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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Royal Mail Plc | LSE:RMG | London | Ordinary Share | GB00BDVZYZ77 | Royal Mail Plc |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 207.00 | 206.00 | 206.30 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRMG
RNS Number : 5502R
Royal Mail PLC
15 June 2018
Royal Mail plc
LEI: 213800TCZZU84G8Z2M70
15 June 2018
Publication of Annual Report and Financial Statements 2017-18 and 2018 Notice of Annual General Meeting
Following the release by Royal Mail plc (the Company) on 17 May 2018 of the Company's Financial Report for the Full Year Ended 25 March 2018 announcement, the Company announces that it has today published its Annual Report and Financial Statements 2017-18 (Annual Report 2017-18) on Royal Mail's website: https://www.royalmailgroup.com/results
The 2018 Annual General Meeting (AGM) will be held on Thursday 19 July 2018 at 11.00am at the Mercure Sheffield St Paul's Hotel, 119 Norfolk Street, Sheffield, S1 2JE. The 2018 Notice of AGM has also been published and is now available via Royal Mail's website:
https://www.royalmailgroup.com/investors/shareholder-communications/annual-general-meetings
In accordance with Listing Rule 9.6.1, copies of the Annual Report 2017-18, Notice of AGM and Proxy Form have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM
The Company also announces that it will provide shareholders, by their chosen communication means, the above documents.
Disclosures required in accordance with DTR 6.3.5
Information on important events that have occurred during the financial year and their impact on the Annual Report 2017-18 were included in the Financial Report for the Full Year Ended 25 March 2018 announcement released on 17 May 2018. This, together with the following information, which is extracted from the Financial report for the full year ended 25 March 2018 (Financial Report) and the Annual Report 2017-18, constitutes the information required by DTR 6.3.5 to be communicated in full, unedited text through a regulatory information service. This information is not a substitute for reading the full Annual Report 2017-18. Any page or note references in the text below refer to those in the Annual Report 2017-18.
For further information, please contact:
Company Secretary:
Kulbinder Dosanjh
Phone: 020 7449 8133
Email: kulbinder.dosanjh@royalmail.com
Investor Relations:
Catherine Nash
Phone: 020 7449 8183
Email: investorrelations@royalmail.com
Media Relations:
Beth Longcroft
Phone: 07435 768 549
Email: beth.longcroft@royalmail.com
PRINCIPAL RISKS
The Governance section describes in detail how the Group manages its risk from the Group Board level, its respective sub-committees and throughout the organisation. Further details can be found on pages 54-99.
The table below details each principal business risk, those aspects that would be impacted were the risk to materialise, our assessment of the current status of the risk and how the Group mitigates it.
Hot Features
Premium
Principal risk Status How we are mitigating the
risk
New Pension, Pay and Pipeline agreement and the risk of industrial action
There is extensive trade union recognition in respect of our workforce
in the UK with a strong and active trade union. As Royal Mail Group continues
to pursue the necessary efficiency programmes in order to remain competitive
in the letters and parcels markets and implements the new Pensions, Pay
and Pipeline agreement, there remains a risk of industrial action.
Industrial
action
----------------------------------------------------------- -------------------------------------------------------------
There is a risk The Agenda for Growth Our Agenda for Growth agreement
that agreement developed with the CWU provides a
one or more jointly with the Communication joint commitment to improved
material Workers Union (CWU) industrial relations and
disagreements or represented a fundamental to resolving disputes at
disputes change in our relationship pace and in a way that is
between the with the CWU, and continues beneficial to both employees
Group and to promote stability and Royal Mail.
its trade unions in industrial relations.
could Under the Agenda for Growth,
result in In February 2018, we there is a prescribed resolution
widespread announced the new Pensions, process for disputes which
localised or Pay and Pipeline agreement requires trained mediators
national (the "agreement") with nominated by and representing
industrial the CWU. As part of both the CWU and the business.
action. the agreement, Royal This must be followed before
Mail and the CWU have any industrial action can
Widespread committed to a broad take place.
localised programme of operational
or national change, as well as pension The Agenda for Growth agreement
industrial reform, changes to pay has legally binding protections
action would and terms and conditions for the workforce in respect
cause material and a vision to achieve of future job security and
disruption to a 35-hour working week our employment model. This
our business by 2022. can be rescinded in the
in the UK and event of national industrial
would be The agreement requires action if the appropriate
likely to result a high level of operational dispute resolution processes
in an change in an increasingly have not been followed.
immediate and competitive market,
potentially which may put additional
ongoing strain on the stability
significant loss of our industrial relations.
of revenue for
the Group.
