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Dear Colleague,

Important information about your Free SharesWe are writing to you because you hold Free Shares from the SIP 2015 and 2016 Free Shares Offers. This letter contains important information about some key dates coming up in relation to our Free Shares Offers. This directly affects you. Please read this letter carefully.

Third anniversary of the SIP 2015 Offer

The 5 October 2018 is the third anniversary of the SIP 2015 Free Shares Offer. Under the rules of the SIP, anyone who holds SIP 2015 Free Shares will be able to sell these shares, if they wish, from this date. You can also choose to keep your shares.

From 5 October 2018, these shares will have ‘conditional’ (taxable) status. This means that you will have to pay income tax and National Insurance Contributions (NICs) if you sell them before their fifth anniversary. For a basic rate tax payer, the tax payable on conditional shares is likely to be 32 per cent (including income tax and NICs), subject to your personal circumstances. When they reach their fifth anniversary on 5 October 2020, your shares will become ‘available’ to sell tax-free.

To see how many Free Shares you currently hold from each Free Shares award, and their status, please visit the Employee Share Plan (ESP) portal at www.royalmailemployeeshares.co.uk.

You may want to seek independent financial advice before making a decision about whether to hold or sell your shares. The directors and employees of Royal Mail, Equiniti Share Plan Trustees Limited (‘Trustee’) and the Share Scheme Administrator, Equiniti Limited (‘Equiniti’) are not authorised to provide independent tax or financial advice.

Keeping your Free SharesIf you want to keep your Free Shares, you do not need to do anything. They will remain in the tax-efficient SIP for as long as you are a Royal Mail employee and you will continue to benefit from being a shareholder. You will continue to receive any dividends the Company chooses to pay and have the right to direct the Trustee how to vote on your behalf at shareholder meetings such as the Annual General Meeting (AGM).

Note: if Royal Mail chooses to pay shareholders an interim dividend 2018-19, you would only receive this on your Free Shares if you still hold them on the record date. The record date is likely to be around the start of December 2018.

September 2018

Royal Mail Group 100 Victoria EmbankmentLONDONEC4Y 0HQ

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Selling your Free Shares

If you decide to sell some or all of your ‘conditional’ Free Shares, you need to be aware of the following information.

There will be temporary changes to our usual process for selling Free Shares

If you do decide to sell any of your conditional shares from 5 October 2018, please be aware that there will be some changes to the way you submit your request and your shares are sold. These are summarised below. The changes are being made because we are in the run up to the fifth anniversary of the 2013 Free Shares Offer on 15 October 2018. This is the point at which eligible colleagues can sell their SIP 2013 Free Shares tax-free. It is impossible to know in advance how many employees will wish to hold their Free Shares or sell them tax-free from this point. Royal Mail is putting in place a sale process to manage the potential volume of sell requests made during this time in the most effective way. The information below explains how this will impact the normal sale methods. The Company’s priority is putting in place a sale process which meets the principles outlined below.

Our principles

The Company will put in place a sale process for SIP Free Shares that aims to:

1. Get employees the best possible price for their shares 2. Result in all employees selling at the same time getting the same price for their shares and having the same

opportunity to take part 3. Maintain an orderly market and help to reduce the potential for volatility in the Royal Mail share price

All sell requests submitted from 15 October will be sold in the same way, even if you do not hold SIP 2013 Free Shares. When you choose to sell them will have an impact on:

• whether you are able to see the share price at which your shares will be sold and, as a result, whether you know exactly how much you will receive from the sale;

• the process used to sell your shares, the possibility of your shares being sold at a discount to the market price and the size of any discount;

• when your sell request will be acted on, and your shares sold on the stock market; and• when you will receive the proceeds (cash) from selling your shares.

It may be that the demand to sell SIP 2013 Free Shares from 15 October 2018 until further notice means that there are more requests to sell Royal Mail shares than can be processed in an orderly way using our usual process. The process used will depend on the volume of sale requests made and market conditions at the time. Equiniti and the brokers will review these market factors and decide which sale process best meets our principles (see the box above). If any additional fees are required for the process (on top of the usual commission fee that employees need to pay each time they sell their shares), these will be paid by Royal Mail. The cost would not be passed on to employees.

