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Post Office Limited ~ Strictly Confidential
POLB 13(13")
POLB 13/97 - 13/115
POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a Board meeting held on 31 October 2013
at Camden High Street Branch, 112-114 Camden High Street, London NW1 ORR.
Present:
Alice Perkins Chairman
Neil McCausland Non-Executive Director
Tim Franklin Non-Executive Director
Virginia Holmes Non-Executive Director
Susannah Storey Non-Executive Director (for items 13/97-13/99)
Paula Vennells Chief Executive Officer
Chris Day Chief Financial Officer
In Attendance:
Alwen Lyons Company Secretary
Sue Barton Strategy Director (items 13/98 & 13/110-13/111)
Nick Beal Head of Network Development (item 13/98 only)
Timothy Warley Camden High Street Branch Manager (items 13/100-13/101)
Andrew Thompson Crown Regional General Manager {items 13/100-13/101)
Sharon Bull Head of Network Finance (item 13/100-13/101)
Tom Moran Crown Transformation Programme Manager (item 13/102 only)
Kevin Seller Head of Government Innovations Programme (item 13/103
only)
Apologies for Absence:
Alasdair Marnoch Non-Executive Director
POLB 13/97 INTRODUCTION
(a) A quorum being present, the Chairman opened the meeting,
welcomed everyone to the Camden High Street Crown Office and
gave Alasdair Marnoch’s apologies for absence.
POLB 13/98 GOVERNMENT FUNDING AND STRATEGIC PLAN
(a) The Board welcomed Sue Barton, Strategy Director, and Nick Beal,
Head of Network Development, to the meeting.
(b) The Board noted the progress report on the Government Funding
and Strategic Plan and discussed the Memorandum of
Understanding (MoU) with the NFSP.
ACTION: (c) Sue Barton updated the Board on the negotiations with the NFSP.
Sue Barton to date. The Board sought assurance that the review mechanism in
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the MoU had the strength required to break the agreement if the
NFSP reneged on the changes required of them. The Board asked
the Business to ensure that the final legal framework agreement
included specific termination rights.
ACTION: Ce —C—“:sSCSCSCiés
General Counsel
ACTION: (e) The Board discussed the merits of the Chairman writing to the
Alice Perkins Secretary of State to explain that Board’s position and it was
agreed that a possible draft would be shared with the Board.
(f) The Board he position the team had negotiated, and
approved the next steps outlined in the paper
(g) Sue Barton and Nick Beal left the meeting.
POLB 13/99 i an
ACTION: (b) I
Alice Perkins 1 :
(c) Susannah Storey left the meeting.
POLB 13/100
(a) I
_ Irrelevant
ACTION:
Sharon Bull
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ACTION: i I
Harry Clarke i I
ACTION: ; I I e e V a Nn
Harry Clarke H '
ACTION: (e)}
Martin George I
POLB 13/101 PRESENTATION BY THE BRANCH MANAGER CAMDEN HIGH
STREET
(a) Timothy Warley gave a presentation on the opportunities and
challenges of running Camden High Street Branch. He explained
his involvement in the changes in the Branch and the challenge of
leading the team. He recognised the changes in the Business since
many of his team had joined and the need to support their
development, but found the performance management tools
available cumbersome. His vision was for the branch to be more
customer-focussed with additional automation, lower staffing levels
and a drive to get rid of paper.
(b) The Board asked what could be done to ensure the right people
leave through redundancy and performance management. The
CEO explained that the current redundancy exercise was voluntary
but that she had starled a piece of visioning work with the CWU to
look at a 2020 Crown Branch and challenge all the staffing
agreements and procedures.
(c) The Board thanked Sharon Bull, Timothy Warley and Andrew
Thompson for their presentation and they left the meeting.
POLB 13/102 INDUSTRIAL RELATIONS UPDATE
(a) Tom Moran joined the meeting and gave an oral update on the
current position regarding Industrial Relations.
