PAF Licence Agreement brochure

PAF Licence Agreement brochure for direct End-Users & Bureau 14 January 2010 1 of 15

Welcome to your 2010 PAF Licences This guide introduces you to the 2010 PAF licences outlining their many features and benefits and explains how the new licence terms can be applied. the small print The information contained in this brochure summarises the PAF products and licences that Royal Mail offers and explains how these products can be used by businesses and organisations. The use of Royal Mail's PAF products is governed by legal Agreements of which this brochure does not form part. In the event of any conflict or inconsistency between these legal documents and this brochure, the terms of the legal documents will prevail. These legal documents contain the full details of rights and obligations with regard to the PAF products and their licensing. Reliance should not be placed on explanations or descriptions set out in this brochure. If you have any doubts with regard to your rights or obligations, please refer to the relevant legal documents and/or consult Royal Mail. You may wish to obtain your own legal advice to check that you are correctly licensed. Royal Mail has made all reasonable efforts to ensure that the information provided in this brochure is accurate and correct at the time of publication. However, Royal Mail reserves the right to correct and amend this brochure at any time and without notice. All prices set out in this brochure are correct as at October 2009. All prices exclude VAT at the prevailing rate. Royal Mail is the creator and owner of, or is otherwise authorised to use and exploit, the databases known as PAF, PIF, Alias, and UDPRN. These databases and all supporting documentation, including this brochure, and all Intellectual Property Rights subsisting in and/or relating to the same from time to time are and shall remain the property of Royal Mail or its licensors. 2 of 15

Contents Page Introduction 3 Why license PAF? 4 New in the 2010 PAF Agreement 5 The BIG change Other important changes Two types of Agreement Data Supply Agreement 7 Data Licence Agreement 8 Overview of Agreement Explanations Agreement principles Pricing Other options Advanced options for franchising & networks Scenarios 14 Contact us 15 Introduction In 1959, along with the arrival of automatic sorting machines in Norwich, the early form of the UK postcode was first introduced. By 1974, the modern form of postcode had been rolled out nationwide, but it wasn t until the 1980s that the Postcode Address File - PAF - was established. Since then PAF has become the standard for postal address databases. Today PAF contains around 1.8 million postcodes and every known business and residential address in the UK. We invest heavily in maintaining PAF data quality and each month on average, we make approximately 100,000 updates, to keep PAF as accurate as possible. In recent years, with the growth of the internet and arrival of new technologies, the use of postcode data and PAF generally has changed dramatically. We knew by listening to our customers and the marketplace that the PAF Agreements needed updating to reflect these changes. Our intention throughout has been to deliver a new 3 of 15

Agreement which encourages more flexible use of PAF, especially for low, infrequent use, and which balances both your needs with our needs too. The published Agreements come into effect from 1 April 2010. We know that the implementation of the new Agreements has implications for your business and we want to help you through the period of transition. This brochure is the starting point. It s designed to help you: 1. familiarise yourself with the new Agreements 2. explain some of the key features of the new Agreements 3. offer you various points of contact if you need help. Why license PAF? Royal Mail employs approximately 66,000 post-men & -women who, as well as postal deliveries, also check every house number, house name, road name and business address to validate all known UK postal addresses; all 28.5 million of them! We also work with Local Authorities and third parties, whose complementary datasets we incorporate into PAF. As a business Royal Mail takes responsibility for managing and updating PAF, and we therefore have intellectual property rights in PAF which we work hard to protect. Of course we are obliged to allow the fair use of PAF at reasonable cost. We license organisations who wish to use PAF, and we are permitted to recover our costs and make a reasonable return on our investment. We show this by presenting separate accounts from Royal Mail Ltd. The revenue we generate from the licence fees is ploughed back into the business to maintain and improve the quality of PAF for the 37,000 or so licensed organisations that use it. 4 of 15

New in the 2010 PAF Agreement Here s a summary of some of the key changes to the 2010 PAF Agreement. More information on these key changes is provided in more detail further on. The BIG change - pricing reflective of use The new Agreement continues to be priced based on usage by the End-User, but moves from pricing based on technology i.e. systems, to User-based pricing i.e. the number of Users of PAF within the End-User. Moreover, the licence fees per User have come down. Licensing by the number of PAF Users is simple to understand and easy to administer. The price reduction will benefit low volume and infrequent Users and help attract new PAF licensees too. The price changes are intended to be income-neutral to Royal Mail. Any increase in income comes only from an increase in overall usage of PAF. These conditions have been agreed with the postal services regulator. Other important changes Our commitment to SIMPLICITY We now license the supply of PAF data separately from its use - in two separate Agreements: the Data Supply Agreement covers the supply of PAF data, and the Data Licence Agreement covers the use of PAF data. Our commitment to STABILITY We still commit to providing a minimum of 12 months notice of any price changes. Our commitment to FAIR PRICING We ve reduced the User royalty by a further 12%, and it is now 50% less than in 2006. Under the current licensing you re charged for each copy of the data, and this will continue. We now allow load balancing as long as you meet certain conditions. There are now separate pricing terms for bureaux and those businesses wishing to offer only bureau services. 5 of 15

