Half-year Report

International Distribution Svcs PLC

21 November 2024

International Distribution Services plc

(Incorporated in England and Wales)

Company Number: 8680755

LSE Share Code: IDS

ISIN: GB00BDVZYZ77

LEI: 213800TCZZU84G8Z2M70

21 November 2024

INTERNATIONAL DISTRIBUTION SERVICES plc (IDS or IDS plc) RESULTS FOR THE 26 WEEKS ENDED 29 SEPTEMBER 2024

Despite difficult market environment, Group delivered revenue growth of 8.2% in the first half and returned to adjusted operating profit.

Royal Mail transformation delivering an improved financial and operational performance - on track to deliver full year guidance³; GLS margin lower compared to H1 2023-24 against a challenging economic and regulatory backdrop; taking action through cost and efficiency measures.

Adjusted measures (£m)¹	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023
Operating profit/(loss)	61	(169)
- Royal Mail	(67)	(319)
- GLS	128	150
Operating margin (%)	1.0%	(2.9)%
Basic loss per share (pence)	-	(22.7)p
Free cash flow	(47)	(72)
Net debt	(1,894)	(1,532)
Reported measures (£m)¹
Revenue²	6,343	5,862
- Royal Mail	3,921	3,541
- GLS	2,432	2,330
Operating loss	(26)	(243)
- Royal Mail	(138)	(383)
- GLS	112	140
Operating margin (%)	(0.4)%	(4.1)%
Basic loss per share (pence)	(2.6)p	(23.3)p

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of alternative performance measures (APMs) that are not defined under IFRS. A full list of the Group's APMs are set out in the section titled 'Presentation of results and alternative performance measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

2. Includes intragroup revenue, which represents trading between Royal Mail and GLS, principally a result of Parcelforce Worldwide operating as GLS' partner in the UK. This was £10 million in H1 2024-25 and £9 million in the prior period.

3. The Royal Mail Profit Forecast is a profit forecast for the purposes of Rule 28 of the Takeover Code and the required confirmation of the IDS Directors, together with the basis of preparation and assumptions, is set out in Appendix 1 to this announcement.

4. The takeover offer for 100% of the shares in IDS plc has been made by EP UK Bidco Limited ("Bidco"). Bidco is ultimately controlled by EP Corporate Group, a.s. ("EP Group").

Group overview:

· Revenue £6,343 million, up £481 million year-on-year.

· Adjusted operating profit¹ of £61 million (H1 2023-24: loss of £169 million), mainly due to significantly reduced loss in Royal Mail.

· Reported operating loss of £26 million (H1 2023-24: loss of £243 million), including an impairment of the carrying value of Royal Mail of £134 million (H1 2023-24: £nil):

o Impairment charge largely due to expected additional tax burden reflected in a c. £120 million annual increase in employers National Insurance from FY 2025-26 - a result of Royal Mail's role as a major UK employer with c. 130,000 people - which is expected to only be partially mitigated in the short term through pricing and costs actions; additional initiatives being developed to fully offset the impact over the long term.

· Net debt increased to £1,894 million (£1,532 million September 2023); strong balance sheet maintained, ample liquidity.

Royal Mail overview:

· Revenue growth of 10.7%:

o Good parcel revenue growth of 8.9%, despite weaker market than anticipated in H1;

o Addressed letter volumes (ex. elections) down 5% year-on-year. Letter revenue growth of 12.7%, with volume decline more than offset by price, and positive impact from General Election.

· Further progress on modernisation and transformation in H1, leading to an improving trajectory for quality of service over the last 12 months:

o Deployed the biggest operational change for over 20 years, changing frontline start times to enable the removal of half of domestic flights, improve reliability, increase network capacity and reduce emissions;

o Permanent employees on new contracts grew to over 19,000 at the end of September (from c. 5,500 a year ago);

o Increased parcel automation: 84% end of September, continuing to invest, c. 90% expected by March 2025;

o Innovation: digitally tagging parcel containers in the network to improve visibility and efficiency;

o Expansion of out of home: planned increase in drop off locations to over 21,000 by end of March 2025, including c. 7,500 parcel shops (with Collect+) and c. 1,500 lockers through partnerships and Royal Mail's own network.

· Considerable change and investment still required to transform Royal Mail and be financially sustainable for the future, including real and urgent need to reform Universal Service, which currently is hindering our competitiveness.

GLS overview:

· Revenue growth of 4.4% year-on-year, driven by B2C and cross-border.

· Adjusted operating profit lower year-on-year due to macroeconomic and regulatory pressures, particularly in Germany and Italy. In response, implementing further pricing and efficiency measures.

· Other developed European markets and Canada performing well.

· Continuing to invest to support strategic delivery:

o Expanding out of home network, with growth of 11% vs. March 2024, to c. 61,000 points;

o Improving digital propositions - new consignee app in Eastern Europe;

o Upgrading the network to drive productivity and growth, with two new hubs open for peak;

o Growing our international business.

Outlook:

· Royal Mail on track to return to adjusted operating profit, before voluntary redundancy costs, for FY 2024-25³. However, fiscal and regulatory backdrop is adding cost and inflexibility to the business, making USO reform even more urgent.

· In GLS, the macro environment across Europe remains challenging, with regulatory pressures in certain markets; continued investment is required to deliver strategic ambitions and support growth.

· Offer by EP UK Bidco Limited⁴: as set out in the Offer document published 26 June 2024, expected that Recommended Offer will become or be declared unconditional in Q1 of calendar year 2025, subject to required conditions being satisfied or waived.

Martin Seidenberg, Group Chief Executive Officer of IDS commented:

"The modernisation of the Royal Mail network continues at pace, with innovation to improve our services to customers, including the rapid expansion of our out of home footprint. As we enter our busiest period, we are well prepared to deliver Christmas, with around 4,000 new vehicles being delivered before peak, 16,000 extra people, extended delivery hours until 8pm and our growing network of parcel lockers and parcel shops.

"We are delivering on the changes we can control, but the cost environment is worsening just at the time when we need to invest. As a major employer with around 130,000 permanent employees, the changes to National Insurance will disproportionately impact our business relative to competitors. This makes Universal Service reform even more urgent.

"GLS' flexible business model, diverse geographic footprint and commitment to high quality has enabled it to navigate a challenging environment. We are taking action to drive efficiencies and control costs while continuing with our strategy to invest to expand our out of home network, develop new digital solutions for customers and upgrade the network to drive productivity and growth. We are also expanding our global service offering across the US and Asia-Pacific.

"I would like to thank all our colleagues across the Group for their continued hard work, dedication to serving our customers every day and the role they have played in the progress we have made."

Results presentation

A results webcast for analysts and institutional investors will be held at 9am today, Thursday 21 November 2024 at https://www.internationaldistributionservices.com/en/investors/financial-results-presentations.

Enquiries:

Investor Relations

John Crosse

Email: investorrelations@ids-plc.com

Media Relations

Jenny Hall

Phone: 07776 993 036

Email: jenny.hall@royalmail.com

Greg Sage

Phone: 07483 421 374

Email: greg.sage@royalmail.com

Royal Mail press office: press.office@royalmail.com

Company Secretary

Matthew Newman

Email: cosec@ids-plc.com

The person responsible for arranging the release of this announcement on behalf of IDS plc is Matthew Newman, Company Secretary.

GROUP OPERATING AND STRATEGIC REVIEW: Martin Seidenberg, Group Chief Executive Officer

The market environment was difficult during the first six months of the year, with macroeconomic, regulatory and competitive headwinds. In the UK, we continue to see cost of living pressures and falling consumer confidence, which was reflected in a weaker than anticipated parcels market. Across Europe, GDP growth is sluggish, with Germany on the cusp of recession.

Despite this, the Group delivered a good performance. Group revenue grew by £481 million year-on-year to £6,343 million, driven by growth in both businesses. Group reported operating loss was £26 million (H1 2023-24: £243 million loss), including the reduction in the carrying value of Royal Mail.

Adjusted operating profit was £61 million (H1 2023-24: £169 million loss) due to revenue growth and a significant reduction in the loss at Royal Mail. We continue to focus on what we can control: the transformation and modernisation of Royal Mail and strategic delivery and mitigation of inflationary pressures at GLS.

Royal Mail made good progress on its modernisation agenda in H1, delivering operational change, innovation and further expansion of our out of home footprint. But considerable change and investment is still required, including the real and urgent need to reform the Universal Service to make it financially sustainable for the future.

GLS is implementing further pricing and efficiency measures and yield management to mitigate inflationary pressures and continuing to invest to support strategic delivery. GLS also expanded its out of home network during H1, launched new digital propositions, continued to upgrade its network to drive productivity and growth and expanded its international business.

Despite the difficult market environment, Royal Mail remains on track to return to adjusted operating profit, before voluntary redundancy costs, for FY 2024-253. However, there is an unfavourable fiscal and regulatory backdrop into the future, adding cost and inflexibility to the business. Changes to employers National Insurance will have a material negative impact in FY 2025-26, and there is still no certainty about the shape of reform of the Universal Service. In GLS, the macroeconomic environment across Europe remains challenging.

Royal Mail

We continue to implement the Business Recovery, Transformation and Growth Agreement, building on the progress already made. In the first half of the year we:

· Deployed the biggest operational change to the business in over 20 years, with later frontline start times. This allows us to remove half of our domestic flights, with 14 out of the planned 18 flights now stopped. This is good for both the environment and for quality of service, improving reliability for customers and helping to meet growing demand for next day deliveries, whilst reducing emissions.

· Started moving a limited number of larger sized parcels from Royal Mail to Parcelforce Worldwide, important as the Parcelforce Worldwide network is more efficient at handling larger parcels. Since 2017, the average size of a parcel sent through the Royal Mail Network has grown by over 29%, and larger sized parcels now account for c. 37% of all parcel traffic, up from c. 30% in 2017. This highlights the need for further change and investment in our network.

· Reduced frontline hours by an average of two hours a week during the summer with the roll-out of seasonal hours, to balance the additional two hours a week our people worked during peak in 2023. Seasonal hours is a key enabler to deliver efficiencies and make our resource more flexible. We will again flex up resource from our fixed employee base, through seasonal variation and overtime, during peak for 2024.

· Further reduced sick absence rates. The average over the first six months was 5.6%, down from 7.0% in the first half of 2023-24. This has been achieved through successful deployment of new attendance standards, a new sick pay policy in the Autumn of 2023 and an improved wellbeing offer for all colleagues.

· Increased the number of permanent colleagues on new, more flexible contracts to over 19,000 at the end of September, from around 5,500 a year ago and 13,000 in March 2024. This has helped reduce our reliance on agency staff, which in turn helps to improve quality.

Quality of service has continued to improve over the past 12 months, for both commercial tracked and Universal Service products, although there is clearly more to do. We invested to support the delivery of the General Election in July, with deliveries of postal votes 50% higher compared to the 2019 General Election, and 30% more candidate mail delivered compared to 2019. Royal Mail is a very important part of the democratic, electoral process and I'd like to thank all our colleagues for helping to deliver it.

We're well placed for peak and will be delivering later to 8pm for our customers, with 16,000 additional people joining for the festive period. A total 141,000 sqm of extra temporary space - equivalent to 20 football pitches - has been created across the five seasonal parcel sort centres. We're adding c. 5,000 new vehicles this financial year, with over 1,000 delivered in the first half and c. 3,000 more due before peak, which will help support quality and reduce rental costs and emissions.

Parcel automation has continued to increase and was at 84% at the end of the period. Three more parcel sorting machines have been installed in Plymouth, Exeter and Leeds, and six large parcel conveyors have been installed across the network, with five more to come into the network after peak. This continued investment is expected to push automation to around 90% by the end of the current financial year. We continue to optimise our Parcel Hubs, with the throughput at our Midlands Parcel Hub now at one million parcels per day, which around peak will increase to 1.1 million. We're also optimising our network by digitally tracking parcels through the network which helps to improve visibility and plan more efficiently. We will introduce AGVs (automated guided vehicles) in our Parcel Hubs in the fourth quarter. We need to maintain investment in the network to support the multi-year transformation of Royal Mail, enable the business to have the flexibility to adapt to a changing market and be able to deliver future profitable growth.

We continue to make good progress on our channel strategy and new growth initiatives. We are expanding our out of home network, which will be important for future long-term growth, to make sending and receiving parcels as convenient as possible and give customers more choice to drop off and collect parcels - from Collect+ Parcelshops, parcel lockers, doorstep collection or Post Offices. Overall, Royal Mail's out of home network is planned to increase to over 21,000 locations by the end of FY 2024-25, including around 7,500 parcel shops with Collect+, and around 1,500 lockers through strategic partnerships and Royal Mail's own locker network, which will launch in the fourth quarter of FY 2024-25.

In October, Royal Mail launched the UK's first Collective Defined Contribution Pension Plan. The innovative scheme will offer over 100,000 Royal Mail employees a cash lump sum and an income in retirement. It was designed and implemented together with the Communications Workers Union and Unite CMA to provide the right pension arrangement for our people and the business.

Turning to financial performance, Royal Mail revenue increased 10.7%, reflecting growth in both parcel and letter revenue.

Domestic parcel volumes (ex. international) increased by 5%, with domestic parcel revenue up 8.9% year-on-year, reflecting price increases offset by mix, with performance in the Consumer and Small Business segment below expectations. The overall parcel market was weaker than anticipated, with ongoing cost of living pressures and falling consumer confidence.

International parcel volumes, including import and export parcels for Royal Mail and Parcelforce Worldwide, showed strong growth of 37%, driven by strong import volumes. International parcel revenue only grew by 9.1% year-on-year, reflecting higher import volumes at a lower average unit revenue and weaker performance from exports, which have a higher than average unit revenue.

Total letter revenue grew by 12.7% year-on-year, benefitting from price rises, necessary given the costs of delivering the Universal Service, partially offset by volume decline and negative mix. Letter revenue growth was also helped by the earlier than expected General Election in July, which added 5.5 percentage points to growth.

Reported operating loss was £138 million (H1 2023-24: £383 million loss) and adjusted operating loss reduced to £67 million (H1 2023-24: £319 million loss). In-year trading cash outflow was £151 million (H1 2023-24: £166 million outflow). Gross capital expenditure increased by £31 million to £109 million, due to investment in our transformation and network.

Further detail on financial performance is included in the Financial Review.

GLS

At GLS, the macroeconomic and competitive backdrop has been difficult, with regulatory headwinds in certain markets.

However, against that backdrop, GLS delivered robust revenue growth of 4.4% in Sterling terms (6.3% in Euro terms), driven by parcel volume growth and pricing. The first half benefitted from working day effects, which if adjusted for, resulted in revenue growth of 2.6% in Sterling terms (up 4.5% in Euro terms).

Parcel volumes increased by 4%, driven by B2C and cross-border, with B2C accounting for 59% of total parcel volumes, compared to 57% in the prior period.

Reported operating profit was £112 million (H1 2023-24: £140 million) and adjusted operating profit was £128 million (H1 2023-24: £150 million) or €150 million (H1 2023-24: €173 million), reflecting macroeconomic and regulatory pressures, including wage inflation, particularly in Germany and Italy, and our ongoing strategic investments, primarily in the expansion of our out of home network. Foreign exchange movements also resulted in a net decrease of £2 million in operating profit. Adjusted operating profit margin declined by 110 basis points to 5.3%.

Whilst most GLS countries delivered an improved performance year-on-year, in Germany and Italy, two of GLS' larger markets, the market backdrop is particularly challenging. In Germany, the economy is on the cusp of recession, with ongoing wage inflation and regulatory pressures. Revenue growth was 7.8% in Euro terms, benefitting from additional working days and favourable price/mix effect, with underlying volumes flat. However, operating profit fell due to the cost pressures, including a minimum wage increase and higher costs in linehaul and last mile delivery. Initiatives to reduce costs, improve efficiency and increase yield are underway.

In Italy, revenue grew by 3.4% in Euro terms, including working days effects. Operating profit declined compared with the prior year due to wage inflation and regulatory changes impacting the subcontractor base. We continue to take action, implementing yield management and cost reduction measures, alongside price increases.

Other markets are performing well, with GLS Spain delivering strong organic revenue growth of 11.1% in Euro terms, driven by double-digit volume growth, benefitting from additional capacity with the new Madrid hub. Operating profit also increased compared with the prior year. GLS France revenue grew by 7.6% in Euro terms, driven by pricing, with strong growth in cross-border. The new Paris hub is now open and will provide additional capacity in advance of peak season, as well as improve efficiency and quality.

The US business is performing in line with expectations. Underlying revenue declined by 7.5% in USD terms, and operating losses reduced compared with the prior year, due to operational efficiencies and yield management. The freight business was divested on 1 September, a key milestone in the turnaround of the US business, to focus on the core parcel operations, including leveraging cross-border traffic between US, Europe and Canada.

GLS Canada organic revenues increased by 4.4% in CAD terms due to growth in freight revenue and parcel volumes. Operating profit also increased.

In-year trading cash flow pre-IFRS 16 remained robust, at £72 million, which compared with £63 million in the prior year. In-year trading cash flow was £113 million (H1 2023-24: £103 million).

Further detail on financial performance is included in the Financial Review.

GLS also made further progress on its strategic initiatives during the first half. Alongside the opening of the new Paris hub, which has the capacity to handle around 200,000 parcels per day, the new Berlin hub opened in May 2024. This is one of Germany's biggest regional hubs with a capacity of 10,000 parcels per hour and will play a key role in serving the greater Berlin area and as an international gateway to Eastern Europe. There is also a new Copenhagen depot in the pipeline due to open in FY 2025-26, which will increase inbound handling capacity and deliver significant operational cost savings.

