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MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON TUESDAY 26
November 2019 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT 11:45 AM
Present: Tim Parker Chairman (TP)
Nick Read Group Chief Executive Officer (NR)
Ken McCall Senior Independent Director (KM)
Tom Cooper Non-Executive Director (TC)
Tim Franklin Non-Executive Director (TF)
Alisdair Cameron Group Chief Financial Officer (AC)
Zarin Patel Non-Executive Director (ZP)
In attendance: Veronica Branton Company Secretary (VB)
Helen Davies QC (HD) (Item 7.)
Alan Watts Herbert Smith Freehills (AW) (Item 7.)
Ben Foat General Counsel (BF) (Items 7. & 9.)
Robin Nuttall McKinsey (RN) (Item 8.)
Stuart Shilson McKinsey (SS) (Item 8.)
Mathieu Halpin McKinsey (MH) (Item 8.)
Debbie Smith CEO — Retail (DS) (Item 10.)
Mark Siviter MD — Mails (MS) (Item 10.)
Apologies: Carla Stent Non-Executive Director (CS)
Action
1. Appointment of Non-Executive Director
The Board RATIFIED the appointment of Zarin Patel as a Non-Executive Director of Post Office
Limited for a period of three years from 26 November 2019 to the nearest Board meeting three
years from that date.
The Board APPROVED the appointment of Zarin Patel as a member of the Audit, Risk and
Compliance Committee.
2. Welcome and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Directors declared that they had
no conflicts of interest in the matters to be considered at the meeting in accordance with the
requirements of section 177 of the Companies Act 2006 and the Company’s Articles of Association.
Zarin Patel informed the Board that she was independent member of the HM Treasury Board.
3. Minutes of Previous Board meetings including Status Report
The Board APPROVED the minutes of the Board meeting held on 23 September 2019.
The Board NOTED the action log and status of the actions shown. The paper on ensuring
compliance with dangerous goods transactions was NOTED. Post Office was the first line of defence,
not the last line of defence but we still had work to do to improve compliance with checking the
contents of parcels with customers. It was noted that branches had a laminated sheet showing
information on restricted goods but it was not a straightforward set of restrictions.
4. Committee updates (verbal update)
41 ARC
Carla Stent had provided an overview of the main items discussed at the meeting and the actions
arising. Al Cameron mentioned that there had been a number of discussions on issues where
progress had been made but the matter had not been resolved such as Joiners, Movers and Leavers
(ML) and contract management. The Committee had also had a further discussion on PCI
compliance and the Ingenico service. The Committee had congratulated the business on there
being no outstanding audit actions while noted that there had also been no green audits.
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Remuneration Committee
Ken McCall provided an overview of the topics discussed at the Remuneration Committee meeting
held before the Board meeting:
LTIP/ STIP rules —\ast year Government had requested that the Remuneration Committee exercise
discretion to consider reducing management bonuses because of the impact of the group litigation
on the business. The LTIP and STIP rules had since been reviewed to ensure they reflected market
practice within listed companies and were internally consistent. The documents should be fully
aligned at end of this exercise
Bonus design proposal - for 2020/21 we were intending to stipulate a target where 70% was linked
to trading profit and 30% to cash and change spend, controls and delivery of benefits. A tighter
definition of what this entailed was going to be drafted and circulated to the Committee for
approval.
The 2020 - 23 LTIP would be finalised after the completion of the Purpose Strategy and Growth
(PSG) project. Threshold and targets had been discussed. We needed to achieve the right balance
to set measures that were challenging while incentivising people to strive to achieve those targets
Equal pay — Pinsent Masons had carried out an equal pay audit to assess our equal pay risks; they
had reported that we were in a good position for a company of our size. “Like work” (work that is
the same or broadly similar) and “equal value” (equal in terms of the demands made) had both
been considered. Nine roles had been identified where on a “like work” basis there is a 5%
difference in pay and where there is no known/obvious non-discriminatory reason for the difference
in pay; these would be assessed further. We had assessed roles of equal value using the Hays job
evaluation methodology but did not propose any further tests at this stage
Remuneration advisers - PWC would step down as our remuneration advisers in March 2020. The
firm had a programme in train to focus on audit only for their FTSE 350 clients. We had started the
tender exercise to select new remuneration advisers.
