POLB 17(5")
POLB 17/51 — 17/64
Present:
Tim Parker
Richard Callard
Tim Franklin
Ken McCall
Carla Stent
Paula Vennells
Alisdair Cameron
In Attendance:
Alwen Lyons
Martin Edwards
Nick Kennett
Rob Houghton
Jeff Smyth
Andy Garner
Kevin Gilliland
Lucy Pink
Tom Wechsler
Christian Muir
Apologies for Absence:
POLB 17/51
POLB 17/52
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POST OFFICE LIMITED
(Company no. 2154540)
(the ‘Company’)
Minutes of a meeting of the BOARD
held at 9.30am on Tuesday 25" July 2017
at 20 Finsbury Street, London EC2Y 9AQ
Chairman (TP)
Non-Executive Director (RC) (Excluding minutes 17/51 and 17/52)
Non-Executive Director (TF)
Senior Independent Director (KM)
Non-Executive Director (CS)
Group Chief Executive (CEO)
Chief Financial and Operations Officer (CFOO)
Company Secretary (CoSec)
Group Strategy Director (ME) (Minutes 17/52 and 17/59)
Chief Executive Financial Services and Telecommunications (NK)
(Minutes 17/57 and 17/58)
Group Chief Information Officer (RH) (Minute 17/59)
CIO FS&T (JS) (Minute 17/59)
CIO Retail (AG) (Minute 17/59)
Chief Executive Retail (KG) (Minutes 17/60 and 17/61)
Product Manager - Mails & Retail (LP) (Minute 17/60)
Government and Payment Services Director (TW) (Minute 17/61)
Client Director, Commercial (CM) (Minute 17/61)
Virginia Holmes Non-Executive Director (VH)
INTRODUCTION
(a)
A quorum being present, the Chairman opened the meeting.
FUNDING UPDATE
(a)
(b)
(c)
The Chairman welcomed ME to the meeting.
ME provided a verbal update on the funding negotiations and
the likely timetable for a response from the Shareholder.
The CFOO explained that once the detail of the funding was
known a cash flow forecast would be produced to prove
sustainability, at which point the Annual Report and Accounts
(ARA) could be finalised with the External Auditors including a
subsequent events review. If a letter was received before the
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summer recess the ARA could be presented at an ARC in I
ACTION: CoSec September, although an additional meeting might be
needed.
(d) ME explained that work was already underway on the
Government's State Aid Submission.
(e) The format of the funding and the ongoing governance was also
under discussion with the Shareholder. The Board stressed the
importance that the Shareholder recognise and protect the
independence of the Board and challenged the need for
additional governance beyond that already incorporated in the
Articles of Association.
(f) The Board thanked ME for his work to date and noted the
funding update.
(9) ME left the meeting.
POLB 17/53 CONFLICTS OF INTEREST
(a) RC joined the meeting.
(b) The Directors declared that they had no conflicts of interest in
the matters to be considered at the meeting in accordance with
the requirements of section 177 of the Companies Act 2006 and I
the Company's Articles of Association.
POLB 17/54 MINUTES OF THE PREVIOUS BOARD MEETING INCLUDING
STATUS REPORT
(a) The minutes of the Board meeting held on 25" May 2017 were
approved and the Chairman was authorised to sign them as a
true record. I
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(b) The actions status report was noted as accurate. The Board
ACTION: CoSec asked the Company Secretary to ensure that Identity
Services and IT Strategy were included on the September
agenda.
(c) The Board noted the paper on Health and Safety Directors’
duties and recognised that the paper covered the duties to
employees I
ACTION: Jane (d) The Board asked for a separate paper setting out any
MacLeod Directors’ duties which apply to agents.
POLB 17/55 CEO REPORT
(a) The CEO introduced her report, focussing on the following key
points. I
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Financial Performance Period 3
(b) The CEO reported that the financial performance was on track.
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Awards and External Recognition
(c) The Business had received a number of awards and recognition
over the last month. The CEO highlighted the change in attitude
and positive report from Citizen’s Advice. The report covered
the effect of Network Transformation and the value of the Post
Office to consumers and small businesses.
Branch Numbers and Technology Transformation
(e) The CEO recognised the adverse trend in branch numbers and
explained that the work underway to tighten up the cash in the
network including an increase in the number of risk based audits
had identified a few large losses and meant some branch
closures.
The CFOO believed that the work underway might find more
losses in the short term but would mean reducing the risk for the
future. The roll out if new kit in the Network was an opportunity
to audit 10% of the branches during the work. The very limited
number of audits to date had not highlighted any systemic
issues.