(b) He explained that the CWU had cancelled their Royal Mail strike
scheduled for Monday 4" November after an improved offer from
RMG. The Post Office strike was still scheduled to go ahead
although talks still continued. The Business could not afford to
move towards a similar offer to that made by Royal Mail.
(c) Tom Moran explained the two areas of visioning underway with the
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CWU: to find a redundancy solution which exits the right people
from the Business and introduces more effective performance
management; and to trial a new branch mode! outside the existing
staffing arrangements. The Business and CWU would work
together to run a number of offices which had been earmarked as
franchise branches to see if they can be made to breakeven
without a change of ownership.
(d) Tom Moran reported that 18 of the targeted 35 franchise branches
had now been announced and were in consultation with more
announcements expected over the coming weeks.
(e) Tom Moran left the meeting.
POLB 13/103 PROJECT MAYPOLE
(a) Kevin Seller, Head of Government Innovations Programme, joined
the meeting.
(b) The Board:
(i) Noted the progress made to date in developing options for the
future of POca;
(ii) Agreed the proposed approach and noted the key risks and
business interdependencies associated with the Business’
preferred option;
(iii) Noted the income variation against Strategy Plan projections;
and
(iv) Agreed that the proposed approach be delegated to the
Executive Committee with updates being provided to the
Board at regular intervals,
ACTION: (c) The Board asked for a future agenda item on the effect of Universal
Martin George Credit on the Business.
POLB 13/104 CHIEF EXECUTIVE’S REPORT
(a) The Board noted the Chief Executive's report and discussed the
following specific items:
(yr
— Irrelevant I
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ACTION:
Martin George
ACTION:
Nick Kennett
POLB 13/105
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Irrelevant
Irrelevant
@) I
Irrelevant
(f) Project Sparrow
Sir Anthony Hooper has now been appointed as Chairman of the
Horizon Working Group. The Business was working to prepare the
team of people to work on the mediation and case information
necessary as there were likely to be up to 150 cases put to the
Working Party for a decision on whether they progress into the
mediation process.
Irrelevant
(h) Sue Barton
The CEO told the Board that Sue Barton had resigned and would
be leaving the Business. The Board asked the CEO to try to ensure
that Sue Barton remained until the NFSP legal deal was completed.
INTERIM REPORT AND CONDENSED FINANCIAL
STATEMENTS FOR 2013 - 2014
(a) The Board received the draft Interim Report and Condensed
Financial Statements for 2013-2014.
(b) The Board discussed the inclusion of the segmental income report
and pillar commentary in the front half of the interim report. It was
agreed that the CFO and CEO would decide whether or not to
include this analysis after taking input from RMG and ShEx.
(c) The Board:
(i) Approved the approach to Going Concern, and agreed the
Going Concern status for the Company at the half year;
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ACTION:
CFO/CEO
ACTION:
Chairman/CEO/CFO/
Chairman of the ARC
ACTION: CEO/CFO
POLB 13/106
ACTION: CFO
ACTION: CFO
ACTION:
Kevin Gilliland
ACTION: CFO
POLB 13/107
POLB 13/108
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(a)
(b)
(c)
(d)
(e)
1)
(a)
(a)
(ii), Approved the Interim report, confirmed that the interim
financial statements have been prepared in accordance with
IAS34 ‘Interim Financial Reporting’ and delegated
responsibility to CEO and CFO to sign the Statement of
Directors’ Responsibilities on behalf of the Board;
(iii) Agreed to delegate authority for reviewing final amendments
and completing the interim Report on behalf of the Company
to a Sub-Committee, the quorum for which to be comprised of
any three of the Chairman, CEO, CFO and the Chairman of
the ARC; and
(iv) Approved the Letter of Representation to the Auditor, and
authorised CEO or CFO to issue it on behalf of the Board.
FINANCIAL PERFORMANCE UPDATE
The Board received the financial performance update for
September 2013, the 2013-2014 Q2 full year forecast and the
2014-2015 Budget look-ahead.
The CFO explained that the expected recovery in the second half
of the year meant that the EBIT target looked secure, but his
concern was that the revenue and exit rate trajectory for revenue
growth would not be at the level required to hit next year's targets.
