Mail Specification and Processing Changes Effective September 2024

This document outlines changes in the processing of out-of-specification mail, starting from September 2nd, 2024. Mail pieces that do not meet specified requirements will undergo manual sortation or less efficient processing, potentially incurring additional charges. Reasons for introducing these changes, typical out-of-specification scenarios, and details of the conversion process are discussed. Adherence to mail specifications and the need for efficient processing are emphasized to maintain operational effectiveness.

• Mail processing
• Specification changes
• Mail automation
• Out-of-specification scenarios
• Operational efficiency

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1. Out of Specification Conversion Mail requiring manual sortation, or processing in a less efficient manner, due to being out of specification From 2ndSeptember 2024

2. REASON FOR INTRODUCTION CAUSE Mail which is out of specification, due to design or production and requires manual sortation or processing on the incorrect machine. This results in mail being processed at a cost which does not reflect the product ordered. We currently do not pass on such costs to the customer despite our existing contractual right to do so. CHANGE From 2ndSeptember 2024, such mailings will be investigated, and charges may be applied if the mail piece is out of specification. CONFIDENTIAL 2 Classified: RMG Internal

3. SPECIFICATION & ADHERANCE To support efficient processing of mail, we have product specifications based on optimum operational processes, the type and number of machine passes and ensuring mailpack integrity is maintained. The specifications are written, by format, in such a way as they represent the requirements of the machine types in the Royal Mail automation suite. Machineable specifications are created through a series of customer engagements, recognising production processes, with extensive testing prior to launch. There are a number of reasons why customers might present mail that is out of specification, such as ; Unaware of the correct specification Testing new creatives on live mailings New production processes Cost reduction measures (adhesives, paper, finish) Examples of specification failures and impact to the recipient and other customers are included on the following page. CONFIDENTIAL 3 Classified: RMG Internal

4. TYPICAL OUT OF SPECIFICATION SCENARIOS Issue Most common mail types Examples of processing issues Includes one-piece mailers, paper wrap, unwrapped large letters, postcards Machine jams, double detection (items need to be singulated during processing to enable item level reading), item damage, culling contents rejection, 3rd party item damage. Ejected at culling contents and / or cause machine and item damage. Mailpiece design Item flexibility Envelope and paperwrap letters Items are required to be read to enable address validation / barcode reading. Includes one-piece mailers, paper wrap, postcards, unwrapped large letters. Machine jams, double detection (items need to be singulated during processing to enable item level reading), item damage, culling contents rejection. Paper quality and gsm Unsealed or poorly sealed items cause jams and item damage. Adhesive application and type One-piece mailers and paper wrap letters Peelable adhesive opens and causes machine and item damage. Excess paper or polywrap Paper wrap letters and large letter, Poly wrap large letters Item jams, item damage and large letters cannot be trayed effectively when machine sorted. CONFIDENTIAL 4 Classified: RMG Internal

5. DETAIL OUT OF SPECIFICATION CONVERSION PROCESS CURRENT CONVERSION 1. Postcards which are sent using Economy are converted to Standard. 2. Polywrapped and unwrapped letters are converted to Large Letter format. MAILMARK LETTER AND LARGE LETTERS WHICH DO NOT MEET SPECIFICATION, THROUGH DESIGN AND / OR CONSTRUCTION WILL INCUR THE OUT OF SPECIFICATION CONVERSION FROM 2ND SEPTEMBER 2024 IF THEY CANNOT BE: 1. Processed on the correct machine(s) to achieve the minimum expected read rate and/or 2. Have to be manually sorted CONFIDENTIAL 5 Classified: RMG Internal

6. OUT OF SPECIFICATION HIGH LEVEL MAPPING Mailmark Letters Mailmark Large Letters Mailmark Large Letter 70 Manual Large Letter CONFIDENTIAL 6 Classified: RMG Internal

