Present:
Apologies:
In attendance:
POL00027534
POL00027534
EXECUTIVE COMMITTEE
AGENDA
for the meeting to be held on 22 October 2013
in The Hoxton Hotel (The Dining Room)
Chris Day (Chair), Martin Edwards, Mark Davies, Lesley Sewell, Kevin Gilliland, Sue Barton, Fay
Healey, Nick Kennett, Alwen Lyons, Martin George, Susan Crichton, Chris Aujard
Paula Vennells
Kevin Seller, Sarah Hall, Angela Van-Den-Bogerd, Sharon Bull
Start: 09.00
End: 14.45/17.00
Time Item ExCo Sponsor/Presenter
09.00 - 09.30 Project Maypole Martin George/ Kevin Seller
09.30 - 10.30 Financial Performance Update, including Half Year Results, Chris Day/Sarah Hall
and Cost reduction update and Trading Board Update
10.30 - 10.45 BREAK
10.45 -11.15 CTP Implementation - Camden Overview (verbal) Chris Day/Kevin
Gilliland/Sharon Bull
11.15 -11.45 Industrial Relations update (verbal) Kevin Gilliland
11.45-12.15 Strategy and Funding update (verbal) Sue Barton
12.15 -12.45 Horizon update (verbal) Angela Van-Den-Bogerd/
Susan Crichton
12.45 - 13.15 LUNCH
13.15 -13.30 Business User Forum Sue Barton
13.30-14.15 Pre Board noting papers (15mins per item)
e Mutualisation update against timeline Sue Barton
e Post Office Advisory Council Sue Barton
14.15 - 14.30 Actions Log Alwen Lyons
14.30-14.45 AOB
« ATMs and Business Rates (verbal) Nick Kennett
14.45 CLOSE OF MAIN EXCO MEETING
15.00 - 17.00 Subgroup Discussion on Income Target Setting (comprising
Sue Barton, Chris Day, Martin George, Kevin Gilliland, Nick
Kennett, Paul Brown, Sarah Hall and Nick Sambridge)
17.00
CLOSE
POL00027534
POL00027534
Strictly Confidential
POST OFFICE LIMITED
Performance Report
September 2013
Produced By : Financial Control and Compliance Team
For Queries & Comments Contact : Sarah Hall or Kam Bassra
CONFIDENTIAL
Commercially Sensitive and not for onward circulation
This document contains commercially mage in the event of unauthorised disclosure.
it should not be copied o rded in its enti nl ly to internal people who understand the consequences of
disclosur signed a non-disclosure agreement.
t is normally only circulated te th jor Leadership Team and Finance Professionals within the Post Office.
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 1 of 25
POL00027534
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Strictly Confidential &
( Contents )
Headlines 3
Profit & Loss Statement 4
CFO High Level Profit Forecast At Period 6 5
Cashflow Analysis 6
Net Income By Pillar vs Budget 7
Net Income By Pillar vs Prior Year 8
Net Income By Channel 9
Crown Profit & Loss Statement 10
Business Scorecard 11
Metrics To Focus On (ExCo remedial action discussion page) 12
Cost Management Report
Staff Cost By Directorate 14
Non Staff Cost by Directorate & Type 15
Cost Management update 16
Transformation Delivery Heat-map 17
Transformation Board Scorecard 18
Network Transformation Scorecard 19
Project Costs (OpEx) 20
Project Costs (CapEx and Exceptionals) 21
Appendices
Network Transformation Scorecard Metric Definitions/ Rationale 23
Cashflow Statement & Balance Sheet Summary 24
Income By Product Groups & Pillar 25
Ne S
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 2 of 25
Headlines Strictly Confidential
September 2013
(Financials - YTO
~
Profit
Half year YTD operating profit was £53.1m, which was £5.1m favourable to budget of £48.0m, and £7.9m adverse
to prior year of £61.1m,
‘Net Income of £426.2m increased the adverse variance to £18.0m to budget and £16.8m adverse to prior year.
~ Versus budget - driven by Mails (£12.5m adv) and lottery (£3.6m adv). Mails performance continues to be driven
by lower parcel volumes following the RM price changes in April. New parcel formats are being introduced at the
end of October which should reverse this trend. Lottery continues to underperform, although the Health Lottery
was introduced during September, and the Camelot price increase is effective from October.
~ Versus prior year, driven primarily by the stamps buy forward last year and the volume decreases this year as a
consequence of Royal Mail pricing changes. Government Services has also decreased as a result of lower rates
from the new DVLA contract and falling Card Account customers. NS&I income has also fallen as they move their
customers away from POL, partially offset by growth in FS commissions reflecting Eagle impacts.
* Staff costs were £0.8m adverse to budget due to higher bonus payments relating to 2012/13 and some savings
task shortfalls both partly offset by unused pay award budget, and £3.7m adverse to prior year due to higher
pension costs, pay awards and increased headcount.
+ Agents’ costs were £18.9m favourable to budget. £9.9m of this relates to lower sales income, £2.0m relates to
sales mix (parcels), £1.6m relates to WHS provision utilisation and the remainder is made up of smaller variances
including timing and favourable VAT recovery. Year on year there is a £15.4m favourable variance. £9.3m due to
lower sales, predominantly Mails buy forward pre price increase, £2.2m lower fixed pay from unfreezing the Core
Tier Payment and roll out of Locals and £2,7m relating to the DVLA rate accrual.
Non people costs were £1.1m adverse to budget, and £8.2m adverse to prior year. The adverse budget position is
driven by Horizon costs which were budgeted to be taken last year. The prior year variance is due to increased IT
costs mainly Horizon, timing of marketing spend, and the removal of the FX bureau rebate received in H1 last
year.
Interbusiness expenditure was £2.2m lower to budget, driven by lower Official Mail costs and insurance claims and
£1.1m favourable to prior year, due to services switching into POL from RM.
Project costs were £2.4m favourable YTD. The underspend is driven by timing of the Project Eagle sales capability
investment and the movement of Separation costs to exceptionals.
Cashflow
The YTD cashflow was an inflow of £193m which was £21m favourable to the £172m inflow budget (period 5
was £99m favourable),
The £241m favourable variance was driven by delays to NTP expenditure
Crown Profit - YTD
The Crown profit is £1.4m adverse to budget. Income was £2.0m adverse driven primarily by Mails, but offset by
Government Services. Costs are £0.2m favourable and share of JV is £0.4m favourable.
Non financials ~ YTD.
* Queue times in branches (less than 5 minutes) were 83.5% which was 4.6% favourable to target.
* YTD Network conversions were 17 ahead of the 1853 target, (P5 was 9 ahead of target).
FYE
This pack shows the Q1 FYF. Once the Q2 FYF has been signed off, it will be added to this pack in time for P7
\ reporting
Period 6 Performance Pack - Chris Day
S
22nd October 2013
POL00027534
POL00027534
F
e Cumulative EBIT pre exceptionals
80
60
40
20
0 T T T 1
YD ne Sy
SE ETE ESESERMS
Total Net Income - Budget to Actual Bridge
£m
1.0 04
(16.2
(82) a4) 07)
Total Net Income (excl NSP) £m (Bonus) 426.2
Operating profit £m (Bonus) 53.1
Free cashflow £m. 192.9
Crown Profit (Loss) £m (Bonus) (11.9)
Non Financials
Queue time % < 5 minutes - Top 1k branches 83.5%
Network Conversions (Mains & Locals) (Bonus) 1870
Page 3 of 25
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Profit & Loss Statement Strictly Confidential e
September 2013
Current Month Prior Year Period Year to Date Prior Year YTD Full Year Prior Year [Prior Year
£m ‘Actual Budget Variance Actual Variance Actual Budget Variance Actual = VarianceI Fovcast Budget Variance Outturn I Variance
TOTAL GROSS INCOME
Cost of Sales
779
(10.2)
799
(9.4)
24) 778
(8.7)
BOL
(57.4)
‘1007.2
(212.2)
T0122
(212.2)
7,023.6
(124.2)
TOTAL NET INCOME
Staff Costs
Agents Costs
Non-Staff Costs
Interbusiness Expenditure
Depreciation
67.7
(19.8)
(300)
43.9)
(55)
(0.0)
708
(20.6)
(37.4)
(13.9)
(65)
694
(20.2)
(35.2)
(42.0)
(59)
(0.1)
hb
(129.6)
(238.7)
(2.9)
(42.8)
{0.5)
895.0
(257.2)
(478.3)
(2605)
(83.9)
(09)
900.0
(256.1)
(480.0)
(260.0)
(63.9)
(0.9)
902.6
(257.4)
(478.4)
(162.3)
(23.6)
(0.4)
Total Expenditure (pre POOC)
FRES - Share Of Operating Profits
73.4)
37
1692.5)
21.4
(80.8)
315
(80.8)
31.5
(981.8)
34.9
IEBIT Pre Overhead Allocations
Overhead allocations
lOne off Project costs (POC)
5)
(1.0)
2699
a3)
(13.8)
69.2)
(13.8)
75)
(14.9)
(30.0) (35.0)
EBIT - Post
(98.0) (98.0)
Interest
Impairment
Exceptionals & Redundancy & Severance Costs
Government Grant Utilisation
Profit/(Loss) On Asset Sale
Period vs. Budget
Operating profit (EBIT) of £15.2m was £6.6m
favourable to budget.
BAU was £6.0m favourable:
+ Lower staff costs of £0.8m
+ Lower Agents costs of £7.1m mainly due to
reduced income, but also the WHS provision
utilisation of £1.6m and DVLA timing of £1.8m,
and
+ Lower interbusiness costs due to lower Property
charges from RM.
Offset by:
+ Lower income of £3-1m due primarily to the
continuation of the trend in Mails and Retail
One-off variance of £0.7m favourable relates to
the moving of Separation costs to exceptional.
Below EBIT
Impairments were favourable due to slower
progress than plan on NTP. In P6 there was a one
off exceptional credit of £102m (budget ril) that
relates to the recently changed pension terms.
eS
Period 6 Performance Pack - Chris Day
YTD vs. Budget
Operating profit (EBIT) of £53.1m was £5.1m favourable to budget.
BAU variance of £2.7m favourable was mainly due to:
+ Lower agents costs of £18.9m due to; £9.9m of this relates to lower sales income, £2.0m relates
to sales mix (parcels), £1.6m relates to WHS provision utilisation and the remainder is made up
cof smaller variances including timing and favourable VAT recovery,
* Lower IB of £2.2m driven by lower Official Mail and Property costs, and
‘* Higher FRES JV income of €1.2m,
Offset by
+ Lower income of £180, mainly Mails and Lottery,
* Higher staff cost of £0.8m, due to bonus adjustments and some savings task shortfalls both
partly offset by unused pay award budget, and
* Higher non staff costs of €1.m due to Horizon costs which were budgeted to be incurred last
year, but incurred this year.
Project One-off variance of £2.4m favourable. The underspend is driven by timing of Brand spend
and the movement of Separation costs to exceptionals,
Below EBIT
Exceptional costs are favourable mainly due to a £102m credit relating to the charge in pensions
terms. The underlying variance is due to slower pace of capital spend and operating exceptionals,
including agents compensation, compared to budget. Government grant utilisation follows this
trend, but also included utilisation against the remaining 2012/13 exceptional costs. The profit on
200.0 200.0
2.0
6.0)
(167.5)
(284.4)
316.9
6.0)
(167.5)
(284.4)
316.9
YTD vs. Prior Year
Operating profit (EBIT) of £53.1m was £7.9m adverse to prior year.
Like for like adverse variance of £10.8m was mainly due to:
+ Lower net income of £16.8m primarily due to Mails (last year included high stamp sales
in period 1 ahead of the price rise) and reduced DVLA income,
‘Higher staff cost of £3.7m due higher pension costs, pay awards and increased
headcount, and
‘Higher non staff costs of £8.2m due higher IT costs relating to Horizon, phasing of
marketing expenditure and the removal of the FX bureau rebate received last year.
Offset by:
* Lower agents costs of £15.4m; £9.3m due to lower sales, including Mails buy forward
pre price increase, £2.2m lower fixed pay from unfreezing the Core Tier Payment and
roll out of Locals and £2.7m relating to the DVLA rate accrual,
* Lower IB of €1.1m, and
‘* Higher JV income of £0.8m.
Non like for like favourable variance of £2.8m was due to:
+ Lower project costs of £5.8m, and
‘* Lower Network payment of £3.0m.
Below EBIT
2012/13 capital expenditure included £11m property transfers from Group. NT
exceptionals including compensation were ahead of the equivalent pace in 2012/13.
2013/14 grant utilisation includes £30m against 2012/13 exceptional costs not covered
\ sale related to the lease surrender of Midway House )
22nd October 2013,
by the 2012/13 grant.
Ne yy
Page 4 of 25
POL00027534
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. 7 . Strictly Confidential .
CFO High Level Profit Forecast At Period 6
September 2013
£m Income JVIncome Costs NSP EBIT
Bet a ae a a ee]
Downsides
Mails income (24) (24)
Gov't Services income (3) (3)
Telephony income 0 0
FS income 65) (5) Q2 bottom up forecast achieved £105m and a
Other income/ POOC contingency (5) 5 0 contingency will be included of £3m in project
Staff efficiency (2) (2) OpEx to bring the forecast back to £102m.
Fujitsu costs (2) (2)
IT&C efficiency task (3) (3) Trading risks are broadly balanced by VAT
Mails segregation penalty a) ) opportunity and will be monitored monthly.