Our commitment to INCREASING YOUR OFFERINGS to your customers We ve introduced new solutions to license certain closely connected groups called Associate Group, Broker Group and Extended Use solutions. You ll find more details later in this brochure. New terms are available specifically relating to the use of PAF in market research. Two types of Agreement We ve split the Agreement into two to give us the flexibility to introduce different types of use: 1. We supply PAF data under a Data Supply Agreement. 2. How you use PAF is covered in the Data Licence Agreement. In this brochure, we ll go into more detail about the Data Supply Agreement first, and from page 8 onwards, discuss the Data Licence Agreement. We ve also pointed to the relevant clauses in the Agreements throughout, to help you refer back to the Agreements, because they should be your definitive references. 6 of 15

Data Supply Agreement The Data Supply Agreement is for the provision of PAF data to you, but does not cover your use of the PAF data. Summary Data format, e.g. CD or online download Data frequency, e.g. daily, monthly, quarterly Type of refresh, e.g. full file or changes/updates What s new? The price of data supply has been reduced by up to 80%. Under the 2010 Agreement, data supply is no longer available on magnetic tape. We will be supplying data on CD and via web download. We re also looking to provide data on other media, e.g. DVD and SFTP (Secure File Transfer Protocol). We ve simplified the pricing to make the cost of taking one complete edition of PAF is now the same as taking Changes files see the red prices in Table 1 below. Table 1 Sample data supply pricing for PAF Current New Frequency Online CD Online CD The Annual package 1 x Complete Edition N/A 500 N/A 400 The Updates package 2 x Half-yearly Complete Editions N/A N/A N/A 800 4 x Quarterly Complete Editions N/A 2,000 N/A 1,000 12 x Monthly Complete Editions N/A 6,000 N/A 1,200 The Changes Package 1 x complete edition + Quarterly changes 1,700 1,700 750 1,000 1 x complete edition + Monthly changes 1,700 1,700 900 1,200 1 x complete edition + Daily changes 3,250 N/A 2,250 N/A For more details on this pricing option and the applicable contractual terms, please refer to the Data Supply Agreement. 7 of 15

Data Licence Agreement The Data Licence Agreement deals with your use of PAF data Agreement principles Each direct End-User signs a licence. A direct End-User is a single legal entity. A User is not a person, but a terminal or device, so those sharing a terminal are treated as just one User. Data Protection rules still apply. Pricing PAF pricing is still based on per copy of PAF. In certain circumstances there is no longer a charge for backup and load balancing copies of PAF. Prices are now based on number of Users within the End-User that can access PAF, rather than number of systems. We ve changed a number of terms and conditions, and changed our pricing structure, to make both the terms and pricing structure more reflective of use. Price for a single User with unlimited internal use has reduced by 12% to 75 per year. To help minimise disruption, we ve made the price points for blocks of Users similar to the previous system based pricing. For more details on the pricing options and the applicable contractual terms, see Annex 3 of the Data Licence Agreement. What the Agreement document looks like The contents page shows clearly the terms relating to your internal use of PAF, Annexes relating to certain external use, and the Advanced Options. Definitions are at the beginning. Pricing is at the end. Use our background paragraphs, or Recitals, as signposts through the Agreement. 8 of 15

Regular, unlimited usage This is the traditional way to license PAF. We license on a User basis for unlimited use at 75 per User per year (a User being one terminal, e.g. one PC or handheld device, etc.). This is ideal for regular, unlimited usage of PAF. For more details on this and the applicable contractual terms, look at Annex 3 of the Data Licence Agreement. Extensive PAF usage For every 55 Users charged at 75 each, a further 245 Users will be licensed at no further charge. Numbers of Users are grouped into Multiple User Blocks. A Multiple User Block is priced at 4,125. For over 655 Users the price is capped at 12,375 per legal entity (per End-User). If User numbers flex during the licensed year, then exact numbers of User licenses are not required, as long as they fall within the boundaries of the relevant 300 Multiple User Blocks. The table below shows the pricing band principles for internal use per legal entity. Table 2 Pricing band principles for a single legal entity (End-User) for PAF For more details on this and the applicable contractual terms, see Annex 3. 9 of 15

Database cleansing As an End-User, you can either cleanse your own internal data as part of normal internal use, or cleanse data and pass it on to third parties (with restrictions) without attracting a further fee, provided that it s part of normal daily activities. An example of this use would be passing cleansed data on to a mailing house for fulfilment. For more details on this and the applicable contractual terms, see part 5 of Annex 1. Bureau A bureau is an End-User using PAF to clean data from another legal entity before passing the cleansed data back to them. A licence fee is payable based on the number of records that have previously been processed by the bureau. There s no requirement to regularly report actual usage of PAF. Table 3: Bureau licence fees for Full PAF Records cleansed in preceding year Fixed licence fees per annum Up to 1 million 250 1 million 10 million 750 10 million 100 million 3,750 Over 100 million 10,000 For more details on this and the applicable contractual terms, see Part 5 of Annex 1. 10 of 15

