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Post Office Limited
Strategic Review —
Strategic Transformation Plan
Summary for DBT/UKGI
21% October 2024
Strictly Confidential
Exec summary
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The Post Office faces multiple headwinds, with an unviable business
model and likely requirement of c. £1.8bn of government funding over
the next five years to stay in operation
Challenge
Continuation of
‘as is’ scenario
(‘counterfactual’)
2D
w Strategic Plan
Plan financials
* The Post Office faces multiple headwinds, with an unviable business model that depends on significant public funding to cover
operating costs and ongoing ‘keep the lights on’ investment
PO's business model is expected to come under increasing pressure given exposure to structurally declining markets, historic
underfunding and its high cost base
We forecast a growing trading loss (£'¢
minimum Security Headroom and cover
replacement and the uncommercial network)
We expect an indicative £1.8bn government funding requirement over the next five years to keep PO in operation, without delivering
transformational change (outside of Horizon replacement) and with a FY30 go-forward business still heavily reliant on government
y end of FY29/30; excl. inflation) and that POL will require additional funding to maintain
imum acceptable’ investment (above funding to support remediation/inquiry, Horizon
The Plan encompasses an extensive set of initiatives across six core pillars of activity (Proposition, Network, Postmaster/SP relations,
Operating Model, Technology/Data, Other considerations)
The Strategic Plan will transform Post Office's operations, finances, relationship with PMs and customer experience, delivering a
viable business model and proactive steps to counter challenges Post Office is facing, alongside positive steps to address market shifts
The Plan is sequenced across three phases, with delivery of a sustainable Post Office largely complete by Year 4
Initiatives in the Strategic Plan deliver change across both the top-line (+£112m) and cost elements (-£178m); the net impact enables
POL to increase Postmaster remuneration to 65% of total revenue, as well as maintain a positive EBITDA
The five-year investment requirement for Strategic Plan initiatives is c.£: }(combining CapEx and Exceptional spend), or c.f;
inclusive of contingency; when combined with other asks of government, the total five-year estimated Government funding
requirement (incl. all NBIT contingencies) is £1” (incl. Plan contingencies); £1” “iless vs. counterfactual
Strictly Confidential
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The Post Office faces multiple
headwinds, with an unviable
business model set to come
under intensifying pressure.
This is expected to drive a \
growing trading loss and \
material dependency on \ e
government subsidy.
A high-level counterfactual
outlook suggests a £1.8bn \
investment requirement over "
the next five years (excl. \
inflation) to ‘keep the lights
on’.
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The Situation Assessment determined that Post Office is at a critical
juncture and faces multiple challenges
Summary of key areas of challenges faced by POL
Shareholder relationship: Opportunity to reset by
providing a strategic plan with transparency around
long-term investment required and future financially
independent state this would achieve
Technology strategy: NBIT involves high risk ‘big
band’ deployment with uncertain but high expected
costs; critical juncture to consider alternatives. Limited
focus on transformational in-store technology
Central operations: Comprehensive review required
to simplify the organisation, reduce costs, structure
operations and instigate cultural change to foster clear-
sighted ambition and better support the Post Office of
the future
Postmasters: Evident need to reconsider current
remuneration model, further professionalise franchisee
model and take material steps to redress PO/PM
relationships
Sources: POL input; Teneo research & analysis
Purpose: Unclear ‘purpose’ to date has hampered
clear direction - critical for PO to develop a strategy
that all stakeholders can align on (& opportunity for PO
leadership to drive this)
Brand: Under pressure from the Horizon IT scandal
and Inquiry. Whilst damaging, brand trust has been
relatively resilient — nevertheless, vital to work to
rebuild trust; good brand awareness but close
Key areas of association with Mails/passports anchor ‘right to play’;
many customers unaware of PO’s diverse product set
challenge faced by
= Customers: Falling retail customer volumes. PO