The announcement on new white space branches would be
made this week which would help to increase branch numbers
especially in urban areas. I
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(g)
The Chairman thanked the CEO for her report. The Board noted
(h) the report from the CEO.
POLB 17/56 FINANCIAL REPORT
(a) The CFOO presented the financial performance report for June
2017.
(b) The cash report comparing the June performance with March
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2017 was presented in the same format produced for the Board
away day, and showed a deterioration in headroom. However
the headroom remained £166m above target. The main change
had been an increase in cash in transit awaiting processing at
cash centres caused by higher inflows, work is underway to
reduce the balance be deploying additional resource.
(c) The Board asked about the renegotiation of the security rules.
The CFOO explained that discussion with Santander might
produce some helpful changes.
(d) The Board discussed agent's debt and challenged why small
branches were allowed to accumulate large amounts of cash. I
The CFOO explained that this was a complex issue reflecting I
inadequacies in systems and MI, compounded by the lack of
prosecutions and the drive to ensure trading at all branches
versus the impact of a few criminals. Work was underway to
improve the situation but would some of the solutions would
take longer to implement.
(e) The CEO explained that the decision not to prosecute agents if
they could use the Horizon system as a defence would be
reconsidered once Deloitte had completed their work on
Horizon and could be used in court as an expert witness.
(f) The Board asked that the lessons learned on agent’s
ACTION: CFOO losses, including recruitment processes, be presented at
the ARC.
(g) The Board noted that Capital investment was £3.6m behind
target and asked if the Business had the capacity to deliver the
planned investment. The CEO recognised the scale of the
investment and assured the Board that programmes would only
be implemented if the pilots were successful, and this had
slowed some of the investment.
(h) The CFOO recognised the capacity issue and explained that by
September the Executive and the Board would have some
critical choices to make on the investment for the rest of the
year.
(i) The Board noted the financial performance report.
POLB 17/57
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Irrelevant I
POLB 17/58 Irrelevant
ACTIONL NK
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POLB 17/59
POLB 17/60
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Irrelevan
Irrelevan
POLB 17/61 POST OFFICE CARD ACCOUNT (POca)
(a)
(b)
(c)
(a)
ACTION: CFOO
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The Chairman welcomed TW and CM to the meeting.
KG reminded the Board of the position presented at the March
2017 Board meeting with a loss of £17.8m for POca in the 5 year
plan. However recent negotiations look as if they will deliver a
saving of £24m to 2021.
The Board discussed the LIBOR position and the consideration
being given to a 3 year interest rate SWAP. RC was unsure how
the Shareholder would respond to the proposed SWAP. The
CFOO reminded the Board that the Business already uses
hedging for FOREX and fuel, and that there was no governance
requirement to obtain Shareholder approval.
The CFOO stressed that no decision on the use of SWAPs
would be taken without approval by the ARC, and offered to
take the Shareholder through the rationale if it would be
helpful.
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(e) The Board delegated authority to the Group CEO to sign a new i
contract with DXC and to authorise the Group CFOO, following I
ARC approval, to execute an interest rate swap if considered I
advantageous. I
(f) The Board thanked KG and the team for the improvements they
had negotiated.
(g) I KG, TW and CM left the meeting.
POLB 17/62 RESIGNATION AND APPOINTMENT OF THE COMPANY
SECRETARY
(a) The Secretary presented the report.
(b) The Board noted with regret the resignation of Alwen Lyons as
Post Office Company Secretary effective from 30 August 2017.
(c) The Board appointed Jane MacLeod as Post Office Company
Secretary with effect from 31 August 2017 and authorised Alwen
Lyons to make the appropriate filings at Companies House.
POLB 17/63 ITEMS FOR NOTING
Pensions Plan
(a) The Board noted the trustee proposal.
Register of Sealings
(b) The Directors resolved that the affixing of the Common Seal of
the Company to documents numbered 1522 to 1543 inclusive in
the seal register was confirmed.
Irrelevant
(c)
The CFOO reported that Post Office had four properties
categorised as high rise which were covered in cladding,
including Finsbury Dials. Samples of the cladding at all four
properties has been sent for testing.
Meeting Dates and Forward Agenda for September 2017
(d) The Board noted the future meeting dates and proposed forward
agenda.
POLB 17/64 ANY OTHER BUSINESS
(a) There being no further business the Chairman closed the
meeting.
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Chairman Date
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