Post Office Limited — Strictly Confidential
POLB 14(1*)
POLB 14/1-14/14
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POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a Board meeting held on 21 January 2014
at 148 Old Street, London EC1V 9HQ
Present:
Alice Perkins Chairman
Neil McCausland Non-Executive Director
Tim Franklin Non-Executive Director
Virginia Holmes
Alasdair Marnoch
Susannah Storey
Paula Vennells
Chris Day
In Attendance:
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive
Chief Financial Officer
Alwen Lyons Company Secretary
Sue Barton Strategy Director (items 14/2-14/3)
Martin George Commercial Director (item 14/2-14/6)
Paul Brown Head of Commercial Development (item 14/4)
Sarah Hall Head of Financial Control and Compliance (items 14/4-14/6)
Fay Healey Chief HR Officer (item 14/8)
Mark Davies Communications Director (item 14/8)
Kevin Gilliland Network & Sales Director (item 14/8-14/9)
Tom Moran Head of Industrial Relations and Network Strategy (item 14/9)
POLB 14/1 INTRODUCTION
(a) A quorum being present, the Chairman opened the meeting and
welcomed Sue Barton, Strategy Director and Martin George,
Commercial Director.
POLB 14/2 2013/20 STRATEGIC PLAN
(a)
(b)
(c)
The Board received a report outlining the Strategic Commitments and
Outcomes in relation to the 2013/20 Strategic Plan.
Sue Barton explained that the Business would monitor progress
against the plan at the Transformation Board chaired by the CEO and
provide a report highlighting the progress and any risks to the plan to
be reviewed at each Board meeting.
The Board asked that the Network Transformation (NT) targets be
shown as target and stretch and not best and worst case. Sue Barton
clarified that the funding agreement included Network Transformation
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target ranges which would be discussed with BiS at the end of
February, after the Sub Postmasters’ surveys were competed.
ACTION: CFO (d) The Board asked for further discussion on NT targets at the February
Board.
ACTION: CoSec (e) The Board noted the key strategic commitments as set out in the
paper and agreed that these should be used by Company Secretary to
drive the agenda and papers for future Board meetings.
POLB 14/3 BUSINESS TRANSFORMATION
(a) The Board discussed the Business Transformation and the work being
undertaken by Alsbridge who are scheduled to present to the
February Board. The Board agreed that the initial design phase,
including defining the operating model, was crucial and supported the
appointment of an experienced interim to drive the transformation from
ACTION: CEO within the Business. Tim Franklin and Alasdair Marnoch offered their
support to find the right individual.
ACTION: CFO/ (b) The Board asked for clarity on the Business Transformation
Sue Barton objectives, milestones and timeline, including the impact of public
procurement, for discussion at the next Board meeting.
(c) The Chairman thanked Sue Barton for her work as Strategy Director
and specifically for leading the 2013/20 strategy development and
funding negotiations. The Board looked forward to her return next
year. Sue Barton thanked the Board for their support and left the
meeting.
POLB 14/4 TRADING PERFORMANCE
(a) The Board asked the Business to analyse its products by contribution
and to recommend to the Board a list of products which would be
ACTION: CFO deprioritised for the next 18 months, so providing opportunities to
reduced costs and focus on the areas of greatest return.
(b) Paul Brown, Head of Commercial Development, and Sarah Hall, Head
of Financial Control and Compliance, joined the meeting.
(c) Martin George explained the new role of Head of Commercial
Development and the longer term perspective this brought to the
Business. He emphasised the changes being made to align the
commercial team’s resource with the product areas with greatest
opportunity and the focus on mails and financial services to support
the strategic plan.
(d) Paul Brown acknowledged the gap in the mails income in 2013/14
driven by Royal Mails price increases but reported that the recovery
plan was working and that he was confident in hitting the mails
forecast. He explained the new partnership approach being developed
with Royal Mail with new monthly meetings at a senior level and a
desire to share business plans, promotions and targets.
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(e) The Board discussed the Collections and Returns market and the
need to move with pace and sign up new contracts. Paul Brown
accepted that new retailers had taken longer than he would have liked
to sign contracts for the service. Several were now in the pipeline for
launch in the first quarter of 2014/15. He explained that the Business
were involved in Royal Mail's negotiations with potential clients and
with over 4000 branches now offering longer opening hours we were
in a strong position to sell the product.
(f) The Board asked the Business to focus on the Collections and
ACTION: Returns market with pace and vigour. A small increase in this market
Paul Brown share would lead to a material increase in revenue. Collections and
Returns had been identified during the separation negotiations with
Royal Mail as a significant opportunity which remained to be exploited.
In particular the Board asked the Business to work with Royal Mail to
strengthen the promotional material; develop the links into retailers’
websites; and improve the return labels sent to customers to ensure
that the Post Office option is more visible.
(g) The Board noted
(i) the impact of market changes and recovery actions on 2013/14
net revenue; and
(ii) the progress being made in arriving at a revenue target for
2014/15 which maintains the integrity of the strategic plan.
(h) Paul Brown left the meeting.
