was given to well-being with
access to a number of means of support and the introduction of an “Empower hour” to promote taking a break
from screen-based meetings during the day.
The branch visits that normally take place during the year to meet Postmasters and our multiple partners were
disrupted during 2020/21 but members of the Group Executive, including the CEO and CFO, continued to make
branch visits, where permitted, under the rules on avoiding unnecessary travel. A fuller programme of
engagement with partners and employees has been scheduled for Board Directors in 2021/22 as restrictions
on travel are lifted.
The Board received information on customer satisfaction metrics and considered the feedback from the
Postmaster consultation run in November 2020.
Board debates are informed by structured papers which consider the stakeholder impact and potential risks
associated with proposals recommended to the Board.
Anew Mails Distribution Agreement with the Royal Mail Group came into force in March 2021. Mails revenue
is a principal income stream for Post Office so entering a 10 year deal provides a strong platform for the
business and supported a long-term view of the services it would operate and how it could grow through the
ability to enter partnerships with other carriers.
The Board took a number of significant decisions during the year which were driven by the imperative of
addressing Post Office Limited's historical failings as a private prosecutor and the positive ambition to create a
modern franchise in partnership with Postmasters and our multiple partners. There is recognition that there
needs to be the right culture as well as the right processes and support. This provided the context for the
Board's commitment to strengthening engagement with Postmasters further and making sure that Post Office
is Postmaster and customer focused. As well as strengthening engagement with Postmasters generally
through continued area manager visits, the introduction of roadshows and co-creation groups and through a
consultation launched in November 2020, the Board also appointed Saf Ismail and Elliot Jacobs, who are
Postmasters, to the Board in June 2021. Access to help and support, on-boarding, training and materials for
Postmasters have been revised to make them better, clearer and simpler and this work will continue with more
information and resources being added to BranchHub and improvements being made to the Support Centre.
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Remuneration Committee Chairman’s Statement
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for 2020/21. This report
outlines the remuneration framework that the Remuneration Committee (“the Committee") has followed and
sets out the activities of the Committee for the financial year ending 28 March 2021. It discloses the
remuneration policy and remuneration details for the Executive and Non-Executive Directors of the Post Office.
The Committee oversees all aspects of pay for the Executive Directors and the Board of Post Office, and the
details of remuneration packages for the Group Executive team. The Committee's recommendations and
decisions in 2020/21 reflect its remuneration policy, which is designed to enable the Post Office to attract,
motivate and retain high-calibre staff by offering both fixed and variable pay to reward commercial outcomes,
whilst being sensitive to Post Office's position as a Government owned business.
This Remuneration Report is presented in four sections:
1. Statement by the Chair of the Remuneration Committee
2. Summary of Directors’ remuneration policy
3, The annual report on remuneration
4, Fairness, diversity and wider workforce considerations
Governance context
Whilst not a legal requirement for Post Office, we remain committed to considering the application of the 2018
Corporate Governance Code to our policy and disclosures, to the extent that it is relevant and practicable to do
so. In response to the updated reporting requirements for Directors’ Remuneration, this year we include the
CEO pay ratio for the first time together with overview information on the comparison in pay change between
the CEO as compared to the general workforce.
This report has been prepared in accordance with the provisions of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2013, and The Companies (Miscellaneous Reporting)
Regulations 2018, the 2018 Corporate Governance Code, which apply to listed companies of similar size and
complexity to Post Office, along with best practice disclosure for unlisted companies, and the Companies
(Directors' Remuneration Policy and Directors’ Remuneration Report) Regulations 2019.
Shareholder engagement.
The Committee works proactively with UKGI on behalf of the Shareholder, BEIS. Tom Cooper, the Post Office
shareholder Board member, is a member of the Committee. The Committee works closely with BEIS on
developments of the remuneration aspects of corporate governance generally, as well as any changes to the
Company's executive pay arrangements in particular. All remuneration for the Executive Directors, and the Non-
Executive Directors, requires BEIS approval.
Committee activity in 2020/21
During 2020/21, the Committee's challenge was to ensure the right Reward response to the combination of
exceptional circumstances facing Post Office. These challenges concerned not only the COVID-19 pandemic
but matters relating to historical matters. Against this backdrop, the Committee needed to ensure that it took
account of the broad range of pressures on Senior Leadership whilst also recognising the high level of external
scrutiny and public concern attached to the historical treatment of Postmasters. It was imperative that Reward
should reflect Post Office's commitment to confronting the past and to creating a future business that would
service the community and deliver value to shareholders.
In addition to standard governance items, the Committee's activities during 2020/21 were to:
* Determine the right approach to incentive compensation for our Senior Leaders. In light of business
performance and uncertain trading conditions, the Committee decided to:
o Cancel the 2020/21 STIP and the 2020-23 LTIP for the Group Executive and Senior Leadership
population.
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© Introduce a Transformation Incentive ("TI") scheme for this group. This is a new deferred cash
plan with a target pay out date of March 2022. The pay out potential is similar to the annual
STIP. The scheme is based on a scorecard of four essential metrics aligned with our business
transformation priorities:
= Postmaster Satisfaction
= Inquiry
= New Branch IT
= Organisation Design
«Approve in principle the approach for other managers, a simple recognition payment was made to
reward the exceptional contribution made by these colleagues in such challenging circumstances.
«Tighten the governance within the different incentive plans with the strengthening of malus and
clawback clauses in line with best practice guidance.
¢ Commence work on the identification of the appropriate metrics for the 2021/22 STIP and 2021-24
LTIP, mindful of the needs to ensure that the plans reflected the new strategy as well as the Inquiry
and resolution of historical matters.
Select a new external advisor to the Committee. Since PwC are also the Group auditors, they stood
down as Executive Remuneration advisors during 2020 to mitigate the risk of potential independence
conflicts. Following a robust selection process, the Committee appointed Willis Towers Watson
(‘WTW") in September 2020. Since then, WTW have supported the Committee in the provision of
benchmarking data for senior positions, advice on variable pay design and best practice trends, and
advice on governance expectations. WTW have attended the Remuneration Committee meetings since
February 2021.
Membership of the Remuneration Committee
During 2020/21, the Remuneration Committee comprised of Ken McCall, Tim Parker, Tom Cooper and Lisa
Harrington. All are independent Non-Executive Directors, with the exception of Tom Cooper who is an
employee of UKGI. During the year ended 28 March 2021, the Committee met seven times to discuss key
remuneration issues arising, the review and operation of the Company's Remuneration Policy and market
updates by its advisers. Committee members’ attendance at the meetings is set out in the table below:
Meetings attended in
Member 2020/21
Ken McCall (Remuneration Committee Chairman) 6/7
Tim Parker 717
Tom Cooper 717
Lisa Harrington 77
The CEO attends the meeting by invitation of the Chairman and assists the Committee in its deliberations,
except in matters relating to his own remuneration. No Directors are involved in deciding their own
remuneration. The Committee also receives advice from the Group Chief People Officer, along with other
members of the Human Resources team and external consultants.
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Committee Changes
At the end of 2021, Ken McCall stood down as Chair of the Remuneration Committee and I have taken over the
Chair role. On behalf of the Committee I would like to thank Ken for his work as Chair for the last six years. I am
pleased to announce that Post Office has appointed Ben Tidswell as a new Non-Executive Director and Ben
joins the Committee from 1 January 2022.
Implementation of remuneration policy going forward
In April 2021, our CEO, Nick Read, published a framework to guide the activities and priorities of the Post Office
through to 2025. Itis critical that our Reward strategy and Reward plans are aligned to support the achievement
of this framework. Against the backdrop of this agreed strategy, this is a good time to take the opportunity in
the coming year to review and refresh our Reward strategy, principles and policy framework. The new Reward
strategy and framework will inform the detail of our Reward approach not only for our leadership, but for all of
our colleagues to ensure we can attract, retain, develop and motivate key talent.
In closing
On behalf of the Committee, I would like to thank the Shareholder for its input and engagement in the year. I
am honoured to step into the Chair role and we look forward to working with Nick and his team to refresh the
Reward strategy and framework.
Directors’ Remuneration Policy
Summary of Remuneration Policy
The Committee is responsible for setting the remuneration packages for the Executive Board members (CEO
and CFO), as well as the other members of the Group Executive. The Committee also provide oversight of the
Reward approach for all colleagues at the Post Office.
The Committee's intention is that the remuneration policy aligns with the business strategy and risk profile so
that individuals are motivated to deliver the Post Office objectives and protect its value to all its stakeholders.
The Post Office remuneration strategy is based on the following:
* attracting, motivating and retaining the right talent within an agreed policy to lead and deliver the
strategic plan;
© using incentives appropriately to reward the achievement of the turnaround strategy and promote the
long-term viability of the organisation;
«reinforcing an emerging culture of sustainable performance, partnership and mutual ways of working;
and
* providing a transparent approach to the disclosure of pay.
The 2018 Corporate Governance Code sets out a number of provisions for best practice remuneration policy.
We have aligned our policy with these provisions, as shown on the next page.
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How Directors’ Remuneration Policy aligns with the Code provisions
We are committed to providing a transparent approach to the disclosure of pay and have worked to
ensure this report is a comprehensive record of the Committee's decisions over the year and their remit.
We also maintain an extensive and continuous dialogue with the Shareholder on all matters related to
the remuneration of our Executive Directors.
Clarity
The remuneration structure is simple to understand for both participants and external stakeholders and
Simplicity
is aligned to the strategic priorities of the business.
Risk Executive Directors are subject to malus and clawback charges in the STIP and LTIP rules, which provide
for the reduction or return of all or parts of bonus payments in the event of misstatement of the accounts,
error, or gross misconduct on the part of an Executive Director. From 2020 the rules have been
strengthened to provide for reduction or clawback of bonuses where the Executive Director has
contributed to serious reputational damage of the company, a material corporate failure or some other
exceptional event. In addition to malus and clawback, the Remuneration Committee has the absolute
discretion to make adjustments, including a downward adjustment, to any bonus payment due under
the TI, STIP and LTIP schemes if it considers such adjustment to be appropriate having taken into
account all relevant factors.
‘As Post Office is not able to pay in shares, there is no risk of excessive gains within our incentives. The
range of possible values of rewards to individual Executive Directors are set out in the scenario charts
on the next page.
Predictability
‘A meaningful portion of an Executive Director's reward is linked to performance. The TI, STIP and LTIP
Proportionality
plans reward the delivery of the business strategy and performance ambition.
(Our remuneration framework overall, and our approach to Executive Remuneration in particular, remains
focused on our aim of becoming a commercially sustainable business with a strong public purpose. We
aim to reinforce a culture of partnership.
Alignment to Culture
Executive Directors: Key elements of the remuneration policy
The following table sets out the key elements of the Remuneration Policy for Executive Directors (the CEO and
CFO). The remuneration framework for the Executive Directors requires consent from BEIS each year.
Element and link to Operation Potential
strategy
Base Salary ISalaries are normally reviewed on an annual basis, in July. There is no formal cap set on salaries.
When determining base salary increases, consideration is given _Any increase in Executive Directors’
To recruit and reward to (i) pay and employment conditions elsewhere in the Post salaries will typically be no more than
MCC RRC ial Office and (ii) market data on comparable roles. that applied to the wider workforce
and will take account of the increases
skills and for the
in the public sector and wider market
responsibilities required.
trends.
Benefits In line with Government guidance for senior employees, Historically, all Executive Directors
participation in benefits such as cars, life insurance and health _had the opportunity to be participants
Jcover schemes are no longer provided to new appointments. in benefit schemes. However, now
The policy is to ; ; the CFO is the only remaining
Since September 2019, any new Executive appointee is not Executive participating in benefit
consolidate taxable ; ;
loffered benefits as part of their remuneration package. schemes as he was appointed prior
benefits into base salary. to September 2019,
Historically, Executive Directors received a 25% salary For 2020/21 the CEO has opted out
‘supplement in lieu of pension. of the Post Office Pension Scheme.
In line with Government guidance for senior employees, anynew The CFO receives a 25% salary
To provide market Executive Director appointment from September 2019 has not _ supplement in line with previous
competitive pensions been offered salary supplement in lieu of pension but remains —_ policy.
entitled to participate in the Post Office Pension Scheme at the
packages.
same levels of contribution as the wider workforce.
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Element and link to
strategy
Operation
Potential
Short-Term Incentive STIP.awards are made annually.
Plan (STIP)
[planning cycle.
A discretionary payment
to reinforce and reward
improved in-year
financial, operational and
personal performance.
The metrics and target ranges are agreed annually with the
Board and BEIS as part of the annual business and budget
180% of the target STIP award is based on a business scorecard
and 20% is based on individual performance objectives which are
agreed with the Board and require approval by BEIS.
The business scorecard is set annually to include a mix of
financial and non-financial measures.
Maximum opportunity under STIP as
% of salary for different levels of
performance are as follows:
CEO:
Threshold: 24%
Target: 30%
Maximum: 45%
CFO:
Threshold: 32%
Target: 40%
Maximum: 66%
Long-Term Incentive
Plan (LTIP)
To reward and retain key
executives and senior
managers on the
achievement of strategic
longer-term targets
linked to the
development and growth
of a sustainable business.
Report.
LTIP awards are made annually and are cash settled if
performance is achieved over the 3-year cycle.
Performance measures for the LTIP are drawn from the Post
Office Strategic Plan agreed with BEIS.
The performance targets are agreed with BEIS in advance of each
Igrant and are described annually in the Directors’ Remuneration
Maximum opportunity under LTIP as
% of salary for different levels of
performance are as follows:
CEO:
Threshold: 24%
Target: 30%
Maximum: 43%
CFO:
Threshold: 40%
Target: 50%
Maximum: 70%
Illustrations of application of remuneration policy
The charts below show the quantum and composition of the current remuneration policy for the two Executive
Directors under three performance scenarios.
These are scenarios showing potential remuneration assuming there is no STIP or LTIP pay out (fixed pay only),
on-target performance (STIP and LTIP paying out at a target level), and maximum (full pay out of STIP and
LTIP).
I CEO CFO
I 800.000 I 800,000
600,000 I 600,000
I 400.000 I 400,000
200,000 I 200,000
o ~—' I o — a I ay
Fixed On-target Maximum I Fixed On-target Maximum
I @Salary BPension mBenefits mSTIP m@LTIP I Salary MPension # Ben wSTIP mLTIP
c I
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Policy on payment for loss of office
item Policy
Fixed pay Payments in lieu of notice of salary only. Payments in lieu of notice are not pensionable.
STIP and TI The default position is that any outstanding STIP or TI will lapse on termination of
employment. However, in certain prescribed ‘good leaver’ circumstances, the awards remain
subject to performance conditions measured to, and paid after, the end of the performance
period, and reduced pro rata to reflect the portion of the period they were employed. The
definition of good leaver status is set out in the scheme rules.
LTP The default position is that any outstanding awards will lapse on termination of employment.
However, in certain prescribed ‘good leaver' circumstances, the awards remain subject to
performance conditions measured to, and paid after, the end of the performance period, and
reduced pro rata to reflect the portion of the period they were employed. The definition of
good leaver status is set out in the scheme rules.
Change of There are no enhanced provisions on a change of control.
control
Approach to recruitment remuneration
The remuneration package for a newly appointed or promoted Executive Director is normally set in
accordance with the terms of the remuneration policy of the Post Office in force at the time of appointment.
Item Polley
Salary, Benefits and The fixed package offered to new Directors takes account of the previous incumbent.
Pension However, in line with Government remuneration guidance for senior employees, from
September 2019 the approach to remuneration has changed and pension and benefits
are not offered separately. These elements are consolidated into salary, resulting in more
competitive base salary levels and reduced benefits.
STIP For new appointees, STIP will not exceed 45% of salary for Executive Directors.
LTIP For new appointees, LTIP awards will not exceed 43% of salary for Executive Directors.
Buyout of . Where the Committee determines that the individual circumstances of recruitment
incentives forfeited justify the provision of a buyout, the equivalent value of any incentives that will be
on cessation forfeited on cessation of an Executive Director's previous employment will be calculated
of employment taking into account the nature, performance conditions and time horizon attaching to
award forgone and will be tailored to the individual.
Any such award would require approval by BEIS.
Internal Any variable pay element awarded in respect of the incumbent's previous role will be
appointments allowed to pay out according to the terms on which it was originally granted.
Adjustments may be made to the award, as relevant, to take account of the new role.
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Non-Executive Directors: Key elements of the remuneration policy
The following table sets out the key elements of the Remunefation Policy for Non-Executive Directors. The
remuneration framework for the Non-Executive Directors requires consent from BEIS each year.
Element and link to Operation Opportunity
strategy
Fees The Chairman is paid a single fee to cover The fees for the Chairman are reviewed by
all duties. The Non-Executive Directors the Committee and approved by BEIS. The
are paid a basic fee together with fees of the Non-Executive Directors are
additional fees for chairing Board Sub- reviewed and approved by BEIS.
Committees or the role of Senior
Independent Director.
To attract and retain a
high calibre Chairman
and Non-Executive
Directors.
Non-Executive Directors do not
participate in any variable remuneration
or receive any other benefits.
The fees for Non-Executive Director roles are set out in the table below:
2020 fees 2021 fees % change
Chairman
Senior Independent NED (including Chair of
Remuneration Committee)*
Non-Executive Directors base fee
Chair of Audit, Risk and Compliance
Committee additional fee
Chair of Nominations Committee additional fee
* The fees for the Senior Independent NED includes the fees for being Chair of the Remuneration Committee for 2020/21. Due to Ken
McCall stepping down from the Board, the Senior Independent NED fees will not include Chair of the Remuneration Committee fees
from January 2022.
The company’s policy when setting fees for the appointment of new Non-Executive Directors is to apply the
same policy which applies to current Non-Executive Directors.
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Annual Remuneration Report
Single total figure of remuneration
Nick Read CEO (Note 1) Alisdair Cameron CFO
Financial year 2020/21 2019/20 2020/21 2019/20
~ £000 £000
-£000 £000_
Annualised salary
Actual salary
Benefits
Cash in lieu of pension
Fixed remuneration
Retention bonus
STIP (Note 2)
LTIP (Note 3)
—
=
Variable remuneration i
Total remuneration
Note 1: The CEO does not take the pension benefit and does not have any benefit entitlements due to being appointed after the
‘September 2019 policy change.
Note 2: The 2020/21 Executive Directors’ STIP was cancelled and replaced with the TI scheme ~ with any payment deferred until March
2022 at the earliest. As the award will not be determined until 2022, these figures do not include any sum in relation to the TI.
Note 3: The 2018-21 LTIP will not pay out as performance did not reach the EBITDAS target threshold.
Base salaries
Salaries for individual Executive Directors are reviewed annually by the Committee and normally take effect
from July. The Committee considered the Executive Directors’ pay review in July 2020 in light of pay review
budgets across the Group and no increases were awarded to existing Executive Directors in post at that time.
STIP award in relation to performance in 2020/21
There was no STIP awarded in 2020/21, the STIP scheme was cancelled and replaced with a one-off TI
Scheme.
Transformation Incentive Scheme
To replace the cancelled STIP and LTIP plans, the TI scheme was introduced for all Group Executive and Senior
Leadership population. This is a deferred cash plan, with a pay out opportunity that mirrors eligibility under the
STIP. Any payment under this plan is deferred until March 2022. The scheme is based on a scorecard of four
metrics aligned to our business transformation priorities:
« Postmaster satisfaction
«= Inquiry
«New Branch IT
« Organisation Design
The targets set and performance against them will be disclosed in the 2021/22 Remuneration Committee
Chair's Report.
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LTIP awards vesting in relation to performance in 2020/21
The performance conditions required for the April 2018 - March 2021 LTIP plan were not met during 2020/21,
and therefore no payment was made. The Performance conditions were as follows:
Performance Weighting Outcome achieved
(based on target set (94, o¢ award) (% of award)
in 2018)
Network Access Criteria Met Gateway Passed
Trading profit Not Met 100% 0%
Outstanding interests in LTIP
Under the remuneration policy, LTIP awards are granted annually. The CEO and CFO have the following
outstanding awards:
Target awa Performance period
CEO 35% 2019 - 2022*
CFO 50% 2019-2022
* CEO award is pro-rated from his start date (30 months),
No LTIP was awarded in 2020/21.
Total pension entitlements
Any new Executive Director appointment from September 2019 is not offered salary supplement in lieu of
pension but remains entitled to participate in the Post Office Pension Scheme at the same levels of contribution
as the wider workforce. This applies to the CEO. The CEO has chosen not to participate in the scheme in
2020/21.
Historically, Executive Directors received a 25% salary supplement in lieu of pension. This still applies to the
CFO.
Remuneration of the CEO over time
The table below shows the total remuneration of the CEO over nine financial years (since the Post Office
became independent from Royal Mail), together with the STIP and LTIP payments in those years:
2016 2017 2018 2019 2020 2021
£000 £000 £001 £000 £000 £000
2013 2014 201
£000 £000 £001
Total
Remuneration I G RO
Salary :
STIP (% of
maximum)
79% 38% 48% 77% 99% 96% 71% 32% NIA
LTIP (% of
. 89% 59% 45% 59% 62% 80% 100% N/A N/A
maximum)
From 2012-2019 the CEO remuneration data relates to Paula Vennells.
The 2020 figure is an annualised figure relating to Nick Read for comparison purposes. Nick worked 54% of the year due to starting on
16 September 2019.
The 2021 figure excludes any STIP payment as the 2020/21 scheme was replaced with a (TI) deferred bonus scheme due to pay out
in March 2022, and as the CEO was not eligible to participate in the 2018-21 LTIP scheme, he will not receive any LTIP payment. The
TI figure is not included as pay out will not be assessed until 2022.
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Percentage change in CEO remuneration compared with employees
The CEO's total pay in 2020/21 reduced by 12.6% in comparison to 2019/20 due to no salary increase or STIP
payment being awarded.
Over the same period, there were some changes to all employee remuneration:
* A pay award for non-management grades of 1.5% was agreed, effective 1 April 2020. In addition,
annual bonuses for this group were consolidated into base pay. This had the effect of a pay increase
of 5% - 7% depending on role. .
«A pay award of 1.5% for other staff effective 1 June 2020 for Middle Managers and 1 July 2020 for
Senior Managers.
* No annual bonus was paid to Senior Management and Middle Management staff as the financial
performance threshold required by the Plan rules was not met. However, to reflect colleague's
exceptional contribution during such challenging times a recognition payment was awarded. This was
a flat rate payment rather than a percentage of salary. In comparison with on-target annual bonus,
Middle Managers received an average of around 6% (on-target bonus: 10%) and Senior Managers
received an average of around 8% (on-target bonus: 18%).
« The maximum matching pension contribution available to employees increased from 11% (for
employees who contribute 7%) to 12% (requiring an employee contribution of 8%) from April 2020
for non-management employees and for all other employees from April 2021.
As stated below, there was no change in the remuneration for Non-executive Directors in the period.
CEO pay ratio
In line with our commitment to transparency, we are publishing our CEO pay ratio for the first time this year.
This has been calculated using Option A under the relevant regulatory requirements. Option A was selected as
this is the preferred approach used by listed companies, as it provides the most statistically accurate
comparison.
In line with the requirements the information is set out in a table reporting the CEO's total pay and benefits as
a ratio of:
« the 25th percentile ("P25") employees’ total pay and benefits.
¢ the 50th percentile ("P50" or median) employees’ total pay and benefits.
« the 75th percentile ("P75") employee's total pay and benefits.
Eventually, the table will include ratios for the previous 10 years.
Total remuneration
2020/21 P50 (median) P75 (upper quartile)
P25 (lower quartile)
CEO single figure remuneration
Pay ratio
G)
A
(e)
Employee total pay and benefits
The CEO remuneration is the total single figure remuneration for the year ended 28 March 2021.
The total pay and benefits for Post Office employees at P25, P50 and P75 has been determined using the
calculated full-time equivalent ("FTE") basic pay, including fixed allowances, taxable benefits, incentives and
the default defined contribution employer pension contribution for the year ended 28 March 2021.
Note: No STIP has been paid in respect of 2020/21 and no payment in respect of the 2018-21 LTIP outturn.
Therefore, the above figures are based on like-for-like remuneration for the CEO and all employees.
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By way of comparison, WTW, Post Office's Remuneration Committee advisors, quote the median UK CEO pay
ratio as at August 2020 at 3
Single Figure for Non-Executive Directors
The table below shows the remuneration of Non-Executive Directors for the year ended 28 March 2021 and
the comparative figures for the year ended 29 March 2020.
Annualised fees Actual fees (note 1) Actual fees
2021 2021 2020
3 £ £
Tom Cooper (note 2)
Tim Franklin (note3)
Lisa Harrington (note 4)
Shirine Khoury-Haq (note 5)
Ken McCall
Tim Parker (note 6)
Carla Stent
Zarin Patel (note 7)
Note 1: The actual fees are shown as at 28 March 2021 or at the date of leaving.
Note 2: Tom Cooper is an employee of UKGI.
Note 3: Stood down as Non-Executive Director on 31 December 2019.
Note 4: Appointed as Non-Executive Director on 8 April 2020.
Note 5: Stood down as Non-Executive Director on 18 July 2019.
Note 6: Donates the after-tax value of his Board fees to charity.
Note 7: Appointed as a Non-Executive Director on 26 November 2019.
Service Contracts
Each of the Executive Directors has a signed contract within Post Office. Service contracts normally continue
until the Executive Director's agreed retirement date or such other date as the parties agree. The service
contracts contain provisions for early termination.
Date of service contract Notice period
CEO 16 September 2019 6 months
CFO 28 January 2015 12 months
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The Chairman and Non-Executive Directors have letters of appointment. Dates of the Directors’ letters of
appointment are set out below:
Name Date of joining the board Notice period
Ken McCall (Remuneration Committee Chairman) 21 January 2016 6 months
Tim Parker 1 October 2015 6 months
Tom Cooper 27 March 2018 NIA
Carla Stent 21 January 2016 6 months
Zarin Patel 26 November 2019 6 months
Lisa Harrington 8 April 2020 6 months
Copies of the service contracts of the Executive Directors and the letters of appointment of the Non-Executive
Directors are available for inspection at the Company's registered office.
External appointments
Tim Parker is the Chairman of Samsonite International S.A and HM Courts & Tribunals Service. He is the
Chairman of The Grange Festival as well as Director and Owner of the British Pathé Film Archive. He is also a
Member of the Governing Body of the Royal Academy of Music. He ceased his role as Chairman of The Brand
Foundation in April 2020. His term as Chairman of the National Trust ended in October 2021.