We are continuing to invest to transform the last mile and expand our out of home network, with growth from March to September 2024 of 11% to c. 61,000 access points. Our locker network increased by c. 2,800, or 38%, to c. 10,000. GLS owned lockers grew by 19%, while third party lockers grew by 69%. In addition, in Poland we have agreed a new partnership with ORLEN, giving customers access to c. 6,000 parcel lockers from October.

GLS Hungary successfully launched a new consignee app, the first version of our loyalty program-based application with a focus on core functionalities like track and trace, out of home point locator, delivery management and redirection features. As part of a wider roll-out in Eastern Europe, GLS Hungary is the first country to launch the app, with Romania being the next, followed by Czechia.

We successfully launched a new cross-border service, allowing our North American and EU countries to seamlessly send transatlantic volumes. The growing cross-border market between North America and Europe remains a significant potential opportunity for GLS, with higher than average margins per parcel.

GLS also announced a bilateral network partnership with SF Express, China's largest integrated logistics service provider, to enhance global distribution capabilities and open up the Asia-pacific region for GLS shipment services, including China, India, Japan, Korea, Thailand and Vietnam.

As previously announced, in October 2024 GLS acquired 20% of ACS in Greece, the largest parcel carrier in the domestic Greek parcels market which serves over 30,000 customers, with an option to acquire the remaining 80% of the share capital of ACS within two years^*. Its network provides 100% coverage across mainland Greece and the Greek islands and is comprised of over 271 ACS outlets operated by exclusive independent agents offering competitive and flexible collection and delivery services and 269 parcel shops. ACS operates eight hubs, including a new, highly automated central hub in Athens which opened in 2022. ACS has been operating as the GLS network partner in Greece since 2004. The investment in ACS is consistent with GLS' strategy to strengthen its parcel operations, including within the cross-border deferred segment.

* More details are included in Note 13 to the financial statements.

Sustainability

Royal Mail continued to grow its electric vehicle fleet in the first half. The deployment of an additional 2,100 electric vans began in August, adding to the existing 5,000, the largest electric delivery fleet in the UK. When all 2,100 new electric vans are in use, they are expected to reduce Royal Mail's total emissions by around 6,000 tCO₂ equivalent per year. Royal Mail will also purchase c. 27 million litres of Hydrotreated Vegetable Oil (HVO) to fuel its heavy goods vehicle fleets this year.

Royal Mail is also investing in more than 300 green upgrades to heating, lighting and water systems across its estate of more than 1,200 operational sites and offices around the UK, as part of the company's strategy to be Net-Zero by 2040. The improvements will save 3,500 tCO₂ equivalent a year, on top of the reduction in emissions already being realised across the fleet and supply chain. Beyond the environmental benefits, we expect to see significant returns on investment by reducing utilities bills.

The removal of 18 domestic flight routes as part of the network window changes will, when fully realised, equate to a saving of c. 30,000 tCO₂ equivalent per year or over 50% of Royal Mail's base year domestic air freight emissions.

During the first half, GLS continued to work closely with its transport partners to grow the number of electric and biofueled vehicles within the delivery and linehaul network. The zero and low emission share of the transport fleet increased from 11% to 15% over the first half. In total 6,125 zero and low emissions vehicles operate in the GLS network. In addition, 26% of the GLS company car fleet is now electric.

Capital allocation and dividend

The Group's net debt position (pre-IFRS 16) was at £542 million as at 29 September 2024 (£142 million at 24 September 2023, £328 million at 31 March 2024).

As previously indicated, the Board is proposing a special dividend of 8 pence per share, conditional upon completion of the transaction with EP Group.

The Group had available liquidity of around £1.6 billion at the end of September 2024, including £645 million of cash and cash equivalents (excluding £39 million GLS client cash), along with an undrawn bank syndicate loan facility of £925 million.

Recommended Cash Offer by EP UK Bidco Limited (Bidco) ⁴

The IDS Board is unanimously recommending Shareholders accept the Offer. The Board continues to believe that the Offer by Bidco reflects the value of GLS' current growth plans and the progress being made on change at Royal Mail. It provides Shareholders with the opportunity to realise the value inherent in the IDS business in cash, against the execution risks in delivering IDS' current strategy, uncertainty over the nature and timing of Universal Service reform and the need for significant strategic investments. To deliver sustainable profitable growth in the future, Royal Mail requires further significant investment in automation, network changes and rapid expansion of out of home solutions, especially parcel lockers. GLS also requires investment into its strategic priorities. Despite the announcement by Ofcom on 5 September 2024, we still do not know what form Universal Service change may take and what the benefits to Royal Mail may be, and over what timeframe.

In arriving at its recommendation, the IDS Board considered the valuation of the business and took into account a range of scenarios on the upside, including the possibility and timing of change in the Universal Service among other factors, as well as downside risks, such as execution of the transformation in Royal Mail and a deterioration in the macroeconomic outlook, among others. Since May 2024, Ofcom has announced it will consult on reform of the Universal Service in early 2025, although there is still uncertainty over the timing for any final change, the nature of any change, and execution risk remains. The Offer price of 370 pence per IDS share represented a significant premium of approximately 72.7% to the IDS share price of 214 pence on 16 April 2024 (being the last business day before the Offer became public), and thus supported the recommendation. Our independent advisors as to the financial terms of the Acquisition unanimously considered them "fair and reasonable" as at the date of the Offer document.

Please read the background to and reasons for the IDS Board's recommendation set out in Part 2 (Paragraph 4) on page 46 of the Offer document.

EP Group is a long-term investor in infrastructure with significant knowledge of the postal, logistics and distribution sectors, that has the expertise and access to capital to accelerate and de-risk the delivery of IDS' strategic plans over the long-term, with the goal of developing IDS into one of the leading postal logistics players in Europe. The Board has negotiated a comprehensive package of legally binding undertakings and contractual commitments from EP Group and Bidco for specific periods, which provide customers, employees, unions, regulators and broader stakeholders with important safeguards, including:

· The provision of the Universal Service Obligation and ensuring Royal Mail's compliance with regulatory conditions imposed by Ofcom (including the one-price-goes-anywhere service in the UK and First Class letters still delivered six days a week);

· Restrictions on distributions or other forms of return of value from Royal Mail unless certain conditions are satisfied;

· Restrictions on change of control of both Royal Mail and GLS;

· Use of the "Royal Mail" trading name and commitment to IDS and Royal Mail being UK headquartered and tax resident;

· Recognition of IDS group's existing unions; and

· Maintenance of certain employee compensation and benefits (including pension benefits).

The undertakings and commitments are subject to varying timeframes and durations as detailed in Part 1 (Paragraphs 4 - 5) starting on page 18 of the offer document.

As set out in the Offer document published on 26 June 2024, it is currently expected that the recommended offer by Bidco will become or be declared unconditional in the first quarter of calendar 2025, subject to the required conditions being satisfied or waived.

Summary and Outlook

Against the backdrop of a challenging market environment, the Group has delivered a good performance over the first six months of the year and made good progress on its strategic agenda.

Royal Mail has built on the momentum from the second half of last year and continues to make good progress implementing the CWU agreement and delivering on its growth, network and channel strategy. We have improved our digital capabilities and are deploying innovative digital solutions quicker than before. We remain on track for Royal Mail to return to adjusted operating profit, before voluntary redundancy costs, for FY 2024-25³.

However, there is still hard work ahead and more investment and change required across our operations and network. The current UK fiscal and regulatory backdrop is unfavourable, with the changes to employer National Insurance announced in the budget coming into effect next year, and no change to the Universal Service as yet agreed, adding significant cost to the Royal Mail business at a time when we need to invest. This makes Universal Service reform even more urgent. Despite that, we will continue to focus on what we can control and deliver our multi-year transformation to enable the business to have the flexibility it needs to compete in a changing market.

Against a backdrop of a weaker macroeconomic environment, alongside regulation changes, GLS has implemented cost reduction and efficiency measures, and pricing actions in a number of countries. We continue to deliver on our strategy, to transform the last mile and expand our out of home network, upgrade the network to drive productivity and growth, and launch new innovative digital propositions. We're also building a global service offering, with new transatlantic routes, and enhanced distribution capabilities in Asia-Pacific.

GLS' flexible business model, broad customer base and geographic diversity, alongside a commitment to high quality, will enable it to navigate through the difficult market backdrop. We will also maintain sustained investment to support GLS' organic and inorganic growth opportunities.

OUR PRINCIPAL RISKS AND UNCERTAINTIES

The Board has considered the principal risks faced by the Group for the remaining six months of the year as described at pages 52 to 58 of International Distribution Services plc's Annual Report and Financial Statements 2023-24:

https://www.internationaldistributionservices.com/media/12344/ids_annual-report-2023-24.pdf

No new principal risks have been identified. The risks remain materially unchanged in their nature and severity, with the exception of the following risk descriptions which have been changed to reflect their change in nature and immediate focus:

· Risk 3: Industrial Relations - changed to "Employee Relations" to reflect that since agreement was reached between Royal Mail and the CWU the focus of activity is on delivery of the Agreement and broader transformational change which can only be achieved through the strengthened engagement of employees at all levels of our workforce. Successful transformation relies upon operational change, increased automation and developing new ways of working in addition to the need for new and different skills in our workforce.

· Risk 5: Customer expectations and our ability to grow revenue - changed to "Failure to grow revenue in an increasingly competitive environment". In Royal Mail there has been a recovery in revenue through the win-back programme post the industrial dispute and improving quality of service. To grow market share in the UK and internationally, in the highly competitive environment, requires continued focus on quality of service, improvement to our products and services including the development of our out of home offering, and next day delivery.

The following principal risks remain materially unchanged:

• Risk 1: Economic and political environment

• Risk 2: Failure to reduce our operational cost base

• Risk 4: Major breach of information security, data protection regulation and/or cyber attack

• Risk 6: Financial sustainability of the Universal Service

• Risk 7: Talent - workforce for the future

• Risk 8: Climate change and environmental management

• Risk 9: Actual or suspected breaches of material law and/or regulation

• Risk 10: Business continuity and operational resilience

• Risk 11: Health, safety and wellbeing

• Risk 12: Failure to manage liquidity and capital structure

FINANCIAL REVIEW

Summary results (£m)

	Reported 26 weeks September 2024	Adjustments and specific items 2024	Adjusted¹ 26 weeks September 2024	Reported 26 weeks September 2023	Adjustments and specific items 2023	Adjusted¹ 26 weeks September 2023
Revenue	6,343	-	6,343	5,862	-	5,862
Royal Mail	3,921	-	3,921	3,541	-	3,541
GLS	2,432	-	2,432	2,330	-	2,330
Intragroup revenue²	(10)	-	(10)	(9)	-	(9)
Operating costs	(6,215)	67	(6,282)	(6,103)	(72)	(6,031)
Royal Mail	(3,921)	67	(3,988)	(3,932)	(72)	(3,860)
GLS	(2,304)	-	(2,304)	(2,180)	-	(2,180)
Intragroup costs²	10	-	10	9	-	9
Profit on disposal of property, plant and equipment	-	-	-	15	15	-
Operating profit/(loss) before specific items	128	67	61	(226)	(57)	(169)
Operating specific items	(154)	(154)	-	(17)	(17)	-
Operating (loss)/profit	(26)	(87)	61	(243)	(74)	(169)
Operating (loss)/profit margin	(0.4)%	-	1.0%	(4.1)%	-	(2.9)%
Royal Mail	(138)	(71)	(67)	(383)	(64)	(319)
Royal Mail Operating loss margin	(3.5)%	-	(1.7)%	(10.8)%	-	(9.0)%
GLS	112	(16)	128	140	(10)	150
GLS Operating profit margin	4.6%	-	5.3%	6.0%	-	6.4%
Net finance costs	(30)	-	(30)	(17)	-	(17)
Net pension interest (non-operating specific item)	60	60	-	66	66	-
Profit/(loss) before tax	4	(27)	31	(194)	(8)	(186)
Tax (charge)/credit	(29)	2	(31)	(29)	2	(31)
Loss after tax	(25)	(25)	-	(223)	(6)	(217)
Earnings per share (basic) - pence	(2.6)p	n/a	-	(23.3)p	n/a	(22.7)p
In-year trading cash flow			(38)			(63)
Royal Mail			(151)			(166)
GLS			113			103
Pre-IFRS 16 in-year trading cash flow¹			(149)			(159)
Royal Mail			(221)			(222)
GLS			72			63
Gross capital expenditure			(156)			(139)
Royal Mail			(109)			(78)
GLS			(47)			(61)
Net debt³			(1,894)			(1,532)

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

2. Intragroup revenue and costs represent trading between Royal Mail and GLS, principally a result of Parcelforce Worldwide operating as GLS' partner in the UK.

3. Net Debt includes an amount of £nil (H1 2023-24: £130 million) released from the RMPP pension escrow which was subsequently used to pay Royal Mail employees a one-off payment following ratification of the Business, Transformation and Growth agreement.

Group results

Group and Royal Mail results are for the 26 week period to 29 September 2024. GLS financial performance is presented for the 6 months to 30 September 2024.

Reported Group revenue increased by £481 million to £6,343 million (H1 2023-24: £5,862 million), with growth achieved in both Royal Mail and GLS. Reported Group operating costs were £6,215 million (H1 2023-24: £6,103 million).

Reported operating profit before specific items improved by £354 million to £128 million (H1 2023-24: £226 million loss) driven by a reduction in losses in Royal Mail, partially offset by lower profit in GLS. Operating specific items were a cost of £154 million (H1 2023-24: £17 million) with the increase driven by an impairment charge of £134 million (H1 2023-24: £nil) of the Royal Mail excluding Parcelforce Worldwide CGU. Further details of the impairment assessment is provided in Note 1 of the Condensed Consolidated Financial Statements.

Reported Group operating loss was £26 million (H1 2023-24: £243 million loss) which comprised a £138 million loss in Royal Mail (H1 2023-24: £383 million loss) and a profit of £112 million in GLS (H1 2023-24: £140 million profit). The Group reported operating loss margin was 0.4% (H1 2023-24: 4.1% operating loss margin).

Non-operating specific items were a credit of £60 million (H1 2023-24: credit of £66 million) and relate to net pension interest.

Reported profit before tax was £4 million (H1 2023-24: loss of £194 million).

Revenue (£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023	% change⁴
Royal Mail	3,921	3,541	10.7%
GLS	2,432	2,330	4.4%
Intergroup revenue	(10)	(9)	11.1%
Total	6,343	5,862	8.2%

Adjusted Operating Costs¹ (£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023	% change⁴
People Costs	(3,320)	(3,237)	2.6%
Non-people costs	(2,962)	(2,794)	6.0%
Total	(6,282)	(6,031)	4.2%

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

Group revenue increased by 8.2% in the period, with parcel revenue growing by 6.4%. Parcel revenue now accounts for 70.1% of total revenue (H1 2023-24: 71.3%). In Royal Mail letter revenue also grew, increasing by 12.7% in the period, aided by the General Election related postings which added 5.5 percentage points to growth.

Adjusted Group operating costs increased by 4.2%, with people costs growing by 2.6% from the prior year and non-people costs by 6.0%. The increase in people costs was driven by wage inflation across both businesses, with Royal Mail people costs increasing by 2.2% largely as a result of the 2% pay award for frontline staff and the additional costs associated with the delivery of elections, partly offset by efficiency savings. Group non-people costs were impacted by inflationary pressures across the Group, in particular in GLS due to increased subcontractor rates and higher IT costs. More detail can be found in the "People costs" and "Non-people costs" sections within the Segment Analysis of this Financial Review.

Segment Analysis

Royal Mail

Royal Mail reported operating loss was £138 million (H1 2023-24 £383 million). The adjusted operating loss was £67 million (H1 2023-24: £319 million) with an adjusted operating loss margin of 1.7% (H1 2023-24: 9.0% operating loss margin). Revenue grew by £380 million or 10.7% versus the prior period of which £94 million was as a result of the General Election. Revenue from the General Election was higher than previous years as we saw more postal votes and candidate mail delivered. Adjusted Operating costs were higher by £128m, or 3.3%, than the same period last year.

Revenue (£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023	% change⁴
Total Parcels	2,017	1,852	8.9%
Domestic Parcels (excluding international)⁵	1,670	1,534	8.9%
International Parcels⁶	347	318	9.1%
Letters & Other	1,904	1,689	12.7%
Total	3,921	3,541	10.7%

Volume (m units)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023	% change⁴
Total Parcels	629	578	9%
Domestic Parcels (excluding international)⁵	533	508	5%
International Parcels⁶	96	70	37%
Addressed letters (excluding elections)	3,104	3,260	(5)%

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

5. Domestic Parcels excludes import and export for both Royal Mail and Parcelforce Worldwide.

6. International Parcels includes import and export for Royal Mail and Parcelforce Worldwide.

Parcels Revenue

Total parcel revenue saw an increase of 8.9% on the prior period, driven by volume growth which was 9%. Parcel revenue represented 51.4% of total Royal Mail revenue or 52.7% excluding General Election revenue, compared to 52.3% in H1 2023-24.

Domestic parcels (excluding International) volume grew by 5% and revenue grew by 8.9% versus the prior period. The first half of the year has seen volume growth driven by customer win back in account parcels which grew by 8%. As well as higher volumes, revenue also benefitted from contract price rises since the previous half year.

International revenue grew 9.1% on the prior period due to volumes which were 37% higher. Prior period performance was impacted by lower consumer spending and a cyber incident. The cyber incident mainly impacted international import volumes where, following a short closure to the international operation, volumes took some time to recover. Growth this year has been driven by commercial import parcel volumes which were 63% higher than the prior period, however these imports have a lower price and so impact less on revenue. The higher imports have more than compensated for a decline in export volumes.

