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POLB 09/01 - POLB09/12
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board
held at 80-86 Old Street, London
on January 19" 2009
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
Paula Vennells Network Director
Sue Whalley Strategy Director
In attendance:
Neil Owen Notes
Stephen Hirst Head of Accounting (for POLBO9/02)
Simon Whale Head of Strategy Planning (for POLBO9/03)
Apologies
Allan Leighton Chairman, Royal Mail Holdings pic
POLBO9/01 PREVIOUS MINUTES
(a) The Board approved the minutes of the previous meetings held
on 20" October 2008 and 24" November 2009;
(b) The Board noted the Investment Committee minutes of 9”
October, 22" October, 6” November, 19" November, 4"
December, 17" December 2008;
(c) The Board noted the POFS minutes of 19" November.2009 and
16" December 2009;
(d) The Board noted the FRES minutes of 29" April 2008 and 23
July 2008.
POLBO09/02 STATUS REPORT POLB(09)01
(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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POLB09/03
POLB09/04
(b)
(c)
(a)
(b)
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(d)
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Crown Offices: POLB08/47(b): Mike Young reported that any
Crown Office relocation would now be screenless. An example
of this was the format being used for the Peterborough
relocation. Where there was a Bureau position then this would
be fortress but the remainder would be screenless;
Sourcing Counsel: POLB08/47(e): the-role of the Group
Sourcing Counsel going forward would be to drive Group
Sourcing contracts rather than consider subsidiary contracts.
The procurement function would then maintain links to the
individual business units. An opportunity existed for POL to
create its own sourcing counsel timed to coincide with
investment committee meetings.
BALANCED SCORECARD POLB(09)02
Simon Whale presented the period 9 balanced scorecard to the
Board, It was noted that:
Customer acquisition and sales had continued to track at lower -
than expected levels which could create difficulties towards the
end of the year However it was not in the long term interests of
the company 'to significantly ramp up spending in an effort to
increase sales;
since the closure programme footfall had decreased, but each
customer was averaging a higher number of transactions. It was
agreed that an ‘official’ footfall figure would be provided for
external presentation purposes;
the Board reviewed the Balanced Scorecard Actions and Simon
Whale updated the action log.
FINANCE FUNCTIONAL REPORT POLB(09)03
Peter Corbett presented the finance report to the Board;
from March 2009 the Company would have less than two years
of funding remaining. The impact of a possible restructuring at
Royal Mail Group may also impact on the Company's funding
arrangements. As a result, it may be necessary for the Board to
review the funding position on a regular basis again;
the operating profit at month 9 was £4.3m ahead of budget,
(£0.4m) deterioration in the month. During December Net
Income missed target by (£4.2m).and with product and channel
costs largely on budget this produced a budget shortfall against
operating contribution of (£3.9m). It was central, overhead and
activity costs that were under budget to off-set this shortfall and
reduce the adverse profit variance. The forecast profit for this
year continued to be £35m, to exceed target by £3m, which
reflected the additional reduction in the contribution to pensions
after the budget was set. Falling interest rates were reflected in
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the forecast for bank commission from Card Account, and offset
by reductions in group overhead costs and continuing saving in
non-staff costs;
(d) the cash outflow to month 9: has: been £95m which is some
“£260m better than target; down from the £185m we were ahead
last month. This represents early achievement of the target from
3 key items:
(i) £74m of this was due to timing of exceptional costs
such as the branch closure compensation, £23m and
redundancy, £33m;,
(ii) the improved arrangement with JP Morgan to receive
on the same day the value of Card account payments
made before 1.30 p.m. had contributed £26m;
(iii) improved cash holdings of £108m better than budget
delivered through lower foreign currency, cheques,
cash centre holdings, and bank balances. Sterling in
branches was slightly worse than target;
(e) the high-level budget agreed by ET in December has
successfully been broken down into detailed cost centre and
cost item budgets as reported to ET on 12th January. The key
risks identified are £4m against travel contribution, and the
continuing exposure to Card Account commission. to reductions
in LIBOR. This could be up to. £15m unless rates start to climb
again during the next 15 months. The submission to Group
should be signed off on 26 January;
(f) the Board noted the performance pack.