Carla Stent is a Director of NCL Investments Limited, Bestinvest (Consultants) Limited, HW Financial Services
Limited, Index Fund Advisers Limited, MCS Advisory Limited’and JP Morgan Elect PLC. She is also a Director of
Tilney Smith & Williamson Group, where she chairs the Risk and Audit Committee and is a member of both the
Remuneration and Nominations Committees. She is Chair of Marex Group and also chairs several early-stage
businesses. She is a Chair and shareholder of Littlefish FX Limited, She is a shareholder of Lightpoint Medical
Limited, Antaco UK Limited and Binomia Limited (trading as New Path). She was appointed as a Director at
HFS Milbourne Financial Services Limited on 02 March 2021. Carla is a shareholder of Malherbe Limited,
Savernake Management Limited, Savernake Capital Limited and Savernake Technology Limited. She ceased
her role as Chair of Malherbe Limited, Savernake Management Limited, Savernake’ Capital Limited and
Savernake Technology Limited on 03 December 2021. She ceased her role as Vice Chair of Power to Change
Trustee Limited on 31 January 2022.
Ken McCall is a Non-Executive Director of Brambles Ltd. He is also a Member of its Audit and Risk Committee.
Tom Cooper is a Director at UKGI and TKGC Consulting Limited. From 20 November 2020 to 23 November
2021, Tom was a Director at OneWeb Holdings Limited.
Alisdair Cameron is a Non-Executive Director of Dover Harbour Board.
Zarin Patel is a trustee and Chair of the Audit and Risk Committee at the National Trust. She is also an
Independent Director at Anglian Water Services Financing Plc, Anglian Water Services Holdings Limited and
Anglian Water Services UK Parent Co Limited. She is an Independent Director at Anglian Water Services
Limited and the Chair of the Audit & Risk Committee since March 2020. On 01 January 2022, she was appointed
as a Board Member and Chair of the Audit and Risk Committee at HM Treasury. Zarin ceased her role at John
Lewis on 14 April 2021. She started her role as Non-Executive Director & member of the Remuneration and
ESG Committees at Pets at Home Group Plc on 14 April 2021.
Lisa Harrington was appointed as an Independent Director and Chair of the Nominations Committee at Digital
9 Infrastructure Plc on 05 March 2021. She ceased her role as a consultant at Kinloch Services Limited on 28
February 2021. From 01 August 2020 to 31 March 2021, Lisa was an Independent Director at Calisen Plc. She
ceased her role as Acting Managing Director of Infrastructure at Hyperoptic Ltd on 12 December 2021.
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Elliot Jacobs is currently a Non-Executive Director at Office Friendly Dealer Association Limited. He is also a
Director at Universal Office Equipment (UK) Limited, UOE Holdings Limited and Onjoy Ltd. Elliot is a Postmaster
NED at Post Office and runs the following Post Office branches: N2 (0110043), EN6 (190008). ,8G14
(1671294), N8 (2050048), N10 (2070049), N16 (2080044) and.NW1 (208005). fa i
Saf Ismail is a Director at IE Group UK. Saf is a Postmaster NED at Post Office and runs the following Post
Office branches: Meadow St Ltd, Boltonn Ltd, Chly Ltd, Ecles Ltd, Bes Ltd, Midlandd Ltd, Hywd Ltd, Bpool Ltd
and Pstw Ltd.
Ben Tidswell is a Chairman at the Competition Appeal Tribunal. Ben was an LLP Designated member of Tractor
Transfer LLP and Ashurst LLP until 31 July 2021. He ceased his role as Global Chairman of Ashurst on 31 July
2021, which included ending his Directorships at the following companies: Ashmor Nominees Limited, Ashurst
Group Limited, Ashurst Healthcare Trustee Limited and Ashurst Business Services Limited.
Brian Gaunt is a Non-Executive Chairman at MFS GroupCo and Non-Executive Director at Interdelta Ltd. He is
the Director and co-owner of Cherry Blossom Developments Ltd and the Director and Owner of B2CSupply
Ltd.
All appointments during the financial year and up to the point of signing the ARA have been included. No
external appointments have been declared by the remaining Executive and Non-Executive Directors.
Malus and Clawback provisions
Executive Directors are subject to malus and clawback clauses in the STIP and LTIP rules, which provide for the
reduction or return of all parts of bonus payments in the event of misstatement of the accounts, error or gross
misconduct on the part of an Executive Director. From 2020 the rules have been strengthened to provide for
reduction or clawback of bonuses where the Executive Director has contributed to serious reputational damage
of the company, a material corporate failure or some other exceptional event. In addition to malus and clawback,
the Remuneration Committee shall have absolute discretion to make adjustments, including a downward
adjustment, to any bonus payment due under the STIP and LTIP schemes if it considers such adjustment to be
appropriate having taken into account all relevant factors.
Consideration of Shareholder's views
Each year the Committee takes into account the views of BEIS. The policy for pay at risk concentrates on
ensuring remuneration is performance led with targets aligned with those of BEIS.
Payments to past Directors
There were no payments to past Directors.
Payments for loss of office
No payments were made for loss of office in 2020/21 to Executive Directors, and at the balance sheet date
there were no provisions made for compensation payable for early termination of contracts or loss of office to
Executive Directors.
Fairness, diversity and inclusion
The remit of the Remuneration Committee includes a consideration of broader workforce issues. This section
of the report explains how we are furthering our commitment to fairness through our work on Equality, Diversity
and Inclusion. This includes our targets and our actions to meet those targets. Whilst we recognise that there
is work still to do, we believe that we are making important progress.
Diversity and Inclusion Policy
Diversity and Inclusion ("D&l") at Post Office goes beyond meeting the minimum legal requirements. We want
to provide an environment that encourages difference of thought, experience and background. We want people
to trust that employment decisions, whether related to recruitment, promotions, transfers or terminations, are
based on merit and fairness.
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D&l is a business priority, not an HR initiative, and we hold Senior Leadership accountable for our performance
in this respect.
D&l targets
The Group Executive has agreed stretching gender and ethnicity diversity targets for the overall workforce and
specifically for Senior Management. Our aspiration is that we will have 50% female and 14% BAME (Black,
Asian and Minority Ethnic) representation across our workforce at all levels by 2024, so that we have a
leadership team that is reflective of the customers and communities. These targets will be reviewed once we
have the information from the 2021 Census.
Performance in 2020/21
Improving our data and understanding
Our reporting capability on diversity data has been improved to give us a clearer picture of our current diversity
across our whole workforce, our leadership team, our promotion appointments and new hires. Each month we
provide our Group Executive team with a Diversity Dashboard which provides a basis for discussion around
achievements and where work is still needed. The Dashboard will be continuously improved so that leaders
have access to more diversity statistics and information to enable better informed discussions.
We continue to work on increasing how many of our people feel comfortable sharing their diversity data
through campaigns, engagement and via our diversity network groups.
During the COVID-19 pandemic, we ran pulse surveys to understand how employees were coping during
challenging times and to understand their preferences going forward. From a D&l perspective, this meant that
we were able to ensure that our support was relevant to the diverse needs of our people. This insight into the
range of needs helped inform our strategy on new ways of working.
Gender
Over the last few years we have made progress towards our goals for gender equality. In 2020/21, our
achievements in increasing the number of senior positions held by females were slightly affected by
organisation restructures with the result that the number of females in the Group Executive team reduced from
3 to 2. Within the Senior Leadership group, we saw a drop back to 33% from 45% in the previous reporting
year. In response to this, we have introduced changes in the recruitment process as well as awareness training
to ensure that we stop the decline and move towards gender parity. The Non-Executive Director gender
representation has remained the same as in 2019/20, with three female NEDs in the year.
For our management group as a whole, 46% of our middle managers and 44% of Senior Managers are women,
Across the whole population, our gender ratio, (proportion of colleague population which is female) was 54%
as of March 2021 - the same as the previous year. This figure has decreased from 57% in April 2019 as a result
of continued franchising of directly managed branches, where roles are predominantly filled by females.
Our continued focus on tailored development plans for high potential colleagues has made an encouraging
difference to our internal talent pipeline in respect of gender balance. Since our last report, 55% of internal
promotions were filled by females and 28% of promotions to leadership level were women.
Our work has been externally recognised, and this year, we are very proud that Post Office was included in the
UK Times Top 50 employers for women.
Gender Pay Gap
The gender pay gap shows the difference between the gross hourly pay of all men and the gross hourly pay of
all women across the organisation. It is not the same as equal pay. Equal pay means that men and women are
paid the same for work of equal value, as set out in the Equality Act 2010. At Post Office we support equal pay
through a robust job evaluation process that is free from gender bias.
Post Office typically reports its latest Gender Pay Gap Report ("GPGR") data in the Annual Report and
Accounts. Due to the later publication in 2019/20, last year’s ARA contained 2020 GPGR data which was
published in the latest report in July 2021. This showed the median gender pay gap at Post Office was 10%
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(2019: 12%) and the mean was 15% (2019: 16%). The 2021 data will be published in line with Government
reporting requirements in April 2022 and will be included in next year's ARA.
We encourage you to read our full Gender Pay Gap report on our website for more information.
Ethnicity
At 21%, we are currently exceeding our target of 14% BAME representation across our whole workforce. At
middle management, the figure is 16%. At more senior levels, there is still work to do: our current performance
is 12% at Senior Management, and 2% at Senior Leadership level, with no BAME representation at Group
Executive level. BAME representation at Non-Executive Director level has remained the same since 2019/20,
with 1 NED identifying as being from an ethnic minority background.
In terms of the internal talent pipeline, 17% of internal promotions were filled by BAME candidates.
To address the low levels of representation at senior levels, we are reviewing our recruitment processes to
identify improvements. Additionally, we are conducting D&l training and we have completed a “lite” version of
the Ethnicity Pay gap report to use as a basis for going forward. We have committed to and are acting on the
five commitments of the Race at Work charter as set out by Business in the Community (see bitc.org.uk for
further information).
Our D&l actions for the future
We continuously review our D& initiatives to achieve our goals of creating a more inclusive culture and more
diverse talent pipelines to support progression to senior roles. Our future plans include:
« Improving diversity data so we can set functional targets and measure the success of initiatives.
* Involving our colleagues in shaping our future values and behaviours as we define our cultural ambition
following the launch of our Purpose in September 2020 (“We're here, in person, for the people who
rely on us").
« Embedding those values into our HR and business processes so we actively identify and eliminate
unconscious bias and encourage diversity through fairness in reward and recognition.
Investing in a new Talent Manager (onboarded in summer 2021) to provide focus and expert support
for managers on the identification and development of high-potential employees.
* Refreshing our personal development review process to improve the support for all employees with
regular performance reviews, coaching and the opportunity to develop.
« Placing additional focus on race and ethnicity to improve our performance in this area. This doesn't
mean that we will be reducing our work for other groups - in fact, the opposite is true. Many of the
actions will benefit all of our diversity groups and improve our diversity networks.
We do not underestimate the challenge of meeting our D&I goals and aspirations, but we will maintain
sustained focus on our commitments so that we create an environment where everyone can fulfil their highest
potential and deliver their best for our customers and colleagues.
Chair of the Remuneration Committee
29 April 2022
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Management of Risk
Our Approach to Risk
As a commercial business with a social purpose, the Post Office must balance the need to provide essential
services to our customers with maintaining and enhancing profitability. The Post Office is, and will continue to
be, exposed to many sources of risk as a result of its various activities and the external environment in which it
operates.
The Post Office adopts an enterprise-wide approach to the management of the risks. This involves; the (i)
identification and evaluation of significant risks, (i) assignment of ownership, and (ii) completion and
monitoring of mitigating actions to manage these risks within risk appetite. This enterprise risk approach seeks
to improve efficiency and the delivery of its services, improve allocation of resources to business improvement
and enhance risk reporting to the Shareholder.
Our Risk Management Framework
The Post Office's risk management framework is designed to support the consistent and robust identification
and management of opportunities and risks across the organisation. It is based on the principles that risk
management is:
. Fundamental to how we are directed, managed and controlled at all levels;
* Anintegral part of all our organisational activities which support decision-making in achieving objectives;
and .
. Collaborative and informed by the best available information and expertise, and that processes include
risk:
© identification and assessment to determine how our risks should be managed;
© treatment options that manage our risks to an acceptable level;
© monitoring options; and
© reporting to enhance the quality of decision-making and to support management oversight.
In line with industry best practice our Framework is made up of three inter-related components: governance,
strategy and protocols.
Risk Management Governance
The Post Office's Risk Management Governance arrangements are concerned with how we manage and
communicate risks in the organisation, underpinned by a risk reporting structure. The Board (along with
operational management), Risk and Compliance Committee ("RCC") and Audit and Risk Committee ("ARC")
provide the three lines of oversight for risk management.
The Board, informed and advised by the ARC, lead on the assessment and management of risk, taking a
strategic view of the risks faced by the Post Office. The Board ensures there are clear accountabilities for
managing key risks, as well as the associated internal controls, and our staff are equipped with the relevant
skills and guidance to perform their assigned roles effectively and efficiently. The Board also ensure roles and
responsibilities are clear to support effective governance and decision-making at each level with appropriate
rules around escalation, aggregation and delegation.
In providing such oversight the Board assesses the nature and extent of the existing and emerging key risks
being encountered, as the Post Office aims to achieve its objectives. The Board agrees the frequency and scope
of its risk discussions and ensures processes are in place to bring significant issues to its attention. It also
examines potential long-term threats, risks, emerging issues and opportunities to assure itself on the
effectiveness of our risk management framework.
The ARC supports the Board in its assessment and management of key risks. In doing so the ARC ensures the
Board understand the business strategy, operating environment and the associated risks. The ARC reviews the
Post Office's policy, risk appetite and attitude to risk to ensure these are appropriately defined and
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communicated so that parameters and expectations are understood. They regularly and critically challenge and
review our risk management framework to evaluate how well the arrangements are working. In doing so they
also review the adequacy and effectiveness of our internal control framework.
We continue to follow the industry standard “Three Lines of Defence” assurance model in managing the risks
across our organisational tiers as it provides a simple and effective way to delegate and coordinate risk
management roles and responsibilities.
In this structure the 1* Line function is performed by Post Office operational management (including the Board)
who identify, assess, own and manage the risks. They are also accountable for the design, implementation and
maintenance of the associated internal control measures.
A Central Risk team perform the 2™ Line function. It oversees our corporate approach to risk management. This
involves defining and implementing risk standards, policies, procedures and guidance. They also assist, with
Central Compliance, the 1* Line function in developing controls in line with good practice as well as monitor
compliance and effectiveness. Furthermore, they are accountable for identifying and alerting the Board, the
Group Executive and the ARC to emerging risks and changing risk scenarios.
Internal Audit, who operate independently of 1* and 2™ Line functions, are the 3” Line of defence. They provide
an independent evaluation of the adequacy and effectiveness of the Post Office's framework of governance,
risk management and control.
Alll Post Office risks are monitored, reviewed and recorded regularly to determine whether, or not, the corporate
risk profile has changed and to gain assurance that corporate risk management rules and procedures are
effective.
Risk Management Strategy
The Post Office’s Risk Management Strategy is concerned with our specific risk policies and framework, our
appetite and attitude to risk, the techniques by which we assess risks as well as the key priorities in any given
year.
Risk Management Protocols
The Post Office Risk Management Protocols are the guidelines provided to the organisation for the
management of risk. These include detailed rules and procedures, how we classify risks, as well as the risk
management methodologies, tools and techniques we use.
Our Control Framework
We have an internal control framework in place for our financial reporting, IT processes, and change
programmes which fall under our self-assessment regime. These are managed through our on-line Governance,
Risk & Compliance (“GRC”) tool. In addition, we have a suite of Post Office policies which define the minimum
control standards, such as Postmaster service and support, which we expect to be performed within the
applicable business areas. Work is underway to undertake a phased migration of these off-line minimum control
standards onto the GRC tool. Our risk management efforts are also underpinned by our Executives’ Declaration.
What has changed since last year?
Risk Policy
During 2020/21 we undertook a comprehensive review of our Corporate Risk Policy which was formally
approved by ARC in November 2020 and the Board in January 2021.
The refreshed policy is based on a number of key principles which are consistent with ISO31000 (Risk
Management - Principles and Guidelines) and supportive of the UK Corporate Governance Code (Guidance on
Risk Management, Internal Control and Related Financial and Business Reporting). It was updated with
additional sections on core principles, application, roles and responsibilities, as well as referencing key risk
management processes and related supporting policies.
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The Policy is based on a number of key principles, namely:
. Risk is embedded in all activities and the underlying risk culture and approach is key to effective decision-
making;
. All material risks are identified, measured, monitored, managed and reported on a continuous basis at an
individual and aggregate level; :
. Risk management processes are aligned with, and support, the delivery of the Post Office strategy,
ambitions and management objectives;
. Risk management processes are integrated with business strategy, project management, process and
decision-making to promote an enterprise wide approach;
* Risk management follows a consistent and transparent methodology;
. There is proactive recognition of external factors, opportunities, and uncertainties;
* Risk reporting supports effective review, challenge and monitoring of risk levels against Post Office's risk
appetite and inform decision-making activities; and,
. Governance of risk is achieved through adhering to the industry standard Three Lines of Defence
assurance model that ensures appropriate segregation of duties.
Risk Appetite 7
The Risk Policy outlined an approach to Risk Appetite such that we could meet our strategic objectives of (i)
supporting Postmasters, (ii) building a fit for purpose network, and (ii) focusing relentlessly on Post Office core
strengths and customers.
The Policy defined Risk Appetite as the amount of overall risk the Post Office is willing to pursue (or retain) to
achieve its strategic objectives. It also outlined a five-tiered appetite scale (ranging from ‘Averse’ which borders
on zero tolerance, through ‘Neutral’ to ‘Open') against which individual risks would be assessed. In doing so,
the Policy requires several factors to be considered including (i) our tolerance for uncertainty (ii) our decision
choices and (iii) our strategic priorities.
ARC have approved risk appetites for both legal & compliance, operational (including Postmaster-centric) and
people risks. Technology (including cyber), finance and commercial are to be prioritised in the next financial
year.
Central Risk Function
Following the in-year Post Office re-structure (and a refocus of our strategic objectives) we have enhanced our
24 Line Central Risk function to provide greater consistency and co-ordination in the management of our
enterprise and key business risks. This work is designed around a series of interrelated themes and builds on
our existing risk management activities.
Work has focused initially on enterprise risks with the 2020/21 focus on designing and implementing enhanced
Key Risk Indicators and Risk Appetite Statements.
Governance, Risk & Compliance (“GRC”) framework
During 2020/21 we have formalised a GRC corporate governance body to oversee the Post Office's GRC
Strategy and supporting framework.
Our GRC framework and tool is made up of 5 components:
i. Governance and Compliance: To ensure the Post Office's governance framework, including policies, laws
and regulations, and best practices are in a centralised system, and mapped to associated controls. It will
provide for the identification of relevant business, risk and IT owners (and systems).
2. Risk Management: To identify and manage existing and emerging risks in the centralised system and
record the accuracy of the associated controls.
3. Implement real-time monitoring: To identify non-compliant controls, using Key Risk Indicators ("KRIs”)
and Key Performance Indicators ("KPIs") augmented by automated data validation and evidence .
gathering.
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Vendor Assessment: To assess vendor risk and provide the ability to manage and assess vendors in a
5. Reporting: To support the Post Office in providing both qualitative and quantitative assessment scores,
informed by service performance data. This will allow us to more accurately gauge and report our risk
exposure in real time.
We have completed our initial deployment of a corporate GRC approach, and supporting tool, across the
business. This allowed for the rollout of risk management capability beyond Central Risk to business unit heads
and individual risk owners. We have also migrated the IT, financial reporting controls and change programme
controls onto the tool, beginning to formally link them to their associated risks for the first time.
Key Risks Review
As part of our review of the Central Risk function we reviewed our key risks along with the key associated
business risks, ensuring they are grouped under a series of enterprise drivers consistent with those advocated
by HM Government's ‘Orange Book’. This ensures our mitigation plans address more than one linked risk,
resulting in a more efficient and effective enterprise risk management process. The table below outlines eight
key risk areas.
Post Office key risks 2020/21
Strategy: Risks in this space are
concerned with the Post Office's
Strategy being ill-defined, unaligned
to the interest of its key
stakeholder(s), cannot readily adapt
toa hostile macro-environment
pport the full
integration of any acquired business.
and/or is unable to s
Commercial: These risks tend to be
prompted by one or more external
factors such as (i) adverse macro-
economic conditions, (ii) changing
consumer preferences, (ii) an
irreversible shift from physical to on-
{ine channels and (iv) an increasing
level of regulatory scrutiny.
Post Office Limited
Post Office Strategy and ‘ransformation
activity seeks to ensure not only that the Post
Office 2025 Vision is clear and well-
understood but also that the organisation
provides the structure and support to
successfully deliver the supporting change.
Akey Post Office risk is that its change
delivery may not be sufficiently aligned to the
strategic direction, is not supported by a
robust and scalable change methodology,
and/or is unable to deliver change efficiently
and effectively.
Through a significant lack of people resource
availability and/or skills.
Uncoordinated, fragmented delivery
Due to immature portfolio & programme
management capability.
Enhance and embed the Post Office
approach to change delivery such that it:
+ is clear about the outcomes to be
delivered,
‘+ translates outcomes into tangible
deliverables and measurable benefits
and use these to steer decisions,
‘* is supported by robust business cases
for investment funding, and
‘+ is clear how success will be measured,
and focuses on delivery of benefits and
‘outcomes,
Undertake periodic portfolio reviews to.
determine strategic alignment, bring in
independent perspectives and integrated
assurance, and capture lessons throughout
the portfolio lifecycle.
Undertake regular review of priorities in light
of delivery.
These are risks that (i) the Post Office's
existing commercial products/services
become unattractive to the market and/or (i)
the Post Office is unable to identify and
benefit from a sufficient number of new
commercial opportunities.
Long term Commercial sus!
Office
Risk that Post Office does not find enough
new commercial opportunities to drive the
‘top line’ and Postmaster profitability.
Limited ability to influence Royal Mail
commercial relationship
Risk that Post Office has limited intluence on
the terms and conditions of the Mails
‘Assess opportunities to enhance Post
Office's core business, simplify business
processes and improve profitability for Post
Office and Postmasters.
Refresh Mails Strategy to identify new
‘opportunities.
Review Government Services contracts to
assess which ones Post Office should bid for,
and scan market for other commercial
opportunities.
‘Amazon ‘click and collect’ and Pick-Up/Drop-
Off initiatives: A contract between Past
Office and Amazon whereby from 2021 an
increasing number of Post Office branches
offer pick-up and drop-off services for
Amazon customers.
Distribution Agreement 2.
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so RISK THEME KEY RISK. MITIGATIONS
Postmaster & Network: Risks of
inadequate or failed internal
processes, people and systems
leading to operational disruptic
leading to an inability to provide
service to customers, with
associated loss and legal and
regulatory im
Financial: Because of the
unpredictability of income and
expenditure there are risks the Post
Office has insufficient funding and/or
uncontrolled costs in the short-.
medium and long-term such it is
unable to deliver its strat
objectives.
Legal: These are risks that Post
Office is unable to comply with
legislative and regulatory
sectorial regulator guidance and/or
the outcome of other external legal
anges.
activity (Le. litigation, Disputes)
resulting in significant fines. loss in
revenue. reputational damage and
Technology: These risks arise from
Post Office technology not delivering
the expected services due to
inadequate or deficient
system/process development and
performance, or inadequate
resilience or capacity constraints.
Post Office Limited
Post Office-DPD agreement: This allows
DPD to deliver parcels directly to some Post
Office branches.
BankHubs: Launch of initial tranche of
“BankHubs' to offer local customers basic
banking and cash services via their local Post
Office.
The non-exclusive nature of the Mails
Distribution Agreement allows Post Office to
partly mitigate this risk by building relations
with other carriers such as Amazon and
OPO.
Postmaster proposition not profitable
Risk the Post Office retail value proposition is
not profitable enough to sustain Postmasters’
business.
Reduce Postmaster staff costs through:
process improvements and automation of
mails & banking; introduce simpler
propositions; review branches which do not
have the conditions for long-term viability;
increase remuneration and top line growth
for Postmasters.
suffici ing — Hi I Matter
Risk that the requisite funding is not
forthcoming to tund the balance of HSS
claims, OHC and Postmaster Remediation
related payments. If this risk
materialises it could lead to reputational
damage and potential insolvency.
Insufficient funding (Network Subsidy and
Investment)
Risk that Post Office is not provided with
sufficient funding (investment funding and
Network Subsidy) to cover investment plans
and other activities. If this risk materialises
Post Office's commercial viability in the
longer term is threatened, leading to knock on
impacts around financials.
Secure funding for HSS, OHC and PR.
Secure requisite funding for 2022/23 to
2024/25 period and determine, agree and
deploy supporting priorities and plan.
Post Office bres nd regul:
requirements
If the Post Office business fails to follow or
comply with its controls, there is a risk that
legal and regulatory obligations will be
breached resulting in regulatory sanction,
penalties, financial and reputational damage.
Development and embedding of formal
enterprise wide corporate controls
framework.
Undertaking of formal control monitoring &
assurance reviews.
Post Office is committed to investing in new
branch technology for Postmasters by rolling
out (in pilot phases) a New Branch IT
programme, There are a number of risks that
need to be managed in this space. These
include the new technology not delivering the
expected seivices due to nadequate or
deficient system/process development and
performance, or inadequate resilience or
capacity constraints. Key risks remain around
legacy systems.
Historical Matters Hori i
Because of the outcome of the Group
Litigation order, in particular the findings from
the Horizon Issues Judgment, there is a risk
that lack of progress towards remediating
these issues may erode Postmaster
Determine and deliver Horizon Issues
Judgment Remediation plan.
Development and implementation of high-
level ransomware response plan.
Implementation of multi-factar
authentication ("MFA").
Undertake security assessment of all Post
Office branch equipment.
Produce a Data Gavernance Framework,
Data Management Proof of concept along
with a supporting implementation plan.
