Jersey Post International: Annual Report and Accounts 2012.

Delivering for you

www.jerseypost.com

Contents

Directors, Officers and Advisors 05 Board of Directors 06 Chairman's Statement 08 CEO's Review 13 Statement of Corporate Governance 20 Directors' Report  28 Independent Auditor's Report 31 Consolidated Profit and Loss Account 32

Consolidated Statement of Total  

Recognised Gains and Losses 33 Consolidated Balance Sheet 34 Consolidated Cash Flow Statement  35 Notes to the Financial Statements 36

This year's performance across all aspects of Jersey Post's business gives confidence in its capacity to withstand external shocks and adapt to radical change.

Stabilising the business after radical cost-cutting

has been the first priority of the new executive

team headed by Chief Executive Kevin Keen, and,

with that objective now largely achieved, attention

21 post officescompared with the previous year.

is being focussed on finding growth opportunities

following the demise of LVCR. There is evidence

that online shopping is growing more rapidly in

Jersey than elsewhere in the British Isles and

our packets and parcels volumes were up 28%

21Post Offices providing

a service to islanders

Section Title

Directors, Officers and Advisors

Directors of Jersey Post International Limited

Jurat Mike Liston OBE, FREng, BSc, CEng, FIEE, CIMgt Non-Executive Chairman

Tim Brown FIoD, FCILT, CPFA Non-Executive Deputy Chairman and Senior Independent Director

Chris Evans Non-Executive Director

Donal Duff BAAF, FCA, AMCT Non-Executive Director

Kevin Keen MBA, FCCA, FCMA, C.D ir Chief Executive Officer

Liz Vince BA (Hons), CPFA, MICA, Dip IoD Finance Director

(Appointed 23 February 2012)

Gary Carroll Dip IoD

Business Development Director (Appointed 23 February 2012)

Company Secretary

Liz Vince BA (Hons), CPFA, MICA, Dip IoD

Independent Auditor

Price waterhouseCoopers CI LLP 37 Esplanade

St. Helier

Jersey

JE1 4XA

Pension Scheme Actuary

Aon Hewitt Limited Actuaries and Consultants 40 Queen Square

Bristol

BS1 4QP

Bankers

HSBC Bank plc PO Box 14

St. Helier Jersey

JE4 8NJ

Registered Office

Postal Headquarters

La Rue Grellier

La Rue des Pres Trading Estate St. Saviour

Jersey

JE2 7QS

Board of Directors

Jurat Mike Liston OBE FREng BSc CEng FIEE CIMgt

Non-Executive Chairman, Mike Liston has wide experience of the public and private sectors. Previously Chief Executive of Jersey Electricity PLC, he now holds a wide range of non-executive Board positions including Chairmanships with public and private operating companies, private equity and venture capital houses, in the Energy and Fiduciary Services sectors. He is a lay Judge in the Royal Court of Jersey.

Mike was founding Chairman of the Jersey Appointments Commission, which was established by government to ensure probity in public appointments. He served for many years on the governing Council and Audit Committees of Europe's largest professional engineering body, the Institution of Engineering and Technology. He is a Fellow of the Royal Academy of Engineering.

Tim Brown FIoD FCILT CPFA

Non-Executive, Tim Brown has more than 20 years' experience in the post, parcel and distribution industry. He has worked in senior positions in Royal Mail and DHL Express, was CEO of Postcomm (the UK's postal regulator), provided advice to government and was vice-chair of the European Regulators' Group

for Post. His work has included providing board level advice, consultancy and interim management to post and parcel companies and their suppliers. He is currently Sales & Marketing Director at City Link.

Donal Duff BAAF FCA AMCT

Non-Executive, Donal Duff qualified as a Chartered Accountant with Coopers

& Lybrand in Ireland in 1991 and subsequently transferred to its Jersey office in 1993 to work on a wide range of audit and corporate finance assignments. In 1996, he joined Le Riche Group Limited, a listed company, as Group Financial Controller, where he performed a variety of roles until such time as it was acquired by C.I Traders Limited, an AIM-listed company, in 2002. Donal was Director of Finance and Company Secretary of this company (the largest private sector employer in the Channel Islands) until its acquisition by a private equity consortium in 2007, and he continued to work with the new owners until 2008. Donal is Chief Operating Officer & Finance Director of The Stanley Gibbons Group plc, an AIM-listed Jersey registered company.

Chris Evans

Non-Executive, Chris Evans has worked in the information technology services sector for 29 years and has been involved in the formation and running of a number of IT businesses. He is currently the Chief Executive of Foreshore, an Internet services business, promoting Jersey-based e-commerce to a global customer base. Chris has served as a Non-Executive Director on a number of Boards. He understands how the disruptive nature of technology can be used to drive business change and diversification and he has been a member of a number of States of Jersey committees with the objective of finding new economic opportunities for the Island.

Board of Directors

Kevin Keen  MBA FCCA FCMA C.D ir

Kevin Keen joined Jersey Post as Chief Executive in June 2011. He spent the majority of his previous career working for Le Riche Group where he was Group Finance Director for five years before being appointed as Managing Director of the group's core retail business in 2000. In 2003, Kevin joined Jersey Dairy

as Managing Director where he led a successful turn-around. He is a past President of The Jersey Chamber of Commerce.

Kevin is also Non-Executive Chairman of Jersey Water, a Non-Executive Director of Voisins Department Store Limited, Le Gallais Real Estates Limited and is Honorary Financial Adviser to the Jersey Heritage Trust.

Liz Vince BA (Hons) CPFA MICA Dip IoD

Liz Vince joined Jersey Post in 2006. In January 2008, she took over the role of Company Secretary and in September 2011 became the Finance Director when this was combined with the post of Company Secretary. Prior to this Liz was the Chief Internal Auditor for the States of Jersey for 10 years. Liz qualified as a Chartered Public Finance Accountant in 1992 with the National Audit Office in London. Liz is Honorary Treasurer of Relate in Jersey.

Gary Carroll Dip IoD

Gary Carroll joined Jersey Post in October 2009, as the Service Delivery Director, with responsibility for the Logistics, Postal and Print Business units of the Group. Prior to joining Jersey Post, Gary worked for 28 years with Royal Mail Group, with the last 11 years as a regional director for Royal Mail International, where he successfully negotiated bilateral agreements and financial settlements with the world's major postal organisations.

Gary spent 5 years working for Royal Mail's International consultancy business, leading on postal development programmes in the Middle East and Far

East, the Americas and Caribbean. Prior to this Gary worked for the Parcels business in the Royal Mail Group, as part of the National Sales team where Gary's responsibilities included the training and development of the sales and customer teams.

Chairman's Statement

This year's performance across all aspects of Jersey Post's business gives confidence in its capacity to withstand external shocks and adapt to radical change. The sudden withdrawal of

Low Value Consignment Relief (LVCR) by the UK government during the year had a dramatic impact, decimating the Island's Fulfilment industry and causing widespread job losses across

the sector. Jersey Post lost one-third of its total revenues, but fortuitously its resilience against this potentially catastrophic loss of business had been achieved just in time, albeit under a different but equally threatening imperative. Anticipating radical market liberalisation, particularly in the bulk mail market, the Board three years ago initiated an unprecedented cost-cutting program to ensure fitness to respond to new entrants' potentially aggressive pricing tactics. In the event the threat of major new competitors evaporated with the withdrawal of LVCR and the collapse of its associated bulk mail market, but by that time Jersey Post had reduced its overhead cost base by 25% or almost £4 million

per year. Not only has this enabled us to limit the impact on our customers of continuing price rises in the UK mail market, but it avoided an otherwise

certain plunge into loss-making. Our profit before tax in 2012 was a respectable £1.3 million despite turnover having plummeted by £20 million.

The transformation of Jersey Post's business model prompted by these external events has not been without casualties. Savings of almost £3 million from the annual pay bill made since 2008 have necessitated large scale job losses and pay cuts which affected one quarter of our staff across the entire organisation – not least at the very top and middle of the company. It is a great credit to our staff who remain, and our new management team, that the negative impacts of traumatic change on morale and customer service have been tackled so effectively during the year.

Stabilising the business after radical cost-cutting has been the first priority of the new executive team headed by Chief Executive Kevin Keen, and with that objective

now largely achieved, attention is being focussed on

finding growth opportunities following the demise of LVCR. There is evidence that online shopping is growing more rapidly in Jersey than elsewhere in the British Isles and

our packets and parcels volumes were up 28% compared with the previous year. This trend, along with the early success we are having in finding new logistics solutions

for those remaining fulfilment companies breaking into

new mainland European markets, should help mitigate

the negative impacts of on-going decline in our traditional letters business. However, we continue to search for

more transformational business activities to support

the deteriorating economics of our Universal Service Obligation.