CEO Report
Nick Read introduced the report and provided updates on a number of issues:
© Operating rhythm — the new range and patterning of meetings was designed to drive
accountability. The weekly trading performance meetings had begun. It was proving difficult to
get the right data and to distil this down; however, the right people were involved, driving the
right conversations. The 10@10 weekly sessions with the CEO had begun. These were broken
down into company performance, current issues, celebrating successes and questions. GE
meetings continued. The monthly operations meetings and the customer plan meetings had not
yet started. These were being split deliberately because of the relative immaturity of the
business. The former was about driving efficiency and the latter about growth
* Key business updates — NR had met with Carl Cowling, the new CEO at WHSmith. Building this
relationship and others with major partners would be important. CC saw WHSmith as the hub
of the high street and franchises with Costa, M&S, Post Office etc. were central to this strategy.
CC was keen to take on more PO franchises but had not previously been aware of WHSmith’s
poor performance compared with Post Office’s other partners and DMBs. WHSmith were
intending to invest heavily in the States and in their travel business To do:
© The new identity proposition was promising. It only included passport processing at the executive
moment. It was agreed that we would check and confirm to Tom Cooper whether AEI enabled
more than passports to be processed
« ATMs — Bank of Ireland were withdrawing their provision of 2,200 ATMs in the Post Office
network. We were working on our strategy for which of these ATMs we wished to maintain.
This linked into the wider automation strategy for branches and the need to avoid piecemeal
work in this area
«© We were considering how to accelerate the last wave of DMB Franchising. This would allow us
to consider the shape of the franchise network as a whole
© The British Gas contract had been signed and the business was getting ready to deliver the
service from 1 December 2019
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The Agents’ pay announcement had been well received
* NR had visited a branch in Leicester that was part of the hothousing programme. Egremont was
supporting Post Office with this work because area managers had only been in post for six
months. We needed to understand “a day in the life of” and “a week in the life of” area
managers. Progress was being made
© There was still time for a second ballot for strike action to be called which would allow industrial
action to take place at Royal Mail before Christmas. We were awaiting the outcome of RM’s
appeal against the first ballot. The timeframe in which a PO strike could be called before
Christmas had elapsed
« We were 4-5 weeks into the PSG process. We were in the discovery phase but were beginning
to narrow down the options and the picture should be much clearer by mid-December. An
additional Board meeting had been scheduled for 19 December 2019. It was agreed that we
should not lose time if decisions were required but would need reading time if this were the
case. If decisions were not required we should review whether the meeting was required. In
either case Directors would be able to dial into the meeting if they were unable to attend in
person.
Anumber of points were raised, including:
That the Board needed to understand the Ingenico situation and that we were encountering
difficulties in progressing our plans to achieve PCI compliance. Nick Read would need to go to
Paris to meet their CEO. The current state of play was not acceptable and we did not have a
satisfactory plan to achieve compliance within the previously agreed timeframe. It was noted
that Shikha Hornsey, CIO, had visited Ingenico in Paris and Ingenico had stated that we were an
important client and that our work was being prioritised but that this was not being translated
into action
« Whether the procurement process for a new ATM provider was already underway? It was
confirmed that this was the case and that the financial benefits associated with a sizeable
number of these ATMs was better than we had expected. We wanted to understand the
reasons for Bol withdrawing from this market fully to make sure we were not overlooking any
element.
The Board NOTED the report.
Financial
Financial Performance Report
Al Cameron introduced the report and highlighted a number of issues:
Performance in P7 had been slightly better than in P6. Discretionary spend was being restricted.