POLB 14/5 2014/15 BUDGET
(a) The Board received an update on the preparation of the 2014/15
budget.
(b) The CFO emphasised that the budget numbers aligned with the
Strategic Plan and gave the right growth trajectory for the future with
the exception of Government Services.
(c) The Board asked the CFO to consider ways to retain the contingency
at £15 million and hold the EBIT number to that in the Strategic plan.
(d) The CFO stressed that the budget already included £34m of cost
reductions but that the required new investment made it difficult to find
the additional contingency he would like. The Board asked the
Business to consider more radical cost reduction options and the
discipline of ensuring that any additional costs were always offset by
additional savings. The CEO agreed that the Business needed to look
again for a single quick solution which would deliver a cost
contingency.
(e) The income numbers in the budget were discussed and the Business
ACTION: FS was asked to accelerate work on Financial Services and set higher
Sub Committee targets for this area. The Financial Services Board Sub Committee
agreed to explore this further at their next meeting. A challenge was
also raised to test if there was further opportunity in the Mails area.
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The CFO stressed the importance of the Business delivering income
growth to achieve the budget and EBITDAS.
(f) The Board discussed the Crown P&L and the breakeven target for
ACTION: CFO March 2015. It was noted that the budget would probably result in a
full year Crown loss but that the exit run-rate should be at break even.
This will be clear in the final budget presentation used for both the
Board and BIS to ensure that there is common understanding of the
position and the precise definition of ‘break even’.
(g) The Chairman emphasised the political importance of delivering the
agreed plan next year as this would give confidence to any new
government that the Post Office could be trusted to deliver its strategy
and funding agreement.
ACTION: CFO (h) The Board discussed the risks highlighted in the paper and asked the
CFO to cover the mitigation for each risk in the Budget book.
(i) I The Board:-
(i) Noted that the budget aligned to the Strategic Plan;
ACTION: CFO (ii) Agreed that the CFO would produce and circulate, in
approximately 4 weeks, a Budget Book taking into account the
discussions at the Board;
ACTION: CoSec (iii) A conference call would be offered to those Board members
who wished to discuss the Budget Book further; and
(iv) Noted that Final Board budget approval will be sought in March
2014.
(j) I Martin George and Sarah Hall left the meeting.
POLB 14/6 FINANCIAL PERFORMANCE UPDATE
(a) The Board received a financial performance update for December
2013. They appreciated the new cost management update and asked
ACTION: CFO for this to continue with a forward looking narrative as well as the
retrospective overview from the CFO.
(b) The CFO explained the effect of the Industrial Action on the Business
Scorecard and annual bonuses.
POLB 14/7 CHIEF EXECUTIVE’S REPORT
(a) The Board noted the Chief Executive's report and discussed the
following specific items:
ACTION: Kevin
Gilliland! Chris
Aujard
(c) The CEO and Chairman were asked to consider whether Board
members who had not visited India should visit.
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ACTION: CEO (d) The CEO was asked to circulate an update on the position on paying
rates for ATMs
(e) The Board discussed the digital and multi-channel programme and
ACTION: agreed that it should be considered as part of the Business
Martin George Transformation. The CEO suggested that the new Head of Digital
present at a future Board meeting.
(f) The CEO explained that Sparrow was taking longer than we had
originally expected but that cases should start to go into mediation in
March. The Chairman hoped for a clearer picture by the summer but
was reassured that Sir Anthony Hooper's governance of the process
would give the Business the best hope for closure.
ACTION: The Board asked if the Terms of Reference agreed with 2" Sight
Chris Aujard precluded them from working with claimants against the Post Office.
(g) The Board agreed that the February ARC would consider an update
ACTION: Alasdair on Sparrow including lessons learned along with the Prosecuting
Marnoch/ CoSec Authority paper. Papers for this ARC would be circulated to the full
Board, and an update on Project Sparrow would then be presented at
the full Board in February.
POLB 14/8 SUBPOSTMASTER ENGAGEMENT METRICS
(a) Fay Healey Chief HR Officer, Mark Davies, Communications Director,
and Kevin Gilliland, Network Director, joined the meeting.
(b) Fay Healey updated the Board on the subpostmaster engagement
measure, the survey results and the work already underway to
improve the engagement.
(c) Mark Davies updated the Board on the segmented approach to
communications to ensure subpostmasters get relevant information for
their branches. He acknowledged that the most challenging aspect
was how to organise face to face communications with such a
geographically spread network, but it was still his aim to reach as
many people as possible through sales events and workshops.
ACTION: (d) The Board asked the Business to try to benchmark the response rate
Fay Healey with other organisation’s surveys and to consider setting a target for
responses rate.
(e) The Board were concerned that the survey showed that
subpostmasters were reticent to recommend products and asked if we
could do more internal product promotions. Fay Healey explained that
she was already working with Nick Kennett, Financial Services
Director, and Martin George, Commercial Director, to strengthen the
colleague offers.
(f) The Board
(i) Thanked the business for the work to date;
(ii) Noted the survey results and the work underway to increase
subpostmaster engagement; and
(iii) I Agreed the metric of subpostmaster engagement as a suitable
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measure for inclusion in the scorecard for 2014/15.