It may also
cause Royal
Mail to fail to
meet
the Quality of
Service
targets
prescribed by
Ofcom, leading
to enforcement
action and
fines.
----------------------------------------------------------- -------------------------------------------------------------
Pension
arrangements
----------------------------------------------------------- -------------------------------------------------------------
We recognise We have closed the Royal We are lobbying Government
that pension Mail Pension Plan (RMPP) to make the necessary legislative
benefits are to future accrual in and regulatory changes required
important its previous Defined to introduce the CDC pension
to our people Benefit form and introduced scheme.
and that a Defined Benefit Cash
we need to Balance Scheme from
continue to 1 April 2018.
provide
sustainable and Both this transitional
affordable arrangement and the
pensions CDC scheme are expected
arrangements to contain pension costs
that are at about 400 million
acceptable to per annum.
our people and
unions.
There is a risk
that
we may be unable
to obtain
the necessary
legislative
changes to
enable us
to implement the
UK's
first Collective
Defined
Contribution
(CDC) pension
scheme as agreed
with
the CWU.
----------------------------------------------------------- -------------------------------------------------------------
Efficiency
----------------------------------------------------------- -------------------------------------------------------------
Royal Mail must In February 2018 we The agreement creates a
become announced the agreement platform for Royal Mail
more efficient with with the CWU. As and CWU to work jointly
and flexible part of the agreement, together to rebuild confidence
in order to Royal Mail and the CWU and trust, deliver change
compete have committed to a and pursue opportunities
effectively broad programme of operational to support growth and efficiency.
in the letter change, as well as pension This includes trialling
and parcel reform, changes to pay new delivery methods, a
markets and grow and terms and conditions new resource scheduling
revenue. and a vision to achieve system and automated hours
a 35-hour working week data capture, as well as
The success of by 2022. progressing towards a shorter
our strategy working week dependent on
relies on the We are continuing to progress on efficiency and
effective see the positive impact change initiatives.
control of costs of our cost avoidance
across activities across the The implementation of the
all areas and UK business. This has agreement will be underpinned
the delivery involved focus on our by a rigorous programme
of efficiency efficiency performance comprising the initiatives
benefits. in all areas, while within the agreement.
providing quality service
We continue to to our customers through The agreement also includes
operate our engaged workforce. proposals for a series of
a tight balance Our cost avoidance programme Forums that will allow us
between achieved GBP235 million to work collaboratively
achieving of costs avoided in with our unions to agree
efficiency 2017-18, despite the efficiency improvements
improvements industrial relations and growth opportunities.
whilst having environment.
some of the This includes a fundamental
highest service However, the negotiation review of the pipeline over
specifications of fundamental changes three, five and seven years,
of any to our pension and other an innovation forum as well
major country in terms and conditions as a forum to monitor progress
Europe. impacted productivity to move towards a shorter
This requires performance, which has working week.
careful fallen below the lower
management of range of our two to We exceeded our target on
efficiency three per cent target. cost avoidance and have
and Quality of It also impacted progress over 200 projects and initiatives
Service. in some business as both in and outside of the
usual transformation core operations, which underpin
initiatives. the cost avoidance target
of GBP230 million in 2018-19.
Coming out of a difficult
industrial relations We continue to scope additional
environment and given cost avoidance opportunities
the scale of change beyond 2018-19.
underpinning the agreement,
there is a risk we will
be unable to make the
required short-term
business as usual and/or
programme level cost
avoidance changes in
a timely way consistent
with the agreement.
----------------------------------------------------------- -------------------------------------------------------------
Changes in market conditions and customer behaviour
The industry sectors in which we operate remain highly competitive, with
customers demanding more and our competitors responding quickly to these
changing demands.