Stabilising the business after radical cost-cutting has been the first priority of the new executive team

With little possibility of raising equity or long-term debt, we  The Board welcomes CICRA's recent proposal to reduce will rely on accumulated reserves for seed funding of any  the level of regulation of the postal sector. We believe new ventures, but your Board recognises the inefficiency  that considerable scope exists to recalibrate the resource

of holding cash reserves significantly surplus to known  expended in postal regulation given the relatively minor requirements. Accordingly it decided to return £4.5 million  economic impact of consumer spending on postal services to the shareholder by way of a special dividend. Of this,  and the disappearance of the only sizeable contestable

£3 million had been paid by the year end and the balance  market following the removal of LVCR. The CICRA will will be paid in 2013. I am also pleased to propose a modest  continue to regulate our quality of service and ensure the increase in the ordinary dividend by 2% to £382,000.  Universal Service Obligation remains sustainable in its The directors believe that dividend cover at 3 times is  present form for as long as possible. Whilst the company is appropriate given the volatility of trading conditions. At  still dominant in some of its markets this privilege comes the year end the company still had cash and other short  with the burden of an obligation to provide public services term investments totalling £13.7 million; so subject to our  of little or no commercial interest to other postal operators. concerns about the deficit in our sub-fund of PECRS which  The existence of a healthy range of competing providers stood at £5.4 million at the year end and the unpredictable  and technologies is a powerful motivator in our continuous risks it presents, the company remains strong. drive for efficiency and value for money.

revenue down

32% after LVCR

 withdrawal

The Board welcomes CICRA's recent proposal to reduce  the level of regulation of the postal sector.

That said, your Board was disappointed this year by the "end-to-end" delivery reliability achieved where other postal operators were involved in the delivery of our service, and it has tasked management with a substantial improvement in 2013.

With stability restored to the business and its management after recent years of tumultuous change, your Board is preparing for its own succession. Paul Jackson stood down at the 2012 AGM after 7 years as a Non-Executive Director. His experience in the global postal and logistics sector, combined with his passion for performance, made for a unique contribution to the company. We are holding this position open pending the better definition of our skills needs as part of our review of strategic opportunities for growth.

Jersey Post has withstood the shock of a UK government policy decision which led to the sudden loss of a third of its revenue compared to 2011, but it is left with a business which is much more vulnerable to small variations in its trading income and its cost base.

We expect turnover to be materially reduced again in 2013 principally due to the impact of the withdrawal of LVCR

in April 2012 on what remains of the bulk mail market. However, we believe that our continuing drive to reduce costs will enable us to remain in profit whilst further improving service quality. Crucially, we remain confident in a return to revenue growth in 2014 as the benefit of our new business initiatives start to kick in.

Jurat Mike Liston OBE

Chairman 24 May 2013

64%

increase in Direct2Home

& Direct2Business volumes

CEO's Review

Financial results and volumes

The progress in the business during 2012 was substantial and positive in spite of the massive impact on our business and the Island following the withdrawal of LVCR (Low Value Consignment Relief) for Channel Island exporters in April.

Although the Island's government fought bravely to defend the fulfilment industry against the decision of

the UK government to withdraw LVCR from exporters

in the Channel Islands but allow it to remain for other jurisdictions, they were, as now known, unsuccessful. Although Judge Mitting acknowledged that there had been no abuse, he ruled in favour of the UK and the relief for Channel Island exporters came to an end on March 31st with a substantial impact on the whole Island. For Jersey Post, volumes from this activity reduced by 57%, or

28 million items, for the year as a whole and were even more significant when the first quarter of the year is excluded, as volumes in logistics were reduced by some 70% in the nine months to December 31st.

Volumes in the traditional mail business were some 6% down at 35 million items. Once again the most significant element was the large reduction in outward mail which reduced by 17%. The contrast with mail delivered locally, where volumes reduced by less than 2%, was significant. Local delivery volumes benefited from the increasing popularity of internet shopping in Jersey where volumes of packets and parcels delivered locally grew by 28%, a trend which is expected to continue. Our unaddressed mail products Direct2Home and Direct2Business also did well with volumes increasing by 64% in the year.

outward mail volumes 17

%

FALL

Group turnover was some £20 million lower at £44 million for the year, wholly due to the withdrawal of LVCR. Excluding the impact of LVCR, turnover actually increased very slightly in spite of the continued reduction in letter volumes. Our gross profit was just over £1 million lower than 2012 at £7.7 million, although this would have been much worse if front line staff costs had not been reduced by some £1.1 million on the previous year.

Excluding a £1 million charge to administrative

costs arising from the valuation of our pension fund, administrative costs were £1.3 million lower than 2011 at £5.6 million. Although there were a number of one off costs in 2011, the underlying progress in 2012 was positive, as the company worked hard to deliver cost savings at all levels subject always to the proviso that these did not undermine the long term prospects for the business in favour of short term savings.

inbound packets & parcels 28 %

Overall staff costs are now almost £3 million or 17% lower  Our financial performance and position is increasingly than in 2008, at £13.5 million. That said, a postal worker's  becoming overshadowed by the state of our pension

basic wage has increased by around 4% since the end of  scheme which was closed to new members some years that year. ago. Generally Accepted Accounting Principles require

us to include the net deficit of £5.4 million on our balance Operating profits before exceptional items ended up at just  sheet as a long term liability. The calculation of this

over £1 million, a 29% reduction on the restated operating  deficit remains extremely sensitive to modest changes in profit for 2011. Profit before tax was £1.3 million also  assumptions and can therefore have substantial impacts substantially below last year but credible when the impact  on our financial position. A further review on how this

of the loss of LVCR and further additional charges from our  liability is calculated was undertaken during 2013 and has pension scheme are taken into account. given rise to a change in accounting policy as described

elsewhere in these accounts, principally relating to the way Net assets were reduced to £12.7 million from £15.2 million transfer values are calculated to the main PECRS scheme last year due principally to the special dividend of £4.5 million  when members leave our sub-fund (through retirement, approved and either paid or provided for at the year end.  redundancy or resignation). These changes were highly Our working capital position was also materially changed  material and gave rise to a prior year adjustment reducing due to the much smaller logistics business, as amounts  the 2011 reported deficit from £9.4 million to £5.7 million due by customers and to suppliers was much reduced due  and increasing the profit after tax from the £1.2 million

to the lower volumes. The liquidity position of the company  previously reported to £2.8 million. We note and welcome remained strong with cash and equity balances  the proposals of the States of Jersey to make the PECRS of £13.7 million and net current assets of £10.3 million. scheme more sustainable but as a matter of course we will

be undertaking our own review to ensure that these new There was an investment into the fixed assets of the  proposals are affordable for this company over the longer company in the sum of £0.9 million of which £0.4 million  term.

related to replacement delivery vehicles. Investment in our

Rue De Pres site and the Group's IT infrastructure made up

the balance. At the year-end our fixed assets were carried at

£7.9 million, the majority of which was freehold property.

operating profit

3 before exceptional items

just over £1 million £ m 24DOWN9%% saved2008

on wage

from 2011 bill since

Customer service

During March 2013, the company repeated its all-island customer survey to gauge customer perception of our performance since the last survey which last took place in December 2011 and which was published in early 2012.

Good or very good Good or very good 2012/13 2011/12

How do you rate your postman? 86.5% 89.9%

How do you rate the overall delivery service? 70.7% 69.3%

How do you rate the retail network? 70.9% 80.4%

The results show a continuing high regard for the service we provide in spite of the need to increase prices quite substantially last year. As in previous years, management will be studying the results of the survey in detail and preparing appropriate action plans to maximize the opportunity for improvement.

Our regulatory targets are based upon independent checks of the days upon which mail is delivered. There is a great deal of frustration in the company that further progress

was not made in 2012. Whilst we managed to consistently achieve the standard of at least 95% of local mail reaching a local destination the next day, and generated meaningful improvements on 2011, mail handled on our behalf by Royal Mail did not meet the standards we aspire to. In some months this was due to periods of bad weather but overall it is still not acceptable and we will be working even harder in 2013 to achieve the required standard.

2008 2009 2010  2011* 2012 JCRA

target

Locally posted mail

Delivered locally 96% 97% 92% 99% 96% 95% Delivered in Guernsey 81% 84% 81% 51% 69% 84% Delivered in UK 85% 80% 80% 60% 76% 82% Mail Posted outside of Jersey but delivered in Jersey

Posted in Guernsey 86% 86% 79% 61% 71% 84% Posted UK and elsewhere 77% 86% 81% 65% 74% 82%

*Only November and December results were available

Our people

In a service business like ours, we are heavily dependent on

the skills, commitment and customer focus of our people

who once again worked hard to meet customer expectations.  2012 was certainly a challenging one for them. A major

change to our delivery rounds placed considerable strain on delivery staff as the new arrangements settled down. Staff working in logistics had to endure months of uncertainty to

find out just what the implications would be for them of the removal of LVCR. The loss of 18 jobs in this division was very sad but we were at least able to manage this through natural wastage and voluntary redundancy. Given all this change,

we were delighted with the results of our staff survey which showed that morale was generally very good and I take this opportunity to thank all staff for the support they have given

to the company.

Many of our staff also found time to raise £15,300 for our

chosen charity Headway Jersey, including being prepared

to strip off' on a cold October morning to appear in our

now famous calendar. Postmen and women are well

known for going the extra mile' and this was another great  £ example of that spirit.

staff raised Wwas once again able to consider investment in staff development. Fith a more stable financial position the company our senior staff commenced the Institute  £15,300

of Directors certificate and diploma programmes and the  for our chosen company also launched a bespoke leadership development  charity course in early 2013. Headway Jersey

We are working hard to engage our people in improving the business either through our back to the floor initiative, staff competitions, formal training, an enhanced appraisal process and by constantly working on improved communication.