the Post Office needs to enhance its digital offering to draw customers
to branches and better use automation to improve in-
branch customer experience
Commercial portfolio: Growing headwinds in core
Mails/Retail; while BF4 will help to partially offset, this
is unlikely to be a long-term solution and there are
likely no ‘big bang’ new products that could be
immediately rolled out
Network: Current branch number requirements are outdated for
@ current customer behaviours and driving an inefficient network,
leading to a significant number of unprofitable branches
Strictly Confidential
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... With a business model that depends on significant public funding to
cover operating costs and ongoing investment
Historical context Outlook
POL revenue grown at 29 across the past six years to Ne
Wis
Revenue i
; £911,6min FY ntraction in Mails,
stagnation Retail, Government Services & ID services
* The market outlook is one of further decline in the short term;
casting PO as a financially unsustainable business primarily
[sD] operating in increasingly less attractive markets
+ PO revenue is forecast to decline further, with maintenance of
PM rem at its current rate (47% of overall revenue) resulting in a
1% reduction in average revenue per branch and a deepening
of trading loss across the period to (£{6R0)})
~This does not quantify total impact on PMs; inflationary rises
in their own costs will likely worsen the picture
Falling real
PM rem
Rellencecn @ = * POLis reliant on government investment for ‘keep the lights on’
m investment and to cover ‘one-time’ costs associated with
gov't Horizon/remediation/Inquiry, with no provision for development
PO’s business model is expected to come under increasing pressure given exposure to structurally declining markets, historic
underfunding and its high cost base
Strictly Confidential
Sources: POL input; Teneo research & analysis
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Counterfactual build up
Our high-level counterfactual outlook suggests a trading loss of £ GRO.
the end of FY29/30 (excl. inflation)
by
High-level estimate; excl. inflation & BF4
Counterfactual forecast financials Background context FY29/30
P&L metrics FY24/25 FY 25/26 I FY26/27 I FY27/28 I FY28/29 I FY29/30 MM Soe
/© High-level counterfactual modelling outlines a ‘do nothing’ scenario. Key S
assumptions: 17
= INFLATION: All numbers shown excluding inflation and Horizon-related EET I I 20
contingency /optimism bias (though the latter is captured ‘below the line’)
— REVENUE: Follows historic five-year CAGRs, with adjustments based on PO Revenue £912m = £844m GRO j
FY24/25 business plan, PO strategy and wider market trends — excludes BF4
— COSTS: Scaled with revenue/ remained flat depending on cost category (with FRES £25m — £23m_— GRO }
specific adjustments for some line items)
— POSTMASTER REM: Fixed at 47% across the period (FY23/24 was 45% and
FY24/25 is expected to be 46% of revenue)
— INTEREST PAYMENT: Rises from £14m to £48m FY25/26 and subsequent years
Expenditure? (£492m) (£493m) I
(captured ‘below the line’) Network Subsidy £50m £50m
— INVESTMENT LOAN REPAYMENT: Rises from £7m to £31m in FY26/27 and then
nil (captured ‘below the line’) £413m = £390m I
As outlined on the following pages, this outturn coupled with various funding = -
requirements implies an ask of Government for £1.8bn over the next five years:
— This does not include Banking Framework 4 (which will improve Post Office's £35k £33k i GRO 1
revenue situation but is not enough to change the narrative)
— POL is expected to continue to require ‘keep the lights on’ funding of at least a
similar quantum beyond the plan period )
With a growing trading loss in the coming years, POL will have a greater need for Government funding support
(see build-up in next few slides)
Strictly Confidential 6
Sources: POL input; Teneo research & analysis
Notes: 1. CoS, OpEx and Merchant Commission; 2. Equals Revenue + FRES ~ Expenditure - PM revenue share
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In the next five years, POL will require ongoing funding to support the
network, remediation and inquiry activities and to replace Horizon
Estimate; based on current known inputs
Estimated known Government funding ask, FY25/26-FY29/30
FY25/26 FY26/27_ FY27/28 FY28/29_ FY29/30 Total Rationale
Amidst rising cost pressures in supporting the uncommercial
network, POL continues to require Network Subsidy from the
Government
a
In addition, DBT is funding remediation and inquiry costs,
Remediation & Inquiry £14m - - - - £14m with the remainder estimated at c.£14m for FY25/26, as public
inquiry comes to an end...