Customer
expectations
and Royal Mail's
responsiveness
to market
changes
----------------------------------------------------------- -------------------------------------------------------------
Changes in We expect addressed We have produced a guide,
customer letter volumes (excluding which highlights key aspects
expectations, political parties' election of the new GDPR legislation
and changes in mailings) to continue when communicating and marketing
the markets to decline in the range to customers, including
in which the of four - six per cent how mail can help our customers
Group operates, per annum in the medium-term. thrive in a GDPR world.
could impact the For 2018-19, we expect We are also undertaking
demand to be at the higher intervention activity with
for our products end of the range of our largest posting customers
and decline for the full and cold data providers.
services. year due to the impact
of GDPR. However, during During the year, we helped
There is a risk 2018-19 the rate could launch JIC MAIL (Joint Industry
that move outside of this Committee) to offer standardised
our product range for a period during data on mails reach and
offerings the year. frequency of mailing demonstrating
and customer more clearly to the market
experience GDPR may drive risk-averse how consumers interact with
may not behaviour, leading to direct mail. It is the first
adequately meet a reduction in marketing time that the mail industry
evolving mail volumes in 2018-19. has had independent data
customer However, marketing mail to indicate frequency and
expectations, does not fall within usage.
or that we are the scope of The Privacy
unable and Electronic Communications There is a continuing requirement
to innovate or Regulations (PECR), to invest in targeted growth
adapt which affect marketing and innovation to meet challenges
our commercial by electronic means, in the marketplace, as well
and operational such as email and SMS. as reducing cost to ensure
activities fast better price competitiveness.
enough The parcels sector is We use continuous in-depth
to respond to competitive and evolving. market monitoring and research
changes Competition in the UK to track how well we match
in the market. domestic and international our customers' expectations,
markets is intense, including relative to our
We expect the with competitors offering competitors, and to predict
letters innovative solutions volume trends.
sector to remain that include convenient,
in structural reliable delivery and We continue to invest and
decline, in the return options, and introduce, at pace, new
medium-term, improved tracking services. and improved products and
driven by services that enhance customers'
e-substitution, The UK has one of the online and delivery experience;
lower GDP, the most developed e-commerce and, expand our core offering
possible markets in the world. to small and medium sized
impact of GDPR Growth available in businesses and marketplace
and continuing the addressable UK parcels sellers. We target investments
business market has been impacted that will extend our value
uncertainty. by Amazon's activities. chain offer and increase
Amazon is both a customer our presence in faster growing
of and a competitor areas of the parcels sector.
to the Group. Capacity We are investing in new
expansion in the sector equipment to respond to
continues to exert downward both our sending and receiving
pressure on prices. customers evolving needs
such as timely and accurate
In the parcels business, tracking information.
disintermediation in
online marketplaces The agreement creates opportunities
may divert traffic to to implement initiatives
other carriers. such as later acceptance
times. Estimated delivery
window, enhanced collection
and returns options are
also key initiatives that
are underway.
----------------------------------------------------------- -------------------------------------------------------------
Economic and
political
environment
----------------------------------------------------------- -------------------------------------------------------------
Historically, The Board continues Macroeconomic risk assessments
there has to monitor the economic are embedded within the
been a environment including monthly Letters forecasting
correlation possible implications processes.
between of Brexit on the UK
economic economy and the Group's The Group also has the following
conditions and operations. Specific strategies in place:
the level of areas of focus include: * A cost avoidance programme to respond to possible
letter and * Business uncertainty, with the recent slowdown in revenue headwinds.
B2B parcel economic activity, is possibly an indicator that
volumes. Flat business customers will look to reduce costs and
or adverse compete aggressively for contracts, impacting letter * Business initiatives that are responding to fluid
economic volumes, in particular marketing mail. competitive pressures (especially in the advertising
conditions arena).
could impact our
ability * A decline in the value of Sterling, which impacts ou
to maintain and r * A possible, absorbable reduction in investment in th
grow International business in terms of the exchange rate e
revenue, either effect on imports and exports and through the impact short-term to protect the cash and indebtedness
by reducing of higher inflation resulting from increases in the position of the business.