Delivering for you 17

Looking forward

Letter volumes unfortunately continue to decline, but the popularity of internet shopping is creating new opportunities for our business. Although we are still very much a letter delivery business that delivers some parcels, over the longer term it is likely we will become the opposite, a parcel delivery business that also delivers a few letters. This is a change that will present its own challenges especially in urban parishes where using trolleys and bicycles has been the best way to deliver mail.

Although our logistics business is now much smaller,

it is still vitally important to the company and we believe there are still many opportunities to support the growth of E-commerce from Jersey by using our relations with other European postal authorities to open up a number of new routes for our logistics customers which we hope to grow over time.

Our retail network of 21 post offices provides many valuable services to the Jersey community but like most other retail businesses it had a tough year in 2012. That said there

are still a number of opportunities to increase the range

of services from these outlets, something we have been working on over the last few months and hope to progress

in 2013. Improving the utilization of the Broad Street Post Office remains an objective; in 2012 we managed to let the surplus office accommodation and also provided space

to members of Genuine Jersey to sell their products in exchange for a modest commission. Longer term we need

to find a more comprehensive solution to how we can maximize the long term value of this valuable freehold site.

Our Philatelic business had a good year in 2012 with the successful diamond and hologram stamps and has some very exciting plans for 2013. So we remain optimistic about that business in spite of the decline in traditional collectors. It is about appealing to new audiences which we believe will be assisted by a new web site to be introduced in the coming months.

Our Promail business had a tough year as more major local businesses chose to have their mail dispatched from the UK. We made some management changes in that business in the latter half of the year and will roll out a number of new services in 2013. We are also examining the possibility of reducing premises costs by relocating Promail to our Rue de Pres headquarters when its lease of the Beaumont premises expires in 2014.

Although management believes we are getting a lot more things right than we were, there are still many areas where we can become more efficient to the benefit of our customers and our operating costs. Getting our core business operating at peak efficiency is also core to our growth plans which all are based on leveraging existing assets and capabilities.

Kevin Keen

Chief Executive Officer 24 May 2013

Statement of Corporate Governance Introduction

Jersey Post International Limited has a Memorandum of Understanding with the Treasury & Resources Minister.

The Memorandum requires the company to produce Financial Statements which include disclosures in accordance with the UK Corporate Governance Code issued by the Financial Reporting Council ("the Code"). This requirement does not require the company to apply other standards relevant to listed entities. The Directors are committed to maintaining a high standard of Corporate Governance in accordance with the principles laid down in the Code. The Board considers that it has complied with all appropriate provisions of the Code during the financial year ended 31 December 2012, except as explained below. The Board does not consider any declared exceptions weaken its corporate governance framework nor threaten the delivery of the company's business objectives.

The Board

The Board is chaired by Mike Liston, who was first appointed as Chairman on 12 June 2006 and reappointed for two further three year terms at the Company's AGMs held on 25 June 2009 and 15 June 2012.

The other Non-Executive Directors as at 31 December 2012 were:

Chris Evans was originally appointed on 25 June 2009 and reappointed for a further three-year term at the company's AGM held on 24 June 2011.

Donal Duff was originally appointed at the Board meeting on 27 November 2009 with his appointment commencing on 1 January 2010 and was reappointed for a further three- year term at the company's AGM held on 15 June 2012.

Tim Brown was appointed at the Board meeting on 8 July 2011 with his appointment commencing on 1 September 2011. Mr Brown's appointment was confirmed at the company's AGM held on 15 June 2012.

Paul Jackson retired from the Board at the AGM held on 15 June 2012.

Non-Executive Directors are appointed to the Board on the recommendation of the Nomination Committee and in consultation with the shareholder.

In 2012 the Board did not comply with that provision

of the Code by which boards elect one of the Non- Executive Directors to be the Senior Independent Director. However, at the Board meeting on 25 April 2013, on the recommendation of the Nomination Committee, Tim Brown was elected as Senior Independent Director.

As at 31 December 2012 the Executive Directors were:

Kevin Keen, Chief Executive Officer. Mr Keen was appointed to the Board at the AGM held on 24 June 2011.

Liz Vince, Finance Director. Mrs Vince was appointed to the Board on 23 February 2012 and this appointment was confirmed by the shareholder at the AGM held on 15 June 2012.

Gary Carroll, Business Development Director. Mr Carroll was appointed to the Board on 23 February 2012 and this appointment was confirmed by the shareholder at the AGM held on 15 June 2012.

In accordance with the Company's Articles of Association, one Non-Executive Director is required to retire by rotation. The Articles state that the director to retire by rotation shall be he who has been the longest in office since their last appointment or re-appointment. Of the existing four Non- Executive Directors, Chris Evans has been the longest in office since his last appointment and will retire by rotation at the AGM on 17 June 2013. The Board considered

this matter at its meeting on 24 May 2013 and agreed

to recommend the re-appointment of Mr Evans to the shareholder at the AGM.

The main role of the Board is to:

Set the overall strategy of the Group;

Approve the annual business plan, budget and annual report and financial statements;

Monitor performance against plans;

Ensure the maintenance of a sound system of internal control and risk management;

Oversee the activities of the Executive Directors;

Ensure obligations to the shareholder (the States of Jersey) are understood and met; and

The Chairman is responsible for leadership of the

Board and monitoring its effectiveness. He ensures effective communication with the shareholder and that

the shareholder's views and interests are considered

when making key decisions. He also facilitates the contribution of the Non-Executive Directors and promotes a constructive relationship between Executive and Non- Executive Directors. The Chief Executive is responsible for formulating strategy and for its delivery once agreed by the Board. The Chief Executive, together with the other Executive Directors, creates the framework of strategy, values, organisation and objectives which ensures

the successful delivery of key targets, and allocates decision making and responsibilities to senior managers accordingly.

The Board held five formal meetings during the financial year ended 31 December 2012. Agendas and supporting papers are circulated to Board members one week in advance of the meeting date. Records of meetings and

the decisions of the Board are maintained by the Company Secretary and are approved by the Board at the following meeting.

Ensure compliance with the Postal Services (Jersey) Law 2004 and other relevant legislation.

The Board has delegated the day-to-day operation of the activities of the company to the Executive Directors. There is a clear division of responsibility between the Chairman and the Chief Executive which is set out in writing as

well as a Schedule of Matters Reserved for the Board. Both documents are reviewed by the Company Secretary annually and updated and re-approved by the Board if necessary. The last review was carried out in October 2012 with only small textual changes to the documents being made.

Number of Meetings attended

*Paul Jackson retired from the Board with effect from 15 June 2012.

Director Independence

The Board considered that all the Non-Executive Directors were independent during the financial year ended 31 December 2012.

Performance Evaluation

The Board did not consider it either necessary or cost effective to undertake an externally facilitated review of its performance.

Instead in January 2013, on behalf of the Chairman,

the Company Secretary circulated a Board evaluation questionnaire to all Board members for completion. The questionnaire required Board members to assess the performance of the Board as a whole, the mechanics of Board meetings and their own individual performance and contribution to the Board. The results of this questionnaire were summarised in a written report which was reviewed by the Board at its meeting held on 1 March 2013.

The performance of the Executive Directors is reviewed annually by the Chief Executive and the Remuneration Committee.

Director Training

All Directors are asked to review if they have any specific training requirements as part of the Board's annual self- assessment questionnaire.

The Chairman would discuss any training and development requirements with individual Directors. Specific training for Audit and Remuneration Committee members

is considered annually. Training and development requirements of the Executive Directors are addressed via their annual Performance and Development Plans. New Directors receive an induction from the Company Secretary.

In 2012, Kevin Keen obtained the Chartered Director designation and both Gary Carroll and Liz Vince passed the Institute of Directors Certificate and Diploma exams.

During 2012, the Non-Executive Directors did not meet without the Chairman present to appraise his performance as this was addressed via the Board self-assessment questionnaire.

Audit Committee

The Audit Committee is appointed by the Board from the Non-Executive Directors. The Audit Committee is chaired by Donal Duff who is a Chartered Accountant. The other members of the Audit Committee are Mike Liston and Tim Brown, a Chartered Public Finance Accountant.

The external auditors, the Finance Director and the Chief Executive Officer attend the meetings by invitation. During the financial year ended 31 December 2012 the Audit Committee met four times.

The Audit Committee's agenda is linked to events in the Company's financial calendar. The agenda for each Audit Committee meeting is agreed with the Chairman two to three weeks prior to the meeting.

New Audit Committee members are provided with induction training and all Committee members receive on-going training on an annual basis as necessary. Training can comprise of attendance at formal conferences or courses

but more likely internal company seminars and briefings by the external auditors.

The Audit Committee reviewed its performance via a self-assessment questionnaire which was discussed at its meeting on 28 February 2013. In addition, the Committee has an Action Plan which records the tasks it needs

to complete during the year, including those to ensure compliance with the Code. Progress against the Action Plan is reviewed at each Committee meeting.

