POL00021489 - Post Office Limited Board Meeting Minutes
Evidence on official site
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POLB05(6™)
POLB 05/91 — 05/115
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board
held at 80-86 Old Street, London
on October 19" 2005
Present:
Sir Michael Non-executive Chairman
Hodgkinson
David Mills Chief Executive (for POLB05/92 — POLB05/106)
lan Anderson Human Resources Director
Alan Cook Non-Executive Director
Peter Corbett Finance Director
Ric Francis Operations Director
Brian Goggin * Non-Executive Director
Graham Banking & Financial Services Director
Halliday .
Allan Leighton Chairman, Royal Mail Holdings (for POLB05/92 — POLB05/106)
David Miller Chief Operating Officer
Gordon Steele Marketing & Direct Sales Director
In attendance:
Jonathan Evans Company Secretary
lan O'Driscoll Commercial Director (for POLBO5/104)
Neil Owen Notes
Derek Rocholl Category Manager (for POLB05/114)
David Smith IT Delivery Director (for POLB05/104)
Apologies: None
POLB05/91 MINUTES OF PREVIOUS MEETINGS POLB(05)5™
(a) The Board approved the minutes of the Board meetings of 47"
August 2005.
POLBO05/92 STATUS REPORT POLB(05)75
(a) The Board noted the report, and in addition:
(b)
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POLBO05/104 HORIZON PROPOSITION POLB(05)84
(a) Ric Francis introduced Dave Smith and lan O'Driscoll. A
presentation was provided on Horizon Next Generation. The
Board noted that:
(b) the current proposal would almost halve the cost of Horizon and
then reduce ongoing costs year on year. The original Fujitsu
proposal had not met this objective, and the new proposal had
been achieved. after hard negotiation;
(c) the original proposal would have resulted in a front-end spend
of £150m, in addition to a fair amount of risk. The current
proposal had removed £140m of cost by ‘sweating’ the existing
assets within the operation for a long as possible. This would
remove the need to have such a large initial capital outlay, but
would still result in the rolling out to all 14,500 branches;
(d) the proposal would still required a £50m front-end cost to pay
fora shared data centre and a ‘lights out’ facility. However, it
would not result in a penalty payment for breach of contract;
(e) the current proposal resulted in an acceptable and achievable
cost profile, and an agreement had been reached in principle
with Fujitsu of new ways of working. The alternative would be to
buy out the existing contract at a cost of £80m, disaggregate
the services, and select an SI partner to manage the
development and integration. This could deliver lower cost but
would result in a significantly higher risk and a longer delivery
time;
(f) The other key features of the new proposal were:
(i) improved availability;
(ii) cost effective service management;
(iii) significant network savings;
(iv) SI Partnership;
(v) the duration of the contract would be until 2015.
(g) David Burden had been briefed on the proposals;
(h) the Board noted the progress that had been achieved, and
agreed to the approach and to £6m investment that would be I
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required to cover the period to full authorisation. Peter Corbett
stated that this investment would be capitalised and impaired.
The Board further agreed that a strategy paper would be written
for noting at the Royal Mail Holdings Board in December 2005,
Action: and that the proposal would return forfull authorisation to the
Ric Francis Royal Mail Holdings Board in April 2006.
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POLBO5/111 OPERATIONS REPORT POLB(05)91
(a) The Board noted the report. There were no further issues raised
given the Horizon Next Generation project and the Cash In
Transit IR strategy had already been discussed in detail.
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POLBO05/115 CLOSE
(a) There being no further business, the meeting was closed.
I Sir Michael Hodgkinson I
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