volumes or prices of UK imported goods and services. Movements
encouraging in the Sterling exchange rate could also result in
customers to higher import prices, increase terminal dues and
adopt cheaper impact domestic inflation rates leading to higher Risks associated with Brexit
products or fuel and wage increases. are continually monitored
formats for and material risks reported
sending letters to senior executives. An
and parcels. * The terms on which the UK leaves the EU's customs internal working group has
union and VAT territory. Our International business been established, comprising
The Labour is one of the largest third parties involved in the taxation, legal and regulatory/policy
Party's 2017 collection of tax and duties on behalf of HMRC. experts, to work with the
manifesto Changes to customs arrangements could impact International business to
included a processing procedures and charges for international update its Brexit scenario
pledge to bring mail, customer demand and the achievability of analysis as events unfold
a number regulated Quality of Service standards for EU mail. and new information becomes
of private available.
companies,
including Royal We are working closely with
Mail, Economic growth in the Government to put in place
back into public Eurozone has shown signs systems to ensure the movement
ownership. of improvement but remains of cross--border parcels
fragile in some countries continues to operate effectively.
(notably Italy). The The UK Government explicitly
Board will, however, referenced the importance
continue to monitor of the passage of small
this position in terms parcels via Royal Mail in
of the impact on our the Customs Bill White Paper.
international parcel We are also engaging with
volumes, including those Ofcom and the Department
handled by GLS. for Business, Energy, and
Industrial Strategy (BEIS)
We are closely monitoring on the applicability of
the development of Labour Quality of Service targets
Party policy on renationalisation. after the UK leaves the
EU.
Royal Mail engages regularly
with politicians and policy
makers, and closely monitors
the potential impact of
political and policy changes
on the Company. The Company
runs an extensive public
affairs programme of engagement
with politicians and policy
makers. We regularly demonstrate
the significant progress
that the Company has made
since privatisation in 2013.
----------------------------------------------------------- -------------------------------------------------------------
Growing in new
areas
----------------------------------------------------------- -------------------------------------------------------------
Our success in Royal Mail Group is Our acquisitions are primarily
growing well positioned to grow delivered through a targeted
in new areas of in new markets through and focused expansion of
business its subsidiary, GLS. GLS' geographic footprint,
is dependent on It has a replicable investing behind a proven
such and scalable business operating model with a track
factors as our model founded on the record of identification,
continued development of strong integration and optimisation
ability to regional businesses. of acquisitions over many
identify new years.
profitable and Through increasing its
sustainable footprint and focusing We are also developing partnerships
areas of on growth opportunities with retailers and network
business, in areas such as the partners to stimulate cross-border
implementing deferred parcels space volumes between the UK and
appropriate and B2C parcels market, Asia, as well as working
investments, GLS is well positioned with China Post to provide
and having in to support Royal Mail Chinese and UK customers
place suitable Group's overall strategy. with faster delivery and
structures to tracking services.
support We are continuing to
continued seek opportunities to We also have a number of
transformation develop a broader revenue small-scale initiatives
of the business. base and growth in the to seek new revenues, which
UK and overseas. leverage our existing assets.
As an example, during 2017
Royal Mail launched a third
party fleet offering to
the market providing maintenance
solutions.
The agreement includes the
establishment of a forum
to assess new business opportunity
ideas.
----------------------------------------------------------- -------------------------------------------------------------
Regulatory and legislative environment
The business operates in a regulated environment. Changes in legal and
regulatory requirements could impact our ability to meet our targets
and goals.
Absence of a
sustainability
framework to
sustain
the USO
----------------------------------------------------------- -------------------------------------------------------------
USO finances are Ofcom will continue We undertake extensive engagement
fragile. to be focused on monitoring with Ofcom across all workstreams,
The regulatory Royal Mail's efficiency. including the cost modelling
system It will build a detailed review and Second Class
applies some delivery cost model Safeguard cap consultation.
constraints to help inform its view We will provide comprehensive,
to Royal Mail's on how cost might change evidence-led reports setting
ability over time under different out our position.
to compete for scenarios. It will also
traffic be used to review the We are continuing to lobby
to support the allocation of Royal BEIS and Ofcom to tackle
costs Mail's delivery costs emerging issues of USO sustainability.