(g) Fay Healey and Mark Davies left the meeting.
POLB 14/9 i
(a)
() I
() I
ACTION: @ I
Kevin Gilliland i
(e) I
me
(9)
POLB 14/10 MINUTES OF PREVIOUS MEETINGS AND MATTERS ARISING
(a) The minutes of the Board meetings held on 27 November and 4
December 2013 were approved for signature by the
Chairman.
POLB 14/11 STATUS REPORT
(a) The Status Report, showing matters outstanding from previous Board
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meetings, was noted.
POLB 14/12 ITEMS FOR NOTING
(a) The Board noted the planned activities to develop the retail offer,
together with the plans to review the way in which retail was currently
managed by POL.
(b) The Board noted the update on the National Savings & Investments
contract which was due to expire in March 2015. The Board asked the
ACTION: Business to ensure it has considered the impact on customers’
Nick Kennett perception before making the final decision to serve notice on NS&l.
(c) The Board noted the update on UK Cyber Security industry initiatives,
the activities of the Information Security and Assurance Group, and
the risk reduction activities being implemented at Post Office in Cyber
Security,
(d) The Board noted the Significant Litigation report.
(e) The Board noted the Health & Safety report.
(f) 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 1097 to 1117 inclusive in the seal
register was hereby confirmed.
POLB 14/13
(a) I
ACTION: CEO/ H
Tim Franklin H '
ACTION:
Virginia Holmes
POLB14/14 NEXT MEETING
(a) {t was noted that the next Board meeting would be held on 26
February 2014.
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POST OFFICE LIMITED 21 JANUARY 2014 BOARD ACTION LOG
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REFERENCE ACTION BY WHOM
Network Transformation
January 2014 Further discussion on NT targets to come to the February Board. CFO
POLB 14/2(d)
NESP & Trade Association
January 2014 The Business to try and benchmark the response rate to the subpostmaster engagement survey I Fay Healey
POLB 14/8(d) with other organisation's surveys and to consider setting a target for responses rate.
Strategy
January 2014 Key strategic commitments to be used by the Company Secretary to drive the agenda and I CoSec
POLB 14/2(e) papers for future Board meetings.
January 2014 Appoint an experienced interim to drive transformation from within the Business, to be supported I CEO
POLB 14/3(a) by Tim Franklin and Alasdair Marnoch to find the right individual.
January 2014 Clarify Business Transformation Objectives, including the impact of public procurement, for I CFO/Sue Barton
POLB 14/3(b) discussion at the next Board meeting.
January 2014 The Business to analyse its products by contribution and to recommend to the Board a list of I CFO
POLB 14/4(a) products which would be deprioritised for the next 18 months, so providing opportunities to
reduced costs and focus on the areas of greatest return.
January 2014 The Business to focus on the Collections and Returns market with pace and vigour. Paul Brown
POLB 14/4(f)
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January 2014
POLB 14/7(d)
Circulate an update on the position on paying rates for ATMs.
CEO
January 2014
POLB 14/7(e)
The digital and multi-channel programme to be considered as part of the Business
Transformation. The CEO suggested that the new Head of Digital present at a future Board
meeting.
Martin George
January 2014
POLB 14/12(b)
The Business to ensure it has considered the impact on customers’ perception before making
the final decision to serve notice on NS&l.
Nick Kennett
January 2014
POLB 14/13(a)
Agree the agenda for the inaugural Post Office Advisory Council meeting.
CEO/Tim Franklin
January 2014
POLB 14/13(b)
FS Sub Committee to consider whether Gordon Gourlay, MD FRES should be invited to attend.
Virginia Holmes
Project Sparrow & Prosecuting Authority
January 2014 Clarification on whether the Terms of Reference agreed with 2” Sight precluded them from I Chris Aujard
POLB 14/7(f) working with claimants against the Post Office.
January 2014 February ARC to consider an update on Sparrow including lessons learned along with the I Alasdair
POLB 14/7(q) Prosecuting Authority paper. Papers for this ARC to be circulated to the full Board, and an I Marnoch/CoSec
update on Project Sparrow to be presented at the full Board in February.
Finance
January 2014 The Business was asked to accelerate work on Financial Services and set higher targets for this I FS Committee
POLB 14/5(e) area.
January 2014 Ensure that there is common understanding of the position and the precise definition of ‘break I CFO
POLB 14/5(f)
even’ between the Business and BIS via the final budget presentation.
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January 2014 The mitigation for each risk contained in the Budget paper to be included in the Budget Book. CFO
POLB 14/5(h)
January 2014 Produce and circulate a Budget Book in approximately 4 weeks that took into account I CFO
POLB 14/5(i)(ii) discussions that had taken place at the Board.
January 2014 A conference call to be offered to Board members who wished to discuss the Board Book I CoSec
POLB 14/5(i)(iii) further.
January 2014 The cost management update to continue as part of the financial performance update, with a I CFO
POLB 14/6(a)
forward looking narrative as well the retrospective overview.