7. METHODOLOGY OF CONVERTING TO NEXT APPLICABLE PRODUCT CURRENT PROCESS FOR CONVERTING WILL BE FOLLOWED 1. eManifest closes after 5 days 2. Read rate for the eManifest (by format) checked (minimum 90% read rate) 3. Volume and % of mail processed on the wrong machine reviewed (no more than 10% permitted) 4. Volume and % of mail not seen, not expected to be seen excluded as current. This is where we don t have Large Letter automation in a small number of mail centres and the items are processed manually. 5. Volume and % of mail not seen, expected to be seen excluded as current if there are site issues (e.g. automation failure, site evacuation etc) 6. At least one operational site has reported issues with the mailing 7. Site visuals reviewed 8. Item design checked against our published specifications a. If not clear from the visuals, customer may be requested to share a seed or returned item from the mailing for review b. If no clear issue or cause, charges are not applied 9. Charges applied if applicable 10. Barcode quality (Barcode Not Seen) adjustment will not be applied CONFIDENTIAL 7 Classified: RMG Internal

8. SUPPORT Notification of issues Timing By whom Comments Self-checking of current designs Ad-hoc Client, Producer, Bill Payer Supply Chain to sense check their mail designs. Email from iRP / Technical Manager Ad-hoc iRP / Technical Manager If high value conversion Issues processing the mail Ad-hoc DSACC As done currently Issues processing the mail Ad-hoc RM Account team / Technical Manager By whom As done currently Mailpiece design Timing Comments Item design checks (visual) As required mailmarkqa@royalmail.com c48 hours turnaround Item design checks (visual) As required Technical Manager As agreed with client Item design checks (visual) As required Account / Network Access team As agreed with client. Machine tests (current design) Variable TBA with RM Tech Manager A desk top check, customer discussion and data review may undertaken prior to formal testing. Machine tests (new designs) Variable TBA with RM Tech Manager Data Timing By whom Source % and volume of mail seen on the wrong machine Daily Customer accesses information via www.royalmail.com New addition to the PDF reports available from 4th April 2024. Weekly % and volume of mail not Daily Customer PDF. CONFIDENTIAL seen, expected to be seen . Weekly Mailmark Direct Data. 8 Classified: RMG Internal

9. PRODUCT MAPPING TABLE MAIL PRESENTED AS: LETTERS MAIL CONVERTED TO: LARGE LETTERS Variation ( /p) Format Format Product Product Tray Tray Product Product Code Code DX4 DX4 DZX DMA DME DFJ DJU DJW DKC Bag Bag Product Product Code Code DX5 DX5 DZY DMC DMG DFI DJV DJX DKD Bag price Bag price Tray Tray price price Format Format Product Product Tray Tray Product Product Code Code DCB Bag Bag Product Product Code Code DCA DUJ DCH DMK DMK DFK DCH DCA DFK Bag price Bag price Tray Tray price price Bag price Bag price Tray price Tray price 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark 70_Letters Mailmark Advertising (tray) Advertising (bag) Business Mail Mailmark Catalogue Economy Mailmark Catalogue Partially Addressed Economy Business Mail Economy Advertising Economy Partially addressed 0.23837 70_ Large Letter Mailmark 70_Letters Manual 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark Advertising Advertising (bag) Business Mail Mailmark Catalogue Mailmark Catalogue Partially Addressed Business Mail Advertising Partially Addressed 0.29166 0.05329 0.24637 0.52138 0.24253 0.20684 0.22637 0.44091 0.21061 0.19061 0.30794 0.57361 0.30784 0.30784 0.29666 0.57361 0.31166 0.29666 0.06157 0.05223 0.06531 0.10100 0.07029 0.13270 0.10105 0.10605 0.51338 0.23453 0.19884 0.21837 0.43291 0.20261 0.18261 DCI DMI DMI DFL DCI DCB DFL 0.55361 0.28784 0.28784 0.27666 0.55361 0.29166 0.27666 0.04023 0.05331 0.08900 0.05829 0.12070 0.08905 0.09405 MAIL PRESENTED AS: LARGE LETTERS MAIL CONVERTED TO: MANUAL LARGE LETTER Variation ( /p) Format Format 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark 70_ Large Letter Mailmark Product Product Advertising Business Mail Partially Addressed Mailmark Catalogue Magazine Subscription Tray Product Code Tray Product Code DCB DCI DFL DMI DJB Bag Product Code Bag Product Code DCA DCH DFK DMK DJA Bag price Bag price Tray price 0.31166 0.57361 0.29666 0.30784 0.40078 Tray price Format 0.29166 0.55361 0.27666 0.28784 0.38078 Format 70_Large Letter Manual 70_Large Letter Manual 70_Large Letter Manual 70_Large Letter Manual 70_Large Letter Manual Product Product Advertising Business Mail Advertising Manual Catalogue Magazine Subscription Tray Product Code Tray Product Code DXG DXB DXG DAQ DKH Bag Product Code Bag Product Code DTT DS2 DTT DAP DKI Bag price Bag price 0.37594 0.63617 0.37594 0.37218 0.48472 Tray price Tray price Bag price 0.35594 0.61617 0.35594 0.35218 0.46472 Bag price 0.06428 0.06256 0.07928 0.06434 0.08394 Tray price Tray price 0.06428 0.06256 0.07928 0.06434 0.08394 There is no Economy variant for Large Letters, so Economy letters are converted to Large Letter Standard. 70 Advertising Letter Mailmark in Bags is converted to Manual Advertising Letter in Bags as the conversion CONFIDENTIAL rate is lower than converting to Advertising Mailmark Large Letter in Bags. 9 Classified: RMG Internal