The Insurance and Telecoms businesses were still under pressure and Mails and Banking were
performing as expected. We could also improve performance in-year by not undertaking
aggregator work in Insurance and Telecoms
* Telecoms — PJT Partners, our advisors on the potential sale of the Telecoms business had advised
us to postpone the sale until after the general election. If we were going to sell the business we
needed to be focussed on obtaining the maximum price. Driving longer term cost efficiencies
became less critical if we decided to sell. We would been meeting PJT Partners again this week.
It was noted that we were required to inform Fujitsu of the approach we were going to take by
17 February 2020 if we had not agreed a contract extension in advance of this date
There had been underspend in Change, much of which was deliberate and linked to tightening
our business case approvals
© The position with Cash had returned to normal
© We were planning to include more narrative in the Financial Performance report to Board but
dispense with the slide deck as part of the pack. The slides would still be produced for internal
use and could put in the Reading Room. Tom Cooper requested the inclusion of the slide which
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Todo:
AC
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© showed the status of larger projects.
A number of points were raised including:
© That an overall summary of the positives and the negatives which focussed on the big business
lines would be helpful. We also needed a better understanding of the root causes of problems,
what action we could take and whether the matter resolvable. We needed to understand trends
better and what was happening with the key business streams, for example with Travel Money it
would be good to know whether we were experiencing a decline in-line with the market or if we
were losing market share. It was noted that this kind of analysis was part of the focus of the
quarterly performance reports for FST& and Retail
That there were too many business lines for a company with a £1bn revenue. This meant that
we were overstretched and unlikely to understand our competitors well enough.
Cash Management and Facility Management
Al Cameron introduced the paper and provided a summary of the main considerations. He noted
that the total earned as a combination of EBITDA and network subsidy had not changed greatly over
the last few years. We had borrowed significant amounts to fund investment for periods of time
while we had the headroom. We had been achieving cash efficiencies but now needed to
understand the line by line detail on working capital. The Bank of England (BoE) had promised to
review the Note Recirculation scheme to see whether it was suitable for the future.
We could manage within the facility headroom and drive further cash efficiencies but this did not
help us with the security headroom because this was limited to the cash in the network, client
liabilities and the !iR iability. Cash efficiencies reduced the cash in the network and
therefore the security headroom. We were trying to minimise our borrowing period and the longer
vault opening hours agreed by BoE meant that we should be able to remove both sets of REMs
entirely on a working day. We also should be able to fund a potential GLO settlement (within the
assumptions proposed) from within the headroom facility but this would make our security
headroom very limited. One option to consider was negotiating an exclusion of the!
liability from the security headroom. We were also analysing the figures associated with retaining
cash from RBS for a longer period at a fee but this would effectively be borrowing. If one of the big
bets was focussed on automation of the network we could consider asking Government to allow us
to create some investment funding.
It was reported that
organisations would then p pi
be controversial with the unions and there was a risk that service costs would increase over a period
of time. However we could generate savings for each depot. Tom Cooper noted that ministers
were likely to have a view on such a deal and that would need to be factored into our thinking.
A number of points were raised, including:
® one option was to explore how we defined the security headroom as HM Treasury would not
want these funds to ‘ded as borrowing. It was thought worth having a further
conversation with! but unless they were prepared for that liability not to be included
in the security headroom it would not be worthwhile having this conversation with HM Treasury
© the likelihood of us selling the Telecoms business was increasing but this capital would be offset
by the potential costs associated with a GLO settlement
*® amore detailed account of the cash flow through the business and more information on
working capital was requested.
The Board NOTED the progress made on cash and facility management.
Borrowing Limits
Al Cameron introduced the paper and noted that we were unlikely to need to reduce the buffer
headroom but that it was prudent to have the option available.
