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POB(01)2nd
POB01/13 to 24
POST OFFICE BOARD
Minutes of the meeting held at 148 Old Street
on 12 February 2001
PRESENT
Neville Bain Chairman
John Roberts Chief Executive
Marisa Cassoni Group Finance Director
Jerry Cope Group Managing Director Strategy & Business Development
Mike Kinski Non-Executive Member (for POB01/13 to 19)
John Lloyd Non-Executive Member (for POB01/13 to 19)
Rosemary Thorne Non-Executive Member
Jonathan Evans Secretary
Miranda Dodd Notes
Richard Dykes Group Managing Director, Mails Services
Stuart Sweetman Group Managing Director, Customer and Banking Services
Kevin Williams Group Managing Director, Distribution Services
OTHERS Malcolm Kitchener, Group Managing Director, Business Services
ATTENDING for PO01/13-24
Mick Linsell, Managing Director Service Delivery, for PO01/18
Alison White, Mergers and Acquisitions Director, Paul Bateson
Managing Director Logistics and Contract Distribution, John
Nicolson Strategy and Planning Director, Logistics and Contract
Distribution, Robert Patterson Price WaterhouseCoopers, for
POB01/19
John Modd, Managing Director International Services and Dom
McKenna, Director and General Manager Europe for POB01/20
APOLOGIES Miles Templeman was unable to attend.
POB01/13 MINUTES OF PREVIOUS MEETING
The Board approved the minutes of its 9 January 2001 meeting.
POB01/14 MATTERS ARISING POB(01)08
The Board noted the matters arising from its meeting held on 9
January 2001.
POBO01/15 CHAIRMAN’S BUSINESS
(i) The Chairman welcomed Marisa Cassoni to her first Board
meeting. On behalf of the Board, the Chairman thanked Malcolm
Kitchener for the significant contribution he had made over the
previous ten months as acting Group Finance Director, and
wished him well in his future role;
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(ii) The Chairman informed the Board that he would shortly be
discussing the strategic plan with Alan Johnson, DTI Minister, and
Government officials;
(iii) The Chairman congratulated the Chief Executive and his team for
their efforts in successfully completing a programme of 71
communication workshops for senior managers to explain the
challenges facing the Business.
POBO01/16 CHIEF EXECUTIVE’S REPORT POB(01)09
The Board noted the Chief Executive's report, and in particular
that:
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(vi)
ACTION
Richard
Dykes
POB01/17
(i)
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Maior IS/IT projects: the Horizon and SPICE programmes were
proceeding well in line with agreed timescales. However the main
contractor in the Address Interpretation (Al) project, Lockheed
Martin, had indicated that it had fallen eight months behind
schedule in the software development for the programme. This
delay would worsen the NPV of the project - set at £27million in
the approved business case - by some £20million, with a further
knock-on cost into the WAND project of £30million. Recent
communication from Lockheed Martin had taken on a legalistic
tone as the company attempted to protect itself from any possible
legal action relating to a potential breach of contract. The Board
was assured that all payments to Lockheed Martin had ceased
while the contract was under review. A range of options for the
future of the Al project was being explored. The Board requested
further information to be made available at the following Board
meeting on: The Post Office legal position, the impact on other
projects of a slippage in Al, the proposed way forward, and the
learning points from the slippage in this major programme.
FINANCIAL OVERVIEW
The Board noted a presentation from Marisa Cassoni, in
particular that:
performance in December had been encouraging with a small
positive profit variance, made up of revenue performance in the
market facing units just exceeding an overspend in the
operational and support units - although in part this improved
revenue performance was the result of budgetary calendarisation
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effects. Concern was expressed that the favourable revenue
performance of December may be offset by weaker January
results;
(ii) it was forecast that the profit for the year end would fall in the
range between £150-£185million, with £175m considered the
most realistic outcome, in the light of December's results. These
forecasts included a £17million benefit from the Executive Board’s
assessment of the extent of caution contained in individual
business unit forecasts;
(iii) the Board expressed its continuing disappointment at the
business performance. To aid its understanding of the reasons
ACTION for the poor performance, the Board sought more detailed
Marisa information on income and cost variances from budget each
Cassoni month;
(iv) the board was assured that there was no risk of a Parcelforce
impairment in the accounts for the year 2000/2001;
(v) the Board was informed that plans were in place to address the
deteriorating cashflow position of the business. The cashflow
position had been caused in part by the poor profit performance,
but the Board nevertheless required the cash position to meet
budget expectations;
(vi) the Board agreed in principle that the full year Group post-tax
profit forecast of £175 million be released to DTI, but only after
validation by the Chairman, Chief Executive and Group Finance
Director in the light of the January results, due one week after the
meeting.
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POB01/24 DATE OF NEXT MEETING
The next meeting was scheduled for 13 March 2001.
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