The Committee is charged by the Board with responsibility for reviewing the strategic processes for risk, control and governance throughout the company. The Audit Committee has terms of reference which include all matters indicated by the Code and which are subject to annual review. The terms of reference were reviewed and updated by the Company Secretary and circulated to all Committee and Board members in November 2012.

Financial Reporting

The Committee monitors the integrity of the financial statements of the Group, including its annual and half- yearly reports and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgements which they contain.

The Committee reviews and challenges where necessary:

the consistency of, and any changes to, accounting policies both on a year on year basis and across the Group;

the methods used to account for significant or unusual transactions where different approaches are possible;

whether the Group has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;

the clarity of disclosure in the Group's financial reports and the context in which statements are made; and

all material information presented with the financial statements, such as the operating and financial review and the corporate governance statement (insofar as it relates to audit and risk management).

Internal controls and risk management  External Audit

systems

The Committee:

The Committee:

considers and makes recommendations to the

keeps under review the effectiveness of the  Board, to be put to the shareholder for approval company's internal controls and risk management  at the AGM, in relation to the appointment, re- systems;  appointment and removal of the Company's external auditors. The Committee oversees the selection

reviews and approves the statements to be included  process for new auditors and if an auditor resigns

in the annual report concerning internal controls and  the Committee shall investigate the issues leading risk management; and to this and decide whether any action is required.

Price waterhouseCoopers CI LLP were appointed

undertakes an annual review of the company's risk  as auditors of the 2012 financial statements at management policy and in particular the financial  the company's AGM on 15 June 2012 following a thresholds used to evaluate the impact of risks to  competitive tendering exercise. ensure these remain appropriate.

makes recommendations annually to the Board on

The Company was the victim of two frauds in 2012 as a  the external audit fee;

result of a sub-Postmaster and a member of staff both

misappropriating cash. Both individuals received prison    oversees the relationship with the external auditors sentences. As a result of these unfortunate incidents a full  including (but not limited to):

review was carried out of the Company's controls over the

significant volumes of cash which are held throughout its    ensuring that the level of fees is appropriate to retail network. More robust independent auditing of cash  enable an adequate audit to be conducted;

balances has been introduced and the amount of cash

held in the network has been substantially reduced. An    approving their terms of engagement, including insurance claim in relation to the fraud by the member of  any engagement letter issued at the start of each staff was settled in March 2013. audit and the scope of the audit;

Whistleblowing and fraud  assessing annually their independence

and objectivity taking into account relevant

professional and regulatory requirements and the The Committee: relationship with the auditor as a whole, including

the provision of any non-audit services;

reviews the Group's arrangements for its employees

to raise concerns, in confidence, about possible    satisfying itself that there are no relationships wrongdoing in financial reporting or other matters; (such as family, employment, investment,

financial or business) between the auditor and

ensures that these arrangements allow proportionate  the Group (other than in the ordinary course of and independent investigation of such matters and  business);

appropriate follow up action; and

reviews the Group's procedures for detecting fraud.  monitoring thethical and professional guidance on the rotation e auditor's compliance with relevant of audit partners, the level of fees paid by the

Internal Audit Group compared to the overall fee income of

the firm, office and partner and other related

The company does not currently consider it needs a  requirements;

dedicated internal audit function. However, the Audit

Committee discusses the need for internal audit at each    assessing annually their qualifications, expertise of its meetings and will utilise the services of professional  and resources and the effectiveness of the audit auditors as and when the need arises to undertake  process which shall include a report from the individual internal audit/risk assurance reviews. external auditor on their own internal quality

procedures;

 seeking to ensure co-ordination with the activities

of any internal audit; and

 considering the risk of the withdrawal of the Group's present auditor from the market.

meets regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee also meets the external auditor at least once a year, without management being present, to discuss their remit and issues arising from the audit.

reviews and approves the annual audit plan and ensures that it is consistent with the scope of the audit engagement.

reviews the findings of the audit with the external auditor. This includes but is not limited to the following:

 a discussion of any major issues which arose

during the audit;

 any accounting and audit judgements; and

 the levels of errors identified during the audit.

reviews the effectiveness of the audit. This was achieved via the use of an audit effectiveness questionnaire which was reviewed and discussed by the Audit Committee at its meeting on 24 April 2013. The results of this review inform the Committee's decision whether to recommend the incumbent auditors for re-appointment at the company's AGM.

reviews any representation letter requested by the external auditor before it is signed by management.

reviews the management letter and management's response to the auditor's findings and recommendations.

develops and implements a policy on the supply of non-audit services by the external auditor, taking into account any relevant ethical guidance on the matter.

Nomination Committee

The Nomination Committee is chaired by Mike Liston. The other members are Chris Evans, Donal Duff and Tim Brown. The Nomination Committee met twice during 2012. In February the Committee met to consider the appointments

of Liz Vince and Gary Carroll to the Board and in May the Committee met to agree the retirement of Paul Jackson and the retirement by rotation and recommended re-election at the AGM of Mike Liston and Donal Duff.

The terms of reference of the Nomination Committee are approved by the Board and reviewed annually by the Company Secretary. The last review was carried out in November 2012. Formal minutes of the Nomination Committee are not kept but recommendations on Board appointments are made to the Board and decisions recorded in the Board minutes. The Nomination Committee has not carried out a performance evaluation for 2012 as this was not considered necessary. The performance evaluation questionnaire for the Board addressed issues of Board skills, experience and future requirements.

When considering future Board appointments the Nomination Committee pays due regard to issues of diversity, including gender. The Board has not set any objectives to diversify the Board composition, as it does not consider this to be necessary or feasible given the size of the Board and its turnover.

Remuneration Committee

The Remuneration Committee is chaired by Chris Evans with Mike Liston and Donal Duff as members. During the financial year ended 31 December 2012 the Remuneration Committee met three times. The Remuneration Committee has responsibility for setting remuneration for the Executive Directors of the Company which is sufficient to attract, retain and motivate people of the quality required. No Director plays any role in the determination of his/her own remuneration. The Memorandum of Understanding with

the Treasury and Resources Minister requires any changes to the level of remuneration paid to Non-Executive Directors to be agreed, in advance, by the Minister. The Committee also monitors the levels of remuneration for senior management.

The Committee has an Action Plan which records the tasks it needs to complete during the year, including those to ensure compliance with the Code. Progress against the Action Plan is reviewed at each Committee meeting. The Committee's terms of reference are reviewed annually

by the Company Secretary. The last review took place in November 2012. The Remuneration Committee undertook a self-assessment exercise via the use of a questionnaire which was reviewed at its meeting on 28 February 2013.

The remuneration of the Directors of the Group for the financial year ended 31 December 2012 is set out below, together with comparatives, where applicable, for 2011:

Liz Vince and Gary Carroll were not appointed to the Board until 23 February 2012 and therefore their 2011 remuneration is not disclosed.

Kevin Keen, Chief Executive Officer, is entitled to a discretionary terminal bonus of up to 100% of his annual salary on leaving the company. The payment of such a bonus will be approved by the Remuneration Committee based on an assessment as to whether the Chief Executive has satisfactorily met the performance objectives set for him at the beginning of his employment with the Company.

During 2012, Jersey Post provided a bridging loan to assist Gary Carroll in acquiring a property in Jersey pending the sale of his house in the UK. The loan is secured and bears interest at 1% over base rate. As the property has been purchased via a company owned by Gary Carroll, this transaction is disclosed in Note 20 as a related party transaction.

Salary/Fees Bonuses Benefit in Kind 2012 Total 2011 Total Non Executives £'000 £'000 £'000 £'000 £'000 Mike Liston 40 40 40 Paul Jackson 10  10 20

(retired 15 June 2012)

Chris Evans 15 15 15 Donald Duff 20 20 20 Tim Brown 17.5 17.5 4 Total 102.50 102.5 99

The benefit in kind received by the Executive Directors comprises the contribution payable into the PECRS pension scheme and health insurance. Part year salary.

Full year salary.

Payments include sums paid under Compromise Agreements to Executive Directors who left the business.

Tim Brown was appointed a NED in 2011, hence the increase in his director's fees.

Internal Controls

The Board is responsible for ensuring that there are effective systems of internal control in place to reduce the risk of misstatement or loss and to ensure that business objectives are met. These systems are designed to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has conducted a review of the effectiveness of the company's system of internal control in 2012 via the following key procedures:

Management Structure

Responsibility for operating the systems of internal control is delegated to management and directed and overseen

by the Executive Team chaired by the Chief Executive. This Team meets weekly.

Human Resources

The company endeavours to ensure that its employees are able to carry out their duties in a competent and professional manner through its commitment to staff training and development.

Risk Management

The company has a Risk Register which details and assesses all the significant risks facing the company. Management is responsible for identifying the key risks

to achieving their business objectives and ensuring that there are adequate controls in place to manage these in

line with the risk appetite set by the Board and contained in the company's Risk Management Policy which is reviewed annually by both the Audit Committee and the Board. There is also a Risk Management Group chaired by the Finance Director and comprising senior managers from each area of the business. This group meets quarterly

and the minutes of the meetings are reviewed by the Audit Committee. The Audit Committee Chairman attended the Risk Management Group meeting held on 13 November 2012 as an observer. Senior managers are invited to attend the Audit Committee meeting to provide presentations

on the key risks within their area of the business and how these are managed.

