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Post Office Limited — Strictly Confidential
POLB 16(4*")
POLB 16/26 — 16/36
POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a Board meeting held at 9.00am on 24 May 2016
at 20 Finsbury Street, London EC2Y 9AQ.
Present:
Tim Parker Chairman
Richard Callard Non-Executive Director
Alisdair Cameron Chief Financial Officer (excluding minute POLB 16/30)
Tim Franklin Non-Executive Director
Virginia Holmes Non-Executive Director
Carla Stent Non-Executive Director
Paula Vennells Chief Executive (excluding Minute POLB 16/30)
In Attendance:
Alwen Lyons Company Secretary
Mark Davies Communications Director (Minute POLB 16/29 & POLB 16/32)
Jane MacLeod General Counsel (Minute POLB 16/31)
Andrew Moys Post Office Advisory Council (Minute POLB 16/32)
Nick Kennett Financial Services Director (Minute POLB 16/33 to POLB 16/34)
Steve Ashton Chairman Post Office Management Services (Minute POLB
16/33 to POLB 16/34)
Kevin Gilliland Network and Sales Director (Minute POLB 16/35)
Kevin Seller General Manager Network Transformation and Development
(Minute POLB 16/35)
Apologies:
Ken McCall Senior Independent Director
POLB 16/26 INTRODUCTION
(a) The Chairman noted that a quorum was present and opened the
meeting.
(b) Each Director confirmed that they had no conflicts of interest in
relation to the business to be considered at the meeting.
POLB 16/27 MINUTES OF THE PREVIOUS BOARD AND COMMITTEE MEETINGS
INCLUDING STATUS REPORT
Minutes
(a) The minutes of the meeting of the Board held on 9" February 2016
were approved as accurate records and the Chairman was
authorised to sign them.
(b) The minutes of the meeting of the Board held on 21* March 2016
were approved as accurate records and the Chairman was
authorised to sign them.
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Post Office Limited — Strictly Confidential
(c) The minutes of the Audit, Risk and Compliance Committee meeting
held on 22" January 2016 were noted.
Status Report
(d) POLB 16/02 (g) — The Board noted NFSP Grant Agreement
update. The CEO reported that to date no grant project funding had
been utilised and that any funding would have to be supported by a
business case.
(e) The Board noted the Status Report dated 16"" May 2016.
POLB 16/28 CEO REPORT
CEO Report
(a) The CEO introduced the CEO Report, focusing on the following key
points:
(b) Period 1 results. Good trading results for the start of the year and
reducing costs have delivered above target results for period 1.
(c)
Irrelevant
(d)
(e) NFSP Conference. The CEO thanked the Chairman for attending
the NFSP Conference. The debate and questions had been
challenging but an opportunity to engage with the NFSP delegates.
(f) Horizon outage. Tim Franklin reported that the ARC had received
an update on the Horizon outage and that a full report, including root
cause analysis, was being presented at the September ARC.
(g) The Board noted the CEO report.
Transformation Update
(h) The Board noted the Transformation Update.
POLB 16/29 ANNUAL REPORT AND ACCOUNTS (ARA)
(a) The Chairman welcomed Mark Davies, Communications Director, to
the meeting.
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(b) The CFO introduced the ARA focussing on the following key points:
(c) The Accounts. The numbers in the accounts are almost finalised
with a few revenue procedures to complete. The CFO explained the
approach to capital expenditure impairment which had been
discussed at the ARC and the different treatment for POMS.
(d) Disclosures. As the Company was no longer reporting compliance
with the ‘spirit’ of the UK Code of Corporate Governance, there was
an opportunity for more flexible approach to disclosures in the ARA.
(e) The CFO reported the debate at the ARC and the recommendation
from EY to disclose the Sparrow claim. The Board agreed that the
note on Sparrow, as detailed in the Board paper, should be included
in the ‘contingent liabilities’.
(f) The Board discussed the Directors’ Remuneration Report and the
level of detail to include in the ARA. It was agreed that the report
would include more than the minimum detail required and although
it was unusual to provide the maximum stretch target for bonus
payments, this would be included as it was included in the past.
(g) Timetable. The ARC would be convened at the end of June for final
sign off of the ARA, which would be published in early July.
