POL00021507
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Post Office Limited — Strictly Confidential
POLB(12)6"
POLB12/58-70
Post Office Limited P
(company no. 2154540)
Minutes of the meeting of the Board of Directors
held at 148 Old Street, London EC1V 9HQ on 23" May 2012
Present:
Alice Perkins Chairman
Neil McCausland Senior Independent Director
Virginia Holmes Non-Executive Director
Alasdair Marnoch Non-Executive Director
Susannah Storey Non-Executive Director
Paula Vennells Chief Executive
Chris Day Chief Financial Officer
In attendance:
Alwen Lyons Company Secretary
Pauline Holroyd HR Director {item POLB12/59)
POLB12/58 APPOINTMENT OF DIRECTOR
{a) The Chairman welcomed Alasdair Marnoch to the Board as a Non-
Executive Director and the Chairman of the Audit, Risk and Compliance
Sub-Committee.
It was resolved that Alasdair Marnoch is appointed a Director of the
Company with immediate effect.
ACTION: {b) IThe Company Secretary was authorised to file form APO1 with
Company Companies House and to notify other regulators of the appointment, as
Secretary required.
POLB12/59 PEOPLE UPDATE
{a) Pauline Holroyd outlined to the Board the capability gap at senior
management level in the business and the lack of ready successors for
ACTION: the Executive Team. She was asked to circulate the current succession
Pauline Holroyd plan.
Paula Vennells pointed out that, although the plan showed no immediate
successors, it did identify emergency cover and “2 years +” successors.
(b) Pauline Holroyd highlighted a proposed new approach to identifying and
developing talent using a bespoke model for rating individuals’ potential.
This would differentiate the Senior Leadership Team (“SLT’- circa 50
people) against performance and potential.
She explained that the SLT would be assessed by their line managers in
July. She expected about 40% to be shown as low potential at that point.
The Board asked if the business could manage if it lost 40% of the SLT.
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Paula Vennells said that the business believed it would need to lose
about 10% and others would respond to the challenge.
Pauline Holroyd was asked, once this exercise was completed, to
circulate a matrix to the Board plotting potential and performance for the
ACTION: SLT. In the meantime, the current draft matrix would be circulated
Pauline Holroyd (without names).
(c) The Chairman suggested that, if the business already knew the low
performers, they should be managing exits and building the potential
model around the people remaining. Paula Vennells explained that this
was already happening in the business. Over 10% of this group had left
last year because of management action. The suggested approach would
sit alongside existing performance management and should help to
improve performance and accelerate exits, as needed. It was agreed that
there was still considerable work to do in this area.
(d) Pauline Holroyd asked the Board to note that this new approach would
mean more recruitment into senior roles, alongside development from
within. The objective would be always to recruit for high potential. As this
might mean a prolonging of the process, the business would need to
ACTION: bring in excellent interim cover. She explained that the business would
Pauline Holroyd/ always be constrained on the salaries it could offer. The intention was to
Company Secretary discuss the reward principles at the first Remuneration Committee.
(e) The Chairman asked the business to ensure that its recruitment and
promotion processes produced a more diverse population. This was a
good opportunity to recruit high potential people and improve the diversity
of the SLT. The Chairman stressed that diversity should be core to the
ACTION: business and her hope would be a very different feel to the SLT in the
Pauline Holroyd next couple of years.
(f) Virginia Holmes raised a concern about the language in the model at
Appendix 1 and would prefer more commercial language in POL's
approach to the ‘Emotional’ category of the potential model, to cover
ACTION: interpersonal skills, self awareness, capacity to self start and emotional
Pauline Holroyd intelligence.
(g) The proposals were duly noted. Pauline Holroyd would come back quickly
to the Board with a note setting out timelines and milestones to deliver the
ACTION: change discussed and return to the Board in September with an update
Pauline Holroyd on implementation.
2012/13 BONUS SCORECARD
Irrelevant
(h)
(i)
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(W)!