Board Reports

Key strategic decisions are taken at Board meetings following due debate and with the benefit of Board papers circulated in advance. The risks associated with decisions are a primary consideration in the information presented and discussed by the Board. The Board discusses and approves the Group's strategic direction, plans, objectives, annual budgets and financial forecasts and the associated risks to achieving these.

Directors' Report

The Board of Directors of Jersey Post International Limited (JPIL' or the Company') present their report on the affairs of JPIL and its subsidiaries (the Group'), together with the audited consolidated financial statements for the year ended 31 December 2012.

Principal Activity Dividends

The principal activity of the Group is that of providing postal  In December 2012 JPIL paid a Special Dividend of £3 million services to the Island of Jersey. to the shareholder. A further Special Dividend of £600,000

was paid on 31 January 2013. A third Special Dividend of Going Concern £900,000 will be paid in July 2013. An ordinary dividend of

£382,000 will be recommended by the Directors for 2012 at The Directors have produced forecasts for the next 12  the AGM to be held on 17 June 2013 (2011: £375,000).

months following the date of signing of these financial

statements which have satisfied them that the Group  Employee Involvement

will continue to be a going concern and be able to meet

its liabilities as they fall due. In making this assessment  During the year, the policy of providing employees with

the Directors have considered the impact of the UK  information about the Group was continued using a variety government's decision to withdraw Low Value Consignment  of media through which employees were encouraged

Relief from all Channel Island exports with effect from 1  to present their suggestions and views on the Group's

April 2012. The Directors have also considered the effect  performance.

of the deficit on the company's sub fund of the Public

Employees Contributory Retirement Scheme (PECRS). Disabled Employees

The Directors are also mindful of Article 8(2)(e) of the Postal Services (Jersey) Law 2004 which states "in so far as it is consistent with paragraph (1), the Economic Development Minister and the Jersey Competition Regulatory Authority [JCRA] shall each have a duty in performing its functions under the Law, to have regard to the need to ensure that persons engaged in commercial activities connected with postal services in Jersey, have sufficient financial and

other resources to conduct those activities". Accordingly

the Directors have adopted the going concern basis in preparing the financial statements.

Results

Details of the results for the year are set out in the Group consolidated profit and loss account on page 32. A review of the Group's business during the year and an indication of the likely future development of the business are provided in the Chairman's Statement and the CEO's review on pages 8-19.

The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a handicapped or disabled person.

Where existing employees become disabled, it is the Group's policy, wherever practicable, to provide continuing employment under normal terms and conditions and to provide training, career development and promotion to disabled employees wherever appropriate.

Board Remuneration

Details of Directors' remuneration are set out in the Remuneration Committee Report on pages 25-26.

Shareholdings

The 5 million £1 ordinary shares of JPIL are 100% owned by the States of Jersey.

Directors' Report

Statement of Directors' Responsibilities

The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

Company Law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the Company as at the end of the year and of the profit or loss of the Company for the year. In preparing these financial statements, the Directors are required to:

Annual General Meeting

The AGM will be held in the Council of Ministers Room, Cyril le Marquand House, St Helier on 17 June 2013.

Auditors

Price waterhouse Coopers CI LLP were appointed and acted as auditors for the year ended 31 December 2012. A resolution to appoint Price waterhouse Coopers CI LLP as auditors for the year ending 31 December 2013 will be proposed at the AGM on 17 June 2013.

This statement was approved by the Board of Directors of Jersey Post International Limited on 24 May 2013 and was signed on their behalf by:

Select suitable accounting policies and then apply

them consistently;

Make judgements and estimates that are reasonable

and prudent;

State whether applicable UK Accounting Standards  Liz Vince BA (Hons), CPFA, MICA, Dip. IoD have been followed; and Company Secretary

24 May 2013

Prepare the financial statements on the going

concern basis unless it is inappropriate to presume

that the Company will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

Delivering for you 29

Independent Auditors Report

Independent Auditors Report

to the members of Jersey Post International Limited

Report on the financial statements

We have audited the accompanying consolidated financial statements (the "financial statements") of Jersey Post International Limited (the Group'), which comprise the consolidated balance sheet as of 31 December 2012 and the consolidated profit and loss account, consolidated statement of total recognised gains and losses and the consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors' responsibility for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance

with United Kingdom Accounting Standards and with

the requirements of Jersey law. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit

to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group as of 31 December 2012, and of its financial performance and its cash flows for the year then ended in accordance with United Kingdom Accounting Standards and have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Report on other legal and regulatory requirements

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises the Directors' Report, Chairman's Statement, CEO's Review, Statement of Corporate Governance Review and the Board of Directors.

In our opinion the information given in the Directors' Report is consistent with the financial statements.

This report, including the opinion, has been prepared

for and only for the Company's members as a body in accordance with Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Karl Hairon

For and on behalf of Price waterhouseCoopers CI LLP Chartered Accountants

Jersey, Channel Islands

24 May 2013

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Consolidated Profit and Loss Account

Year Ended 31 December 2012

Note  Restated 2012  2011

£'000  £'000

Turnover  44,247  64,868 Cost of sales  _______(36,550) _______(56,094)

Gross profit  7,697  8,774 Administrative expenses

• FRS 17 Charge  (1,027)  (335)

• Other  _______(5,640) _______(6,983)

(6,667)  (7,318) Operating profit before exceptional costs  2  1,030  1,456 Operating Exceptional Items

• Restructuring costs  4  (239)  (633)

• Pension adjustment  -  1,097 _______  _______

Operating profit  791  1,920

Interest and Dividends receivable  5  297  217 Net gain on investments  6  45  - Net finance income  7  161  634

_______  _______

Profit before taxation  1,294  2,771

Taxation  8  -  - _______  _______

Profit after taxation   1,294   2,771 _______  _______

The basis of preparation of these financial statements is set out on page 36, and the notes on pages 36-50 form part of these financial statements.

The above results are derived from continuing activities.

The restatement of 2011 figures is due to a change in accounting treatment as explained in Note 15.

Consolidated Statement of Total Recognised Gains and Losses

Consolidated Statement of Total Recognised Gains and Losses

Year Ended 31 December 2012

Note  Restated 2012  2011

£'000  £'000

Profit for the year as originally stated  1,294  1,251 Prior year adjustment   -  1,520

_______  _______

Profit for the year as restated  1,294  2,771

Actuarial gain/(loss) in respect of the pension scheme as originally stated  1,090  (7,748) Prior year Adjustment   -  (1,699) _______  _______

Actuarial gain/(loss) in respect of the

pension scheme  15  1,090  (9,447) _______  _______

Total recognised gains and (losses) for the year   2,384   (6,676) _______  _______

The basis of preparation of these financial statements is set out on page 36, and the notes on pages 36-50 form part of these financial statements.

The restatement of 2011 figures is due to a change in accounting treatment as explained in Note 15.

Consolidated Balance Sheet

Year Ended 31 December 2012

Note  Restated 2012  2011

£'000  £'000

Fixed assets

Assets  9  7,875   8,011

Current assets

Stock  10  215  221 Debtors – due within one year  11  4,413  9,263 Short-term Investments

• Cash Deposits  7,581  15,276

• Equity Investments  2,078  -

Cash  12  4,066  3,626 _______  _______

18,353  28,386

Creditors

Amounts falling due within one year  13  (8,041)  (15,495) _______  _______

Net current assets  10,312  12,891 _______  _______

Total assets less current liabilities  18,187  20,902

Pension Deficit  15  (5,436)  (5,660)

_______  _______ Net assets   12,751   15,242

_______  _______ Represented by:

Ordinary share capital  17  5,000  5,000 Profit and loss account reserve  7,751  10,242

_______  _______ Shareholder's funds  21   12,751   15,242

_______  _______ The financial statements were approved by the Board of Directors of Jersey Post International Limited on 24 May 2013 and

were signed on their behalf by:

Kevin Keen  Liz Vince

Chief Executive Officer  Finance Director

The basis of preparation of these financial statements is set out on page 36, and the notes on pages 36-50 form part of these financial statements.

The restatement of 2011 figures is due to a change in accounting treatment as explained in Notes 13 and 15.

Consolidated Cash Flow Statement

Consolidated Cash Flow Statement

Year Ended 31 December 2012

Note  Restated 2012  2011

£'000  £'000

Net cash (outflow)/inflow from operating activities  25  (1,402)   7,668 _______  _______

Returns on investments and servicing of finance

Interest received  317   262 Net cash inflow from returns on investments  _______  _______

and servicing of finance  317   262 _______  _______

Capital expenditure

Net purchase of investments  (2,000)  - Net purchase of tangible fixed assets  (870)   (698)

_______  _______

Net cash outflow from capital expenditure  (2,870)   (698) _______  _______

Net cash (outflow)/inflow before management

of liquid resources and financing  (3,955)  7,232 Management of liquid resources  25  7,695  (6,280)

Financing

Dividends paid  (3,375)  - Dividends received  33  - Net gain on investments  42  -

_______  _______

Increase in cash in the year  25   440   952 _______  _______

The restatement of 2011 figures is due to a change in accounting treatment as explained in Notes 13 and 15.