Bonuses @) @)
Agents pay - sales impact 16 16
NT Locals delays (2) 2)
Agents segregation payments @) @
POOC overspend (3) @)
Non staff savings task (4) ()
[67 0 5 0 G2) ]
Mitigating actions
Mails income - dangerous goods 7 7
Mails income - format changes/campaigns 6 6
Lottery price rise 3 3
Gov't - UKBA Cost of Sales correction 1 1
Govt - volume trends 2 2
FS income - Santander volumes 2 2
FS income - Junction deal 3 3
FRES upside (higher ATV's) 1 1
PhotoMe income 1 1
IT&C savings 3 3
Telephony implementation 2 2
Agents mix and DVLA timing 7 7
POOC 5 5
Agents pay - sales recovery (8) (8)
[25 a 9 0 35 I
= eee ee I
Variance to budget (12) 1 14 0 3
Risks and Opportunities (10) 10
[atest View at 02 (ex contingeng) aa oe oo ao
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 5 of 25
Cashflow Analysis
Strictly Confidential
S
September 2013
r Cashflow
YTD Cashflow ns
cm The YTD cashflow was an inflow of £193m which was £2:1m favourable to the £172m
budgeted. The main variances are:
* Capital expenditure and exceptionals were a combined £54m favourable due to lower
200 than planned NTP and CTP expenditure.
: —a
‘* Working capital is £2m adverse to budget.
(20)
(56) ‘* Client and Network Cash balances are £7m favourable to budget, and profit is £5m
(35) favourable.
(61)
EBTDAS —Ciet Netware Waring Catal Captal —Reduntney Cetfow ore Netware Gat Funding Frweaentow I I There is a payroll variance which reflects to the timing of the BACs payment for staff and
Incanto poids and Si Pyrat agents pay at P6 and will reverse for next months reporting,
( YTD Cashflow Variances ) Full Year
£m Budget
Em 5h [Operating Profit 102.0
Depreciation 09
5 7 an Working Capital (41.2)
@ Client Balances (44.4)
Network Cash 114.6
Dividends (45)
Capital Expenditure (267.5)
Government funding 215.0
: NSP in advance 0.0
ee cite te Tansermaton tment Tega Exceptional Items (298.8)
terse aber Pensions 23
X _) IProceeds from asset sales 0.0
Free cashflow before interest, tax Gre
Network Cash Interest (5.0)
£m Prior Year I__Mar-13 P6 Tax 10.3
P6 Opening I Actual Budget var Free Cashflow 63)
Retail, Cash Centres 557 650 609 606 oe)
Bureau 85 59 82 86 4 Network Cash
Cheques, debit cards 136 J6t 134 135 2 + Network cash variances are small at Pé, reflecting
Network Cash 778 870 825 827 2 good cash management
[Opening [Pe I
Headroom (€m) 8: 883
Period 6 Performance Pack - Chris Day
22nd October 2013
POL00027534
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Page 6 of 25
Net Income By Pillar vs Budget
Strictly Confidential
POL.00027534
POL00027534
September 2013
Period Prior Vear Period Year to Date Prior Year YTD Full Year Prior Year
Net Income (€rm) Actual I Budget I Variance I Actual I Variance I Actual I Budget I Variance I Actual I Variance [01 Forecast } Budget I Variance I Outturn I Variance
Malls & Retail 28 3a7 2a) 28a 05 qea7T_I 1990 I oar I i932 I Gos) 7069 746 7a 7040 29
Financial Services 229 226 03 235 (0.6) 1387 1411 (2.4) 1377 10 2774 2774 (0.0) 279.6 (2.4)
Government Services 96 109 (04) 100 (ox) 597 60.4 (07) 689 3) 1146 1159 43) 1332 I (186)
Telephony 26 35 {0.9) 38 (2.3) 251 241 10 228 23 50.7 504 03 45.0 57
Other 38 31 o7 34 04 199 19.6 O4 203 (0.4) 37.6 426 (5.0) 40.7 (3.4)
TOTAL NET INCOME 67. 70. (3.4) 69.4 (1.4) 426. hhh. (18.0) 462.9 (16.8) 887.2 900. (43.7) 902. (15.2)
FRES - Share Of Operating Profits 38 34 03 37 o1 226 214 12 218 08 315 315 o 319 (0.4)
Mails & Retail Services Financial Services Pillar Performancevs YTD Budget
em
02 tm 20 o7 Mats 6 Retail Services ~ (£16 2m) Ady
Labels - (£4.0m) adv driven by lower parcel volumes since
(1.5) 2) 22 (0.7) the RM price changes in April
: 23) 1 (08) Lottery ~(€3.6m) adv due primarily to lower than planned
en (19) ‘olumes, Camelet pice inerease from October i expected
to reverse this trend
(65) (40) PEW -(£2.7m) adv ~ due to lower volumes vs. budget
international - (€2.3m) adv due to lower volumes
Other Mails - (€3.6m) adv due to unallocated stretch and
lower than planned volumes across the Mail product
range
Financial Services - (€2.4m) Adv
Other - (£4 0m) adv due to unassigned income targets
including Sales Effectiveness stretch target stil to be
allocated to product.
Travel Services - (E1.6m) adv driven by phasing of bureau
2010-14 YTD Spootl Slampe(IsL8 Oter Mas ntematonal” PFW” ~Retald Label teta 2010-14 YTD income,
“guage Ney nscss) sey aise) Nixa!” II 09036 VFO” Eaing "Bx Paymot FEAT” Ramat Tiss Obwr ab. vi I] Payment Services -(€0.8n) at diver by lone oft
Netincome Somens ioce tn Netincome’ II voucher volumes.
‘Budget MoneyGram) Actual ATMs - (£0.7m) adv driven by lower volumes than planned
and delayed rl out of new ATM's
Offset by:
Bill Payment ~ £2.0m fav driven by lower dectine than
Government Services Telephony Services ‘expected, specifically in Housing.
Banking Services ~ £2 2m fav driven by higher personal
withdrawal volumes and higher business banking volumes
PES - £0.7m fav driven by mortgages tral fees partally
em offset by adjustment on creditcard,
1.0 02 ry y ad
02 Sovran (0.7) Ay
; Gov. Services Other -(£1.0m) adv driven by delayed
(07) &m implementation of new id Serves
Motoring (£0.7m) adv due to lwer than planned
(19) ‘volumes in line with latest DVLA forecasts.
Ofeet by
Passport Check Send ~£4.0m fav due to higher volumes.
Telephony Services - £1.0m Fay
Homephone- £1.0m fay due to higher than planned
customer numbers and higher revenue per user.
omer £0.4m Fav
Higher Supply Chain income fr services provided to RM
FRES Profit Share - £1.2m Fa
i ine with atest prof forecast From FRES.
2019-4 YTONet Checkend Send (OSenices “POCA ——«Mtotng—”~=«<OerGort ‘2012-14 YTD Net
(noome Budget income ‘2013-14 YTD Net Income Budget ‘HomPhone/Dus! & trosdbert 2019-14 YTD Net Income Actual
Period 6 Performance Pack - Chris Day
XX
22nd October 2013,
Page 7 of 25
Net Income By Pillar vs Prior Year
September 2013
Strictly Confidential
Period
Prior Year Period
Year to Date
Prior Year YTD.
Full Year
Prior Year
Actual Budget Variance
Net income (Em)
Actual Variance
Actual Budget
Variance } Actual I Variance
01 Forecast
Budget
Variance Outturn Variance
Mails & Reta
Financial Services
Government Services
[Telephony
other
TOTAL NET INCOME
IFRES = Share Of Operating Profits
288
229
96
26
38
677
38
37
226
100
35
34
708
34
Ta
03
(0.4)
(09)
o7
Ga)
03
ae
235
100
38
34
694,
37
05
(06)
(0.4)
43)
04
Te27
1387
597
254
1990
Pree
604
244
199
426.2
22.6
196
hh
21.4
Tea
(24)
(o7)
10
04
(18.0)
12
Te
4377
689
228
203
442.9
218
Gos)
20
(93)
23
(0.4)
(16.8)
08
7069
2774
1166
507
376
387.2
315
Tine
274
1159
504
426
Tar
(oo)
a3)
03
7040
2796
1332 (18.6)
45.0
60) 407
(13.7) 9024
0 319
Mails & Retail Services vs. Prior Year
03) (0.4) (0.9)
(26)
@3)
2012-13 YTD PFW Intemational Retails
Latory
Special Other Mats
Ooi
vary ‘2nd Clase)
Labals (Ist Stamps tet 2013-14 YTD
(49)
‘2nd Class) Net Income
‘tual
£m 404
2012-13
YTD Net
i
Bess
Financial Services vs. Prior Year
o7
07) (4.2)
(45)
BIPayment Payment
(ine Serves
MoneyGram)
Nssi
(4.8)
Banking
2ors14
Servent 4
YTD Net
Ioome
Betis
Government Services vs. Prior Year
£m
09
(0.3)
8.9)
2012-13 YTD Net Check and Send
Income Acta
Other Govt ID Services Poca
(6.3)
Motoring 2019-14 YTD Net
nome Aetal
Period 6 Performance Pack - Chris Day
£m
‘2012-13 YTO Net Income
atu
Telephony Services vs. Prior Year
34
(0.7)
HomePhona/Dual & E Top ups
c
roland Customors
2013-14 YTD Net Income
ata
22nd October 2013
Pillar Performance - Vear on Year Variances
Mails & Retail Services - (€10.5m) Adv
Overall volumes are lower than prior year.
This is largely due to the price increase last year and the
resultant buy forward experienced n period 1
‘ast and 2nd Class (€8.2m) adv ~ driven by price increase
last year. First class labels are lower by £2.9m,
Other Mails (£2,6m) adv - driven by standard parcel
volumes,
PEW £1.9m fav - driven by increased PF 24 & 48
volumes.
Financial Services - £1.0m Fav
PES £10.1m fav ~ driven by savings products and Eagle
impact.
Travel Services £1.2m fav - due to Moneygram.
Offset by:
Banking (£4,6m) adv ~ £2.2m driven by lower DWP
Exceptions and the remainder driven by new Santander
contract,
NS&I (€4.5m) adv ~ driven by NS&I withdrawing products
from POL to sell directly and a fixed fee contract.
Government Services - (E9.3m) Adv
Motoring (£6.8m) adv due to lower priced new contract
and continued volume falls as mgration to online
contrues (c8% Yr on Yr
POCA (E3,9m) adv ~ du to fall in number of accounts
and greater ATM usage
Passports £0.8 fav - due to higher volumes
Telephony Services - £2.3m Fav
Homephone £3.4m fay ~ higher ‘average revenue per
E-Top ups (£0.7m) adv - general volume decrease and
lower pricing
Other ~ (€0.4m) Adv
Supply Chan - mamly related to warehousing on behalf
of Royal Mail
'S Profit Share - £0.8m Fav,
Qe
Page 8 of 25
POL00027534
0100027534
Strictly Confidential
Net Income By Channel
Period 6 YTD - Focus products were £0.6m adverse to target and Standard products were £13.2m adverse (mainly Mails and Lottery),
September 2013 with the Agency network driving the variance. The favourable Direct channel performance is driven by mortgage phasing as targets
started to ramp up from period 4.
£m Month Year to date Full Year
Targeted Income Actual Budget Variance Actual Budget Variance Budget
Focus Products ;
Crown Offices 27 29 18.9 200 (4.0) 390
WHS 05 05 3.6 3.6 01 67
Agents - Managed 5.6 58 38.1 378 03 740
Centrally Supported 34 35 23.0 233 (0.3) 49.6
Direct Sales
Central
0.7
Focus Products Total
Standard Products
Crown Offices
WHS
Agents - Managed
Centrally Supported
Direct Sales
Central
Standard Product Total
Other Income
Cash Services
Gamma
Fixed Income & Other
Retentions
TOTAL POL NET INCOME . (18.0)
100.0 100 00 200.0
TOTAL POL NET INCOME 526.2 544.1 (18.0) 1,100.0
Centrally Supported Net Account Mgd Net Income YTD Crown Offices Net Income Direct Sales Net Income YTD. WHS Net Income
Income YTD (£m) (£m) YTD (£m) (Em) * YTD (£m)
160 60 19 18
140
504
99% 120 101% i g 109% 3
100 95% 6 ‘4 102%
80 30 8 H
93% 60 . 20 I
0 94% 20 om% 3 96% 3 98%
20 I 10 2 2
: 0 0 + ) 1 4
Actual Target Actual Target Actual Target Actual Target Actual Target
Standard Focus % of target. I [ Standard Focus % of target ] [ Standard Focus _% of target ] [[ Standard Focus _ % of target I Slandard Focus % of target
* Both target and actual exclude lead
Period 6 Performance Pack -
Chris Day
22nd October 2013
generation income
POL00027534
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Page 9 of 25
POL00027534
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Crown Profit & Loss Statement Strictly Confidential
September 2013
Period Prior Year Period Year To Date Prior Year YTD Full Year I Prior Year
£m Actual Budget Variance I Actual Variance Actual Budget Variance I Actual Variance Budget Outturn
lmcome and Distributions
Variable income
~ Mails 3.0 34 (04) I 38 (08) 187 206 = (49): I 187 00 43.2 448
~ Financial Services 23 25 (0.2) I 25 (0.2) 149 155 (0.7) I 134 14 29.6 304
~ Government Services 16 14 02 18 (0.2) 109 102-07 107 02 19.9 26.4
~ Telephony 0.0 04 (oo) I 04 (0.0) 04 05 (04) I 06 (0.2) 13 13
Fixed income 19 23 (03) I 28 (08) 120 124 (0.4) I 123 (0.3) 24.8 282
Gamma/ Other 09 1a (0.2) I 05 04 6.0 73 a3) I 40 20 148 109
Renewals and Retentions 15 12 03 09 06 101 8.4 17 29 74 16.5 144
Total income including Gammafother I 112 12.9 (0.6) I spoaga: aE ee a The 20) 626 03 [asoa I 7a5327
Direct Product Costs (0.4) (0.5) 01 (08) (04 a) 82) 02 6.2 O41 (5.0) (83)
Branch costs
- Staff (8.2) (8.2) 0.0 (88) 06 (541) (54.0) (0.0) I 68.3) 42 206.0) I (217.9)
- Property (26) (27) 01 (26) 00 47.4 475) 0a I 474) (02) (35.4) (36.9)
~ Other branch costs (03) (03) 0.0 (04) 04 (2.2) a9) 2) I Bo 09 (4.7) (63)
Infrastructure costs a ? “ a ° 1 F a ° : (20.4) (40.6) 0 1 40.9) 04 (22.9) (22.5)
Allocated central costs (5 (4.4) (4.4) (3.3) (4.1) (8.4) (77)
Ceo sao CHE Te1. (asl aa) 08 Ce Tae [are
IV Share of Profits 01 10 01 6.2 04 57, 09
Statutory PBT. COME Te EEE Ws SoHE COBETESE Tee dee TET i ae
(Sarnmary
+ Income £2.0m less than plan
of the ‘shoebox’.