Irrelevant
ACTION: W)
Company Secretary H
Irrelevant
ACTION:
Pauline Holroyd
ACTION:
Pauline Holroyd
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POLB12/60 THE ROLE OF THE NON-EXECUTIVE DIRECTOR REPRESENTING
SHEX
(a) Susannah Storey outlined the reasons for representation of ShEx on the
Board of POL. She confirmed that the ShEx representative would have
exactly the same legal responsibilities as the other directors and, like all
members of the Board, would be acting to promote the success of POL.
She clarified that she would not be sharing the Board papers with her
colleagues in ShEx.
The Board discussed possible conflicts. Susannah Storey believed that
the areas of possible conflict should be easy to anticipate, funding being a
good example.
(b) I The Chairman thanked Susannah Storey for clarifying the role of the
director appointed to represent ShEx and asked members of the Board to
flag up any concerns, either at the time of the meeting or to her separately
if they were more comfortable.
POLB12/61 MINUTES OF PREVIOUS MEETING AND MATTERS ARISING
(a) The minutes of the meeting of 18 April 2012 were agreed.
(b) The status report was noted.
(c) The Chairman reported her discussion with Donald Brydon, RMG
Chairman, and the continued emphasis he placed on the joint collections
and returns work. Virginia Holmes reiterated the point as he had also
raised the importance of the issue at their meeting.
POLB12/38
(d) I Chris Day sought clarity over the action point and asked the Board to
accept two action points on efficiencies ~ the first, a commitment to
produce a paper on Value for Money for the Network Transformation
Programme, which he would bring to the Board in July and the second
being a separate paper to come to the September Board meeting
ACTION: highlighting the possible efficiencies in the core costs of the business and
Chris Day what could be delivered over the next three years. This was agreed.
POLB12/28
ACTION:
Lesley Sewell Hl
POLB11/62(c
(f) I Chris Day was asked to clarify what would be covered at the procurement
workshop. The Chairman suggested that it might include the Government
ACTION: approach to public procurement, how POL was caught by the rules, the
Chris Day business's strategy and the major contracts coming up.
(g) The Board asked to be given more notice of forthcoming meetings and
events.
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Paula Vennells explained that a Business Calendar would be produced
ACTION: which would improve planning and enable the Executive Committee to
Company Secretary anticipate Board involvement, allowing greater notice to be given.
POLB12/62 MINUTES FOR NOTING r
(a) The minutes of the meeting of the Sub-Committee of the Board held on
26 April 2012 to discuss Project Eagle were noted.
(b) The minutes of the POFS Board meetings held on 22 and 27 March 2012
and of the General Meeting of POFS held on 27 March 2012 were noted.
(c) The minutes of the FRES Board meeting held on 26 April 2012 were
noted.
POLB12/63 CHIEF EXECUTIVE’S REPORT
(a) The Chief Executive’s report was noted.
ACTION:
Pauline Holroyd '
ACTION: Virginia Holmes asked if POL was getting the right level of legal advice
Susan Crichton/ from Linklaters and if they were working on a fixed fee basis. The
Nick Kennett business should look at the lessons learned from the process.
ACTION: Alasdair Marnoch asked for a summary of the key commercial points and
Nick Kennett it was suggested that Nick Kennett brief Alasdair Marnoch.
Paula Vennells informed the Board that she would contact Des Crowley to
discuss the problem and make him aware that the Board was
disappointed that the issue had arisen at such a late stage. She would
seek his assurance that there were no other surprises likely to emerge.
ACTION: Paula Vennells was also asked to contact the partner at Linklaters to
Paula Vennells review progress.
(d) Paula Vennells reported that she had shared a platform at the NFSP
conference with the Minister. Their reception had been very good which
had enabled her to be quite challenging of their sometimes negative
response
(f) I Susannah Storey asked for an update on the work done to date on
Crown Transformation. It was confirmed that Network Transformation,
including Crowns, would be an agenda item at the next meeting, in July.
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POLB12/64
POLB12/65 “ FINANGE/PERFORMANCE REPORT
(a) The Board noted the Period 1 finance and performance update.
It was agreed that the normal performance report would be suspended in
Period 1 in future, to allow the team to focus on the annual accounts.
(b) I Chris Day explained that aggressive project spend had continued in
Period 1. He would expect this to slow in the following two months.