The basis of preparation of these Financial Statements is set out on page 36, and the notes on pages 36-50 form part of these Financial Statements.

Notes to the Financial Statements

1. Accounting Policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the year and preceding year.

1. Basis of Preparation

The financial statements are prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practise). The financial statements are prepared under UK GAAP using the historical cost convention. Our Memorandum of Understanding with the Treasury and Resources Minister does not require us to adopt all UK Listing Rules. In particular, the Group implements and maintains a sound system of internal controls to safeguard the Shareholder's investment and assets.

2. Going Concern

The Directors have produced forecasts for the next 12 months following the date of signing of these financial statements which have satisfied them that the Group will continue to be a going concern and be able to meet its liabilities as they fall due. In making this assessment the Directors have considered the impact of the UK government's decision to withdraw Low Value Consignment Relief from all Channel Island exports with effect from 1 April 2012. The Directors have also considered the effect of the deficit on the company's sub fund of the Public Employees Contributory Retirement Scheme (PECRS).

The Directors are also mindful of Article 8(2)(e) of the Postal Services (Jersey) Law 2004 which states "in so far as it is consistent with paragraph (1), the Economic Development Minister and the Jersey Competition Regulatory Authority [JCRA] shall each have a duty in performing its functions under the Law, to have regard to the need to ensure that persons engaged in commercial activities connected with postal services in Jersey, have sufficient financial and other resources to conduct those activities". Accordingly the Directors have adopted the going concern basis in preparing the financial statements.

3. Basis of Consolidation

The consolidated financial statements include Jersey Post International Limited and its subsidiaries ("the Group") drawn up to 31 December each year. Intra-Group sales and profits are eliminated on consolidation and all sales and profit figures relate to external transactions only.

4. Tangible Fixed Assets

On a continuing use basis within the business, tangible fixed assets are stated at cost less depreciation.

In accordance with the Postal Services (Transfer) (Jersey) Regulations 2006 which regulated the transfer of the assets, liabilities and rights of Jersey Post to Jersey Post International Limited at 30 June 2006, the freehold land and buildings were re-valued on an existing use basis prior to their purchase by the Group.

The cost of all other tangible fixed assets is their purchase cost, together with any incidental costs on acquisition. Tangible fixed assets with a cost of less than £1,000 are not capitalised.

Depreciation is calculated so as to write off the cost of tangible fixed assets on a straight-line basis over the expected useful economic lives of the assets concerned. Tangible fixed assets are not depreciated until they are available for use.

The lives assigned to major categories of tangible fixed assets are:

Land Not depreciated

Freehold buildings 15 – 30 years

Computer hardware and software 1 – 5 years

Plant, vehicles and equipment 3 - 10 years

Improvements to leasehold property Remaining length of the lease

The carrying value of tangible fixed assets is reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Website development costs are capitalised when they meet the criteria set out in UITF 29 "Website Development Costs" and are capitalised along with the Computer hardware and software with which they are associated.

5. Stocks

Stocks are stated at the lower of cost and net realisable value. Provisions are made where necessary for obsolete, slow- moving and defective stocks.

6. Investments

Investments are held at the lower of cost and market value. Dividends received are reinvested back into the cost of the Investment.

Realised gains and losses arising on disposal of investments are calculated by reference to the proceeds received on disposal and the cost attributable to those investments, and are recognised in the Profit and Loss Account.

7. Foreign Currencies

Transactions in foreign currencies are translated into sterling at the exchange rate ruling when the transaction was entered into. Monetary assets and liabilities expressed in foreign currencies are translated to sterling at the exchange rates ruling at the balance sheet date. Foreign currency gains and losses are taken to the profit and loss account. All foreign currency transactions were entered into in accordance with the Group's Foreign Exchange policy.

8. Turnover

Turnover represents the invoiced value of goods and services supplied less post office boxes and business reply licences invoiced in advance, unexpended credit on franking meters and prepayments on mobile telephones. The sale of stamps is based on the cash received and no provision is made for services to be provided in respect of stamps in circulation as the Directors consider this to be immaterial.

9. Taxation

Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

10. Pension Costs

The Group operates both defined benefit and defined contribution schemes. Defined Benefit

Prior to incorporation the Group operated two defined benefit schemes, the Jersey Post Office Pension Fund (JPOPF), a closed occupational scheme, and the Public Employees Contributory Retirement Scheme (PECRS), an open multi- employer scheme, both of which required contributions to be made to separately administered funds. Upon incorporation the States of Jersey retained responsibility for the fully funded JPOPF. For the purpose of the Group JPOPF is treated as a defined contribution scheme.

Operating profit is charged with the cost of providing pension benefits earned during the year. The expected return on pension scheme assets less the interest on pension scheme liabilities is shown as a finance cost within the profit and loss account.

Actuarial gains and losses arising in the year from the difference between the actual and expected returns on pension scheme assets, experienced gains and losses on pension scheme liabilities and the effects of changes in demographics and financial assumptions are included in the consolidated statement of total recognised gains and losses ("STRGL").

10. Pension Costs (continued)

Pension scheme liabilities are measured using the projected unit credit method, discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability. Recoverable pension scheme surpluses and pension scheme deficits are recognised in the balance sheet.

With effect from the financial year ending 31 December 2012 Jersey Post is changing the approach to accounting for pension costs under FRS 17. In previous years the policy has been to measure the value of the future benefit payments to beneficiaries, using assumptions that are consistent with the principles prescribed by FRS 17 and, importantly, being appropriate to the term over which those payments are made. It is recognised that this accounting treatment does not appropriately reflect the reality of the Terms of Admission which sets out Jersey Post's relationship with the Scheme. In particular, the Terms of Admission provides for an internal transfer of assets (the Internal Transfer) out of the Jersey Post Sub Fund and into the general PECRS fund in respect of members who have left Jersey Post's employment. From that point on Jersey Post is no longer responsible for the financing of those benefits and the underlying liabilities are also transferred. The Internal Transfer of assets is calculated by the Scheme Actuary using a methodology prescribed by the Terms of Admission and having reference to the assumptions used by the Scheme Actuary for other purposes, namely the triennial funding valuation of the PECRS and the assumptions used to calculate Cash Equivalent Transfer Values (CETVs) to early leavers. In effect, Jersey Post's obligation to the PECRS is to provide funding for the Internal Transfers when members leave service, instead of funding for the future benefit payment to those individuals.

Defined Contribution

Both the company and employees pay contributions into an independently administered fund. The cost of providing these benefits, recognised in the profit & loss account, comprises the amount of contributions payable to the scheme in respect of the year.

11. Operating Leases

Rentals receivable and payable under operating leases are charged in the profit and loss account on a straight line basis over the lease term.

12. Research and Development

Expenditure on research and development is written off in the period in which it is incurred.

13. Related Parties

The Group has taken advantage of the exemption in Financial Reporting Standard 8 Related Party Disclosures' from disclosing transactions with related parties that are members of the Group on the basis that all subsidiaries are wholly owned.

2. Operating Profit for the Year

2012  2011 £'000  £'000

Operating profit for the year is stated after charging the following:

Auditor's remuneration  • audit  65  63

• non-audit  20  26

3. Employees Costs

2012  2011 £'000  £'000

Wages and salaries  11,999  12,743 Social security contributions  709  729 Employer pension contributions   827   1,161

_______  _______

_______13,535  _______ 14,633

4. Operating Exceptional Costs

Operating exceptional costs relate to non-recurring redundancy costs of £239,000 (2011:£323,000). In 2011 there were also asset impairment costs of £150,000 and IT transitional costs of £160,000.

5. Interest and Dividends Receivable

2012  2011 £'000  £'000

Bank interest receivable  259  217 Dividend receivable   38   -

_______  _______

_______297  _______ 217

6. Net gain on Investments

The net gain on investments during the period comprise:

2012  2011 £'000  £'000

Proceeds from sales of investments made during the year  367  - Original cost of investments sold during the year  (322)   -

_______  _______

Gain realised on investments sold during the year  _______ 45  _______ -

7. Net Finance Income

Restated 2012  2011

£'000  £'000

Expected return on pension scheme assets  1,394  1,901 Interest on pension liabilities  (1,233)  (1,267)

_______  _______

Net finance income  _______161  _______ 634 The restatement of 2011 figures is due to a change in accounting treatment as explained in Note 15.