Design and deliver the migration of Post
Office corporate data away from the Belfast
physical data centre to Amazon Web
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RISK THEME KEY-RISK MITIGATIONS
Brand: Risks that the Post Office
reputation becomes severely
damaged as a result of perceived
ethical violations and/or adverse
stan¢e to corporate social
responsibility. resulting in
reputational damage, fines and loss
in client and customer confidence.
People: Post Office may have
greater than acceptable levels of
risks or unmitigated risks that
adversely impact culture and
structure, colleague capability and
wellbeing, People processes and
policies. industrial and employee
relations and the ability for Post
Office to attract, retain, recognise
and reward colleague:
Post Office Limited
confidence and expose Post Office to
criticism from the Statutory Inquiry.
sof Availability of Critical Systems
Due to external malicious actors, there is a
risk Post Office critical systems become
unavailable. If this risk materialised we could
suffer from business disruption, Postmaster
dissatisfaction, and reputational damage.
Inadequate Data Governance _and Data
Management Framework
Risk that Post Office does not have a single
source of the truth of data, effective data
ownership.
End of Life Technoloay (Fujitsu)
Because Post Office is currently operating
with a number of unsupported IT services
within Fujitsu's environment there is a risk
that software upgrades could no longer be
delivered.
End of Life Technology (AccentureI
Because Post Office is currently operating
with a number of unsupported IT services
within Accenture’s environment. There is
risk that hardware and software upgrades
could no longer be delivered.
Services; an online platform that provides
scalable and cost-effective cloud computing
solutions, including computer processing,
database storage, content delivery, machine
learning and Al etc.
The Post Office is working to rebuild its
Postmaster relationship including providing a
clear focus on its Historical Matters work and
supporting the Statutory Inquiry. Post Office
will demonstrate how its has learned from
past mistakes and see benefits of changes it
has made and will be making following the
judgements in the civil & criminal courts and
any conclusions emerging from the Statutory
Inquiry itself.
Lack of Public Trust due to Historical Matters
Risk that Historical Matters and the Statutory
Inquiry adversely impacts consumer
perceptions of the Post Office Brand,
Continue to track consumer perceptions to
identify any detrimental changes.
Understand position and strategies for
protecting Post Office intellectual property
and reputation in response to known and
expected media and challenges.
Lack of Employee Motivation for Business
Strateay
Risk that Post Office employees will not be
motivated or bought into 2025 Vision.
People capability and capacity
Given the scale of change and challenge
there is a risk that the Post Office staff
capability and capacity is insufficient to
deliver the 2025 Vision and it is unable to
attract, retain, recognise and reward
colleagues.
Emplovee Burn Out
As a result of significant aid extensive work
pressures there is risk that key Post Office
employees will suffer burn-out
Delivery of engagement and retention
strategies.
Succession Planning: identify key positions in
the organisation and create a talent pipeline,
by preparing staff to fill vacancies in
response to staff churn.
Future of the workplace initiative: implement
arrangements to best enable home, office
and combined working
Identify and develop critical skills required.
Full review of Reward and Recognition
strategy to ensure market competitiveness
and support attraction and retention.
Implementation of various wellbeing
mitigations.
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Streamlined Energy & Carbon Reporting
This report summarises the energy usage, associated emissions, energy efficiency actions and energy
performance for Post Office Limited for the data reporting year 1 April 2020 - 31 March 2021, under the
Government policy Streamlined Energy & Carbon Reporting ("SECR"), as implemented by the Companies
(Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
It also summarises the methodologies utilised for all calculations related to the elements reported under Energy
& Carbon.
The organisational boundary for the reporting has been set to relate to the Post Office Limited only, as the only
organisation within the Group meeting the SECR qualification criteria, and its direct operations. The
organisational boundary includes the impact of Post Office's directly managed network only and not the total
independent franchise network.
Under the SECR legislation we are mandated to include energy consumption, emissions, intensity metrics and
all energy efficiency improvements implemented in our most recent data reporting year.
Consumption (kWh) and Greenhouse Gas emissions (tCO2e) totals
The following figures show the consumption and associated emissions for this second year of reporting for
Post Office Limited, with figures from the previous reporting period included for comparison.
Scope 1 consumption and emissions relate to direct combustion of natural gas, and fuels utilised for
transportation operations, such as company vehicle fleets.
Scope 2 consumption and emissions relate to indirect emissions relating to the consumption of purchased
electricity in day-to-day business operations.
Scope 3 consumption and emissions relate to emissions resulting from sources not directly owned by the
reporting company. For Post Office Limited, this is related to grey fleet (business travel undertaken in‘employee-
‘owned vehicles) only.
Post Office Limited has chosen to examine the emissions of each stream of transportation within the business
from this year, to ensure visibility of carbon reductions across each stream of transportation operations for the
business. .
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The total consumption (kWh) figures for energy supplies reportable by Post Office Limited are as follows:
; 2019/20 2020/21
Utility and Scope Consumption Consumption
(kWh) (kWh)
Gaseous and other fuels (Scope 1) 12,677,318 10,765,410
Transportation: MPO Fleet (Scope 1) 34,726
10,957,146
Transportation: CIT Fleet (Scope 1) 9,895,288
MPO and CIT Fleet Subtotal: 10,957,146 9,930,014
Transportation: Company Car Fleet (Scope 1) 1,011,911
3,885,630
Transportation: Car Allowance Fleet (Scope 1) 64,349
Company Car and Car Allowance Fleet Subtotal: 3,885,630 1,076,260
Grid-Supplied Electricity (Scope 2) 13,825,748 11,785,422
Transportation: Grey Fleet (Scope 3) 1,073,983 301,731
Total 42,419,825 33,858,837
The total Greenhouse Gas (GHG) emission figures (tCO2e) for energy supplies reportable by Post Office Limited
are as follows. Conversion factors utilised in these calculations are detailed in the following reporting
methodology section.
2019/20 2020/21
Utility and Scope Consumption Consumption
(tCOze) (tCOze)
Gaseous and other fuels (Scope 1) 2,330.83 1,979.44
Transportation: MPO Fleet (Scope 1) - 8.35
2,682.32
Transportation: CIT Fleet (Scope 1) 2,380.51
MPO and CIT Fleet Subtotal: 2,682.32 2,388.86
Transportation: Company Car Fleet (Scope 1) 239.70
929.35
Transportation: Car Allowance Fleet (Scope 1) 15.24
Company Car and Car Allowance Fleet Subtotal: 929.35 254.94
Grid-Supplied Electricity (Scope 2) 3,534.03 2,747.65
Transportation: Grey Fleet (Scope 3) 256.87 71.47
Total 9,733.40 7,442.36
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Intensity Metric
An intensity metric of tCOze per FTE has been applied for the annual total emissions of Post Officé.Li
methodology of the intensity metric calculations is detailed in the Reporting Methodology section; and results
of this analysis is as follows:
2020/21 Intensity Metri
tCOze / FTE 2.50 2.17
Energy efficiency improvements
The reporting year has benefited from lower energy use during the COVID-19 pandemic, however Post Office
Limited is committed to year-on-year improvements in its operational energy efficiency. As such, a register of
energy efficiency measures available to Post Office Limited has been compiled, with a view to implementing
these measures in the next 5 years.
Measures ongoing and undertaken through 2020/21
Staff Engagement Programme
Staff across the business are encouraged to ensure that all plant operational within the sites is necessary. This
includes the switching off of all manually controlled lighting and heating within unoccupied areas. This is
supported through the use of posters throughout sites encouraging mindful behaviour with regard to energy
usage. It is anticipated that where staff have worked from home over the COVID-19 pandemic, aspects of
where energy wastage could have occurred in the office space (leaving lights on, monitors on standby) will
have been identified, and staff will have an increased awareness of where energy could be saved when
returning to the office.
Driver Engagement Programme
Following the introduction of increased telemetry throughout the vehicle fleet of the business, The Post Office
have been collating driver data from telematics in order to be utilised to support a driver engagement
programme. This data will provide information on driver habits (braking, idling time etc.), and support the
analysis of the efficacy of driver training undertaken by the business.
Building Energy Usage Overview
Through the 2020/21 reporting year, a number of the Post Office Limited portfolio, similar to many others in
the UK, shifted a large proportion of operations where possible to be home-based. As a result, a number of
buildings were unoccupied for significant portions of the reporting year. Following the installation of Building
Energy Management Systems (“BEMS") within 2019/20, Post Office Limited was able to ensure that plant was
not unnecessarily operational while the building was unoccupied, and energy was not being wasted.
Measures prioritised for implementation in 2021/22
Ongoing Vehicle Replacement Policy
Due to the COVID-19 pandemic, projected achievements with regards to the increase in efficiency of the Cash
in Transit (CIT) fleets were not possible given the longer lead times for the planned replacements vehicles.
Targets for the increase of the number of vehicles of a Euro 6 emissions standards within the fleet have been
realigned for the 2021/22 data reporting year.
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Reporting methodology
Scope 1, 2 and 3 consumption and COQ2e emission data has been calculated in line with the 2019 UK
Government environmental reporting guidance. The following Emission Factor Databases consistent with the
2019 UK Government environmental reporting guidance have been used, utilising the current published kWh
gross calorific value ("CV") and kgCO2e emissions factors relevant for data reporting year 1 April 2020 - 31
March 2021: Database 2020, Version 1.0.
Estimations undertaken to cover missing billing periods for properties directly invoiced to Post Office Limited
were calculated on a kWh/day pro-rata basis at meter level. These estimations equated to 6.1% (2019/20:
4.1%) of reported consumption.
For properties where Post Office Limited is indirectly responsible for utilities, an average consumption for
properties with similar operations was calculated and applied to the properties with no available data. An
average kWh/m2 was calculated for directly invoiced properties also, and for leased properties with floor area
data available, this was utilised in the consumption estimate calculations.
These full year estimations were applied to 106 electricity supplies, and 100 gas supplies for Post Office
Limited.
Intensity metrics have been calculated utilising the 2020/21 reportable figures for the following metrics, and
tCOve for both individual sources and total emissions were then divided by this figure to determine the tCOe
per metric:
Average full time equivalents ("FTE") for the year was 3,430 (2019/20: 3,897).
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Directors’ Report
The Directors present the Group Annual Report and Financial Statements and Company Financial Statements
for the year ended 28 March 2021.
Expected future developments
Expected future developments are detailed in the Chief Executive's statement on pages 7 and 8.
Stakeholder Engagement
Details of stakeholder engagement is included in the $172(1) statement on page 28 and 29 and the
Remuneration Committee Chairman's Statement on page 30.
Results and dividends
The loss after taxation for the year was £597 million (2020: loss of £305 million). The Directors do not
recommend the payment of a dividend (2020: fnil).
Political contributions
No political contributions were made in the year (2020: £nil).
Research and development
No claim for research and development was submitted during the year. Our first research and development
claim was submitted during 2018/19 in respect of 2017/18 and 2016/17. The claim related to IT transformation
projects.
Directors and their interests
The Directors of the Company who were in office during the year and up to the date of signing the financial
statements were:
T C-Parker
ACJ Cameron
TK G Cooper
LC Harrington (appointed 8 April 2020)
KS McCall
ZH Patel (appointed 26 November2019)
NJ Read (appointed 16 September 2019)
CR Stent
SG Ismail (appointed 3 June 2021)
EM Jacobs (appointed 3 June 2021)
BJ Tidswell (appointed 27 July 2021)
No Director has a beneficial interest in the share capital of Post Office Limited. The emoluments of Directors are
set out in the Remuneration Committee Chairman's Statement on pages 32 to 42.
Directors’ indemnity
As at the date of approval of the Directors’ report a qualifying indemnity provision, made by the company, is in
force for the benefit of all Directors of the company.
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People
Our people are critical to our success to meet our organisational purpose and to allow our Postmasters to serve
the communities in which we operate by attracting, motivating and developing our people. To do this we:
Conduct regular employee surveys, including culture surveys, and use the feedback to track progress and
make improvements.
Issued regular ‘Pulse’ surveys since the start of the COVID-19 pandemic to gauge the mood of employees
and ensure that we are offering the right type of support.
Regularly provide information on Company performance, policies and organisational developments
through our weekly CEO presentations, intranet, briefing sessions and company-wide emails.
Operate our Learning Academy to provide high quality learning for all employees and Postmasters,
aiming to ensure that everyone is supported into reaching their full potential.
Invest in developing the best talent to support our business, including graduate recruitment and active
participation in the apprenticeship programme, available for new and existing colleagues.
Are committed to providing a safe working environment that promotes the health, safety and wellbeing
of employees. A range of services are provided to help all employees stay mentally and physically healthy,
including trained mental health first-aiders.
Collect and report the diversity information of our employees to track and ensure that diversity
programmes are moving in the right direction.
Promote diversity and inclusion and celebrate the diversity of the workforce and communities we serve.
We have a number of active employee network groups such as: Affinity - Women at Post Office, to
support and nurture female talent; Prism, which supports and celebrates our LGBTQ+ community; Post
Office Ethnic Minorities ("POEM") which supports Black, Asian and Minority Ethnic colleagues, and Be
You which supports colleagues with a disability.
Proactively communicate that we are a Disability Confident Leader and actively try to attract talented
people to Post Office from diverse backgrounds. We do this through our corporate careers webpage and
by working with our recruitment agencies.
Set diversity and inclusion targets including 50% equal gender representation and 14% BAME
representation through all levels of the Post Office by 2024. See page 42 to 44 for more detail.
Ask all applicants to inform us of any reasonable adjustments we can make to ensure they are not
disadvantaged due to a particular disability during the selection process and throughout their
employment, including training, career development and promotion.
Before hiring new team members, line managers must undertake unconscious bias training to reduce
instances of bias in the recruitment process.
Do not tolerate any form of bullying, harassment, victimisation or discrimination whether written, verbal,
visual or physical. We are committed to taking the necessary action to ensure that they do not occur, or
where they do occur that they are dealt with quickly and eliminated, by following a consistent, fair and
robust Bullying and Harassment Policy and Procedure. All managers are required to complete Dignity at
Work training to ensure they understand their responsibilities and that they demonstrate the correct
behaviours and treat everyone with dignity and respect at all time.
Disabled employees
As noted above, Post Office has been recognised as a Disability Confident Leader. We have a Disability
Confidence networking group called ‘Be You’. This group provides support and advice and helps the business
to do the best it can for employees with disabilities. We also make necessary adjustments for colleagues who
are disabled or become disabled during the course of their employment to allow them to carry out their role and
fulfil their potential, including any specific training needs.
Gender pay gap
Gender pay gap is detailed in the Remuneration Committee Chairman's Statement on pages 43 and 44.
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Post balance sheet events
The Directors would like to draw attention to five post balance sheet event items:
- 2021/22 Government funding receipts,
= 2022/23 to 2024/25 Government funding agreement,
= Overturned Historical Convictions payments and funding,
- Additional compensation for GLO claimants, and
- Employment tribunal claim.
Further details are provided on page 119.
Going concern
After careful consideration of the plans for the coming years, factoring in the impact of the COVID-19 pandemic
and the support of Government, we are satisfied that the Group (being the group of companies headed by Post
Office Limited) will be able to meet its liabilities as they fall due for a period of at least 12 months from the date
of approval of these financial statements. In assessing the going concern position, the Board has considered
the Group's financial forecasts for the 15 months to 31 July 2023.
In recent years, the Group has become profitable at a trading level. However, trading profit peaked in 2019/20
and has fallen by over 50% in the subsequent years. This is due to the ongoing impact of the COVID-19
pandemic, notably on the travel business, rising inflationary pressures on the costs of both the Group and
Postmasters and the removal of the trading profit contribution of the Telecoms business following its sale in
2020/21.
The Government has been providing investment funding, subsidy payments and working capital facilities. Such
funding was steadily declining as the business improved its profitability. It is now of increasing importance
again, partly because of the reduced profitability described above and partly because the Group must fund the
very considerable costs of supporting and enabling compensation and legal justice for wronged Postmasters
and Sir Wyn William's Statutory Inquiry. In addition, the business needs to make ongoing investments, notably
replacing the Horizon EPOS system. As set out below, compensation for Postmasters is mostly being funded
directly by Government. However, some £86 million of compensation under the HSS must be funded by the
Group from trading profit and the proceeds of the sale of the Telecoms business.
For 2021/22, the Group received £50 million of Network Subsidy Payments and £177 million in investment
funding, made up of a £125 million equity injection and a £52 million loan. In addition, the £950 million working
capital facility and £50 million same-day liquidity facility were both extended to 31 March 2024. Looking ahead
to 2022/23 through to 2024/25, Government has continued to evidence its support of Post Office by
committing to provide £150 million in Network Subsidy Payments and £185 million in investment funding, to
be received as a grant.
Compensation and settlement for Postmasters remains highly material and deeply uncertain. The continued
support of Government is therefore critical in the Directors’ view of the Group’s going concern position.
For the specific one-off matters, Government has agreed to provide sufficient financial support to Post Office
to ensure that the HSS can proceed and settlement payments for OHC can be made, with agreed funding in
excess of the current provisions. Funding of up to £233 million has been guaranteed for the HSS provided that
the Government's operational and approval processes are followed and all initial offers are sent out by 31 March
2023. Funding of up to £780 million has been guaranteed for compensation to Postmasters who were wrongly
convicted of criminal offences (“OHC"). Discussions are underway on funding other Postmaster Remediation
and the Government has written a letter of comfort stating its intention to provide support, subject to future
approval processes.
There is significant estimation uncertainty within the HSS and OHC provision calculations, which are explained
further within note 1 to the financial statements. Funding is currently being sought and finalised in relation to
potential future payments for claims which may be received in relation to areas of possible Postmaster
Remediation. The funding commitments received provide evidence of continued support from Government.
Further assurances related to unquantified potential cash outflows, such as any possible additional aspects of
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Postmaster Remediation, cannot be given as it is not the nature of Government's budget process to provide
guarantees for unquantifiable potential liabilities.
In 2019/20 the Group agreed and subsequently made payment of a full and final settlement with the GLO
claimants, thus extinguishing any liabilities which the Group had in respect of the GLO. In March 2022 the
Government announced its intention to provide additional compensation payments to the individual claimants
that formed the GLO. It is clear that Post Office will not be asked to fund this additional compensation.
Government's announcement does not create a liability for the Group.
However, the Government have yet to announce the process through which additional compensation will be
paid to the GLO claimants. Presently, the Group has not been asked by Government to either run or partake in
any such process. When considering the HSS and OHC processes, where compensation is partly funded by
Government, Post Office has been required to oversee and pay for the running costs of the processes.
Confirmation has therefore been sought from Government to provide assurances that if Post Office is requested
to partake in or oversee any such process for GLO claimants then the costs associated will not be borne by the
Group. This assurance has not been forthcoming.
The going concern assessment does not include cashflows associated with Government's intention to provide
additional compensation to GLO claimants, either compensation payments or process running costs. The costs
of any future process are not known. However, there are circumstances where the costs of supporting such a
process could call into question whether the Group can remain in compliance with its borrowing covenants and
therefore remains a going concern. The Directors have assessed that excluding such cashflows from its
forecasts is reasonable on the basis that Post Office has no present liability in respect of GLO claimants and the
Government has provided general assurances about their intentions to continue to support Post Office.
The Directors have received written assurances from BEIS that they place a high priority on Post Office's ability
to continue delivering vital public services and as such will continue to support the Group. This includes the
intention to provide support if / when required in respect of HSS, Overturned Historical Convictions and
Postmaster Remediation to the extent that contractual support has not already been committed or is not
sufficient to cover the eventual costs.
There stilt remains an element of funding uncertainty, with the existence of some potential future liabilities,
which may or may not have a significant adverse impact on the Group, for which guaranteed funding is not in
place. However, the Directors believe the guarantees and assurances received, when considering the legislated
nature of the Government funding process which creates restrictions on guarantees, provide enough
assurances to evidence Government's continued support should future material liabilities arise in relation to the
items highlighted within these financial statements.
Management has performed a cashflow assessment for a period of 15 months to the end of July 2023, factoring
in no further funding beyond that agreed above, whilst assuming any cash outflows arising as a result of
potential Postmaster Remediation will be funded by Government and that there will be no cashflows associated
with the GLO claimants and the process which may ensue. This assessment supports the Directors’ view that
the Group can continue to meet its liabilities as they fall due for the period under review.
The assumption of continued Government support in relation to i) potentially material future cash outflows,
which may or may not arise in respect of HSS and OHC related settlements in excess of amounts already
guaranteed by Government; ii) potential payments to be made for Postmaster Remediation for which
Government funding is not yet guaranteed; and iii) possible future requests by Government resulting in cash
outflows for Post Office to meet compensation payments or process running costs associated with the
Government's intention to provide additional compensation to GLO claimants, which could occur during the
going concern period such that Post Office requires additional support, represent material uncertainties which
may cast a significant doubt on the Group's and Company's ability to continue as a going concern. The financial
statements do not include adjustments that would result if the Group and Company were unable to continue
as a going concern.
Further details regarding the going concern assessment and the associated significant judgements are included
in note 1 of the financial statements.
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Financial instrument risk
The exposure of the Group to market risk, credit risk and liquidity risk has been disclosed in note 17 to the
financial statements on pages 102 to 104.
Audit information
The Directors confirm that, so far as they are aware, there is no relevant audit information of which the auditors
are unaware, that each Director has taken all reasonable steps to make themselves aware of any relevant audit
information and to establish that the auditors are aware of that information.
Independent Auditor
The Board reappointed the auditors, PricewaterhouseCoopers LLP, for financial year 202 1/22 on 21 April 2022.
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have prepared the Group financial statements in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and the company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). In preparing the Group
financial statements, the Directors have also elected to comply with International Financial Reporting Standards
issued by the International Accounting Standards Board (IFRSs as issued by IASB).
Under company law, 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 Company and of the profit or loss of the Group
for that period. In preparing the financial statements, the Directors are required to:
« Select suitable accounting policies and then apply them consistently;
* State whether applicable international accounting standards in conformity with the requirements of the
Companies Act 2006 and IFRSs issued by IASB have been followed for the Group financial statements and
United Kingdom Accounting Standards, comprising FRS 101 have been followed for the company financial
statements, subject to any material departures disclosed and explained in the financial statements;
« Make judgements and accounting estimates that are reasonable and prudent; and
« Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and
explain the Group's and Company's transactions and disclose with reasonable accuracy at any time the financial
position of the Group and Company and enable them to ensure that the financial statements comply with the
Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the company’s website. Legislation in the
United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
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Directors’ confirmations
In the case of each Director in office at the date the Directors’ report is approved:
So far as the Director is aware, there is no relevant audit information of which the Group's and Company's
auditors are unaware; and
@ They have taken all the steps that they ought to have taken as a Director in order to make themselves aware
of any relevant audit information and to establish that the Group's and Company's auditors are aware of
that information.
Rachel Scarrabelotti
Interim Company Secretary, Post Office Limited
(Company Number 2154540) Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ
29 April 2022
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Independent Auditors’ Report to the members of Post
Office Limited
Report on the audit of the financial statements
Opinion
In our opinion:
© Post Office Limited's Group financial statements and Company financial statements (the “financial
statements") give a true and fair view of the state of the Group's and of the Company's affairs as at 28
March 2021 and of the Group's loss and the Group's cash flows for the 52 week period then ended;
© the Group financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006;
© the Company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101
“Reduced Disclosure Framework", and applicable law); and
© the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements, included within the Annual Report & Consolidated Financial
Statements (the “Annual Report”), which comprise: the Consolidated and Company Balance Sheets as at 28
March 2021; the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Cash Flows, and the Consolidated and Company Statements of Changes in Equity
for the period then ended; and the notes to the financial statements, which include a description of the
significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and
applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for
the audit of the financial statements section of our report. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to other
entities of public interest, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical
Standard were not provided.
Other than those disclosed in Note 4, we have provided no non-audit services to the Company or its controlled
undertakings in the period under audit..
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Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the-adequacy of
the disclosure made in note 1 to the financial statements concérning the Group's and the Company’ ability to
continue as a going concern. The cash flow forecasts for the Group and Company during the going concern
period ending 31 July 2023 contain assumptions regarding continued Government support in relation to i)
potentially material future cash outflows, which may or may not arise in respect of Historical Shortfall Scheme
("HSS") and Overturned Historical Convictions ("OHC") related settlements in excess of amounts already
guaranteed by Government, ii) potential payments to be made for Postmaster Remediation (“PR") for which
Government funding is not yet guaranteed; and iii) possible future requests by Government resulting in cash
outflows for Post Office to meet compensation payments or process running costs associated with the
Government's intention to provide additional compensation to GLO claimants. These could occur during the
going concern period and Government funding is not guaranteed for all potential outflows. The directors have
received written assurances from BEIS that it is the Government's intention to continue to support the Post
Office, however, given the nature of Government funding protocols this support does not constitute a financial
guarantee. These conditions, along with the other matters explained in note 1 to the financial statements,
indicate the existence of a material uncertainty which may cast significant doubt about the Group's and the
Company's ability to continue as a going concern. The financial statements do not include the adjustments that
would result if the Group and the Company were unable to continue as a going concern.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group's and the Company's ability to continue to adopt the
going concern basis of accounting included:
@ assessing the budgets and cash flow forecasts prepared by management and assessing the severe but
plausible downsides for both trading profit and exposures relating to OHC, HSS and PR, with the latter
leading to a material uncertainty over going concern. We challenged management on their
assumptions, including on the severity of their Trading Profit downside, validating the mathematical
accuracy of the model's calculations, including headroom;
© corroborating the existence of government funding and the extension of working capital facilities to
signed agreements; and.
¢ reviewing the disclosures in the basis of preparation and Directors’ Report.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Emphasis of matter - Estimation uncertainty in relation to the valuation of
Historical Matters related provisions
In forming our opinion on the financial statements, which is not modified, we draw attention to the estimation
uncertainty which is disclosed in relation to the valuation of the HSS provision, the OHC provision and the PR
provision as explained in note 1 (Critical accounting estimates and judgements in applying accounting policies)
to the financial statements. Post Office Limited ("POL") has recognised provisions of £150 million related to the
HSS, £502 million related to the OHC and £59 million related to PR. In aggregate the financial statements
include provisions in respect of these Historical Matters of £711 million. As disclosed in note 1, Government
has stated its intention to provide sufficient financial support to ensure that POL can meet the cost of these
liabilities. Although the directors have based the provisions on their best estimate, including input from legal
advisors, there is significant estimation uncertainty in determining the ultimate amounts that will be payable in
respect of these Historical Matters. In particular the provisions are highly sensitive to assumptions regarding i)
the estimated average payment value per claim in respect of the HSS; ii) the estimated number of claimants to
whom payments will be made and the estimated average value of such payments in respect of OHC
settlements; and iii) the number of eligible Postmasters who will receive payments and the average value of
such payments in respect of PR. Changes in any of these assumptions could result in highly material changes
to the valuation of the provisions
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Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included,
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report
certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
Report and Directors' Report for the period ended 28 March 2021 is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors' responsibilities statement, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The directors are also 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.