10. FREQUENTLY ASKED QUESTIONS Timings & Rationale Q. When is the charge being introduced. We confirmed a go live date of 2nd September 2024, which gives the industry more time to identify and resolve issues. Q. Why has Royal Mail decided to start converting charges for out of specification non-compliances? Mail which has to be, due to design or production, manually sorted or processed on the wrong machine does not reflect the actual read rate %. This in turn results in mail being processed, without adjustments, at a cost which does not reflect the postage paid. Q. Is there a grace period? We do not propose a grace period from the launch date. Q. Why is there no grace period? Many of the mailings which are problematic to process have been raised with the Network Access contract holder, some mail producers and some end clients for over 12-24 months. There are some common themes in terms of problematic postings such as sealing and design of one-piece mailers, location and application of tab seals and flexibility. One would expect that, once the customer/producer/bill payer was aware of the issue and solution it could be applied to other mailings. Customers have been getting advisory notes since April and still have until September to make the changes. CONFIDENTIAL 10 Classified: RMG Internal

11. FREQUENTLY ASKED QUESTIONS - Pricing Q. Will my entire mailing be changed to another format? No, not necessarily. We will only consider those items which (a) have not been seen and (b) which have had to be sorted on a different machine. Our operational teams try hard to get the items through the right automation despite being presented with mail that is out of specification, but this is not always possible. The charge is applied to the out of specification volumes we have been unable to process correctly. Q. Which items may have charges applied? The items which have to be sorted on a machine not intended for that format (e.g. letters on a large letter machine, large letters on a parcel machine) and those which have to be manually processed. Q. Why are you charging me Large Letter format? Under the Access Letters Contract, Royal Mail has the right to convert charges to the applicable charge for the product which the mailing items meet. Additionally, the principle of Mailmark is to apply charges at the next best priced product. Q. Why are Advertising Letters in bags not being charged as Large Letters? The principle of Mailmark to apply charges at the next best priced product. In the case of Adverting Letters this is Manual Advertising Letters in bags. Q. How will you calculate the items to be charged? Charges may only be applied to volume manually processed or seen on the wrong machine for the declared format. Q. Is there anything I can do if I don't agree with the charges applied? The existing appeals process applies. CONFIDENTIAL 11 Classified: RMG Internal