8. Taxation

2012  2011 £'000  £'000

Jersey income tax

Current charge  -  - (Credit)/Charge in respect of prior year  _______ -  _______ -

Total current tax (credit)/charge for the year  -  - Deferred taxation

Charge for the year taken to profit and loss  -  - Charged/(credited) to the profit and loss in respect of prior periods  _______ -  _______ -

Total charge to profit and loss  -  - Charge/(credit) for the year taken to the STRGL  _______ -  _______ -

Total tax charge/(credit) for the year  _______ -  _______ -

The differences between the total current tax shown above and the amount calculated by applying the standard rate of Jersey corporation tax to the profit before tax is as follows:

Profit on ordinary activities before taxation  _______1,294  _______2,771 Tax on profit on ordinary activities at 20%  259  554

Factors affecting tax charge for the year

Fixed asset timing differences  18  29 Timing differences on pensions  173  (598) Expenses not deductible for tax purposes  56  2 Income taxed at 0%  (15)  (9) Losses brought forward from prior year  _______ (491) _______ 22

Total current income tax charge/(credit) for the year  _______ -  _______ - Deferred taxation

2012  2011 £'000  £'000

Total deferred tax balance at 1 January  -  - Charged to profit and loss  -  - (Charge)/credit to the STRGL  -  - (Charge)/credit to the profit and loss in respect of prior periods  _______ -  _______ -

Total deferred tax balance at 31 December  _______ -  _______ -

Jersey Post Limited is subject to Jersey income tax at the rate of 20% (2011:20%). All other companies in the Group are subject to Jersey income tax at the standard rate of 0% (2011:0%). A net deferred tax asset has not been recognised in respect of timing differences relating to taxable losses carried forward and fixed asset timing differences as there is uncertainty in relation to the availability of future taxable profits arising in the immediate future. The estimated value of the net deferred tax asset not recognised, measured at the standard rate of 20% is £334,000 (2011 Restated: £610,000).

In addition, a deferred tax asset has not been recognised in respect of the defined benefit pension scheme deficit. The estimated value of the net deferred tax asset not recognised, measured at the standard rate of 20% is £1,087,000 (2011 Restated: £1,132,000).

The restatement of 2011 figures is due to a change in accounting treatment as explained in Note 15.

9. Fixed Assets

Freehold  Improvements  Plant,  Intangible

land &  to leasehold  vehicles &

buildings  property  equipment  Total

£'000  £'000  £'000  £'000  £'000

Cost

At 1 January 2012  7,735  711  11,251  -  19,697 Additions  -  7  890  -  897 Transfer  -  -  (162)  162  - Disposals6 -  (49)  (2,919)  -  (2,968) Assets written-off  -  -  (300)  -  (300)

_______  _______  _______  _______  _______

At 31 December 2012  _______7,735  _______669  _______8,760  _______162  _______17,326

Depreciation

At 1 January 2012   1,314  645  9,727  -   11,686 Annual charge/impairment  239  66  560  15  880 Transfer  -  -  (78)  78  - Disposals7  -  (50)  (2,888)  -  (2,938) Assets written-off  -  -  (177)  -  (177)

_______  _______  _______  _______  _______

At 31 December 2012  _______ 1,553  _______ 661  _______ 7,144  _______ 93   9,451_______

Net book value

At 31 December 2012  6,182  8  1,616  69  7,875

At 31 December 2011   6,421  66  1,524  -  8,011

10. Stock

2012  2011 £'000  £'000

Stamps and philatelic products  169  162 Post Office Shop  17  19 Promail Paper  _______ 29  _______ 40

215_______  _______ 221

The disposal relates to a historic true up of previously written down assets. The disposal relates to a historic true up of previously written down assets.

11. Debtors: Amounts Falling Due Within One Year

2012  2012  2011  2011 £'000  £'000  £'000  £'000

Trade debtors  2,838  8,101

Provision for bad and doubtful debts  _______(145) 2,693  _______ (42) 8,059 Other debtors  781  195 Agency debtors  236  236 Prepayments and accrued income  _______703  _______ 773

_______4,413  _______ 9,263

A provision of £106,000 was created in 2012 (2011: £42,000) in respect of uncertainty over the collection of some customer balances.

Provisions

2012  2011 £'000  £'000

Provision for bad and doubtful debts

As at 1 January  42  71 Provided for in year  106  42 Amounts recovered previously written off  -  (33) Provisions utilised  _______(3)  _______(38)

As at 31 December  _______145   42_______

12. Equity Investments

2012  2011 £'000  £'000

Opening balance  -  - Additions  2,400  - Disposals  _______(322) _______ -

Closing balance  _______2,078  _______ -

13. Creditors: Amounts Falling Due Within One Year

Restated 2012  2011

£'000  £'000

Trade creditors  949  10,768 Accruals and other creditors  6,496  4,191 Agency creditors  254  131 Deferred income  _______342  _______ 405

_______8,041  _______ 15,495

Deferred income relates to prepaid post office boxes, business reply licences, and unexpended credit on franking meters.

Included within 2012 Accruals and other creditors is £2.1 million of VAT due to HMRC as a result of customer postings above the HMRC de minimis' level. The customers pay the amounts due to Jersey Post who then pay these to HMRC. The amounts received from customers but not paid over to HMRC at the Balance Sheet date are recorded within cash. This is

a change of accounting treatment as previously the amount owed to HMRC was disclosed in creditors net of the balances received from the customers. The effect of this in 2011 is that Accruals and other creditors have increased by £994,000 and have been restated accordingly.

Included within accruals and other creditors is a provision in relation to leased properties, following a review by property surveyors during 2012.

2012  2011 £'000  £'000

Opening balance  753  500 Movement in the year  _______53 _______ 253

Closing Balance  _______806  _______ 753

14. Operating Lease Commitments

Land & Buildings

Restated 2012  2011

£'000  £'000

The Group

Non-cancellable annual commitments in respect of operating leases which expire:

Less than one year  16  47 Between two and five years  1,667  2,196 After five years  _______ -  _______-

_______1,683  _______2,243

The prior year comparative has been restated due to the exclusion of an operating lease in 2011.

15. Pension Costs – Defined Benefit

The Group had one defined benefit pension scheme at 31 December 2012, which is open to certain employees of Jersey Post - Public Employees Contributory Retirement Scheme (PECRS)(the scheme'). Prior to incorporation Jersey Post had a second defined pension scheme (JPOPF). The responsibility for JPOPF remains with the States of Jersey as from 30 June 2006.

The Public Employees Contributory Retirement Scheme (PECRS) is a multi-employer defined benefit scheme operated by the States of Jersey, funded in accordance with the recommendations of an actuary, which provides benefits based on final pensionable pay. The assets of the fund are held separately from those of the States of Jersey.

Salaries and emoluments include pension contributions of £751,000 for the year ended 31 December 2012 (2011: £1,161,000) for staff who are members of PECRS. There are unpaid contributions of £39,000 outstanding at the year-end (31 December 2011: £98k). The current employer contribution rate is 8.14% of members' salaries as set by the Scheme Actuary.

The latest full actuarial valuation of PECRS was carried out by the PECRS's independent actuary as at 31 December 2010. The valuation of PECRS has been updated by the actuary to 31 December 2012 in accordance with FRS17.

From 31 December 2012 Jersey Post is changing the method of calculating and reporting the defined benefit obligation under FRS 17. The obligation will be measured as the present value of the expected future Internal Transfers. It will be assumed that the Internal Transfers will take place upon the anticipated retirement date of the current membership, with no allowance for earlier leaving service. See accounting policy 1.10 for further details on the revised calculation method.

Actuarial gains and losses have been recognised in the period in which they occur, (but outside the profit and loss account), through the Statement of Recognised Gains and Losses (STRGL).

The financial statements for 2011 have also been updated to include the recognition of a Settlement Profit in the pension scheme relating to a significant number of scheme leavers over 2011. The Settlement has been measured using a full valuation of the benefits of the affected staff carried out by an independent actuary.

The principal assumptions used by the independent qualified actuaries to calculate the liabilities under FRS 17 are set out below:

Main financial assumptions

Restated  Restated 31 December  31 December  31 December 2012 (% p.a.)  2011 (% p.a.)  2010 (% p.a.)

Before Retirement

Jersey Price Inflation  3.05%  3.15%  3.60% Rate of general long-term increase in salaries*  4.05%  4.15%  3.70% Rate of increase to pensions in deferment  2.90%  2.85%  3.30% Discount rate for scheme liabilities  4.10%  4.55%  5.40%

After Retirement

Jersey Price Inflation  3.15%  3.30%  3.80% Rate of increase to pensions in payment  3.00%  3.00%  3.50% Discount rate for scheme liabilities  5.20%  5.20%  6.10%

* In addition, allowance has been made for the same age related promotional salary scales as used at the previous actuarial valuation of the scheme.

Expected return on assets

Restated  Restated

31 December  31 December  31 December  31 December  31 December  2012  2011  2010  2009  2008

Long-  Long-  Long-  Long-  Long-

term  term  term  term  term expected   expected   expected   expected  expected

rate of  rate of  rate of  rate of  rate of

return*  £'000  return*  £'000  return*  £'000  return*  £'000  return*  £'000

Fixed–income bonds  2.7  -  2.8%  -  4.2%  -  4.5%  -  3.8%  - Equities  8.0%  18,061  8.0%  17,742  8.0%  25,021  8.3%  22,025  7.6%  17,673 Index–linked gilts  2.5%  -  2.6%  -  4.0%  -  4.3%  -  3.6%  - Property  7.5%  1,508  7.5%  -  7.5%  -  8.8%  311  6.6%  483 Corporate Bonds  3.1  2,421  3.9%  5,657  5.0%  7,010  5.5%  7,678  5.5%  7,822 Cash  ______1.0% ______561  ______1.8% ______ 493  ______1.4% ______ 422  ______0.7% 2,857 ______  ______2.5% 856______

Total fair value of assets   ______22,551   ______23,892   ______32,453    ______32,871   ______26,834

* JPIL employs a building block approach in determining the long-term rate of return on pension plan assets. Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The assumed long-term rate of return of assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the scheme.

