POL Accounts 2019/20 (Part 1)

Post Office Annual Accounts 2019/2020

An opinion.

Since 2010 when the doomed Network Transformation project started I have taken more than a keen interest in Post Office Ltd’s annual accounts.  At first it was tracking the vast, £2 billion or so of public money that was being thrown at destroying the income and fixed assets of Subpostmasters in return for turning the Post Office Network into a profitable stand alone company with no need for financial assistance from the Government.   Once I had left the network, profiting on the way from some of that misspent £2 billion as compensation for loss of goodwill, my attention turned to the amount of money that was being utilised in fighting the Group Litigation Order.   I therefore have some experience in what to look for in their accounts and in many cases I have found the real secrets are exposed in what has not been stated and in comparing what was said the previous year to the current one.

Up until 2015 when Al Cameron took over the accounts were set up in quite a different way to the way they are now.  He made a few changes that I must admit I overlooked recently so as I set out a comparison in this report to what the accounts looked like in 2010/11 there will have to be some interpretation of my own that may or may not be entirely accurate and I am open to any comments on glaring errors on my part.

General Impression

This year’s report is the first real report overseen by Nick Read as publication has been delayed for a variety of reasons not least Covid.   While it covers the financial year 19/20 much has happened since the year end of March 2020 and it is clear that even Al Cameron has had difficulties in reporting on financial events that would normally be reported into the next financial year 20/21 whose year end is tomorrow against events that, due to the delay, now need to be reported for the year end 21/20.  More of that later.

 It seems to me that there is a sea change in the reporting of POL’s financial accounts.  They are now far more open than they have been in the past, perhaps due to Nick Read but also perhaps POL are now unburdened (for the time being) of scrutiny by the EU State Subsidy Commission albeit that the 19/20 accounts should actually fall under the EU rules for state aid.

Annual reports give POL the opportunity to highlight their current strategy and Nick Read has certainly changed that since his arrival.  He states:

“Genuine value, for a business such as the Post Office, and one with an overarching social and public purpose, should not solely be represented by its ability to generate profit, important though that is.”

“As an organisation, we must understand that commercial sustainability is not solely driven or best interpreted by the trading profit of Post Office Limited”

I couldn’t agree more.  His predecessor was driven by profit and incentivised to do so by huge unjustifiable incentive bonuses.   Vennells in my opinion destroyed the brand, destroyed the value of SPMRs personal investment into the business and actively promoted the culture of ‘Them and Us’ that still exists between POL and their SPMR network.  Resetting that relationship is top of Nick Read’s list of things to do and he needs to be successful at it quickly.

Annual Accounts start with a Chairman’s statement and I have only one thing to say about Mr Parker – why is he still there having overseen the national public disgrace of the Group Litigation which resulted in judicial remarks such as ‘POL is like a Victorian Workhouse’ and ‘akin to believing the world is flat in the 21st Century’.  Nothing more shameful for the man should be his involvement in overseeing the most unfair settlement of all time with the JFSA.   However he is entrenched in the establishment and no doubt will be rewarded with a peerage in due course.  That on its own could put paid to Nick’s project to reset the SPMR/POL relationship. I wonder if Boris had Parker in mind when he made his comments yesterday at PMQs?


Billions of pounds spent of public money with more to come between 2010/11 and 19/20 so let’s have a look at headline figures and see if the investment was worthwhile.


10/11 £971m

19/20 £951m

2011 was the year that the Postal Services Bill was enacted which paved the way for the separation of POL from RMG and it also marked the start of the NT project.   Great things were promised in parliament for POL including massive increases in Government business which was news to the various departments involved.  What Ed Davey, the minister in charge at the time, didn’t realise was that cut backs were forcing the various departments and government entities into streamlining their processes and I often found out long before POL did apparently by looking at the department annual reports and seeing their intention to reduce spending with POL in the next financial year.   This year sees the end of the POCA card but since 2011 the DVLA, NS&I and the DWP have all abandoned POL in favour of their own online offering.


10/11 £1100m !!

19/20 £912m

A reduction after 10 years of £188m.   This is where it gets a bit messy in trying to compare the two sets of accounts in different formats but let’s look at key areas of cost saving before I come back to investigate the current costs of running POL.

Obviously number one on everybody’s list to look at is and should be the reduction in SPMR remuneration.   In 2011 they were £475m and in 2020 £384m a reduction of £91m which would actually have been a bigger reduction had it not been for the outcry over remuneration for banking products and the effect of POL subsequently increasing it.

But subpostmasters were not the only ones to suffer.  In the last 10 years nearly all the crown offices have been shut and POL had reduced their head office staff numbers as well.  In 2011 people costs were £256m and now in 2020 they are £172m a reduction of £84m.

So a combined saving in costs from remuneration of £175m which almost accounts for the entire cost reduction over the 10 years while turnover remains relatively static.

The product mix sold by POL over these 10 years has changed a lot and it would be too complicated for me to try to interpolate this into attributable costs but you would have to consider that if turnover remains much the same and the fixed costs of remuneration have decreased by so much then surely the profit of the company would be fairly substantial now.   I will come back to costs when I write more on this tomorrow (its currently 3.30am)


Turnover less Costs equals Profit.  I don’t think POL have ever offered Gross Profit v Nett Profit figures so what the accounts reveal is basically Nett Profit and it is here where Al Cameron’s revaluation of assets a few years ago needs to be taken into account.  As Al says the key indicator for POL is the EBITDA bottom line which is the earnings before income tax (they don’t pay any) depreciation and amortisation.  So I will try and use that figure.

2011 EBITDA was a loss of £29m and in 2020 it was £136m! A difference of £165m and clearly attributable to the substantial £175m reduction in remuneration costs.

You can look at this in many ways but one way which irks me is to think that Vennells takes charge, screws her staff and SPMRs by reducing their income or making them redundant and as a result walks away with £6m or so for her efforts, a CBE (has she not returned it yet?) and a couple of nice little earners on various boards.

I need some sleep….

Coming up in the next instalment – a more detailed look at costs as recently revealed in a confidential document, investment funding and contingent liabilities and also a note about the £125m Equity injection announced by POL but not the Government!

2 thoughts on “POL Accounts 2019/20 (Part 1)

  1. Tim, this really is a tour de force and I congratulate you on the speed and clarity of your analysis so far.

    As you may have noticed by my frequent comments over the past years of my twitterdom, I share your appraisal of the depth of mis-management at the top. As an aside I would like to share with you, in privacy, a remarkable coincidence concerning one of the miscreants in this saga.

    I look forward, once you’re rested, to part two!


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