Data The table below shows the key differences between Data Cleansing and Bureau Services. It illustrates the point at which Database Cleansing is deemed to be Bureau Services, i.e. at the point when the data is passed back to the End-User Customer. Table 4: when Data Cleansing is deemed to be Bureau Services Data Creation Data Creation is defined in the Agreement as creating a new Record in an End-User Database or a Customer Database, or creating a new database where previously there was none. Created Data is deemed to be a separate copy of PAF. Data Creation was previously prohibited in our Agreements. It is now allowed. Data passed on must be: Internal to the End-User Limited to 10,000 Records in any 12 month period Limited to 10 other Users, but a data recipient cannot link data together For more details on this and the applicable contractual terms, look at clause 3.5.3 of Annex 3. 11 of 15

Other options Market research During the consultation process some customers made us aware of this very specific type of use which was difficult to license in the traditional way. In the new Agreement is a set of clauses allowing certain market research companies to provide researchers with sample lists including PAF verified address and postcode information, for certain defined market research purposes only, i.e. conducting a survey. These new Market Research terms provide specific exceptions to Data Creation to allow infilling of large databases using PAF. These terms are only intended for this niche part of the market. For more details on this and the applicable contractual terms, look at Annex 2, and for End-User terms go to Schedule 2 to Annex 3 of the Data Licence Agreement. Licensing options other than internal use are described in the Agreement as Advanced Options. These are: Web use PAF can help capture correct addresses as part of your website. This type of pricing is called External Transaction Solution. We license External Transaction unlimited use for 4,000. For more details on this option and the applicable contractual terms, look at at Part 1 of Annex 1. Advanced options for franchises and networks We ve introduced licensing options for specific closed groups to benefit from network or membership opportunities. These options are for franchise- and network-type situations; often independent businesses operating under the same umbrella. 12 of 15

Associate Group Solution: designed especially for franchise-type organisations operating under a common brand to come together under one Agreement. For every 55 Users charged at 75 per year each, a further 245 Users will be licensed at no further charge. If you have more than 1,555 Users (i.e. 6 Multiple User Blocks) in the Associate Group the price is capped at 24,750 per year per Associate Group. With this type of stepped pricing, the price may be reduced for Associate Groups with small numbers of Users. For more details on this pricing option and the applicable contractual terms, look at Part 3 of Annex 1. Broker Group Solution: designed especially for closely connected groups to come together under one Agreement (e.g. insurance brokers, or independent financial advisors). Under the current licensing terms, this type of use would have been uneconomical, hence the introduction of terms for Broker Groups in the new 2010 Agreement. For every 55 Users charged at 75 per year each, a further 245 Users will be licensed at no further charge. If you have more than 3,110 Users in the Broker Group the price is capped at 49,500 per year per Broker Group. With stepped pricing this reduces the price for Broker Groups with a small number of Users. For more details on this & the applicable contractual terms, look at Part 4 of Annex 1. Extended Use Solutions: a new licence term designed to allow you to pass data to third parties in order to verify or amend address details, prior to the third party sending out mail, packages, products and services, on your behalf. The data that you ve passed to the third party can only be used for the purposes of delivery mentioned above. For more information on Extended User Solutions please refer to part 2 of Annex 1. 13 of 15

Scenarios Here are 4 annual pricing scenarios to help you understand how the new Agreements should be applied. For more scenarios, visit www.royalmail.com/paflicence. Scenario 1 the charity End-User A charity has 10 Users and makes and takes calls on behalf of another smaller charity. No address data is passed to the smaller charity. Today 10 User licences @ 85. Total cost 850 2010 Licensing 10 User licences @ 75. Total cost 750 Scenario 2 the call centre End-User A call centre has 50 employees sharing 15 PCs and one copy of PAF on a single application. Today 15 User licences @ 85. Total cost 1,275 2010 Licensing 15 User licences @ 75. Total cost 1,125 Scenario 3 the retailer End-User A retailer has 280 internal Users on one system and a website offering goods and services with an unforeseeable number of Transactions. Today One internal system licence 3,850 + unlimited External Transaction fee 3,750. Total cost 7,600 2010 licensing 280 internal Users (1 block of 300) is 4,125 + unlimited External Transaction fee 4,000. Total cost 8,125 Scenario 4 the investment house End-User An investment house has 600 Users currently on a multisystem licensing arrangement. Today One multi-system licence is 11,550 2010 Licensing 600 Users (capped price of 2 blocks of 300 Users) is 8,250 14 of 15

Contact us Email paflicence@royalmail.com Telephone 0845 60 66 854, Option 2 Post Web PAF Agreement, Address Management Unit, Fourth Floor, Royal Mail, Slindon Street, PORTSMOUTH, PO1 1AF www.royalmail.com/paflicence Contact the PAF Advisory Board The PAF Advisory Board is an independent body which offers Royal Mail advice, on behalf of PAF Users and resellers. Web www.pafboard.org.uk Royal Mail, the cruciform ad the colour red are registered trade marks of Royal Mail Group Ltd. All rights reserved. Royal Mail is a trading name of Royal Mail Group Ltd, a company registered in England and Wales, number 4138203, registered office 100 Victoria Embankment, LONDON, EC4Y 0H 15 of 15