The Board asked for a detailed report as part of the financial report
tracking the second half of the year with more detail on costs.
The Board recognised the need to grow the revenue and agreed
that any EBIT upsides should be reinvested on activity which would
drive current year revenue back to the £900m target. The CFO
reported that he had tasked the commercial/sales teams with
closing the gap.
The CFO was asked to include two measures for Network
Conversions on the scorecard showing ‘network conversions’ and
‘contracts signed’.
The Board noted the Network Transformation scorecard and the
income decline for locals and asked for a note to the Board in
November to explain trend.
The CFO explained the £40m budget gap for 2014/15 and the need
to implement the cost reduction activities necessary. A more
detailed budget debate would come to the January Board.
MINUTES OF PREVIOUS MEETINGS AND MATTERS ARISING
The minutes of the Board meeting held on 25 September 2013
were approved for signature by the Chairman.
STATUS REPORT
The Status Report, showing matters outstanding from previous
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Board meetings, was noted.
POLB 13/109 FINANCIAL SERVICES BOARD SUB-COMMITTEE TERMS OF
REFERENCE
(a) The Board approved the draft Terms of Reference for the Financial
Services Board Sub-Committee, but re-emphasised that key FS
decisions and actions would still come to the Board.
(b) The Chairman explained that, after consideration by the
Nominations Committee, it had been agreed that Virginia Holmes
would Chair the sub-committee and that Tim Franklin would be a
member.
(c) I It was proposed that the Bank of Ireland Finance Director be invited
to the sub-committee to present the Capital and Liquidity report.
POLB 13/110 Porritt +
(a)
(b)
ACTION: (c)
Sue Barton
(a)
POLB 13/111 POST OFFICE ADVISORY COUNCIL
(a) The Board received a paper on the establishment of a Post Office
Advisory Council.
(b) The Board reviewed the Terms of Reference for the Post Office
Advisory Council (POAC). It was agreed that:
{i) the Council would be more effective if restricted to around 20
members;
(ii) the Business should consider whether payment of a small fee
for attending a meeting as well as expenses would be
beneficial;
(iii) the Business would review the membership rule of asking a
member to stand down if they missed two meetings; and
(iv) an inaugural dinner and then an annual dinner was preferable
to dinner before each meeting.
(c) The Chairman explained that after consideration by the
Nominations Committee, it had been agreed that Tim Franklin
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would Chair the Post Office Advisory Council and that Neil
McCausiand would be a member.
ACTION: (d) The Board asked Sue Barton and Tim Franklin to agree any
Sue Barton/ changes and finalise the Terms of Reference.
Tim Franklin
(e) The Board:
(i) Approved the Terms of Reference and arrangements for the
establishment of a Post Office Advisory Council, subject to any
changes agreed by Sue Barton and Tim Franklin;
(ii) Agreed a budget allocation of £40K per annum to establish
and run the Council; and
(iii) Agreed that the POAC Chairman work with the Secretariat to
establish to Council, in line with the proposals outlined in the
paper, with the aim of holding a first Council meeting in early
2014.
(f) I Sue Barton left the meeting.
POLB 13/112 ANY OTHER BUSINESS
(a) Authentication of the Post Office Limited Company Seal
The Board approved that the affixing of the company seal may be
authenticated by any one of the following: a current Director of the
Company; the Company Secretary; the Assistant Company
Secretary; the General Counsel; and Piero D'Agostino, Principal
Lawyer.
POLB 13/113 ITEMS FOR NOTING
(a) The Board noted the Significant Litigation report.
(pb) The Board noted the Report on Sealings and resolved that the
affixing of the Common Seal of the Company to the documents set
out against items numbered 1075 to 1085 inclusive in the seal
register was hereby confirmed.
POLB 13/114 NEXT MEETINGS
(a) It was noted that the next Board meeting would be held on 27
November 2013, and that the next Board awayday would be held
on 10-11 June 2014.
POLB 13/115 CLOSE
There being no further business, the meeting was then closed.
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