International Distributions Services plc

(Incorporated in England and Wales)

Company Number: 8680755

LSE Share Code: IDS

ISIN: GB00BDVZYZ77

LEI: 213800TCZZU84G8Z2M70

21 April 2023

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR

AGREEMENT REACHED WITH COMMUNICATION WORKERS UNION

International Distributions Services (IDS.L) is today providing further detail on the agreement reached between Royal Mail and the Communication Workers Union (CWU).

The Business Recovery, Transformation and Growth Agreement has been ratified by CWU's Postal Executive Committee and will be put to a ballot of the union's membership with a recommendation to approve. The ballot is expected in the coming weeks.

Context to the agreement

Royal Mail is currently materially loss making. This agreement is an important step forward in the turnaround of Royal Mail and, if approved by the CWU membership, represents a good outcome for customers, employees and shareholders.

The agreement provides a platform for the next phase of stabilising the business whilst continuing to drive efficiency and change. The operational changes in the agreement are designed to improve competitiveness, particularly in next day parcels, reduce cost and environmental impact, and improve quality of service for our customers. A three year pay deal will provide certainty for our employees and ensure Royal Mail remains the industry leader on pay, terms and conditions.

Key initiatives

The key initiatives in the agreement are:

·    Later start times: From March 2024, start times in delivery will be moved back to help Royal Mail respond to the market demand for more next day parcels, reduce our impact on the environment through the removal of 18 flights a day, improve quality of service and create greater capacity to grow. A programme of work on the pipeline will seek to limit changes to start and finish times in delivery by 60 minutes, with the option to move times up to 90 minutes if needed. The last letter delivery time will move to 4.30pm at this time.

·    Seasonal working patterns: From Autumn 2023 we will deploy new seasonal working patterns. Delivery postmen and women will work 39 hours per week in the peak Christmas season, 35 hours per week in the quieter summer season, and 37 hours for the remainder of the year to better reflect the seasonal variations in letter and parcel volumes.

·    Optimised single parcel network for larger parcels: Currently there is duplication across the Royal Mail and Parcelforce Worldwide networks, with both companies carrying the same format of parcels and visiting the same customers on the same day. The creation of an optimised single parcel network between Royal Mail and Parcelforce Worldwide will maximise synergies between the two brands and improve competitiveness in the delivery of larger parcels.

·    More efficient indoor mail preparation: Currently postmen and women spend up two hours a day re-sorting mail before their delivery round. Under this agreement we will reduce the amount of time spent sorting by 20-35 minutes, so that more time can be spent delivering to our customers.

·    Sunday working: New employee contracts will include a requirement for regular Sunday working, enabling Royal Mail to grow its seven day parcels business and adapt to changing customer demands.

·    The agreement includes a commitment to no compulsory redundancies for the life of the agreement. There will be a joint review of this position in April 2025 to consider whether circumstances allow for the company to extend this commitment.

·    The agreement also covers changes to sick pay, attendance standards, ill health retirement, and agreement on revised contracts for new starters (introduced in 2022)

Pay offer and profit share scheme

The agreement includes a 10% salary increase and a one-off lump sum of £500 for CWU grade employees in Royal Mail and Parcelforce. This is broken down as follows:

·    The previously consolidated 2% pay rise that applied from 1 April 2022;

·    A consolidated 6% pay rise applying from 1 April 2023;

·    A one-off non-consolidated lump sum payment of £500 (broadly equivalent to 2% of pay and pro-rated for part-time employees);

·    A consolidated 2% pay rise applying from 1 April 2024.

In addition to the pay increases, agreement has been reached on a profit share scheme over the life of this agreement. Subject to Royal Mail returning an adjusted operating profit in any financial year up to and including 2024/2025, 20% of adjusted operating profit will be distributed as a one-off payment to employees, paid after publication of the company's audited accounts.

The agreement can be found at: www.internationaldistributionsservices.com/en/people/business-recovery-transformation-and-growth-agreement/

International Distributions Services plc will publish its Full Year Results on 18 May 2023.

ENDS

Enquiries:

Investor Relations

John Crosse

Email: [email protected]

Media Relations

Mark Mann

07506 341416

Jenny Hall

07776 993036

Email: [email protected]

Company Secretary

Mark Amsden

Email: [email protected]