Letters Revenue

Total letter revenue saw an increase of 12.7% versus the prior period, or 7.2% excluding revenue generated as a result of the General Election. Volumes for addressed letters excluding elections fell by 5%, reflecting the ongoing structural decline in the letters market. However, this volume decline was more than offset by price increases.

Advertising mail volumes were down 3% year-on-year, however revenue grew 5.1% on the prior period. As the general economic outlook for the UK has improved, we have seen some customers returning to using advertising mail compared to the same period last year.

Business mail volumes, which include mandatory communications from the Financial Services sector e.g. interest rate change mailings, have declined 5% year-on-year excluding the impact of the General Election. Unexpected one-off mailings softened the decline in volume year-on-year, whilst revenue grew 17.6% in total.

Consumer and small business letter volumes fell by 13% versus the previous year, however revenue grew by 4.5%.

Adjusted operating costs¹

(£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023	% change⁴
People costs	(2,753)	(2,693)	2.2%
People costs excluding voluntary redundancy	(2,738)	(2,693)	1.7%
Voluntary redundancy costs	(15)	-	N/M
Non-people costs	(1,235)	(1,167)	5.8%
Distribution and conveyance costs	(430)	(394)	9.1%
Infrastructure costs	(463)	(433)	6.9%
Other operating costs	(342)	(340)	0.6%
Total	(3,988)	(3,860)	3.3%

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

Total adjusted operating costs increased by £128 million or 3.3% year-on-year. People costs have increased by £60 million or 2.2% on the prior period. Non-people costs have increased £68 million or 5.8% on the prior period. This has been driven by distribution and conveyancing costs and infrastructure costs with other operating costs remaining broadly flat.

People costs

People costs have increased by £60 million or 2.2% on the prior period. Excluding the cost of voluntary redundancy of £15 million (H1 2023-24: £nil) people costs increased by 1.7%.

Within people costs, Royal Mail's operational staff costs increased by £60 million, however, a significant portion of this increase is attributed to non-recurring election related expenses. In addition, the increase includes the impact of the 2% pay award and increased resourcing to handle higher parcel volumes, which were partially offset by lower sick absence compared to the prior period, and benefits from the full impact of seasonal variation of frontline hours.

Non-operational people costs were flat and included the benefit of continued cost saving and transformation programmes.

Non-people costs

Non-people costs increased by £68 million or 5.8% versus the prior period.

Distribution and conveyance costs increased by 9.1%. The increasing average age of vehicles within the Royal Mail Fleet has led to higher maintenance costs and use of hire vehicles. The increasing age of the fleet has driven Royal Mail to invest in new vehicles to refresh the age of the fleet. This investment will continue throughout the year. These additional costs, as well as fuel inflation, have been partially offset by lower international overseas conveyance costs due to lower export volumes. Royal Mail has removed 14 domestic flights at the end of H1 2024-25, and although the impact of this is minimal in the period, the savings will continue to grow throughout the year.

Infrastructure costs increased year-on-year by 6.9%. This category includes the inflationary impacts of rents and business rates which have increased by £13 million against the prior period. Technology costs have increased by £12 million driven by inflationary pressures and higher costs associated with Heathrow Worldwide Distribution Centre following the rebuilding of the network, ensuring increased resilience.

Other operating costs have remained broadly in line with the prior period.

GLS

GLS reported operating profit was £112 million (H1 2023-24: £140 million). Adjusted operating profit was £128 million (H1 2023-24: £150 million). Adjusted operating margin declined by 110 basis points to 5.3% due to operational cost pressures including the impact from regulatory effects in some markets and an investment in strategic initiatives with initial start-up losses. Foreign exchange movements adversely impacted revenue by £44 million and favourably impacted costs by £42 million resulting in a net decrease in operating profit of £2 million.

Adjusted operating profit in Euro terms decreased by 13.3%.

Summary results^1,7 (£m)	6 months to 30 September 2024	6 months to 30 September 2023	% change⁴
Volume (m units)	449	433	4%

Revenue	2,432	2,330	4.4%
Operating costs	(2,304)	(2,180)	5.7%
Adjusted Operating profit	128	150	(14.7)%

(€m)
Revenue	2,863	2,694	6.3%
Operating costs	(2,713)	(2,521)	7.6%
Adjusted Operating profit	150	173	(13.3)%

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

7. The results for H1 2024-25 include £0.4 million (H1 2023-24: £1 million) operating profit before specific items from acquisitions.

Revenue

Revenue increased by 4.4% in Sterling terms (6.3% in Euro terms) driven by a combination of parcel volume growth, and slightly improved pricing. Overall price development was negatively impacted by mix effects due to a higher proportion of B2C shipments with a lower average price. Revenue growth was achieved in most markets. GLS' European markets represented 89.1% of total revenue (H1 2023-24: 88.2%), with the North American market contributing 10.9% (H1 2023-24: 11.8%).

Overall volumes increased by 4% despite challenging economic conditions. Growth was driven by higher cross-border volumes and increasing domestic volumes. B2C volume share at 59% was two percentage points above the prior period.

Operating costs

(£m)	Reported 6 months to 30 September 2024	Reported 6 months to 30 September 2023	% change⁴
People costs	(567)	(544)	4.2%
Non-people costs	(1,737)	(1,636)	6.2%
Distribution and conveyance costs	(1,512)	(1,420)	6.5%
Infrastructure costs	(173)	(161)	7.5%
Other operating costs	(52)	(55)	(5.5)%
Total	(2,304)	(2,180)	5.7%

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

Total reported operating costs in Sterling terms increased by 5.7%.

Inflationary effects across GLS markets, including higher minimum wages in some countries, impacted rates for sub-contracted services such as collection, delivery and linehaul as well as own labour costs.

The reported cost increases in Euro terms are presented below.

(€m)	6 months to 30 September 2024	6 months to 30 September 2023	% change⁴
People costs	(668)	(629)	6.2%
Non-people costs	(2,045)	(1,892)	8.1%
Distribution and conveyance costs	(1,780)	(1,642)	8.4%
Infrastructure costs	(204)	(186)	9.7%
Other operating costs	(61)	(64)	(4.7)%
Total	(2,713)	(2,521)	7.6%

4. All percentage changes reflect the movement between figures as presented, unless otherwise stated.

People costs

In Euro terms people costs increased by 6.2% due to a combination of factors including higher unit labour costs for hub and depot operations driven by wage inflation across GLS' markets and higher minimum wages in some jurisdictions.

Non-people costs

Non-people costs increased by 8.1% in Euro terms. Distribution and conveyance costs were up 8.4%, driven by higher sub-contractor rates due to wage inflation and the impact from regulatory changes in markets such as Italy, Germany and Belgium. Infrastructure costs increased by 9.7%, whilst other operating costs were down by 4.7%. The increase in infrastructure costs was principally due to higher depreciation, IT costs and repairs and maintenance.

Country overview

The following individual market summaries detail growth in Euro terms.

In Germany, the largest GLS market by revenue, revenues were up 7.8%, benefitting from additional working days, with underlying volumes flat. Price increases were implemented in response to inflationary effects on the cost base. Wage inflation resulted in higher subcontractor rates for pick-up and delivery, as well as higher labour costs in hubs and depots; in addition, linehaul tolls doubled. Germany is seeing record-high business bankruptcies and is on the cusp of recession, a challenging environment that has driven operating profit and margin decline compared with the prior period.

Italy revenue grew by 3.4%, including the impact of more working days. Operating profit declined compared with the prior period due to increasing operational costs resulting from wage inflation and regulatory effects on the subcontractor base, which have placed downward pressure on margin.

Organic revenues in Spain grew by 11.1% driven by double-digit volume growth with prices relatively flat. Volume growth was supported by additional capacity in the Madrid hub which became fully operational by August 2023. A full period impact from the extra capacity and linked operational efficiencies contributed to an improvement in operating profit. The acquisition of fulfilment business e-Log Logistica Insular was completed on 13 June 2024 for consideration of €2 million expanding GLS Spain's service portfolio.

France revenue grew by 7.6%, due to a combination of volume growth and improved pricing. Volumes benefitted from significant growth in cross-border, with domestic volumes marginally higher. Losses were slightly higher than the corresponding period of the prior year. In September 2024 the new hub in Le Coudray (Paris) was opened providing additional capacity ahead of the peak season. The new facility is expected to generate efficiency savings once fully scaled-up and further improve quality across the French network.

In the US, underlying revenues declined by 7.3% in Euro terms (7.5% decline in USD terms), due to lower parcel volumes resulting from lower B2C volumes including the impact from yield management initiatives. Despite the volume and revenue decline, improved operational productivity resulted in a marginal improvement in total operating losses. On 1 September the US Freight business was divested for consideration of USD 21 million resulting in a gain on disposal of USD 0.4 million. GLS US management will now focus on the core parcel operations, including leveraging cross-border traffic to/from Europe and Canada. Shipments from US to Europe commenced in February 2024 and are on a good trajectory.

Canada organic revenues increased by 2.8% in Euro terms (4.4% in CAD terms) principally due to a combination of higher parcel volumes and growth in freight revenues. Operating profit was slightly up on the prior period despite fragile economic conditions. The integration of Rosenau and Altimax to create a unified national operation in Canada continues to progress well.

Revenue growth in GLS' other developed European markets was 3.7%, driven by a combination of higher volumes and better pricing. Operating profit was above the prior year, with good progression in most markets including positive developments in Belgium, Denmark and Austria.

In other developing markets, where GLS has a high exposure to B2C, organic revenue increased 13.1% in the period, with growth in all markets. Overall operating profit was slightly below the prior period, with performance in Poland broadly offsetting profit declines in some other eastern European markets. Investment in strategic initiatives, such as the roll-out of parcel lockers with initial start-up costs, are impacting profit development. In Hungary the acquisition of fulfilment business iLogistic was completed on 28 June 2024 for initial consideration of €3 million with a further €2 million deferred contingent consideration subject to future performance. iLogistic will complement GLS Hungary's parcel operations and represents a further step in expanding GLS' European fulfilment footprint.

Other Group financial performance measures

Adjustments and specific items¹

(£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023
Exclude adjustments to reported operating profit/(loss) (£m):
Pension charge adjustment	11	(132)
Depreciation/amortisation adjustment for impaired assets	56	60
Profit on disposal of property, plant and equipment	-	15
Total adjustments to operating profit/(loss)	67	(57)
Add back operating specific items
Amortisation of intangible assets from acquisitions	(8)	(11)
Impairment of Royal Mail excluding Parcelforce Worldwide CGU	(134)	-
Regulatory and legal charges	7	(6)
Incremental bid costs	(22)	-
Legacy/other items	3	-
Total operating specific items	(154)	(17)
Non-operating specific items:
Net pension interest	60	66
Total specific items	(94)	49

Tax credit on adjustments and specific items	2	2

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

The pension charge adjustment is £11 million debit (H1 2023-24: £132 million credit). In the current year this solely (H1 2023-24: £2 million credit) relates to the difference between the IAS 19 income statement pension charge rate of 13.2% (H1 2023-24: 14.8%) for the Defined Benefit Cash Balance Section (DBCBS) and the cash funding contribution rate agreed with the Trustee of 15.6% (H1 2023-24: 15.6%). The prior period also includes £130 million in relation to a refund of cash held in escrow by the Trustee of the Royal Mail Pension Plan (RMPP). The RMPP escrow cash was subsequently used to provide a one-off payment to UK employees.

In previous years an impairment charge was recognised to write down the value of the Royal Mail (excluding Parcelforce Worldwide) CGU. This has resulted in a lower depreciation/amortisation charge in infrastructure costs, and an adjustment of £56 million (H1 2023-24: £60 million) has been made to the adjusted results to reflect the depreciation/amortisation on a pre-impairment basis in line with how Management reviews the underlying performance of the business.

Amortisation of intangible assets from acquisitions of £8 million (H1 2023-24: £11 million) mainly relates to amortisation in GLS.

In the period the Royal Mail excluding Parcelforce Worldwide CGU was impaired by £134 million (H1 2023-24: £nil). In assessing whether the CGU was impaired, the carrying value of the CGU of £2,053 million was compared to its recoverable amount, using the higher of a value in use (VIU), or fair value less cost of disposal (FVLCD) methodology. The VIU methodology would have resulted in a significant further impairment, while the FVLCD methodology resulted in an impairment charge of £134 million. Further details of the calculations involved are provided in Note 1 of the Condensed Consolidated Financial Statements.

The regulatory and legal charges credit of £7 million represents changes in the best estimates to settle present obligations for Royal Mail and GLS. The prior year debit of £6 million was in respect of the penalty issued by Ofcom in respect of the 2022-23 USO Quality of Service performance.

Incremental bid costs of £22 million (H1 2023-24: £nil) represent the one-off costs incurred by the Group in relation to the takeover bid by EP Group. These costs mainly relate to the provision of financial and legal advice.

Legacy/other items mainly relate to a £3 million release (H1 2023-24: £nil) of the industrial diseases provision.

Net finance costs

Reported net finance costs of £30 million (H1 2023-24: £17 million) comprise interest on bonds (including the cross-currency swaps and the two new bonds issued in September 2023) of £29 million (H1 2023-24: £12 million), interest on leases of £24 million (H1 2023-24: £19 million), interest/fees on the bank syndicate loan and the €500 million backstop facility of £1 million (H1 2023-24: £4 million), and other net interest payable of £4 million (H1 2023-24: £1 million). This was partially offset by interest income of £28 million (H1 2023-24: £19 million), which increased as a result of interest earned on the net proceeds of the two bond issues in September 2023.

The blended interest rate on gross debt, including leases for the remainder of 2024-25, is approximately 4%.

Taxation

The Group recognised a reported tax charge of £29 million (H1 2023-24: £29 million) which consists of a tax charge of £30 million (H1 2023-24: £33 million) in GLS and a tax credit of £1 million (H1 2023-24: £4 million credit) in Royal Mail.

The GLS reported effective tax rate of 29.4% (H1 2023-24: 25.8%) is higher than the GLS weighted average tax rate of 20.7% (H1 2023-34: 21.9%) mainly due to the effect of losses in certain territories for which no deferred tax credit is recognised and the non-tax-deductible legal and regulatory provisions.

The GLS adjusted effective tax rate of 27.1% (H1 2023-24: 25.4%) is lower than the reported effective tax rate as it does not include the effect of the non-tax-deductible provisions in GLS Italy, which are treated as a specific item.

In Royal Mail there is a reported tax credit of £1 million (H1 2023-24: £4 million).

Due to the uncertainty of generating future taxable profits, Royal Mail continues to not recognise a tax credit for its losses and other temporary differences.

Earnings per share (EPS)

Reported basic EPS was 2.6 pence loss per share (H1 2023-24: 23.3 pence loss per share) and adjusted basic EPS was nil pence per share (H1 2023-24: 22.7 pence loss per share).

In-year trading cash flow¹

	26 weeks ended 29 September 2024			26 weeks ended 24 September 2023
(£m)	Royal Mail	GLS	Group	Royal Mail	GLS	Group
Adjusted operating (loss)/profit	(67)	128	61	(319)	150	(169)
Adjusted depreciation and amortisation	212	98	310	209	90	299
Adjusted EBITDA	145	226	371	(110)	240	130
Trading working capital movements	(157)	(33)	(190)	20	(38)	(18)
Other non-cash adjustments⁸	7	-	7	2	-	2
Gross capital expenditure	(109)	(47)	(156)	(78)	(61)	(139)
Net finance costs paid	(47)	(8)	(55)	(13)	(11)	(24)
Income tax received/(paid)	10	(25)	(15)	13	(27)	(14)
In-year trading cash flow	(151)	113	(38)	(166)	103	(63)
Capital element of operating lease repayments⁹	(70)	(41)	(111)	(56)	(40)	(96)
Pre-IFRS 16 in-year trading cash flow	(221)	72	(149)	(222)	63	(159)

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

8. Other non-cash adjustments include £2 million (H1 2023-24: £2 million) relating to the share-based awards (LTIP and DSBP) charge and £5 million (H1 2023-24: £nil) relating to foreign exchange movements.

9. The capital element of lease payments of £115 million (H1 2023-24: £101 million) shown in the statutory cash flow is made up of the capital element of operating lease payments of £111 million (H1 2023-24: £96 million) and the capital element of finance lease payments of £4 million (H1 2023-24: £5 million).

Group in-year trading cash outflow was £38 million (H1 2023-24: £63 million outflow). This improvement was predominantly driven by the trading improvement in Royal Mail, partially offset by higher trading working capital movements, increased capital expenditure and higher finance costs.

Royal Mail trading working capital outflow in the period was £157 million compared to a working capital inflow of £20 million in the prior period. This was driven by a number of factors including higher international settlements in the current period, seasonality of payroll costs and a number of working capital actions taken in the prior half year that did not repeat.

GLS in-year trading cash flow remains robust, a slight improvement on prior year principally as lower operating profit was more than offset by a reduction in capital expenditure and lower trading working capital movements and income tax payments.

Net debt¹

A reconciliation of the movement in net debt is set out below.