+ Costs are £0.2m less than plan:
+ Staff savings from industrial action continue to offset delays in CTP savings.
+ Mainly driven by favourable variance in POC as a result of separation costs moving to exceptional spend
+ The impact of size based pricing has adversly impacted Mails as follows: Priority Mails £0.2m, 1st class and 2nd class £0.8m, International Standard £0.5m are products most
impacted by PIP. Retail sales are also underperforming against target by £0.1m. The expectation is that the gap will reduce with the roll out of remedial actions, including the delivery
+ Main drivers of favourable Government income are UKBVI (due to backlog in applications) £0.7m, ID Services £0.4m and Passports £0.2m, offset by Motorist services (DVLA Licences
and AEI) which are £0.3m behind target.
+ Savings £0.6m and Life insurance £0.1m are the main drivers in the shortfall against Financial Services netted off against the Travel portfolio delivering a £0.2 upside
Period 6 Performance Pack - Chris Day
22nd October 2013
Page 10 of 25
Business Scorecard
Strictly Confidential
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September 2013
Key Perf Indi Current Month Year to Date Prior Full Year 2012-13
ey Performance Indicators Act Target Var Act Target Var Year Q1F'cast Target Var Outturn
Growth
Total Net Income (excl NSP) £m (Bonus) 67.7 708 (3.4) I 426.2 442.9 895.0 900.0 902.4
Operating profit £m (Bonus) 15.2 8.5 I 532 61.0 102.0 102.0 94.2
Earnings before ITDA and Subsidy £m* (0.2) (68) I (46.7) (44.5) (97.2) (97.2) (115.4)
Free cashflow £m (03) 375 RR 1029 3116 I (463) (46.3) 132.2
Customer
Customer Satisfaction** 87% 88% 86% 88% 88% 87%
Easy to do business with (Bonus)** 35% 45% N/A 44% 44% N/A
Net Promoter score** (2) (4) N/A 5 5 N/A
Queue time % < 5 minutes - Top 1k branches 88.7% 83.5% 78.9% 81.0% 81.0% 80.7%
Horizon availability 99.9% 99.9% 99.8% 99.7% 99.7% 99.8%
Branch - Compliance (new basket) 95.4% 98.0% 98.1% 98.0% 98.0% 97.8%
People
Engagement Index % (Once a year) (Bonus) 55% 55% 56% 55% 56% 56% 55%
(No.) % of BME appointments over total recruits at senior 20% 11% a N/A a % NVA
leadership and senior manager
(No.) % of Female appointments over total recruits at senior 60% 53% 40% NVA 40% 40% NA
leadership and senior manager
Modernisation
Crown Profit (Loss) £m (Bonus) (1.3) (4.2) (21.9) (10.5) (16.6) (23.0) (23.0) (37.0)
Network Conversions (Mains & Locals) (Bonus) 111 103 1,870 1,853 269 3,000 3,000 1,450
Bonus worthy metrics
* [TDA Interest, Tax, Depreciation, Amortisation
** Monthly = 3 month average. YTD = 12 month average
Period 6 Performance Pack - Chris Day
22nd October 2013
Page 11 of 25
Strictly Confidential
Metrics To Focus On
September 2013
(Key metrics to focus on (YTD below target) this month include:
Net Income: (Paul/ Kevin)
Net income is £18.0m adverse and is driven primarily by Mails income. The Mails variance was driven by ‘(st class labels, Lottery, International
and Parcelforce.
Net Promoter Score: (Paul)
NPS is negative and is believed to be driven by the RMG pricing changes, privatisation and potential strikes.
Engagement Index: (Susan)
The Engagement Index target is 1% greater than prior year outturn. Although this will not be measured againin the same manner until early
2013-14, a Pulse survey has been sent out in October to give an indication of the current score.
Crown Profit (Kevin)
The Crown profit is £1.4m adverse to budget. Income was £2.0m adverse driven primarily by Mails, but offset by Government Services
income. Costs are £0.2m favourable and share from FRES joint venture is £0.4m favourable
~\
Period 6 Performance Pack - Chris Day 22nd October 2013
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Strictly Confidential
Cost Management Report
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 13 of 25
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Staff Cost By Directorate Strictly Confidential
September 2013
lem Year to Date Prior Year YTD Full Year YTD Headcount
Staff Cost by Directorate Actual Budget Variance I Actual Variance Fonest Budget Variance % I Actual Budget —Variance
(Central (incl. MD's office) 3) (ea) G3) I 08) 6) a OF Te 5 1
Commercial (3.7) 3.1) (0.6) (7.4) (74) 0.0 1% 118 444 @
[Communications (1.2) (0.9) (0.2) (2.3) (2.3) 00 1% 47 35 (12)
Human Resources (2.4) (2.4) 0.2 (4.8) (48) (00) ae I 144 110 (4)
HR - Centrally Held Bonus Payments (9.0) (9.0) (04) I G80) (480) 0.0 - - -
Financial Services (a (1.0) (1.3) (4.5) (45) 0.0 ae I 261 70 cc
Finance 69) (4.9) (0.7) I G18) (448) 0.0 3h I 244 264 20
Network (90.8) (94.4) 42 I (785) (1785) (0.0) 86% I 6874 7,476 302
Supply Chain (27.9) (277) (05) I (52) (65.1) 00 20% I 1594 1,574 (20)
Crowns (52.3) (67.4) 50 I (1021) (2021) (00) 54% I 4316 4,462 148
Other Network (10.6) (9.6) (0.3) (21.3) (21.3) 0.0 5% 413 501 88
CTP and NTP Heads (Costs in exceptionals) 7 I 553 639 86
Legal (1.2) O41 (a) (0.0) (2.4) (0.1) 1% 45 30 (25)
Security (13) (0.0) (1.4) 0.0 (27) 0.0 1% 54 57 3
Strategy (7.0) (0.2) (6.4) (0.9) (14.2) O41 3x_I 228 239 14
ae a = Za Tas
PY Actual
PY Variance
Human Resources Staff Cost by Directorate
incl Bonus
% Strategy
B% Finance YTD Staff Costs are £0.8m adverse to budget.
4%
This variance to budget includes higher bonus payments relating to the prior year and a
shortfall against savings risks in Supply Chain and held centrally. this is partly offset by the pay
award budget as no pay award for 2013-14 has been offered at this stage.
Central (incl, MD's
office)
Commercial Vs. Prior Year
The staff costs are £3.7m adverse to prior year including the impact of the higher IAS19
pension rate reflecting market conditions at March 2013, pay increases and higher bonus
incentives costs.
Legal
2
Headcount of 7,999 is 108 below plan and is due to vacancies within the Network directorate,
both Crowns and transformation projects. The adverse variance in Financial Services (FS) is
offset by a favourable variance in Network. This is due to some of the Financial Specialists
transferring from Network to FS. The remainder are due to transfer over the coming months
and once complete the headcount budget will also be transferred.
Vs. prior year headcount has increased by 87 primarily due to NTP and separation
strengthening
‘Communications
1%
Note: The budget is flat for all directorates, with only the Crown savings being the difference
=: between each month.
Period 6 Performance Pack - Chis Day 22nd October 2013 Page 14 of 25
Non Staff Cost by Directorate & Type
Strictly Confidential
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September 2013
lem Year to Date Prior Year YTD Full Year lem Year to Date Year YTD Full Year
INon- Staff Cost by Directorate ‘Actual Budget Variance I Actual VarianceI °* Budget Variance} INon- Staff Cost by Type ‘Actual Budget VarianceI Actual Variance! _°* Budget VarianceI
Forecast Forecast
Central ~ Centraly Held inal , a Tamputers & Telephones wy wa as I eo aa] 59 05) oo
Strengthening Ge 9) 42 I 8) Ga) I 48 38 Other Operating Costs 3) 9} (05) I @9) 05 I tsa) 456 5)
Commercial we =) os I yo I a5) 00 Consultancy, Marketing & Legal Fees “55 447) 8 I azo Gs) I 295) 295) 0)
Communications aa 2) I 7) 8) I 2) 00 * Sills Group external contractors 3 60 09 I Gs Go I a9 Gi9 00
Finance ws 64) = I 62 Ge I G26) 00 Remainder @o @7 o1 I 62 a I 476 G76 (oo
Financial Services es Ga o7 I ean o2 I 63) 00 Finance as a7 op Ie en] a7 72 oo
Human Resources 2s) Ga) os I 9) 6) I a) 00 Property Facilities 63 26 7 I Go 2] 622) 62 00
Network a2) 33) 9) I asa) 0a I 79 (0.00) }} Property Maintenance so 64 on ]ea on] 6) 69) oo
Supply Chain 2) 74 ~~ o2 I 76) 04 I 5.) (0.00) }] Venicies aa) 42) 01 I a2 01 I 24 © ~— 080
Crowns a7 aa = 3) I Gs) on I ed 00 Compensation 7) 42 06 I ©) 02] 26) eR Oo
Other Network 64 46) 8) I GO} (04) I Goa) (0.00) }] Collection, Delivery & Conveyance Charges a) 2 00 I @s 05 I 3) 3) 00
Legal 9) 0% oo I 4 3) I a9 09 Staff & Agent Related Costs & Consumables 03 a7 19 I 04 2] G4 Ga 00
Security a2) 405) ea) I a) oa I 8) 00 * Shils Group off-charges to projects 86 75 10 I si 05 I oo 00 = 00
Programme costs os) oo a I oo a I o 00 Remainder 3 62 09 I 7 on] Ga Ga 00
Strategy 34) 2a) a3) I wos) (25) I (92.2) 8)
tal Non Staff Costs I (83.0) (81.9) (4.1) I (74.8) (8.2) I (160.5) (160.0) (0.5) [Total NonStaff Costs I (83.0) (82.9) (4.4) I (74.8) (8.2) I (460.5) (160.0) (0.5)
Non Staff by Type
Non Staff by Directorate ‘Variance other Operating costs
a YTD non people costs were £1.1m adverse to budget and
™ Financ serves £8.2m adverse to prior year
a Property aitnance
‘ve
Finance France
fy Vs. Budget ee
Network ‘erat Costs were £1.1m adverse to budget and this is driven by
186 Horizor/ Fujitsu costs, which were budgeted forthe prior Pony ae
year, but have been incurred this financial year
omanResouces Comsany Maen
™ Vs. Prior Vear me other
ter Cost were £8.2m adverse to prior year. Ths increase is
* Communications driven by the EX bureau rebate received in previous years, ue
but which ceased from period 6 lat year. The remainder Bs
sateey is due to higher Fujitsu costs this year as outlined inthe computers Telephones tcvon orient
oe explanation vs. budget above, increased marketing costs ‘oe conrgncehae
a there was more POOC one off Brand marketing last
i year, which reduced the normal marketing and increased
me legal costs driven by Separation %
I rmance Pack -
ris Day I
22nd October 2013
* Skils group is the internal ‘consultancy’ providing project resource made up of a
mixture of employees topped up with contractors. If demand is high the contractor
spend increases but this s offset by higher recharges to project.
Page 15 of 25,
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Cost Management update Stiety Confidential “
September 2013
Cost reduction opportunities: Confidence and value FY14/15
Progress since September 2013 Board Paper 50m PP /:
Value and confidence
* Work to firm-up values and implementation plans has resulted in some changes at an 400
individual initiative level 7 —
+ The net impact of these on Value and Confidence is an upward movement in FY13/14 mlow
(€0.4m) and in FY14/15 (0.4m). Confidence has increased for both years. pe ia Med
Medium
Delivery and gavernance £20m
Milestone plans are now in place for the FY13/14 deliverables and progress is on track - 7 / High
FY14/15 initiatives fall into two categories - those that have a defined value attached to them £108
and those that are currently at too early a stage: oe
i. Milestone plans are in place for those initiatives that have a value attached to them. <0
i im +
To allow the teams to focus on delivery of those more advanced propositions. the other
initiatives are being held centrally for work at a later date.
FY13/14 benefits have been built into the latest Q2 Forecast and delivery will be tracked
through normal Business performance Management. FY14/15 initiatives have been build
into the Directorate level budget planning targets.
