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In Strictest Confidence
POLB(08)5"
POLB 08/39 — POLB08/51
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board
held at 80-86 Old Street, London
on October 20" 2008
Present:
Alan Cook Managing Director, Post Office Limited (Chairman of meeting)
Peter Corbett Finance Director
Mike Young Operations Director
David Glynn Sales Director
Gary Hockey- Marketing Director
Morley
Debbie Moore HR Director
In attendance:
Neil Owen Notes
Stephen Hirst Head of Accounting (for POLBO08/42)
Simon Whale Head of Strategy Planning (for POLB08/42)
Apologies
Allan Leighton Chairman, Royal Mail Holdings. ple
Paula Vennells _ Network Director
Sue Whalley Strategy Director
POLB08/39 PREVIOUS. MINUTES
(a) The Board approved the minutes of the previous meeting;
(b) The Board noted the Investment Committee minutes of 19"
June, 3% July, 25" July, 14" August, 28" August, 10”
September, 24" September, 9" October;
(c) The Board noted the POFS minutes of 12" September 2008;
(d) The Board noted the FRES minutes of-29" April 2008.
APPOINTMENT OF DIRECTOR
POLBO08/40 (a) The Board ratified the appointment of Mike Young to the Board
of Directors, effective 1° August 2008.
POLB08/41 STATUS REPORT POLB(08)35
(a) The Board_noted the report which showed all actions from the
previous meeting were completed or in hand. The Board also
noted that:
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POLB08/42
POLB08/43
ACTION:
Peter Corbett
(b)
(a)
(
=
(c)
(a)
(b)
(c)
(d)
(e)
(f)
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POLB08/32(c): weekly sales continued to track significantly and
materially below business case. This would be escalated to
WHS Senior Management to agree remedial action. A meeting
would take place between Alan Cook and Kate Swann.
FINANCE FUNCTIONAL REPORT POLB(08)37
Peter Corbett presented the finance report and period 12
performance pack to the Board;
the operating profit at half-year was £28:5m, which was just
£(0.5)m behind budget. Although this meant thatthe target was
in sight, there remained concerns that. sales were 4% behind
target and were being offset by other income streams such.as
bank commission from Card Account and cost savings. To be
confident of delivering the rest of the Plan sales needed to be
back on track;
in Period 6 the profit share from POFS was revised to reflect the
accounting method that had been established for the ‘Gamma’
contract with the Bank of Ireland. This would improve income at
the expense of profit share and the net impact was within
budget. This was the principle reason for the £(4.5)m variance
on profit share in the month;
it was agreed that an appropriate internal communications
briefing would be prepared to explain the financial results of the
Company;
the Product & Branch Accounting (P&BA) capacity and business
cases backlogs continued to reduce but P&BA was very
stretched. Higher profile reviews of Saving Stamps and ATMs
were positive but P&BA continued to overspend on agency;
the Board noted the performance pack.
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POLB08/44
POLB08/45
ACTION:
Gary Hockey-
Morley
POLB08/46
(a)
(b)
(c)
(d)
(a)
(b)
(c)
(a)
(b)
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NETWORK FUNCTIONAL REPORT POLB(08)38
The Board noted the report and in particular that:
Crown Network: the first refurbishments had commenced and
there were.no material issues. Procurement problems over CMS
equipment had been resolved and the tender documents had
been issued;
Network Change: 11 area plans have now concluded in full and
public consultations were. concluded on all 42 plans. Final
decisions. had. now been announced for 39 area plans to date
with decisions yet to be announced on only 3:area plans. To
date, over 169,000 pieces of correspondence (c30% via e-mail)
had been received by the Consultation Team. 1800 branches
had closed and 174 outreach offices had gone live;
WH Smith: all conversions were now complete and the total WH
Smith network now stood at 82 branches. Further franchise sites
had been identified as possible additions to WHS estate. Overall
physical and presentation standards were good.
MARKETING FUNCTIONAL REPORT POLB(08)39
ATMs: momentum in the internal ATM programme had now ‘
been re-established with both POL and Bank of Ireland (Bol)
confirming their desire to recommence installations as soon as
possible. Bi-weekly meetings with Bol had now been scheduled
up to the end of November to finalise the commercial position
and update the current Agreement. In parallel, work was in
progress to establish the overall profitability of the ATM
programme, which will inform remuneration discussions with the
NFSP and feed into the full ATM business case;
Bill Payments: improvements in bill payments were now
beginning to show. British Gas had announced that Payzone
had been dropped which would generate more business for the
Post Office;
Queuing: the queuing results were under pressure, mainly in
Crown offices, due to the levels of migration. It was agreed that
GHM, PV and MY would meet to discuss.
SALES REPORT POLB(08)40
The Board noted the report, and in particular that;
total POL sales P6 YTD income from Focus and Standard
products was £347.49m. YTD P6 Focus product income now
stood at £86.44m, some £8.1m below target, with Standard
product income at £261.05m, £7.32m below target. Focus
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product income performance now stands at 91% YTD, a further
drop of 1% on P5 although still 109% vs. this time last year;
(c) all sales forecasts for.2009/10, from both channels and
marketing teams (including JVs) were under review to ensure
that these were both achievable and stretching, and
underpinned by. careful and detailed assumptions of market
opportunities. This was part of the current exercise to determine
how the existing £30m gap against plan for 09/10 can be closed.