(£m)	Reported 26 weeks ended 29 September 2024	Reported 26 weeks ended 24 September 2023
Net debt brought forward at 1 April 2024 and 27 March 2023	(1,716)	(1,500)
Free cash flow	(47)	(72)
In-year trading cash flow	(38)	(63)
Cash cost of operating specific items	(17)	(2)
Proceeds from disposal of property (excluding London Development Portfolio) plant and equipment	5	7
Cash received on sale and leasebacks - rights to assets transferred	-	8
Acquisition of business interests, net of cash acquired	(10)	(31)
Proceeds from disposal of business interests	15	-
London Development Portfolio net (costs)/proceeds	(2)	9
Sale of pension escrow investments	-	130
RMSEPP refund of surplus	6	-
Movement in GLS client cash¹⁰	(7)	8
New or increased lease obligations under IFRS 16 (non-cash)	(137)	(101)
Foreign currency exchange impact	27	3
Amortisation of Bond discount (finance costs payable)	(1)	-
Dividends paid to equity holders of the Parent Company	(19)	-
Net debt carried forward	(1,894)	(1,532)
Operating leases¹¹	1,352	1,390
Pre-IFRS 16 net debt¹²	(542)	(142)

1. Reported results are prepared in accordance with UK adopted International Financial Reporting Standards (IFRS). In addition, the Group's performance is explained through the use of Alternative Performance Measures (APMs) that are not defined under IFRS. The APMs used are explained in the section entitled 'Presentation of results and Alternative Performance Measures' and reconciliations to the closest measure prescribed under IFRS are provided where appropriate.

10. GLS client cash movements are presented as part of the working capital movements line in the statutory cashflow. The movement in the period excluding foreign currency exchange impacts is £7 million outflow (H1 2023-24: £8 million inflow). The foreign currency movement on GLS client cash in the period was a loss of £1 million (H1 2023-24: £1m loss) which is included in the £27 million inflow (H1 2023-24: £3 million inflow) foreign currency exchange impact line in the table.

11. This amount represents leases that would not have been recognised on the Balance Sheet prior to the adoption of IFRS 16.

12. This measure is considered as the Group's banking covenants are calculated on a pre-IFRS 16 basis.

An analysis of the net debt as at 29 September 2024 is set out below.

Net Debt (£m)	2024-25 RM	2024-25 GLS	2024-25 Corporate Centre	2024-25 Group
Bonds	-	-	(1,120)	(1,120)
Asset Finance	-	(27)	-	(27)
Financial Leases	(71)	(8)	-	(79)
Cash and cash equivalent investments¹³	141	322	182	645
Client cash	-	39	-	39
Inter-business loans	(606)	(178)	784	-
Pre-IFRS 16 Net Debt¹²	(536)	148	(154)	(542)
Operating Leases	(882)	(470)	-	(1,352)
Net Debt	(1,418)	(322)	(154)	(1,894)

12. This measure is considered as the Group's banking covenants are calculated on a pre-IFRS 16 basis.

13. Cash and cash equivalents includes bank overdrafts of £58 million at 29 September 2024 that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group's cash management.

London Development Portfolio

In total we have invested £2 million (H1 2023-24: £2 million) in the period on works to separate the retained operational sites from the development plots at Mount Pleasant and infrastructure works at Nine Elms.

The development site at Mount Pleasant was previously sold to Taylor Wimpey UK Ltd. Proceeds in relation to the sale of the site have been received in stage payments in prior years and the remainder of the proceeds is due to be received through a final payment of £9.5 million later this year.

Pensions

Royal Mail makes contributions to two main schemes in the UK; the Royal Mail Defined Contribution Plan (RMDCP) and the Defined Benefit Cash Balance Section (DBCBS) of the Royal Mail Pension Plan (RMPP).

The Group also operates the legacy section of the RMPP which is closed to accrual.

The buy-out of the Royal Mail Senior Executives Pension Plan (RMSEPP) was completed in June 2022, when the bulk annuity policies held were exchanged for individual policies between the insurers and all remaining members. The Group's obligations under the RMSEPP have now been fully extinguished and the scheme was wound up in April 2024. The residual assets were returned to the Group after the remaining closure expenses and the deduction of withholding tax.

Since the half year, on 7 October 2024, Royal Mail introduced a new pension scheme, the Royal Mail Collective Pension Plan (RMCPP) which replaced the existing DBCBS and the RMDCP for future accrual and comprises a Defined Benefit Lump Sum Section (DBLS), similar to the existing DBCBS, and a Collective Defined Contribution (CDC) Section.

The CDC Section will be accounted for as a defined contribution scheme and the DBLS as a defined benefit scheme with the accounting treatment expected to be similar to the DBCBS. The new arrangements will have fixed employer contributions of 13.6%, plus an additional 1.0% for employees who choose to save for an additional lump sum payment. Standard employee contributions will be 6.0%.

Cash pension costs

The Group's cash pension costs in respect of all UK pension schemes were £71 million (H1 2023-24: £193 million) in the period, excluding Pension Salary Exchange (PSE). In addition, £120 million (H1 2023-24: £nil) of employer contributions were paid into an escrow in respect of accrual in DBCBS for the first half year.

Defined benefit schemes - balance sheet position

An IAS 19 deficit of £19 million (31 March 2024: £60 million) is shown on the balance sheet in respect of the DBCBS; however, the scheme is not in funding deficit and it is not anticipated that deficit payments will be required. The decrease in the deficit in the period is largely due to an increase in the assets of £129 million, which was offset by a smaller increase in the IAS 19 liabilities in the period of £88 million.

The RMPP scheme closed to future accrual in its previous form from 31 March 2018. The pre-withholding tax accounting surplus of the legacy section of the RMPP at 29 September 2024 was £2,338 million (31 March 2024: £2,462 million). The pre-withholding tax accounting surplus has decreased by £124 million in the period. The decrease in the surplus is due to a decrease in the assets of £229 million partially offset by a decrease in liabilities of £105 million.

Dividends

No FY 2024-25 interim dividend to be paid.

Presentation of results and alternative performance measures (APMs)

The Group uses certain APMs in its financial reporting that are not defined under IFRS, the Generally Accepted Accounting Principles (GAAP) under which the Group produces its statutory financial information.

These APMs are not a substitute for, or superior to, any IFRS measures of performance. They are used by Management, who considers them to be an important means of comparing performance period-on-period and are key measures used within the business for assessing performance.

APMs should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Where appropriate, reconciliations to the nearest GAAP measure have been provided. The APMs used may not be directly comparable with similarly titled APMs used by other companies.

A full list of APMs used are set out in the section entitled 'Alternative Performance Measures'.

Reported to adjusted results

The Group makes adjustments to results reported under IFRS to exclude specific items, depreciation/amortisation adjustment for impaired assets, profit/(loss) on disposal of property, plant and equipment, and the pension charge adjustment. Management believes this is a useful basis upon which to analyse the business' underlying performance (in particular given the volatile nature of the IAS 19 charge) and is consistent with the way financial performance is reported to the Board.

Further details on specific items excluded from adjusted operating profit are included in the paragraph 'Adjustments and specific items' in the Financial Review. A reconciliation showing the adjustments made between reported and adjusted Group results can be found in the section headed 'Consolidated reported and adjusted results' below.

Presentation of results

Consolidated reported and adjusted results

The following table reconciles the consolidated reported results, prepared in accordance with IFRS, to the consolidated 26 week adjusted results:

	26 weeks ended 29 September 2024			26 weeks ended 24 September 2023
Group (£m)	Reported	Adjustments and specific items¹⁴	Adjusted	Reported	Adjustments and specific items¹⁴	Adjusted
Revenue	6,343	-	6,343	5,862	-	5,862
Operating costs	(6,215)	67	(6,282)	(6,103)	(72)	(6,031)
People costs	(3,309)	11	(3,320)	(3,369)	(132)	(3,237)
Non-people costs	(2,906)	56	(2,962)	(2,734)	60	(2,794)
Distribution and conveyance costs	(1,932)	-	(1,932)	(1,805)	-	(1,805)
Infrastructure costs	(580)	56	(636)	(534)	60	(594)
Other operating costs	(394)	-	(394)	(395)	-	(395)
Profit on disposal of property, plant and equipment	-	-	-	15	15	-
Operating profit/(loss) before specific items	128	67	61	(226)	(57)	(169)
Operating specific items¹⁴
Amortisation of intangible assets from acquisitions	(8)	(8)	-	(11)	(11)	-
Impairment of Royal Mail excluding Parcelforce Worldwide CGU	(134)	(134)	-	-	-	-
Regulatory and legal charges	7	7	-	(6)	(6)	-
Incremental bid costs	(22)	(22)	-	-	-	-
Legacy/other items	3	3	-	-	-	-
Operating (loss)/profit	(26)	(87)	61	(243)	(74)	(169)
Finance costs	(58)	-	(58)	(36)	-	(36)
Finance income	28	-	28	19	-	19
Net pension interest (non-operating specific item)¹⁴	60	60	-	66	66	-
Profit/(loss) before tax	4	(27)	31	(194)	(8)	(186)
Tax (charge)/credit	(29)	2	(31)	(29)	2	(31)
Loss for the period	(25)	(25)	-	(223)	(6)	(217)
Earnings per share (pence)
Basic	(2.6)p	n/a	-	(23.3)p	n/a	(22.7)p
Diluted	(2.6)p	n/a	-	(23.3)p	n/a	(22.7)p

14. Details of adjustments and specific items can be found under 'Adjustments and specific items' in the Financial Review.

Segmental reported results

The following table presents the segmental reported results, prepared in accordance with IFRS:

	26 weeks ended 29 September 2024				26 weeks ended 24 September 2023
Group (£m)	Royal Mail	GLS	Intragroup eliminations	Group	Royal Mail	GLS	Intragroup eliminations	Group
Revenue	3,921	2,432	(10)	6,343	3,541	2,330	(9)	5,862
People costs	(2,742)	(567)	-	(3,309)	(2,825)	(544)	-	(3,369)
Non-people costs	(1,179)	(1,737)	10	(2,906)	(1,107)	(1,636)	9	(2,734)
Profit on disposal of property, plant and equipment	-	-	-	-	14	1	-	15
Operating profit/(loss) before specific items	-	128	-	128	(377)	151	-	(226)
Operating specific items¹⁴	(138)	(16)	-	(154)	(6)	(11)	-	(17)
Operating (loss)/profit	(138)	112	-	(26)	(383)	140	-	(243)
Net finance costs	(20)	(10)	-	(30)	(5)	(12)	-	(17)
Net pension interest (non-operating specific item)¹⁴	60	-	-	60	66	-	-	66
(Loss)/profit before tax	(98)	102	-	4	(322)	128	-	(194)
Tax credit/(charge)	1	(30)	-	(29)	4	(33)	-	(29)
(Loss)/profit for the period	(97)	72	-	(25)	(318)	95	-	(223)

14. Details of adjustments and specific items can be found under 'Adjustments and specific items' in the Financial Review.

Alternative Performance Measures

This section lists the definitions of the various APMs disclosed throughout this report. They are used by management, who considers them to be an important means of comparing performance year-on-year and are key measures used within the business for assessing performance.

Adjusted operating profit/(loss)

This measure is based on reported operating profit excluding the pension charge adjustment, the depreciation/amortisation adjustment for impaired assets, profit/(loss) on disposal of property, plant and equipment, and operating specific items, which Management considers to be key adjustments in understanding the underlying result of the Group at this level. These adjusted measures are reconciled to the reported results in the table in the 'Presentation of results' section within 'Consolidated reported and adjusted results'. Definitions of the pension charge adjustment, the depreciation/amortisation adjustment for impaired assets, profit/(loss) on disposal of property, plant and equipment, and operating specific items are provided below.

Adjusted operating profit/(loss) margin

This is a measure of performance that management uses to understand the efficiency of the business in generating profit. It calculates 'adjusted operating profit' as a proportion of revenue in percentage terms.

Earnings before interest, tax, depreciation and amortisation (EBITDA) before specific items and adjusted EBITDA

EBITDA is reported operating profit before specific items with depreciation and amortisation added back. Adjusted EBITDA is EBITDA before specific items with the pension charge adjustment added back.

(£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023
Reported operating profit/(loss) before specific items	128	(226)
Adjustment for profit on disposal of property, plant and equipment	-	(15)
Reported operating profit/(loss) before profit on disposal of property, plant and equipment and specific items	128	(241)
Reported depreciation and amortisation	254	239
EBITDA before profit on disposal of property, plant and equipment adjustment and specific items	382	(2)
Pension charge adjustment	(11)	132
Adjusted EBITDA	371	130

Adjusted earnings per share

Adjusted earnings per share is reported basic earnings per share, excluding operating and non-operating specific items, the pension charge adjustment, the depreciation/amortisation adjustment for impaired assets and profit/(loss) on disposal of property, plant and equipment.

Adjusted people costs

People costs incurred in respect of the Group's employees and comprise wages and salaries, temporary resource, pensions, bonus and social security costs. People costs relating to projects and voluntary redundancy costs are also included. The pension charge adjustment is excluded from reported people costs in establishing adjusted people costs.

(£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023
Reported people costs	(3,309)	(3,369)
Pension charge adjustment	(11)	132
Adjusted people costs	(3,320)	(3,237)

Adjusted non-people costs

These are costs incurred in respect of the operations of the Company and comprise distribution and conveyance costs, infrastructure costs (e.g. depreciation/amortisation, property and IT) and other operating costs (e.g. Post Office Ltd charges, transformation costs, consumables). The depreciation/amortisation adjustment for impaired assets is excluded from reported non-people costs, specifically infrastructure costs, in establishing adjusted non-people costs.

(£m)	26 weeks ended 29 September 2024	26 weeks ended 24 September 2023
Reported non-people costs	(2,906)	(2,734)
Depreciation/amortisation adjustment for impaired assets	(56)	(60)
Adjusted non-people costs	(2,962)	(2,794)

Pension charge adjustment

This adjustment represents the difference between the IAS 19 income statement pension charge and the funding cost of accrual as specified in the DBCBS Schedule of Contributions, plus any payments into, or out of, RMPP pension escrow investments and any scheme deficit payments. Management reviews the performance of the business based on the cash cost of the pension plans in the adjusted operating profit/(loss) of the Group.

Depreciation/amortisation adjustment for impaired assets

This adjustment represents the reinstatement of the amounts for depreciation and amortisation that would have been charged to the income statement, had the partial impairment of the Royal Mail excluding Parcelforce Worldwide CGU impairment in prior years not taken place. The reported depreciation and amortisation is in accordance with UK-adopted IFRS, however when reviewing these balances management exclude the impact of impairments and the related impact on depreciation and amortisation. Due to the unpredictability of impairments and the resulting impact on depreciation, this measure is used to provide a consistent basis for operating profit.

Profit/(loss) on disposal of property, plant and equipment

Management separately identifies the profit/(loss) on disposal of property, plant and equipment as these disposals are not part of the Group's trading activity and are driven primarily by business strategy.

Operating specific items

These are items that management consider significant by nature or value and that, in management's opinion, require separate identification. Management does not consider them to be reflective of year-on-year operating performance.

Amortisation of intangible assets in acquisitions

These charges, which arise as a direct consequence of IFRS business combination accounting requirements, are separately identified as management does not consider these costs to be directly related to the trading performance of the Group.

Impairment of Royal Mail excluding Parcelforce Worldwide CGU

These costs represent the impairment charge arising from the impairment assessment of the Royal Mail excluding Parcelforce Worldwide CGU. The reported impairment charge is in accordance with UK-adopted IFRS, however, when reviewing performance, management exclude the impact of impairments. Due to the unpredictability of impairments, this measure is used to provide a consistent basis for operating profit.

Regulatory and legal charges

These costs relate to incremental one-off costs arising from various ongoing legal and regulatory matters across the Group. These costs have been separately identified as management do not consider these costs to be directly related to the trading performance of the Group.

Incremental bid costs

These costs relate to the incremental one-off costs arising from the bid from EP Group. These costs have been separately identified as management do not consider these costs to be directly related to the trading performance of the Group. These costs have been allocated against the Royal Mail segment on the basis that this is where Corporate Centre costs are included.

Legacy/other items

These costs/credits relate to unavoidable ongoing costs arising from historic events (such as the industrial diseases provision).

Non-operating specific items

These are recurring or non-recurring items of income or expense of a particular size and/or nature which do not form part of the Group's trading activity and in management's opinion require separate identification.

Net pension interest

The net pension interest credit/charge is a non-cash item recognised under the requirements of IAS 19. It is calculated based on the pension surplus/deficit multiplied by the discount rate at the beginning of the reporting period. It is not considered to form part of the Group's trading activity and in management's opinion requires separate identification.

Adjusted tax (charge)/credit

The adjusted tax (charge)/credit is the total reported tax (charge)/credit excluding the tax (charge)/credit in relation to specific items, the depreciation/amortisation adjustment for impaired assets, profit/(loss) on disposal of property, plant and equipment and the pension charge adjustment.

Weighted average tax rate

This rate is calculated by taking the weighted average sum of the expected tax charge of each territory. The expected tax charge in a territory is calculated by taking the profits multiplied by the standard rate of tax in that territory. The weighted average tax rate is sometimes considered as a useful alternative to the parent company standard rate of tax when reconciling the effective tax rate.

Adjusted effective tax rate

The adjusted effective tax rate is the adjusted tax charge or credit for the year expressed as a proportion of adjusted profit before tax. The adjusted effective tax rate is considered by Management to be a useful measure of the tax impact for the period. It approximates to the tax rate on the underlying trading business through the exclusion of specific items, the pension charge adjustment, the depreciation/amortisation adjustment for impaired assets and profit/(loss) on disposal of property, plant and equipment.

Free cash flow

Free cash flow (FCF) is calculated as statutory (reported) net cash flow before financing activities, adjusted to include finance costs paid and exclude net cash from the purchase/sale of financial asset investments and GLS client cash movements. FCF represents the cash that the Group generates after spending the money required to maintain or expand its asset base, thus is useful for Management in assessing liquidity. FCF is also shown on a pre-IFRS 16 basis as it is used to support dividend cover analysis, taking into account all cash flows related to the operating businesses.

