POLB(12)5"
POLB12/44-57
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Post Office Limited - Strictly Confidential
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board of Directors
Id at 148 Old Street, London EC1V 9HQ on 18" April 204
hel p 2
Present:
Alice Perkins
Neil McCausland
Virginia Holmes
Susannah Storey
Paula Vennells
Chris Day
in attendance:
Alwen Lyons
Martin Moran
Nick Kennett
POLB12/44
POLB12/45
ACTION:
Chairman
ACTION:
Martin Moran
ACTION:
Paula Vennells/
Alwen Lyons
Page 1 of 5
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(b)
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Chairman
Senior Independent Director
Non-Executive Director
Non-Executive Director
Chief Executive
Chief Financial Officer
Company Secretary
Commercial Director (item POLB 12/45 & 46)
Financial Services Director {item POLB12/46)
The Chairman welcomed Virginia Holmes and Susannah Storey to
the Board.
MAILS UPDATE
Martin Moran updated the Board on the current issue of stock
availability for customers buying stamps before the price rise on 30"
April. He assured the Board that the business had enough stock
and that Royal Mai! was supplying additional stamps to cover
demand.
Martin Moran presented the Malls paper, focusing on the growth
areas Vital to delivering the strategy. He highlighted the progress
made to date and the collaborative relationship with Royal Mail who
were presenting the necessary business cases to their Board to the
timescales agreed.
The Chairman suggested she call Donald Brydon (Roya! Mail
Chairman) to thank him for the work to date and re-emphasise its
importance to POL.
Virginia Holmes informed the Board that she has a meeting with
Donald Brydon. Martin Moran to provide a brief on the mails
opportunities which need Royal Mail support.
Paula Vennells suggested a visit to a Royal Mail mail centre and a
meeting with Nick Landon (MD, Fulfilment & Parcel Strategy) or
Mike Newman (Chief Customer Officer) to enable the Board to
understand the Royal Mail operation and emphasise the importance
of working together on collections and returns.
ACTION:
Chris Day
ACTION:
Martin Moran
ACTION:
Martin Moran
POLB12/46
ACTION:
Martin Moran
ACTION:
Martin Moran
POLB12/47
ACTION:
Nick Kennett
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Post Office Limited — Strictly Confidential
Chris Day highlighted the link in the mails P&L between improving
contribution and moving to variable agents’ pay. The Board
requested a paper on agents’ pay as part of the next Network
Transformation update, to include an explanation on how agents’
pay is made up, the effect of current plans and what future options
might exist.
Susannah Storey asked how aggressive competitors were being in
this market. Martin Moran explained that most of the competitors
were starting from a very low base but were seeing rapid growth.
He would include a market share analysis in future presentations.
Virginia Holmes asked if the business had learned from other
countries’ experiences. Martin Moran assured her that they had
and would include this analysis in her induction briefing.
FEEDBACK ON BIS FOoG WEEK AND NEXT STEPS
PLUS ORAL UPDATE ON FOoG
The Board noted the update paper and congratulated Martin Moran
and his team on the success of the week. The business now
intends to hold this event on an annual basis. Susannah Storey
also reported good feedback from her Business, Innovations &
Skills (BIS) colleagues. Martin Moran was asked to check that the
BIS address database used by the business was up to date with no
duplications.
Martin Moran updated the Board on the DVLA tender. The Post
Office has been shortlisted and has now submitted a detailed
response to all 16 lots in the tender. The Business now enters into
a competitive dialogue which will last a couple of months, with the
final tender document in July.
Martin Moran offered to take the new Non-Executive Directors
through a Front Office of Government introductory session.
EAGLE UPDATE
Nick Kennett explained that the Eagle negotiations were ongoing
and that the deadline of Tuesday 24” April was unlikely to be
achieved. Some significant areas have already been resolved,
notably in the insurance business, but the termination rights and
portfolio valuation in the event of a ‘distress’ termination and move
to a new provider had still to be agreed.
Nick Kennett asked the Board to note a change to Appendix 4 of
the paper in that the payment to Bank of Ireland at ‘managed
termination’ would probably end up as zero and cannot be ‘less
than zero’ as presented in the paper.
Paula Vennells supported the network commitments in 4.3 of the
paper, but stressed the need to ensure the contract schedules align
to these commitments, as they had been agreed by Kevin Gilliland,
the Network Director.
(d)
ACTION:
Nick Kennett
ACTION: (e)
Nick Kennett
POLB12/48
(a)
(b)
(c)
POLB12/49
(a)
ACTION:
Lesley Sewell
(b)
ACTION:
Paula Vennells
(c)
ACTION:
Paula Vennells
(a)
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Post Office Limited — Strictly Confidential
Nick Kennett asked for a Board sub-committee meeting to be set up
to agree the contract. The meeting would be presented with a
paper highlighting any final areas of difference and would include
advisers from KPMG and Linklaters to give comfort on the valuation
and the legal contract.