The Board APPROVED a derogation to draw the Government Loan up to £850 million (i.e. to reduce
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Action: AC
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the headroom buffer from £200 million to £100 million), subject to approval by the CFO, for the
period from 27 November 2019 to 2 February 2020.
Group Litigation Update — subject to legal privilege
Ben Foat provided an update on the Group Litigation:
the embargoed judgment on the Horizon Issues trial was likely to be handed down this week.
We would activate our Horizon contingency planning
¢ the first mediation would take place on 27 and 28 November 2019. The Postmaster Litigation
Subcommittee had recommended to the Shareholder approval of a settlement of up to £48m
with a mechanism in place for seeking approval of up to £65m. Shareholder approval for Group
Litigation November 2019 Mediation Parameters had been confirmed by letter on 25 November
2019
© the statements of fact for the Further Issues trial had been signed
© the decision not to allow an appeal hearing on the Common Issues trial judgment was
disappointing but reaffirmed our revised litigation strategy.
Alan Watts reported that the claimants’ funders were seeking to obtain three times their costs
before starting to make pay outs to claimants (i.e. the funders were seeking £45m for their £15m
investment). The claimants’ starting position for settlement was £145m upwards but the difference
between the parties was not unusual at this stage. The claimants’ solicitors had not analysed the
claims to be able to underpin these figures and had concentrated on the post-termination losses.
We had looked at the individual cases and that might assist in reducing the numbers gap between
the parties. The mediators had been focussed on the 26 months which had been the fee paid to
postmasters exiting as part of the network transformation programme. We had a further meeting
with the mediator this evening and were clear on our strategy and financial limits.
Helen Davies QC reiterated the disappointment at the decision on appeal. There were a number of
points that were clearly of relevance for the court of appeal and it was surprising that we had not
been given permission to appeal on these grounds. We were entering unchartered territory but
should assume that the Managing Judge would take a position that was as favourable as possible for
the claimants within legal constraints. The more reasonable we were in our approach, the more
likely we were to achieve a sensible outcome.
We now needed to implement the findings of the Common Issues trial in full. This would entail
asking Subpostmasters to sign a new contract. This would be a focus of attention for the coming
year.
The Horizon Issues trial judgment was expected to be adverse. The question would be the extent to
which it was ruled that system bugs could have led to shortfalls and how we could prove system
shortfalls if we could not rely on Horizon.
The judgment was likely to be handed down in the middle of mediation. We would not be arguing
over liability and needed to advise the claimants why this was a deal they should consider. The duty
of good faith and the notice period would be key issues. The Common Issues trial judgment had
referred to a 12 month notice period but we could not be sure that this position would be
maintained by the Managing Judge in subsequent trials. We would have a two to three month
window to settle after the first mediation and would need to select the right lead cases for the next
trial. Tier 1 and Tier 2 had already been identified.
The Shareholder letter approving the mediation parameters for settlement was discussed. The
letter stated that “Shareholder approval is conditional on the settlement being fully funded by POL
and has no bearing on any current or future subsidy agreement”. Tom Cooper reported that BEIS
had thought we were indicating that our funding of the settlement was dependent on future
government funding and seeking a commitment to future funding which could not be given in
advance of a spending round. It was confirmed that POL was not seeking a funding commitment in
advance of the normal submission process but funding to deliver its SGEIs was part of its budgeting
assumptions. POL and UKGI/ BEIS recognised that the starting point on debt was going to be higher
and therefore the need for future financial support was more likely after a settlement of the group
litigation order. In addition, while the letter stated that any offer above £48m (and up to the £65m.
limit) should only be made “if is ensures a final settlement takes place with all the claimants” UKGI/
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BEIS recognised that a settlement offer could not be made directly to the criminally convicted but it
was understood that a global sum could be offered and the claimants could determine its
distribution.