POLB08/47 OPERATIONS REPORT POLB(08)41
(a) The Board noted the report, and in particular that;
(b) Fujitsu: negotiations concluded and were now ready for sign off
after many hours of input, securing benefits for POL despite. late
delivery of Horizon Next Generation X against original plan. As
part of the deal there would be an increase in operating costs
this year but it will be fully recovered against operating costs
next year;
(c) Horizon Online: the HNG:team ran an exhibition stand and held
a seminar session on Horizon Online at last weekend's
Subpostmaster Exhibition at Olympia. The stands were very well
attended, and the response from delegates to the new system
remains overwhelmingly positive; .
ACTION: (d) Crown Office Relocations: it was agreed that Mike Young would
Mike Young verify that the new offices featured a screenless format;
(e) Sourcing Council: it was agreed that the authority of the sourcing
ACTION: council would be clarified to ensure that the focus remained on
David Glynn the vendor selection process.
POLB08/48 HR REPORT POLB(08)42
(a) I I
ACTION: :
Deborah Moore
POLB08/49 STRATEGY REPORT POLB(08)43
(a) The Board noted the report.
POLBO08/50 CLOSE
(a) There being no further business, the meeting was closed.
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In Strictest Confidence
POLBO08/51
In Strictest Confidence
DATE OF NEXT MEETING
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The next meeting of the Board was scheduled for 19 January
2009.
BALANCED SCORECARD ACTION LOG
2010 POLBO1
FP1.1 Contribution from variable products needs to be
noted as a Bonus Target .
Siw
2010 POLBO2
FP1.1 Variable Contribution: Investigate why there has
been a £2m drop from last month to this
DG/Siw
2010 POLBO3
CP1.5 - No. of Customer Complaint — Agree a target
going forward and owner to drive this. Current target is
an assumptions
SiW/ GHM
2010 POLB04
CP1.1 - Average No of Products held per customers.
Ensure this metric is delivered
SiW/SH
2010 POLBO5S
FP2.2 — FRES profit share. Need an explanation of the
shortfall for the month (Sept)
GHM
2010 POLBO6
FP2.3 Investigate the provision of an advertising
campaign for Life Insurance Products from reduced
spend on aggregators.
GHM
2010 POLBO7
Ensure metrics are in place for Financial Services:
e Cost of customer acquisition
e Retention metrics for balances
e Ave No. of FS product held per customer
GHM/SiW/SH
2010 POLB08
CP3.3 - No.of Customer Complaints — Mails. Agree
owner and target for this.
GHM/SiW
2010 POLBO9
Remove ‘fastdrop’ and online postage metrics — as not
due this year
e No of offices with FD capability
e Proportion of FD offices generating sales
e Sales on POL online postage
Siw
2010 POLB10
CP4.1 — Confirm reason for'>1000 missing MVL disks
with Keith Woollard and John Scott
Siw
2010 POLB11
Review Government Metrics to ensure we have the best
measures in place
Card Account linked transactions (per customer)
Cross sales from Government Services (£m)
Customer Satisfaction for Government Services
Client Satisfaction with POLs Government
Services (Sherpa linked?) offerings (may have to
be removed in line with JEMM Survey)
GHM/KS/SW
2010 POLB12
LP5.3 — No. of dual customers — Check YTD score as
seems too high
Siw
2010 POLB13
FP4.4 & LP4.1 Review metrics in light of planned activity
(with Kevin Seller)
GHM
2010 POLB14
FP5.5 — Review opportunity of putting ETU onto ATMs
GHM
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(or other alternatives to drive income)
2010 POLB15
IP5.1 - Cost of Customer Acquisition (£). Drive to get this
metric in place
SiW/SH/GHM
2010 POLB16
Direct metrics — Agree metrics with Penny to agree
replacements for:
e Customer feedback on website
Customer feedback on call centre
e External benchmark of direct experience. (%)
Penny has proxy measure that would be useful to see
here (e.g. abandonment rates etc )
DG/SiW
2010 POLB17
CP6.1 -'No. of profitable offices (Volume) — Ensure
metric is in place as soon as possible
SH
2010 POLB18
Ops Efficiency -.Add in new metric for ‘getting it right first
time’ from a C&IS / product delivery point of view
MY
2010 POLB19
CP8.4- Talent Group retention / promotions / internal
moves. Metric needs to be agreed and put in place
DM
2010 POLB20
Remove metrics that are not used:
e Take up of ‘Colleague Offers'
e Proportion of parcels using carbon offset
Siw
2010 POLB21
Add in new metrics that better reflect HR improvements
areas:
e Rookie Ratio — Proportion of staff that have been
in the business for less that one year
¢ _ Rookie resignation rate — Need to reduce this
e Business resignation rate - Currently very low
(how would we target this?)
e Charity giving — (either payroll-giving and/or
matched funding) to help measure CSR
Need to agree owners and detail of each metric
DM/Siw
2010 POLB22
Prepare an appropriate briefing for CWU and NFSP-
tegarding half year results announcement
DM/ PV/GHM
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In Strictest Confidence