(c) I Susannah Storey asked if the budget bridge shown in the pack was a
one-off reconciliation and asked for assurance that the budget was now
as agreed by the Board. Chris Day assured her that this was purely a
bridge to get to the agreed budget and would not appear in the pack
again.
(d) Virginia Holmes asked for a more detailed briefing on the data behind the
scorecard. Paula Vennells explained that, for the next Board meeting,
ACTION: both the scorecard and a transformation programme RAG status report
Chris Day would be provided.
ACTION: She asked the Board to let Chris Day know if there were any other areas
Non-executives on which they required more detail.
POLB12/66 ANNUAL REPORT AND ACCOUNTS
(a) Alasdair Matnoch, Chairman of the Audit, Risk and Compliance
sub-committee, presented the draft directors’ report and financial
statements for the financial year ended 25 March 2012.
He reported that the Committee had reviewed the accounts and
preparation of the accounts on a going concern basis and had
received a report from the external auditor. The auditor's
opinion to be issued to the shareholders would be unqualified.
The committee had noted the auditor’s comments on improvements
to internal controls.
Alasdair Marnoch explained that the draft directors’ report in the
Board pack would be amended to ensure that it reflected the
ACTION: changes brought about by separation and provided a more
Chris Day independent commercial view.
(b) The Board accepted the recommendations of the sub-committee
and it was agreed:
(0) that preparation of the accounts on the going concern basis
was appropriate;
(ii) that it was appropriate to state that POL was a going concern
at the full year end and currently;
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(ili) that it was appropriate for the directors of Post Office
Limited to make the undertakings and statements in the
Financial Statements;
(iv) that, in the opinion of each individual director, so far as they
are aware, there was no relevant audit information of which
the auditor was unaware and that each director had taken all
reasonable steps to make themselves aware of any relevant
audit information and to establish that the auditor was aware
of that information;
“{v) that the directors’ report and financial statements for the 52
weeks ended 25 March 2012 be and are hereby approved,
subject to such minor amendments as may be deemed
necessary by any two of Alice Perkins, Paula Vennells and
Chris Day;
(vi) that authority be delegated to Alwen Lyons to sign the
directors’ report and to Chris Day (or, in his absence, Paula
Vennells or Alice Perkins) to sign the balance sheet, each
acting on behalf of the Board;
(vii) that the Letter of Representation to the auditor in the form
presented to the Audit, Risk and Compliance Committee be
and is approved and authority is delegated to Chris Day to sign
it on behalf of the Board of Post Office Limited.
POLB12/67 PENSION TRUSTEE REPRESENTATION
ACTION:
Susan Crichton
POLB12/68 NOTING PAPERS
(a) The Fujitsu Services Review of Horizon Online (POLB(12)76) was noted.
The Mutualisation Update (POLB(12)77) was noted.
(b) The Significant Litigation Report (POLB(12)78) was noted.
(c) The Register of Sealings (POLB(12)79) was noted. The Board resolved
(d) _ that the affixing of the Common Seal of the Company to the documents
set out under numbers 786 to 796 inclusive in the Register of Sealings is
hereby confirmed.
(e) The minutes of the Communication Action Group (POLB(12)80) were
noted.
(f) I The Health and Safety Sub-committee minutes (POLB(12)81) were noted.
ANY OTHER BUSINESS
POLB12/69 (a) The Chairman drew to the Board's attention the Select Committee on
Network Transformation at which Paula Vennells had given evidence.
She congratulated Paula Vennells on the impact she had made and her
handling of the questions from the panel.
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(b) I Paula Vennells and the Chairman updated the Board on the meeting with
James Arbuthnot MP and Oliver Letwin MP, taking them through their
constituency cases which, they believed, had challenged the integrity of
the Horizon system. The meeting had been a success and James
Arbuthnot had now agreed to facilitate another meeting with the other
MPs who also had cases in their constituencies. The business had also
agreed to use a forensic accountant fo investigate the system and give
further comfort to those concerned about these cases.
CLOSE
POLB12/70 There being no further business, the Chairman closed the meeting.
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