A number of points were raised, including:
that we faced the operational challenge of implementing the changes required by the Common
Issues trial judgment. We needed to be able to track this and should not be dilatory
when issuing new contracts how bound were we by the Managing Judge’s interpretation of the
current contract? It was reported that we could specify the period of notice within the new
contracts but would still have an overriding duty of good faith. We would need to think
carefully about how we constructed the liability clause within the contract. We also needed to
consider carefully how we on-boarded our Subpostmasters; they needed to be given enough
time to understand the contracts prior to signature and the contracts needed to be written in
plain English.
The Subcommittee NOTED the updates in the paper and the next steps to be taken in the litigation,
namely:
* attend to the courts’ decisions on the Horizon trial and not to allow an appeal on the Common
Issues judgment
e filing Post Office’s Defences for the Further Issues trial by 25 November 2019 (completed)
* attending mediation on 27-28 November 2019
© draw up proposed criteria for selecting Test Claimants for later trials.
Purpose, Strategy, Growth (PSG)
Robin Nuttall introduced the presentation which was split into five chapters. We were currently in
the discovery phase of work and would be diving deeper into some of these work streams.
1. Where we make money
- McKinsey were presenting POL Finance data to identify implications for the big bets
- cash and banking were growth engines currently. Mails was holding its share. Financial Services
made a strong contribution and our online channel was profitable
- we had fixed overheads of £82m for the majority of the central functions but some of our other
overheads could be linked to products. Once this had been accounted for Mails became a
smaller share of the fixed contributions and FS a higher share but we were also looking at how
this would change in 2020/21 as agent pay increases started to flow through
- the FS contribution was set to decline over the next two years. Mails and parcels, cash
and banking, telecoms, FS and Insurance would all remain core pillars
- Mails and locals branches were profitable in aggregate. Traditional branches lost money but we
were working on moving these to the locals format
- the bottom two branch quartiles drove losses almost as great as profits from first two quartiles.
A number of points were raised, including:
* how had the costs been allocated in FS? For example, Travel Money was an integral part of our
network. Were we painting an unfair picture of the mails position and allocating too high a
cost? A minor reallocation of costs could change the apparent contribution of business lines.
AC noted that this was why we focussed on direct contributions rather than net contributions
* that we needed to identify the permanent profit drivers
* we were too dependent on the Banking Framework and needed to find different footfall drivers
© that the information provided could not currently show us the gain from taking out loss making
elements because we could not show how this impacted our fixed costs. The immediate focus
would be on retaining a network of 11,600 but moving branches to better locations and formats
{including outreach). It was helpful to be able to spread fixed costs over as wide a network as
possible
what was the premium associated with POL and RM being one organisation/ joint venture? It
was noted that as a first step one would need to assume that RM would deal with union and
efficiency issues. It would then be necessary to determine the strategic aims e.g. delivering
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parcel shops
* we would need to address branch numbers and rationalise access to cash across the network as
the demand for cash decreased. Government was likely to ask why we could not automate
many of our services, which would be feasible but would require significant investment and
understanding of how much cash servicing depended on a counter service. It was noted that it
was cheaper for a retailer if they did not need a separate space in their store to run a post
office. We could develop parcel shops and provide a range of additional PO services and
consider how to deal with cash requirements. This would take us closer to the unmanned PO
models in place overseas for which the technology was available
that outreach services were not profitable but we had not identified a better way to deliver our
SGEI requirements where there was not a bricks and mortar branch
that some retailers adopted a suburban strategy rather than an urban strategy by geomapping
suburban densities.
The Board requested a relentless focus on direct contribution when assessing product or channel
profitability. The way to improve contribution was to reduce overheads and therefore the
contribution analysis could be misleading when applied to products and channels. It was AGREED
that the information should be analysed from a direct costs and contribution angle.
