1. Door 2 Door

2. Growth (Removal of CAP) Mapping Summary Key growth postcode subsectors opportunities map directly onto our current high volume demand areas. Removal of CAP in lowest 20 postcode subsectors would have no impact on revenue (below 3 items per week) Ability to reverse this trend is limited & expensive to achieve. Newshare and team distribution networks are geared around high volume demand areas. Capturing of additional volume would pose direct competitive threat to Newshare & Team and a competitive response is inevitable (lowering of price) Stimulation of sector d & c bands present “white space” growth with less risk of direct competitive threat Addressing quality issues in London provides significant growth opportunities in both capped and non capped environment but key corner stone of competitors business model Band E – High Demand Band A – Low Demand

3. D2D Market Context 14bn items. RM = 3.0bn = 22% share, but falling 90/100 top advertisers use Door Drops Dependency on Financial Services sector, versus Retail Massive competitive activity, particularly TNT TNT Up to 3 x more expensive than competitors

4. Some Facts Current Total D2D Payments £51.4m Down £181,600 on previous year. Average D2D payment is currently £12.39 Currently 79,753 receive payments Which means 17,000+ don’t. Payments in deal go to 87,800 FTE 97,500 people in delivery £20.60 allowance is made up of £12.42 D2D and £8.18 E1 and E2. Early shift payments fell by £3m in last year and will continue to fall

5. Allowance Not Paid Pro Rata £20.60 x 87,800 FTE = £1808680 x 52 = £94051360 £94051360 / 97,500 Total in delivery = £964.63 / 52 = £18.55 (This will be the FT payment) 30 hr contract will get 18.55 + 6.60 = £25.15 27 hr contract will get 18.55 + 5.94 = £24.49 20 hr contract will get 18.55 + 4.40 = £ 22.95 10hr contract will get 18.55 + 2.20 = £ 20.75 5hr contract will get 18.55 + 1.10 = £19.65 Everybody (FT and PT) will get the same amount of time to prep and deliver each item as it is now in workload.

6. Why Change OpportunityOpportunity for growth Opportunity Increased workload = more hours Market share has declined Money Paid out has declined Quality has declined Threat from Mailing Houses Restricts Competition Restricts Competition Royal Mail considered switching product off entirely in some areas Automation (Could be Regional) Casual Workforce 2007 offer was small buy out and absorption

7. Why Change – New Deal Paid 52 weeks per year, on sick and annual leave. Increase’s every year with pay deals Captures all monies and Workload Opportunity to fully consolidate Improves Reliability and Quality Potential to increase revenue Potential for new products + growth “Strike while the iron is hot”

8. D2D Media Comment ….”the decision will not necessarily lead to a spike in unaddressed mail. It will, however, allow Royal Mail to compete on a level playing field with the likes of TNT Post and grab a larger slice of the £500m market without necessarily inflating it any further”. Russell Parsons DM Expert Russell Parsons DM Expert

9. Competition TNT Post has introduced a next day delivery service Called FirstSort, which it claims is the first physical alternative to the first class service offered by Royal Mail. Through FirstSort, customers will be able to use the next day service regionally. The service will see a phased implementation across the UK, starting with Scotland. A national expansion will follow later this year. Currently the service is being used by a number of clients including hospitals and accountancy firms. The move is the latest action from TNT Post as it bids to offer a competitive alternative to Royal Mail.