Licence Condition 4.6 (a) and (b) Licence Condition 4.9 (a) Licence Condition 5.6 (a) and (b) National Report To Postcomm and Postwatch

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1 Licence Condition 4.6 (a) and (b) Licence Condition 4.9 (a) Licence Condition 5.6 (a) and (b) National Report To Postcomm and Postwatch 2007/08 Quarter 1 Report

2 NATIONAL QUARTER 1 REPORT 2007 / 2008 CONTENT PAGE Overview Of Quality Of Service Performance - Quarter / Table 1 Scheduled Service Standards & Standardised Measures 3 Actual Quarter Results Table 2 Postcode Area (PCA) First Class Stamped and Metered Delivered in PCA 4 5 Actual Quarter Results Table 3 Percentage of Deliveries By Latest Delivery Times 6 Actual Quarter Results Table 4 Percentage Of Collections At Or After Final Advertised Time of Collection 7 Actual Quarter Result Table 5 Downstream Access Products 8 Actual Quarter Results Table 6 Business Collections Served Each Day 9 Actual Quarter Results Table 7 Business Collections Made No Earlier Than The Collection Window 10 Actual Quarter Results Commentary on Performance Table 8 Licence Condition 5.6 Complaints Report 15

3 OVERVIEW OF QUALITY OF SERVICE PERFORMANCE This report is produced in accordance with Conditions 4.9(a), 4.6(a) (b) and 5.6(a) (b) of Royal Mail's amended Licence dated 25 May The Annex to Condition 4 of the Licence details twelve Scheduled Services or Standardised Measures. Each of the twelve (apart from Special Delivery) has four performance bands, with the consequences of performance in each band explained in the Licence. This commentary compares actual performance in 2007/08 with the Performance Band 1 standard. The Quarter 1 reporting period for all measures except European International Delivery is 19 March June 2007 ( 11 weeks). The Quarter 1 reporting period for European International Delivery is 1 April June Overall, a good start to the new reporting year. For eleven of the twelve Scheduled Services or Standardised Measures Royal Mail performed in Quarter 1 at or above the full-year Licence requirement, as follows: Quarter 1 Actual cw Full-Year Target Retail First Class At target level Retail Second Class +0.3 Bulk First Class +1.5 Bulk Second Class +0.5 Bulk Third Class +1.9 Standard Parcels +3.8 European International Delivery Special Delivery +0.1 Postcode Area % Delivered -20/118 PCAs % Of Collection Points Served Each Day At target level % Of Delivery Routes Completed Each Day % Of Items Correctly Delivered

4 The only Standard below the Licence full-year target level after Quarter 1 is the geographical Postcode Area (PCA) measure of 1st Class Stamped and Meter Delivered From The UK. 20 Postcode Areas out of the targetted 118 were below the full-year target level. For several of these PCAs the results were adversely impacted by the consequences of industrial action at Edinburgh Mail Centre in Period 1 and weather disruption. However, the rest-of-year performance required in order to achieve the full-year target is achievable, assuming steady-state, at each of the PCAs based on historical performance. (NB. The PCA- level results at Quarter 1 are subject to wide statistical accuracy which will reduce as the year progresses as more samples are taken into account). The underlying performance for all the twelve Scheduled Services and Standardised Measures is on course to meet the full-year Licence targets, assuming no force majeure or indusrial action disruption. (However, the national level industrial action called by the CWU which started in Period 4 and continued throughout Quarter 2, together with the flooding in Yorkshire in Period 4 and the flooding in Gloucestershire, Worcestershire, Warwickshire and Oxfordshire in Period 5, have severely affected the results, which will be confirmed when the Quarter 2 Report is produced in November.) The following report details the results for Quarter 1. In addition, in accordance with the requirement from Postcomm, a written commentary is provided for any Scheduled Service or Standardised Measure, or for any products in the Bulk First Class or Bulk Second Class grouping, which falls into Band 3 or 4 of the performance bands as detailed in the Annex to Licence Condition 4. Cumulatively to the end of Quarter 1 this applies in three cases only: Response Services 1st Class Response Services 2nd Class Postcode Area: 1st Class Stamped And Meter Delivered From The UK The Licence also requires Royal Mail to provide quarterly results against the following Non-Standardised Measures which do not have Licence targetry: the percentage of deliveries in the UK which are made by the latest delivery time the percentage of collections in the UK which are made from Post Office letter boxes and other access points at or after the final advertised time of collection the percentage of Downstream Access products which are delivered on the first working day after receipt by Royal Mail Royal Mail has also agreed to provide from Quarter /08 quarterly information in respect of business collections viz: percentage of business collections served each day percentage of final business collections made no earlier than the collection window 2