In preparing the financial statements, the directors are responsible for assessing the Group's and the 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 the directors either intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but to do so.
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Auditors’ responsibilities for the audit of the financial statements
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 an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance
with laws and regulations related to the Proceeds of Crime Act 2002 and the Money Laundering Regulations
2007, Data Protection Act, and health and safety legislation, and we considered the extent to which non-
compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006 and UK tax
laws. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and determined that the principal risks were related to
posting inappropriate journal entries to manipulate financial performance and management bias in determining
significant accounting estimates. Audit procedures performed by the engagement team included:
« — Enquiring with management, internal audit and those charged with governance to understand the
relevant laws and regulations applicable to the Group and Company, and their assessment of fraud
related risks;
« Evaluation of management's controls designed to prevent and detect fraudulent financial reporting;
«Identifying and testing journal entries using a risk-based targeting approach for unusual account
combinations that could impact revenue and Trading Profit;
* Challenging assumptions and judgements made by management in determining significant accounting
estimates including litigation provisions, the assumptions within the property, plant and equipment and
intangible impairment assessments, and the assumptions underpinning the defined benefit pension
obligation; and
* Reviewing financial statement disclosures and testing to supporting documentation, where
appropriate, to assess compliance with applicable laws and regulations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
Website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company's members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion :
* we have not obtained all the information and explanations we require for our audit; or
* adequate accounting records have not been kept by the Company, or returns adequate for our audit
have not been received from branches not visited by us; or
* certain disclosures of directors’ remuneration specified by law are not made; or
«the Company financial statements are not in agreement with the accounting records and returns.
to report arising from this responsibility.
Andrew Paynter (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
29 April 2022
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Consolidated Income Statement
for the 52 weeks ended 28 March 2021 and 52 weeks ended 29 March 2020
Note 2021 2020*
£m £m
Revenue from contracts with customers 2 f 815] 807
\Costs . (793) (791)
\Costs — investment spend 5 (29) (85)
[Costs — exceptional items 4 (626) (232)
Total costs (1,448) (1,108)
Other operating income 3 19
Funding for exceptional items 4 64 -
Investment funding 5 . 42
Network Subsidy Payment 50) 50
Depreciation, amortisation and impairment 45 (126) (154)
Share of post-tax (loss)/ profit from joint venture 11 (7) 28
Operating loss from continuing operations 4 I (649)I (316)
Operating loss before exceptional items from continuing operations I (87) (84)]
Finance costs 7 (7) (11)
Loss before taxation from continuing operations (656) (327)
Taxation credit 8 & 8
Loss for the financial year from continuing operations (655) (319)
Profit after taxation for the financial year from discontinued operation 21 58{ 14
Loss for the financial year I (597)I (305)
* Comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a discontinued operation.
See note 21 for further details.
For the year ended 28 March 2021 trading profit was £35 million (2020: £86 million).
Trading profit is one of the Group's key financial measures and is calculated as operating loss excluding
exceptional items, depreciation, amortisation, impairment, investments, Network Subsidy Payment and profit
on disposal of discontinued operations. Further detail is given in note 24 — alternative performance measures.
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Consolidated Statement of Comprehensive Income
for the 52 weeks ended 28 March 2021 and 29 March 2020
2021 2020"
Note £m £m
Loss for the financial year from continuing operations I (655)I (319)
Profit for the financial year from discontinued operations 21 I 58 14
Items that may be reclassified to profit or loss
Loss on cash flow hedge 17 (2) (1)
Items that will not be reclassified to profit or loss
Re-measurements on defined benefit surpluses 18 : 1
Total other comprehensive expense (2) -
Total comprehensive expense for the year (599)I (305)
* Comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a discontinued operation.
See note 21 for further details.
There are no additional other comprehensive income items (2020: fnil) that will be reclassified to the profit and
loss in future periods.
Post Office Limited corporate.postoffice.co.uk I Page 67
Consolidated Statement of Cash Flows
for the 52 weeks ended 28 March 2021 and 29 March 2020
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2020
£m
Cash flows from operating activities
Operating (loss) / profit before investments and exceptional items
Adjustment for:
Share of loss / (profit) from joint venture
Depreciation and amortisation
Pension defined contribution charge
Other (gains) /losses
Working capital movements:
(28)
130
12
13
\Incréase)/decrease in trade and other receivables (excluding exceptional funding)
[Decrease in contract assets
Increase/(decrease) in trade and other payables -
- [Decrease in inventories
Increase in trading provisions
Pension contributions paid
Net payment in respect of investments and exceptional items:
investment funding
Restructuring and other exceptional costs
Litigation costs- GLO
Surrender of tax losses to joint venture
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Dividends received from joint ventures
Proceeds from Sale of discontinued operation ;
Proceeds from the sale of property, plant and equipment
Purchase of tangible non-current assets *
Purchase of intangible non-current assets
(27)
(76),
Net cash inflow/(outflow) from investing activities
(76)
Cash inflow/(outflow) before financing activities
(139)
Cash flows from financing activities
Finance costs paid
Lease payments
Net (repayments) / proceeds of borrowings from BEIS
(8)
(15)
52
Net cash (outflow) /inflow from financing activities
29
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year. 13
(110)
572
Cash and cash equivalents at the end of the year : 13
/ 462
See note 21 for details regarding cash flows relating to the discontinued operation.
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Consolidated Balance Sheet
at 28 March 2021 and 29 March 2020
2020
Note £m
Non-current assets .
Intangible assets 9 247
Property, plant and equipment 10 199
Investments in joint venture . i 67
Retirement benefit surplus 18 1
Trade and other receivables : 12 7
Total non-current assets 521
Current assets
Inventories 1
Trade and other receivables 12 283
Cash and cash equivalents . : ts 13,17 bee 462
Total current assets a 746
Total assets , 1,267,
Current liabilities . .
Trade and other payables ° . 14 (408)
Financial liabilities - interest bearing loans and borrowings 15 (617)
Provisions 16 (31)
Total current lial (1,056)
Non-current liabilities
Other payables 14 (70)
Provisions 16 (198)
Total non-current liabilities (268)
Net liabilities (57)
Equity
Share capital 19 S
Share premium : : 19 465
‘Accumulated losses (526)
Other reserves : : a) 4
Total equity : ese (57)
The notes on pages 71 to 120 form an integral part of the consolidated financial statements.
The financial statements on pages 66 to 120 were approved by the Board of Directors on 29 April 2022 and
signed on its behalf by:
NRead ~~ ° : .
Chief Executive Officer
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Consolidated Statement of Changes in Equity
for the 52 weeks ended 28 March 2021 and 29 March 2020
Share Share Accumulated Other Total
capital premium losses reserves equity
£m £m £m £m £m
Note
At 30 March 2020 - 465 (526) 4 (57)
Loss for the year - - (597) - (597)
Other comprehensive expense = ° : (2) (2);
¢ {
At 28 March 2021 I = 465, (1,123) 2 (656) {
Share Share Accumulated Other Total
capital premium losses reserves equity
£m £m fm £m £m
Note
At 1 April 2019 - 465 (226) 5 244
Changes in accounting standards i - - 4 - 4
Restated at 1 April 2019 =: 465 (222) 5 248
Loss for the year - - (305) - (305)
Other comprehensive expense - - - (1) (1)
Re-measurements on defined benefit
surplus 18 = Z 1 - 1
At 29 March 2020 : 465 (526) 4 (57)
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Notes to the Financial Statements
1. Accounting Policies
Financial year
The financial year ends on the last Sunday in March and for this reason these financial statements are made up
for the 52 weeks ended 28 March 2021 (2020: 52 weeks ended 29 March 2020).
Basis of preparation
The Group financial statements on pages 66 to 120 have been prepared in accordance with international
accounting standards in conformity with requirements of the Companies Act 2006. Unless otherwise stated in
the accounting policies below, the financial statements have been prepared under the historic cost accounting
convention.
The financial statements have been prepared on a going concern basis. This basis is predicated on the
assumption that Government will continue to provide support to the Group as required. A material uncertainty
has been identified in respect of this assumption, specifically in relation to several potentially material future
cash outflows which may or may not arise and for which Government funding is not at this point guaranteed.
Further details can be found in the going concern assessment on pages 72 to 76.
The principal accounting policies applied in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The Company is incorporated and domiciled in the United Kingdom. The Group consolidated financial
statements are presented in sterling and all values are rounded to the nearest £ million except where otherwise
indicated. The financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Post Office Limited is a private company limited. by shares incorporated in England and Wales.
Income statement presentation
In prior years, investment funding from Government, restructuring, impairment and transformation costs were
separately disclosed from trading performance in an investments column. As of 2020/21 these items, to the
extent they existed, are included within a single column, but remain identifiable through separate disclosure in
the income statement. The change in presentation is as a result of no investment funding being received from
Government in 2020/21. Trading profit, which represents the underlying performance of the business, is
separately disclosed in note 24 as an alternative performance measure.
Discontinued operations
During the year, the Group disposed of the Telecoms operation, which represented a separate line of business.
The net results of the Telecoms operation, up until disposal, are presented as discontinued operations in the
Group consolidated income statement. Comparatives have been re-presented — see note 21 for further details.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiary
undertakings as at 28 March 2021. Subsidiaries are consolidated from the date of acquisition, being the date
on which the Group obtains control, and continue to be consolidated until the date such control ceases. A
separate set of financial statements has been prepared for both Post Office Management Services Limited
(subsidiary, registered address: Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ) and Payzone Bill
Payments Limited (subsidiary, registered address: Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ) for
the 52 weeks ended 28 March 2021.
The year-end dates of these subsidiaries are in line with the Company. The subsidiaries use consistent
accounting policies where appropriate and their results have been consolidated into the Group financial
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statements. All intra-group balances, transactions, and unrealised gains and losses resulting from intra-group
transactions are eliminated in full. :
New and amended standards
New standards and interpretations applied
The following accounting standards and interpretations became éffective for the current reporting period:
« IAS 1 &IAS 8 ‘Definition of materiality’;
« IFRS 7, 1AS 39-& IFRS 9 ‘Interest rate benchmark reform’;
« IFRS 3 ‘Definition of a business’; and
* IFRIC IC agenda decision on Configuration and Customisation ('CC') costs in a Cloud Computing
Arrangement.
The introduction of these standards has not had a material effect on the net assets, results and disclosures of
the Group.
New and revised standards and interpretations not applied
There are a number of new and revised IFRSs that have been issued but are not yet effective. Of these, there
are none that are expected to have a material impact on the net assets, results and disclosures of the Group.
Basis of preparation — going concern
After careful consideration of the plans for the coming years, factoring in the continued impact of the COVID-
19 pandemic and the continuing support of Government, we are satisfied that the Group (being the Group of
companies headed by Post Office Limited) will be able to meet its liabilities as they fall due for a period of at
least 12 months from the date of approval of these financial statements. In assessing the going concern position
the Board has considered the Group's financial forecasts for the 15 month period to 31 July 2023.
This judgement is predicated on the assumption that Government will continue to provide financial support
when it is needed. The assumption of continued Government support is in relation to: i) potentially material
future cash outflows, which may or may not arise in respect of HSS and OHC related settlements in excess of
amounts already guaranteed by Government; ii) potential payments to be made for Postmaster Remediation
for which Government funding is not yet guaranteed; and iii) possible future requests by Government resulting
in cash outflows for Post Office to meet compensation payments or process running costs associated with the
Government's intention to provide additional compensation to GLO claimants, which could occur during the
going concern period such that Post Office requires additional support.
In addition to providing funding for investments and to subsidise the loss-making branches, what we might
term “traditional” funding, we are facing significant liabilities and uncertainties:
- HSS: A provision of £150 million has been recognised. Guaranteed Government funding in excess of this
level is in place through to March 2024. As outlined in the critical accounting estimates section on pages
76 and 77, significant estimation uncertainty around this provision balance remains, however we believe
the level of funding agreed should be adequate.
- OHC: A provision of £502 million has been recognised in 2020/21. In 2021/22 Government has
committed to provide funding of up to £780 million, which is in excess of the current estimated liability.
As outlined in the critical accounting estimates section on page 77 and 78, significant estimation
uncertainty around this provision balance remains, however we believe the level of funding agreed should
be adequate.
- Postmaster Remediation: A provision of £59 million has been recognised in 2020/21 and it is recognised
there is the potential for further liabilities to arise in future years should ongoing reviews identify any
further areas of potential redress. See critical accounting estimates section on page 78.
- GLO: In March 2022 the Government announced its intention to provide additional compensation
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payments to the individual claimants that formed the GLO. It is clear that Post Office will not be asked to
fund this additional compensation and Government's announcement does not create a liability for Post
Office. However, assurances have not been forthcoming from Government around its intention to request
Post Office to partake in, or oversee a process for compensation payments to be made and if such a
request was made whether the costs of running such a process would be funded by Government. Any
such costs have not been included within the going concern assessment. This represents an uncertainty
for management albeit the risk of costs being incurred without associated funding is deemed remote.
Government has and continues to demonstrate its commitment to support Post Office, albeit significant funding
uncertainty remains:
- The nature of our funding, all of which is essentially provided by Government, is that it is provided when
needed;
- Commitments to future funding have either to be part of a wider departmental spending review or be
based on a specific, quantified case;
- Departmental spending commitments and our funding contract with BEIS last until March 2025, although
our working capital facility with BEIS is currently contracted to March 2024;
- Weare not in a position to quantify any possible future liabilities which might arise as a result of Post
Office's continued review of historical policies and processes or the financial implications if Government
were to request Post Office partake in the compensation process for GLO claimants and incur unfunded
costs; and
- _ Itis clear that Government can, if it believes it is in the public interest, change its mind and stop funding
Post Office, the HSS or the OHC.
Nonetheless, traditional funding has been provided and funding for HSS and OHC has been committed. The
Shareholder has provided letters of comfort. Every indication has been given that Government considers the
work of Post Office to be vital and our underlying commercial progress valued. We have been assured that if
Government support were to come into question we would be told promptly.
Having reviewed the Group's going concern position for the period to 31 July 2023 and taking the Shareholder
support into account, the Board has concluded that the Group is a going concern and can continue to settle its
liabilities as they fall due. As part of this assessment, the Board considered the net liability position of the Group,
created by the recognition of the HSS, OHC and Postmaster.Remediation provisions, for which only partial
funding has been recognised to date, in line with accounting standards.
The lack of a formal signed agreement for continued Government support represents a material uncertainty
which may cast a significant doubt on the Group’s and Company's ability to continue as a going concern. The
financial statements do not include adjustments that would result if the Group and Company were unable to
continue as a going concern.
Performance and position
In recent years, facilitated by continued Government support, the Group has been on a transformational journey
which has enabled it to become profitable at a trading level. However, the ongoing impact of the COVID-19
pandemic, notably on the travel business, along with increasing inflationary cost pressures for the Group and
Postmasters alike, continues to impact profitability. These pressures, when combined with the removal of
trading profit contribution from the Telecoms business following its sale in 2020/21, mean that despite the
Group remaining profitable this is not to the same levels as those seen in 2019/20.
During the early stages of 2020/21, reduced trading activity resulted in a notable decline in cash transactions,
leading to significant reduction in security headroom. Subsequently the level of cash transactions has increased.
A security headroom waiver was obtained from BEIS for the period 30 April 2020 through to 28 June 2020.
Although ultimately the waiver was not required, it has provided management with comfort that should short-
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term headroom breaches be forecast, the funding facilities should still be available, subject to further waivers
being granted. At its lowest point, the headroom on the £950 million facility reduced to £258 million (E692
million drawn) in January 2022.
As a result of the decline in trading activity, the carrying values of assets have been reassessed. In one case,
Payzone Bill Payments Limited, we have recognised some uncertainty in recovery and impaired the carrying
value of relevant assets, as can be seen in note 9. Impairment does not directly impact going concern, but it
does provide an indication of uncertainty which management have considered and assessed whilst looking at
cashflow forecasts associated with the going concern review.
Post Office’s current financial position is not dissimilar to that seen historically, being in a net liability position
and reliant on Government funding. Given the expectation of necessary Government support, the net liability
position is not deemed to have an adverse impact on the going concern position.
The underlying trading performance of the Group and its ability to therefore generate cash is not deemed to be
an area of concern, notwithstanding the need for investment and Network Subsidy funding from Government.
Funding - traditional
The Group's activities are funded by Government. This traditional funding has been in different forms:
- Investment funding: Funding received for transformational activities. The funding, which is combined with
the Group's own funds derived from trading, is used to’ fund transformational projects which are assessed
via a formal business case review process. Monitoring and review activities are undertaken, with routine
reporting to the Shareholder.
- Network Subsidy: Payment received to partially subsidise the gross losses incurred by Post Office as a
result of making available the network of public Post Offices that the Secretary of State for BEIS considers
appropriate. If the subsidy were to exceed the cost of making the network available, the excess would be
repaid to Government.
- Financing facilities: £950 million working capital facility, £50 million same day facility and membership of
the Bank of England (“BOE”) Note Circulation Scheme ("NCS"). The working capital facility exists to
provide liquidity to the Group, with forecasting, monitoring and reporting of security headroom occurring.
Security headroom is a covenant which ensures there is sufficient collateral in the form of cash and other
assets to cover the borrowings under the facility. The same-day facility has not been used but is in place
to provide short-term liquidity should an operational need arise in the period between requesting the
appropriate balance on the working capital facility and this balance being provided, currently 24 hours.
The continued participation in the NCS ensures that Post Office has an adequate supply of notes to meet
customer demand across its network, see note 23 for further details.
The continued availability of this funding, or a suitable alternative, is necessary to allow the Group to continue
to be assessed as a going concern.
In respect of these items, and therefore playing a crucial part in the going concern assessment, is the status and
availability of each of these over the going concern period being assessed.
The agreed Government funding which falls within the going concern period under review includes: £185
million investment funding for the three year period 2022/23 through to 2024/25; £150 million Network
Subsidy Payment for the same three year period; and the existence of the £950 million working capital facility
and £50 million same-day liquidity facility, both to 31 March 2024.
The continued inclusion in the BOE NCS is assumed, given the role Post Office plays in ensuring the distribution
of notes across the UK.
When compared with the forecasted future cashflows of the Group and considering severe but plausible
downside trading scenarios, including the ongoing impact of the COVID-19 pandemic, the level of funding
available to support regular operations and continued development of the organisation is deemed adequate.
From the perspective of traditional funding, the Group can therefore be considered a going concern.
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Funding - exceptional and contingent
There are three items which have the potential to result in significant cash outflows in the going concern period
and beyond, for which the traditional funding could be insufficient. These include:
- HSS: Payments due to be made to claimants as part of the HSS. A provision of £150 million has been
recognised, reduced from £153 million in 2019/20. Government funding in excess of the current provision
is in place. Post Office will fund a significant portion of the payments before drawing down on
Government funding. An asset of £64 million has been recognised in 2020/21 in respect of the portion
expected to be funded by Government, based on current forecasts.
- OHC: Compensation payments to be made in respect of civil claims following the overturning of historical
criminal convictions. A provision of £502 million has been recognised in 2020/21, representing
management's best estimate of potential future payments to claimants. Government has agreed to
provide funding up to £780 million in respect of these payments. As the funding was not agreed until
after the balance sheet date, no asset has been recognised within these financial statements, in line with
accounting standards. However, the funding is in place as at the time of signing these financial
statements and is therefore pertinent to the Board's going concern assessment.
- Postmaster Remediation: Payments to be made to Postmasters as financial redress in respect of historical
policies and processes. A provision of £59 million has been recognised in 2020/21, representing
management's best estimate of potential future payments to eligible Postmasters who did not receive
remuneration during periods of suspension before March 2019, when this policy changed. Government
has provided a comfort letter stating its intention to provide support in respect of these liabilities and as
such management has assumed this financial support will be forthcoming as part of their going concern
assessment. The Directors acknowledge that as the Group continues to review its historical policies and
processes further associated liabilities may arise, in addition to suspension remuneration, and the impact
of those liabilities could fall within the going concern period.
Where provisions have been recognised in respect of the above, there is a significant level of management
estimate included in the provision calculations, which is explained further within the critical accounting
estimates section on pages 76 to 78. As such, the quantum and timing of potential cash outflows could vary
materially from the estimates made.
The costs of historically managing and settling the GLO, of settling a significant portion of the HSS and of
managing both the HSS and OHC have been and will be funded through Post Office's trading cashflows. The
costs are determined in part by the processes and approvals that Post Office must follow. Without
Government's support, Post Office does not have the financial resources to fund HSS, OHC, Postmaster
Remediation or any cashflows which may arise as a result of Government's intention to provide additional
compensation to GLO claimants.
The nature of Government's budget process does not typically enable Government to give uncapped
guarantees or future funding commitments that sit outside Government spending review timelines. As such,
Government funding cannot be assured in respect of future liabilities which may arise in respect of Postmaster
Remediation or in respect of any cashflows which may arise as a result of Post Office assisting Government
with providing additional compensation to the GLO claimants.
This lack of guaranteed funding for what could be material cash outflows is a source of material uncertainty
impacting the going concern assumption. BEIS has provided written assurances that its present intention is to
continue providing support to Post Office, including providing financial support for the settlement of Postmaster
Remediation claims. This does not constitute a financial guarantee.
Management has made the assessment that support from Government will continue to be made available, as
recently evidenced by the renewed traditional funding arrangements and the agreement to fund HSS and OHC.
As such, the basis of preparation of these financial statements on a going concern basis is predicated on the
assumption that should additional funding be required for the significant items highlighted above, it will be
provided by Government.
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The notable difference from previous years is the existence of potentially material future cash outflows
associated with Postmaster Remediation, for which funding is not guaranteed as well as the potential for HSS
and OHC related settlements to exceed amounts already guaranteed by Government. Furthermore, there is
now uncertainty around what role Post Office may play in the process for providing compensation to GLO
claimants in line with Government's announced intentions, and to what extent this will impact our future
cashflows.
As noted above, we believe that Government support will be available when there is clear evidence that it is
required. If that situation changes, the Shareholder has assured the Board that it will be informed.
Critical accounting estimates and judgements in applying accounting policies
The Group makes certain estimates and assumptions regarding the future. Estimates and assumptions are
continually evaluated based on historical experience and other factors. In the future, actual experience may
differ from these estimates and assumptions.
In addition, the Group has to make judgements in applying its accounting policies which affect the amounts
recognised in the financial statements. The most significant areas where judgements and estimates are made,
and which will most likely have a significant effect on the amounts recognised in the financial statements in
the next twelve months, are outlined below.
Critical accounting estimates:
Historical Shortfall Scheme
In December 2019, Post Office reached an out-of-court settlement with the claimants in the High Court
proceedings which were being conducted under a Group Litigation Order dated 22 March 2017 (the “Post
Office Group Litigation"). As part of the settlement reached with the claimants in the Post Office Group
Litigation, Post Office agreed to establish a remediation scheme open to Postmasters who had not participated
in the Group Litigation but who had experienced similar issues relating to shortfalls indicated by the previous
Horizon system, known as the Historical Shortfall Scheme (“HSS"). The agreement to establish this scheme
was deemed to be a triggering event on which to recognise a provision in the 2019/20 accounts.
Under the framework for the operation of the HSS, eligible applications are being investigated by Post Office
before being presented to an Independent Advisory Panel (the “Panel") by case assessors from Post Office's
legal advisers, Herbert Smith Freehills LLP. The Panel comprises independent experts in the fields of law,
forensic accounting and retail. The Panel will independently assess each claim that is presented to it and
formulate a recommended offer based on its understanding of the relevant legal principles to be applied and
guided by broad considerations of fairness. Following assessment of a claim by the Panel, Post Office will write
to the individual applicant setting out the outcome of their application, including the terms of any offer. There
is a dispute resolution mechanism available to applicants if they are dissatisfied with the outcome of their
application. This includes a mediation stage to be conducted under the auspices of Wandsworth Mediation
Services, a charitable organisation. In the event that claims are not resolved through the dispute resolution
mechanism, disputes will be referred to and be resolved by the County Court (for smaller disputes) or through
arbitration (for disputes in excess of £10,000).
The HSS launched on 1 May 2020 and officially closed for applications on 14 August 2020 (although late
applications have been accepted in exceptional circumstances). As at 25 April 2022, the HSS had received
2,369 eligible applications from current and former Postmasters. Of these, 434 are fully quantified, 1,601 are
part quantified and 334 are unquantified claims. HSS is now closed to new applications. Settlement offers have
been issued to 1,243 claimants and of these 952 have been settled.
A provision of £153 million was recognised within exceptional costs in 2019/20. As at the 2020/21 balance
sheet date the provision stands at £150 million. The reduction is a result of payment of a number of settlements
to scheme applicants in the period and revisions to management's estimate based on information arising from
assessments made by the independent panel. This represents management's best estimate of the most likely
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outcome of the potential future payments associated with the claims. The provision requires a number of
significant estimates and assumptions by management, with the level of estimation risk increased as a result of
the volume and range of claims received and the early stage of the settlement process.
As a result of the early stage of the HSS settlement process, with limited trends and patterns currently arising
out of the Panel's assessments on which management can base its estimates, many of the assumptions remain
subjective. As a result, the eventual outcome of the HSS could vary significantly to that which has been
estimated.
Analysis performed over the assumptions used indicates a wide range of possible outcomes, with the upper
range indicating that the cost of payments could double when compared with that recognised as a provision,
to in excess of £300 million. If the estimated average payment value per claim increased/decreased by 10%, as
compared to the average value assumed in arriving at the provision calculation, the provision would
increase/decrease by £15 million and could have a further highly material impact on the financial statements.
Government has confirmed it will provide sufficient financial support to Post Office to ensure that the scheme
can proceed, based on current expectations of the potential cost. As outlined above, significant uncertainty
around the provision balance remains, however we believe the level of funding agreed should be adequate. An
asset of £64 million (2020: fnil) has been recognised in the year in respect of the portion of the £150 million
HSS provision which will be funded by Government, as guaranteed funding was in place at the balance sheet
date for scheme liabilities in excess of an initial £86 million which are to be funded directly by Post Office, and
thus the accounting requirements for asset recognition were met.