The following table reconciles free cash flow to the nearest IFRS measure 'net cash inflow before financing activities'.

(£m)	Reported 26 weeks ended 29 September 2024	Reported 26 weeks ended 24 September 2023
Net cash inflow/(outflow) before financing activities	249	(1)
Adjustments for:
Finance costs paid	(81)	(42)
Movement in GLS client cash¹⁵	7	(8)
Sale of pension escrow investments	-	(130)
(Sale)/purchase of financial asset investments	(216)	109
RMSEPP refund of surplus	(6)	-
Free cash flow	(47)	(72)
Capital element of operating lease repayments⁹	(111)	(96)
Pre-IFRS 16 free cash flow	(158)	(168)

9. The capital element of lease payments of £115 million (2023-24: £101 million) shown in the statutory cash flow is made up of the capital element of operating lease payments of £111 million (2023-24: £96 million) and the capital element of finance lease payments of £4 million (2023-24: £5 million).

15. The movement in GLS client cash is shown excluding foreign currency exchange loss of £1 million (H1 2023-24: £1 million loss).

In-year trading cash flow

In-year trading cash flow reflects the cash generated from the trading activities of the Group. It is based on reported net cash inflow from operating activities, adjusted to exclude movements in GLS client cash and the cash cost of operating specific items and to include the cash cost of property, plant and equipment and intangible asset acquisitions, net finance payments and dividends received from associates. In-year trading cash flow is also shown on a pre-IFRS 16 basis as it is used to support dividend cover analysis, taking into account all cash flows related to the operating businesses.

The following table reconciles in-year trading cash flow to the nearest IFRS measure 'net cash inflow from operating activities'.

(£m)	Reported 26 weeks ended 29 September 2024	Reported 26 weeks ended 24 September 2023
Net cash inflow from operating activities	155	106
Adjustments for:
Movement in GLS client cash¹⁵	7	(8)
RMSEPP refund of surplus	(6)	-
Cash cost of operating specific items	17	2
Purchase of property, plant and equipment	(105)	(85)
Purchase of intangible assets	(51)	(54)
Net finance costs paid	(55)	(24)
In-year trading cash flow	(38)	(63)
Capital element of operating lease repayments⁹	(111)	(96)
Pre-IFRS 16 in-year trading cash flow	(149)	(159)

15. The movement in GLS client cash is shown excluding foreign currency exchange loss of £1 million (H1 2023-24: £1 million loss).

Net debt

Net debt is calculated by netting the value of financial liabilities (excluding derivatives) against cash and other liquid assets. Management consider this APM to be useful as it is a measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that can be used to assess the combined impact of the Group's indebtedness and its cash position. The use of the term net debt does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure. Net debt is also shown on a pre-IFRS 16 basis as the banking covenants are calculated on a pre-IFRS 16 basis.

Net debt excludes £230 million (FY 2023-24: £102 million) related to the RMPP and RMCPP pension escrow investments on the balance sheet which are not considered to fall within the definition of net debt.

(£m)	At 29 September 2024	At 31 March 2024
Bonds	(1,120)		(1,454)
Asset Finance	(27)		(29)
Leases	(1,431)		(1,423)
Cash and cash equivalents¹³	645		927
Investments	-		216
GLS Client cash	39		47
Net debt	(1,894)		(1,716)
Operating leases¹¹	1,352		1,388
Pre-IFRS 16 net debt	(542)		(328)

11. This amount represents leases that would not have been recognised on the Balance Sheet prior to the adoption of IFRS 16.

GLS performance presented in Euro

IDS plc financial statements are presented in Sterling, being the Group functional currency. However, given GLS strategic targets are set using Euros, GLS financial performance is presented in Euro as well as Sterling in order to aid transparency.

The reconciliation between the Group functional currency of Sterling and Euro are set out below:

	6 months to 30 September 2024		6 months to 30 September 2023
	GLS performance in Sterling (£m)	GLS performance in Euro (€m)	GLS performance in Sterling (£m)	GLS performance in Euro (€m)
Revenue	2,432	2,863	2,330	2,694
People costs	(567)	(668)	(544)	(629)
Non-people costs	(1,737)	(2,045)	(1,636)	(1,892)
Operating profit	128	150	150	173

GLS performance has been translated using an average exchange rate between Sterling and Euro of £1:€1.18 (H1 2023-24: £1:€1.16). This has resulted in a net negative £2 million (H1 2023-24: positive £2 million) impact in GLS reported operating profit before tax.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed consolidated income statement

		Reported 26 weeks ended 29 September 2024	Reported 26 weeks ended 24 September 2023
	Notes	£m	£m
Continuing operations
Revenue	2	6,343	5,862
Operating costs^1,2		(6,215)	(6,103)
People costs	3	(3,309)	(3,369)
Distribution and conveyance costs		(1,932)	(1,805)
Infrastructure costs		(580)	(534)
Other operating costs		(394)	(395)
Profit on disposal of property, plant and equipment²	4	-	15
Operating profit/(loss) before specific items²		128	(226)
Operating specific items²	4	(154)	(17)
Operating loss		(26)	(243)
Finance costs		(58)	(36)
Finance income		28	19
Net pension interest (non-operating specific item)²	4	60	66
Loss before tax		4	(194)
Tax charge	5	(29)	(29)
Loss for the period		(25)	(223)

Earnings per share	6
Basic		(2.6)p	(23.3)p
Diluted		(2.6)p	(23.3)p

1. Operating costs are stated before operating specific items.

2. Details of Alternative Performance Measures (APMs) are provided in the section entitled 'Presentation of results and alternative performance measures'.

Condensed consolidated statement of comprehensive income

	Notes	Reported 26 weeks ended 29 September 2024 £m	Reported 26 weeks ended 24 September 2023 £m
Loss for the period		(25)	(223)
Other comprehensive expense for the period from continuing operations:
Items that will not be subsequently reclassified to profit or loss:
Amounts relating to retirement benefit plans		(2)	(564)
Remeasurement losses of the defined benefit surplus in RMPP and RMSEPP		(56)	(674)
Remeasurement gains/(losses) of the defined benefit deficit in DBCBS		23	(103)
Decrease in withholding tax payable on distribution of RMPP and RMSEPP surplus	7	31	213
Items that may be subsequently reclassified to profit or loss:
Foreign exchange translation differences		(45)	(2)
Exchange differences on translation of foreign operations (GLS)		(56)	(7)
Net gain on hedge of a net investment (€500 million bond)		11	5
Designated cash flow hedges		(12)	14
(Loss)/gain on cash flow hedges deferred into equity		(17)	19
Loss/(gain) on cash flow hedges released from equity to income		1	(8)
Losses released from equity to the carrying value of non-financial assets		1	1
(Loss)/gain on cross-currency swap cash flow hedge deferred into equity		(9)	1
Loss on cross-currency swap cash flow hedge released from equity to income - interest payable		12	6
Gain on cost of hedging released from equity to income - interest payable		-	(1)
Tax on above items		-	(4)
Total other comprehensive expense for the period		(59)	(552)
Total comprehensive expense for the period		(84)	(775)

Condensed consolidated balance sheet

	Notes	Reported At 29 September 2024 £m	Reported At 31 March 2024 £m
Non-current assets
Property, plant and equipment		3,196	3,307
Goodwill		444	458
Intangible assets		270	304
Investment in associates		1	1
Financial assets	9
Pension escrow investments		160	102
Derivatives		-	2
RMPP/RMSEPP retirement benefit surplus - net of withholding tax payable	7	1,753	1,851
Other receivables		16	15
Deferred tax assets		7	7
		5,847	6,047
Current assets
Inventories		28	32
Trade and other receivables		1,578	1,595
Income tax receivable		16	23
Financial assets	9
Investments		-	216
Pension escrow investments		70	-
Derivatives		-	6
Cash and cash equivalents	9	742	1,030
Assets held for sale	8	3	42
		2,437	2,944
Total assets		8,284	8,991
Current liabilities
Trade and other payables		(1,876)	(2,106)
Financial liabilities	9
Interest-bearing loans and borrowings		(3)	(315)
Lease liabilities		(246)	(241)
Derivatives		(20)	(16)
Income tax payable		(12)	(3)
Provisions	10	(83)	(95)
Bank overdrafts	9	(58)	(56)
Liabilities held for sale	8	-	(24)
		(2,298)	(2,856)
Non-current liabilities
Financial liabilities	9
Interest-bearing loans and borrowings		(1,144)	(1,168)
Lease liabilities		(1,185)	(1,182)
Derivatives		(36)	(24)
DBCBS retirement benefit deficit	7	(19)	(60)
Provisions	10	(93)	(89)
Other payables		(17)	(16)
Deferred tax liabilities		(48)	(51)
		(2,542)	(2,590)
Total liabilities		(4,840)	(5,446)
Net assets		3,444	3,545
Equity
Share capital	12	10	10
Retained earnings		3,496	3,540
Other reserves		(62)	(5)
Total equity		3,444	3,545

Condensed consolidated statement of changes in equity

	Share capital £m	Retained earnings £m	Foreign currency translation reserve £m	Hedging reserve £m	Total equity £m
Reported at 26 March 2023	10	3,761	32	(1)	3,802
Loss for the period	-	(223)	-	-	(223)
Other comprehensive (expense)/income for the period	-	(564)	(2)	14	(552)
Total comprehensive (expense)/income for the period	-	(787)	(2)	14	(775)
Transactions with owners of the Company, recognised directly in equity
Share-based payments
Employee Free Shares issue	-	1	-	-	1
Long-Term Incentive Plan (LTIP)	-	2	-	-	2
Reported at 24 September 2023	10	2,977	30	13	3,030
Profit for the period	-	277	-	-	277
Other comprehensive income/(expense) for the period	-	284	(27)	(21)	236
Total comprehensive income/(expense) for the period	-	561	(27)	(21)	513
Transactions with owners of the Company, recognised directly in equity
Share-based payments
Long-Term Incentive Plan (LTIP)	-	1	-	-	1
Deferred Share Bonus Plan (DSBP)	-	1	-	-	1
Reported at 31 March 2024	10	3,540	3	(8)	3,545
Loss for the period	-	(25)	-	-	(25)
Other comprehensive expense for the period	-	(2)	(45)	(12)	(59)
Total comprehensive expense for the period	-	(27)	(45)	(12)	(84)
Transactions with owners of the Company, recognised directly in equity
Dividend paid to Shareholders	-	(19)	-	-	(19)
Share-based payments
Long-Term Incentive Plan (LTIP)	-	1	-	-	1
Deferred Share Bonus Plan (DSBP)	-	1	-	-	1
Reported at 29 September 2024	10	3,496	(42)	(20)	3,444

Condensed consolidated statement of cash flows

	Notes	Reported 26 weeks ended 29 September 2024 £m	Reported 26 weeks ended 24 September 2023 £m
Cash flow from operating activities
Profit/(loss) before tax		4	(194)
Adjustment for:
Net pension interest (non-operating specific item)	4	(60)	(66)
Net finance costs		30	17
Profit on disposal of property, plant and equipment	4	-	(15)
Specific items (operating)	4	154	17
Operating profit/(loss) before profit on disposal of property, plant and equipment and specific items¹		128	(241)
Adjustment for:
Depreciation and amortisation	2	254	239
EBITDA before profit on disposal of property, plant and equipment and specific items¹		382	(2)
Working capital movements		(197)	(10)
Decrease in inventories		4	3
Decrease in receivables		34	16
(Decrease)/increase in payables		(239)	43
Net decrease in derivatives		-	3
Increase/(decrease) in provisions (non-specific items)	10	4	(75)
Pension charge adjustment²	7	(11)	132
Other non-cash adjustments³		7	2
RMSEPP refund of surplus		6	-
Cash cost of operating specific items		(17)	(2)
Cash inflow from operations		170	120
Income tax paid		(15)	(14)
Net cash inflow from operating activities		155	106
Cash flow from investing activities
Finance income received		26	18
Proceeds from disposal of property (excluding London Development Portfolio), plant and equipment		5	7
Proceeds from disposal of business interests		15	-
Cash received on sale and leasebacks - rights to assets transferred		-	8
London Development Portfolio net (costs)/proceeds		(2)	9
Purchase of property, plant and equipment		(105)	(85)
Acquisition of business interests, net of cash acquired		(10)	(31)
Purchase of intangible assets (software)		(51)	(54)
Sale of pension escrow investments		-	130
Sale/(purchase) of financial assets investments (current)		216	(109)
Net cash inflow/(outflow) from investing activities		94	(107)
Net cash inflow/(outflow) before financing activities		249	(1)
Cash flow from financing activities
Finance costs paid		(81)	(42)
Payment of capital element of obligations under lease contracts		(115)	(101)
Cash received on sale and leasebacks - rights to assets retained		1	71
Proceeds from loans and borrowings		-	674
Repayment of loans and borrowings		(308)	(118)
Dividends paid to equity holders of the parent Company		(19)	-
Net cash (outflow)/inflow from financing activities		(522)	484
Net (decrease)/increase in cash and cash equivalents		(273)	483
Effect of foreign currency exchange rates on cash and cash equivalents		(17)	(4)
Cash and cash equivalents at the beginning of the period		974	809
Cash and cash equivalents at the end of the period		684	1,288

1. Details of Alternative Performance Measures (APMs) are provided in the section entitled 'Presentation of results and alternative performance measures'.

2. Includes £11 million (H1 2023-24: £2 million) relating to difference between pension service cost and the cash costs of pensions as detailed in the DBCBS schedule of

contributions; and £nil million (H1 2023-24: £130 million) in relation to the release of pension escrow, see Financial Review for further details.

3. Other non-cash adjustments include £2 million (H1 2023-24: £2 million) relating to the share-based awards (LTIP and DSBP) charge and £5 million (H1 2023-24: £nil) relating to foreign exchange movements.

Notes to the condensed consolidated financial statements

1. Basis of preparation

The comparative figures for the 53 weeks ended 31 March 2024 are not the Company's statutory accounts for that financial period. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified; (ii) included reference to a matter to which the auditor drew attention by way of emphasis without qualifying their report in respect of a material uncertainty in respect of going concern, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards (UK-adopted International Financial Reporting Standards (IFRS)). As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, this condensed consolidated set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the 53 weeks ended 31 March 2024, which were prepared in accordance with UK-adopted international accounting standards.

This condensed consolidated set of unaudited financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK i.e. on a 'Reported' basis. The Group's financial reporting period ends on the last Sunday in September and, accordingly, these Financial Statements are prepared for the 26 weeks ended 29 September 2024 (H1 2023-24: 26 weeks ended 24 September 2023). GLS' reporting half year-end date is 30 September each year. There were no significant transactions between the respective reporting dates that required adjustment in the Financial Statements.

In some instances, Alternative Performance Measures (APMs) are used by the Group. This is because Management is of the view that these APMs provide a useful basis on which to analyse business performance and is consistent with the way that financial performance is measured by Management and reported to the Board. Details of the Group's APMs, including any changes in calculations and/or definitions, are included in the section entitled 'Presentation of results and alternative performance measures'.

In the current year a new operating specific item in relation to incremental bid costs has been added, which falls within the existing policy for operating specific items.

Incremental bid costs

Going Concern

In assessing the going concern status of the Group, the Directors are required to look forward a minimum of 12 months from the date of approval of these Financial Statements to consider whether it is appropriate to prepare the financial statements on a going concern basis. The Directors have reviewed business activities, together with factors likely to affect the Group's future development and performance, as well as the Group's principal risks and uncertainties.

The Board has concluded that it is appropriate to adopt the going concern basis, having undertaken a rigorous assessment of the financial forecasts, with specific consideration of the trading position of the Group in the context of the current global economic environment for the reasons as set out below.

At 29 September 2024 the Group had net current assets of £139 million and net assets of £1.5 billion (excluding defined benefit scheme balances and pension escrow investments). Liquidity available as at the reporting date was £1.6 billion (excluding GLS client cash), made up of cash and cash equivalents of £645 million and a committed and undrawn bank syndicate loan facility of £925 million - available until September 2026.

In their assessment of going concern over the period to 30 November 2025 (the 'going concern assessment period'), the Group has modelled two scenarios referred to below as the Base Case and the Downside Case.

The key inputs and assumptions for the Base Case include the economic impact driven by the ongoing macroeconomic headwinds in both Royal Mail and GLS. The Base Case assumes Royal Mail has mid to high single digit revenue growth in parcels, with volume growth supported by continued improvement in quality and strategic growth initiatives including expanded channel mix (e.g. lockers). The structural decline in letters will continue but the volume decline will be partially offset by pricing actions. Productivity improvements from projects, including those enabled by the pay deal, as well as a continued focus on cost control, will help mitigate cost pressures including pay inflation, the impact of higher workload and increasing fleet maintenance costs. No further industrial action is assumed for Royal Mail, however the full impact of the recently announced changes to Employers National Insurance Contributions have been included from April 2025. GLS assumes mid-single digit revenue growth and some margin dilution linked to ongoing inflationary cost pressure. The Base Case assumes a dividend will continue over the going concern period, funded by GLS.

1. Basis of preparation (continued)

In July 2024, the Group repaid the remaining outstanding balance on the 2024 €500 million bond. The Group now has three bonds outstanding, the first of which to mature is the €550 million Euro bond repayable in October 2026, and the RCF which matures in September 2026, both of which are outside this going concern assessment period.

The base case assumes no regulatory reform. Ofcom are currently reviewing the USO and has stated that it expects to publish a consultation on regulatory reform in early 2025, with a view to issuing a decision statement in summer 2025. Management believes modernisation of the USO is critical for the sustainability of the USO. Regulatory reform could materially improve the prospects of the Royal Mail business, particularly in light of the increase in costs driven by the recently announced changes to Employers National Insurance Contributions.