5 Table 1. Scheduled Services & Standardised Measures Actual Quarter 1 Results Scheduled Services & Standardised Measures Standard Standards Quarter 1 Quarter 1 % % 95% cl Grouping 1 (Retail First Class) /- 0.2 Grouping 2 (Retail Second Class) /- 0.2 Grouping 3 (Bulk First Class) / st Class Postage Paid Impression / st Class Response Services /- 2.0 Mailsort /- 2.5 Presstream /- 1.0 Grouping 4 (Bulk Second Class) / nd Class Postage Paid Impression / nd Class Response Services /- 1.3 Mailsort /- 1.0 Presstream /- 1.5 Grouping 5 (Bulk Third Class) /- 0.7 Standard Retail Parcels /- 0.9 European International Delivery /- 0.8 Special Delivery # ## Postcode Area Target % (Delivered) 91.5 (in 118/118) 98 of 118 Percentage Of Collection Points Served Each Day Percentage Of Delivery Routes Completed Each Day Percentage Of Items Delivered Correctly / Standard is full-year cumulative. ## Product subject to continuous sampling (confidence limit inapplicable). 95% cl = 95% confidence limit. # The result for Special Delivery is for all Special Delivery (Next Day) items. The Licence target is for Special Delivery (Next Day) other than when sold to users having an account with the licensee buying the service using their account. The Royal Mail measurement system is unable to separate the performance for account and non-account customers in this way. 3

6 Table 2. Postcode Area (PCA) First Class Stamped and Metered Delivered In PCA Actual Quarter 1 Results Postcode Area Q1 C/L Postcode Area Q1 C/L Postcode Area Q1 C/L AB Aberdeen /- 2.3 DL Darlington /- 2.6 KW Kirkwall /- 2.3 AL St Albans /- 1.9 DN Doncaster /- 1.9 KY Kirkcaldy /- 3.1 B Birmingham /- 1.9 DT Dorchester /- 2.5 L Liverpool /- 2.0 BA Bath /- 2.1 DY Dudley /- 1.9 LA Lancaster /- 2.1 BB Blackburn & Burnley /- 2.5 E London East /- 2.4 LD Llandrindod Wells /- 2.4 BD Bradford /- 1.6 EC City of London /- 1.9 LE Leicester /- 1.9 BH Bournemouth /- 2.1 EH Edinburgh /- 2.6 LL North Wales /- 2.4 BL Bolton /- 2.4 EN Enfield /- 2.1 LN Lincoln /- 2.1 BN Brighton /- 2.4 EX Exeter /- 2.2 LS Leeds /- 2.3 BR Bromley /- 1.6 FK Falkirk /- 2.6 LU Luton /- 1.7 BS Bristol /- 1.8 FY Fylde /- 3.1 M Manchester /- 1.9 BT Northern Ireland /- 2.6 G Glasgow /- 1.8 ME Maidstone /- 2.5 CA Carlisle /- 2.2 GL Gloucester /- 1.9 MK Milton Keynes /- 2.1 CB Cambridge /- 2.5 GU Guildford /- 2.4 ML Motherwell /- 2.4 CF Cardiff /- 2.5 HA Harrow /- 1.8 N London N /- 2.0 CH Chester & Deeside /- 2.1 HD Huddersfield /- 2.0 NE Newcastle /- 2.2 CM Chelmsford /- 2.4 HG Harrogate /- 2.2 NG Nottingham /- 2.3 CO Colchester /- 2.6 HP Hemel Hempstead /- 2.2 NN Northamptonshire /- 2.2 CR Croydon /- 1.6 HR Hereford /- 2.3 NP Newport /- 2.4 CT Canterbury /- 2.1 HS Hebrides /- 3.6 NR Norwich /- 2.1 CV Coventry & Warwickshire /- 2.4 HU Hull /- 2.7 NW London NW /- 2.0 CW Crewe /- 2.4 HX Halifax /- 2.0 OL Oldham /- 2.3 DA Dartford /- 2.0 IG Ilford /- 2.1 OX Oxford /- 2.3 DD Dundee /- 2.9 IP Ipswich /- 2.2 PA Paisley /- 2.3 DE Derby /- 2.0 IV Inverness /- 2.1 PE Peterborough /- 1.9 DG Dumfries /- 2.4 KA Kilmarnock /- 2.4 PH Perth /- 2.8 DH Durham /- 2.2 KT Kingston upon Thames /- 1.8 PL Plymouth /- 2.4 = Areas below full-year target = Areas meeting or exceeding full-year target = Exempted from postcode area targets 4