Overturned Historical Convictions
In relation to Overturned Historical Convictions, further information of which can be found on page 14 of the
Financial and Business review, management's view is that liabilities arising from any future civil claims or
requests for compensation arising out of the overturned convictions to date represent a probable obligation
arising from past events. Post Office communicating its decision in 2020/21 not to oppose a number of appeals
was deemed to be a triggering event for liability recognition. The triggering event is deemed to apply to the
population of all potential claimants as opposed to only those currently going through the various stages of
appeal as outlined above. .
As such, a provision of £502 million (2020: £nil) has been recognised in respect of the Overturned Historical
Convictions ("“OHC"). This represents management's latest and best estimate of the most likely outcome of the
potential future payments associated with civil claims which may be received, assessed across the whole
population of potential claimants. The provision requires a number of significant estimates and assumptions by
management, with the level of estimation risk increased as a result of the early stage of the proceedings.
Given the volume of and uncertainty around the number of potential claimants, the spread of potential claim
values and the early stage of the process, with no payments having been made except for a small number of
interim payments, there is a significant level of estimation uncertainty. In estimating the provision, management
have made two key estimates: the number of claimants to whom payment will be made and the potential
average value of payments to be made. The assumptions used are subjective, but represent management's
best estimate based on advice from external legal advisors. The potential outcomes are wide ranging, with
analysis indicating the provision could increase or decrease by a material level if key assumptions were altered
and could have a further highly material impact on the financial statements. A 20% change in the key
assumptions could lead to an increase / decrease of c. 40% in the provision level. In accordance with paragraph
92 of IAS 37, detailed information in respect of the key assumptions underpinning this provision as required by
the standard has been excluded on the grounds that the Directors consider that it would be seriously prejudicial
to individual settlement discussions which need to take place on a case by case basis
Government has confirmed it will provide financial support in respect of future payments arising as part of the
OHC. Should the future payments exceed the current funding level guaranteed by Government of £780 million,
additional support will be sought from Government. See the Going Concern section on pages 72 to 76 for
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further details surrounding Government support. An asset has not been recognised in respect of Government
funding, as guaranteed funding was not formally in place at the balance sheet date and thus the accounting
requirements for asset recognition were not met.
Postmaster Remediation — suspension remuneration
Historically, before March 2019, Postmasters did not receive remuneration during the period of any contract
suspension. Post Office has subsequently changed this policy, resulting in Postmasters being remunerated
during a period of suspension.
A provision of £59 million has been recognised within exceptional costs in the year. This represents
management's best estimate of the potential future payments to eligible Postmasters whose contract with Post
Office Limited was suspended before March 2019. A number of significant estimates and assumptions have
been made in deriving the accounting provision. The primary estimates are the number of eligible Postmasters
who may receive a payment and the average value of such potential payments.
As the redress process is currently being worked through and formal funding arrangements are still to be
finalised, no trends or patterns exist on which management can utilise when forming its estimates. As such,
many of the assumptions are subjective and therefore the eventual outcome could vary significantly to that
which has been estimated. In accordance with paragraph 92 of IAS 37, detailed information in respect of the
key assumptions underpinning this provision as required by the standard has been excluded on the grounds
that the Directors consider that it would be seriously prejudicial to individual settlement discussions which need
to take place on a case by case basis.
Analysis performed over the assumptions used indicates a wide range of possible outcomes. If the estimated
average individual payment value increased/decreased by 20%, as compared to the average value assumed in
arriving at the provision calculation, the provision would increase/decrease by £12 million and could have a
further material impact on the financial statements.
Government has stated its intentions to provide sufficient financial support to Post Office for this, with formal
funding arrangements being progressed. AS assurances over Government funding were not formally in place
at the balance sheet date, and in line with accounting requirements for asset recognition, no asset has been
recognised on the balance sheet. This position will be revisited in future financial years, once Government
funding has been finalised.
Key assumptions used in impairment tests for non-current assets
The Group assesses whether there are any indicators of impairment for all non-current assets at each reporting
date as well as if events or changes in circumstances indicate that the carrying value may be impaired. Factors
considered important that could trigger an impairment review include the following:
. Significant underperformance compared to historical or projected future operating results.
. Significant changes in the manner of use of the acquired assets or the strategy of the overall Group.
. Significant negative micro- or macro-economic trends.
Where appropriate, an impairment loss is recognised in the income statement for the amount by which the
carrying value of the asset or cash generating unit ("CGU") exceeds its recoverable amount. The recoverable
amountis determined based on value in use calculations which require the use of assumptions. The calculations
use cash flow projections based on four-year financial forecasts approved by management, factoring in current
economic circumstances and challenges such as the ongoing impact of the COVID-19 pandemic. Where
applicable, cash flows beyond this period are extrapolated using estimated growth rates. Refer to notes 9 and
10 for the results of the latest impairment tests, including sensitivity analysis where relevant.
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Actuarial assumptions
The costs, assets and liabilities of the pensions operated by the Group are determined using methods relying
‘on actuarial estimates and assumptions.
The pension figures are particularly sensitive to changes in assumptions for discount rates, mortality and
inflation rates. The Group exercises its judgement in determining the assumptions to be adopted, after
discussion with its Actuary and in accordance with published statistics and experience. Refer to note 18 for
details of the key assumptions and sensitivity analysis performed.
Pension 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.
Judgement has been applied in determining that for these purposes a high quality corporate bond constitutes
AA rated or equivalent status bonds.
Property provisions
The Group recognises provisions for property contracts that are onerous. Assumptions are made to determine
whether the unavoidable costs of meeting the obligations of a contract exceed the economic benefits expected
to be received under it. These include estimates around the future trading performance of the site and cost
allocations.
Critical accounting judgements:
Pension schemes
Post Office participates in two defined benefit pension schemes. The Group recognises only the Post Office
section of the Royal Mail Pension Plan and a 7% share of the Royal Mail Senior Executives Pension Plan. These
key judgements are based on the sectionalised nature of the schemes as well as contractual arrangements and
existing funding contribution agreements.
Network Programmes
The Group recognises provisions for payments due to Postmasters in relation to the major network
transformation programme. A key judgement is required as to whether payments are expected to be made
beyond the current contractual period for which the associated agreements relate.
Cash generating units (“CGU")
Post Office has determined that it has two CGUs: Post Office Limited and Post Office Management Services
Limited. Post Office Management Services Limited is a standalone entity with an identifiable asset base and
therefore is deemed to be one CGU. Post Office runs a national network of branches which provide a distinct
retail offering, resulting in a fluid customer base across the network. As such the network as a whole is deemed
to be one CGU.
Going concern assumption
Akey judgement is required as to whether support will be provided by Government, to a level which allows the
Group to settle its liabilities as they fall due, incorporating potential future cash outflows in respect of significant
one off items which may or may not occur. The judgement that support will be provided by Government, to the
extent no formal guarantees are in place, has been made by management, as outlined within the going concern
section, from page 72 to 76, and fundamentally impacts the going concern decision made.
Revenue from contracts with customers
The Post Office business was organised in the period into three strategic commercial pillars plus the Telecoms
operation which was subsequently sold in March 2021. As such, revenue segments have been updated to
reflect these changes.
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Mails, Retail & Government Services
Mails
The Group provides Mails support services to Royal Mail and Parcelforce. Each Mails product and service has
an associated transaction price. The transaction price may vary due to the volume transacted in the period.
Revenue from providing Mails support services is recognised in the accounting period in which the services are
rendered.
Retail
The Group acts as a selling agent and earns commission on the sale of lottery tickets, scratch cards and gift
vouchers. The transaction price is a contractual commission rate, which is based on the value of sales in the
period. Revenue from the sale of lottery tickets, scratch cards and gift vouchers is recognised in the accounting
period in which these sales are made.
Government Services
Government services are provided under contract to Government departments, such as the DWP, DVLA and
the Home Office. Each Government service has an associated transaction price. Revenue is recognised in the
accounting period in which the services are rendered and is based on the transaction price multiplied by the
volume of each service provided in the period. Post Office Limited is the agent for identity services revenue.
Banking, Payments & Transactional Services
Banking
Through the Banking Framework Agreement, the Group provides over-the-counter banking services, such as
withdrawals, deposits and balance enquiries, on behalf of banks. A transaction price is associated with each
banking service provided. Revenue is recognised in the accounting period in which the services are rendered
and is based on the transaction price multiplied by the volume of each service provided in the period. In addition,
the Banking Framework Agreement provides a fixed fee element based on activity levels over a 12 month rolling
period. Accrued income is recognised until amounts earned are settled.
Payment & Transactional Services
Payment services comprise bill payments (including the subsidiary Payzone Bill Payments Limited). The
transaction price is the fee that the Group earns for each bill paid in a branch. Revenue from bill payments is
recognised in the accounting period in which the service is rendered and is based on the transaction price
multiplied by the volume of bill payments in the period.
Financial Services
Our Financial Services products include mortgages, credit cards, savings, travel and banking. The Group earns
commission on the sale of these products. The transaction price is a contractual commission rate. This
commission rate varies by product and is based on volume or value of products sold in the period as well as the
channel of sale, for example online or through the branch network. Revenue is recognised in the accounting
period in which the new products are sold. Post Office Limited is the agent for Financial Services revenue.
Identity Services
Each Identity service has an associated transaction price. Revenue is recognised in the accounting period in
which the services are rendered and is based on the transaction price multiplied by the volume of each service
provided in the period.
Insurance
Through its subsidiary, Post Office Management Services Limited, the Group provides general and life insurance
intermediation. The transaction price is a contractual commission rate. This commission rate varies by product
and is based on the volume or value of products sold in the period as well as the channel of sale, for example
online or through the branch network. Revenue is recognised in the accounting period in which the new
products are sold. Post Office Limited is the agent for insurance revenue.
Telecoms
The Telecoms operation, prior to being sold on 15 March 2021, included Post Office HomePhone and
Broadband services. The transaction price was the subscription fee, consisting primarily of charges for access
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to broadband and other internet access or voice services. Revenue was recognised as the service was provided
because the customer received and used the benefits simultaneously. Post Office Limited was the principal for
Telecoms revenue.
For all the revenue streams noted above, a receivable is recognised when the goods are delivered or the services
are provided, as this is the point in time that the consideration is unconditional, because only the passage of
time is required before the payment is due.
The Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer and the payment by the customer exceeds one year. As a consequence, the Group
does not adjust any of the transaction process for the time value of money.
Accrued and deferred income
Income is accrued on the balance sheet for goods and services for which control has transferred to the customer
before consideration is due. Accrued income is reclassified as trade receivables when the right to payment
becomes unconditional and we have invoiced the customer. Banking, payment and transactional services
attract material amounts of accrued income.
Deferred income is recognised when we have received advance payment for goods and services that we have
not yet transferred to the customer. Telecoms attracted material levels of deferred income.
Other income
The Network Subsidy Payment is received from Government and is recognised as other income to match the
related costs of making available the network of public Post Offices that the Secretary of State for BEIS
considers appropriate. The subsidy is recognised in the year in which it is received. If the subsidy were to exceed
the cost of making the network available, the excess would be repaid to Government and the associated income
would be derecognised.
Other income also includes commission income relating to Government Services.
Exceptional items
Exceptional items are significant, one off items which management consider require separate disclosure within
the financial statements in order to enhance understanding of the financial performance of the Group.
Exceptional items include legal fees and settlement costs for ongoing litigation and one-off costs associated
with the COVID-19 pandemic. Refer to note 4 for further details.
Investments
Investment funding is received from Government and recognised at the point of receipt. The funding is received
for transformational activities.
Investment spend relates to costs associated with significant, transformational activities which do not form part
of the underlying trading of the business. Refer to note 5 for further details.
Leases
The Group leases various offices, depots, branches, equipment and vehicles in accordance with IFRS 16.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a present
value basis. Lease liabilities include the net present value of the following lease payments:
. Fixed payments (including in-substance fixed payments), less any lease incentives receivable.
. Variable lease payments that are based on an index or a rate, initially measured using the index or rate
as at the commencement date.
. Amounts expected to be payable by the Group under residual value guarantees.
. The exercise price of a purchase option if the Group is reasonably certain to exercise that option.
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. Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability. The lease payments are discounted to their present value. In accordance with the terms of the
lease contract, the Group may exercise extension or termination options as part of ordinary business operations.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect. When adjustments to lease payments based on an
index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset:
Right-of-use assets are measured at cost comprising the following:
. The amount of the initial measurement of lease liability.
. Any lease payments made at or before the commencement date less any lease incentives received.
. Any initial direct costs.
. Restoration costs. ‘
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term ona
straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life. Testing for impairment on right-of-use assets is done on a
CGU basis.
Taxation
The amount charged or credited as current income tax is based on the results for the year adjusted for items
which are not taxed or are disallowed. It is calculated using tax rates in legislation that have been enacted or
substantively enacted by the balance sheet date.
Deferred income tax assets and liabilities are recognised for all taxable and deductible temporary differences
and unused tax assets and losses except:
. On the initial recognition of goodwill.
. On the initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit and loss.
* On the taxable temporary differences associated with investments in subsidiaries and interest in joint
ventures, where the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available
against which they can be utilised.
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 the liability is settled, based on tax rates that have been substantively enacted at the
balance sheet date. Deferred tax balances are not discounted.
Current and deferred tax is recognised in the income statement, except to the extent that it relates to items
recognised in other comprehensive income, or directly to equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent
that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the
draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be
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drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the
facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
Under IAS 7 section 22b, proceeds and repayments are shown as net in the Statement of Cash Flows.
Investments in joint ventures
Investments in joint ventures within the Group's financial statements are accounted for under the equity method
of accounting. Under this method the investment is carried in the balance sheet at cost plus post-acquisition
changes in the Group's share of the net assets of the joint venture less any impairment in value. The income
statement reflects the Group's share of post-tax profits from the joint venture. The joint venture is an integral
part of the Group's operations.
Property, plant and equipment
Property, plant and equipment excluding freehold property, long leasehold property and land:
Property, plant and equipment is recognised at cost, including attributable costs in bringing the asset into
working condition for its intended use. These assets are depreciated on a straight-line basis over the following
useful lives:
Range of asset lives
Plant and machinery 3-15 years
Motor vehicles 3-12 years
Fixtures and equipment . 3-15 years
Freehold property, long leasehold property and land:
As with property, plant and equipment this is recognised at cost, including attributable costs of bringing the
asset into working condition for its intended use. These assets have a long useful life and a fair market value.
They are depreciated on a straight-line basis over the following useful lives:
Range of asset lives
Freehold land Not depreciated
Freehold buildings Up to 50 years
Long leasehold and short leasehold The shorter of the period of the lease, 50 years or the estimated remaining
useful life
The remaining useful lives of freehold buildings are reviewed periodically and adjusted where applicable on a
prospective basis. Where freehold property and long leasehold includes the fit-out of those properties, the fit-
out is depreciated over its useful economic life in line with fixtures and fittings.
Assets in the course of construction are carried at cost, with depreciation charged on the same basis as all other
assets once those assets are ready for their intended use.
Leased assets:
Long leasehold, short leasehold and motor vehicles categories include right-of-uses assets. Further detail is
included in note 20.
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Intangible assets
Goodwill:
Goodwill is initially recognised at cost, being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable
assets acquired and liabilities assumed. After initial recognition, goodwill is recognised at cost less any
accumulated impairment losses. The Group's management undertakes an impairment review annually or more
frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.
Software:
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the Group are recognised as intangible assets when the following criteria are met:
. Itis technically feasible to complete the software so that it will be available for use;
. Management intends to complete the software and use or sell it;
. There is an ability to use or sell the software;
. It can be demonstrated how the software will generate probable future economic benefits;
. Adequate technical, financial and other resources to complete the development and to use or sell the
software are available; and
. The expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate
portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the
asset is ready for use.
Research and development:
Research expenditure and development expenditure that does not meet the criteria above are recognised as an
expense as incurred. Development costs previously recognised as an expense are not recognised as an asset
in subsequent periods.
Software-as-a-service ("SaaS") arrangements:
During the year, the Group revised its accounting policy in relation to configuration, customisation and access
costs incurred in SaaS arrangements, following the IFRS IC agenda decision in March 2021. The Group
previously accounted for costs incurred to configure, customise and access the cloud providers application
software as intangible assets. The Group has adopted the treatment set out in the IFRS IC agenda decision and
such costs are now recognised as expenses in the income statement when the services are received. The prior
year impact of this change in accounting treatment has been assessed and was found to be immaterial, as such
this change has been accounted for prospectively, resulting in an additional charge of £5 million in the current
year income statement in respect of brought forward intangible assets, as a result of the clarification issued by
the IFRS IC (see note 9). The Group may incur related costs for the development of software code that enhances
the capability of existing Group controlled software. Where such costs lead to future economic benefit and meet.
all other recognition criteria for an intangible asset as set out in IAS 38, they are recognised as intangible assets
and amortised over the useful economic life of the software.
Intangible assets with a finite useful life:
Intangible assets acquired separately or generated internally are initially recognised at cost. They are amortised
ona straight-line basis over the following useful lives:
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Range of asset lives
Software 3-6 years
Customer relationships 5 years
Merchant relationships 5-10 years
Brands 15 years
Assets in the course of construction are carried at cost, with amortisation commencing once the assets are
ready for their intended use.
Inventories
Inventories include stationery and Royal Mint coin products and are carried at the lower of cost and net
realisable value after adjusting for obsolete or slow-moving stock.
Trade receivables
Trade receivables are recognised and carried at original invoice amount. An allowance is made when collection
of the full amount is no longer probable. The Group applies IFRS 9 to measure this allowance for expected credit
losses, grouping trade receivables based on shared risk characteristics and days past due. Bad debts are written
off when identified.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and on hand, including cash in the Post
Office network and short-term deposits (cash equivalents) with an original maturity date of three months or
less.
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.
The subsidiaries Post Office Management Services Limited holds fiduciary cash balances, these are held on
trust on behalf of third parties, see note 13 for details.
Pensions and other post-retirement benefits
Membership of occupational pension schemes is open to most permanent UK employees of the Group.
The Group is the principal employer of the Post Office Section of the Royal Mail Pension Plan (“"RMPP") and is
a participating employer within the Royal Mail Senior Executives Pension Plan ("RMSEPP"). RMPP and RMSEPP
are both defined benefit plans closed to new members and closed to future accrual. All members of these plans
are contracted out of the earnings-related part of the State pension scheme.
A Memorandum of Understanding was executed in 2016/17 which removed the unconditional right to refund
from the RMPP. As a result of these events the surplus relating to this Plan was derecognised.
The pension assets of the defined benefit schemes are measured at fair value. Liabilities are measured on an
actuarial basis using the projected unit credit method and discounted at a rate equivalent to the current rate of
return on a high quality corporate bond of equivalent currency and term.
Full actuarial funding valuations are carried out at intervals not normally exceeding three years as determined
by the Trustees and actuarial valuations are carried out at each balance sheet date and form the basis of the
surplus or deficit disclosed. When the calculation at the balance sheet date results in net assets to the Group,
the recognised asset is limited to the present value of any future refunds of the plan or reductions in future
contributions to the plan (the asset ceiling). As noted above, the RMPP Plan has been closed and no future
refunds will be made to the Group.
Actuarial gains and losses are recognised immediately in the statement of comprehensive income. Any deferred
tax movement associated with the actuarial gains and losses is also recognised in the statement of
comprehensive income. As the Group has no right to a future surplus in the RMPP, an equal and opposite
adjustment to the asset ceiling is recognised in other comprehensive income. There is no effect on the net assets
position of the Group.
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For defined contribution schemes, the Group's contributions are charged to operating profit, as part of staff
costs, in the period to which the contributions relate.
Bonus plans — short-term incentives
The Group recognises a liability and an expense for bonuses based on a mix of financial and non-financial
measures. The Group recognises a provision where contractually obliged or where there is a past practice that
has created a constructive obligation.
Bonus plans — long-term incentives
Long-term incentive awards are made annually and are cash settled if performance is achieved over a 3-year
cycle. Performance measures are drawn from the Post Office Strategic Plan agreed with BEIS. The Group
recognises a liability and an expense for long-term incentives as milestones are hit.
Foreign currencies
The functional and presentational currency of the Group is sterling (£).
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange
rates are recognised in profit or loss.
Provisions
Provisions are recognised when; the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. Due to the nature of provisions the future amount settled may be
different from the amount that has been provided. 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. The Group has
considered the provisions recognised in the balance sheet and concluded that discounting would be immaterial.
Therefore, no adjustment has been made in the financial statements for the effect of the time value of money.
Financial instruments
Initial measurement of financial instruments
All financial instruments are initially measured at fair value plus or minus, in the case of a financial asset or
financial liability not at fair value through profit or loss, transaction costs.
Subsequent measurement of financial assets
IFRS 9 divides all financial assets into two classifications - those measured at amortised cost and those
measured at fair value.
Where assets are measured at fair value, gains and losses are either recognised entirely in profit or loss (fair
value through profit or loss, “FVTPL"), or recognised in other comprehensive income (fair value through other
comprehensive income, “FVTOCI)".
The classification of a financial asset is made at the time itis i
the classification of an asset may subsequently need to be reclassified.
ally recognised. If certain conditions are met,
Subsequent measurement of financial liabilities
IFRS 9 divides all financial liabilities into two measurement categories: FVTPL and amortised cost. All of the
Group's financial liabilities are measured at amortised cost.
Derecognition of financial assets
A financial asset is derecognised when the Group determines that it has transferred substantially all of the risks
and rewards of ownership of the asset.
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Derecognition of financial liabilities
A financial liability is removed from the balance sheet when it is extinguished; that is, when the obligation
specified in the contract is either discharged or cancelled or expires.
Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date that a derivative contract is entered into, and they
are subsequently .re-measured to their fair value at the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument
and, if so, the nature of the item being hedged. The Group designates certain derivatives as either:
«Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges).
« Hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly
probable forecast transactions (cash flow hedges).
« Hedges of a net investment in a foreign operation (net investment hedges).
At inception of the hedge relationship, the Group documents the economic relationship between hedging
instruments and hedged items, including whether changes in the cash flows of the hedging instruments are
expected to offset changes in the cash flows of hedged items. The Group documents its risk management
objective and strategy for undertaking its hedge transactions.
The fair values of derivative financial instruments designated in hedge relationships are disclosed in note 17.
Movements in the hedging reserve are shown within other reserves in the statement of changes in equity. The
full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity
of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining
maturity.of the hedged item is less than 12 months.
Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other reserves within equity. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.
When the forecast transaction subsequently results in the recognition of a non-financial asset or non-financial
liability, the associated cumulative gain or loss is removed from equity and included in the initial cost or other
carrying ‘amount of the non-financial asset or liability. If a hedge of a forecast transaction subsequently results
in the recognition of a financial asset or financial liability, the associated gains or losses that were previously
recognised in the statement of comprehensive income are reclassified into the income statement in the same
period or periods during which the asset acquired or liability assumed affects the income statement.
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2. Revenue from contracts with customers
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All Group sales occur in the UK. The Group derives revenue from the transfer of goods and services over time and
at a point in time in the following major product lines:
Revenue segments
2021 2020*
£m. £m
Mails, Retail & Government Services 415
Banking, Payments & Transactional Services 288
Financial Services, Identity Services & Insurance 20
Other** 4
Total revenue 807
* Where applicable, comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a discontinued
operation, See note 21 for further details.
** Principally relates to Supply Chain income of £9 million (2020: £10
lion) predominantly for warehousing of Royal Mail stock, transport of
high value mails and release of Bank of Ireland deferred income of £2 million (2020: £3 million). The remaining £1 million (2020: £1 million) is
made up of individually immaterial revenue balances.
3. Staff costs and numbers
Employment and related costs were as follows:
: 2020"
People costs (excluding investments): £m
Wages and salaries 143
Social security costs 16
Pension costs (note 18) 12
Total people costs (exciuiding investments) 71
Sifters anaiadida. core evre beorne-rsaerhed ouerensiial Wouteghoal atthe laleemmeteraieen, whikcrzypieaptindileed red
Operation. See riote 21 for further details.
People costs within investments relate to severance costs as part of restructuring and are disclosed within note 5.
Period end and average monthly employee numbers were as follows:
Period end employees
Average Finan employees
2020
2020
Total employees
3,663
4,027
Total employee numbers can be categorised as follows:
Period end employees
2020 2020
‘Administration 1,090 1,146
Directly managed branches ("DMB") 1,592 1,820
Supply Chain 14 833
Network programmes 32 98
Post Office Insurance 43 I 50
Payzone .92 80
Total 3,663, 4,027
Post Office Limited
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4. Operating loss
The following items are included within operating loss:
2020"
£m
Postmasters’ remuneration 384
People costs (excluding investments) 171,
Depreciation and amortisation 127
Cost of inventories recognised as an expense -
(Profit) / loss on disposal of fixed assets 4
Exceptional items: £m
* Historical Shortfall Scheme 153
©’ Overturned Historical Convictions -
© Postmaster Remediation -
e Group Litigation Order 72
* COVID-19 pandémic -
© Other Legal 7
Funding for exceptional items: £m
* © Historical Shortfall Scheme funding © -
Fees payable to the Group's auditor for audit and other services: £000
= parent Company and Group audit 590
- audit of subsidiaries 110
-.> other assurance services 86
= other non-audit services 49
* Where applicable, comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a
discontinued operation. See note 21 for further details.
Exceptional costs:
Exceptional costs of £626 million (2020: £232 million) were recognised in the year. This includes Historical Matters
related costs of £610 million (2020: £225 million) broken down as follows:
« Historical Shortfall Scheme (“HSS”) costs of £26 million (2020: £153 millon), which are made up of legal -
costs and costs to run the scheme of £29 million, offset by a £3 million reduction in the provision estimate
(see note 16).
e ©Overturned Historical Convictions (“OHC") costs of £524 million (2020: £nil) which is made up of a £502
million (2020: £nil) provision recognised in the year, and £22 million (2020: £nil) of related legal and
+, running costs.
« Postmaster Remediation provision of £59 million (2020: £nil).
e Group Litigation Order costs of £1 million (2020: £72: million). Related costs dropped significantly
compared to the prior year as a resolution was reached in December 2019 and claims were settled in
2019/20. The costs in 2020/21 relate to remaining legal fees.