of the Universal between parcels and We are arguing for fundamental
Service letters. changes in the regulatory
network. It environment including:
imposes Ofcom is due to consult * greater focus on sustainability including
operational on the level of the
requirements not Second Class Safeguard
applied cap. The outcome could through the prompt introduction
generally to the impact our commercial of a proactive sustainability
industry. flexibility. framework; and
These may impact * a level playing field across the whole industry,
our We have been lobbying including higher consumer protection standards in
revenues and our Ofcom to introduce fundamental parcels and lifting labour standards across the
ability changes to the regulatory delivery sector.
to compete in environment. This includes
the highly a greater focus on sustainability.
competitive Ofcom has not taken
sectors in forward our proposal
which we for a proactive sustainability
operate. This framework. It has also
could ultimately not taken forward the
impact opportunity to raise
our ability to consumer protection
deliver standards across the
the Universal industry.
Service
on a sustainable
basis.
----------------------------------------------------------- -------------------------------------------------------------
Competition Act
investigation
----------------------------------------------------------- -------------------------------------------------------------
In January 2014, Royal Mail is refuting This investigation remains
Royal all of the allegations. a key agenda item on all
Mail issued updates to both the Royal
Contract In its annual concurrency Mail Board and Audit and
Change Notices report published on Risk Committee. We are working
(CCNs) 30 April, the Competition closely with our external
under the terms and Markets Authority advisers at every stage
of the stated that Ofcom expects of this investigation and
access contract to make a decision in our position remains that
regime. this case before summer we have been fully compliant
2018. However, Ofcom with competition law. We
In February has not published a have refuted in our written
2014, Ofcom formal timetable (or and oral representations
announced that provided any such timetable all of the allegations that
they would to Royal Mail). Ofcom has put forward, and
investigate some we will continue to defend
of these our case.
CCNs. The
opening of
the
investigation
automatically
suspended the
CCNs that
were the subject
of the
investigation.
These
CCNs were
therefore never
implemented.
Ofcom issued a
Statement
of Objections in
July
2015. This
statement
sets out Ofcom's
provisional
view that Royal
Mail
breached
competition
law by engaging
in conduct
that amounted to
unlawful
discrimination
against
postal operators
competing
with Royal Mail
in delivery.
Depending on the
outcome
of the Ofcom
investigation
and any appeal,
Royal
Mail may be
fined.
----------------------------------------------------------- -------------------------------------------------------------
Employment
legislation
and regulation
----------------------------------------------------------- -------------------------------------------------------------
Changes to laws Recent case law has We continue to monitor developments
and regulations suggested that, in some in case law relating to
relating to circumstances, regular the application of the Working
employment overtime and commission Time Directive in respect
(including the payments should form of holiday pay calculations.
interpretation part of holiday pay Based on our estimates of
and enforcement calculations. The legal the potential financial
of those position remains unclear impact, we believe that
laws and as case law is still we have made sufficient
regulations) evolving in this area. provision for any historic
could, directly We have concluded an liabilities that may arise.
or indirectly, agreement with the trade
increase the union about initial We liaise with the CBI,
Group's steps to mitigate the HMRC and HM Treasury to
labour costs. concern about holiday influence employment tax
Given the pay for part timers. developments and minimise
size of the Further discussions the impacts for Royal Mail
Group's are also planned on as far as possible.
workforce, this subject.
this could have
an adverse
effect on the
Group.
----------------------------------------------------------- -------------------------------------------------------------
Health, safety
and wellbeing
----------------------------------------------------------- -------------------------------------------------------------
The way in which The business has a large We are reviewing our Safety,
we conduct number of employees Health and Environment Management
our business, including seasonal staff System (SHEMS) to ensure
despite and agency workers. that the Standards contained
having a It also operates a very within it achieve legal
rigorous health large fleet, employs compliance and adequately
and safety a large number of contractors control our key risk areas.
regime, can and interacts extensively
occasionally with members of the Operational implementation
have a human public. A large proportion of the SHEMS is monitored
impact. That is of our employees spend via an annual audit programme
why the most of their time working and a professional and independent
health, safety outdoors, on foot or SHE function is in place
and wellbeing driving, where the environment to provide advice, support
of our cannot be controlled. and guidance on the implementation
employees, Despite the very significant of standards.