Please note that from 2010 onwards the accounting treatment has changed as described at the beginning of the note. 2009 and 2008 have not been restated.

Reconciliation of funded status to balance sheet

Restated  Restated Value at  Value at  Value at

31 December 2012  31 December 2011  31 December 2010 (£K)  (£K)  (£K)

Fair value of scheme assets  22,551  23,892  32,453 Present value of funded defined benefit obligations  27,987  29,552  30,314 (Liability)/asset recognised on the balance sheet  (5,436)  (5,660)  2,139

Changes to the present value of the defined benefit obligation during the year

Restated Year ending  Year ending

31 December 2012  31 December 2011 (£K)  (£K)

Opening defined benefit obligation  29,552  30,314 Current service cost  1,333  1,240 Interest cost  1,233  1,267 Contributions by scheme participants  340  404 Actuarial (gains) / losses on scheme liabilities*  (102)  5,660 Net benefits paid out  (124)  (92) Past service cost  545  - Net increase in liabilities from disposals / acquisitions  -  - Curtailments  -  - Settlements  _______(4,790) _______(9,241)

Closing defined benefit obligation  _______27,987  _______29,552

* Includes changes to the actuarial assumptions.

15. Pension Costs – Defined Benefit (continued)

Changes to the fair value of scheme assets during the year

Restated  Year ending  Year ending  

31 December 2012  31 December 2011  

(£K)  (£K)

Opening fair value of scheme assets  23,892  32,453 Expected return on scheme assets  1,394  1,901 Actuarial gains / (losses) on scheme assets  988  (3,787) Contributions by the employer  751  1,157 Contributions by scheme participants  340  404 Net benefits paid out  (124)  (92) Net increase in assets from disposals / acquisitions  -  - Settlements  (4,690)  (8,144) Closing fair value of scheme assets  22,551  23,892

Actual return on scheme assets

Restated Year ending  Year ending

31 December 2012  31 December 2011 (£K)  (£K)

Expected return on scheme assets  1,394  1,901 Actuarial gain / (loss) on scheme assets  _______988  _______(3,787)

Actual return on scheme assets  _______2,382  _______(1,886) Analysis of profit and loss charge

Restated Year ending  Year ending

31 December 2012  31 December 2011 (£K)  (£K)

Current service cost  1,333  1,240 Past service cost  545  - Interest cost  1,233  1,267 Expected return on scheme assets  (1,394)  (1,901) Curtailment cost  -  - Settlement cost  _______(100) _______(1,097)

Expense recognised in profit and loss  _______1,617  _______(491)

Analysis of amounts recognised in STRGL

Restated  Year ending  Year ending  31 December  31 December  

2012 (£K)  2011 (£K)

Difference between actual andexpected return on pension scheme assets  988  (3,787) Experience gains arising on the scheme liabilities  662  544 Effect of changes in assumptions underlying the present value of scheme liabilities  _______(560) _______(6,204)

Total gains/(losses) recognised in the Statement of Total Recognised Gains and Losses  _______1,090  _______(9,447) History of experience gains and losses

Restated  Restated

2012  2011  2010  2009**  2008** (£K)  (£K)  (£K)  (£K)  (£K)

Experience gains / (losses)

on scheme assets

Amount  988  (3,787)  655  3,232  (7,649) Percentage  4.3%  15.8%  2.9%  9.8%  2.9%

Experience gains on

scheme liabilities*

Amount  662  544  5,995  1,829  562 Percentage  2.4%  1.8%  20.3%  4.9%  1.8%

Total gains/(losses) recognised

in statements of total

recognised gains and losses

Amount  1,090  (9,447)  (4,312)  421  (4,703) Percentage  3.9%  32%  15.6%  1.1%  15.1%

* This item consists of gains / (losses) in respect of liability experience only, and excludes any change in liabilities in respect of changes to the actuarial assumptions used.

** 2009 and 2008 have not been restated

16. Pensions – Defined Contribution

The pension cost represents contributions payable by the Group to the defined contribution scheme and amounted to £77,000 (2011: £38,000). Contributions totaling £2,000 (2011: £8,000) were payable to the scheme at 31 December 2012 and are included within "accruals and other creditors".

17. Ordinary Share Capital

2012  2011 £'000  £'000

Authorised, issued, allotted and fully paid

5 million £1 ordinary shares  _______5,000  _______ 5,000

18. Dividends Paid and Payable

During the year £3,375,000 (2011: £Nil) dividends were paid to the shareholder.

2012  2011 £'000  £'000

Declared and paid during the year

Final for 2011  375  - Special Dividend for 2012  _______3,000  _______-

_______3,375  _______-

Balance of Special Dividend provided for at year end (to be paid in 2013)  _______1,500  -

Proposed for approval by shareholders at the AGM:

Final dividend for 2012 (2011)  _______382  _______375

19. Ultimate and Immediate Controlling Party

The ultimate and immediate controlling party is the States of Jersey, which owns 100% of the ordinary share capital.

20. Related Party Transactions

The Group provides multi-channel services to a number of different departments of the States of Jersey. Sales of £863,000 were made to departments in 2012 (2011:£998,000). As at 31 December 2012, the amount owing to the States of Jersey was £376,000 and the amount owed from the States of Jersey was £179,000 (31 December 2011:£350,000 and £71,000 respectively). All services provided by the Group to the States of Jersey are provided on an arm's length basis.

The following transactions have taken place on an arm's length basis with the below companies connected with directors of JPIL:

Director  Relationship  Interest  Service  Purchases  Sales  Balance@ 31/12/12 Creditor  Debtor

£'000  £'000  £'000  £'000

Chris Evans  Director  Foreshore  IT  £180k  £1k  £23k  £Nil Limited   (2011:£102k)  (2011:£1k)  (2011:£2k)  (2011:£1k)

Gary Carroll  Director  St Lo Ltd  Loan  -  -  -  £730,000

(2011: Nil)

21. Consolidated Reconciliation of the Movements in Shareholder's Funds

Note  2012  2011

£'000  £'000

Shareholder's funds at 1 January as previously stated  15,242  18,007 Prior year adjustment  _______ -  _______ 3,911

15,242  21,918 Profit attributable to the shareholder as previously stated  1,294  1,251

Prior year adjustment  _______ -  _______1,520

Profit attributable to shareholder as restated  1,294  2,771 Ordinary Dividend  (375)  - Special Dividend  (4,500)  - Movement in deferred tax  8  -  - Actuarial gain/(loss) in respect of the pension schemes

as previously stated  15  1,090  (7,748)

Prior year adjustment  _______ -  _______ (1,699)

Actuarial gain/(loss) in respect of the pension schemes as restated  1,090  (9,447) Shareholder's funds at 31 December  _______12,751  _______15,242

The restatement of 2011 figures is due to a change in accounting treatment as explained in Note 15.

22. Subsidiary Undertakings

JPIL is the 100% owner of the equity share capital, either through itself or through its subsidiary undertakings, of the following companies:

Name  Nature of Business

Jersey Post Limited  Postal Operator

Offshore Solutions Limited  Mail Consolidation & Logistics Services – dormant Jersey Post (Broad Street) Limited  Property Holdings

Jersey Post (Rue des Pres) Limited  Property Holdings

Jersey Post (Parishes) Limited  Lease Holdings

Jersey Post International Development Limited  Business Development - dormant

Ship2Me Limited  E-commerce Logistics - dormant

Postfone Limited  Dormant

CI Courier Limited (Dormant)  Courier - dormant

In accordance with Article 105(11) of the Companies (Jersey) Law 1991, the Company is no longer required to prepare separate company only accounts as consolidated accounts have been prepared.

23. Board Remuneration and Fees

Details of remuneration paid to Directors and related party transactions therewith are disclosed in the Remuneration Committee Report on pages 25-26 and in note 20.

24. Post balance sheet event

On 26 March 2013, JPIL received an insurance settlement to the value of £68,409 in relation to the fraud committed by an ex member of staff which is referred to on page 24. This receipt has not been accounted for in 2012.

25. Notes to the Cash Flow Statement

1. Reconciliation of Operating Profit to Net Cash (Outflow)/inflow from Operating Activities

2012  2011 £'000  £'000

Operating profit  791  1,920 FRS17 charge / (credit)  1,027  (1,010) Provision for Special Dividend  (1,500)  - Add depreciation charge  880  988 Decrease/(increase) in stock  6  (39) Decrease/(increase) in debtors  4,849  (132) (Decrease)/increase in creditors due within one year  (7,455)  5,870 Loss on write-off of fixed assets  _______-  _______71

Net cash (outflow)/inflow from operating activities  _______(1,402)  _______ 7,668 The restatement of 2011 figures is due to a change in accounting treatment as explained in Notes 13 and 15.

2. Analysis of Changes in Net Funds

1 January 2012  Cash Flow  31 December 2012

£'000  £'000  £'000

Cash  3,626  440  4,066 Debt due within one year  -  -  - Debt due after one year  -  -  - Short-term deposits  _______15,276  _______(7,695) _______7,581

_______18,902  _______(7,255)  _______11,647

Monies held on seven day and month deposit meet the definition within FRS1 "Cash flow statements" of liquid resources and are disclosed above as short-term deposits.

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