=
Network Subsidy
.. as Well as Horizon replacement costs (including NBIT
GRO program, activities to maintain Horizon in parallel, and further
technology workstreams)
The total covers losses on the uncommercial network and
) Anown Funging I GRO I] < ongoing Horizon IT and remediation & inquiry costs
requirement $$ [aaa Excludes live liabilities/risks
> The known funding ask amounts to a total of £. I over the next five years (excl. Horizon contingency & “optimism bias”)
Sources: POL input; Teneo research & analysis: Strictly Confidential
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Counterfactual build up
In addition, POL will need further funding to maintain minimum Security
Headroom and to cover ‘minimum acceptable’ investment
Estimate; based on current known inputs
Estimated incremental Government funding ask, FY25/26-FY29/30
FY25/26 FY26/27_ FY27/28 FY28/29 FY29/30 I Total Rationale
Given worsening trading profit outlook and increase in
interest and investment loan payment over the next five
years, POL requires additional funding in order to maintain the
recommended SH! buffer of £1
Funding to meet SH!
=
PO outlines a ‘minimum acceptable’ level of change spend in
tes ' i e.g. technology, commercial products, 100% of which is
Mvest ene tunes t GRO presented here, though historically funding levels have not
matched the total
In addition to known funding requests, POL potentially needs
more Government money to cover ‘minimum acceptable’
{ I I 664m I < : nan i
GRO ! ™ operations and sustain its cash position
Excludes live liabilities/risks
Additional funding
requirement
An incremental funding requirement of £664m is anticipated over FY25/26-FY29/30 to maintain security headroom and
support tactical investment
Strictly Confidential 8
Sources: POL input; Teneo research & analysis
Notes: 1. Security Headroom; 2. Includes ‘keep the lights on’, ‘minimum acceptable’ and Teneo contingency as mitigation for diminishing visibility (20% for FY26/27-FY27/28, 30% for FY28/29 and 40% for FY29/30)
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Situation
In total, our high-level counterfactual outlook projects a £1.8bn
investment requirement over the next five years (excl. inflation)
High-level estimate; excl. inflation & BF4
Estimated total Government funding ask?
FY25/26 FY26/27 FY27/28 FY28/29 FY29/30
Network subsidy sisi nineties —- GRO
Funding to meet SH®
Investment funding*
£14m
an
I i i
I
Remediation & Inquiry* £14m = a - -
Horizon replacement®
Total funding ask
Horizon - DBT Optimism Bias & contingency
Total ask incl Horizon Optimism Bias & contingency £1.8bn
b This indicative £1.8bn ask over the next five years simply keeps Post Office in operation, without delivering transformational change
(outside of Horizon replacement) and with the business in FY30 still heavily reliant on government
Sources: POL input; Teneo research & analysis Strictly Confidential
Notes: 1. FY25/26 -> FY29/30; 2. Excludes live liabilities and risks. Note that the basis of the numbers presented (e.g. timeframe, inflation) is different to those presented in the Situation Assessment report: 3. Security Headroom. Funding
numbers a function of trading profit; 4. Data from Jun-2024; 5. Data from Sept-24
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Post Office has developed a
Strategic Plan that will ensure
Post Office can remain viable,
transforming to a new model
where POL operates fully as a
franchisor, with a lean cost
base that supports PMs in
delivering high-quality in-
branch digital services to their
communities
The Plan delivers a business
fundamentally different in
financial health, operational
efficiency, digital sophistication
and attractiveness (to both
PMs and customers) — for a
smaller investment quantum vs
the Counterfactual
Background and aims
Context Strategic Review aims
« The Post Office faces multiple headwinds, including: declining
relevance of its commercial proposition; significant breakdown ina Bas 3 =
F ie Fs Z Significant increase in
in Postmaster relations; poorer public sentiment and =
government ‘trust’ following the Horizon scandal and Inquiry PM remuneration
« Achange in POL leadership has brought appetite for
transformational change and precipitated a Strategic Review
Critically assess
« Teneo was asked to support POL to consider: approach to Horizon
— How does the Post Office need to change in the (near-term) future, to replacement
best serve its customers, Postmasters and other key stakeholders?
