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Post Office Limited - Document Classification: INTERNAL
Today’s Agenda
6 What cost savings has POL delivered to date?
[2] How is POL’s cost base structured today?
3) What is POL already doing and what more can it do?
4) What are our suggested next steps?
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Post Office Limited - Document Classification: INTERNAL
@ Since separating from RMG, POL has increased trading profit by
£59m adjusting for
the sale of POL’s
telco business
FY11/12 FY12/13.-FY43/14 = FY14/15-FY15/16 -FY16/17__ FY17/18 FY18/19 FY19/20 FY20/21_-FY21/22_—- FY22/23
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Post Office Limited - Document Classification: INTERNAL
& 50% of POL’s cost base today is focused on key areas of DBT policy,
with 23% driven by back office central costs
FY23/24 FORECAST COST BASE:
Cost. OF SALES STAFF Costs Non. STAFF Costs
Revenue Sustaining o pmb sth
supporting: 27% the network: 35% ~ Paypury ood
_. eh, (ery
(Oram) \ chert
Pe be.
(Fs! iss)
Back office Cost of
central: 23% cash access: 15% ( (uy\ \. Ac
ony AM Sy
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Post Office Limited - Document Classification: INTERNAL
& 60% of POL’s FTE headcount today are focused on key areas of DBT
policy, with 31% working in back office functions
OCTOBER-23 HEADCOUNT POSITION: 3,821 FTE
CENTRAL POL EMPLOYEES DMB AND SupPLy CHAIN PZ AND POI CONTRACTORS
1,773 FTE 1,574 FTE 103 FTE 371 FTE
(900 = mb) (Reppoas ot) forjents token
Revenue (agin
. NBT)
supporting: 8%
Sustaining
the network: 36%
Back office
central: 31%
Cost of
cash access: 24%
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Post Office Limited - Document Classification: INTERNAL
& 60% of 1,773 central POL employees earn below £50k with 8%
earning above £100k
CENTRAL POL EMPLOYEE FTES BY GRADE CENTRAL POL FTEs By S.
GE 9 FTE, 1%
£150k + 40 FTE, 2%
SLP 61 FTE, 3%
£100k- £150k 103 FTE, 6%
Senior Manager
543 FTE, 31%
£50k - £100k
Middle Manager 568 FTE, 32%
724 FTE, 41%
Admin, < £50k
436 FTE, 24% 1,062 FTE, 60%
Note: Excludes DMB and Supply Chain, Strictly Confidential
Payzone and PO! and Contractors 5
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Post Office Limited - Document Classification: INTERNAL
C3] POL is already delivering extensive self-help and savings with limited
investment in the 3 year plan
Cost SAVINGS ASSET SALES Cost AVOIDANCE
ENABLED By:
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Post Office Limited - Document Classification: INTERNAL
[4] Further scope for self-help is possible but this either involves trade-offs
in the near term or it delivers benefits outside of the 3YP
We have cost saving targets for FY23/24 and we will have further targets for FY24/25. However cash constraints limit
what we can deliver in the near term
Yand noting subsidy has been flat for five years), we
If DBT _ was tl
: Woiildalso have more funds to support cost saving activity
would;
We know our costs can and should be reduced and we have a track record of taking costs out across our business
over the last ten years. But to have any material lasting impact we need access to funding
With limited capacity, tight cash and uncertain future funding, working up detailed cost saving plans is speculative
and high risk. Plans developed today can only be implemented today
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Post Office Limited - Document Classification: INTERNAL
What savings are we achieving in the current 3YP?
Cost SAVINGS ASSET SALES Cost AVOIDANCE
I IRRELEVANT}
3YP Cost Saving Asset Sales Staff Cost
Non-OD Staff Cost Avoidance
OD Staff Cost Darwin (Swindon) proceeds
POHIT Inquiry
Non-Staff Cost I CVIT Manchester Relocation
I CVIT London Sale and Leaseback POHIT Inquiry RLR.
DMBs
Property Efficiency POHIT Inquiry D&O Recovery
Network Strategy Remediation Unit IRRELEVANT
Wood Street Relocation HSS Late App. Fixed Fee
Swindon Stock Centre Outsource OHC Run In-house :
TOTAL Detriment Run In-house
TOTAL
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