Sep13. Oct13 Nov13 Dec13 Jani4 Feb14 Mar14 Apri4 May14 Ol-Jun
Cost reduction opportunities: Confidence and value FY13/14
£5m
Enablers
A key decision to be made is how we propose to manage the people implications of the Cost
Management. In the current list of cost reductions for FY14/15, £9m is delivered through staff fam
reductions. A recommendation will be presented to the 12 November ExCo. mlow
£3m
Strategic initiatives for FY15/16 and beyond m Medium
Work is underway within the Directorate teams and Finance to develop the strategic cost © High
m gl
management initiatives that will deliver the goals for FY15/16 and beyond, particularly in the
context of the emerging new Operating model. Potential opportunities are to be submitted by
end November, £im
Sep13 Qct13 Nov13 Dec13 Jan14 Feb 14 Mar14 Apri4 May14 OtJun
£0m
. i anitiati FY14/15 (£m)
overview of high impact initiatives Directorate FTE impact Confidence
L mM 4 Total
~ Procurement savings in Network and Supply Chain Network & 35 35
(£2.6m Facilities Management; £2.0m Fleet Maintenance; £0.5m Official Mails) Supply Chain
- Reduce cash delivery frequency and move to single person operation Supply Chain 50 18 18
- Marketing spend efficiencies Commercial 16 16
~ Reduce cost and volume of Official Mail Finance 10 05 15
~ Restructure product and marketing to reduce duplication and increase customer focus Commercial 8 07 0.7
- Manchester Cash Centre Closure Supply Chain 20 07 07
~ Restructure Audit and Training team in the Agency network Network 20 07 07
= Deliver remainder of Finance Roadmap Programme savings Finance 15 07 07
= Restructure call centres transferring from Royal Mail and improve efficiency Network 20 06 0.6
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 16 of 25
Transformation Delivery Heat-map
September 2013
POL00027534
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Strictly Confidential &
Highlights heatmap status of key transformation programmes, and points of escalation to Transformation Board on selected
projects including resulting Transformation Board action / guidance. Also highlights wider points of discussion / action
‘mation Board (TB}- Key Point
Crown Transformation - Branch transformation is underway with 5 transformed and 13 m progress. 16 WH
Smiths franchises have been announced and are in public consultation. The automation pitot is on track for
November with the printer issue now resolved, but feaving no contingency for further delays. In-year cost
savings expected to be £0.7m below the £8m target. but income shortfalt is the most significant risk to
achieving the crown benefit targets. Anal of the half-year performance and forecast will now inform the i
programme board consideration of next steps.
Nelwork Transformation ~ Planning for implementation of revised approach under new strategy is underway,
pending agreement with NFSP and BIS, in order achieve the scale of conversions required, Contracts signed
so far are stightly ahead of current year target, but at risk for 03 while the strategy negotiations remain
ongoing.
Wave ~ Transformation Board discussed the implicatons of the development of the mobile solution with
Fujitsu stalling (following their commercial position changing and their unwillingness to provide a genuine
managed service). It was agreed that moving away from Fujitsu would not have a detrimental impact on other
negotiations with them. Aiternative delivery options will be presented in November to meet commercial
objectives.
Separation - Analysis is underway to confirm the approaches and target dates for HR, Fmance and tower
related projects (EUC, IT Networks) in the context of latest agreements on approach with Royal Mail, Findings
wilt be presented back senior management of both organisations end of October to agree next steps and any
resulting change in plans. /
Delivery to Baseline Milestones
CD colour of Creole netincts
14 Francia benefits
4» Shaws movement from tant parked
Period 6 Performance Pack - Chris Day
Finance Roadmap ~ A revised go-live date of 4st July 2014 is now agreed with RMG. The FMi project is now
integrated with the core system replacement into a single programme, now moving from Blueprint to Build
‘The decision to move to build was made with the recognition that an element of the spend may be non
recoverable if subsequently a strategic decision to BPO Finance is taken.
HP&BB - Data migration is complete. network migration is on track and billing has cornmenced in smaii
volumes, but there are continuing cali centre performance problems, although no significant increase in
customer churn has been detected. A programmatic approach to resolving the cali centre issues is now in
place and Fujitsu has vestructured its service management team to give better focus on the key areas. 130
additional call centre heads are being deployed and 50 additional back office heads are being deployed. Fujitsu
is also looking at other opportunities to bring in more resource in the short-term. seen performance
improve but it is still poor. The plan provided by Fujitsu should see the customer experience getting to
acceptable levels by the end of October.
22nd October 2013 Page 17 of 25
Transformation Board Scorecard
‘September 2013
‘Stcty Confident
Tamalatve PE Fal Yesr Contbuton
8 Full Year Full Year
I Business Owner I Programme / Project Business Capability Her Actual Target iS a Business Outcomes (in year) Hay ‘Actual I Target A _
é (rae), I Fane trac I Foveee
omc
ister Management
Talim Woble opined ne TaaS_I [rable channel sale grown (rom Sen Tac_[ vet [Tac_[_Tet Sutene Managemen
SI spencer Champan I Digital & Mult Channel Common egal platform inal unebonaly ie ‘pri I I Reduction in running cet (rom 14/15) NA [Wik I WA eS
° Customer Management Strategy implementation for-tt_I I rose calelupeale customer gronth tac_I tec I tec I tec rable to help deliver
Sales targets in 2020
Strategy. Implementation
Trhanced Salesforce (als par FS par wool Es z z Tu z Taser] nar 9
g]_asrerxtaw I loroving Sales Cpabity Fabeced Slcine_Gale pe FS er wee = 3 F—] [ conituton from increased ales, eae alee ‘Under Under” TE3B00R)I £2.200K date tobe rebazsined
5 I oh Wiese and Warkgage Raut MR compliance & addtional sales per HS par month i 25 I 25 I I contnbation fn yer target FLR00K Financial Services
fa OC Launched May 13 May-13-I I numberof account apseatone 3583, Solr capably bene
ST sm witesck I POLO ales capability benfts
3 National Rol Out 2016 TBC TEC numberof acount sales 2500 under rein eurant
5 I Paul Havennand_I Travel eurance (tan) Interalineurance product capably m pace Tua] Juric] [FS revenue growth (nt myasr NAL I NA Ni plans in place. inc
}E I alan Smith IGeneral Spend Card Product ral out oo eb-14_I I contibton fom new product ofa F008 Incentive echeme, FS
‘Alay Smith) Payment Strategy Card holder not present ares launched Now I 02-13 I [contrbuton fromnew product o[~o £3934 rea mgr. & changes to
Teun Ser] Sen oe Tine po We ended es pees ane) Toa Tae] [aaicten Fone ae To ee] Ta
sg I Their Seer I entity Aesurancs Ready to enter IDK mart Wae13 I 02-23 I [coninbuton from new serace of-o 1k Foo6
8 I “kevin Seer —["Stakeolder and Comme: Dsivey Pan [Gow Comma to POCA extension Suneis-I Tae] [uneas I Tec I [wider Use of OVUA Framework 0 Tec I Tac a DRtmigs & ents at
Kin Solar 1 UKBA Product launched ingror year Sole Revenue BUOT] £7 626K [PERSSON £13378 Teeth anceanty of
3 ]_Famon Pree I Smal Busines Cub onine mais) Smal Business online payment and ace mat 1 War-ie_] [ineremental contnbation from online mais a 7] ‘mplernartation
[2 [“tamon Price) Coline and Retums [ul unetionsity ~capacty planing and out a Rous sien Jui] [contrition fom new product [oo F001 005%] Mais
Some re to beefs but
I sereny Wooton I Wave be propastin) Tobie proostion plot bunched Tani] [ contabatan Fam nen produc o a working to mibgate
[erry Woodrow I Home Phone & Broad Gand Migration —I-Sucessfl mgration of customers to Fula Spi Sep-13 I [inerased contribution (ost savings © growth) o 0
Tateahan
(CiStman Footie I marketing [Net Promoter Score ~roling 12 months Ze) Ses T ] HPBB moration
completed. No net
Branch Pancha a SS] — 26] I Coatrcton rom Tanceang 0 FOO benefits n-year, however
5 I Harry clarke I Crown Traneformation Naw Se Senvce machines raed ot o[-0 189 I Stat savings supored by automaton 0 £54 longterm benfte
eo umber of new format branches raed oat oo B97 I 117 I [Cost eduction rom her programme activ 75389 cpt to be achieved
Tonvacts signed Target SESH] 1570] [OOO] F000 I [Average ening time new Tora branches Shay] _0105_ SMe] 5 Wins Markting
ane si Transforaton Programme [Baier open = Plan 1095 3.950] I Customer satisfaction 90% 96k [90% I 90% NPS not recovered fom
=) Net Ennis I Network Transformation Progr ‘versace n opening Fours CCN dip following mais rice
Gon recon sige 22 7 Fi 6a changes
Crown
BS] bow humen loalon Wasa [SSO pace 0s THO. T T ] Ta] [Cestratueton a Franchise benefits look
[E_seetatee [tenon [toners awarded I I J TEC} [ais of eontrasisin tone ooo} cafe outst saing
implementation dl.
ei vilineon I Separation Separaon of business 6 aypteme (eaness by quarter) °° Zo 2) ers Wa I WA] NA] NR NTP
Boater Goodman I Finance Transformation Programme [ct Finance system implemented aa wa I wa I wa I Wa Cost eduction forecast
Peter Godman] Finance Trensformation Prog Process mprovements plemented (umber ag i 5 SI [Hsdeount reduction ‘rac I Tac [eaepRI-E292x loner because of ower
(C1 Beinds Crowe I watuatzaton
[ Pub pupose of PO agreed by BS 6 Board
eee 7 [
evant eae)
XR
Benefits shown as income pending establahment of contribution measure
** Targets to be reset in ine of revised approved business case next month, turning the RAG to Amber
Period 6 Perfomance Pack Cis Day
22nd October 2019
Page 18 of 25
POLo0027534
Povovoz7se
Network Transformation Scorecard
September 2013 Reporting prior months data (ie. one month in arrears)
Strictly Confidential
Sample size is stil small but provides a starting point to build on. All branches in the financial section have been operating for greater than 12 months to allow for
steady state, and branches that had previously received overscale / one off payments have been removed to provide a clean baseline.
Actual S: I
Key Performance Indicators Aetual “Target Ven I ce Commentary
MAINS Mains
Converted >12 months 7
Finance Approved Investment per Mains £000 9) (39) 0 7 Financial performance
Total Income - Overall income for the branches live 12-24 mths have increased
[Total income: Post vs Pre Conversion when compared with the control group, 3 of the branches live between 24-36 are
Branches live 12-24 months 3bt fo 30% 2 also performing better than the control group. 1 is performing better than the
others c. +418 and if this were to be removed the overall impact would by (-78) vs
POL Branches live 24-36 months 3% (he % 5 (-59).
Focus Income; Post vs Pre Conversion Focus income - Product mix has a significant impact on such a small sample.
Cash Withdrawals, Parcelforce 24/48 and and International Standard are
Branches we 12-24 months 38% cad 2 performing well in most of the branches whilst Growth Bonds and E Top ups are
Branches live 24-36 months 1” ei 5 weaker. 1 branch in the 12-24 group is performing stronger than the control
group on travel money and special delivery. Some of the branches in the 24-36
— group appear to be performing weaker in products such as insurance, credit cards
lngant ©) 4) OT Pernuneretion: Pest ve Pre Conversion 38% (7% aad 2 and international priority products. The demographics of the branch will have an
loperator Feedback on Retail Sales Performance 138 o% 4h 35 impact on the result
Agents pay ~ Higher than in the control group, with 1 branche performing well in
[average Increace in Opening Hours oe er 510 travel money and special delivery. Branches in sample receive new Mains pay
Customer rates that are favourable to previous rates.
Customer Satisfaction 98t 90k at 1,723
LOCALS Non financial performance
was Converted » 12 Months \ Customer satisfaction consistently above 90% for both Main and Locals D)
Finance Approved Investment per Local £000 (a4) 0 ty) I
[Total income: Post vs Pre Conversion t) Locals
POL Branches lve 12-26 months (nS no 49 Financial performance
Branches live 24-36 months aa on (ox 5 Income - Branch performance ranges from -40% to +100% so there isn not a
consistent pattern in this population. The Local model assumption was that income
JAnnualised Agents Fixed Pay savings per conversion £000 10 10 o 9 would reduce by c.5% due to the removal or certain products. 17 branches are
performing better than this against products such as lottery.
ICustomer Sessions 12- 24 months 2h (he 5% 47 ‘Agents pay fixed savings - Savings in line with strategic plan target.
Agent Icustomer Sessions 24- 36 months % (ye 7% 5
Non financial performance
Operator Feedback on Retail Sales Performance 128 % 38 81 Customer sessions - Strong performance compared to income. implies greater
footfall but lower value transactions, Further analysis underway.
Cust JAverage Increase in Opening Hours 115% 80% 35% 445 Cutsomer Satisfaction - Jun - Aug 13 Data (Lower average monthly score caused
eT Icustomer Satisfaction oon 90x Py 1453 by 2 local branches. Under investigation with field visits taking place).
988 liye branches within the 1758 contract signed ~ August 2013
0-12 Months (Se 3) 734
Financial targets reflect the equivalent performance of the control group (2899 Mains and 5015 Locals)
Branches with a break in customer session or branches that had previously received overscale payments have been excluded.
Period 6 Performance Pack - Chris Day
22nd October 2013
Page 19 of 25
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Project Costs (OpEx) Strictly Confidential
September 2013
The overall YTD expenditure is lower than budget, but with variances between projects.
(Ope €2.5m under investment >)
fm Current Month Year To date Full Year Current month £0.7m and YTD £2.5m favourable.