— What is the Plan needed to achieve this?
— What is the funding requirement required to achieve the Plan?
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Streamlined, fit-for-
purpose central
organisation
Re-evaluate network,
incl. segmentation &
formats
Modernise proposition
and in-store experience
Strictly Confidential
mink
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Future vision for the
Post Office
Strictly Confidential
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Future vision for the Post Office
The future PO must reflect its core purpose, serving communities with
essential services via a physical branch network and digital channels
Core purpose of the Post Office Strategic imperatives
New Deal for PMs
Help citi: manage their daily lives, supporting local . .
i ’ + Create a sustainable, fair
(9) communities and busine: to thrive by providing access to. and attractive proposition I
essential cash, banking, mails and public services for Postmasters, that Improved community
reflects their vital role in service
delivering Post Office
services + Become a platform of
choice for businesses and
Provide access for digitally excluded and vulnerable groups Government to serve and
(i.e. those who either cannot, o1 er not to, use online/digital support local communities
platforms)
Lasting financially
stability
* Achieve financial
Provide an interface between physical and digital services, Ubgaestg seat
particularly where identity and security are critical sustainable in the long-
term
The Strategic Plan will ensure Post Office can (i) remain viable and (ii) fulfil its purpose and the key outlined strategic imperatives;
‘mission and values’ will be subject to further iteration in the early stages of Plan enactment
Sources: POL input; Teneo research & analysis Strictly Confidential 13
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Future
The Post Office is a broad ‘system’ of customer-facing Post Office
branches, the Postmasters who run them and the central POL organisation
Service Providers (HMG, Banks, Carriers, etc.) ene
Post Office Limited Veriols PM
subsidy for
support/
NO subsidy for engagement
uncommercial channels
network or
£412m REM;45% of revent funding
requirement = —
Post Office Limited (SRB
Service Providers (HMG, Banks, Carriers, etc.)
POL's role
POL's role
+ Characterised by unclear and blurred responsi
leading to uncommercial decisions
* Directly manages Post Office branches as well as via Postmasters
+ Treats PM remuneration as a cost item
« Limited incentive to control central costs
The proposed Strategic Plan will transform Post Office to a new model where POL operates fully as a franchisor, with a lean cost
base that supports Postmasters in delivering high-quality in-branch and digital services to their communities
+ Enabling the network of expert Postmasters serving their local communities and compensating them
appropriately
+ Franchisor providing a range of vital services (e.g. brand, commercial partnerships, propositions,
marketing, central administrative services, tech/systems, training, stakeholder engagement, etc.)
+ Providing digital services that drive margin, bolster brand, and/or enable omni-channel services
‘ies, at times
14
Strictly Confidential
Sources: POL input; Teneo research & analysis
Notes: 1. # Represent FY23/24
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Strategic plan
Strictly Confidential
Strategic plan
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The plan encompasses an extensive series of initiatives across six core
pillars of activity...
* Capitalise on the Banking
opportunity (both PO-
delivered banking services
and Banking Hubs)
+ Range of new product/
service propositions
+ Increase marketing spend
to drive awareness/
consideration
+ Development of enhanced
digitaVomni-channel
customer proposition
+ ‘no regrets’ right-sizing of
+ Deploy segmented branch
strategy by format and
ongoing footprint
management approach
* Material increase in
Banking Hubs to c.500 by
Postmaster/SP.
relations
* Material increase in
‘revenue share’ and a
structural embedding of
this within these
arrangements
+ Whole ‘lifecycle’ enhanced
package of engagement,
support and agency
+ Performance support &
incentives
+ Strategic partner strategy
(+) Operating
Model
+ Streamline POL via ‘zero-
based’ principles and org.