2. Organisational Health Index (OHI)
Stuart Shilson explained that there were 9 health outcomes which underpinned the long-term
health of an organisation, under which sat 37 management practices which drove long-term
performance. An organisation’s results could be compared to the rest of the database. Role clarity,
personal ownership (including poor consequence management), strategic clarity and competitive
insights should be areas of focus to move POL from the bottom quartile. Work on strategic clarity
had already begun involving the Leadership Council. Innovation and learning had a low score,
particularly from more senior people in the organisation.
A number of points were raised, including:
© that engagement scores had been modest at Post Office historically but with different patterns
across different locations
© that we lacked clear accountability, which in turn meant that we did not penalise poor
performance and lacked the right capabilities in some instances. Gaps in capability would need
to feed into the big bets together with a clear understanding of the resources the organisation
needed to deliver the strategy. We would need to be specific rather than, for example, say we
were going to digitise.
3. Other posts
Robin Nuttall provided an overview of other postal providers and how they had developed their
services. DHL had developed the concept of “winning the first mile”. Parcel lockers had been
successful in Germany but were less acceptable in the UK market. A number of postal providers
such as Poste Italiane and Post Japan had developed successfully in financial services but were
closer to being banks than a financial distributor like Post Office. An analysis of which postal
providers had done well with FS, which had not and why, and the model they had adopted was
requested.
A declining letter line was the norm and postal providers had sought to develop a wide range of
different revenue streams. Those initiates had generally failed where growth was outside the core
and into adjacent markets. There had been a shift away from owned branches and Post Office was
further ahead in this journey than most postal providers.
A number of points were raised, including:
to what extent was the branch network involved in selling FS? It was noted that the regulatory
requirements for selling FS products were much higher. We sold most of our FS products
through an aggregator. We had disaggregated our FS products and were not getting as much
customer value as we should
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Action:
McKinsey
Action:
McKinsey
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. whether collection from the home was common? It was reported that this service had started
but was not widespread. We should expect to see pick-up and delivery services coming
together more
. changing the specification of the service obligation had to be part of our strategy to adapt to
trends such as the declining use of cash
. whether Payzone should be part of this conversation if our big bets were going to include
parcel shops which could be located in Payzone outlets
. not having a logistics arm limited some options for us
* — weneeded a strategy to get us to a critical mass in areas we saw as big bets.
Action:
McKinsey
McKinsey would provide information on the current position of BPost which had recently appointed
a new CEO and were operating as a successful small post provider in Belgium.
4, Big Bets
Mathieu Halpin outlined the approach taken to generating ideas for big bets. These were evaluated
on three dimensions: financial returns, ease of value capture and fit with the purpose of the Post
Office. The big bets that passed these tests would be refined and further developed. Some
proposals would not proceed, others might become small bets. The big bets fell into four
categories: Optimise the product portfolio and grow revenues from the existing product categories;
Transform the network and its operations to ensure its sustainability; Build technology and digital
capabilities to support the business; Right-size the central functions. The Board session on 19
December 2019 would be focussed on big bets which would be refined over the next few weeks. Action:
Anumber of points were raised, including: McKinsey
© that we had not yet taken a view on whether we could modernise or replace Horizon
© it might be worth focussing the Board discussion on one big bet to be clear that we could
execute this successfully and what this would require
* the Board would be making a strategic set of decisions so would need to understand the
process of elimination of big bets and how that had been followed
© insurance felt like a big bet by definition and if not should we not be looking at disposal?
* we needed the business to deliver on the investment POL had made to promote its growth. It
was requested that the insurance analysis was further developed and noted that we had
previously discussed the idea of a partnership with an entrepreneur
© the business was diverse and complicated and needed to be streamlined. We needed to stop
work on areas which were not core to the strategy.
Action:
McKinsey
The article on big bets would be circulated.