POLIC
Directorate Programme Actual Budget. Var Actual Budget. Var_—«I ‘Forecast. «= Budget. Approved to II Brand Marketing
Date £0.5m adverse is offset against the underspend in Customer
[Commercial Brand Marketing oD 00 wa 05) 00 oa 00 0 Engagement net position £0.8m favourable
customer Engagement (0.4) 00 (04) (5) (58) (5.8) (58) oo
Digital & Multi Channel (a4) (0.1) (0.5) (0.3) 2 (0.6) (0.6) (0.5) Customer Engagement
F006 (02) (02) an) (2.0) (20) (23) ae) £1.3m favourable, £0.5m to offset Brand Marketing
Mails (01) (01) (02) (06) ) (0.4) (20) 07) Budget was for 2013-14 activity which has not commenced,
retephony (oa) (02) ta) 22 (33) (a6) (09) but has been used to cover the 2012-13 costs that were
delayed into this year.
Financial Services [Financial Services, (o7) (o7) 27) (3.4) (65) 75) 79
[Communications [Communications (0.0) (0) (0) (05) (07) (o) cr) FO0G
Network & Sales, Network Other (0.0) 00 oD 00 (03) 00 00 £0.4m adverse relating to unbudgeted projects.
Network Transformation 00 00 a0 oo (0.0) 00 a0
Property 02 (0.1) (0.3) (0.3) (0.5) (0.5) {0.3) ‘Supply Chain
Supply Chain (01) 0.0 (0.4) ‘a0 4 (0.7) 00 (0.6) £0.4m adverse relates to the North West Cash centre move,
IT & Change Branch POS 00 00 00 00 00 00 00 where the spend was budgeted as Capex
IT Delivery (0.4) (04) (05) (0.6) (0.6) (a) (07) Corporate Services
Corporate Services __I Corporate Services (03) (02) rm) (0.2) (32) Ga) rr) €1 3m adverse due to the £0.5m Fraud Software analysis
independence & Separation 00 00 00 00 (02) (02) 00 project which had approval spend in 2012~13, but was
Finance Finance (0.0) 00 (03) 00 (03) 00 (2) delivered in 2013-14, and £0.8m other unbudgeted activities
[Strategy independence & Separation (0.0) (0.1) (0.2) (0.3) (0.7) (0.5) 0.0
Centrally Held 08 (03) (02) (3.0) (8.8) 00 Independence & Separation : Now mostly Exceptional
Finance
£0.3m adverse relates to FRP to be transfered to CapEx in P7.
Under Programmed £4.1m
This is to mainly due to £2.8m Independence & Separation cost
transferred to Exceptional.
N S
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Project Costs (CapEx and Exceptionals) Strictly Confidential
September 2013
Both CapEx and Exceptional costs are underspent against budget, driven by NT and CTP.
CapEx m Current Month Year To date Full Year Capex - £28 8m under investment
POLIC
Directorate Programme Actual Budget ——-Var_-«I Actual «= Budget. ~—=Var_—I Forecast © Budget_-Approved to I I Current month £8,7m and YTD £28.8m
Date _ II favourable
Commercial Brand Marketing 00 00 00 00 00 00 00 00 00
Customer Engagement 00 (01) 02 0.0 (0.4) 04 aa) 00 0.0 The favourable variance is mainly driven by
Digital & Multi Channel (0.0) 00 oo) (0.4) 00 (0.4) (13) (16) (0.1) Crown (£5.7m) and Network Transformation
F006 ao =©03 ~©= 7) I a7) Ro 03 28) (4a) 4.2) _ II (€17m) Programmes tracking behind planned
Mails (02) (0.0) (0.2) (05) (02) (0.4) (22) (08) (a7) I} activites
Telephony. 0.0 (0.4) O41 (0.5) (0.1) (0.4) (0.7) (0.2) 0.0 IT Delivery
Financial Services [Financial Services (0.0) (05) 05 (0.0) (19) 19 (54) (67) 5)__II ¢3.1m adverse mainly due to phasing of Risk &
[Communications [Communications 00 00 00 0.0 00 00 00 0 00 Resilience
Network & Sales [Crown Transformation (0:3) (25) 23 18) 75) 57 (305) (36.1) ee
Network Other 00 a0 0.0 00 00 a0 a3) (18) (23) II Property
Network Transformation (2.6) (4.8) 24 (10.6) (27.5) 17.0 (57.4) (50.6) 0.0 £1.7m favourable due to £1.2m of costs
Property (0.4) (0.6) 02 (1.2) (29) 17 (68) (5.4) (2.6) transferred to Crown Transformation,
Supply Chain (0.9) (1.7) os (3.0) (4.4) 13 (11.1) (12.0) (8.2)
IT & Change Branch POS 0.0 (11) a1 00 G4) 34 (46) (88) 0.0 Corporate Services
IT Delivery (07) (20) 1h (98) (68) 3.) (25.7) (17.2) (8.4) £0.4m adverse relating to unbudgeted projects
IT Transformation (0.0) ao (oo) (0.2) 00 (02) (0.2) rd 0.0 Independence & Separation
Corporate Services Corporate Services (0.2) 00 (01) (0.4) 00 (04) (25) 00 (15) I] yrD is £3.2m favourable, this mainly due to a
Independence & Separation (0.4) (2.5) aa (2.3) (5.4) 3.2 (48.4) (29.3) (8.9) combination of projects (E-Business, HR
Finance Finance (0.4) (03) on) (20) (7) 03 G8) 85) 3.4) __ III Systems and IT Towers ) behind schedule
(Centrally Held 00 00 00 0.0 00 00 00 0 00
Old Projects (0.0) 00 00 (05) 00 (05) (4) 05 00
0 9) 7 (167.5) (75.1) —X /
Exceptional Current Month Year To Date Full Year I Exceptional ~ £46 Sm under investment
Directorate Programme Actual Budget. Var] Actual «Budget = Var‘ Forecast’ © Budget Approved tol] Cent month £0.5mm & Year to Date £16.9m
Date favourable
Network Sales [Crown Transformation (6.0) (08) a 7.6) 73) oy I e724 (29.4)
Network Transformation 77) (9.1) 14 (oo) = (545) 139 I (685) = 4287) ~~ 228.7) HT The favourable variance in the month & YTD is
Supply Chain 00 (aa) 11 00 (28) 28 (48) (6.1) a.) mainly driven by Network transformation
I & Change IT Transformation 0) @3) 02 (4.6) (55) 09 9) 450) 80)_I} programme & Supply Chain (North West Cash
Corporate Services _ Iindependence & Separation (07) (03) (0.4) (3.0) (1.4) (19) (61) (02) (3.9) Centre & Supply Chain Strategy) tracking behind
Other (Cost reduction 00 ) Os 0.0 (2.4) 14 (50) 00 Planned activities
Exceptional Total
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22nd October 2013
Page 21 of 25
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Strictly Confidential
Appendices
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 22 of 25
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Network Transformation Scorecard Metric Definitions/ Rationale Strictly Confidential °
September 2013 Reporting Prior Months data (one month in arrears)
Key Performance Indicators Metric Rationale
MAINS.
Converted » 12 months Source: NTP database Source: NTP databace
Finance Approved investment per Mains £000 fverage investment spend approved for number of branches Recognise investment spend
otal Income: Post vs Pre Conversion
Branches lve 12-24 months otal Variable Income - Source: Credence* Review impact on POL income as a result of corverting te new models
Branches lve 24-36 months current month vs same period pre conversion
iL
PO Focus Income: Post vs Pre Conversion
Branches lve 12-24 months Total Focus income - Source: Credence* Review impact on POL focus income to assess the sales model post conversion
Branches lve 24-36 months current month vs same period pre conversion
Agents Remuneration: Post vs Pre Conversion Total agents remuneration excluding overscale and NIMVAT. Current month vs same period jAssess the impact on income for our agents as a result of POL business
feet pce conversion
[Operator Feedback on Retail Sales Performance Source: Operator survey issued to branches 2 months after opening starting in Aug 12 Indicative retail performance for Agents
Average Increase in Opening Hours Based on systems data of open hours Assess the impact of extended hours for our customers
Customer
[Customer Satisfaction
Exit interviews conducted by research company Brass at recently transformed branches
Indication of customer experience
LOCALS
Converted > 12 Months
Branches converted greater than 12 months
Branches converted greater than 12 months
POL
Finance Approved Investment per Local £000
[Total Income: Post vs Pre Conversion
Branches live 12-24 months
Branches live 24-36 months
JAnnualised Agents Fixed Pay savings per conversion £000
JAverage investment spend approved for number of branches
Total Variable Income - Source: Credence*
[Current month vs same period pre conversion
Fixed pay saving per branch vs the strategic plan assumptions
Jassessment of investment spend
Review impact on POL income as a result of converting to new models,
JAssess the savings to POL
[Customer Sessions 12- 24 months
ISource: Mi Database
Measurement of footfall for an Agent
[Customer Satisfaction
Exit interviews conducted by research company Brass at recently transformed branches,
Agent Customer Sessions 24- 36 months
lOperator Feedback on Retail Sales Performance ISource: Operator survey issued to branches 2 months after opening starting in Aug 12 JAssess impact of increased revenue from retail
Javerage Increase in Opening Hours [Based on systems data of open hours Assess the impact of extended hours for our customers.
Customer
Indication of customer experience
* Same income factor used for each year, Performance is impacted by sales and product mix
Period 6 Performance Pack - Chris Day
22nd October 2013
Page 23 of 25
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Cashflow Statement & Balance Sheet Summary — St Content °
September 2013
Balance Sheet Cashflow Statement
P6 YTO Full Year
£m Mar-43 Actual Budget I Variance £m Actual Budget Variance I [Forecast Budget Variance
Fixed Assets 71 4 92 2 Operating Profit baa 48.0 51 102.0 102.0 00
Debtors 122 123 107 16 Depreciation 02 05 (0.3) 09 09 00
Cash 870 825 827 (2) Working Capital (46.8) 06 (47.4) (44.2) (44.2) 0.0
Client Balances (288) (219) (214) (5) Client Balances (68.5) (73.4) 49 (444) (44.4) 0.0
Trade Creditors (362) (512) (547) 5 Network Cash 446 426 2.0 1146 1146 0.0
Pension (deficit)/surplus 97 145 74 74 Dividends (22.6) (244) (4.2) (4.5) (4.5) 0.0
Provisions (26) (30) (24) (16) Capital Expenditure (35.0) (63.9} 28.9 (167.5) (167.5) 0.0
Investments, Funding 95 (5) 87 (92) Government funding 2150 215.0 00 2150 215.0 0.0
Loan (291) 0 (120) 110 NSP in advance 1000 1000 00 0.0 0.0 0.0
Net Assets 288 421 329 92 Exceptional Items (60.7) (85.4) 247 (4988) (1988) 0.0
Pensions 19 14 08 23 23 0.0
Reserves Mar-43 Actual Budget [I Variance Proceeds from asset sales 24 0.0 24 0.0 0.0 0.0
(Capital and Reserves (288) (421) (329) (92) 0.0 0.0
(288) (424) (329) (92) Free cashflow before interest, tax 18316) tea 9D) Gi) 2i6) 00
Interest (09) (2.0) 11 6.0) (5.0) 0.0
Tax 10.2 10.2 00 10.3 103 0.0
Free Cashflow 1929" dad 208 (163) G63) 00
Cash Management Table
£m Prior Year I Mar-13 P6
P6 Opening Actual Budget var
Retail, Cash Centres 557 650 609 606 @)
Bureau 85 59 82 86 4
Cheques, debit cards 136 161 134 135 1
Network Cash
Headroom (£m) 838 883
Period 6 Performance Pack - Chris Day 22nd October 2013 Page 24 of 25
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Income By Product Groups & Pillar Strictly Confidential
Adverse; Mails is £16.2m, Financial Services is £2.4m, other income is £0.1m and Government Services is £0.7m
September 2013 adverse. Favourable; Telephony is £1.0m and Supply Chain £0.5m favourable
Current Month Prior Year Year to date Prior Year Full Year Prior Year
Net Income £m Actuals Budget Variance Period ‘enn Actuals Budget Variance IYTD Actual von on Foucest Budget Variance eosin
Parcelforce 17 19 (0.2) 14 03 108 109 (a) 89 19 23.2 245 (1.40) 19.9
Special Delivery 38 39 (0.1) 38 0.0 25.2 251 02 25.7 (0.4) 50.0 500 0.00 53.2
International Priority & Standard 24 28 (0.4) 23 0.0 155 179 (2.3) 15.9 (0.3) 327373 (4.60) 34.9
Stamps (1st & 2nd Class plus other stamps) 19 23 (0.4) 17 0.2 121-136 (1.5) aa (4.9) 338 33.8 0.0 35.2
Labels (1st & 2nd Class) 69 83 (1.4) 7A (0.2) 446 511 (6.5) 47.9 (3.3) 948 106.2 (41.40) I 100.2
RM Mail Fixed 43 43 0.0 44 (0.1) 280 280 0.0 28.4 (0.4) 560 56.0 0.0 57.9
Retail & Lottery 32 4.0 (0.8) 33 (0.4) 215 25.2 (3.7) 223 (0.9) 519 516 0.30 45.7
Mails Other 47 43 05 bb 03 25.0 27.2 (2.2) 274 (2.2 647 55.3 9.34 57.0
[Total MailServices ssi—(i“‘;C;*;*;*;*;”*Y:~C BC (8) I le COS I Bl 990 ~~) I 193.2 (40.5) I 406.9 416.6 (7.76) I 404.0
Total TelephonySenicss I ee ae 5) I oe Gs) I cba ee a ene 8 sO? ok OS I a
Motoring Services, 25 27 (0.3) 25 (0.0) 100 107 (0.7) 168 (6.8) 207 214 ~~ (0.73) 318
Card Account 48 49 (0.4) 58 (0.9) 303 305 (0.2) 34.2 (3.9) 594 59.4 (0.0) 65.8
Check and Send 12 12 0.0 12 (0.0) 126 9 116 10 118 os 222 204 184 214
JAEI (DVLA & UKBA) 06 06 0.0 os (0.1) 39 37 02 42 (03) 82 79 0.2 10.1
Other Government Services 04 05 (0.1) (0.2) 0.6 29 38 (1.0) 19 09 4a 67 (2.6) 42
es oe EX SO CES
Bill Payment Services Direct 07 08 (0.1) 08 (0.0) 54 54 (0.0) 5h (0.3) 109 411 (0.22) 118
Bill Payment Services Reseller 22 19 03 22 O41 14.0 12.06 2.0 1465 (0.4) 262 © 24.9 1.26 276
Postal Orders 16 16 00 19 (0.3) 104 103 O41 115 (11) 202 © 202 0.04 23.4
Payment Services 04 07 (0.3) 0.36 (0.0) 25 35 (0.9) 26 (0.1) 74 89 (1.7) 63
Personal Banking Clients 2.0 20 (0.0) 16 0.4 134 126 os 13.0 03 275 25.4 24a 26.4
DWP Exceptions 0.0 0 0.0 04 (0.4) 0.0 01 (0.1) 22 (2.2) 0.0 1 (0.07) 39
Business Banking 29 20 09 27 03 5 132 14 173 (2.7) 288 266 2.27 348
ATM 28 26 02 23 05 155 163 (0.7) 14.9 07 320 332 (1.20) 30.2
PFS-Savings 47 42 05 49 (0.2) 25.0 247 03 17.0 8.0 50.0 505 (0.54) 40.6
PFS-insurance 06 06 0.0 04 0.2 32 34 (0.1) 24 1a 92 67 2.41 53
PFS-Lending 01 0s (0.3) 04 (0.3) 26 24a 05 16 1.0 66 49 1.70 47
Bureau (excl profit share) (incl Travel Money Card) 23 25 (0.2) 23 (0.0) 4 = 16.2 (1.8) 14.2 02 244 25.0 (0.60) 2h.