design best practice (‘no
regrets’), including creation
of new centres of
excellence
Plan enablers: cutture-
change programme;
capability/ talent-build
programme
Technology &
Data
‘no regrets’ pursuit of
alternative, lower-cost and
lower-risk Horizon
replacement programme
Segmented in-branch
technology and automation
strategy
Core systems refresh
Management information
enhancement
Customer data platform
Other
considerations
Brand rebuild programme
Master brand architecture
re-launch
Stakeholder & shareholder
engagement programme
Financing and investment
Wind-down of
Inquiry/retated
programmes
Clear Strategic Plan
vision relating to:
Sources:
end FY29/30 + ESG strategy development
& = xs
72m s ele
Customers POL Postmasters/SPs Government Digital strategy
POL input; Teneo research & analysis
Strictly Confidential
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Strate:
gic plan
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The Plan is sequenced across three phases, with the delivery of a
sustainable Post Office largely complete by Year 4
Vital
Proposition: Continue with new product/service
launches for in-flight or ‘easier’ to launch
propositions (esp. digital)
Network: Ongoing Banking Hubs expansion and
‘no regrets’ network rationalisation
Postmaster: launch of polarity shift (revenue);
support/engagement design
Operating model: No regrets rationalisation
Tech/data:
+ NBIT alternative approach, incl.{
& Oracle upgrade
+ Launch tech/data evolution (core systems,
Management Information, customer data,
app/digital journey development)
* Deploy already purchased in-branch tech, in
accordance with brand segmentation
Embedding
+ Proposition: ‘Should do’ new product launches;
increased marketing spend
+ Network: Ongoing Banking Hubs expansion;
ongoing network rationalisation and launch of
format alignment (incl. in-branch tech)
+ Postmaster: revenue share increase; go-live for
enhanced engagement/support
+ Tech/data:
+ NBIT alternative approach (wave 2), including
c ind Oracle upgrade
+ Finalisation/wrap and embedding of most
tech/data evolution activities; tech/ automation-
unlocked people rationalisation
+ Other: brand rebuild launch
Leverage
+ Proposition: ‘Can do’ new product launches and
CRM-informed marketing
+ Network: Ongoing Banking Hubs expansion (to
500); ongoing network rationalisation and format
alignment (incl. in-branch tech)
+ Postmaster: PM/branch insights available,
unlocking PM incentives (higher revenue)
+ Operating model
* Shift to
automation
+ Exits enabled by tech/data improvements
+ Tech/data:
+ Final elements of NBIT alternative
Joutsourcing unlocked by
+ Customer app/omni-channel journey go-live
Sources:
POL input; Teneo research & analysis
going shareholder and stakeholder engagement
Strictly Confidential
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Strategic plan
The five-year investment requirement for Strategic Plan initiatives is
c£
GRO _I(combining CapEx and Exceptional spend), or c.£
of contingency
Strategic Plan output: total investment requirement (CapEx + Exceptional), FY25-FY30
GRO
improving
Mails
proposition
footprint
mgmt. - note
redundancy
costs shown
in ‘Op Model’
Driven by
redundancy
costs
exceptional
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GRO I inclusive
Forecast represents best estimates from available data; excludes inflation
customer
data
contingency of 19%7; Not applied to
redundancy costs
Sources:
Notes:
Network
PM/SP relations
Op Model
Tech and Data
Horizon/NBIT
With contingency
Spend on the Horizon/NBIT programme constitutes c.43% of the total five-year Strategic Plan investment requirement
POL input; Teneo research & analysis
Strictly Confidential
1. Excludes existing change spend items for FY25/26 which overlap with Strategic Plan initiatives (see later slide for holistic view); 2. Excludes Horiz
redundancy costs given these represent ‘worst case’ scenario already; 3. Figure does not include optimism bias or contingency, includes removal of
18
INBIT optimism bias (but includes contingency). Contingency not applied to
PM Indexation Adjustment
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Est. funding requirement (incl. all NBIT contingencies) is £: GRO
(incl. Plan contingencies); £ GRO less vs. counterfactual
I Estimate; excludes inflation ]
PO metrics FY24/25 I FY25/26 I FY26/27 I FY27/28 8/29 I FY29/30 Commentary on delta vs counterfactual
© The initiatives in the Strategic Plan deliver change across both the
top-line (+£112m) and cost elements (-£178m)
Estimated total Government fundii ¢ The net impact enables POL to increase Postmaster remuneration to
Network subsidy [ 65% of total revenue, as well as maintain a positive EBITDA
Funding to meet SH
EW ecaREnTTERaIn? © The total five-year estimated Government funding ask post NBIT
avesune ns) optimism bias and overall contingency is cf GRO s. the
Remediation & Inquiry counterfactual).