7 Table 2. (Continued) Postcode Area (PCA) First Class Stamped and Metered Delivered In PCA Actual Quarter 1 Results Postcode Area Q1 C/L Postcode Area Q1 C/L PO Portsmouth /- 2.4 TW Twickenham /- 1.7 PR Preston /- 2.0 UB Uxbridge /- 1.9 RG Reading /- 2.2 W London West /- 1.7 RH Redhill /- 1.7 WA Warrington /- 2.1 RM Romford /- 2.1 WC London West Central /- 1.9 S Sheffield /- 2.1 WD Watford /- 1.6 SA Swansea /- 2.6 WF Wakefield /- 1.8 SE London SE /- 2.1 WN Wigan /- 2.4 SG Stevenage /- 1.8 WR Worcester /- 2.4 SK Stockport /- 2.2 WS Walsall /- 2.1 SL Slough /- 1.9 WV Wolverhampton /- 2.1 SM Sutton /- 2.1 YO York /- 2.2 SN Swindon /- 2.2 ZE Lerwick /- 5.0 SO Southampton /- 2.7 SP Salisbury /- 2.2 SR Sunderland /- 2.9 SS Southend-on-Sea /- 2.1 ST Stoke-on-Trent /- 2.6 SW London SW /- 2.0 SY Shrewsbury & Mid Wales /- 2.6 TA Taunton /- 2.1 TD Borders /- 3.1 TF Telford /- 2.3 TN Tonbridge /- 1.9 TQ Torquay /- 2.1 TR Truro /- 2.0 TS Teesside /- 2.3 = Areas below full-year target = Areas meeting or exceeding full-year target = Exempted from postcode area targets 5

8 Table 3. Non-Standardised Measure: Percentage of Deliveries By Latest Delivery Times Standard Urban Rural Quarter 1 Quarter 1 UK

9 Table 4. Non-Standardised Measure: Percentage Of Collections At Or After Final Advertised Time of Collection Percentage Of Collections (From All Access Points Except Business Collections) At Or After Final Advertised Time of Collection National Result Quarter 1 UK

10 Table 5. Non-Standardised Measure: Downstream Access Products Percentage Delivered On The First Working Day After Receipt By Royal Mail National Result Quarter 1 UK /

11 Table 6. Non-Standardised Measure: Business Collections Served Each Day Percentage Of Business Collections Served Each Day National Result Quarter 1 UK

12 Table 7. Non-Standardised Measure: Business Collections Made No Earlier Than The Collection Window Percentage Of Final Business Collections Made No Earlier Than The Collection Window National Result Quarter 1 UK

13 1 ST CLASS RESPONSE SERVICES Quarter 1 Result Confidence Level /- 2.0 OVERVIEW 1 st Class Response Services is within the overall Grouping 3 (Bulk First Class) Scheduled Service which has a Licence Standard of 91.0 for full year performance. Quarter 1 result for the Grouping was 92.5, well above Standard. Royal Mail have consistently stated that the previous Licence target levels (which became the Grouping target levels from 2006/7) were not realistic for the RS product specification. It was for this reason that Royal Mail developed and launched in 2004/05 a new but complementary set of products, Response Plus, which give customers a choice. We have told Postcomm and Postwatch that we do not consider that the residual controlled Response Services products in the amended Licence are able to achieve the targets for the groupings. The actual results for RS should not be automatically considered against the grouping targets. 11

14 2 nd CLASS RESPONSE SERVICES Quarter 1 Result Confidence Level /- 1.3 OVERVIEW 2 nd Class Response Services is within the overall Grouping 4 (Bulk Second Class) Scheduled Service which has a Licence Standard of 97.5 for full year performance. Quarter 1 result for the Grouping was 98.0, above Standard level. As explained in the commentary for 1 st Class Response Services, the actual results for RS should not be automatically considered against the grouping targets. 12