contractors, focus on our people's
agency workers wellbeing, due to this There is an annual SHE initiative
and members wide reach and the number and communications plan
of the public is of people affected by in place. This is informed
of the the business's undertakings, by a review of compliance
utmost the risk of serious data, risk data, KPI performance
importance to harm to people cannot and legislative requirements.
us. We be totally mitigated.
acknowledge that Employees have access to
there is a risk The potential fines health and wellbeing assistance
that for very large organisations through our Feeling First
a health and (as defined by the Health Class website, First Class
safety incident and Safety Executive) Support helpline and Occupational
or failure could have greatly increased Health provision.
result as a result of the Sentencing
in the serious Guidelines - health SHE performance is discussed
injury, and safety breaches and reviewed by the board
ill health or now have a much greater and senior leaders are committed
death of financial impact for to driving full compliance
employees, the business. We acknowledge to the SHE Management System.
contractors, that every health and
agency workers safety incident has
or members a human impact.
of the public.
This risk An integrated Safety,
is a key focus Health and Environment
for us, System was completed
given the and deployed in 2017-18.
potential human We continue to work
impact and the to ensure full and consistent
corporate implementation is achieved
ramifications. across all parts of
We are the business.
including it now
in our
Principal Risks
to reflect
its major
internal
significance.
Such an incident
may
lead to criminal
prosecution
or fines by the
enforcing
authority or
civil action
by the injured
party
resulting in
large financial
losses and
reputational
damage for the
Group.
Similarly,
inadequate
arrangements for
effectively
managing the
health and
wellbeing of our
employees
could also lead
to financial
losses and
reputational
damage - through
increased
sickness
absence, lower
productivity,
civil action
or criminal
prosecution.
----------------------------------------------------------- -------------------------------------------------------------
Major breach of
information
security,
data protection
regulation
and/or
cyber--attack
----------------------------------------------------------- -------------------------------------------------------------
We are subject While no material losses As external threats become
to a range related to cyber security more sophisticated, and
of regulations, or data breaches have the potential impact of
contractual been identified, given service disruption increases,
compliance the increasing sophistication we continue to invest in
obligations, and evolving nature cyber security. Recognising
and customer of this threat, and that this risk cannot be
expectations our reliance on technology eliminated, we continuously
around the and data for operational review our security enhancement
governance and strategic purposes, and investment plans to
and protection we consider cyber security reflect the changes in the
of various and/or a breach of data threats we face.
classes of data. protection regulation
In common a principal risk. For GDPR we are undertaking
with all major activities across the Group
organisations, to work towards compliance.
we are the This includes protecting
potential us from data breaches, managing
target of information rights and managing
cyber--attacks our marketing permissions
that could correctly.
threaten the
confidentiality,
integrity
and availability
of data
in our systems.
A cyber security
incident
could also
trigger material
service and/or
operational
interruption.
A major breach
of data
protection
regulation
is also
considered a
risk that could
result
in financial and
reputational
damage,
including loss
of customer
confidence.
----------------------------------------------------------- -------------------------------------------------------------
Attracting and
retaining
senior
management
----------------------------------------------------------- -------------------------------------------------------------
Our performance, Voluntary turnover in The Group's remuneration
operating senior management continues policy sets out that the
results and at similar levels to overall remuneration package
future growth previous years but remains should be sufficiently competitive
depend on our a business risk. to attract, retain and motivate
ability executives with the commercial
to attract and experience to run a large,
retain complex business in a highly
talent with the challenging context.
appropriate
level of We operate a succession
expertise. planning process and have
in place talent identification
and development programmes.
Our succession planning
enabled us to announce two
major internal promotions
in April 2018.