Framework Document and Articles of Association
Ben Foat introduced the paper. The description of the Shareholder Representative’s role was largely
agreed but we needed to be clear about executive and non-executive roles. The position on the
application of Public Sector Pay & Terms (PSP&T) was also discussed. On 6 November 2019, UKGI
had proposed including a separate appendix to the Framework Document (FD) on the PSP&T and
the executive wished to confirm its understanding of the Board’s view on the application of the
PSP&T to POL. UKGI had advised how it thought POL needed to reflect the PSP&T in its current
remuneration practices, principally by not offering private medical insurance (PMI) as a benefit in
kind to new employees. Remuneration for staff below Board level remained a matter for POL. The
£95k redundancy cap did not apply to POL currently but future legislation could change that position
(and could apply retrospectively). This would have a significant impact on POL as it would affect
many employees in the supply chain and impact on contractual rights. It was recognised the
Government might introduce additional PSP&T requirements in the future or take a different view
on how PSP&T applied to POL and this would be addressed as required at that time.
Tom Cooper offered to confirm UKGI’s views on the wording Shareholder Representative’s role and
the position on the application of the PSP&T so that the Framework Document and Articles of
Association could be finalised. He noted that the Framework Document would need to be approved
by BEIS and HMT and formal agreement had not yet been obtained.
To do:
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Royal Mail Update
Debbie Smith introduced the paper, noting that the negotiations with RM were continuing and that
we had set out what would constitute a successful deal in the paper.
Mark Siviter provided an update on the negotiations. RM did not appear to have an alternative to
continuing the arrangement with POL and discussions were focussed on how we would continue to
work together. POL’s key requirements for the contract were as set out in the paper but
understanding and negotiating the detail of how each element operated in practice was important.
We were entering an intense period of negotiations and seeking to lock down our position. We
might need to seek agreement to a three month extension to the current MDA to be able to work
through the detail on the new contract.
We were planning for our future digitisation and partnership options once areas of exclusivity had
been removed from our contract with RM. Discussions had been taking place with Amazon with
whom we had signed a Non-disclosure agreement. This information should help us understand the
potential economic value of a partnership. We were not considering working with one of the small
players.
A number of points were raised, including:
© how aggressive were we prepared to be in pursuing new digitisation and partnership options?
It was reported that there were some gaps in our ability to deliver on potential options. It was
requested that we map out these gaps and what we would need to do bridge them
. what benefit was a three month extension to POL, could this not allow more time for the
currently agreed elements to unravel? MS noted that if we could get to an agreement point
without an extension we would request an additional Board meeting in January 2020 to
discuss the deal
. that it would be helpful to understand what RM might do as a counter measure to our plans to
work with other operators. We should also consider whether there might be complementary
products between RM, POL and Amazon
. could the requirement to maintain a network of 9,000 branches be problematic for us at some
point in the future and would it be better to be able to agree a reduction if we were likely to
go below that figure? Was there also an issue about what constituted a branch? MS reported
that dropping below 9,000 branches would result in a cut in the fixed fee.
The Board NOTED progress made with the negotiations and the proposed timelines.
Telecoms routers
The Board APPROVED the forecast capex spend of £5.56m on customer routers, which was £0.74m
(15%) in excess of the budget amount which the Board had approved in April and May 2019.
Noting and governance items
Health & Safety Report
It was reported that we were trialling carry cases with glue which allowed bank notes to be
destroyed in the event of an attack. There had been two attacks in branch during the last fortnight
which had involved machetes. We were considering whether to roll out more fogging devices.
The Board NOTED the Health & Safety Report.
Sealings
The Board APPROVED the affixingof the Common Seal of the Company to the documents set out
against itemsnumber 1842 to 1853 inclusive in the seal register.
Future Meeting Dates
The future meeting dates were NOTED.
Forward Agenda
The forward agenda was NOTED.
Page 9 of 9
Action: MS
13.
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential and Subject to Legal Privilege - DO NOT FORWARD
Date of next meeting
- 19 December 2019 (further PSG session). Requirement to proceed to be confirmed nearer the
date.
- 28 January 2020.
Page 10 of 9
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POL00163726