15 POSTCODE AREA 1 ST CLASS STAMPED AND METER DELIVERED The Schedule Of Standardised Measures requires all Postcode Areas (excluding HS, KW and ZE) to achieve an average performance of 91.5% next day delivery for 1 st Class Stamped and Meter Delivered in the PCA throughout the 12 months period ending March 2008, excluding the Christmas period. Progress against this standard is shown in the table below: Number Of Postcode Areas Averaging 91.5% Or Above For 1 st Class Delivered Stamped And Meter Quarter 1 Result Full Year Cumulative Standard 98 out of out of 118 The End-to-End measurement system is designed to produce results which have meaningful statistical accuracy on an annual basis. The results for a single quarter have wider statistical accuracy. We do not expect all Postcode Areas to be achieving the full-year target level at the beginning of the year as a single month of weaker performance with wide statistical accuracy can have a significant effect on the cumulative result. Obviously, as the year progresses the impact of that single month will decrease. The table below summarises the performance of the 20 Postcode Areas which after Quarter 1 are below the full year target level, together with the performance which is required during the remainder of the year in order for each to achieve its full year standard. In all cases, the rest-ofyear requirement is achievable assuming no force majeure or indusrial action disruption. (However, as stated in the Overview above, the national level industrial action called by the CWU which started in Period 4 and continued throughout Quarter 2, together with the flooding in several areas of the country in Periods 4 and 5, have severely affected the results, which will be confirmed when the Quarter 2 Report is produced in November.) 13

16 Postcode Area Quarter 1 Results Rest Of Year Requirement 2006/7 Full Year Performance BN Brighton / BT Northern Ireland / CF Cardiff / CM Chelmsford / CO Colchester / CW Crewe / DD Dundee / DL Darlington / DT Dorchester / EH Edinburgh / FK Falkirk / GU Guildford / HU Hull / KY Kirkcaldy / LS Leeds / PH Perth / SA Swansea / SO Southampton / ST Stoke-on-Trent / TD Borders / of the 20 PCAs (DD, EH, FK, KY, PH and TD) were affected by the Unofficial Industrial Action which took place at Edinburgh Mail Centre and Edinburgh Airport on 24 th and 25 th March Each of these PCAs is served by Edinburgh Mail Centre. The dispute was regarding working practices at the unit. In addition, in Period 1 adverse weather disrupted air network services into and out of Scotland. As can be seen from the actual results for 2006/7 summarised above, all the PCAs except DD and PH achieved or exceeded the level of performance required in the remainder of this year to achieve the full-year Licence target. This both supports the need to take account of the statistical accuracy of a single quarter s results and also provides confidence of their ability to recover without the need for remedial action plans over and above business as usual performance management. The 2 PCAs which need a step change in performance above last year s level have focused action plans 14

17 Table 8. Licence Condition 5.6 Complaints Report The number of complaints unresolved at the beginning of period Q1 Report (a), 5.6 (b) (i), (iii) The number of complaints received in the period The number of complaints resolved in the period The number of complaints unresolved at the end of period Total Compensation Value Royal Mail Letters Total 21, , ,495 19,308 2,710,854 Main Causes: Loss 12, , ,853 11,983 1,859,361 Redirection Failure 1,715 35,172 36,467 1,188 71,719 Mis-Delivery ,751 28, ,273 Delivery Procedures ,577 26, ,104 Delay 1,084 18,360 18, ,813 Damage 1,296 12,299 12,817 1, ,182 Delivery Frequency 339 4,100 4, ,972 Redirection Centre Failure 46 4,108 4, ,432 Part Loss 115 3,868 3, ,138 Other Complaints 3,253 44,157 45,307 2, ,861 Q1 Report (b) (ii) % Calls answered to quality standard aim 80% in 20 seconds % Cases closed to quality standard aim - 100% (inland) in 30 calendar days Royal Mail 69.0% 87.3% 15

National Report To Postcomm and Postwatch

Licence Condition 4.6 (a) and (b) Licence Condition 4.9 (a) Licence Condition 5.6 (a) and (b) National Report To Postcomm and Postwatch 2008/09 Quarter 1 Report NATIONAL QUARTER 1 REPORT 2008 / 2009 CONTENT