Horizon replacement
‘Strategic Plan (excl NBIT)
Total funding req.
NBIT alternative - DBT Optimism Bias & contingency I
Total ask incl Horizon Op
smaller ask inclusive of Plan
Overall Strategic Plan contingencies (incl. revenue/costs/investment) I
Total ask incl Strate
smaller ask inclusive of Plan contingency
The incremental estimated funding ask represents a saving (vs counterfactual) and delivers transformational change that puts the
business on a more viable footing (incl. significant enhancements to the P&L of the business and share of revenue available to PMs)
Sources: POL input; Teneo research & analysis Strictly Confidential 19
Notes: 1. FY25/26 -> FY29/30; 2. Core methodology as described in counterfactual version; 3. Investment funding lower than counterfactual due to removal of items covered by Strategic Plan investment
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Strategic plan
The counterfactual scenario, whilst delivering a ‘replacement’ for
Horizon, requires significant ongoing subsidy to sustain the network ...
Continuation of ‘as-is’
“Keep the lights on”
* Current approach sustains the existing financially unviable business
* Retail-based proposition with limited capitalisation on shift to digital
« Incoherent, unprofitable network
« Falling real-term PM REM, with disillusioned PMs and poor
engagement and support
* Bloated central ops characterised by inefficiency and failure
to drive change
“Big bang” Horizon replacement
+ NBIT programme has high inherent delivery risk due to
‘Big Bang’ approach and a large associated price tag
(£0.8m still to come, excl. inflation)
+ Relatively like-for-like solution (not ‘future-proofed
innovation’)
+ Development costs run parallel with Horizon,
increasing gov't funding ask whilst delivering no Rol
until deployment
New deal for PMs
+ PM revenue share
increases from 46%
to 65% (incl of NSP),
with average income
per branch doubling
Enhanced reporting
and data insights,
support, training,
comms and voice
Investment in branch
environment,
hardware & tech
(with operational
savings for PMs) —_/
A modern, fit-for purpose Post Office
Streamlined central
operations
De-risked & lower cost
NBIT alternative
+ >{GRO lower investment
ask
“bite-sized” flexible strategy
Modernised network
+ Right-sized network with
coherent segmentation
+ Modern, consistent in-branch
experience
Refreshed proposition
Digital-forward proposition,
prioritising lean into banking
Zero subsidy
Achieve zero subsidy
requirement within 5 years
Positive cash flow
Positive cash flow achieved
within 5 years
Future-proof tech
Modern tech and data stack
Improved CX /PM experience
via new in-branch tech
To-be vision
.. by comparison, the Strategic Plan delivers a business fundamentally different in financial health, operational efficiency, digital
sophistication and attractiveness to both Postmasters and customers — for a smaller investment quantum
Strictly Confidential
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Strategic plan
Plan requires £562m of new investment, which represents c. £
investment ‘savings’ vs Counterfactual (net of contingencies)
Strategic Plan output:
££ GRO
Reduction in
Network
Subsidy
payments
from the
GRO
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Pla
Key
{_ Counterfactual [fl Base funding excl. contingencies
Horizon OB & Contingency fll Investment saving [lll Additional investment [ill Contingency
Removal of
Partially
I additional i
1 irinding reallocated to I
I requestto I {Strategic Plan!