Travel insurance 06 09 (0.3) 09 (0.3) 65 63 0.2 63 02 90 9.0 00 94
MoneyGram 13 13 0.0 12 o4 81 81 (0.0) 73 os 166 = 166 = (0.02) 15.4
NS&I 03 03 0.0 1.0 (0.7) 24 24a 0.0 66 (4.5) 39 39 0.0 13.3
Other 0.2 08 (0.6) 0.2 0.0 1.2 52 (3.9) 12 0.0 5.0 104 (5.36) 25
[fetal Financlal Sewkes © 1 02D Jh eee eee OS I ee. I el ed ea an dO ane ele OO) I emse
(Other Income 14 08 03 09 0.20 54 5.2 (0.1) 541 (0.0) 84 13.4 (5.0) 10.7
Supply Chain 27 22 0.4 0.22 U8 143 0.5 15.4 (0.3) 292 29.2 0.0 30.0
Net Income
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22nd October 2013
Page 25 of 25
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ExCo Trading Board
Update
22™ October 2013
Week 27 YTD Performance 2013'14 E>
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POL Income
99% 9b 96%
-068 “13.59 “14,27
Channel Focus and Standard performance against target YTD
Network
hannels
105%
101%
104%
Financial Services & Travel Total I Savings Book
% Income YTD 99% 104% 102% __ 16.01bn
Income Variance £m 70.40 2.47 2.07 16.2bn @ 20 Aug
Savings - In September the book dropped by another £80m to £16.01bn as Post Office assisted Bank of
Ireland re-structure its balance sheet. Online Bonds and Online Saver are on track to hit targets. The sales of
fixed rate products in branch are also picking up with FRISA topping the best-buy tables. Premier Cash Isa sales
continue to be supported by marketing activity. There is an increased presence of all savings products in all the
rate tables. Network targets have been rebased and re-cut for the second half of the financial year.
Life Insurance - income remains on target despite lower than budgeted sales, a range of initiatives are being
deployed that to increase sales over the remainder of the year. A DRTV Press and In Branch campaign will run
through Q4 with a central theme of “always paying your way and settling your tab”.
Motor Insurance - sales volumes remain ahead of target but reliance on aggregators continues to impact
income, while improved retention rates offset some of the additional aggregator costs.
Home Insurance - sales are down year to date due to aggressive competitor pricing through aggregators,
although the branch network is ahead of target.
Travel Money - Sales income is below target due to lower transactional volumes. The average transaction
value, however, is higher than budget so this will result in a higher profit share from FRES. The channel sales
performance remains on target as these are based upon sales value (benefiting from increase ATV) rather than
the sales volume.
Travel Insurance - period 6 income was below plan due to an historic commissions adjustment made by our
administrator Aon; we are investigating the background to this. New policy sales continued with a strong
performance, across all channels and YTD income remains on plan.
Credit Cards are at 88% of target and 106% year on year. We have now launched a new online application
form and the improved balance transfer offer to 18 months. We are starting to see an improvement in online
applications and estimate 950 additional online applications were made in the 17 business days following
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launch. The “start-to-submit” rate on the online application form had improved from around 32% to an average
of 46% since launch and we expect this to improve further over time. We are now rolling out additional
marketing activity with affiliates and anticipate strong growth in applications over the coming weeks.
Mortgages - In September mortgage applications dipped slightly to £115m, down from £130m in July and
August as the range needed re-pricing. Our new products gained traction towards the end of September and
flows have improved and we are on track to achieve £130m+ during the month. We achieved branch sales of
£8.5m through our Mortgage Specialists (MS) in September and we anticipate a similar performance in
October. Run rates will improve in the branch channel in the New Year when we will have completed the
recruitment of a skilled MS sales team, in addition to the new supervisory structure, new incentive programme
and lead generation activity.
MoneyGram - remains on track to achieve its budget for the year.
2. Government Pillar update
Income
Income Variance £m 0.86 I 70.62 0.23
Passport Check and Send continues with a strong performance and volumes remain at 107% of forecast YTD.
After a spike of applications at the beginning of the year sales have returned close to forecast volumes. Market.
share YTD is down on last year and Network Field Teams have been asked to engage with branches to ensure
they are promoting the service and having the appropriate sales conversations with customers.
3. Mails and Retail Pillar update
__Bincome YTD HOC (BHC
Income Variance £m i -0.80 -15.36 -16.16
Mails Focus products income has remained steady and 3 out of our 4 Focus products (express24&48,
International Express, International Priority) have increased sales volumes compared to last year. Currently we
are slightly behind target with our Focus products income however, the volume at Christmas will get this back
on track. Our Standard income is down by 12%, this will improve from November onwards with the
introduction of the new small parcel sizing, when we expect to see 225k parcels coming back to POL per week.
Lottery - down by -£3.27m vs. budget. Lottery income is down vs. last year and budget, driven by Camelot’s
decline in market sales and poor performance of the new terminals following their 3rd licence extension.
Camelot are optimistic there will be a turnaround in sales due to the launch of the new Lotto game in early
October, along with aggressive marketing campaigns for Euromillions and scratchcards in Q3 and Q4. Post
Office launched The Health Lottery in mid-September which will deliver incremental income.
Retail (Crown only) down by -£117k vs. budget. Retail is down due to decline in packaging sales, in line with
the decline in standard mails volumes. There are strong plans to improve sales in Q3 including promotions on:
commemorative coins, packaging and Christmas.
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4. Telecoms Pillar update
% Income YTD 91% i 85% i 90% 461,864 -1.10%
Income Variance £m -0.33 -0.08 -0.41 467,000 @ end Aug
The YTD HomePhone, HomePhone Combined and Broadband performance have fallen behind target. The
targets have started to ramp up as it was intended that post-migration we would be in a position to take
advantage of the new products we have available and drive an uplift in sales. Given the issues that we have
experienced since migration, sales have declined due to the network not actively promoting the product and
customers struggling to get through to the call centre. The current focus is on stabilising the call centre
operation for our existing customers and we are re-visiting our plans for the rest of the year as the current
view is that we cannot commit to running a campaign throughout the entire quarter 4. We are working through
options with Marketing Communications which will allow a campaign to run from mid-February. Whilst this
would not materially impact income in-year, there would be an impact on the strategic plan and, as such, an
additional push early in 2014’15 would be required. We are working up a proposal to ‘relaunch’ HomePhone
and Broadband at an appropriate time in the New Year including a branch engagement programme, a
consumer offer, a colleague incentive and a re-launch of the colleague offer.
E Top-up performance continues to run at just below 10% below target and has stabilised at this level. We
have explored a number of options to drive E Top-up sales with a number of the mobile networks but there is
limited appetite to invest in the category. We are also looking at the opportunity to undertake E Top-up online
with our provider E-pay.
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Confidential
POST OFFICE LTD EXECUTIVE COMMITTEE
Business User Forums
1. Purpose
The purpose of this paper is to invite ExCo to:
1.1. approve the proposal and arrangements for the establishment of a number of
Post Office Business User Forums.
2. Background
2.1. At its away day in June the Board agreed a mutualisation timeline which set
out a programme of initiatives aimed at improving and increasing stakeholder
engagement. To meet the commitments in the timeline we need to have a
number (unspecified) of Business User Forums in place by early 2014.
3. Activities/Current Situation
3.1. Weare already in the process of establishing a Branch User Forum. This is a
forum established specifically to meet the commitments we made in response
to the findings of the Second Sight Report. We are in the process of inviting
subpostmasters and staff to join that Forum.
4. Options Considered
4.1. In developing this proposal we have considered how other organisations with
a comparable stakeholder mix have established forums to contribute to the
development of business proposals which are of interest or importance to
them.
5. Proposal
5.1... The proposal is to establish a small number of Business User Forums,
proposed by Directorate areas or commissioned by ExCo. There is no
agreed number or subject matter. We should start with a small number in key
areas and use the learning to inform decisions about how and where others
might add value.
5.2. The general aim of the Business User Forums is to provide a formal
mechanism for engaging stakeholders in the development, communication
and implementation of key business issues. The role played by the Forums
will vary according to the subject matter but, overall, the objective would be to
get early input and expertise from stakeholders and interested parties and,
where possible, their buy-in to new ideas so that they can act as advocates
and communicators within their stakeholder communities.
Business User Forums Susan Barton
October 2013
Page 1 of 3
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Confidential
5.3. The specific proposal is that the Business User Forums:
e do not form part of the governance of the Post Office
are proposed and sponsored by the relevant Director, and chaired by
them to ensure the leadership necessary to attract senior
stakeholders
e comprise an appropriate but diverse group of stakeholders and
experts who would add value, by bringing knowledge, expertise and
advocacy, to specific business areas or initiatives
e are established and managed in a way which allows stakeholder input
and discussion at an early stage so that, for example, where possible
handling issues are dealt with before final decisions are made.
5.4. Areas which might benefit from a Business User Forum are mails; financial
services; telecoms; FOoG, marketing and communications.
5.5. To ensure the Business User Forums receive the profile necessary for them
to succeed, it is proposed that the Chairs report quarterly to Exco on the
progress and work of their Forum. However, as the Communications Director
has overall responsibility for the delivery of the stakeholder engagement
programme, he should have a co-ordinating role and also report to ExCo on
the delivery of the programme in its entirety. Secretariat support for the
individual Business User Forums should be provided from within the relevant
business area.
6. Commercial Impact/Costs
6.1. Closer and earlier involvement of stakeholders in business developments
should lead to better and more informed decisions and allow stakeholder
concerns/ideas/issues to be factored in early. The cost of early engagement
and problem solving would potentially be less than dealing with those issues
when decisions have already been made.
6.2. Each Business User Forum should have a small budget of £5k to cover the
out of pocket expenses of the members.
7. Key Risks/Mitigation
7.1. There are no significant risks. There may be minor handling risks arising in
relation to the creation of specific Business User Forums. These should be
identified by the proposing Director along with mitigating actions. More
generally, starting with a small number of Forums will allow us to test the
concept properly and learn what works well before establishing others.
8. Long term considerations — horizon scan
8.1. None.
Business User Forums Susan Barton
October 2013
Page 2 of 3
10.
11.
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Confidential
Communications Impact
9.1.
The creation of Business User Forums provides us with a positive
communications message for Government about progress towards
mutualisation, and to our staff and stakeholders about the steps we are taking
to change the culture of the organisation to one which listens, engages and
involves its stakeholders in the business.
Conclusion
10.1.
We have already made progress with the plans for the Branch User Forum.
Established with the right membership and well-crafted terms of reference,
Business User Forums will increase and improve stakeholder engagement.
The experience from other organisations suggests that if properly established
and chaired, such forums bring significant benefits to the business. Overall
co-ordination of the Forums by the Communications Directorate will enable
ExCo to monitor the overall success of the programme.
Recommendations
11.1.
ExCo is asked to:
* approve the proposal for the establishment of a number of Business
User Forums, and agree in which areas a Business User Forums
should be established;
e agree that individual Directors will submit proposals for the creation of
Business User Forums for ExCo consideration in November
« agree the co-ordination role of the Communications Director and the
reporting arrangements to ExCo
Susan Barton
October 2013
Business User Forums Susan Barton
October 2013
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1. Purpose
Mutualisation Update October 2013
Confidential
POST OFFICE LTD BOARD
The purpose of this paper is to
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1.1. update the Board on progress against the mutualisation timeline
1.2. request approval from the Board to share the update with BIS, and update
them on a monthly basis.