The Board agreed that a Sub-Committee (comprising of the
Chairman, Neil McCausland, Paula Vennells and Chris Day) be
formed to agree the final contract, with papers being circulated to
the whole Board.
A letter of consent would also be required from Jane Hoy at the
Shareholder Executive.
MINUTES OF PREVIOUS MEETINGS
The minutes of the meeting of 15"" March 2012 were agreed.
The minutes of the 22"! March 2012 meeting of the Sub-Committee
of the Board were noted.
The minutes of the 23" February 2012 FRES Board were noted.
MATTERS ARISING — Status Report
POLB11/54 (e
Paula Vennells circulated the new Executive Structure.
POLB12/28(b)
Questions were raised about the points covered in the Berkeley
report and the fact that the Board had not received validating
evidence of other organisations where the SI approach had worked.
Paul Vennells would ask Lesley Sewell to update the Board on the
latter. She explained that she had challenged the structure of the
tender to ensure the Business maintained full flexibility to keep
options on structure open but she was confident that Berkeley
supports the SI approach for POL on a medium term basis.
The Chairman asked Paula Vennells to ensure that the new
Strategy Director (who will have responsibility for IT) validate the IT
strategy.
The Board confirmed the decision taken on the SI at the previous
meeting but agreed to convene a meeting to take stock of the
position on IT procurement and strategy.
POLB12/38(a)
Chris Day updated the Board on the three areas of focus for
efficiencies:
ACTION:
Chris Day
ACTION:
Chris Day
ACTION:
Chris Day
POLB12/50
ACTION:
Alwen Lyons
POLB12/51
POLB12/52
ACTION:
Paula Vennells
POLB12/53
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Post Office Limited — Strictly Confidential
e the tactical £15m saving which was already included in
directorate objectives;
« the medium term re-engineering to reduce the cost base
without destabilising the Network Transformation;
* the evidence of value for money for Network Transformation
investment.
Chris Day would return to the Board in July with a paper on
efficiencies and value for money.
Chris Day to present the Business score card and transformation
score card at the May Board.
Chris Day was asked to agree with Will Gibson (ShEx) the areas of
the Business score card to be used for Shareholder reporting.
DIRECTOR APPOINTMENTS
The appointments of Virginia Holmes and Susannah Storey as non-
Executive Directors to the Board were ratified.
The Company Secretary was asked to make the necessary filings
with Companies House,
MANAGING DIRECTOR’S REPORT
The Board noted the Chief Executive’s report.
Olympics
Paula Vennells updated the Board that one of the planning ‘dry run’
days would be 8" or 9" May to align with a request from Transport
for London.
Fujitsu
Paula Vennells reported that she and the chairman had met with
Duncan Tait (CEO) and Rod Vawdry (Vice Chairman) of Fujitsu and
that she had a further follow up meeting on 19" April.
Independence
Paula Vennells emphasised how well the separation from Royal
Mail had gone. The Chairman congratulated all those involved.
HEALTH AND SAFETY UPDATE
The Board noted the Health & Safety Report and the Chairman
asked for an appendix to be added to the report to give more
information about any injuries sustained by staff or agents to enable
the Board to understand the severity of the cases.
FINANCE/PERFORMANCE REPORT
The Board noted the year-end finance report and congratulated the
Business on a strong result.
ACTION:
Chris Day
POLB12/54
POLB12/55
ACTION:
ALL
ACTION:
Alwen Lyons
POLB12/56
POLB12/57
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Post Office Limited — Strictly Confidential
In the absence of a Non-Executive Chair of Audit on the Board,
Chris Day was asked to invite Matthew Lester (Royal Mail CFO) or
Paul Murray (Royal Mail Chair of Audit) to chair the Post Office
Audit, Risk & Compliance Committee which will be necessary to
recommend the Report & Accounts to the full Board.
Chris Day reported that the year-end audit would complete on 19"
April and that no material issues had been raised to date.
VEHICLE TENDER
The proposed award was approved,
ANY OTHER BUSINESS
The Chairman informed the Board that Alasdair Marnoch would be
joining as Chair of Audit from the July Board and that he would be
available for the June Strategy day.
One remaining non-executive director with retail financial services
experience is still to be found and all the directors were invited to
inform the chairman if they knew of anyone who would be
appropriate.
The Chairman reported attending a meeting called by Vince Cable
and Chaired by Lord Green focusing on small and medium
enterprises and driving growth.
Neil McCausland re-emphasised the good year and asked Paula
Vennells to pass on thanks to the business.
The Chairman asked that a contact list of all Board members be
circulated and that Non-Executives let the Company Secretary
know of any meetings on Post Office business. A Board diary
would then be circulated.
NOTING PAPERS
Significant Litigation Report (POLB(12)61) was noted.
Post Office Sealings (POLB(12)62) was noted.
Communication Action Group Minutes (POLB(12)63) were noted.
Berkeley Report on IT & C Transformation (POLB(12)64)} was
noted.
CLOSE
There being no other business, the Chairman closed the meeting.
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