POLBO9/05 . NETWORK FUNCTIONAL REPORT POLB(09)04
(a) The Board noted the report and in particular that:
(b) Crown Network: the Financial Services Specialists project
remained on track. The agreed moratorium would allow the
Performance Management team to have an impact and to
embed the Training and Development Framework;
(c) Network Change: as at the end of December, 2248 branches
have been closed and a further 283 outreach solutions
implemented.13 area plans had now concluded in full with all
closures, outreaches and replacement activities implemented.
The National Audit Office meeting on 7th January was
constructive with no indication of any significant negative issues;
(d) Restrictions: the indications were that the Co-op was likely to
support the restrictions policy and ask paypoint to pull out.
However some contractual issues existed and it remained
important for POL to win the EON contract.
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POLBO09/06 MARKETING FUNCTIONAL REPORT POLB(09)05
(a)
(b) ATMs: It had been confirmed to Bol that POL did not wish to
proceed with an extension to the current ATM Agreement at this
stage, but that the rollout of external ATMs and Internal ATMs
(on a limited basis) would continue as detailed in the ATM
business case. Meetings had been scheduled with Bol to take
forward the agreement on this basis and forthe work undertaken
on contract extension to be "boxed-up" in order that it can be
easily revisited at a future date if required;
POLB09/07 SALES REPORT POLB(09)06
(a) The Board noted the report, and in particular that;
(b) total POL sales P9 YTD income from Focus and Standard
products is £529m (£21.8m below target). YTD. P9 Focus
product income now stood at £122.99m, some £13.86m below
target (89.9%). Standard product income is at £ 405.95m (98%
of target), which left a £7.9m gap YTD, a shortfall mainly coming
from Financial Services;
(c) . performance over the key weeks (36-38) leading up to Christmas
was very disappointing, with focus product income only
achieving 73% of target (£3.15m gap) in this period, and
Standard product income achieving 90% (£4.23m gap). This was
primarily due to very high calendarised targets for Special
Delivery, and slow performance on Travel, Etop ups, Savings
and Personal Banking;
(d) the 3 main contributors to this focus product underachievement,
totalling 65.6% of the gap, were combined travel insurance, E.
Top Ups and Passports. Evidence of ongoing economic
turbulence-can be seen in the material year on year volume:
declines in P9 across entire network and all products pillars;
(e) there remained a need for smaller SPDOs to focus on certain
ACTION: : products. Incentives were currently provided through the
Gary Hockey- commission mechanism. It was agreed that Gary Hockey-Morley
Morley and. David Glynn would provide. a focus product presentation for
David Glynn the sub-postmasters conference. Simon Whale would be
consulted as to how this would work.
POLB09/08 OPERATIONS REPORT POLB(09)07
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(a) The Board noted the report, and in particular that;
(b) Fujitsu: there were risks of delays to the volume and integrity
and Migration test rigs. Problems were ongoing throughout
December, and the rigs were not now expected to be available
until mid/late January. This would represent a 4-8 week slip if
viable mitigations cannot be identified. Work was on-going to
ensure that no further slippage occurs to the delivery of rig or
network components and to assess options to minimise the
impact on the overall rollout dates. It was not anticipated that the
full rollout date in September will be impacted. Sue Whalley
asked for clarification as to whether any delays would impact on
other programmes;
(c) Paystation Plus: migration from legacy host (ITRv1) to new host
ITRv2 continued successfully. Platform performance and
stability over the busy Christmas period was very good. 90% of
terminals now on ITRv2;
(d) Card Account Project: further contract agreement sessions were
held from 6"- 8” January including commercial, security,
implementation and solution provisions. Expected signature
date was the end January 2009.
POLBo9/09 HR REPORT POLB(09)08
(a) I
Irrelevant:
Ks
POLBO09/10
(a)
(b) The Board. noted the report.
POLB09/11 CLOSE
(a) There being no further business, the meeting was closed.
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POLB09/12 DATE OF NEXT MEETING ~
The next meeting of the Board was scheduled for 20 April 2009.
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