----------------------------------------------------------- -------------------------------------------------------------
RELATED PARTY INFORMATION
This Note provides details of amounts owed to and from related parties, which include the Royal Mail Pension Plan (RMPP), the Group's associate companies, and payments to key management personnel. Details of the Group's principal subsidiaries and associates are also provided. ============================================================================
Related party transactions
During the reporting year the Group entered into transactions with related parties as follows:
52 weeks 52 weeks
2018 2017
GBPm GBPm
======================================================== ======== ========
Sales/recharges to:
RMPP (administration and investment service recharge) 5 5
======================================================== ======== ========
Purchases/recharges from:
Associate undertaking (Quadrant Catering Limited) (7) (8)
======================================================== ======== ========
Amounts owed to:
Associate undertaking (Quadrant Catering Limited) (1) (1)
======================================================== ======== ========
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.
Key management compensation
52 weeks 52 weeks
2018 2017
GBP000 GBP000
============================= ======== ========
Short-term employee benefits (14,592) (11,174)
Post-employment benefits (70) (44)
Other long-term benefits (551) (734)
Share-based payments (3,679) (4,102)
============================= ======== ========
Total (18,892) (16,054)
============================= ======== ========
In July 2017, the Group made a payment of EUR6.6 million to Mr Rico Back as consideration for the termination of his contract of employment (and all rights and obligations contained within it) with GLS and its replacement with a new GLS contract. The original contract dated back to 2000 when the Post Office, then in State ownership, acquired German Parcel. It gave Mr Back certain management control rights relating to the governance of what subsequently became GLS, in order to retain its entrepreneurial focus. They included right of veto on decisions and membership of GLS' management board. In addition, Mr Back was only required to give the Company three months' notice and there were substantial payments for termination of his employment in certain circumstances. This arrangement was rooted in the fact that Mr Back was a shareholder in German Parcel, and its Managing Director, at the time of its acquisition by the Post Office. The Board came to the conclusion that some of the provisions of the original contract were increasingly inappropriate and needed to be removed. The growing importance of GLS for Royal Mail Group and our greater investment to accelerate its growth makes it important that it is integrated more closely with the rest of the Group, while maintaining its overall entrepreneurial focus and ethos. In addition, as part of the buyout, Mr Back's fixed pay was rebased downwards.
Key management are considered to be the Executive and Non-Executive Directors of Royal Mail plc, all other members of the Chief Executive's Committee (see page 62) and the remainder of the Persons Discharging Managerial Responsibilities.
The ultimate parent and principal subsidiaries
Royal Mail plc is the ultimate parent Company of the Group. The consolidated financial statements include the financial results of Royal Mail Group Limited and the other principal subsidiaries listed below. The reporting year end for these entities is 25 March 2018 unless otherwise indicated.
Company Principal activities Country of incorporation % equity % equity
interest interest
2018 2017
============================ ======================== ========================= ========= =========
General Logistics Systems Parcel services holding
B.V.1 company Netherlands 100 100
Royal Mail Estates Limited Property holdings United Kingdom 100 100
Royal Mail Investments
Limited Holding company United Kingdom 100 100
RM Property and Facilities
Solutions Limited(formerly
Romec Limited) Facilities management United Kingdom 100 100
============================ ======================== ========================= ========= =========
The Company has complied with section 410 of the Companies Act 2006 by including, in these financial statements, a schedule of interests in all undertakings (see Note 27).
1 GLS' reporting year end date is 31 March each year. No adjustment is made in the financial statements in this regard on the basis that, irrespective of the Group's reporting year end date (last Sunday in March) a full year of GLS results is consolidated into the Group.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS 2017-18
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law, they are required to prepare the Group financial statements in accordance with IFRS as adopted by the EU and applicable law, and have elected to prepare the parent Company financial statements in accordance with UK Accounting Standards, including FRS 101 'Reduced Disclosure Framework'.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant, reliable and prudent;
-- for the Group financial statements, state whether they have been prepared in accordance with IFRS as adopted by the EU;
-- for the parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent Company financial statements;
-- assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
-- use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Financial Statements 2017-18, when taken as a whole, are fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
Each of the Directors, whose names and function are set out on pages 58-60 confirm that, to the best of their knowledge:
-- the financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
This responsibility statement is approved by the Board of directors and is signed on its behalf by:
Moya Greene Stuart Simpson Chief Executive Chief Finance Officer Officer
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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June 15, 2018 06:00 ET (10:00 GMT)
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