UKGI00042351 - Report re: Postal Services Holding Company Limited (PoSH) - late filing of annual accounts - from Martin Donnelly to Richard Callard

Evidence on official site

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To: Martin Donnelly B I S
From: Richard Callard (G 0 I Department fr Business

Date: 15 December 2015

Purpose: To make you aware that PoSH (the 100% BIS owned company that owns
POL and remaining RM shares) will not be able to file its 2014/15 annual accounts
within deadline and will be filing late.

Timing: Routine
Recommendation:
¢ That you note for information

1. The filing deadline for PoSH is the end of December this year.

2. The Directors will not be able to sign and agree the accounts in time to meet
this deadline, as this is subject to successful resolution of work in connection
with the provisioning error identified in Post Office Limited’s (POL) 2014/15
accounts - on which you have already been briefed.

3. Directors and POL currently expect to be in a position to agree and file the
PoSH accounts mid-to-late January 2016.

Background:

What is PoSH?

1. PoSH is a private limited company classified to central government (100% owned
by BIS SoS) and is the company which disposed of the Government’s shares in

Royal Mail, holds the remaining 10m shares in RM (until these are gifted to
employees), and it also holds Government’s 100% ownership of POL.

2. It is a non-trading holding company with a Board of three directors (BIS civil
servants — Mark Russell (ShEx), Roger Lowe (ShEx), Ruth Elliot (HE)). The
Directors are not remunerated for their position with the company.

3. The accounts of PoSH comprise group and company accounts. The group accounts
consolidate POL and the company accounts are individual accounts for the holding
company only.

Why can’t the accounts be finalised on time?

4. You are aware from my earlier submission of 4 December that POL has identified
an error in its balance sheet provision and exceptional charges in 2014/15 in
connection with provision made for compensation payments to postmasters under
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its Network Transformation Programme. POL’s 2014/15 accounts will need to be
restated.

5. POL is consolidated for PoSH’s group accounts and the Directors of PoSH
therefore rely on necessary comfort provided by POL in connection with its
numbers in order for them to be in a position to sign and approve the PoSH
accounts.

6. POL has not yet concluded its work in connection with the provision error (a
complex issue which is taking time to fully test and work through) and POL’s CFO
(Alisdair Cameron) has confirmed to the Directors that he will not be in a position
where he can give the Directors the necessary comfort they would require until into
the New Year.

7. The Directors have therefore concluded and agreed that they cannot sign and
approve the PoSH accounts until that position has been reached.

What are the next steps?

8. PoSH Directors have met with POL’s CFO to discuss the provision issue and
timescales surrounding resolution. This has included requests for additional
information to be provided in connection with the work being undertaken on this
issue and POL’s control environment, as well as its strategy in connection with
auditors and its internal audit function.

9. Further meetings are planned early next year where POL and the auditors (E&Y)
will provide the Directors with necessary comfort they require in order to approve
and sign the accounts; current expectation is that this should be possible from mid-
to-late January 2016. We will be informing Companies House (CH) of late filing.

What is the impact of filing late?

10. A small late filing penalty (c.£150-£375) will be incurred and late filing will remain
on the company’s record with CH for a year, but there is no additional action CH
will take around this.

11. We are not expecting this to be picked up more widely as the PoSH accounts are not
published and there are no announcements made around their finalisation.

Copied: Ministers’ Offices; SPADs; Howard Orme; Mark Russell; Roger Lowe; Ruth
Elliot; ShEx POL Team; BIS Finance; BIS Analysts, BIS Legal, BIS Comms

Advice Received From:

Finance SpAds Press Legal Analysts
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