I Gaeta investment I
minimum SH} I Removalof !
i Teneo I
H mitigation for I
H < diminishing I
I Profitability visibility! I
cost software I
development
with
conservative
estimates
elsewhere
icremental government funding ask impact, FY25-FY30
Suggested contingency of 19% on investment (not
applied to redundancy costs) plus additional funding
required to maintain minimum SH of
GRO I
£ GRO }
Note, Plan also
reduces Network
‘Subsidy
Sitios funding
could be offset.
against this to give
anet yalue of
FY29/30 Network
counterfactual subsidy
(with Horizon
Optimism Bias
& contingency)
Investment.
funding
Funding to
meeting SH
Horizon
replacement
Remediation & Strategic Plan
Inquiry
Horizon FY29/30 Strategic Plan
(excl NBIT) Optimism Bias Strategic Plan contingency
& contingency (with Horizon
Optimism Bias
& contingency)
an om
-E-
With
contingency
The investment ‘savings’ outlined are enabled by the Strategic Plan, with the similar overall requirement delivering a manifestly
different outcome (‘sustainment of an unviable as is’ vs ‘transformational change for Postmasters, customers and Government’)
Sources:
Notes:
POL input; Teneo research & analysis
1 Included in change spend assumptions for counterfactual
Strictly Confidential
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Successful delivery of the Plan will require significant support from and a
further set of ‘enablement’ asks of government
@_ © @ @
f ( , a ( “_
Collaboration on
Shareholder Protect the Arms-length HMG support of Horizen
relations Royal Mail USO procurement Plan replacement
+ Immediately post- + 95% of Post Office's + Help POL to + Across areas of Plan + Evolve to a more
Inquiry Phase 7 Mails income relates streamline likely to attract more collaborative model
agree across DBT, to Royal Mail procurement around development
UKGI and POL _ - current oversight
appropriate + Areduction in the drives inefficiencies/
arrangements that USO would duplication and cost
enable faster materially impact
Post Office!
decision making and
faster delivery of
transformation” )
@
urces: POL input; Teneo research & analysis
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Strictly Confidential
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[__ Funding, govt & next steps I
Plan funding
There are further longer-term considerations outside the core focus of
the Plan that will need to be revisited
>
Sources:
Ownership model
+ The Strategic Review actively took the
view that questions of ownership would
be best explored after remedial work to
safeguard the future of the Post Office
— Given Post Office's financial outlook,
as per the Counterfactual, and scale
of investment required
+ We note material interest from
Postmasters in a mutualisation/similar
model
* Once the Plan has been substantively
‘achieved’ it would be appropriate to
\_ explore this further (post Y3)
Further commercial
initiatives
« During the Strategic Planning exercise,
several commercial initiatives were
considered but, ultimately, de-
prioritised due to bandwidth during the
Plan period
* Key ‘tier two’ initiatives include:
Longer-term evolution
+ The Strategic Review provides a 5-year
plan to Stabilise, Simplify and Sustain
Post Office
* The Plan does not actively consider
longer-term evolution that may be
required to continue to evolve the Post.
Office to meet shifting market demand
or partner requirements
GRO
\
\
These questions should be revisited as the core plan progresses
POL input; Teneo research & analysis
Strictly Confidential
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POL00462532
POL00462532
Strategic plan
Various strands of the Plan come together to deliver against the three
underpinning strategic imperatives
Strategic imperatives How the Plan delivers against these
Improved community service
(~ + Compelling products/service, incl more comprehensive
+ New App and omni-channel propositions and digitally enabled customer journeys
he + Become a platform of choice for businesses and + Enhanced online and in-store experience
Government to serve and support local communities + Brand repair to restore trust in PO and better awareness of its range of valuable
services )
Lasting financially stability + Positive EBITDA position
+ NSP switched off
* Achieve financial independence, enabling the Post + Programme of transformation investment that will overhaul PO and negate long-term
Office to be sustainable in the long-term reliance on Government funding )
New Deal for PMs a
+ Material increase in ‘revenue share’ (+ c.40% increase in revenue share and a doubling
of average branch revenue)
« Create a sustainable, fair and attractive proposition « Whole ‘lifecycle’ enhanced package of engagement, support and agency
for Postmasters, that reflects their vital role in + Performance support & incentives
delivering Post Office services + Strategic Partner strategy
+ Fit-for-purpose central franchise organisation providing cost effective value )
The Plan aligns well with Labour's policy ambitions relating to Post Office (strengthen PO), safeguarding provision of vital banking
services, refocusing historical Government overspending, and reinvigorating UK high streets
Sources: POL input; Teneo research & analysis Strictly Confidential