There is a range of ways that Equiniti and the brokers could sell the shares that employees request to sell from 15 October 2018. Depending on market conditions, and in the event that there is a very high number of sell re-quests in the period up to and from 15 October 2018, the process used could result in employees’ shares being sold at a discount to the prevailing share price at the time. The discount could potentially range from five to 10 per cent, and could be more than that.

Or, if the volume of sell requests is lower, but is still above normal trading volumes, a different process may be used. This could mean that the price you receive for your shares is at a discount to the average share price on

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the stock market over the period of time during which the shares are sold. Equiniti will use the process they believe is in the best interests of employees selling Free Shares, and of other shareholders.

Here is more information on how to submit your sell request from 5 October 2018:

• From Friday 5 October to 16:30 on Friday 12 October 2018: you can only submit your sell request online via the Employee Share Portal at www.royalmailemployeeshares.co.uk. You will not be able to sell via the free automated phone service (0800 012 12 13) during this time. If you submit your request when the stock market is open (08:00 to 16:30), your shares will be sold in real time. You will get a quote based on the current share price, before you commit to selling your shares. If you submit your request when the stock market is closed, your request will be processed on the next working day.

• 16:30 on Friday 12 October until further notice: the online and phone dealing services will not be available for any Free Shares sell requests while Equiniti processes the volume of SIP 2013 sale requests they have already received. We will inform you when they become available.

• When online and phone dealing services become available again: both services are available 24 hours a day. During this time, your shares will not be sold in real time. This means you will not be able to see the share price at which your shares are sold until after they are sold. Following these services becoming available, it is possible that they could again be withdrawn temporarily, and we will inform you if that is the case.

• We will inform you when online real time dealing will be available: this will depend on the volumes of shares employees wish to sell. There is no certainty on when real time dealing will be reinstated, and it could be subsequently withdrawn depending on demand. We will keep you informed about when real time dealing becomes available via the ESP portal, phone service and Royal Mail internal communications channels.

When submitting your sell request, please note:

• If you are registering for your online Employee Shares Account for the first time, you will need to activate your account first. If you have a royalmail.com email address, the activation code will be sent straightaway by email. If not, your activation code will be sent to your home address. This can take up to five working days.

• When submitting your request by phone, you will need your payroll number, which you can find on your payslip, and date of birth when you call. At the end of the call, you will need to take a note of your reference number. Keep this number for future reference and if you have any questions.

If you have any questions regarding the contents of this letter, please call the Royal Mail Employee Shares Helpline free on 0800 012 12 13. You can also chat live to a share expert online using Live Chat. You can access Live Chat at www.myroyalmail.com/employee-share-offers. Both Live Chat and the helpline are open 08:30 to 17:30, Monday to Friday (not including UK bank holidays).

Yours sincerely,

Sally Ashford

Chief HR Officer

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Important notices: Please read the Terms and Conditions on the ESP portal (www.royalmailemployeeshares.co.uk) before making a decision about whether to hold or sell your shares. The price of shares can go down as well as up. The value of the shares you have depends on the share price and when you sell your shares. The price of Royal Mail shares is shown on our website at www.myroyalmail.com, on the business screens in your workplace and in certain newspapers. On our website and on our business screens, the share price will update every 15 minutes when the stock market is open. When the stock market is closed they will show the price at the end of the previous working day. The share price you see may not be the up-to-the-minute price and should not be used to make any investment decisions.If you have any questions about what you should do with your shares, you should get independent financial advice. Nothing in this letter should be taken as tax or financial advice. The directors and employees of Royal Mail, the Trustee and Equiniti are not authorised to provide independent tax or financial advice. If there is any inconsistency between this letter and the terms and conditions of the Free Shares Offer, the SIP rules or tax legislation, they shall take priority over this letter.The brokers will undertake any sale of shares in accordance with the separate terms and conditions in place between them, the Trustee and Equiniti. Those terms and conditions will govern how the brokers will effect the sale of shares and nothing in this letter will amend those terms, unless otherwise agreed between the brokers, the Trustee and Equiniti.