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POLB(10)8"
POLB 10/10 ~ 20
Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board of Directors
held at 100 Victoria Embankment, London, EC4Y 0HQ on
3" November 2010
Present:
Donald Brydon Chairman
Moya Greene Group Chief Executive
David Smith Chief Customer Officer, Royal Mail Group
Mike Moores Finance Director
Paula Vennells Managing Director
Les Owen Non Executive Director
In attendance:
Jon Millidge Company Secretary, Royal Mail Group
POLB10/10 MINUTES OF PREVIOUS MEETINGS
(a) The Board noted the minutes of the meetings of 21% May 2010, 4"
August 2010, 21% September 2010 and 19" October 2010;
(b) the Board approved the minutes of 29" October 2010.
POLB10/11 CONFLICT OF INTEREST
(a) The Board was concerned that it was able to demonstrate that it
was acting in the best interests of Post Office Ltd. There was a full
discussion where each member outlined their potential conflicts of
interest. The Board agreed that this would be kept under review.
POLB10/12 APPOINTMENT OF DIRECTORS POLB(10)01
(a) The Board approved the appointments of Moya Greene, Les Owen
and Paula Vennells to the Board effective from 18" October 2010.
POLB10/13 HEALTH & SAFETY REPORT
Action: (a) The Chairman asked that future board meetings should have health
Jon Millidge and safety as its first item;
(b) the Managing Director advised the Board that there had been 5
RIDDOR accidents in the period and that these were being
investigated;
(c) I the Board noted that an employee had sustained a gunshot wound
in a recent attack but had recovered well. The Board also noted that
a move to single operation of vehicles was expected to reduce the
POLB10/14
(a)
(b)
(c)
Action:
Jon Millidge
(d)
POLB10/15
(a)
(b)
Action:
Mike Moores
(c)
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number of such attacks as the scope for hostage taking was
reduced.
TERMS OF REFERENCE POLB(10)02
The Board noted the paper on the terms of reference for the Board
and its sub committees. It also noted that its minutes would be
submitted to the Royal Mail Group Holdings Board as the parent
company;
the Board agreed the Terms of Reference for the Board;
the Board agreed the Terms of Reference for the Audit and Risk
Committee and that it should be established well in advance of
separation; but in the meantime asked that the Chair of the
Holdings Board Audit and Risk Committee be asked to include the
Terms of Reference in his remit;
the Board agreed the Terms of Reference for the Remuneration
Committee and that it should be established well in advance of
separation. In the meantime it was agreed that the Remuneration
Committee for the Holdings Board would perform this function.
STRATEGIC PLAN AND FUNDING AGREEMENT POLB(10)03
The Board noted the funding deal agreed with the Government and
congratulated the Post Office executive team on a successful result;
Dave Smith outlined the key elements of the deal:
(i) the deal covered the period from 2012/13 to 2014/15;
(ii) the financial difference between this deal and the one
noted by the Royal Mail Holdings plc Board at 4
September could be explained by the period of the deal
and the slower pace of change;
(iii) all payments from the Government were subject to State
Aid clearance;
(iv) receipt of the funding was dependant upon achievement
of milestones that were regarded by the Post Office
team as straight forward to achieve;
(v) there was some question about the involvement of the
Government in setting bonus targetry for senior
managers. This was unclear to the Board and was to be
resolved;
(vi) the terminology of the payments had been constructed
with a State Aid case in mind and Dave Smith confirmed
that there would be no repayment of the funding to the
Government;
the Board noted that the State Aid process for the 2010/11 funding
would start shortly and that it was explicit that Post Office Ltd would
be expecting to conduct further discussions with the Government on
the funding arrangements for 2015/16 and 2016/17. The Board
Action:
Dave Smith
POLB10/16
POLB10/17
Action:
Mike Moores
POLB10/18
(d)
(e)
(a)
(b)
(a)
(b)
(c)
(a)
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noted that if this further funding were not forthcoming then it would
not be held to the number (11,500) of Post Offices required by the
Government, and this should be made clear to Government;
the Board noted that the funding for 2011/12 had yet to receive
State Aid clearance but there was confidence that this would be
achieved. The Board further noted that if State Aid clearance were
not granted then there was a risk that Post Office Ltd would no
longer be a going concern;
the Board noted that both Royal Mail Group and Post Office were
seeking a long term contract for the provision of mail services by
Post Office.
FINANCE UPDATE POLB(10)04
The Board noted the finance report and expressed concern that
sales performance was still adrift of target. The Board discussed the
action taken to improve sales and noted that Post Office Ltd had
parted company with the Marketing Director. It also noted that an
intense training programme had improved sales effectiveness by
20% for the 1000 agents who had completed it;
the Board further noted that the executive team expected to achieve
its profit target but that this would be through tight cost control
compensating for lower sales.
BANK OF IRELAND UPDATE
Mike Moores briefed the Board on the Bank of Ireland relationship.
He advised the Board that the BOI were coming to the view that the
current joint venture did not provide the best way forward for selling
their products within post offices. He also advised that BOI were
keen to review the Gamma payments (made for selling Financial
Services);
the Board noted that BOI wished to maintain exclusivity in their
relationship with Post Office Ltd;
the Board agreed that metrics to check that the BOI products were
fit for purpose should be established and reported back to the
Board.
POL TENDER FOR SMoTS POLB(10)05
The Board noted Mike Moores’ paper on Simple Money
Transmission Services and that there was an opportunity arising
from the comprehensive spending review by Government to review
the bid already submitted. The Board further noted that the
Company was confident that its bid would provide a much higher
qualitative specification than that provided by PayPoint (the other
bidder), but that it was unlikely to beat the competitor on price;
Action:
Paula Vennells
POLB10/19
Action:
Jon Millidge
POLB10/20
(b)
(c)
(a)
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the Board noted the strategic importance of this contract to the
Company and noted that it would have been able to offer a
reduction in price to the Government had their requirement been for
the service to be offered in the core network of 4,500 offices;
the Board agreed that the compliant bid should not be reviewed but
that the variant bid would be reviewed in line with the proposal. The
Board noted that this would reduce the Net Present Value of the bid
from £4.6m to £2.9m and that the unit pricing would be reduced
from 45p to 31.5p for the first two years from April 2012 and then to
24p;
the Board agreed that a strategy paper would be produced for a
future meeting to look at the options for managing the competitive
challenges from PayPoint.
FORWARD PLAN FOR THE BOARD
The Board agreed the proposed dates for meetings in 2011 and
asked for a further meeting to be arranged for December 2010.
CLOSE
There being no other business, the Chairman closed the meeting.