(h) Taking into account the discussion topics, the Board:
e Noted the Briefing Book.
e Noted the Post Office Annual Report and Financial
Statements.
e Noted the Audit Results Report provided by EY.
e Delegated authority to the Post Office Audit, Risk and
Compliance Committee (ARC) to approve the Annual Report
and Financial Statements
e Delegated authority to the Chairman, the Chief Executive
and the Chief Financial Officer to sign the Annual Report and
the Financial Statements following approval by the ARC.
(i) Mark Davies left the meeting.
POLB 16/30 - _ _ - - 1
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ACTION:
Neil Hayward
POLB 16/31 ITEMS FOR NOTING
(a) The CEO and CFO re-joined the meeting. The Chairman welcomed
Jane MacLeod, General Counsel (GC), to the Meeting.
Sparrow.
(b) The GC introduced the report on Postmaster Litigation and gave a
verbal update on the High Court Claim described in the Noting
paper.
(c) The GC noted that the claim although filed in the High Court, had
not been formally served on the Company and that service must be
effected by 11 August in order to be effective.
(d) The GC noted that a 53 page letter had been received
from Freeths (the solicitors acting for the claimants) and that a
response would be sent during July. Initial review of the letter
suggested that there were no new areas of concern that had not
previously been raised through the Complaint & Mediation Scheme.
(e) The GC advised that it was proposed to continue to instruct Bond
Dickinson, who had detailed knowledge and experience of the
claims and that Tony Robinson QC had been interviewed and
instructed to act also.
(f) The Board noted the pro forma litigation timetable set out in the
paper.
(g) The Board noted the report.
Modern Slavery
(h)
(i) The Board discussed the requirements of the Act and the proposed
statement which would be published on the Company website. The
publication of the statement by September 2016 would ensure
compliance with the Act.
()
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(0) Taking all the discussion points into consideration, the Board
approved the Modern Slavery Transparency Statement 2015-2016.
(k) The GC left the meeting.
Sealings
(I) The Directors resolved that the affixing of the Common Seal of the
Company to the documents numbered 1400 to 1421 inclusive in the
seal register was confirmed.
POLB 16/32
POLB 16/33 Irrelevant
(a) The Chairman welcomed Steve Ashton, Chairman of POMS, and
Nick Kennett, Financial Services Director and CEO of POMS, to the
meeting.
° I I t
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(c)
(d)
(e)
(f)
presented at the June away day.
ACTION: ALL (9) Nick Kennett offered 121 sessions to Board members before
the June away day.
POLB 16/34
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(h) I
0)
(0)
POLB 16/35 DIRECTLY MANAGED NETWORK STRATEGY UPDATE
(a) The Chairman welcomed Kevin Gilliland, Network and Sales
Director, and Kevin Seller, General Manager Network
Transformation and Development, to the meeting.
(b) Kevin Gilliland introduced the Directly Managed (DM) Network
Strategy Update, and explained thai ugh the transformation of
.4he.DM branches had produced urnaround from a loss of
te fit Irrele\ Yer annum, and_ that
‘EBITDAS improvement, the
strategy needed to develop further if the network was to become
cash generative.
{lrreleve
(c) Kevin Gilliland explained that the Business case was predicated on
simplifying the operating model and taking out significant central
costs.
(d) The Board discussed the options for the DM branches and the
investment which would be required to deliver the change.
(e) The CFO recognised that there would be a finite investment pot to
right size the Business and that the directly managed transformation
should be considered alongside other initiatives. Richard Callard
reminded the Board that the Government were not expecting to fund
a further big investment. The CFO noted that the earlier plans
assumed a much higher level of profitable Government revenue.
(f) The Board recognised that significant reduction in the DM network
would cause serious industrial relations issues but the CEO believed
that if this was the agreed strategy it could be delivered.
(g) Kevin Seller acknowledged that there would be areas of the country
where an alternative approach would be required. Large city mails
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branches may require dividing and replacing with automation or
smaller cheaper sites. Urban deprived areas, where there are no
other solutions, may need to be considered as community branches
and require ongoing support.
(h) The Board noted the update, confirmed its appetite for a
transformation programme to further reduce the Directly Managed
network and welcomed a fuller debate at the June away day with a
business case to returning to the Board in September.
(i) Kevin Gilliland and Kevin Seller left the meeting.
POLB 16/36 CLOSE
(a) There being no further business, the Chairman declared the meeting
close.
Chairman Date
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