In the Base Case it is projected that the Group will have sufficient cash and liquidity. The £925 million bank syndicate loan facility would remain available as covenants would not be breached.

The Downside Case applies further stress to the Base Case to model further deteriorating economic and market conditions impacting both Royal Mail and GLS.

Further details of the scenarios modelled are as follows:

Scenario:	Failure to grow revenue in an increasingly competitive and deteriorating economic environment.
Assumptions:	Revenue growth and property disposal proceeds in the Business Plan not achieved
Scenario:	Costs to avoid industrial action in Royal Mail
Assumptions:	Lower operating profit as a result of incurring costs to avoid industrial action.
Scenario:	Failure to reduce our operational cost base
Assumptions:	Delays in budgeted cost efficiencies being realised.
Scenario:	Cyber attack triggering material service and/or operational interruption.
Assumptions:	Cyber breach impacting revenue/costs to rectify.

The Directors believe that the downside is a severe but plausible scenario, recognising that the Base Case already anticipates the negative impacts from the weak economy and flow through impact from industrial action that has already taken place in Royal Mail. The gross liquidity impact of the Downside Case to November 2025 is approximately £0.5 billion.

Royal Mail is making good progress on its transformation journey but the Board remains concerned about the financial situation in Royal Mail given the continued uncertainty around USO reform and the recently announced changes to Employers National Insurance Contributions.

Royal Mail's parent company IDS plc has been clear in their expectation that Royal Mail will take reasonable steps to finance its transformation and ongoing business requirements from its own resources, which include a substantial freehold property portfolio. To the extent that there are short-term working capital needs outside of these arrangements the IDS plc Board would arrange and/or provide access to funds if satisfied these can be repaid.

If the severe but plausible scenario were to materialise, the Directors would be required to take mitigating actions to preserve cash and maintain liquidity. The Directors have identified a number of mitigations, all within management's control, to reduce costs and optimise the Group's cash flow, liquidity and covenant headroom.

The mitigating actions include:

· Reducing capital and investment expenditure through postponing or pausing projects, change activity and reduction in leasing.

· Deferring or cancelling discretionary spend (including management bonus).

· Potential additional price increases in letters

· Cost reductions through further cost saving programmes

· Reviewing dividend

1. Basis of preparation (continued)

The Directors have assessed the Group's financial commitments and consider that in the Downside Case, after taking into account mitigations and cash generated from operations and existing facilities, the Group is forecast to have sufficient cash and liquidity. The Group is not projected to breach the financial covenants under its committed credit facilities under the Downside Case, with the lowest EBITDA headroom during the assessment period being above £0.3 billion. The lowest total available liquidity modelled under the Downside Case was c. £1.3 billion in August 2025 including the £925 million undrawn syndicate loan facility. As such, the Group has sufficient liquidity to continue to operate and to discharge its liabilities as they fall due over the going concern assessment period.

Having reviewed the Base Case, and Downside Case, the Directors have a reasonable expectation that the Group has sufficient liquidity to continue in operational existence over the going concern assessment period and hence continue to adopt the going concern basis in preparing the Financial Statements.

Consideration of Recommended cash offer by EP UK Bidco Limited to acquire IDS plc

On 29 May 2024, the Board confirmed that they had reached agreement on the terms and conditions of a recommended cash offer of 370 pence per IDS plc share from EP UK Bidco Limited for the entire issued share capital of IDS plc not already owned by EP Group and its affiliates, namely VESA Equity Investment S.à r.l. (Vesa Equity). The Group has a number of financial liabilities in the form of unsecured senior fixed rate notes in place with a carrying value of £1,120 million at 29 September 2024 and a bank syndicate loan facility of £925 million undrawn at 20 November 2024 as well as other contractual arrangements which contain provisions in relation to change of control of IDS plc. Upon a change of control, the bank syndicate loan facility would be subject to renegotiation which could result in withdrawal. In addition, the fixed rate notes contain provisions that in the event of a change of control of IDS plc together with an adverse credit rating change (downgrade to a non-investment grade rating), or credit rating withdrawal, the loan notes can be redeemed at the option of the noteholders. Whilst the Board continues to seek assurances in relation to EP Group financing arrangements, these remain outside of the control of the Board.

The Directors have concluded that the extent of the uncertainty related to whether existing finance will be recalled following a change in control, together with a lack of visibility or control over the availability of funding following a change in control, are conditions that constitute a material uncertainty related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern and that it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business. Notwithstanding this uncertainty, having assessed the Company's and the Group's risks, existing facilities and performance, the Directors have concluded that the Company and the Group have adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements.

New accounting standards and interpretations in 2024-25

The new, and interpretations of existing, accounting standards that became effective during the period have not had a significant impact on these condensed consolidated financial statements.

Key sources of estimation uncertainty and critical accounting judgements

The preparation of the condensed consolidated financial statements requires management to make certain estimates and judgements that can have a significant impact on the financial statements. These estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The significant judgements and estimates applied by the Group in these condensed consolidated financial statements are consistent with those applied in the Annual Report and Financial Statements 2023-24.

Of the significant accounting estimates, the following updates are considered by management to be relevant:

Pensions

The value of defined benefit pension plan liabilities and assessment of pension plan costs are determined by long-term actuarial assumptions. These assumptions include discount rates (which are based on the long-term yield of high-quality corporate bonds), inflation rates and mortality rates. Differences arising from actual experience or changes in assumptions will be reflected in the Group's consolidated statement of comprehensive income. The Group exercises its judgement in determining the assumptions to be adopted, after discussion with a qualified actuary. Details of the key actuarial assumptions used are included in Note 7.1. Basis of preparation (continued)

Royal Mail excluding Parcelforce Worldwide CGU ('Royal Mail CGU') impairment test

In accordance with IAS 36, Management performs an impairment assessment of the Royal Mail CGU at least annually or whenever events or circumstances indicate that the value of the balance sheet may not be recoverable. In 2023-24 an impairment charge of £48 million (2022-23: £539 million charge) was recognised in relation to the Royal Mail CGU. Since the impairment assessment at year end, interest rates have decreased, a new government have been elected and broader economic conditions have changed resulting in a trigger for reassessment of impairment at 29 September 2024.

The impairment calculation has been performed on a post-IFRS 16 basis. The CGU carrying value is £2,053 million. In accordance with the financial reporting standards, the recoverable amount is the higher of the Value in use ("VIU") and Fair value less cost of disposal ("FVLCD"). The FVLCD approach resulted in a recoverable amount of £1,919 million that was below the carrying value at the period end, and therefore a further impairment charge of £134 million has been recognised, with the additional impairment from year end being driven principally by additional costs anticipated from fiscal changes.

Assessment

In assessing whether the Royal Mail CGU remains impaired, the carrying value of the Royal Mail CGU of £2,053 million on a post IFRS 16 basis was compared to its recoverable amount. The recoverable amount is the higher of its VIU and its FVLCD.

Royal Mail's strategy to transform the business into a more efficient operation that meets customers' changing needs and the future cash flows in the Board approved 2024 5-year Business Plan ("2024 Plan") reflects both the costs and benefits associated with this transformation.

Royal Mail has a robust process for tracking and managing environmental policy and legislation in the UK and is aiming to meet changing customer expectations for lower carbon alternatives. As such, management have considered the implications for the forecast cash flows based on the 2024 Plan and the assumptions in the Business Plan reflect management's current climate strategy.

As required by IAS 36, under the VIU calculation, estimates of future cash flows shall not include cash inflows or outflows that are expected to arise from a future restructuring or improving or enhancing the assets to which an entity is not yet committed, at the balance sheet date. The VIU approach, after adjusting for the restructuring and transformational cashflows, resulted in a significant further impairment.

Management therefore assessed the recoverability of the Royal Mail CGU using the alternative FVLCD methodology. The FVLCD considers the valuation from a 'market participant' perspective. Deriving a market participant valuation would typically be through a multiple of earnings methodology. However, Management do not believe this methodology would be appropriate in the current circumstances, as the significant transformation required in the business means that there is not a normalised level of profits against which to apply a multiple until the outer years of the plan. In addition, given the unique nature of the Royal Mail business as the universal service provider in the UK, and a heavily unionised workforce, there is lack of an exact comparator in order to determine an appropriate multiple. Consequently, Management have calculated a valuation using a discounted cash flow model from the perspective of a market participant i.e. a buyer transacting in the principal market for an asset of this type.

The Board have used the 2024 Plan as the base of the discounted cash flows in the FVLCD model (Level 3 fair value inputs). They then considered their assumptions in the context of information that would be available to a market participant.

Expected revenue and operating margin performance

Forecast cash flows are based on the 2024 Plan approved in April 2024. The key inputs and assumptions underlying the 2024 Plan have not changed since the year end (see the Group's published consolidated financial statements for the 53 weeks ended 31 March 2024). The plan does not anticipate any regulatory support from Ofcom or Government, for example a change in the scope of the Universal Service Obligation. Ofcom are currently reviewing the USO and has stated that it expects to publish a consultation on regulatory reform in early 2025, with a view to issuing a decision statement in summer 2025. However, as there is no certainty on the timing or nature of regulatory reform, its impact on the impairment assessment cannot be quantified.

1. Basis of preparation (continued)

Since year end a market participants view of cash flows have been updated and adjustments have been made to reflect the risk in the plan and cost headwinds anticipated as a result of a new government and increased tax burden on businesses to close the gap in public finances. Some of these cost headwinds have materialised since the balance sheet date in the form of additional Employers National Insurance contributions from 6 April 2025. Adjustments have also been made to reflect actions a market participant would take in order to mitigate against additional cost pressures in the form of pricing adjustments and further cost reductions. In addition, the real estate proceeds assumed in the plan have been adjusted to reflect current market conditions, to represent a market participant's view.

Discount rate: The discount rate is based on the UK-specific post tax discount rate of 10.1%, which reflects a risk premium a market participant would apply in order to reflect uncertainty in terms of ability to deliver revenue growth and improve operating margin. In deriving the risk premium, a market participant would consider past performance in terms of delivering transformational change, and the significant change and efficiency programme to be delivered.

Long-term growth rate: A long-term growth rate of 0.5% has been used for cash flows subsequent to the five-year plan period. This long-term growth rate is considered by management to be the best estimate towards the lower end of the range when benchmarked against comparative industry peers.

Sensitivity to changes in assumptions: The valuation of the Royal Mail CGU is dependent upon a number of estimates used in arriving at revenue growth, operating margin, terminal growth rates and the discount rate. An evaluation of sensitivities to the FVLCD calculation illustrates that there are both risks and opportunities. The operational changes and improvements required in Royal Mail are fundamental to its turnaround to restore profitability. Given past performance of delivering transformational change, and the significant change and efficiency programme to be delivered, there is execution risk in delivering the plan which could lead to further impairment. However, there is also significant opportunity and, subject to progress being made in transforming the business and evolution of the letters and parcels markets, there is a reasonable possibility in the future for the business to be restored to its full carrying value.

The following represent key areas of sensitivity in the model:

Market: If parcel growth rates are 1% per annum more positive this would result in a valuation of £3.1 billion but if parcel growth reduced by 1% it would result in a valuation of £715 million. If letter growth rates are 1% per annum less than has been assumed, this would result in a valuation of £1.0 billion.

Regulation: The plan does not anticipate any regulatory support from Ofcom or Government, for example a change in the scope of the USO. Management believes modernisation of the USO is critical for margins to be durably restored to sustainable levels (defined as between 5 and 10 per cent EBIT margin in the regulated business by Ofcom). Regulatory reform could materially improve the prospects and valuation of the business.

Discount rate: Whilst the plans have been de-risked for the purposes of the impairment model, further delivery risk remains that the planned change programmes are unable to progress at the rate targeted in the FVLCD model. An increase in the discount rate by a further 100 bps reflecting increased uncertainty would result in a valuation of £1,795 million and an implied further impairment of £124 million.

Terminal growth rates: An increase in the terminal growth rate to 1% to reflect the higher end of the range of comparative peers would result in a valuation of £1,983 million and a reduction in the impairment recognised of £64 million.

Property proceeds: Property proceeds values for the three London sites are based on the middle of the expected range of likely proceeds. Taking proceeds at the low end of the range would result in a valuation of £1,907 million and an implied impairment of £146 million.

Employers National Insurance Increase: The assessment assumes the additional Employers National Insurance costs can be partially mitigated in the shorter term and fully mitigated in the longer term. For every £10 million of costs not mitigated into perpetuity, this would increase the impairment recognised by £53 million.

Combined sensitivities: An 11% discount rate and 1% terminal growth rate would result in a valuation of £1,858 million. In order for there to be a full reversal of the impairment the discount rate would need to reduce by 290 bps, or the terminal growth rate would need to increase to 3.5%.

The impairment charge of £134 million has been allocated to the various Group asset categories as set out below:

1. Basis of preparation (continued)

	Plant and machinery £m	Motor vehicles £m	Fixtures and equipment £m	Software assets £m	Total £m
Carrying value at 29 September before impairment¹	532	299	114	237	1,182
Impairment charge²	(36)	(42)	(14)	(42)	(134)
Carrying value at 29 September after impairment¹	496	257	100	195	1,048

1. The carrying values represent the position of the Group, not just the Royal Mail CGU.

2. Includes charge against right of use (ROU) assets for plant and machinery of £6 million, motor vehicles of £31 million and fixtures and equipment of £5 million.

Deferred revenue

The Group recognises advance customer payments on its balance sheet, predominantly relating to stamps and meter credits purchased by customers but not used at the balance sheet date.

The majority of this balance is made up of stamps sold to the general public, referred to as Stamps in the hands of the Public ('SITHOP'). Management must assess the value of deferred revenue in relation to SITHOP, and this requires a degree of estimation.

From the end of 2023-24 Royal Mail has been using a new methodology to calculate the SITHOP balance by using the barcode scan data. The new methodology uses barcode scan data to build a profile of how long stamps are held by customers before being used for postage, this profile is referred to as the 'usage curve'.

At 29 September 2024, the Group recognised a £120 million (31 March 2024: £138 million) SITHOP liability in respect of stamps sold to the general public but not used at the balance sheet date. The method applied in calculating this balance is consistent with that described in the 2023-24 consolidated financial statements with the main change in assumptions being a release in the total buy down adjustment recognised as a result of stamp price rises in the period.

The Group has performed sensitivity analysis of reasonably possible changes in significant assumptions as follows:

• Increasing the bucket size for non-Christmas stamps from three sheets or books to four increases SITHOP by £6 million, whilst decreasing it from three sheets or books to two would reduce the estimate by £12 million.

• A ±5% change in non-scan percentage changes the SITHOP estimate by ±£5 million.

• Increasing or decreasing the gradient when extrapolating the usage curves (changing the speed at which the usage flattens by ±20%) changes SITHOP by c. £5-6 million.

• Increasing the breakage period from 36 to 48 months increases the SITHOP estimate by £14 million, whilst reducing the breakage period to 24 months reduces the SITHOP estimate by £20 million.

Although the impact of the assumptions are individually not material, in combination they could have a significant impact on the SITHOP balance.

2. Segment information

The Group's operating segments are based on geographic business units whose primary services and products relate to the delivery of parcels and letters. These segments are evaluated regularly by the International Distribution Services plc Board - the Chief Operating Decision Maker (CODM) as defined by IFRS 8 'Operating Segments' - in deciding how to allocate resources and assess performance.

A key measure of segment performance is operating profit before specific items. This measure of performance is disclosed on an 'adjusted' basis, a non-IFRS measure, which excludes specific items and includes other adjustments to the 'reported' IFRS results. This is consistent with how financial performance is measured internally and reported to the CODM.

Transfer prices between segments are set at an arm's length/fair value on the basis of charges reached through negotiation between the relevant business units that form part of the segments.

Segment revenues have been attributed to the respective countries based on the primary location of the service performed.

Seasonality

Parcel and letter volumes are subject to seasonal variation. The Group's busiest period is from September to December, when there is: typically, an increase in marketing mail as businesses seek to maximise sales in the period leading up to Christmas; an increase in parcel volumes as a result of online Christmas shopping; and an increase in addressed letter

2. Segment information (continued)

volumes as a result of the delivery of Christmas cards. During this period, Royal Mail and GLS would expect to record higher revenue, as greater volumes of parcels and letters are delivered through their respective networks. Higher costs are also incurred, particularly in Royal Mail, where large numbers of temporary workers are hired to assist in handling the increased workload.

Other seasonal factors that can affect the Group's results include the Easter period, the number of bank holidays in a reporting period and weather conditions. Typically, late spring and summer months are less busy in Royal Mail and GLS.

