POL00021535 - Meeting minutes: minutes of Extraordinary Board meeting held on 15th July 2015
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Post Office Limited — Strictly Confidential
POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a Board meeting held at 9.00am on 15 July 2015
at 20 Finsbury Street, London EC2Y 9AQ
Present:
Alice Perkins
Richard Callard
Alisdair Cameron
Tim Franklin
Virginia Holmes
Alasdair Marnoch
Neit McCausland
Paula Vennells
In Attendance:
Alwen Lyons.
Martin Edwards
David Hussey
Mark Davies
Nick Kennett
Geoff Smyth
Martin George
Kevin Gilliland
Roger Gale
Tom Parkin
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Chairman
Non-Executive Director
Chief Financial Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive
Company Secretary
Head of Strategy and Corporate Planning (minute 15/72)
Business Transformation Director (minute 15/73)
Director, Communications & Corporate Affairs (minute 15/73)
CEO, Post Office Management Services Limited (POMS)
(minute 15/74)
Head of Telecommunication (minute 15/75)
Commercial Director (minute 15/75)
Network Sales Director (minute15/76)
General Manager Crowns (minute 15/76)
Crown Transformation Programme manager (minute 15/76)
INTRODUCTION
(a)
A quorum being present, the Chairman opened the meeting.
CEO’S REPORT
(a)
(b)
The CEO recognised that this Board meeting would be the tast for
Alice Perkins, who was stepping down from her role as Chairman,
and Alasdair Marnoch, who was stepping down from his role as a
NED and Chair of the Audit Committee. She thanked them both on
behalf of herself and the Business for their support, challenge and
hard work during their time with the Post Office.
The CEO introduced her report and focused on the following key
areas:
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Sparrow. The CEO updated the Board on Sparrow and a meeting
taking place between the Minister and some of the MPs involved.
The CEO explained that 40 cases had now disengaged with the
process and that they would be written to with a final date by which
ACTION: they needed to agree to commence mediation. The CCRC were
Company Secretary likely to revert on the criminal cases by December. The Chairman
thanked the CEO for a briefing on Sparrow received for her
meeting with the Minister and asked for it to be circulated to the
Board.
Blast Films. The CEO reported that the three episode series on the
ACTION: Post Office was thought to be starting on 29" July BBC2 at 9pm.
Mark Davies The confirmed schedule would be circulated to the Board. She
explained that Mark Davies had seen two of the episodes and was
unhappy with some issues of accuracy and tone, but was working
with Blast to resolve as many of the areas as possible. The CEO
recognised that areas of the programme would be challenging.
(c)
Having taken all of the discussion issues into account, the Board
noted the CEO's report.
POLB 15/71 FINANCIAL PERFORMANCE UPDATE
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POLB 15/72 IGN OFF - THREE YEAR PLAN
ACTION:
CFO
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ACTION:
CFO/Company
Secretary
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TRANSFORMATION NARRATIVE - VISION
The Chairman welcomed Mark Davies, Director, Communications
& Corporate Affairs and David Hussey, Business Transformation
Director, to the meating.
Mark Davies introduced the Vision and explained the work which
had taken place including the critical role played by the Post Office
Advisory Council (POCA) in developing the final statement. The
Board challenged whether the business could determine whether it
was a ‘force for good’ and ‘unique’ but the CEO explained that the
vision was an internal document and that many people had joined
the business because of these qualities.
David Hussey stressed the importance of communication in
building confidence to deliver the transformation. That was why the
Business had written the transformation narrative and launched it
on the 6" July pointing out that it was 1000 days to March 2018.
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The narrative resonated well with the Board who supported the
proposed approach.
(d) The Board noted the Post Office’s Vision Statement and
transformation narrative, its place within the business’ wider
mission and values infrastructure, and the proposed delivery
approach as presented.
(e) The Board asked Mark Davies about the BBC Blast documentary.
Mark Davies explained that he had only seen 2 of the 3
programmes and had challenged quite a few things in the ones he
had seen. On balance he still thought it was the right things to do,
but acknowledged that although there were a lot of good messages
the Business would find some of the footage difficult.
(f) I Mark Davies and David Hussey left the meeting.
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Irrelevant
ACTION: H i
Geoff Smyth i (
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POLB 15/76 CROWNS STRATEGY
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(a)
(b)
(c)
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The Chairman welcomed Kevin Gilliland, Network Sales Director,
Roger Gale, Crown General Manager and Tom Parkin, Crown
Transformation Programme Manager to the meeting.
The Chairman asked for an update on Network Transformation and
Kevin Gilliland explained that the remaining 1500 branches had
now been sent letters explaining the options available to them
under network transformation, with a deadline of 1 December to
engage with the process. The options offered are to; convert to a
new model; take 26 months compensation (providing the business
can find a replacement ); or lose their fixed pay.
Kevin Gilliland introduced the Crown paper explaining the analysis
that had been undertaken to categorise the Crown branches into
Star Performers, Cash Cows, Strategic Essentials and Problem
Branches. He explained that branches would have an individual
plan to help optimise their contribution to the network.
The Board asked if the Crown P&L. presented in the paper included
the costs for Financial Specialist and Kevin Gilliland assured them
that it did.
The Board discussed the options for the 4 categories of branch and
the attributes of a Crown compared to those of a Main. Kevin
Gilliland explained that the desired end state was to have no
remaining problem branches; to have solutions for those branches
which were strategically essential but currently unprofitable; to
develop the star performers and to consider the best commercial
future for the cash cows.