2. Background
2.1.
At its away day in June the Board agreed a mutualisation timeline which set
out a programme of initiatives aimed at increasing and improving our
engagement with Stakeholders. The timeline (reproduced below) was shared
with BIS colleagues in July and although they are broadly content, they have
pressed for more detail so they can understand more of the activity that sits
behind the high level milestones.
FY 2014495,
Engagement
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3. Current Situation
3.1.
below.
Stakeholder Forum
3.2.
I reporesonitn I
I pups purpose!
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PF comenienent
Since June we have made significant progress against the plan as set out
The aim of the Stakeholder Forum is to bring stakeholders and experts
together to work with Post Office to define its public benefit purpose.
Established in October 2012, the Stakeholder Forum has met six times.
Meetings included presentations from experts, and discussions about the
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public purpose, and two working groups were established to produce the
content of the public purpose with the outputs from the groups to be tested
with the public and wider stakeholders
3.3. The public engagement exercise started with a ‘qualitative’ engagement
exercise which ran through September. Over 1,000 questionnaires were
completed and 150 people attended the focus groups. The responses will be
analysed through October and a qualitative survey of a. statistically
representative group of people will be conducted in November based on the
responses.
3.4. I Stakeholder Forum to consider the findings from the engagement project in
December and agree a public purpose definition to recommend to the Post
Office Board. The intention is that the Board will consider the Stakeholder
Forum’s recommendation in January and make a recommendation to
government with a view to publishing an agreed public purpose before the end
of the financial year.
Post Office Advisory Council
3.5. A detailed proposal for the Post Office Advisory Council is dealt with in a
separate paper for consideration by the Board.
Business User Forums
3.6. We aim to create a number of business specific forums comprising of
stakeholders with an interest or expertise in particular subjects to input into
developing thinking or implementation plans. A detailed proposal has been
submitted to ExCo for approval.
3.7. We are already in the process of establishing a Branch User Forum, created
specifically in response to the findings of the Second Sight report to provide a
mechanism for subpostmasters and others to raise issues and insights about
business processes, training and support. Using this as a model, the intention
is to create other similar groups focussed on specific business areas.
Directors have been invited to make proposals, to be agreed by ExCo, for
subject specific user forums where stakeholder and other input could add
business benefits. It will be important to begin with a small number of groups
and use the learning from those to inform how and where other such groups
could add value. We anticipate having two or three groups up and running by
the end of the financial year.
Subpostmaster engagement survey
3.8. The survey, developed through workshops and 1-2-1s with stakeholders
across the business and interviews with a selection of sub-postmasters, was
launched at the end of September and runs until mid October. The findings
will be presented to ExCo in November.
Information sharing
3.9. An information sharing agreement has been in place with the NFSP since
June. Principally this was to enable confidential discussions about the
strategy. The learning from this process will form the basis for routine
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information sharing going forward and similar arrangements will be developed
with CWU and CMA when the industrial relations position allows.
Superbriefers
3.10. The regular programme of superbriefers continues with Senior Managers
visiting Crown branches on a monthly basis to update staff on network
transformation and other business issues.
WOW staff magazine
3.11. A new monthly staff magazine about transformation was launched in
September, written for staff and developed with their contribution.
Regional sales events
3.12. Regional sales events, running from September to November, have been
extended to all agents, incorporating training and two way communications on
business issues.
4. Future engagement activities
4.1. There are also a number of engagement activities planned to start over the
coming months. The detail is set out below.
Social network
4.2. ‘Yammer’ an enterprise social network will be introduced in November to allow
real time, interactive collaboration and engagement across the network.
NFSP/Post Office communications forum
4.3. A bi-monthly communications forum was established in September with the
NFSP to share communications plans.
Subpostmaster events
4.4. Six-monthly events for subpostmasters, covering business wide issues, will
begin in December.
Phone bank sessions
4.5. Monthly phone-in evenings for staff, hosted by senior leaders, will begin in
December.
Quarterly business updates
4.6. A rolling programme of half day sessions, led by ExCo members, for staff in
different locations will start in November. Social media will be used to
maximise coverage.
Culture workshops
4.7. I The culture workshops to work through the recommendations in Patrick Burn’s
culture gap analysis did not take place because of the industrial dispute with
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CWU and CMA. Plans to reorganise the workshop will be revisited when
industrial relations allow.
5. Conclusion
5.1. We have made good progress against our timeline and continue to do so. If
we were able to share the information about our progress and plans with BIS
colleagues this should satisfy their desire to understand more about the
activities underway and planned. Regularly and proactively sharing our plans
with BIS will help put us on the front foot and help remove their concerns
about whether or not we are serious about adopting mutual ways of working.
6. Recommendations
The Board is asked to:
6.1. note the update and actions set out above;
6.2. agree that an update detailing the progress and activity set out above is sent
to BIS for information, and on a monthly basis.
Susan Barton
15 October 2013
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POST OFFICE LTD BOARD
Post Office Advisory Council
1. Purpose
The purpose of this paper is to:
1.1. request approval for the arrangements and Terms of Reference for
establishing a Post Office Advisory Council;
2. Background
2.1. At its June away day, the Board agreed a mutualisation timeline. A key
initiative agreed in the mutualisation timeline was the creation of a Post Office
Advisory Council in early 2014.
2.2. The Terms of Reference and proposed arrangements for the Advisory Council
are drawn from Tim Franklin's experience of working with a Members’ Council
in a mutual organisation. They are also consistent with examples of
organisations which are broadly comparable with Post office in terms of
stakeholder characteristics.
2.3. The proposals are based on the assumption that the Council will:
. not form part of the governance arrangements of the Post Office
. not be a representative body
. have no decision-making authority.
3. Current Situation
3.1. I The Stakeholder Forum was created specifically to work with the Post Office
to develop its public purpose. There are no plans for the Stakeholder Forum
to continue beyond recommending a public purpose to the Board.
3.2. Apart from the Stakeholder Forum, we have no arrangements in place for
cross stakeholder engagement. Our engagement at a senior level, where it
happens, tends to be bi-lateral. The experience of the Stakeholder Forum has
shown that bringing together a range of stakeholders and experts can provide
wide and valuable perspective on matters of interest to Post Office and its
stakeholders.
4. Proposal
4.1. The proposal is to create a Post Office Advisory Council in line with the Terms
of Reference attached at Annex 1. The aim of the Council is to provide a
formal mechanism for the Post Office to engage stakeholders on matters of
mutual interest and to improve stakeholder understanding of, and
engagement in, Post Office business. As with the Stakeholder Forum, the
Council would benefit from members who are not stakeholders but who have
expertise which could add value to Council discussions. .
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4.2. Within its remit the Council could provide both strategic and tactical advice; it
might act as a sounding board and provide feedback on matters such as
marketing campaigns, policies, products and services as well as provide a
broader perspective on strategic issues such as market opportunities. It will
be important to ensure that the context in which subjects are presented is
clearly defined so that members are clear at the outset about why a specific
subject has been brought to the Council.
4.3. I The creation of an Advisory Council will not, of itself, improve stakeholder
engagement. It will require a change of culture and processes if it is to work
well and produce business benefits. The experience from other organisations
suggests that stakeholder involvement on important issues at an early stage
can, if properly managed, improve the quality of business decisions.
4.4. The key benefits of this type of Council are:
. involving stakeholders prior to taking final business decisions, where
appropriate, might highlight new opportunities and result in those
decisions being better informed because of the richness and variety of
insights that may not be available within the business
. identifying challenges or points of contention before a course of action
has been decided enables those issues to be dealt with and
accommodated, if possible, before matters are finalised
. co-creating ideas is more likely to achieve stakeholder buy-in, and
reduce the more traditional type of stakeholder discussions where the
business presents a solution or decision leaving stakeholders free to
critique, criticise or present alternatives after the event
. bringing a range of stakeholders together to discuss subjects of
common interest allows all stakeholders to hear each other's position —
a challenge against a partisan view from another stakeholder is more
powerful than a challenge from the business
. Council members can become advocates and communicators of Post
Office messages within their own communities.
4.5. The benefits listed above are unlikely to be realised immediately. It will take
time and commitment from the business to allow the Council to develop and
mature into a forum which can add real value to the business.
4.6. As the Council will only meet three times a year, it is proposed that
relationships and understanding of different perspectives will be enhanced if
Council members are invited to meet over dinner on the evening before a
Council meeting. This will help build relationships and smooth the way for a
more relaxed and better informed meeting.
4.7. Two factors which will be key to the success of the Council in terms of
improving stakeholder engagement and delivering business benefits are:
° The Chair - the appointment of a Chair who is independent of the
executive management, who has the skills and experience necessary
to chair a Council of this size and diversity, and who has the
confidence of the Board and the business as a whole. The Chair will
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need to ensure engagement with Council is meaningful whilst
respecting the decision-making and accountabilities of the Board and
ExCo, as well as ensuring that the Council operates in line with its
agreed terms of reference
. The membership - the appointment of a diverse and balanced
membership with the skills and experience necessary to make a
positive contribution to the Council. We would, properly, invite some
stakeholders to join the Council as of right, such as NFSP and union
officials. However, we should also advertise and recruit to ensure a
diverse membership which balances commercial and social expertise
and that our customers and the general public are represented. A
framework for selection and appointment is at Annex 2.
5. Costs
5.1. It is recommended that a budget of £40k is allocated for the Council. The
costs would cover three off-site meetings per year including dinner and
overnight stay (£10k per meeting) and out of pocket expenses for Council
members to attend the meetings.
5.2. There will be a resource cost for the Council secretariat. The average
resource requirements should amount to no more than 0.5 person over the
year, but the activity will not be spread evenly with the initial establishment of
the Council and recruitment of members, and the secretariat support at
meeting times requiring dedicated resource with little or no resource required
between meetings and recruitment exercises.
6. Key Risks/Mitigation
6.1. There are some limited risks related to confidential information with Council
members. However, it is unlikely that the Council would be involved in
matters which are commercially confidential. It would be made a pre-requisite
to membership that confidentiality, where required, would be respected and
the Chair would agree ways of working at the initial meeting.
7. Long term considerations
7.1. None
8. Communications
8.1. The intention to establish the Council should be announced publicly as a
positive step, following separation, towards the Post Office working more
closely with its many stakeholders as it delivers its 2020 strategy and
continues its transformation journey. The announcement would be
accompanied by advertisements inviting people to express their interest in
becoming members.
9. Conclusion
9.1. The creation of a Post Office Advisory Council will allow Post Office to
demonstrate that it is progressing its mutualisation timeline and is serious
about increasing stakeholder involvement in the business. Experience from
organisations with similar bodies have found that, over time, and if properly
managed, a mechanism for senior stakeholder engagement can bring
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business benefits which outweigh the time and cost involved in establishing
and running them.
10. I Recommendations
The Board is asked to:
10.1. approve ToRs and arrangements for the establishment of a Post Office
Advisory Council
10.2. approve a budget allocation of £40k per year to establish and run the Council
10.3. agree that the Chair works with the secretariat to establish the Council, in line
with the proposals in this paper, with the aim of holding a first meeting of the
Council in early 2014.
Susan Barton
15 October 2013
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Annex 1
POST OFFICE ADVISORY COUNCIL —- DRAFT TERMS OF REFERENCE
TERMS OF REFERENCE
PURPOSE I The Post Office Advisory Council exists to provide a forum for Post Office stakeholders and
other experts to discuss issues of interest and importance that impact on customers and
stakeholders and their communities.
ROLE The role of the Post Office Advisory Council is to:
provide a two-way channel of communications between the Post Office and its
stakeholders
provide a mechanism for stakeholders and experts to offer views and advice to Post Office
Board and ExCo on subjects brought to it
increase understanding and strengthen relationships between Post Office, its stakeholders
and wider interest groups
provide a community for advocacy and communication of Post Office issues
CONSTITUTION
ROLE JOB TITLE CURRENT INCUMBENT
CHAIR Post Office Board NED TBC
MEMBERS A Post Office Board NED TBC
Between 35 and 50 members would be] To be determined through agreed selection
consistent with other organisations. process
OTHER ExCo members (as required by agenda)
ATTENDEES Guests invited at the discretion of the
Chair
SECRETARIAT] Company Secretary (or Assistant] Alwen Lyons (Gill Catcheside)
Company Secretary)
MEETINGS
FREQUENCY] 3 meetings per year, full morning duration
FORMAT Each meeting to be preceded by dinner the evening before with an ovemight stay where
necessary
QUORUM N/A
AREAS OF CONTROL
N/A
SPECIFIC POWERS & AUTHORITIES
The Post Office Advisory Council:
* is not part of the formal governance arrangements of the Post Office
* is nota representative body
* has no decision-making authority
* may provide advice and views on matters brought before it but neither the Board nor ExCo is required to
act on that advice or those views
REPORTING ARRANGEMENTS
The Chair will provide feedback from Council meetings to the Board and ExCo as appropriate
Agendas and a summary of minutes of Council meetings will be published, redacted where appropriate to
protect confidential information
SELECTION AND APPOINTMENTS
SELECTION Members will be selected to provide a diverse and balanced mix of skills, experience and
stakeholder representation.
Selection will be through a mix of invitations for nominations from key stakeholder groups
and advertised competition, with interviews to ensure the membership has a strong skills
mix and fully reflects the geographical, stakeholder, social, community and commercial
interests.
TERMS Members will be appointed for a term of four years, non-renewable, with the first
appointments a mix of 2, 3 and 4 years to maintain continuity of membership.