Historical Matters related provisions are explained in the-critical accounting estimates section in note 1.
Exceptional funding:
Funding for exceptional items of £64 million was recognised in the year (2020: fnil) in line with agreed Government
funding for the HSS.
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Fees payable to the Group's auditor:
Non-audit services have reduced to £19,000 (2020: £49,000) due to PwC stepping down as Post Office's
Executive remuneration advisor. The remaining non audit services were contracted prior to PwC's formal
appointment as financial statement auditor in 2019 and the service has ceased after 2020/21 year-end. The parent
Company and Group audit fee includes £150,000 additional billing for the 2019/20 audit, billed during 2020/21.
5. Investments
2021 2020"
£m £m
Investment funding - 42
Restructuring:
Business transformation (6) (10)
Network programmes . . 5 (66)
IT transformation (12) (2)
Severance (16) (7)
Total restructuring costs, I (29) I (85)
Impairment of intangible assets (note 9) : 2 (8) (27)
Unwinding of discounts on provisions + (1)
Total investments charge (37) (71)
* Where applicable, comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a
discontinued operation. See note 21 for further details.
Investment funding: Investment funding was received from BEIS for transformation activities in 2019/20. No
investment funding was received from BEIS in 2020/21.
Restructuring: Restructuring costs are transformational spend incurred in order to implement major transformation
programmes. Business transformation is an overarching programme that will transform the business, driving Post
Office toward commercial sustainability through technological innovation and the fundamental re-envisaging of
long-term contracts. Network programmes is a multi-year initiative designed to simplify the retailer proposition,
with key areas of focus being simplification and automation. IT transformation includes programmes to restructure
our IT operating model and overhaul legacy back office systems, transitioning to a cloud-based architecture. As
part of the aforementioned transformational activities, severance costs have been incurred.
Impairment: See note 9.
Unwinding of discounts on provisions: Finance costs incurred in order to unwind the discount on onerous
lease provisions.
6. Directors’ emoluments
No Directors were accruing pension entitlements during the period (2020: none).
Disclosures required by the Companies Act 2006 in relation to Directors’ emoluments are provided on pages 37
to 40.
7. Finance costs
2021 2020
£m £m
Interest payable on loans (3) ”)
Finance charges (4) (3)
Unwinding of discounts on provisions = (1)
(7) i (11)
Total ~ net finance costs
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8. Taxation
(a) Taxation recognised in the year
Current and deferred income tax is credited to the income statement as follows:
* 2021 2020
£m £m
Current income tax:
Corporation tax credit for year (1) (7)
Deferred income tax:
Deferred tax income relating to the utilisation of losses brought forward - (1)
1
Taxation (credit) (1) (8)
The current income tax credit recognised in the income statement is £1 million (2020: £7 million). The 2020
taxation credit mostly relates to the surrender of tax losses to the joint venture.
The deferred income tax result recognised in the income statement is £nil (2020: £1 million credit). The 2020
deferred income tax credit arose as a consequence of the acquisition of intangible assets as part of a business
combination and corresponded to the deferred tax liability recognised in the business combination.
In the current year no deferred income tax has been recognised in other comprehensive income.
No current or deferred income tax was recognised directly in equity in the current or prior year.
(b) Factors affecting current tax credit on profit
As in 2020, the tax assessed for the year differs from the standard rate of corporation tax in the UK of 19% (2020:
19%). The differences are explained below:
2021 2020
£m £m
Loss before taxation from continuing operations (656) (327)
Profit before taxation from discontinued operations 58 14
Total loss before taxation multiplied by the standard rate of corporation tax in the (114) (59)
UK of 19% (2020: 19%)
Effect of unutilised losses carried forward 113 55
Increase in tax charge as a result of change in unrecognised deferred tax assets 11 7
Surrender of tax losses to joint venture - (6)
Tax effect of share of results of joint venture - (5)
Expenses not deductible for tax purposes 1 -
Income not taxable (10) -
Fixed asset differences (2) -
Taxation (credit) (1) @)
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(c) Deferred tax
Deferred tax relates to the following:
Consolidated balance sheet Consolidated income statement
2021 2020 2021 2020
£m £m £m £m
Acquired intangible assets 3 (1) I - (1)
Tax losses I - I 1 I - 7
Deferred tax (liability) /assets I 5 I -I a I -
Z Z a
Deferred tax income / (expense) I -
In the current year no deferred tax has been recognised (2020: £1 million liability). The 2020 deferred tax liability
was recognised on the acquisition of intangible assets as part of a business combination, with a corresponding
deferred tax asset of £1 million recognised for the value losses up to the same liability.
The Group has significant tax losses which are available indefinitely for offsetting against future taxable profits. As
at the balance sheet date no deferred tax asset has been recognised in relation to these tax losses (2020: nil).
AUK corporation rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020, reversing the
previously enacted reduction in the rate from 19% to 17%. This will increase the Group's future current tax charge
accordingly. The deferred tax asset as at 28 March 2021 has been calculated at 19% (2020: 17%).
The UK Budget on 3 March 2021 included an announcement that the corporation tax rate will increase to 25%
from 1 April 2023 for certain companies and was substantively enacted on 24 May 2021. This will increase the
Group's future tax charge accordingly. Under IAS 12, deferred tax is required to be calculated using rates that have
been substantively enacted at the balance sheet date, hence 19% has continued to be used.
(d) Factors that may affect future tax charges
The Group has unrecognised deferred tax assets of £360 million (2020: £253 million), comprising £350 million
(2020: £218 million) relating to tax losses that are available to offset against future taxable profits, £10 million
(2020: £33 million) relating to fixed asset timings, £nil (2020: £1 million) relating to temporary differences on
provisions, and £nil (2020: £1 million) relating to temporary differences on pension relief.
The Group has rolled over capital gains of £2 million (2020: £2 million); no tax liability would be expected to
crystallise should the assets into which the gains have been rolled be sold at their residual value, as it is anticipated
that a capital loss would arise.
The Finance (No.2) Act 2017 was substantively enacted on 16 November 2017. This includes a restriction on the
utilisation of brought forward tax losses and corporate interest in certain circumstances effective from 1 April 2017.
In the Spring Budget 2021, the Government announced that from 1 Apri! 2023 the corporation tax rate will
increase to 25%. At the balance sheet date, the proposal to increase the main corporation tax rate to 25% had not
been substantively enacted, substantive enactment occurred on 24 May 2021, therefore its effects are not included
in these financial statements. However, it is likely that the overall effect of the change, had it been substantively
enacted by the balance sheet date, would not result in a material change to the tax charge.
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9. Intangible assets
Other
Software. Goodwill intangibles Total
£m £m fm. £m
Cost : :
At 1 April 2019 . 502° ~ 53? “43 568
Additions ; : 64 - - 64
At 30 March 7020 32"
Reclassification A 3)
Additions 3b
Disposals (49).
Adjuistments 03)
At 28 March 2021 I 16325)
‘Accumulated amortisatic :
At 1 April 2019 7 . ; 274 - 3 277
Amortisation . 80 - 1 81
Impairment 10 17 - 27
At 30 March 2020
Amortisation
Impairment
Disposals
Adjustments
‘At 28 March 2021
Net book value
_ At 28 March 2021
“At 29. March 2020
Included within software in the above table are assets under construction of £33 million 020: software of £63 ©
million).
Other intangibles include customer relationships, merchant relationships and brands.
Additions: to software relate. to IT transformation projects undertaken during the current year. These include
capitalised development costs being an internally generated intangible asset.
In the current year, the useful lives of some software intangible assets have been extended whilst others have
been reduced to better reflect expected usage. This change in accounting estimate is within the range of asset
lives stated on pages 84 and 85 and has resulted in a net reduction in amortisation of £15 million.
During the year, the Group revised its accounting policy in relation to configuration, customisation and access costs
incurred in SaaS arrangements, following the IFRS IC.agenda decision in March 2021. The prior year impact of this
change in accounting treatment has been assessed and was found to be immaterial, as such this change has been
accounted for prospectively, resulting in an additional charge of £5 million in the current year income statement in
respect of brought forward intangible assets. The.impact on intangible assets is shown within adjustments in the
above table. ‘
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Goodwill and intangible assets are tested for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable. Management determined that no
impairment was necessary for the current year in relation to software (2020: £10 million) or other intangible assets
(2020: £nil). Management determined that an impairment totalling £8 million (2020: £17 million) was required
during the year in relation to goodwill. In the year, following the impact of the COVID-19 pandemic on trading, it
was deemed prudent to impair the carrying value of the goodwill held in Payzone Bill Payments Limited. The Group
still recognises the value that Payzone brings, through joint contracts, increased footfall and technology sharing
amongst other items. Refer to note 10 for details of impairment reviews performed during the year over cash
generating units.
Amortisation rates are disclosed on pages 84 and 85 within the accounting policies note.
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10. Property, plant and equipment
. “Land aiid buildings ;
a7 Plant. °° Fixtures’
; Long Short. Motor and - and
Freehold leasehold © léasehold * vehicles’. machinery equipment I. Total _
* £m £m £m fm fm fm: . £m
ACL April2019. re a) 1 849 974
“ Additions Cr Sacre Saree! on - oO 15 24
Right-of-use on = 238 a7 re Pa, 63
transition . 7
Right-of-use.additions - = . 1. 1 - 1 . 2
Digposals ” ay en) (35)
Right-of-use disposals en 4 o F 3 - 6)
At 30 March 2020
Reclassification.“
. Additions -
Right-of-use additions.
Disposals :
Right-of-use disposals
“At 28 March 2021
Accumulated depreciation .:
At 1 April 2019.” 28 . 17 219 (24 1 709. ~ 798
Depreciation 2- : e 1.36 40
Right-of-use asset a es “3g a oe . Bk 9
depreciation
Disposals _
“At 30 March 2020
© Reclassification
_ Depreciation
Right-of-usé asset _
‘depreciation
© Right
reversal
f-use impairment
Disposals
Right-of-use disposals
At 28 March 2021 :
Net book value
At 28 March 2021
Rv29 March 2020
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Included within fixtures and equipment in the above table are assets under construction of £4 million (2020: £14
million).
The closing net book value of right-of-use assets by asset class is presented within note 20.
Depreciation rates are disclosed on page 83 within the accounting policies note. No depreciation is provided on
freehold land, which represents £1 million (2020: £2 million) of the total cost of freehold land and buildings as
included in the table above.
During the current year, reviews of property, plant and equipment and intangible assets took place and resulted in
reclassifications between categories to give a more appropriate representation of the nature of the assets.
An impairment test was performed during the year. Intangible assets and property, plant and equipment were
tested for impairment by comparing the carrying amount of each Cash Generating Unit (“CGU") with the
recoverable amount determined from value in use calculations.
Post Office has determined that it has two CGUs: Post Office Limited and Post Office Management Services
Limited. Post Office Management Services Limited is a standalone entity with an identifiable asset base and
therefore is deemed to be one CGU. Post Office Limited runs a national network of branches which provide a
distinct retail offering, resulting in a fluid customer base across the network. As such the network as a whole is
deemed to be one CGU.
The discounted net cash flows from the value in use calculations were used to determine the recoverable amount.
of the CGU's identified, being Post Office Limited and Post Office Management Services Limited. Value in use is
determined using the Group's net cash inflows from the continued use of the assets within each CGU over a four-
year period and then continued into perpetuity, with no nominal growth rate assumed outside of this period. Pre-
tax discount rates for Post Office Limited of 9.3% (2020: 9.3%) and for Post Office Management Services Limited
of 10% (2020: 10%) have been used to discount the forecasted cash flows.
A sensitivity analysis has been performed in assessing the value in use of property, plant and equipment and
intangible assets. This was based on changes in key assumptions considered to be reasonably possible by
management: This included an increase in the discount rate of up to 12% and a reduction in forecasted cashflows
to that of a plausible downside scenario factoring in key cashflow variables. The sensitivity analysis showed that
no impairment would arise under each of these reasonably possible scenarios assessed.
Management therefore believes that any reasonable possible change in the key assumptions would not cause the
carrying amount of any CGUs to exceed their recoverable value.
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11. Investments in joint venture
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The following entity has been included in the consolidated financial statements using the equity method:
Joint venture
During the current and prior year, the Group's only joint venture investment was a 50% interest (1000 £1 ordinary
A shares) in First Rate Exchange Services Holdings Limited, whose principal activity is the provision of foreign
currency exchange services. First Rate Exchange Services Holdings Limited ("FRESH") is a company registered in
the United Kingdom. The registered address of FRESH is Great West House, Great West Road, Brentford,
Middlesex, TW8 9DF.
The principal activity of FRESH is the supply of foreign currency in the UK, which complements the Group's
operations and contributes to achieving the Group's overall strategy. The principal risks of the Group are disclosed
on pages 48 to 50.
The financial year-end date of FRESH is 31 March. For the purposes of applying the equity method of accounting,
the financial statements of FRESH for the year ended 31 March 2021 have been used; this is considered
appropriate given the proximity of this year-end date to the Group's own year-end date of 28 March 2021.
2021 2020
Joint venture Joint venture
£m £m
Share of net assets
Total net investment at 29 March 2020, 31 March 2019 67 66
Share of post-tax pre dividend (loss) / profit (7) 28
Dividend (14) (27)
Total net investment at 28 March 2021, 29 March 2020 a6 e
2021 2020
Share of assets and liabilities: domnvenite Poinkververe
£m £m
Receivables 158 129
Cash and cash equivalents 8 35
Non-current assets 8 8
Share of gross assets 174 172
Current liabilities (128) (105)
Share of net assets 46 67
Share of revenue and profit:
Revenue 7 78
(Loss)/Profit after tax ”) 28
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12. Trade and other receivables
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2020
£m
Current: ©
Trade receivables
Accrued income
Prepayments
Client receivables
Other receivables
88
64
32
78
21
Total
Non-current:
Accrued income
Other assets
Other receivables
283
Total
The Group receives and disburses cash on behalf of Government agencies and other clients to customers through
its branch network. Amounts owed from and to Government agencies-and other clients are disclosed separately
as client receivables (as above) and client payables (see note 14).
£nil (2020: £2 million) has been recognised within current prepayments for costs incurred to fulfil contracts, Non-
current other receivables constitute costs incurred to fulfil contracts, in both the current and prior year.
The Group has recognised £64 million (2020: £nil) in non-current other receivables for Government support in
relation to HSS settlement costs.
The Group applies IFRS 9 when measuring expected credit losses. Trade receivables have been grouped based on
shared credit risk characteristics and the days past due to measure the expected credit losses. The loss allowance
for the current and prior year has been determined as follows: °
28 March 2021
Current,
>30 days
and <60
days past
due
>60 days
and <120
days past
due
>120.days
past due
Expected loss rate - %
Gross carrying amount - £m
Loss allowance - £m
>30 days >60 days
and <60 and <120
days past days past >120 days
29 March 2020 Curent due due past due Total
Expected loss'rate - % 0% 0% 0% 51%
Gross carrying amount - £m 58 10 a 39 108
Loss allowance - £m - - . 20 20
There is a loss allowance in the current, more than 30 days and more than 60 days ageing categories, however it
is immaterial for disclosure.
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The closing loss allowance for trade receivables as at 28 March 2021 reconciles to the opening loss allowance as
follows:
2021 2020
£m £m
Opening loss allowance ” 20 19
Increase in loss allowance 4 6 6
Receivables written off as uncollectible : (2) (4)
Unused amounts reversed . @) (et)
Closing loss allowance 24 20
The fair value of trade and other receivables is not materially different from the carrying value.
13. Cash and cash equivalents
2021 2020
‘£m £m
Cash in the Post Office Limited network 354 449
Short-term bank deposits 2 6 9
Fiduciary cash balances held on behalf of third parties 5 4
Total cash and cash equivalents 365 462
Cash in the Post Office Limited network represents the notes and coins in circulation in branches and cash centres.
Refer to note 23 for further detail.
Where interest is earned, it is at a floating or short-term fixed rate. The fair value of cash and cash equivalents is
not materially different from the carrying value.
The fiduciary cash balances are held within Post Office Management Services Limited and are held on trust on
behalf of third parties and cannot be called upon should either company become insolvent.
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14. Trade and other payables
2021 2020
£m £m
Current:
Trade payables 76 68
Accruals 103 106
Deferred income ‘ 9 16
Social security 8 6
Client payables 288 199
Lease liabilities 12 12
Capital accruals 5 9 1
Total 505 408
Non-current:
Lease liabilities 39 56
Other payables 4 14
Total 43 70
The fair value of trade and other payables is not materially different from the carrying value. Trade payables are
unsecured and usually paid within 30 days of recognition.
15. Financial liabilities — interest bearing loan and borrowings
2021 2020
£m £m
Department for Business, Energy and Industrial Strategy I 426 I 617
The loan under the facility is short dated on a programme of liquidity management and matures one day after the
year-end (2020: one day). The fair value of borrowings approximates their carrying value due to the short-term
maturities of the loan. On maturity it is expected that further loans will be drawn down under this facility. At 28
March 2021 the Group had unused Working Capital Facility of £524 million (2020: £333 million). The Working
Capital Facility was due to expire in 2022 but was extended before the balance sheet date to 2024. In addition,
the Group has a further £50 million facility available from BEIS to provide same-day liquidity. This facility was
undrawn at the year-end. The average interest rate on the drawn down loans is 0.55% (2020: 1.1%).
The facility is currently restricted to funding the cash and near cash items held within the Post Office Limited
network.
The facility (including drawn down loans) is secured by a floating charge over all assets of Post Office Limited
(excluding shares in FRESH and lease of any property which Post Office Limited is a tenant) and a negative pledge
over cash and near cash items. The negative pledge is an agreement not to grant security over the assets or to set
up a vehicle that has the same effect.
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16. Provisions
Network Postmaster
Programmes Property Severance HSS: OHC Remediation Other Total
£m £m £m fm. £m £m £m £m
At 30 March 2020
‘Charged to investments
Charged to trading
Utilisation
Provisions released in’ the
year —investments
Provisions released in the
year - trading
At 28 March 2021
Network Postmaster
“Programmes Property -’--Severance-- ~-» HSS~" “OHC’ “Remediation * Other ~~” Total
At 28 March 2021
Current
Non-current
At 29 March 2020
* Current 6.° 7 10 me Foe BOF BL
Non-current . 2a 23 + 153 - - 1 198
27 . 30 10 153 . ' a’ 9 229
The Network Programmes provision relates to payrnénts due to Postmasters in relation to the major transformation
programme. Provisions are recognised when either Postmasters agree to terminate their existing contracts, sign the
new format contracts or when there is'a legal or constructive obligation under Network Transformation and Post
Office expect a payment to be made.
Property provisions relate to vacant and onerous contracts and dilapidations. Vacant contract provisions are
recognised on leasehold properties when the unavoidable costs. of meeting the obligations of the-contract exceed
the benefits expected to be received under it. The onerous contracts provision is also recognised on occupied
leasehold properties when the unavoidable costs of meeting the contract exceed the--benefits. However, in
accordance with IFRS 16, this only: includes business rates and dilapidations costs.
Severance provisions are recognised far business reorganisation where the plans are sufficiently d detailed and well
advanced and, where appropriate communication to those affected has been undertaken at the balance: sheet date.
Historical Mattérs related provisions of £711 million includes; £150 million (2020: £153 million) related to the
Historical Shortfall Scheme provision which is management's best estimate of future payments to be made to the.
scheme’s claimants, £502 million (2020: £nil) rélated to the Overturned Historical Convictions provision which is
management's best estimate of potential future payments to be made to claimants who may have / have had
- convictions ‘overturned and £59 million (2020: fnil). related to:the Postmaster Remediation provision which is
management's best estimate-of future payments to be made to both Current and former Postmasters who did not
receive remuneration during periods’ of suspension. These provisions are subject to significant management
estimation, see the critical accounting estimates section in note 1 for further details:
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Other provisions of £15 million includes; £11 million for other network related provisions and £4 million which sits
within the subsidiary Post Office Management Services Limited and relates to the repayment of commission
received in the event of the cancellation of insurance policies.
17. Financial assets and liabilities
a. Financial assets and liabilities by category
The breakdown of the Group's financial instruments at 28 March 2021 and 29 March 2020 is shown below:
2021 2020 (restated)**
Non - Non -
Current current Total Current current Total
£m £m £m £m £m £m
Financial assets {
Trade and other receivables* 183 65 248 185 3 188
Cash and cash equivalents 365 - 365 462 - 462
Financial liabilities
Trade and other payables* (488) (43) (531) (330) (56) (386)
BEIS loan (426) - (426) (617) - (617)
Net financial (liabilities)/assets (366) 22 (344) (300) (53) (353)
. * Excluding non-financial assets and liabilities.
** Two restatements were noted when preparing the 2020/21 Annual Report & Accounts in relation to financial assets and liabilities. In the
prior year, trade and other receivables included accrued income, which is not a financial asset. Additionally, the split of lease liabilities in trade
and other payables has been updated. This has resulted in a decrease in financial assets and a revised split of financial liabilities in the prior
year. The affected line items in the table above have been restated to reflect these updates.
With the exception of cash, all of the Group's financial assets and liabilities are carried at amortised cost.
The fair value of the Group's financial assets and liabilities approximate their carrying value due to the short-term
maturities of these instruments. The fair value of financial assets and liabilities is defined as the amount which the
Group would expect to receive upon selling an asset or pay to transfer a liability in a transaction between market
participants at the measurement date.
All of the Group's financial assets and liabilities are considered to be Level 2 in the fair value hierarchy. The nature
of the inputs used in determining the values of the financial assets and liabilities are those 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).
The Group has no Level 1 and Level 3 financial instruments and there have been no transfers between the levels
of fair value hierarchy during the period.
b. Financial risk management objectives and policies
The Group is exposed to a variety of financial risks: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability
of financial markets and aims to minimise potential adverse effects on the Group's financial performance.
Interest rate risk
The Group is exposed to changes in interest rate on floating rate debt, cash deposits, current account balances,
and commission income. Interest rate risk on borrowings is managed through determining the right balance of
fixed and floating debt within the financing structure. In the year, the Group benefited from an interest rate swap,
put in place to protect the interest income received from the POCa cash balance. It should be noted the swap
expired in September 2020, resulting in a loss of £2 million (2020: £1 million) on the cash flow hedge recognised
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in the statement of comprehensive income. The Group is currently benefiting from a lower rate on borrowing, but
continues to review its options for future interest rate risk management.
Foreign currency risk
The Group is exposed to foreign currency risk resulting from balances held to operate foreign currency exchange
services.
The currencies in which these transactions are primarily denominated are US dollar and Euro. The Group's foreign
currency risk management objective is to minimise the impact on the income statement of fluctuations in the
exchange rates. The Group hedges its foreign currency risk principally through external forward foreign currency
contracts to cover near-term future revenues with a number of providers including First Rate Exchange Services
Holdings Limited.
The following table demonstrates the sensitivity of financial instruments to a reasonably possible change in the US
dollar and Euro exchange rates, assuming they are unhedged and with all other variables held constant, on profit
before tax and equity. The underlying holdings in 2020/21 have been significantly lower than previous years due
to the COVID-19 pandemic.
Strengthening Effect on Strengthening Effect on
. , Effect. / (weakening) profit Effect
Hweakenino) prone ‘on equity in euro rate before tax on equity
% £m £m % £m £m
Increase / Increase/ _ Increase / Increase / Increase / Increase /
(Decrease) (Decrease) (Decrease) (Decrease) (Decrease) (Decrease)
2021 10 1 1 10 1 1
(10) (1) (1) (10) (1) (1)
2020 : 10 2 2 10 3 3
(10) (2) (2) (10) (3) (3)
Credit risk ‘
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. Financial credit risk arises from cash balances (including bank deposits and cash and cash
equivalents) held by the Group and business credit risk arises from exposures to customers. Business risk includes
commission receivable and client related settlements for amounts paid out of the Post Office network on its behalf.
The Group aims to minimise its financial credit risk through the application of risk management policies approved
by the Board. Counterparties are limited to major banks and financial institutions. The policy restricts the exposure
to any one counterparty by setting appropriate credit limits. The maximum exposure to credit risk is limited to the
carrying value of each class of asset summarised in note 12.
Business credit risk is monitored centrally. The level of bad debt provision is 2% (2020: 2%) of revenue.
Capital management
The Group's objectives when managing capital (defined as the net of borrowings and cash and cash equivalents
excluding cash in the Post Office network) are to safeguard its ability to continue as a going concern and to
maintain an optimal capital structure in order to support the business and maximise stakeholder value. In managing
the Group's capital levels the Board and the Group Executive regularly monitor the level of debt in the Group, the
working capital requirements and the forecast cash flows. The Board and Group Executive plan accordingly
following this review process in order to meet the Group's capital management objectives.
Liquidity risk
The Group’s primary objective is to ensure that the Group has sufficient funds available to meet its financial
obligations as they fall due. This is achieved by aligning short-term investments and borrowing facilities with
forecast cash flows. Typical short-term investments include short-term bank deposits with approved
counterparties. Borrowing facilities are regularly reviewed to ensure continuity of funding.
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The Group has adequate cash reserves to meet operating requirements for at least the next 12 months. See going
concern disclosures in note 1 for more detail.
At 28 March 2021 the Group has unused facility of £524 million (2020: £333 million). The working.capital facility
was due to expire in 2022 but was extended before the balance sheet date to 2024. .
In addition to the security interest provided to BEIS.in connection with the £950 million Working Capital Facility
(note 15), Post Office Limited has also created a first floating charge over its assets as’security for the payment *
and discharge of certain liabilities arising in the normal course of its client-related activity. al at the balance sheet
date the outstanding liabilities amounted to £32 million (2020: £32 million).
The tables below analyses the Group's financial assets and liabilities into relevant maturity groupings based on the
remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table
are the contractual undiscounted cash flows and include interest, where applicable. Balances due within 12 months
equal their carrying balances as the impact of discounting is'not significant. &
Less than 1 Between
At 28 March 2021 °
year 1-Syears Over 5 years Total
Financial assets
Trade and other receivables*
Cash and cash equivalents
Financial liabilities
Trade and other payabies*
Interest bearing loan
Net financial (liabilities) / assets”
Less than Between
, At 29'March 2020 (restated)**
lyear 1-5 years Over 5 years Total
£m £m £m t £m
Financial ‘Assets
Trade and other receivables* . 185 EB - : 188
Cash and cash equivalents . " 462 Fa : 462
Financial Liabilities .