The Board challenged the logic of converting a cash cow to a
franchise contract and Kevin Gilliland explained that he would
consider franchising a cash cow if its profitability could be
sufficiently improved under the Mains model to generate a
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substantial 3 year payback. He stressed that the importance of
analysing each individual non-strategic branch to decide on the
best return for the Business.
The Board asked if the Business believed that the Financial
Services Specialists (FSS) model could be effective in large Mains
or franchised branches such as WH Smiths. Kevin Gilliland
explained that the further rollout of FS and Mortgage Specialists
had been put on hold until the existing cohort was selling
effectively. The CEO recognised the importance of strong visible
branding for sites offering FS consultation.
Kevin Gilliland stressed his support for the flagship branches and
their importance for the brand and the business, including the
opening of new greenfield sites if the conditions were right. He
emphasised that the flagships needed to cut costs and grow
income especially in FS.
The Board asked how it could best support the programme and it
was agreed that Kevin Gilliland would work with Richard Callard
and ShEx to explore the relationship with Consumer Focus
(Citizens Advise Bureau) to understand the additional costs of their
regulation and how they might be reduced in line with
Government's focus on deregulation.
Having taken all of the relevant issues into account, the Board:
¢ Noted the three-year Crown network strategy as presented;
¢ Noted that the strategy was consistent with the work being
undertaken to assess a potential strategic partnership with
WH Smith.
¢ Noted that the strategy called for up to 66 Crown branches
to be franchised or closed over the next three financial
years and that in the event of closures, remaining customer
demand would instead be serviced through upgrading
existing, or introducing new, agency branches in the
surrounding areas.
« Resolved to accept the recommendation of the Group
Executive to invest up to £52m over the next three financial
years in order to deliver the strategy, under the newly
mobilised Crown Network Development Programme
(CNDP).
Kevin Gilliland acknowledged that this was the Chairman and
Alasdair Marnoch’s last meeting and thanked them for their support
and resolve which had been invaluable in delivering both Network
and Crown Transformation.
Kevin Gilliland, Roger Gale and Tom Parkin left the meeting.
POLB 15/77 MINUTES OF THE PREVIOUS MEETING AND MATTERS ARISING
(a)
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Minutes
The minutes of the Board meeting held on 21 May 2015 and the
extraordinary Board meetings held on 18 June 2015 and 2 July
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2015 were approved for signature by the Chairman.
(b) There were no matters arising.
COMMITTEE MEETING MINUTES FOR NOTING
(a) The Board noted the minutes of the meeting of the Financial
Services Committee held on 11 March 2015, the Pensions
Committee held on 11 March 2015, the Annual Report Sub-
Committee held on 1 July 2015, the Remuneration Committee held
on 13 May 2015 and the Nomination Committee held on 13 May
2015.
STATUS REPORT
(a) The Status Report, showing matters outstanding from previous
Board meetings, was noted.
AWAYDAY ACTIONS REPORT
(a) The away day Actions report was noted.
ITEMS FOR NOTING
(a) The Board noted the Health and Safety report. The Board asked
for a note explaining the reason why body armour was not used by
the Supply Chain.
(b) 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 1311 to 1330 inclusive in the seal
register was hereby confirmed.
ANY OTHER BUSINESS
(a) POAC
Tim Franklin, Chairman of POAC reported that the Council
had met on the 1* July and that there continued to be good
levels of engagement. He thanked Alice Perkins for attending
the meeting and for her reflections on her time as Chairman
and the potential challenges Post Office would face in the
coming years. Tim Franklin explained that the next meeting
in November would be held at Google and invited other
Board member to attend in the future, to that end he
promised to circulate the agenda once it was available.
{b) I BOARD CHANGES
The Chairman updated the Board on the announcement of
Tim Parker as the new Chairman who would take up the role
on 1* October 2015, confirmed her own leaving date as 31%
July 2015 and thanked Neil McCaustand for agreeing to take
on the role in the interim period.
The Chairman reported that Alasdair Marnoch would leave
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the Board on the 31% July 2015 and thanked him for his time
as a Non-Executive Director and Chair of the Audit
Committee.
The Chairman asked the Company Secretary to make the
necessary filing at Companies House to register the
changes.
The Chairman explained that the process was underway to
find the Chair of Audit replacement with the agreed shortlist
being interviewed by Russell Reynolds before Tim Parker
and Virginia Holmes would interview the chosen candidates.
Russell Reynolds were also leading the search for the new
(c) SID.
POMS CHAIR OF AUDIT
The Chairman reported that a preferred candidate, Amanda
Bowe, had been found as a prospective Non-Executive
Director of POMS. The Nomination Committee had satisfied
itself that Ms Bowe was an appropriate candidate and
recommended her appointment,
It was noted that any appointment would require the consent
of the Board pursuant to article 4.3(U) of POMS’ articles of
association.
Having considered the recommendation of the committee,
the Board resolved to grant the consent required for Ms
Bowe's appointment and authorised the Company Secretary
to sign a written consent to that effect on behalf of the Board.
(d) The Board requested sight of Ms Bowe's CV for information.
CIO RESIGNATION
The Board discussed the resignation of Lesley Sewell, ClO,
and the increased risk to the IT transformation. Neil
McCausland explained that this had been discussed at the
Nominations Committee and the Remuneration Committee
and that it had been agreed to bring in and interim CIO to be
in place by the end of the summer.
FORWARD AGENDA TOPICS
(a) The forward agenda to May 2016 was noted and approved, the
Board asked that the cyber security update be provided on a
quarterly basis.
DATE OF THE NEXT MEETING
(a) It was noted that the next Board meeting would be on 22
Septefnber 2015.
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