MEMBERSHIP I Members cannot send deputies
RULES Members cannot bring guests without the express permission of the Chair
Membership terminated if a member misses two meetings within the term of appointment
Confidentiality must be maintained where requested
REMUNERATION] Unpaid except for out of pocket expenses
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Annex 2
Membership Selection and Appointment
Numbers — between 35 and 50 would be consistent with other organisations, allow a broad
mix of people, and be manageable in terms of numbers.
Recommend: aim for around 40 members, to a maximum of 50, allowing flexibility for the
Chair and secretariat to make appointments which achieve an optimal balance of skills,
experience and diversity.
Recruitment, selection and appointment — a selection process would be required to
ensure the right mix/balance of membership as well as the right skills.
Recommend:
a) invite key organisations (e.g. NFSP, CWU, CMA) to nominate a member
b) advertise through Post Office channels and inviting stakeholder and other groups to
advertise within their communities
c) select against the following broad criteria based on written application and interview:
* excellent communications skills — able to speak/challenge effectively and constructively
strategic thinking
* demonstrable interest/experience in Post Office issues
* experience in either community, social, commercial, financial services, retail, marketing
or SMEs
¢ able to devote time necessary to attend 3 meetings a year
d) appoint using the matrix below to achieve a broad and diverse mix of membership
Geography Diversity Experience
England Young Commercial
Scotland Later life Financial Services/Banking
Wales Carers Marketing
Northern Ireland Ethnic groups Retail
Rural SME
Urban Social
Deprived Community
Affluent Government
Mails
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Current Actions and Decisions Log
ExCo Meeting 23 April - Actions and Decisions
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23/04/02
Action 1
Pay Strategy
Fay Healey to work with Sue Barton to produce a 2 page summary of
pay principles required to support the 5 year strategic plan and
incentivise a commercial business. Update 16/5/13: Meeting on 17
May to progress. Update 1/7/13: Another meeting to progress further
FH Update 19/8/13: Workshop has been delayed due to annual leave.
The Workshop is being held to develop the Reward Principles which
relate to the 20/20 Strategy. SB Update 9/9/13: FH and SB will have
a catch up on the 17" Sept at 9am to progress this action.
FH/SB
end of Sept
23/04/13
Action 2
Risk
e Redefine TOR for RCC to cover FS risk
e Consider the training necessary for the RCC with heightened
awareness for FS as the Business moves into Current Accounts
e Define compliance in FS and the relationship with the bank.
Update 27/06/13: Ongoing - in progress.
Sc
SC/FH/NK
SC/NK
End of Oct.
23/04/22
Action 6
Potential Opportunities
Explore the opportunities of leveraging economies of scale with utility
companies and creating a shared benefit scheme.
Update 07.08.13 - currently in discussion
HC to meet with SB
HC/MM (PB)
End of Oct
23/04/23
Action 7
Explore the opportunity using the Alarm response centre to provide
care for customers; possibly as part of the home insurance market.
Update 07.08.13 - currently in discussion - NK to be involved
HC to meet with SC
HC/MM (PB)
End of Oct
ExCo 18 June - Actions and Decisions
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18/06/06
Action 1
Information Security
Policies need to come back to ExCo for review and agreement with
solutions for areas where compliance is difficult. E.g. acceptable use
policy.
LS Update: 01/07/13 The Head of Information Security will be
contacting each ExCo member to discuss the Policies and identify area
where compliance will prove difficult.
LS Update: 07/08/13 All but 1 Policy (Acceptable Use) are now on the
Intranet and are part of an Information Security and Assurance
communication plan along with the Information Security Handbook
and on-going training and awareness. The Acceptable Use Policy was
raised as a potential non-compliance issue by several ExCo members
and therefore has not been published; a Corrective Action Plan has
been drafted to mitigate any potential risks of non-compliance. The
Corrective Action Plan will be provided to ExCo for agreement during
the week ending 9 August 13, members will be asked to provide their
response by 27 August 13
The Information Security Training, Awareness and Communications
plan is on target, with specific Information Security requirements
being tailored for Central Support Tea, Branch (Crown) Branch
(Network) and Supply Chain every month. Branch Training will be
completed, in September, and includes online learning and
Workbooks, with additional communications on Branch Focus and
Grapevine.
LS
Completed
All but
acceptable use
- solution to
come to ExCo
Corrective
Action Plan for
this Policy has
been compiled
with a
proposed
solution to be
presented on
15 October
due to diary
coordination.
ExCo 23 July - Actions and Decisions
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23/07/16
Action 2
Forecast
After decisions are taken on 1 August, announce the big decisions
about cost reduction and changing the business, small central function
(ways of working - new HQ), then position the cost reductions which
will affect people e.g. Christmas stamps.
Update 12/09: in progress - ongoing discussions taking place
MD/FH/CD
Ongoing
23/07/25
Action 3
Risk
MZ/DM to pick up risks with each individual owner and agree key
controls/triggers and actions. Update 08/08/13: Ongoing
MZ/DM
End of Sept
23/07/29
Action 6
Risk
Internal Audit to communicate their purpose and ensure SLT realise
that they can request help if they have an issue which needs audit
Update 08/08/13: Currently being drafted.
MZ
End August
End
September
23/07/30
Action 1
Unconscious Bias
A note to be produced for ExCo to explain what we are doing as a
business
AA
End Sept
23/07/32
Action 3
Unconscious Bias
Explain what we are expecting people to do - the key deliverables
AA
End Sept
ExCo 20 Augu:
st - Actions and Decisions
20/08/08
Action 2
Business Performance
Circulate the Lucy Kellerway article from the FT
AR
25 Aug
20/08/17
Action 1
ExCo Cascade
Put in place a process for cascade of ExCo decisions and update on
discussions.
Update 12/09: ongoing - process put in place
MD/AL/AR
Ongoing
ExCo 10 September - Actions and Decisions
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10/09/04
Action 4
Supply Chain
Need to produce a supply chain P&L to help highlight the cost drivers
to the customers and help reduce demand.
cD
End Nov
10/09/09
Action 3
Strategy and Funding
Work to continue network expansion including effect on P&L
SB
End of Oct.
10/09/11
Action 1
Sparrow
Paper to come to ExCo and the Board on the future of the Post
Office’s position as a prosecuting authority
sc
End of Oct
10/09/12
Action 2
Sparrow
Communications team to continue contact with MPs involved in
Sparrow to build the relationship and build in good news e.g. NT.
Next contact before JA letter (likely 1°* week Oct).
MD
Ongoing
ExCo 16 September - Actions
and Decisions
16/09/01
Action 1
Cost Management/Value for Money Board paper
Set out a timeline (5 weeks and 5 months) in section 3 linking back to
the people strategy from June away day. Refresh work from strategic
plan showing savings target and actual as one page annex, showing
projections to 2020 as a reference point.
cD
20/09
16/09/02
Action 2
Cost Management/Value for Money
ExCo to see the detail of the weekly updates before their weekly
meetings
cD
17/09
16/09/03
Action 3
Cost Management/Value for Money
SB
End Oct
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Set up a cost reduction strategic programme board to give the work
structure and monitor progress for the 5 week, 5 months and 5 year
horizon to include communications.
16/09/04 Action 4 Cost Management/Value for Mone\ cD End Oct
Consider how we will build a contingency into the plan.
16/09/05 Action 5 Cost Management/Value for Money CD/SB/PV 18/9
Section 5 to be expanded into a programme - include reference to IT
value for money. Currently underplays what is happening (possible
additional appendix)
Update 23/9: Meeting on 24/9 for Chris,Sue and Paula to discuss
setting up a Strategic Cost Programme.
16/09/06 Action 6 Cost Management/Value for Money cD November
Set up a cost workshop to identify costs/wastage in the business.
16/09/07 Action 7 Cost Management/Value for Money KG/FH/HD/MD End Oct
Communication needed to explain what we are trying to achieve
through Cost Management, growth, investment, commercial culture
message to come from Paula then quarterly briefing set up.
16/09/10 Action 3 Supply Chain HF End Sept
Information on how we could cover Supply Chain IA - legal advice
needed on the use of other supplies
16/09/11 Action 1 IT Strategy Update Ls End November
LS to return to ExCo with a proposal on standardising the IT
equipment provided by the Business. To highlight opportunity to
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reduce cost and fixed/variable costs.
16/09/23 Action 3 Strategy & Funding ongoing
Need to start to reconsider targets for this year STIP & LTIP - ME/FH/CD/SB
because of the delay in getting agreement. Start to communicate this
with Will & Tim.
- Also need to consider communication to colleagues for STIP.
16/09/24 Action 1 Business performance KG/PB Completed
What support can we give to Branches to make the re launch of lotto
a success.
Update PB: We have done a lot with Camelot for the launch of the
new Lotto game into POL branches including, product introduction &
education, branch incentive programmes, POS - Camelot POS, not
POL, new horizon prize payment functionality for the Lotto game,
social media/PR and internal communications.
16/09/25 Action 2 Business performance Pv COMPLETED
Paula to circulate Archie Norman article.
Update 24/9: Article circulated to ExCo.
16/09/26 Action 3 Business performance CD/KG End Dec
Consider whether we have the right focus products as part of the
Budget Process - to see if more products could be included as ‘focus’
16/09/27 Action 4 Business performance PB/SFM 18/09
What are the levers to move the ‘easy to do business with’
performance. Email from SFM to explain why the measure has
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moved.
16/09/28 Action 5 Business performance PB/SFM 18/09
SFM to provide a note to explain the Branch Compliance
performance. If the performance is not accurate remove from the
Board pack, but need to triangulate with customer complaints
coming through especially for passports.
16/09/29 Action 6 Business performance NK/KG End Oct
Need to consider if we could replace Branch Compliance with FS
compliance. Define how this could be measured.
16/09/30 Action 7 Business performance All On going
All ExCo members to consider before committing spend that we need
to hit the profit target this year and challenge discretionary spend.
16/09/31 Action 1 Sales recovery plan LS/PB/KG On going
Dangerous Goods - consider using the Pin Pads for customers to
identify if they have been asked if the parcel contains Dangerous
Goods. Subgroup to consider to include Lesley, Paul & Kevin
Update PB: This is currently being considered by the Dangerous
Goods project team and a CR has been raised with Fujitsu for a full
response on the feasibility of enlivening the pin pads with this
transaction
16/09/32 Action 2 Sales recovery plan KG Completed
Contact the NFSP (George) to tell him about the changes in small
parcel dimensions - the shoebox
Update: Done
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16/09/33 Action 3 Sales recovery plan CD/NS End Sept
Need to update forecast with actual P6 numbers for 2014/2015
budgets.
16/09/34 Action 4 Sales recovery pla CD/SB/NK End Oct
Challenge the budget needing to be approved before Christmas - to
see if it could work after Christmas. Test the plan to see if it could be
moved back and still hit the end of March target.
16/09/35 Action 1 Action Log AG End Sept
Note from Andy Garner- explain the SLA contract penalties on us and
on suppliers. How we will monitor these penalties. Issue to be taken
to the Operations Board. Paper circulation to all for reading.
16/09/36 Action 1 AOB NK/KG Closed
FS Mystery shopping using filming is widely used and becoming
normal practice. It is used by various banks including Santander,
Lloyds and Natwest.
ExCo 15 October - Actions and Decisions
15/10/01 Decision 1 I Looking Beyond Network Transformation
Proposal to take forward network development focussing on growth
was agreed.
15/10/02 Action 1 Looking Beyond Network Transformation
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Return to ExCo with a defined proposal and timeline, (including
resource plan to be agreed with Chris Day and Fay Healey).
SB End Nov
Terms of Reference to cover (1) customer and growth; (2) models;
(3)ownership and efficiency (including product portfolio) and to be
agreed by a sub-group of NK.MG,KG,SB
15/10/03 Action 1 Q2 Full Year Forecast and Budget
Pick up the staffing levels with Fujitsu to ensure service levels can be I MG End Oct
achieved for Q4 telephony campaign.
15/10/04 Action 2 Q2 Full Year Forecast and Budget
Reconsider the mobile strategy as Fujitsu are unable to deliver. MG End Oct
15/10/05 Action 3 Q2 Full Year Forecast and Budget
Driving Licence renewal leaflet and poster to highlight the risk to PB As soon as
customers of non-renewal. material can
be printed
15/10/06 Action 4 Q2 Full Year Forecast and Budget
Build a plan to ensure any overachievement in EDIT is invested to KG/PB/MG/NK Mid Nov
drive current year revenue growth - to be considered at Trading
meeting.
15/10/07 Action 5 Q2 Full Year Forecast and Budget
Consider any additional FYF risk to FS and telephony sales as a result I NK/MG/SH End Nov
of ‘Action Short of a Strike’ and feed into Sarah Hall.
POL00027534
POL00027534
15/10/08 Action 6 Q2 Full Year Forecast and Budget
Undertake initial debate on the top-line of next year’s budgets - to SB/CD/MG/NK/PB/KG I Mid Nov
understand the challenge eg high level income targets relating back
to FYF and exit rates.
15/10/09 Action 7 Q2 Full Year Forecast and Budget
Fay and Colin to return to ExCo with a cost/headcount reduction FH/CD 12 Nov
proposal including CR as one of the tools. All teams to assume CR as
a tool to achieving cost reductions.
15/10/10 Decision 1 I Q2 Full Year Forecast and Budget
All ExCo members to ensure their plans hit the numbers in the
budget allocation and highlight any risks as appropriate.
15/10/11 Action 1 FS Investment Products
Nick to bring the FS Investment product options back to ExCo after NK Jan 2014
completion of the market research for decision on progressing
further.