26 weeks ended 29 September 2024	Adjusted					Specific items and other adjustments²		Reported
Continuing operations	Royal Mail £m	GLS £m	Eliminations¹ £m	Group £m	Royal Mail £m		GLS £m		Group £m
Revenue	3,921	2,432	(10)	6,343	-		-		6,343
People costs	(2,753)	(567)	-	(3,320)	11		-		(3,309)
Non-people costs	(1,235)	(1,737)	10	(2,962)	56		-		(2,906)
Profit on disposal of property, plant and equipment	-	-	-	-	-		-		-
Operating (loss)/profit before specific items	(67)	128	-	61	67		-		128
Operating specific items	-	-	-	-	(138)		(16)		(154)
Operating (loss)/profit	(67)	128	-	61	(71)		(16)		(26)
Finance costs	(48)	(17)	7	(58)	-		-		(58)
Finance income	28	7	(7)	28	-		-		28
Net pension interest (non-operating specific item)	-	-	-	-	60		-		60
(Loss)/profit before tax	(87)	118	-	31	(11)		(16)		4

26 weeks ended 24 September 2023	Adjusted					Specific items and other adjustments²		Reported
Continuing operations	Royal Mail £m	GLS £m	Eliminations¹ £m	Group £m	Royal Mail £m		GLS £m	Group £m
Revenue	3,541	2,330	(9)	5,862	-		-	5,862
People costs	(2,693)	(544)	-	(3,237)	(132)		-	(3,369)
Non-people costs	(1,167)	(1,636)	9	(2,794)	60		-	(2,734)
Profit on disposal of property, plant and equipment	-	-	-	-	14		1	15
Operating (loss)/profit before specific items	(319)	150	-	(169)	(58)		1	(226)
Operating specific items	-	-	-	-	(6)		(11)	(17)
Operating (loss)/profit	(319)	150	-	(169)	(64)		(10)	(243)
Finance costs	(28)	(15)	7	(36)	-		-	(36)
Finance income	23	3	(7)	19	-		-	19
Net pension interest (non-operating specific item)	-	-	-	-	66		-	66
(Loss)/profit before tax	(324)	138	-	(186)	2		(10)	(194)

1. Revenue and non-people costs eliminations relate to intragroup trading between Royal Mail and GLS, due to Parcelforce Worldwide being GLS partner in the UK. Finance costs/income eliminations relate to intragroup loans between Royal Mail and GLS.

2. Specific items and other adjustments represent amounts that are excluded in measuring segmental adjusted performance as reported to the CODM. Specific items in GLS relate to the amortisation of intangible assets in acquisitions and an element of the regulatory and legal charges. Further information in respect of specific items and other adjustments are included within Note 4.

2. Segment information (continued)

The depreciation and amortisation costs shown below are included within 'operating profit/(loss) before specific items' in the income statement.

The non-current assets below exclude financial assets, retirement benefit surplus and deferred tax, and are included within non-current assets on the balance sheet.

26 weeks ended 29 September 2024	Royal Mail (UK operations) £m	GLS (Non-UK Operations) £m	Eliminations³ £m	Total £m
Depreciation	132	92	-	224
Amortisation of intangible assets (mainly software)	24	6	-	30

Non-current assets	1,972	1,955	-	3,927
Total assets	5,476	2,986	(178)	8,284
Total liabilities	(3,496)	(1,522)	178	(4,840)

26 weeks ended 24 September 2023	Royal Mail (UK operations) £m	GLS (Non-UK Operations) £m	Eliminations³ £m	Total £m
Depreciation	123	85	-	208
Amortisation of intangible assets (mainly software)	26	5	-	31

Non-current assets	2,117	1,960	-	4,077
Total assets	6,042	3,020	(190)	8,872
Total liabilities	(4,485)	(1,547)	190	(5,842)

The company is domiciled in the UK. The split of revenue from external customers and non-current assets (excluding financial assets, retirement benefit surplus and deferred tax) between the UK and GLS' presence in Continental Europe and North America is shown below.

	UK	Continental Europe	North America	Eliminations³	Total
26 weeks ended 29 September 2024	£m	£m	£m	£m	£m
Revenue	3,921	2,167	265	(10)	6,343
Non-current assets	1,972	1,508	447	-	3,927

	UK	Continental Europe	North America	Eliminations³	Total
26 weeks ended 24 September 2023	£m	£m	£m	£m	£m
Revenue	3,541	2,055	275	(9)	5,862
Non-current assets	2,117	1,420	540	-	4,077

3. Eliminations in respect of revenue and assets/liabilities relate to intragroup balances between Royal Mail and GLS.

3. People information

	Reported 26 weeks ended 29 September 2024 £m	Reported 26 weeks ended 24 September 2023 £m
Wages and salaries	(2,749)	(2,796)
Royal Mail	(2,247)	(2,313)
GLS	(502)	(483)
Pensions (see Note 7)	(280)	(293)
UK defined benefit plans (including administration costs)	(112)	(129)
UK defined contribution plan	(68)	(66)
UK defined benefit and defined contribution plans' Pension Salary Exchange employer contributions	(95)	(93)
GLS pension costs accounted for on a defined contribution basis	(5)	(5)
Social security	(280)	(280)
Royal Mail	(221)	(224)
GLS	(59)	(56)

Total people costs	(3,309)	(3,369)

People numbers

The number of people employed, expressed as both full-time equivalents and headcount, during the reporting period was as follows:

	Full-time equivalents (FTEs)¹				Headcount²
	Half-year end		Average		Half-year end		Average
	26 weeks September 2024	26 weeks September 2023	26 weeks September 2024	26 weeks September 2023	26 weeks September 2024	26 weeks September 2023	26 weeks September 2024	26 weeks September 2023
Royal Mail	141,110	140,342	139,977	140,549	131,491	127,833	131,027	127,092
GLS	22,145	22,169	22,159	22,344	22,939	23,072	23,277	23,082
Total	163,255	162,511	162,136	162,893	154,430	150,905	154,304	150,174

1. Full-time equivalents numbers relate to the total number of paid hours (including part-time, full-time and agency hours) divided by the number of standard full-time working hours in the same period.

2. These people numbers represent permanent employees.

4. Adjustments and specific items

Adjustments to reported operating profit/(loss):	26 weeks ended 29 September 2024 £m	26 weeks ended 24 September 2023 £m
Pension charge adjustment	11	(132)
Depreciation/amortisation adjustment for impaired assets	56	60
Profit on disposal of property, plant and equipment	-	15
Total adjustments to operating profit/(loss)	67	(57)

Operating specific items:
Amortisation of intangible assets from acquisitions	(8)	(11)
Impairment of Royal Mail excluding Parcelforce Worldwide CGU	(134)	-
Regulatory and legal charges	7	(6)
Incremental bid costs	(22)	-
Legacy/other items	3	-
Total operating specific items	(154)	(17)
Non-operating specific items:
Net pension interest	60	66
Total non-operating specific items	60	66
Total specific items	(94)	49

Tax credit on adjustments and specific items	2	2

In previous years an impairment charge was recognised to write down the value of the Royal Mail (excluding Parcelforce Worldwide) CGU. This has resulted in a lower depreciation/amortisation charge in infrastructure costs, and an adjustment of £56 million (H1 2023-24: £60 million) has been made to the adjusted results to reflect the depreciation/amortisation on a pre-impairment basis, in line with how Management reviews the underlying performance of the business.

Amortisation of intangible assets from acquisitions of £8 million (H1 2023-24: £11 million) mainly relates to amortisation in GLS.

The regulatory and legal charges credit of £7 million represents changes in the best estimates to settle present obligations for Royal Mail and GLS. The prior year debit of £6 million was in respect of the fine issued by Ofcom in respect of the 2022-23 USO Quality of Service performance.

Incremental bid costs of £22 million (H1 2023-24: £nil) represent the one-off costs incurred by the group in relation to the takeover bid by EP Group. These costs mainly relate to the provision of financial and legal advice.

Legacy/other items mainly relates to a £3 million release (H1 2023-24: £nil) of the industrial diseases provision.

5. Taxation

The GLS reported effective tax rate of 29.4% (H1 2023-24: 25.8%) is higher than the GLS weighted average tax rate of 20.7% (H1 2023-24: 21.9%) mainly due to the effect of losses in certain territories for which no deferred tax credit is recognised and the non-tax-deductible legal and regulatory provisions in GLS.

Royal Mail has a tax credit of £1 million (H1 2023-24: £4 million) on a reported loss before tax of £98 million (H1 2023-24: £322 million loss). Due to the uncertainty of generating future taxable profits, Royal Mail continues to not recognise a tax credit for its losses and other temporary differences. At 29 September 2024 Royal Mail has unrecognised tax losses and temporary differences totaling approximately £1,482 million (31 March 2024: £1,487 million). Details of the adjusted tax results and effective tax rates are provided in the Financial Review.

6. Earnings per share

	26 weeks ended 29 September 2024			26 weeks ended 24 September 2023
	Reported	Specific items and other adjustments¹	Adjusted	Reported	Specific items and other adjustments¹	Adjusted
Loss for the period (£ million)	(25)	(25)	-	(223)	(6)	(217)
Weighted average number of shares issued (million)	958	n/a	958	956	n/a	956
Basic earnings per share (pence)	(2.6)	n/a	-	(23.3)	n/a	(22.7)
Diluted earnings per share (pence)	(2.6)	n/a	-	(23.3)	n/a	(22.7)

1. Further details of specific items and other adjustments can be found in Note 4.

The diluted earnings per share for the 26 weeks ended 29 September 2024 is based on a weighted average number of shares of 965,934,561 (H1 2023-24: 963,519,765) to take account of the potential issue of 621,078 (H1 2023-24: 186,297) ordinary shares resulting from the Deferred Share Bonus Plan (DSBP) and 7,811,510 (H1 2023-24: 6,766,251) ordinary shares resulting from the Long-Term Incentive Plan (LTIP). Management have historically elected to settle this scheme using shares purchased from the market.

The 791,502 (H1 2023-24: 526,257) shares held in an Employee Benefit Trust for the settlement of options and awards to current and former employees, are treated as treasury shares for accounting purposes. The Company, however, does not hold any shares in treasury.

7. Retirement benefit plans

Summary pension information

	26 weeks ended 29 September 2024 £m	26 weeks ended 24 September 2023 £m
Ongoing UK pension service costs
UK defined benefit plans (including administration costs)¹	(112)	(129)
UK defined contribution plan	(68)	(66)
UK defined benefit and defined contribution plans' Pension Salary Exchange employer contributions²	(95)	(93)
Total UK ongoing pension service costs	(275)	(288)
GLS pension costs accounted for on a defined contribution basis	(5)	(5)
Total Group ongoing pension service costs	(280)	(293)
Cash pension service costs³
UK defined benefit plan's employer contributions⁴	(3)	(127)
Defined contribution plans' employer contributions	(73)	(71)
UK defined benefit and defined contribution plans' PSE employer contributions	(88)	(93)
	(164)	(291)
Pension-related escrow payments⁵	(101)	-
Pension-related accruals (timing difference)⁵	(26)	-
Total funding cost of accrual	(291)	(291)

Pension charge adjustment excluding pension escrow release⁶	11	(2)

1. These pension service costs are charged to the income statement. They represent the cost (as a percentage of pensionable payroll - 13.2% (H1 2023-24: 14.8%)) of the increase in the defined benefit obligation due to members earning one more half years' worth of pension benefits. They are calculated in accordance with IAS 19 and are based on market yields (high-quality corporate bonds and market implied inflation) at the beginning of the reporting year. Also included are pensions administration costs for the RMPP of £6 million (H1 2023-24: £6 million) and the DBCBS of £2 million (H1 2023-24: £2 million).

2. Eligible employees who are enrolled into PSE opt out of making employee contributions to their pension and the Group makes additional contributions in return for a reduction in basic pay.

3. These values exclude the impact of any timing differences in pension payments and represent the equivalent cash costs of the amounts charged to the income statement in the period.

4. The employer contribution cash flow rate of 15.6% is paid in respect of the DBCBS (H1 2023-24: 15.6%). These contribution rates are fixed, with actuarial funding valuations carried out every three years to determine whether additional deficit contributions are required. These actuarial valuations are required to be carried out on assumptions determined by the Trustee and agreed by Royal Mail. The most recent triennial valuation at 31 March 2021 was completed in May 2022 and no additional contributions were required. Also, the H1 2024-25 figures do not include £120 million relating to April - September 2024 contributions that were paid to the pensions escrow account.

5. This relates to contributions of £101 million (H1 2023-24: £nil) that were made into the pensions escrow account for April to August 2024 and a timing difference of a further £19 million

6. Excludes £nil (H1 2023-24: £130 million) adjustment in relation to the release of pension escrow, see Financial Review for further details.

Virgin Media Case

The Group is aware of the 2023 high court case that considered the validity of deeds where no s.37 confirmations (confirming that the minimum level of benefits had not been breached) was attached to the deed. Group Legal carried out a review of all the RMPP deeds of amendment over the period when the requirements were in force when the initial Virgin Media judgement was published. The conclusion was that all the necessary s.37 confirmations were in place until contracting out ceased to apply in 2016. The Group's view is that there is no impact on the RMPP benefits or on the Group's accounting position; the appeal judgement does not change this view.

7. Retirement benefit plans (continued)

Below is a summary of the combined plans' assets and liabilities on an accounting (IAS 19) basis.

	DBCBS		RMPP		RMSEPP
	At 29 September 2024 £m	At 31 March 2024 £m	At 29 September 2024 £m	At 31 March 2024 £m	At 29 September 2024 £m	At 31 March 2024 £m
Fair value of plans' assets	2,032	1,903	6,754	6,983	-	7
Present value of plans' liabilities⁷	(2,051)	(1,963)	(4,416)	(4,521)	-	-
(Deficit)/surplus in plans (pre-withholding tax payable)	(19)	(60)	2,338	2,462	-	7
Withholding tax payable⁸	n/a	n/a	(585)	(616)	-	(2)
(Deficit)/surplus in plans	(19)	(60)	1,753	1,846	-	5

7. The DBCBS liabilities as at 31 March 2024 were reduced by a one-off past service credit of £172 million which arose from the change in constructive obligation.

8. Any reference to a withholding tax adjustment relates to withholding tax payable on distribution of a pension surplus.

Having taken legal advice with regards to the rights of the Group under the Trust deeds and rules, the Directors believe there is an obligation to recognise a pension surplus for the RMPP on an accounting basis. The surplus on an accounting basis will be different to the scheme's funding position. Under IAS 19 and IFRIC 14, it must recognise the economic benefit it considers to arise from either a reduction to its future contributions or a refund of the surplus at some point in the future, using current long-term accounting assumptions at the reporting date. This is a technical adjustment made on an accounting basis only.

This surplus is presented on the balance sheet net of a withholding tax adjustment of £585 million (at 31 March 2024: £616 million) in respect of the RMPP, which represents the tax that would be withheld on the surplus amount. Any actuarial surplus will remain in the RMPP for the benefit of members until the point at which all benefits have been paid out or secured.

Under the terms of the DBCBS, any surplus would be awarded to members and therefore if this section was found to be in surplus the defined benefit liabilities would increase to equal the asset value under IAS 19.

The Group's obligations under the RMSEPP have now been fully extinguished and the Plan was wound up in April 2024. The residual assets were returned to the Group after the remaining closure expenses and the deduction of withholding tax.

Major long-term assumptions used for accounting (IAS 19) purposes - RMPP and DBCBS

IAS 19 assumptions are derived separately for the legacy RMPP and DBCBS, in particular taking into account the different weighted durations of the future benefit payments.

The major assumptions used to calculate the accounting position of the pension plans are as follows:

	At 29 September 2024	At 31 March 2024
Retail Price Index (RPI) - RMPP	3.2%	3.2%
Retail Price Index (RPI) - DBCBS	3.2%	3.3%
Consumer Price Index (CPI) - RMPP	2.9%	2.9%
Consumer Price Index (CPI) - DBCBS	2.8%	2.9%
Discount rate - RMPP⁹
- nominal	5.1%	4.9%
- real (nominal less RPI)	1.9%	1.7%
Discount rate - DBCBS¹⁰
- nominal	4.9%	4.8%
- real (nominal less RPI)	1.7%	1.5%

9. The discount rate reflects the average duration of the RMPP benefits of around 18.5 years (at 31 March 2024: 19 years). The reduction in duration is primarily due to the increase in the liability discount rate.

10. The discount rate reflects the average duration of the DBCBS benefits of 10 years (at 31 March 2024: 11 years). The pension service cost applicable for 2024-25 is based on 1 April 2024 assumptions.

8. Assets and liabilities held for sale

The balance sheet values of the assets and liabilities held for sale during the reporting period are shown below.

	At 29 September 2024 £m		At 31 March 2024 £m
Property and other assets held for sale	3	42
Liabilities held for sale	-	(24)
Total	3	18

During the reporting period, assets and liabilities of the GLS US freight business with a carrying value of £15 million, which were recognised as held for sale at 31 March 2024, were sold for £15 million.

The £3 million carrying value of property assets held for sale at the balance sheet date mainly comprises the depot at Royal College Street, Camden, London.

9. Financial assets and liabilities

Classification, carrying amount and fair value of financial assets and liabilities

The following analysis shows the classification, carrying amount and fair value of the Group's financial assets.

	Level	Classification	At 29 September 2024 Carrying amount £m	At 29 September 2024 Fair value £m	At 31 March 2024 Carrying amount £m	At 31 March 2024 Fair value £m
Financial assets
Cash	1		335	335	457	457
Cash held within cash pool			58	58	56	56
Client Cash			39	39	47	47
All other cash			238	238	354	354
Cash equivalent investments	1		407	407	573	573
Money market funds		FVTPL	357	357	428	428
Short-term deposits - bank		Amortised cost	50	50	145	145
Cash and cash equivalents¹			742	742	1,030	1,030
Current asset investments - short-term deposits - bank	1	Amortised cost	-	-	216	216
Pension escrow investments - long term	1	FVTPL	160	160	102	102
Pension escrow investments - short term	1	FVTPL	70	70	-	-
Trade and other receivables²	2	Amortised cost	1,427	1,427	1,493	1,493
Derivative assets (current)	2	FVTPL	-	-	6	6
Derivative assets (non-current)	2	FVTPL	-	-	2	2
Total financial assets			2,399	2,399	2,849	2,849

1. Cash and cash equivalents shown in the consolidated statement of cash flows includes bank overdrafts that are part of a cash pool for the UK companies which generally has a net £nil balance across the Group and forms an integral part of the Group's cash management.

