POL00021508
POL00021508
Post Office Limited — Strictly Confidential
POLB(12)7"
POLB12/71-79
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board of Directors held on 4" July 2012
at the Gatwick Mail Centre, James Watt Way, Crawley, West Sussex RH10 9AA
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
Kevin Gilliland Sales and Network Director
Martin Moran Commercial Director
POLB12/71 NETWORK TRANSFORMATION (NT) UPDATE
Agency Network Transformation
(a) Kevin Gilliland presented an update on NT progress. He reported that 217
new model branches were now live and the business was seeing a good
response to the model from the market and from the Post Office's multiple
partners. He was confident that the target of 1,200 branch conversions
would be achieved this year but there was an ongoing risk if the
programme fost stakeholder support from the NFSP or Consumer Focus,
Kevin Gilliland explained that successful agents from Phase 1 of the
programme were now working with the business as advocates, presenting
at road shows and offering one to one visits with prospective branches.
(b) The Board asked at what point the business would be confident about
hitting the 3 year target. Kevin Gilliland explained this would probably be
in 2013/14 (after the next funding discussions); however, the results for
this year should give some confidence.
(c) The Board requested a quarterly report to understand the transformation
pipeline, showing the number of Postmasters interviewed; number
accepted; number in progress and the number completed against quarterly
targets,
Paula Vennells assured the Board that the Executive Team already
ACTION: monitored the programme at this level and would provide this information
Kevin Gilliland/Chris Day for the Board.
Board Minutes 4 July 2012 Page 1 of 7
(4)
ACTION:
Kevin Gilliland/Chris Day
(e)
(f)
(g)
ACTION: (h)
Kevin Gilliland!
Chris Day
0)
ACTION:
Kevin Gilliland/Chris Day
Board Minutes
Post Office Limited — Strictly Confidential
Alasdair Marnoch asked that a separate value for money NT scorecard be
produced to show the number of branches converted; the investment
made in their transformation and the benefits flowing from that investment.
Crown Transformation
4 July 2012
Irrelevant
POL00021508
POL00021508
Page 2 of 7
POLB12/72
ACTION: Chris Day/
Alasdair Marnoch
ACTION: Chris Day
POLB12/73
Board Minutes
(i)
Post Office Limited — Strictly Confidential
(b)
Irrelevant
(
2
4 July 2012
Page 3 of 7
POL00021508
POL00021508
POL00021508
POL00021508
Post Office Limited — Strictly Confidential
(b)
ACTION: I
Martin Moran/Chris Day i
ACTION: Company ' :
Secretary
(c)
ACTION: Martin Moran
POLB12/74 MINUTES OF THE PREVIOUS MEETING AND MATTERS ARISING
(a) The minutes of the Board meeting held on 23 May 2012 were agreed and
approved for signature by the Chairman subject to the following changes:
POLB12/65:
The Board agreed that the normal period 1 Performance Report would not
be suspended but be replaced by a “light” report. It was also noted that
ACTION: Chris Day specific timescales should be met when reports were requested,
(b) The status report was noted.
Board Minutes 4 July 2012 Page 4 of 7
POL00021508
POL00021508
Post Office Limited — Strictly Confidential
POLB12/42:
The Horizon risk and timeline review including the use of “hot and cold”
back up systems would return to the Board as part of the Horizon update
ACTION: Lesley Sewell in September.
POLB12/75 MINUTES FOR NOTING
{a) The Board noted:
(i) the minutes of a meeting of the Audit, Risk and Compliance Sub-
Committee held on 23 May 2012
(ii) a record of the formal approval of the annual accounts by two
directors on 27 June 2012.
POLB12/76 CHIEF EXECUTIVE’S REPORT
(b) Alasdair Marnoch asked the business to check that the governance
ACTION: arrangements for monitoring performance were agreed and written into the
Nick Kennett / Chris Day contract.
ACTION: Company (c) The actions from the Board Eagle Update would be circulated to the
Secretary Board.
(d) The Board accepted the update and asked for a briefing note confirming
ACTION: Nick Kennett the details, once the wording for the review date had been drafted.
Segregation
(e) Paula Vennells explained that the Business was not achieving the
segregation targets set out in the Mails Distribution Agreement; however,
there were some issues with the testing which were being discussed with
Royal Mail. The risk of missing all the targets in 2013-14 was £6 million
and this would be built into the Risk Register if necessary.
(f) I The Board noted the latest Health and Safety report and the Appendix
showing the most significant recent incidents.
Board Minutes 4 July 2012 Page 5 of 7
POL00021508
POL00021508
Post Office Limited — Strictly Confidential
James Arbuthnot
(g) The Chairman updated the Board on the meeting taking place on 4 July
between James Arbuthnot and 2™! Sight, Forensic Accountants. She
promised to keep them informed.
POLB12/77 FINANCE/PERFORMANCE REVIEW
{a) The Board noted the Period 2 finance and performance update.
({b) Chris Day presented the “flash results” for period 3 which showed net
income £6.1 million favourable to budget and cash flow of £39 million.
{c) The Board discussed the investment expenditure which at period 3 was
£6.5 million above budget. Chris Day assured the Board that this would be
reviewed with each function at their quarterly performance review but that
he did not expect any additional action to have to be taken.
(d) He provided some insight into P3’s results which would be explained in
ACTION: Chris Day more detail at the next Board meeting.
(e) Chris Day recognised the need to report on the Strategic Programmes and
on Business as Usual together, to give the Board a clear view of the
current year's position and its effect on the strategic plan.
ACTION: Chris Day A suggested report would be circulated to the Board for feedback.
POLB12/78 ANY OTHER BUSINESS
Update on Strategy Away Day
caw Irrelevant
Secretary
(b) I
Irrelevant
Board Minutes 4 July 2012 Page 6 of 7
POL00021508
POL00021508
Post Office Limited — Strictly Confidential
‘Irrelevant.
ACTION: Company
Secretary
ACTION: Company
Secretary
POLB12/79 NOTING PAPERS
The Significant Litigation Report (POLB(12)96) was noted.
The Register of Sealings (POLB(12)97) was noted, The Board resolved
that the affixing of the Common Seal of the Company to the documents
set out under numbers 797 to 801 inclusive in the Register of Sealings is
hereby confirmed.
The minutes of the Communication Action Group (POLB(12)98) were
noted,
The latest employee engagement scores (POLB(12)99) were noted.
The amended Crown Loss measure to be included in the Bonus
Scorecard for 2012/43 (POLB(12)100) was noted.
There being no further business, the meeting was then closed.
Board Minutes 4 July 2012 Page 7 of 7
‘GRO