Trade and other payables*." (330) (29) (312) (671)
Interest bearing loan : (617) soe - ; " (617)
Total financial (liabilities) (300) (26) (312) (638)
* Excluding non-financial assets and liabilities.
++ A restatement was:identified when preparing the 2020/21 Annual Report & Accounts in relation to financial assets and liabilities. In the
prior year, trade and other receivables included accrued income, which is not a financial asset. Additionally, the split of lease liabilities in
trade and other payables has been updated to show the correct split and the effect of undiscounted cash flows. In the prior year, the figures"
in the table reflected the discounted valué of lease liabilities. The affected line items in the table above have been restated to reflect these
updates. - .
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18. Retirement benefit surplus
Disclosures in this note reflect the following pension schemes in which Post Office participates:
Name - I Eligibility Type
Post Office Pension Plan ("POPP") UK employees Defined contribution
Royal Mail Pension Plan (“"RMPP")* UK employees Defined benefit
Royal Mail Senior Executives Pension Plan ("RMSEPP") UK Senior Executives Defined benefit
* The RMPP closed to future accrual on 31 March 2017.
Defined Contribution
The charge in the income statement for the defined contribution scheme (“POPP”) was £11 million (2020: £12
million) and the Group contributions to this scheme were £18 million (2020: £19 million) during the year.
Defined Benefit
There are two defined benefit schemes in which Post Office participates:
* the Post Office section of the Royal Mail Pension Plan (“RMPP") which is independent from the Royal
Mail section of the RMPP, and
* a7% share of the Royal Mail Senior Executives Pension Plan (“RMSEPP"). Royal Mail Group Ltd is the
principal employer of RMSEPP and Post Office Limited became a participating employer with effect
from 1 April 2012.
A series of changes to RMPP and RMSEPP have taken effect since July 2017.
The changes include the following:
¢ On 21 March 2017 Post Office executed a Memorandum of Understanding with the Trustee of the
RMPP. This clarified the Trustee's powers to distribute surplus without Post Office's agreement and
Post Office concluded that it no longer had an unconditional right to refund from the Plan. In light of
this, in accordance with IFRIC 14, the RMPP pension surplus was derecognised as at 26 March 2017.
* On 20 July 2017, the Trustee of the RMPP entered into two bulk annuity contracts with Rothesay Life
Plc. These contracts are assets of the Post Office Section of the RMPP that provide incomes closely
matching the benefit payments from the Plan. The largest of the two contracts is in respect of
crystallised benefits and benefits accrued after 31 March 2012. The smaller of the two contracts is in
respect of pre-April 2012 for members in Post Office employment at the time of the bulk annuity
purchase. The bulk annuities cover the vast majority of the Plan benefits, although uninsured liabilities
and costs may arise in relation to increases to the pre-April 2012 benefits arising as a result of certain
salary increases in excess of RPI inflation, deflation risk in relation to Section C members (while they
remain in Post Office employment, the pre-April 2008 gross benefit revalues with RPI on a year-by-
year basis, but revaluation of the deductible is based on cumulative RPI inflation to the date of leaving
service), and operational expenses.
« As noted in the prior year annual report, in January 2020 the Trustee of the Plan wrote to members to
inform them that it intends to convert the larger of the two policies into individual policies outside of
the Plan. This means that each member of the Plan will hold a policy in their own name and the benefits
under those policies will no longer be liabilities of the Plan. The Trustee is continuing to work with
Rothesay Life to implement the transfer to individual policies. To facilitate the transfer into individual
annuity policies the Trustee is continuing to implement a data cleanse exercise, which will result in some
adjustments to individual member benefits. To the extent that the adjustments are known, they have
been reflected in the defined benefit obligation shown in these accounts.
The disclosures in this note show the value of the assets and liabilities that have been calculated at the balance
sheet date.
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Both RMPP and RMSEPP are funded by the payment of contributions to separate Trust administered funds. It
should be noted that the assumptions used for these pension disclosures are not the same as the assumptions
used for funding the plans.
The latest full actuarial funding valuation of the RMPP was carried out as at 31 March 2018 using the projected
unit method, concluding at a £24 million surplus on a Technical Provisions basis. Valuations are carried out
triennially.
RMPP includes sections A, B and C each with different terms and conditions:
* Section A is for members (or beneficiaries of members) who joined before 1 December 1971.
* Section B is for members (or beneficiaries of members) who joined after 1 December 1971 and before
1 April 1987 or to Section A members who chose to receive Section B benefits.
* Section C is for members (or beneficiaries of members) who joined after 1 April 1987 and before 1 April
2008.
The latest full actuarial funding valuation for RMSEPP was carried out as at 31 March 2018 using the projected
unit method. For 100% of RMSEPP, the valuation concluded at £49 million surplus (31 March 2015 valuation:
£17 million surplus) on a Technical Provisions basis.
Even though RMSEPP had a funding surplus on a Technical Provisions basis at the date of the latest full
actuarial funding valuation, under the associated Schedule of Contributions, payments of £1 million per annum
has been made. Post Office’s share of these payments is 7% of the total. The payments will continue to 31
March 2025.
The weighted average duration of the Post Office section of the RMPP is around 25 years, and for RMSEPP it
is around 20 years.
The two bulk annuity policies with Rothesay Life provide an income to the Post Office section of the RMPP that
matches the vast majority of the required benefit payments; as shown in the following disclosures, the
estimated value of those policies (on the IAS 19 assumptions as at 28 March 2021) is £332 million (2020: £278
million), compared to the RMPP defined benefit obligation of £343 million (2020: £286 million). The £11 million
difference in these figures is due to small differences between the insured benefits and the actual benefit
obligation.
A bulk annuity policy (with Scottish Widows) is also held by the Trustee of the RMSEPP. As shown in the
following disclosures, the estimated value of that policy, on the IAS 19 assumptions as at 28 March 2021, is
£29 million (2020: £25 million), compared to the RMSEPP defined benefit obligation of £29 million (2020: £25
million).
Therefore, as at 28 March 2021, 97% of the aggregate defined benefit obligation (i.e. £361 million out of the
£372 million) is matched by bulk annuities that provide income matching the required benefit payments. As
such, the majority of the investment and longevity risk associated with Post Office's obligations in respect of
the defined benefit plans has been removed (noting that the bulk annuity policies are subject to protection from
insurance regulations, including access to the Financial Services Compensation Scheme, in the event of insurer
insolvency). Nevertheless, to the extent that 3% of the defined benefit obligation is not matched by bulk
annuities, some risk remains in respect of that 3%, in particular the risk that members with uninsured benefits
live for longer than expected, the risk that inflation is higher than expected, leading to higher than expected
increases to the uninsured benefits, the risk that the assets in excess of the bulk annuity polices generate poor
investment returns, and the risk that administration expenses are higher than anticipated. However, these risks
are expected to be mitigated by the surplus assets shown in the disclosures (before allowing for the fact that
the RMPP surplus is not recognised on Post Office's balance sheet due to the Memorandum of Understanding
described above).
The following disclosures relate to the losses/gains and deficit/surplus in respect of Post Office's obligations to
RMPP and RMSEPP:
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a) Major long-term assumptions
The size of the defined benefit obligation shown in the financial statements is materially sensitive to the
assumptions adopted. Small changes in these assumptions could have a significant impact on this value. The
overall income statement charge and past service adjustment in the income statement are also sensitive to the
assumptions adopted. However, the majority of any change in the defined benefit obligation due to changes in
assumptions, will be matched by a corresponding change in the value in the bulk annuity policies (described
above).
The major long-term assumptions in relation to both RMPP and RMSEPP were:
At 28 March 2021 At 29 March 2020
% pa % pa
” " 3.4 28
Increases to benefits that retain a link to pensionable pay
Rate of pension increases - RMPP sections A/B 24 21
Rate of pension increases — RMPP section C 3.4 2.8
Rate of pensions increases - RMSEPP members transferred
2.4 21
from Section A or B of RMPP-
Rate of pension increases - RMSEPP all other members 3.4 28
Rate of increase for deferred pensions 24 21
Discount rate 2.0 2.2
Inflation assumption (RPI) - RMPP & RMSEPP 3.4 28
Inflation assumption (CPI) - RMPP & RMSEPP 24 2.1
The following table shows the potential impact on the value of Post Office's defined benefit obligation in respect
of RMPP and RMSEPP of changes in key assumptions. As noted above, the bulk annuities held by the
arrangements provide an income that matches the vast majority of the RMPP benefit payments, and a
significant proportion of the RMSEPP benefit payments. Therefore the following changes in the defined benefit
obligation would be largely offset by a corresponding change in the asset values.
2021 2020
£m £m
Changes in RPI and CPI inflation of +0.1% pa (8) (7)
Changes in discount rate of +0.1% pa 8 7
Changes in CPI assumptions of +0.1% pa 5 4
An additional one year life expectancy 13 iL
The sensitivity analysis has been prepared using projected benefit cash flows as at the latest full actuarial
valuation of the plan. The same method was applied as at the previous reporting date. The accuracy of this
method is limited by the extent to which the profiles of the plan cash flows have changed since those valuations
although any change is not expected to be material in the context of the above sensitivity analysis.
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Mortality: The mortality assumptions used to calculate the value of Post Office’s defined benefit obligation in
respect of RMPP.and RMSEPP are based on the latest self-administered pension scheme (SAPS “S2" series)
mortality tables as shown in the following table:
Base moitality tables
Male members
Male dependants
Female members
Female dependants
Future improvements
2021 2020
Sa 100% x S2PMA
100% x S2PMA .
100% x S2PFA
100% x S2DFA
CMI 2019 Core
Projections with a 1.5%
pa long-term trend
‘Average expected life expectancy from age 60
2020
For a current 60 year old male RMPP member
For a current 60 year.old female RMPP member
For a current 40 year-old-male RMPP member.
For a current 40 year old female RMPP member
27 years.
29 years
29. years
31 years
b) Plans’ assets
._. The assets in the plans for the Group were:
Sectionalised RMPP. Market value 2021 Market value 2020
£m
Equities -
Private Equity 4
Cash and cash equivalents 40
Bond/index-linked funds 10
Other loan/debt funds 16
Alternative asset funds 1
Bulk annuity policies* 278
Fair value of RMPP assets 349°
Present value of RMPP liabilities (286)
Surplus in plan before asset ceiling adjustment 63
Less effect of asset ceiling (63)
Surplus in plan after asset ceiling adjustment
* As described above, the Post Office section of the RMPP holds two bulk annuity policies with’ Rothesay Life Pic. The value ascribed to
the policies has been calculated using the same assumptions as used to calculate the present value of the defined benefit obligation.
Market value 2021
7% Share of RMSEPP. Market value 2020
» £m
Property 1
Cash and cash equivalents -
Bulk annuity policy* _- 25
Fair Value of share in plan assets for RMSEPP. 26
Présent valuie of share in’plan liabilities for RMSEPP (25)
Surplus in plan for the share of RMSEPP before tax 1
Tax effect : -
1
Surplus in plan for share of RMSEPP after tax
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* RMSEPP holds a bulk annuity policy with Scottish Widows. The value ascribed to this policy has been calculated using the same
assumptions as used to calculate the present value of the defined benefit obligation. . .
As described above, no surplus is recognised for RMPP because the Group no longer has an unconditional right
to refund from the Plan. A retirement benefit surplus of £1 million is disclosed on the balance sheet, representing
the surplus in the RMSEPP only. «I
There is no element of the above present value of liabilities that arises from plans that are wholly unfunded.
With the exception of the bulk annuity policy described above, private equity and other loan/debt funds, all
other RMPP and RMSEPP assets are securities with a quoted price in an active market.
c) Movement in plans’ assets and liabilities
Changes in the fair value of the plans’ assets are analysed as follows:
RMPP Assets” Sectionalised
RMPP'2020
£m
“Assets in sectionalised RMPP at beginning of period 362
Contributions paid -
Finance income 7
Actuarial gains/(losses) _ (14) -
Benefits paid to members (5)
Administrative expenses (1)
Assets in sectionalised RMPP at end of period 349
RMSEPP Assets Share of RMSEPP
° 2020
£m
Share of assets in RMSEPP at beginning of period 29.
Contributions paid -
Finance income 1
‘Actuarial gains/(losses) (2)
Benefits paid to members (2)
Share of assets in RMSEPP at end of period 26
Changes in the present value of the defined benefit pension obligations are analysed as follows:
RMPP Liabilities Sectionalised
a : RMPP
. . 2020£m
Liabilities in sectionalised RMPP at beginning of period (300)
Past service cost -
Finance cost (7)
Experience adjustments on liabilities 2
Financial assumption changes 17
Demographic assumption changes (3)
Benefits paid 5
Liabilities in sectionalised RMPP at-end of period (286) :
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Share of
RMSEPP 2020
£m
ies in RMSEPP plans at beginning of period (29)
Finance cost (1)
Experience adjustments on liabilities -
Financial assumption changes 1
Demographic assumption changes 1
Beriefits paid 3
Share of liat in RMSEPP at end of period (25)
d) Recognised charges
An analysis of the separate components of the amounts recognised in the performance statements of the Group
is as follows:
Sectionalised Sectionalised
. ~ - RMPP RMPP
RMPR) 2021 2020
: £m
Analysis of amounts recognised in the income statement
Analysis of armiounts charged to investments: °
Administration expenses incurred 1.
Loss due to curtailments :
Total charge to operating profit 1
Analysis of amounts charged/(credited) to net pensions interest:
Interest on plan liabilities 7
Interest income on plan assets (7)
‘Net pensions credit to financing :
Net charge to the income statement 1
Analysis of amounts recognised in the statement of
comprehensive incomé
Actual return/(loss) on plan assets (7)
Less: expected.interest income on plan assets (7)
Actuarial gains/(losses)‘on assets (all experience adjustments) (14)
Actuarial gain/(losses) arising from changés in demographic assumptions (3)
Actuarial (losses)/gains arising from changes in financial assumptions 17
. Actuarial.gains arising from experience adjustment 2
Actuarial (losses)/gains on liabilities a 16
Effect of the asset ceiling ; @)
Total actuarial gains recognised in the statement of ;
comprehensive income
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d) Recognised charges (continued)
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* Share of RMSEPP. ‘Share of RMSEPP
RMSEPP 2021 2020
. £m
Analysis of amounts recognised in the incomé statement
Analysis of amounts charged/(credited) to net pensions interest:
Interest on plan liabilities 1
Interest income on plan assets (1)
‘Net pensions credit to financing .
Net charge to the income statement before deduction for tax -
Analysis of amounts recognised in the statement of
comprehensive income
Actual return on planassets (1)
Less: éxpected interest income on plan assets (1)
‘Actuarial losses on assets (all experience adjustments) 2)
Actuatial losses arising from changes in demographic assumptions “4
Actuarial losses arising from changes in financial assumptions 1
Actuarial losses on liabilities 2
Total actuarial losses recognised in the statement of
comprehensive income before tax effect
Tax effect
Total actuarial losses recognised in the statement of
comprehensive income after tax effect
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19. Equity
Share capital
2021 2020
£ £
Authorised ;
Ordinary shares of £1 each 51,000 51,000
Total I 51,000 51,000
Allotted and issued and fully paid
Ordinary shares of £1 each 50,003 50,003
Total I 50,003 50,003
Share premium
On 7 August 2007 one ordinary share of £1 was issued in return for £313 million cash paid by the Secretary of State
for Business, Enterprise and Regulatory Reform (now known as BEIS). A share premium of £313 million resulted
from this subscription. In April 2008 two ordinary £1 shares were issued in return for £152 million cash paid by the
Secretary of State for Business, Energy and Industrial Strategy. A share premium of £152 million resulted from this
subscription.
Other reserves
Other reserves of £2 million (2020: £2 million) relates to First Rate Exchange Services Holdings Limited, the joint
venture entity, and fnil (2020: £2 million) relates to a cash flow hedge.
20. Commitments and contingent liabilities
Capital commitments contracted for but not yet provided in the financial statements amount to £2 million (2020: £6
million).
Leases
Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
2021 2020
Right-of-use assets £m £m
Short leasehold buildings 22 28
Long leasehold buildings 15 19
Equipment - 1
Vehicles 1 2
Total 38 50
Right-of-use assets in the table above are recognised within property, plant and equipment in the balance sheet
and included in the relevant asset class in the property, plant & equipment note (see note 10).
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wn 2021 2020
Lease liabilities
£m £m
Current I 12 I 12
Non-current i 39 I 56
Total I 51 I 68
Additions to right-of-use assets during the 2020/21 financial year were £9 million (2020: £2 million) and
disposals were £14 million (2020: £6 million).
Amounts recognised in the Consolidated Income Statement
The Consolidated Income Statement shows the following amounts relating to leases:
2021 2020
Depreciation charge of right-of-use assets £m £m
Short leasehold buildings 9 8
Vehicles 1 1
Total I 10 I 9
Interest expense (included in finance cost) I 2 I 2
The total cash outflow for leases in 2020/21 was £14 million (2020: £15 million).
Income from sub-leased right-of-use assets was £3 million (2020: £2 million) in the year and has been recognised
as a credit to costs.
Contingent liabilities -
In previous years a contingent liability was disclosed in relation to the Employment Tribunal claim issued on behalf
of a number of Postmasters against Post Office on 14 June 2018, in which they sought to establish that they are
"workers" of Post Office. The matter, originally listed to be heard in June 2021, has now been heard over 4 weeks
at a trial which commenced on 1 February 2022. The parties have been through an extensive case management
process, which involved identifying a small group of 10 “sample cases” whose cases were examined at the trial.
On 14 March 2022 Post Office successfully defended the Employment Tribunal on all counts, resulting in the
likelihood of a possible obligation arising from past events in relation to this matter being considered remote. As
such, no contingent liability is disclosed for 2020/21.
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21. Discontinued Operations
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In March 2021 the Group sold its Telecoms operation and this is reported in the current year as a discontinued
operation. The results of this operation are disclosed below for the period to the date of disposal (2021 column) and
the year ended 29 March 2020.
2021 2020
£m £m
Revenue 142 144
Other operating costs (125) (121)
Depreciation () @)
Operating profit before investment expenditure ii 20
Operating investment expenditure © @
Operating profit after investment expenditure 5 14
Taxation F : =
Profit on disposal of discontinued operation 53 _
Profit for the year from discontinued operation 58 14
Net cash inflow from operating activities 8 18
Net cash inflow/(outflow) from investing activities 57 @)
Net cash inflow/(outflow) from financing activities - -
65 10
Net increase in cash generated by discontinued operations
As at the date of sale, the carrying value of assets totalled £27 million, consisting of fixed assets of £8 million, trade
receivables of £8 million, prepayments of £8 million and other assets of £3 million. The carrying value of liabilities as
at the date of sale totalled £21 million, consisting of accruals of £8 million, deferred income of £9 million and other
liabilities of £4 million. The consideration received in respect of the sale was £65 million. The profit on disposal, after
deduction of costs of £6 million, was £53 million.
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22. Related party disclosures
Joint venture
The following Company is a joint venture of the Group:
Company Country of incorporation % Holding Principal activities
irk ee Mews Sear United Kingdom 50 Foreign currency exchange
Holdings Limited
All shareholdings are equity shares. Summarised financial information for the joint venture is included in note 11.
Related party transactions
During the year the Group entered into transactions with the following related parties. The transactions were in the
ordinary course of business. The transactions entered into and the balances outstanding at the financial year-end
were as follows:
Sales / recharges to Purchases / Amounts owed from Amounts owed to
related recharges from related party including related party including
party related party outstanding loans outstanding loans
2021 2020 2021 2020 2021 2020 2021 2020
£m £m £m £m £m £m £m £m
First Rate Exchange
Services Holdings
Limited 23 36 24 105 1 3 sal -
The sales to and purchases from related parties are made at normal market prices. Balances outstanding at the year- _
end are unsecured, interest free and settlement is made by cash. First Rate Exchange Services Holdings Limited is
a joint venture of the Group.
The Group trades with numerous Government (UK Government) bodies on an arm's length basis, such as the DWP,
the DVLA and the Home Office. The Group takes the exemption available to Government controlled entities not to
disclose transactions with other entities controlled by Government, or where Government has significant influence
over that entity.
Separately, the Group discloses significant transactions with Government related entities:
The Group has certain loan facilities of £1,000 million (2020: £1,000 million) with Government (page 74). This is
made up of the £950 million (2020: £950 million) working capital facility and the £50 million (2020: £50 million)
same day facility.
. The Group has received funding for exceptional items from Government of £64 million (2020: 42 million), all
of which was recognised through the income statement and shown in note 4.
. The Group has received the Network Subsidy Payment of £50 million (2020: £50 million) from Government
(page 74).
Key management personnel comprises the Executive and Non-Executive Directors of the Post Office Limited Board
at 28 March 2021. The remuneration of the key management personnel of the Post Office Group is disclosed in the
Remuneration Committee Chairman's Statement on pages 37 to 40.
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23. Membership of the Bank of England’s Note Circulation Scheme
Post Office Limited is a member of the Bank of England ("BOE") Note Circulation Scheme ("NCS") which governs
the custody of BOE notes that are not in issue. The NCS promotes efficiency in the distribution and processing of
notes by allowing approved commercial organisations engaged in the wholesale.distribution and processing of
cash, such as the Post Office Limited, to hold notes owned by the BOE.
The continued participation in the NCS ensures that Post Office Limited has an adequate supply of notes to meet
customer demand across its network. .
The NCS mechanisms that enable Post Office Limited to hold Bank of England owned notes comprise of two
elements:
Bond Facility Cash ("Bond") - this is cash that is permanently owned by the BOE and is stored in secure vaults at
Post Office Limited cash centres, physically separate from other cash. Post Office Limited buys cash from and sells
cash to the Bond.
Note Recirculation Facility Cash ("NRF") - this is cash that is held securely, either in Post Office NCS cash centres
or in the branch network and that is sold to the BOE at the end of each day with a commitment from Post Office
Limited to buy it back the next morning. In order to sell notes in this way to the BOE, Post Office Limited must
ensure that gilts are lodged each night as collateral. Post Office Limited's ability to sell notes to the BOE under the
NRF is constrained by:
a) The amount of eligible notes available for sale.
b) The collateral available.
¢) An annual limit imposed by the BOE dependent upon the volume of notes sorted and issued from Post Office
cash centres.
During the year, BOE relaxed one of its rules over the use of the NRF. The change allows Post Office Limited to
over-borrow against the annual limit historically imposed but retains the daily facility limit. The impact is that Post
Office Limited can borrow more against NRF and reduce borrowings on the working capital facility. BOE confirmed
that at least six months’ notice would be given before this amendment is reversed or revised.
In order to support its participation in the NCS, Post Office Limited has bank facilities of up to £400 million in place
("Facilities"), comprising:
a) An overnight collateral facility.
b) An intra-day overdraft facility.
The Facilities may be cancelled by the lender with 60 days’ notice.
As at 28 March 2021 £240 million (2020: £276 million) of NRF was held in this way and has not been recognised
in the balance sheet.
Post Office also had an arrangement in Scotland with a commercial banking partner whereby surplus Scottish
notes were sold to the partner overnight for repurchase the next day. This arrangement came to an end in
December 2020 and therefore £nil was outstanding at the balance sheet date (2020: £11 million).
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24. Alternative performance measures
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An alternative performance measure is a financial measure of historical or future financial performance, position or
cash flows of the Group which is not a measure defined or specified in IFRS.
Trading profit
* Trading profit is one of the Group's key financial measures as it shows the underlying performance of the Group.
It is calculated by taking operating loss before depreciation, amortisation, impairment, exceptional items,
investments, Network Subsidy Payment and profit on disposal of discontinued operations. The table below
summarises the calculation of operating loss before exceptional items, trading profit including Network Subsidy
Payment and trading profit.
2021 2020
£m £m
Operating loss in respect of continuing operations (649) (316)
Operating profit in respect of discontinued operation 5 14
Adjusted for:
Exceptional items (note 4) 626 232
Funding for exceptional items (note 4) (64) -
Operating loss before exceptional items I ; (82) (70)
Depreciation and amortisation (notes 9 and 10) 124 130
Investments (excluding interest) (notes 5 and 21) 43 76
Trading profit including Network Subsidy Payment (EBITDA) I 85 { 136
Network Subsidy Payment (60) I (50)
Trading profit (EBITDAS) I 35 I 86
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25. Cash flow information
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The consolidated statement of cash flows starts at a non-statutory measure, being operating loss (before
exceptional items and investments) The table below reconciles loss for the financial year to operating loss
(before exceptional items and investments).
2020
£m
Loss for the financial year (305)
Profit on disposal of the Telécoms operation -
Investment spend - continuing operations 85
Investment spend ~ discontinued operation 6
Impairment of intangible assets 27
Investment funding (42)
Exceptional items 232
Funding for exceptional items :
Finance costs iL,
Taxation credit (8)
Operating (loss)/profit (before exceptional items and investments) 6.
Net debt
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
30 March Cush how Other non- 28 March -
2020 cash changes 2021
£m £m £m £m
Cash and cash equivalents 46: Rae GO en ee
Borrowings
Lease liabilities
1 April Other noni- 29 March
2019 Cash flow cash changes 20202.
£m £m £m . £m
Cash and cash equivalents 572 (110) = 462
Borrowings (565) (52) - (617)
15 - (68)
Lease liabilities . (83)
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26. Post balance sheet events
The Directors would like to draw attention to five post balance sheet event items:
2021/22 funding
In accordance with the 2021/22 funding agreement with Government, Post Office Limited received Network
Subsidy Payments totalling £50 million in the period from 29 March 2021 to the date of this report. In total £50
million of Network Subsidy Payments was received during 2021/22.
On 1 April 2021 one ordinary share of £1 was issued in return for £61 million cash paid by the Secretary of
State for Business, Energy and Industrial Strategy. A share premium of £61 million resulted from this
subscription.
On 9 March 2022 one ordinary £1 share was issued in return for £64 million cash paid by the Secretary of State
for Business, Eneray and Industrial Strategy. A share premium of £64 million resulted from this subscription.
On 1 April 2021 Post Office Limited received a £52 million loan. Quarterly principal repayments of £1.75 million
are scheduled from the 2023/24 financial year, with a bullet payment of £25.75 million due in March 2027.
Interest of 0.65% per quarter is charged on the loan.