12. FREQUENTLY ASKED QUESTIONS - Engagement Q. Why have I not been told my posting is out of specification? Royal Mail s Technical, Network Access Account and Downstream Access Control teams have over the past years had ongoing contact with mail producers, clients and the Network Access Contract Holders to raise issues and offer support. This collaborative way of working has had some positive and proactive responses which in turn has improved the quality of mailings. Q. What does this mean for me? There may be charges for the items which cannot be processed, and which have to be sorted on a different machine e.g. letters on a large letter machine, large letters on a parcel sorting machine. Q. Will I receive daily feedback on problematic postings? You can access PDF reports daily or weekly to view the volumes of mail processed on the wrong machine. This is available by eManifest for your individual SCIDs. Q. What feedback will Royal Mail give me? The bill payer will be advised of the reason for the charges being applied e.g. 'one piece mailer' out of specification, flexibility of the insert e.g. passports. Q. What support is there for me? The support remains as current. Your account team, Downstream Access Control Centre (DSACC), Royal Mail Mailmark and Mailmark CONFIDENTIAL QA teams and our Technical Manager. 12 Classified: RMG Internal

13. FREQUENTLY ASKED QUESTIONS - Process Q. Why aren't you applying charges to all the unseen and all the items processed on the wrong machine? Our operational sites are very customer focussed and will do all they can to process mail through the automation. This adjustment means only out of specification items that cannot be processed on the correct machine will be converted . For example, if 100% of a mailing is out of specification but our operational sites can process all of it and they will try a number of times, then in this scenario, no conversion will be applied. Q. How do I know your Mail Centres are processing mail correctly? The process by which postings are investigated are based on national data and overall performance of the posting. If there are issues at a site e.g. power failure, then we excluded those volumes from the eManifest being investigated. Q. What is the process you will follow? A number of steps will take place; 1. A read rate of 90% on the correct machine type (for that format) is required. 2. 'Volume not Seen' (items are declared but not seen on the automation) + 'Volume processed on the wrong machine' (e.g. letters on a large letter machine) are highlighted by our internal reporting and reviewed by our iRP team. 3. At least one operational site must have reported issues with the mailing. 4. There must be visuals clearly showing the issue / out of specification design, with the item checked against published specifications. 5. It is important to note that we will continue to exclude volume of mail at a Mail Centre where issues have been reported (e.g. a power failure). Q. Would charges be raised if only one or a few Mail Centres reported they had issues? Yes, if the read rate falls below what is expected and the item is out of specification. Q. Will a Conversion charge be applied if Royal Mail is unable to process items because of an issue at a Mail Centre Items that meet specification will not be charged if Royal Mail is unable to process them. CONFIDENTIAL 13 Classified: RMG Internal

14. FREQUENTLY ASKED QUESTIONS - Reporting Q. How do I know if there are items being processed on the wrong machine? The volume, by SCID and eManifest, can be seen on Active and Historic PDF reports. Q. Can I have item level data of the items affected? The PDF reports updated on 4th April 2024 provide the overall volume (and %) of mail which has been seen on the incorrect machine and continue to show the volume (and %) of mail not seen. Item level data will be available later this year through Mailmark Direct Data. Q. When will Mailmark Direct Data show the volumes of mail on the wrong machine? Overall volume (and %) of mail which has been seen on the incorrect machine will be available via Mailmark Direct Data (MDD) later this year. We will seek to engage with Software Suppliers and those customers using MDD as the solution is scoped. Q. Are there images available? If we send advisory notifications and/or apply charges, then we will include an image within the email. CONFIDENTIAL 14 Classified: RMG Internal

15. FREQUENTLY ASKED QUESTIONS - Design Q. What steps could I take to ensure my mail meets the specifications? Review of your mailpiece designs, do they meet the current published specifications? Review the construction of your mailing, is the sealing or the application of tab seals good enough for the mail to withstand multiple machine sorts? Q. What are the main design issues which could result in charges? Please refer to the summary presentation pack 'Out of Specification - Check list of requirements' for details available on www.royalmailwholesale.com In summary; sealing, flexibility and 'one piece mailer' designs are the most prolific issues identified. Q. What if my client wishes to mail a design which isn't covered in your technical specifications? We do not recommend mailing designs which have not been tested. CONFIDENTIAL 15 Classified: RMG Internal

16. For more information contact For more information contact your Account Director your Account Director CONFIDENTIAL 16 Classified: RMG Internal Full terms and conditions apply