2. Trade and other receivables excludes prepayments of £151 million (at 31 March 2024 £102 million).

9. Financial assets and liabilities (continued)

The following analysis shows the classification, carrying amount and fair value of the Group's financial liabilities.

	Level	Classification	At 29 September 2024 Carrying amount £m	At 29 September 2024 Fair value £m	At 31 March 2024 Carrying amount £m	At 31 March 2024 Fair value £m
Financial liabilities
Bank overdrafts (in a cash pool)¹	1		(58)	(58)	(56)	(56)
Obligations under leases (current)	2	Amortised cost	(246)	(246)	(241)	(241)
Interest-bearing loans & borrowings (current)			(3)	(3)	(315)	(313)
Asset finance	2	Amortised cost	(3)	(3)	(3)	(3)
€364.5 million 2024 bond	2	Amortised cost	-	-	(312)	(310)
Trade and other payables³	2	Amortised cost	(1,665)	(1,665)	(1,879)	(1,879)
Derivative liabilities (current)	2	FVTPL	(20)	(20)	(16)	(16)
Interest-bearing loans & borrowings (non-current)			(1,144)	(1,165)	(1,168)	(1,175)
€550 million 2026 bond	2	Amortised cost	(458)	(443)	(469)	(440)
€500 million 2028 bond	2	Amortised cost	(414)	(440)	(425)	(445)
£250 million 2030 bond	2	Amortised cost	(248)	(258)	(248)	(264)
Asset finance	2	Amortised cost	(24)	(24)	(26)	(26)
Obligations under leases (non-current)	2	Amortised cost	(1,185)	(1,159)	(1,182)	(1,097)
Derivative liabilities (non-current)	2	FVTPL	(36)	(36)	(24)	(24)
Total financial liabilities			(4,357)	(4,352)	(4,881)	(4,801)
Net total financial liabilities			(1,958)	(1,953)	(2,032)	(1,952)

3. Trade and other payables excludes advance customer payments of £211 million (at 31 March 2024: £227 million). Trade and other payables includes a balance of £4 million (at 31 March 2024 £11 million) measured at fair value level 3 relating to deferred consideration on acquisitions.

Derivatives that do not qualify for hedge accounting are classified as fair value through profit and loss (FVTPL) and any gains or losses arising from changes in fair value are taken directly to the income statement in the period.

The main purpose of these financial instruments is to raise finance and manage the liquidity needs of the business' operations. The Group has various other financial instruments such as trade receivables and trade payables which arise directly from operations and are not considered further in this Note.

No speculative trading in financial instruments has been undertaken during the current or comparative reporting periods, in line with Group policy.

Fair value measurement of financial instruments

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date.

Where there is no active market, fair value is determined using valuation techniques. These include using recent arm's length market transactions; reference to the current market value of another instrument which is substantially the same; and discounted cash flow analysis and pricing models.

9. Financial assets and liabilities (continued)

The Group determines whether any transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period. For the purposes of disclosing the Level 2 fair value of investments held at amortised cost in the balance sheet, in the absence of quoted market prices, fair values are calculated by discounting the future cash flows of the financial instrument using quoted equivalent interest rates as at close of business at the balance sheet date. For the bonds, the disclosed fair value is calculated using the closing market bond price (converting to Sterling using the closing spot Sterling/Euro exchange rate for the Euro-denominated bonds).

For the purposes of comparing carrying amounts to fair value, fair values have been calculated using current market prices (bond price, interest rates, forward exchange rates and commodity prices) and discounted using appropriate discount rates.

10. Provisions

Charged as specific items

Charged in operating costs

	Industrial diseases £m	Regulatory and legal £m	Other £m	Voluntary redundancy £m	Property decomm- issioning £m	Litigation claims £m	Other £m	Total £m
At 31 March 2024	(39)	(52)	(3)	(3)	(22)	(52)	(13)	(184)
Released/(charged)	4	7	-	(15)	(3)	(20)	(3)	(30)
Reclassifications	-	-	-	3	-	-	1	4
Utilised	1	-	-	10	1	20	2	34
Forex adjustment	-	1	-	-	-	-	-	1
Unwinding of discount	(1)	-	-	-	-	-	-	(1)
At 29 September 2024	(35)	(44)	(3)	(5)	(24)	(52)	(13)	(176)
Disclosed as:
Current	(4)	(25)	-	(5)	(7)	(41)	(1)	(83)
Non-current	(31)	(19)	(3)	-	(17)	(11)	(12)	(93)
At 29 September 2024	(35)	(44)	(3)	(5)	(24)	(52)	(13)	(176)
Disclosed as:
Current	(7)	(37)	-	(3)	(4)	(42)	(2)	(95)
Non-current	(32)	(15)	(3)	-	(18)	(10)	(11)	(89)
At 31 March 2024	(39)	(52)	(3)	(3)	(22)	(52)	(13)	(184)

Specific items provisions

Royal Mail has a potential liability for industrial diseases claims relating to individuals who were employed in the former General Post Office Telecommunications company and whose employment ceased prior to October 1981. The provision is derived using estimates and ranges calculated by its actuarial consultant, based on current experience of claims, and an assessment of potential future claims, the majority of which are expected to be received over the next 25 to 35 years. Royal Mail has a rigorous process for ensuring that only valid claims are accepted. In the reporting period, the rate by which liabilities are discounted increased by 12 basis points, this combined with a decrease in the level of claims has resulted in a £4 million release of the provision at 29 September 2024. A further £1 million was utilised for claims settled in the period.

The regulatory and legal provisions are pertaining to regulatory obligations for both Royal Mail and GLS.

Operating costs provisions

During the year Royal Mail has carried out a number of voluntary redundancy exercises mainly with the aim to improve operational efficiency. This has resulted in a charge during the year of £15 million with £10 million being utilised during the period. At the reporting date £3 million was reclassified to accruals due to more certainty over the amount and timing of the settlement of the liability.

Property decommissioning obligations represent an estimate of the costs of removing fixtures and fittings and restoring leased properties to their original condition.

Provisions for litigation claims, are based on best estimates as advised by external legal experts, mainly comprise outstanding liabilities in relation to road traffic accidents and personal injury claims.

11. Contingent liabilities and contingent assets

The probability of the following contingent liabilities resulting in an outflow of benefits and their financial impact cannot be estimated reliably due to the nature of the cases and respective legal processes.

Contingent liabilities

Whistl damages claim

In October 2018, Whistl filed a damages claim against Royal Mail at the High Court relating to Ofcom's decision of 14 August 2018, which found that Royal Mail had abused its dominant position. Whistl's High Court claim was paused until after the completion of the appeal by Royal Mail against the Ofcom decision. Following the exhaustion of Royal Mail's appeal against the Ofcom decision, the stay on Whistl's related damages claim has been lifted, and in March 2023, the proceedings were transferred from the High Court to the Competition Appeal Tribunal. A trial date has been set for November 2025, and a number of pre-trial steps are progressing. Whistl has pleaded that the estimated value of its losses exceeds £600 million. Given the early stage of the proceedings it is currently not possible to determine the outcome of the trial or quantify any potential liability, and therefore no liability has been recognised. IDS and Royal Mail consider Whistl's claim to be unsubstantiated and are defending it robustly.

In June 2024, a company called Bulk Mail Claim Ltd (BMCL) commenced legal proceedings against IDS in the Competition Appeal Tribunal. This proceeding relates to the Whistl claim above. BMCL alleges that, but for the anti-competitive conduct as found by Ofcom, Whistl's end to end business would have succeeded which would have increased competition in the bulk mail market and led to lower prices.

BMCL has estimated that the total value of the claim is £878 million. IDS considers BMCL's claim to be highly speculative and unsubstantiated and will defend it robustly.

Contingent asset

Court awarded compensation

In 2016 and 2017, Royal Mail investigated a group of companies and individuals suspected of a long-running under-declaration fraud. A number of individuals were charged for conspiracy to commit (statutory) fraud and a further charge of conspiracy to commit false accounting. The main defendants have pleaded guilty and will be sentenced in the coming months.

Work is ongoing regarding the recovery of certain identified assets and at the balance sheet date, assets with a value of £3 million have been recovered and a further £8 million have been recognised on the balance sheet as recoverable, for which management considers the recovery of assets of this value to be virtually certain. In addition, management also considers that further assets with a value of up to £4 million could potentially be recovered over the next two to three years, although there is not sufficient certainty at the balance sheet date for these to be recognised.

12. Share capital and reserves

Authorised and issued	At 29 September 2024 £m		At 31 March 2024 £m
958,293,475 (2023-24: 958,293,475) ordinary shares of £0.01 each	10	10
Total	10	10

A final dividend of two pence per share in respect of 2023-24 was paid on 29 September 2024. No FY 2024-25 interim dividend to be paid.

13. Events after the balance sheet date

Acquisition of 20% of the shares in ACS Postal Services SMSA ("ACS")

On 21 October 2024, GLS entered into a definitive agreement to acquire 20% of the shares in ACS from Quest Holdings for a total consideration of €74 million. ACS has been operating as the GLS network partner in Greece since 2004. The investment in ACS is consistent with GLS' strategy to strengthen its parcel operations, including within the cross-border deferred segment. In addition to the initial investment, GLS has also secured a call option to acquire the remaining 80% of the share capital of ACS within two years, to be exercised on 31 October 2025 or 30 October 2026.

In the event that GLS does not exercise this call option Quest Holdings will have the right to repurchase from GLS and GLS the right to sell 20% of ACS' share capital to Quest Holdings unless certain criteria are met, in which case this period can be unilaterally extended by Quest Holdings to 29 October 2027. GLS will have the right to appoint a minority of directors to the company's Board of Directors during the minority investment period.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR FINANCIAL REPORT

The Directors confirm that to the best of our knowledge:

· The condensed set of financial statements, which has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK.

· The Interim Management Report includes a fair review of the information required by:

DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Directors of International Distribution Services plc are as listed in the International Distribution Services plc Annual Report and Financial Statements 2023-24.

A list of current Directors is maintained at https://www.internationaldistributionservices.com/en/

By order of the Board

Michael Snape

Group Chief Financial Officer of International Distribution Services plc

20 November 2024

INDEPENDENT REVIEW REPORT TO INTERNATIONAL DISTRIBUTION SERVICES PLC

Conclusion

We have been engaged by International Distribution Services plc ('the Company') to review the condensed set of consolidated financial statements in the half-yearly financial report for the 26 weeks ended 29 September 2024 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the 26 weeks ended 29 September 2024 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

Material uncertainty related to going concern

We draw attention to Note 1 to the condensed set of consolidated financial statements which indicates that there are uncertainties arising from the Offer, received from EP UK Bidco Limited to acquire IDS plc and the impact that a change in control could have on the Group's borrowings given the nature of those contractual arrangements and lack of visibility over post-acquisition funding. These events and conditions, along with the other matters explained in Note 1, constitute a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern.

Our conclusion is not modified in respect of this matter.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ('ISRE (UK) 2410') issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions relating to going concern

The Directors have prepared the condensed set of consolidated financial statements on the going concern basis. As stated above, they have concluded that a material uncertainty related to going concern exists.

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of conclusion section of this report, nothing has come to our attention that causes us to believe that the Directors have inappropriately adopted the going concern basis of accounting, or that the Directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the Group to cease to continue as a going concern, and the above conclusions are not a guarantee that the Group will continue in operation.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with UK-adopted international accounting standards.

The Directors are responsible for preparing the condensed set of consolidated financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of consolidated financial statements, the Directors are responsible for assessing the Group'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 to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of consolidated financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Andrew Bradshaw

For and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

20 November 2024

FORWARD-LOOKING STATEMENTS

This announcement contains certain forward-looking statements concerning the Group's business, financial condition, results of operations and certain Group's plans, objectives, assumptions, projections, expectations or beliefs with respect to these items. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'targets', 'goal', 'forecasts' or 'estimates' or similar expressions or negatives thereof.

Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Group's actual financial condition, performance and results to differ materially from the plans, goals, objectives and expectations set out in the forward-looking statements included in this announcement.

All written or verbal forward-looking statements, made in this announcement or made subsequently, which are attributable to the Group or any persons acting on its behalf are expressly qualified in their entirety by the factors referred to above. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements. No assurance can be given that the forward-looking statements in this announcement will be realised; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Subject to compliance with applicable law and regulation, the Group does not intend to update the forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, and does not undertake any obligation to do so.

Other than in relation to the Royal Mail Profit Forecast, no statement in this announcement is intended as a profit forecast or estimate for any period.

POST-OFFER UNDERTAKINGS OR POST-OFFER INTENTION STATEMENTS

No statement in this announcement constitutes a "post-offer undertaking" or a "post-offer intention statement" for the purposes of Rule 19.5 or Rule 19.6, as applicable, of the Takeover Code.

Appendix 1

Profit forecast for purposes of the Takeover Code

On 18 May 2023, IDS released its unaudited preliminary results for the 52-week period ended 26 March 2023, which included the Royal Mail Profit Forecast, as follows:

"Royal Mail: Targeting to restore profitability in Royal Mail over the two remaining years of the recommended pay deal, with a return to adjusted operating profit (before voluntary redundancy costs) in 2024-25."

The Royal Mail Profit Forecast was repeated in IDS' unaudited results for the half year ended 24 September 2023 released on 16 November 2023, as follows:

"On a 2-year outlook, we are still targeting Royal Mail to return to adjusted operating profit (excluding voluntary redundancy

costs) in FY 2024-25, although the current weaker macroeconomic conditions represent a significant headwind."

The Royal Mail Profit Forecast was first made before EP Group made an approach with regard to a possible offer for IDS and accordingly the requirements of Rule 28.1(c) of the Takeover Code apply to the Royal Mail Profit Forecast. In the Offer document published on 26 June 2024, the Directors of IDS confirmed that the Royal Mail Profit Forecast continued to be valid as at that date, had been properly compiled on the basis of the assumptions stated therein and that the basis of accounting used was consistent with IDS' accounting policies.

The Directors of IDS confirm that the Royal Mail Profit Forecast continues to be valid as at the date of this announcement.

Set out below is the basis of preparation of the Royal Mail Profit Forecast and the assumptions on which it is based.

Basis of preparation

The Royal Mail Profit Forecast has been prepared on a basis consistent with IDS' accounting policies which are consistent with those applied in the preparation of IDS' results for the 53-week financial period ended on 31 March 2024.

The Royal Mail Profit Forecast has been prepared on the basis referred to above and subject to the principal assumptions set out below. The Royal Mail Profit Forecast is inherently uncertain and there can be no guarantee that any of the factors referred to under 'Assumptions' below will not occur and/or, if they do, their effect on IDS' and/or Royal Mail's results of operations, financial condition or financial performance, may be material. The Royal Mail Profit Forecast should therefore be read in this context and construed accordingly.

Assumptions

The Royal Mail Profit Forecast is based on the assumptions listed below:

1.1 Factors outside the influence or control of the Directors of IDS:

(a) there being no changes to existing prevailing macroeconomic, regulatory or political conditions in the markets and regions in which Royal Mail operates that would materially affect the business, including there being no changes due to any impact of the ongoing Ukraine-Russian and Israel-Palestine crises;

(b) the inflation, interest, foreign exchange and tax rates in the markets and regions in which Royal Mail operates remaining materially unchanged from the prevailing rates;

(c) there being no material adverse events that would have a significant impact on Royal Mail's financial performance, including litigation, change in political regime, climate change or adverse weather events;

(d) there being no industrial action involving Royal Mail;

(e) there being no reform of the Universal Service Obligation of Royal Mail;

(f) there being no material changes in market conditions over the forecast period to 30 March 2025;

(g) there being no business disruptions that materially affect Royal Mail or its key customers or any major breach of information security or data protection regulation as a result of a cyberattack and/or technological issues;

(h) there being no material impact on stakeholder relationships on account of any offer for IDS;

(i) there being no material adverse outcome from any ongoing or future disputes with any customer, competitor, regulator or tax authority;

(j) there being no material adverse impact on the health, safety and wellbeing of Royal Mail's employees, no material change in employee attrition rates and no material change in Royal Mail's labour costs, including medical and pension and other post retirement benefits driven by external parties or regulations; and

(k) there being no material changes in legislation, taxation, regulatory requirements, applicable standards or the position of any regulatory bodies impacting on Royal Mail's operations or on the accounting policies of IDS.

1.2 Factors within the influence or control of the Directors of IDS:

(a) there being no further material change to the present management of IDS;

(b) there being no material adverse change in IDS' ability to maintain customer and partner relationships and to meet customer needs and expectations;

(c) all long-term customers being retained and continuing to generate revenues in line with their historical trends and past behaviours and there being no loss of customer contracts or volumes of activity unless a contract is due to terminate in the period to 30 March 2025;

(d) there being no material corporate acquisitions or disposals, developments, partnership or joint venture agreements being entered into by Royal Mail, prior to 30 March 2025 (for the avoidance of doubt, other than any offer for IDS);

(e) there being no material strategic investments over and above those currently planned;

(f) there being no material changes in the dividend or capital policies of IDS;

(g) IDS' accounting policies being consistently applied over the forecast period;

(h) there being no material change in the operational strategy of IDS and/or Royal Mail; and

(i) there being no inability to secure ongoing access to finance and/or to manage working capital and cash to support the ongoing running of, and investment in Royal Mail.

Statement of the Directors of IDS

The Directors of IDS have considered the Royal Mail Profit Forecast and confirm that it remains valid as at the date of this announcement, has been properly compiled on the basis of the assumptions set out above and the basis of accounting used is consistent with IDS' accounting policies.

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