2022/23 to 2024/25 funding
On 21 April 2022 Post Office signed a funding agreement with Government for the period 2022/23 through to
2024/25. As part of this agreement BEIS will provide to Post Office £150 million in Network Subsidy Payments
and £185 million in investment funding, to be received as a grant, over the three year period.
Overturned Historical Convictions
It was announced on 22 July 2021 that Postmasters who have had “Horizon-related” convictions overturned
could apply to Post Office for an interim compensation payment of up to £100,000, providing certain basic
criteria were met. To date, Post Office has received 69 applications for interim compensation and has paid
interim compensation to 66 Postmasters totalling £6.6 million. Further cases will be reviewed following receipt
of application forms.
In July 2021 BEIS confirmed their commitment to fund interim payments for all potential claims received. In
November 2021 BEIS agreed to provide funding to Post Office to ensure that settlement payments can be
made for overturned convictions. Funding levels are based on current expectations of the potential cost.
Recognition of payments made and the associated funding received by Government will be recognised in
2021/22 and beyond, in line with accounting standards.
Additional compensation for GLO claimants
In March 2022 the Government announced its intention to provide additional compensation payments to the
individual claimants that formed the GLO. In 2019/20 Post Office agreed and subsequently paid a full and final
settlement with the GLO claimants, thus extinguishing any liabilities which Post Office had in respect of the
GLO. It is clear that Post Office will not be asked to fund this additional compensation. Government's
announcement therefore does not create a liability for Post.Office. However, there remains some uncertainty
around what role Post Office may play in the process for providing compensation and to what extent this will
impact our future cashflows. Further details are included in the going concern note on pages 72 to 76.
Employment tribunal claim
In previous years a contingent liability was disclosed in relation to the Employment Tribunal claim issued on
behalf of a number of Postmasters against Post Office on 14 June 2018 in which they sought to establish that
they are "workers" of Post Office. The matter, originally listed to be heard in June 2021, has now been heard
over 4 weeks at a trial which commenced on 1 February 2022. The parties have been through an extensive
case management process, which involved identifying a small group of 10 “sample cases” whose cases were
examined at the trial. On 14 March 2022 Post Office successfully defended the Employment Tribunal on all
counts, resulting in the likelihood of a possible obligation arising from past events in relation to this matter now
being considered remote. As such, no contingent liability is disclosed for 2020/21.
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27. Ultimate controlling party
The Secretary of State for BEIS holds a special share in Post Office Limited and the rights attached to that
special share are enshrined within Post Office Limited Articles of Association. BEIS, through UK Government
Investments Limited (“UKGI"), has no day to day involvement in the operations of Post Office Limited or in the
management of its branch network and staff. As such, at 28 March 2021, the Directors regarded Post Office
Limited as the immediate and ultimate parent Company. BEIS is the ultimate controlling party.
The smallest and largest Group to consolidate the results of the Company is Post Office Limited, a company
registered in the United Kingdom. Post Office Limited financial statements can be obtained from Finsbury Dials,
20 Finsbury Street, EC2Y 9AQ.
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Post Office Limited
Company Financial
Statements
2020/21
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Company balance sheet
at 28 March 2021 and 29 March 2020
2021 2020
Note £m £m
Non-current assets
Intangible assets 3 137 181
Property, plant and equipment 4 146 195
Investment in subsidiaries 5 48 62
Investments in joint venture 6 46 67
Retirement benefit surplus 12 1 1
Trade and other receivables 7 69 3
Total non-current assets 447 509
Current assets
Inventories 2 1
Trade and other receivables 7 274 279
Cash and cash equivalents 8 352 449
Total current assets 628 729
Total assets 1,075 1,238
Current liabilities
Trade and other payables 9 (490) (392)
Financial liabilities - interest bearing loans and borrowings 10 (426) (617)
Provisions : 11 (50) (29)
Total current liabilities (966) (1,038)
Non-current liabilities
Other payables 9 (42) (69)
Provisions 11 (724) (197)
Total non-current liabilities (766) (266)
Net liabilities (657) (66)
Equity :
Share capital 13 7 -
Share premium 13 465 465
Accumulated losses (1,124) (535)
Other reserves 13 2 4
Total equity (657) (66)
The notes on pages 124 to 135 form an integral part of the financial statements. The result dealt with in the
financial statements of the Company amounted to a loss after tax of £647 million (2020: £319 million) in
respect of the continuing operations and a profit after tax of £58 million (2020: £14 million) in respect of the
discontinued operations. The financial statements on pages 122 to 135 were approved by the Board of
Q
ys]
[e)
N Read
Chief Executive Officer
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Company statement of changes in equity
for the 52 weeks ended 28 March 2021 and 52 weeks ended 29 March 2020
Share Share Accumulated Other Total
Capital Premium losses reserves equity ~
Notes £m £m £m £m £m
At 30 March 2020 - 465 (535) 4 (66)
Loss for the year ne : (589) - (589)
Loss on cash flow hedges 2 : : Q) (2)
At 28 March 2021 : 465 (1,124) 2 (657)
Share Share Accumulated Other Total
capital Premium losses _ reserves equity
Notes £m £m £m £m £m
At 1 April 2019 - 465 (236) 5 234
Changes in accounting standards : : 4 : 4
Restated at 1 April 2019 - 465 (232) 5 238
Loss for the year - - (304) - (304)
Loss on cash flow hedges - - - fe) (1)
Re-measurements on defined - . - 1 - 1
At 29 March 2020 : 465 (535) 4 (66)
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Notes to the financial statements
1. Accounting Policies
The accounting policies which follow, set out those which apply in preparing the Company financial statements
for the 52 week period ended 28 March 2021. .
Financial year
The financial year ends on the last Sunday in March and accordingly, these financial statements are made up to
the 52 weeks ended 28 March 2021 (2020: 52 weeks ended 29 March 2020).
Authorisation of financial statements
The parent Company financial statements of Post Office Limited (the “Company”) for the year ended 28 March
2021 were authorised for issue by the Board of Directors on 29 April 2022 and the balance sheet was signed on
the Board's behalf by N Read. Post Office Limited is a company limited by share capital, incorporated and domiciled
in England and Wales. The address of the registered office is given on page 136.
Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS” 101). These financial statements are prepared under the historical cost convention.
The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
As permitted by Section 408 of the Companies Act 2006 Post Office Limited has not presented its own income
statement.
The results of Post Office Limited are included in the consolidated financial statements of Post Office Limited which
are available from Companies House.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a) The requirements of IFRS 7 ‘Financial Instruments: Disclosures’,
(b) The requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement,
(c) The requirements of paragraphs 10(d), 10(f), 39(c), 40.A and 134-136 of IAS 1 ‘Presentation of Financial
Statements’,
(d) The requirements of IAS 7 ‘Statement of Cash Flow's,
The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes in Accounting
Estimates and Errors’,
(e]
(f) The requirements of paragraph 17 of IAS 24 ‘Related Party Disclosures’, and
The requirements of 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
iC)
~ is wholly owned by such a member.
Basis of preparation — going concern
After careful consideration of the plans for the coming years, factoring in the impact of the COVID-19 pandemic
and the support of Government, we are satisfied that the Company (being Post Office Limited) will be able to meet
its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial
statements. In assessing the going concern position, the Board has considered the Company's financial forecasts
for the 15 months to 31 July 2023.
In recent years, the Company has become profitable at a trading level. However, trading profit peaked in 2019/20
and has fallen by over 50% in the subsequent years. This is due to the ongoing impact of the COVID-19 pandemic,
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notably on the travel business, rising inflationary pressures on the costs of both the Company and Postmasters
and the removal of the trading profit contribution of the Telecoms business following its sale in 2020/21.
The Government has been providing investment funding, subsidy payments and working capital facilities. Such
funding was steadily declining as the business improved its profitability. It is now of increasing importance again,
partly because of the reduced profitability described above and partly because the Company must fund the very
considerable costs of supporting and enabling compensation and legal justice for wronged Postmasters and Sir
Wyn William's Statutory Inquiry. In addition, the business needs to make ongoing investments, notably replacing
the Horizon EPOS system. As set out below, compensation for Postmasters is mostly being funded directly by
Government. However, some £86 million of compensation under the HSS must be funded by the Company from
trading profit and the proceeds of the sale of the Telecoms business.
For 2021/22, the Company received £50 million of Network Subsidy Payments and £177 million in investment
funding, made up of a £125 million equity injection and a £52 million loan. In addition, the £950 million working
capital facility and £50 million same-day liquidity facility were both extended to 31 March 2024. Looking ahead to
2022/23 through to 2024/25, Government has continued to evidence its support of the Company by committing
to provide £150 million in Network Subsidy Payments and £185 million in investment funding, to be received as a
grant.
Compensation and settlement for Postmasters remains highly material and deeply uncertain. The continued
support of Government is therefore critical in the Directors’ view of the Company's going concern position.
For the specific one-off matters, Government has agreed to provide sufficient financial support to the Company to
ensure that the HSS can proceed and settlement payments for OHC can be made, with agreed funding in excess
of the current provisions. Funding of up to £233 million has been guaranteed for the HSS provided that the
Government's operational and approval processes are followed and all initial offers are sent out by 31 March 2023.
Funding of up to £780 million has been guaranteed for compensation to Postmasters who were wrongly convicted
of criminal offences (“OHC"). Discussions are underway on funding other Postmaster Remediation and the
Government has written a letter of comfort stating its intention to provide support, subject to future approval
processes.
There is significant estimation uncertainty within the HSS and OHC provision calculations, which are explained
further within note 1 to the Group accounts. Funding is currently being sought and finalised in relation to potential
future payments for claims which may be received in relation to areas of possible Postmaster Remediation. The
funding commitments provide evidence of continued support from Government. Further assurances related to
unquantified potential cash outflows, such as any possible additional aspects of Postmaster Remediation, cannot
be given as it is not the nature of Government's budget process to provide guarantees for unquantifiable potential
liabilities.
In 2019/20 the Company agreed and subsequently made payment of a full and final settlement with the GLO
claimants, thus extinguishing any liabilities which the Company had in respect of the GLO. In March 2022 the
Government announced its intention to provide additional compensation payments to the individual claimants that
formed the GLO. It is clear that the Company will not be asked to fund this additional compensation. Government's
announcement does not create a liability for the Company.
However, the Government have yet to announce the process through which additional compensation will be paid
to the GLO claimants. Presently, the Company has not been asked by Government to either run or partake in any
such process. When considering the HSS and OHC processes, where compensation is partly funded by
Government, the Company has been required to oversee and pay for the running costs of the processes.
Confirmation has therefore been sought from Government to provide assurances that if the Company is requested
to partake in or oversee any such process for GLO claimants then the costs associated will not be borne by the
Company. This assurance has not been forthcoming.
The going concern assessment does not include cashflows associated with Government's intention to provide
additional compensation to GLO claimants, either compensation payments or process running costs. The costs of
any future process are not known. However, there are circumstances where the costs of supporting such a process
could call into question whether the Company can remain in compliance with its borrowing covenants and
therefore remains a going concern. The Directors have assessed that excluding such cashflows from its forecasts
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is reasonable on the basis that the Company has no present liability in respect of GLO claimants and the
Government has provided general assurances about their intentions to continue to support the Company.
The Directors have received written assurances from BEIS that they place a high priority on the Company's ability
to continue delivering vital public services and as such will continue to support the Company. This includes the
intention to provide support if / when required in respect of HSS, Overturned Historical Convictions and Postmaster
Remediation to the extent that contractual support has not already been committed or is not sufficient to cover the
eventual costs.
There still remains an element of funding uncertainty, with the existence of some potential future liabilities, which
may or may not have a significant adverse impact on the Company, for which guaranteed funding is not in place.
However, the Directors believe the guarantees and assurances received, when considering the legislated nature
of the Government funding process which creates restrictions on guarantees, provide enough assurances to
evidence Government's continued support should future material liabilities arise in relation to the items highlighted
within these financial statements.
Management has performed a cashflow assessment for a period of 15 months to the end of July 2023, factoring
in no further funding beyond that agreed above, whilst assuming any cash outflows arising as a result of potential
Postmaster Remediation will be funded by Government and that there will be no cashflows associated with the
GLO claimants and the process which may ensue. This assessment supports the Directors’ view that the Company
can continue to meet its liabilities as they fall due for the period under review.
The assumption of continued Government support is in relation to: i) potentially material future cash outflows,
which may or may not arise in respect of HSS and OHC related settlements in excess of amounts already
guaranteed by Government; ii) potential payments to be made for Postmaster Remediation for which Government
funding is not yet guaranteed; and ili) possible future requests by Government resulting in cash outflows for the
Company to meet compensation payments or process running costs associated with the Government's intention
‘to provide additional compensation to GLO claimants, which could occur during the gaing concern period such that
the Company requires additional support, represent material uncertainties which may cast a significant doubt on
the Company's ability to continue as a going concern. The financial statements do not include adjustments that
would result if the Company were unable to continue as a going concern.
Further details regarding the going concern assessment and the associated significant judgements are included in
note 1 of the Group financial statements.
Accounting policies
The following accounting policies are consistent with those of the Group as detailed in note 1 of the Group financial
statements:
¢ IFRS 9 Financial Instruments.
« IFRS 15 Revenue from Contracts with Customers.
« IFRS 16 Leases.
* Critical accounting estimates and judgements in applying accounting policies.
e Revenue.
* Other income.
« Leases.
* Taxation.
«Investments in joint venture.
« Property, plant and equipment.
e Intangible assets.
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+” Inventories.
° Trade receivables.
* Cash and cash equivalents.
e Pensions and other post-retirement benefits.
* Foreign currencies.
«Provisions.
* Derivatives and hedging activities.
Auditors’ remuneration
The remuneration paid to auditors is disclosed in the Group financial statements (note 4).
Directors’ emoluments
The emoluments paid to Directors are disclosed in the Group financial statements (note 6). Directors for the
Company are the same as Group.
Investment in subsidiaries
Investment in subsidiaries are carried at cost less accumulated impairment losses.
Critical accounting estimate:
Key assumptions used in impairment tests for investments in subsidiaries
The Group assesses whether there are any indicators of impairment for investments in subsidiaries at each
reporting date as well as if events or changes in circumstances indicate that the carrying value may be impaired.
Factors considered important that could trigger an impairment review include the following:
. Significant underperformance compared to historical or projected future operating results.
* Significant changes in the manner of use of the acquired assets or the strategy of the overall Group.
. Significant negative micro- or macro-economic trends.
Where appropriate, an impairment loss is recognised in the income statement for the amount by which the carrying
value of the investment exceeds its recoverable amount. The recoverable amount is determined based on value in
use calculations which require the use of assumptions. The calculations use cash flow projections based on four-
year financial forecasts approved by management, factoring in current economic circumstances and challenges
such as the ongoing impact of the COVID-19 pandemic. Where applicable, cash flows beyond this period are
extrapolated using estimated growth rates. Refer to note 5 for the results of the latest impairment tests.
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2. Staff costs and:numbers
Employment and related costs were as follows:
“2020
People costs (excluding investments): £m
Wages and salaries #6
Social security costs 15
Other pension costs (note 12) il
162
Total people costs (excluding investments)
* Where applicable, comparatives have been re-presented as a result of the disposal of the Telecoms business, which represents a discontinued
operation. See note 21 in the Group financial statements for further details.
Period end and average employee numbers were as follows:
Period end employees Average employees
: 2020 2020
Total employees 3,528 3,897
Total employee numbers can be categorised as follows:
Period end employees ‘Average monthly employees
: 2020
Administration 1,146
Directly managed branches ("DMB") 1,820
Supply Chain 833
Network programmes 98
Total 3.897
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.3. Intangible assets
Other
Software Goodwill. Intangibles Total
£m £m £m £m
Cost ;
At 1 April 2019 . 478 jo 6 485
Additions . 53 2 - 53
At 30 March 2020 . : 3 :
Reclassification
Additions
Disposals
Adjustments
At 28 March 2021.
‘Accumulated amortisation and impairment
At April 2019
Amortisation
Impairment =
At 30 March 2020
Amortisation
Disposals
Adjustments
‘At 28 March 2021
Net book value
‘At 28 March 2021
At 29.March 2020
Included within software in the above table are assets under construction of £35 million (2020: £42 million).
During the current year, reviews of property, plant and equipment and intangible assets took place and resulted in
- reclassifications between categories to give a more appropriate representation of the nature of the assets.
Goodwill and intangible assets are tested for impairment arinually, or more frequently, if events or changes in
circumstances indicate that the carrying value may not be recoverable. Management determined that in relation to
software assets, no impairment charge (2020: £10 million) was required during 2020/21.
During the year, the Group revised its accounting policy in relation to configuration, customisation and access costs -
incurred in SaaS arrangements, following the IFRS IC agenda decision in March.2021. This change in accounting
treatment has been accounted for prospectively, resulting in an additional charge of £5 million in the current year
income statement in respect of brought forward intangible assets. The impact on intangible assets is shown within
adjustments in the above table. :
Amortisation rates are disclosed on pages 84 and 85.within the Group accounting policies note.
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'-4, Property, plant and equipment -
P. os : . Land and Buildings .
_ . a Plant Fixtures.
: Long Short Motor. and and .
Freehold leasehold. leasehold vehicles": machinery equipment. . Total
fm £m Em's em I £m s £m £m
Cost ; : 5
"At 1 April 2019 39. 39 21 25, 1 e45. ~*~ 970
Additions _ : L 5 . > - 14 20.
Right-of-use on 2. 2B 7° a . -
~ transition
Right-of-use additions : : 1 1 - -
Disposals 7”) (4) 2) (1) E (18)
Right-of-use disposals: - (4) * (2) = - -
‘At30 March 2020 3 9 = ae z ies
~ Reclassification” 2 - A : 2 Be
Additions = 2 oe als : 6 9
Right-of-use.additions oe 2 Z 2 2 é 9
Disposals (3) (6) (3) (2) =
Right-of-use disposals p (9) 5) : A
At 28 March 2021 3 a6 6 27, 2
Accumulated depreciation and impairment . .
“AtT April2019__ 2B 17 19 "24 a. 708 797
Depreciation . 2, Be 2a ot - 5 ile 34: 37
Right-of-use asset - - 8 i - im
depreciation vets : .
- Disposals. (5) SQ), 2) aes oy (11)
At 30 March 2020 2 i 05) 24 1 W731.
Reclassification S 2 : &
, Depreciation D estes Be a ‘ Vy ‘
Right-of-use asset 5 se mi 2s SNe ;
depieciation .
3 Right-of-usé impairment 2 a) a) 2 3 6)
“reversal
Disposals _
Right=« ise disposals
At 28 March 2021
Net book value _
- At 28 March 2021
RE 29 March 2020
Included within fixtures and equipment in the above table are assets under construction of £4 million (2020:.£13 *
million).
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Depreciation rates are disclosed on page 83 within the Group accounting policies note. No depreciation is provided
on freehold land, which represents £1 million (2020: £2 million) of the total cost of properties.
Included within the table above are right-of-use assets with a net book value of £38 million (2020: £50 million).
The split between categories has been disclosed in note 20 in the Group financial statements.
During the current year, a review of property, plant and equipment and intangible assets took place and resulted
in reclassifications between categories to give a more appropriate representation of the nature of the assets.
An impairment test was performed during the year. Intangible assets and property, plant and equipment were
tested for impairment by comparing the carrying amount of each Cash Generating Unit ("CGU") with the
recoverable amount determined from the value in use calculations.
The discounted net cash flows from the value in use calculations were used to determine the recoverable amount
of the CGU identified, being Post Office Limited. Value in use is determined using the Group's net cash inflows
from the continued use of the assets within each CGU over a four-year period and then continued into perpetuity,
with no nominal growth rate assumed outside of this period. A pre-tax discount rate for Post Office Limited of
9.3% (2020: 9.3%) has been used to discount the forecasted cash flows.
A sensitivity analysis has been performed in assessing the value in use of property, plant and equipment and
intangible assets. This was based on changes in key assumptions considered to be possible by management. This
included an increase in the discount rate of up to 12% and a reduction in forecasted cashflows to that of a plausible
downside scenario factoring in key cashflow variables. The sensitivity analysis showed that no impairment would
arise under each scenario assessed. Management therefore believes that any reasonably possible change in the
key assumptions would not cause the carrying amount of any CGU to exceed its carrying value.
5. Investment in subsidiaries
The carrying value of £48 million (2020: £62 million) is made up of two investments in subsidiaries.
The carrying value of the Company's investment in Post Office Management Services Limited is £43 million (2020:
£43 million) - a 100% subsidiary of the Company with 60,000,000 shares at a nominal value of £1 and one share
with a nominal value of £100.
The remaining £5 million (2020: £19 million) is for the Company's investment in Payzone Bill Payments Limited, a
100% subsidiary of the Company with one share at a nominal value of £1. In the year, following the impact of the
COVID-19 pandemic on trading, it was deemed prudent to impair the carrying value of the investment held in
Payzone Bill Payments Limited by £14 million (2020: £nil). The Group still recognises the value that Payzone
brings, through joint contracts, increased footfall and technology sharing amongst other items.
The registered address of both Post Office Management Services Limited and Payzone Bill Payments Limited is
Finsbury Dials, 20 Finsbury Street, EC2Y 9AQ.
6. Investments in joint ventures
2021 2020
£m £m
I 46 67
Investment in joint ventures I
During the current and prior year, the Company's only joint venture investment was a 50% interest (1,000 £1
ordinary A shares) in First Rate Exchange Services Holdings Limited with a carrying value of £46 million (2020:
£67 million), whose principal activity is the provision of foreign currency exchange. First Rate Exchange Services
Holdings Limited is a company registered in the United Kingdom. The registered address of First Rate Exchange
Services Holdings Limited is Great West House, Great West Road, Brentford, Middlesex, TW8 SDF.
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7. Trade and other receivables”
2020
: £m
Current:
Trade receivables 82
Amounts owed by group undertakings 12
Accrued income 61,
Prepayments 31
Client receivables 77
Other receivables 16
Total 279
Non-current:
Accrued income Ey
Other vocation -
Total 3
8. Cash and cash equivalents
2021 2020
£m
Cash in the Post Office Limited network 449
Short-term bank deposits -
Total 449
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9. Trade and other payables
2020
£m
Current:
Trade payables 59 -
Amounts owed to group undertakings
Accruals 98
Deferred income 19
Social security 6
Client payables 198
Lease liabilities 12
Capital payables . -
Total 392
Non-current:
Lease liabilities 7 56
Other payables 13
Total 69
10. Financial liabilities — interest bearing loans and borrowings
2020
£m
617
Details of the financial liabilities dre included in note 15 in the Group financial statements.
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11. Provisions
. 7 7 Postmaster .
Network property Severance. - HSS. OHC Remediation. Other Total
Programmes . : : ‘
° £m £m fm £m £m fm £m £m
~~ At30'March 2020 “27°30 10 153 2 = a? 0G 226
Charged to investments : 5 5 i REE AS ¥)
Charged to trading 5 Q 9 e502 ) 60. 667
Utilisation (4) Als (15) = S (3) (26)
Provisions released in the year ie : a: : Be ;
‘a “mem (2) (8) On EES eo Uc
- investments . = si ~ se
Provisions released in the year oe ee i a g 5
-trading ; ee ae ;
At 28 March 2021 é 24 23 S40 150:
Lo Postmaster
‘Network HSS OHC Remediation es
“Programmes Property’. "Severance tm am * gay Other Total
fm. €m fm _ £m £m
Disclosed as:
At 28 March 2021
* Current
Non-current
At.29 March 2020
Current 6 cr 7 -/ 76 29
Non-current : 21 23 7 153 - ~~" 497
27 30 ss 10. 153 ~ “= 6 226
Details of the provisions are included in note 16 in the Group financial statements.
12. Retirement benefit surplus
The Company pension's disclosure is consistent with the Group disclosure included in note 18 of the Group financial
statements. . . “
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13. Equity
Called up share capital
2021 2020
£ £
Authorised
Ordinary shares of £1 each 51,000 51,000
Total I 51,000 51,000
Allotted and issued
Ordinary shares of £1 each 50,003 50,003
Total I 50,003 50,003
Share premium
On 7 August 2007 one ordinary share of £1 was issued in return for £313 million cash paid by the Secretary of
State for Business, Energy and Industrial Strategy. A share premium of £313 million resulted from this subscription.
In April 2008 two ordinary £1 shares were issued in return for £152 million cash paid by the Secretary of State for
Business, Energy and Industrial Strategy. A share premium of £152 million resulted from this subscription.
Other reserves
Other reserves of £2 million (2020: £2 million) relate to First Rate Exchange Services Holdings Limited, the joint
venture entity, and £nil (2020: £2 million) relates to a cash flow hedge.
14. Commitments and contingent liabilities
Details of the Company commitments and Company contingent liabilities are disclosed in note 20 of the Group
financial statements.
15. Related party disclosures
Related parties for Post Office Limited are as per the Group; details of which are disclosed in note 22 of the Group
financial statements. The Directors have taken advantage of the exemption permitted by FRS 101 not to disclosure
transactions with wholly owned subsidiaries within the Group.
16. Discontinued operation
Details of the discontinued operation are included in note 21 of the Group financial statements.
17. Post balance sheet events
Details of post balance sheet events are included in note 26 of the Group financial statements.
18. Ultimate controlling party
The Secretary of State for BEIS holds a special share in Post Office Limited and the rights attached to that special
share are enshrined within Post Office Limited Articles of Association. BEIS, through UK Government Investments
Limited (“UKGI"), has no day to day involvement in the operations of Post Office Limited or in the management of
its branch network and staff. As such, at 28 March 2021, the Directors regarded Post Office Limited as the
immediate and ultimate parent Company. BEIS is the ultimate controlling party.
The largest and smallest Group to consolidate the results of the Company is Post Office Limited, a company
registered in the United Kingdom. Post Office Limited financial statements can be obtained from Finsbury Dials, 20
Finsbury Street, EC2Y 9AQ.
Post Office Limited corporate.postoffice.co.uk I Page 135
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Corporate information
Registered Office Actuary
Post Office Limited Towers Watson Limited
Finsbury Dials Watson House
20 Finsbury Street London Road
London Reigate
EC2Y 9AQ Surrey
RH2 9PQ
Independent Auditors Solicitor
PricewaterhouseCoopers LLP Linklaters LLP
Central Square One Silk Street
29 Wellington Street, London
Leeds EC2Y 8HQ
LS1 4DL
Post Office Limited corporate.postoffice.co.uk I Page 136
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