POL00448712
POL00448712
Tab 4 CEO Report
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POST OFFICE LIMITED
BOARD REPORT
Title: Chief Executive’s Report Meeting Date: I 06" June 2023
Author: Nick Read, Group CEO Sponsor: N/A
CEO Narrative
There can be little debate that the period since my last Board Report has been one of the
most challenging for Post Office in its recent history. The combination of the TIS sub-
metric issue, combined with the racial codification scandal as well as legal challenges to the
HSS Scheme, has put the organisation on the back foot reputationally, as well as politically.
It is also unlikely that this will cease in the near term. The Select Committee hearing at
the end of the month along with the publication of Amanda Burton's Report will ensure we
remain in the media spotlight. It is as yet unclear what approach the Government propose
to take with their Remuneration Governance review, but it is unlikely to be positive. The
implications of all this should not be underestimated. A fragile and brittle business is
creaking. Morale is being severely tested. A culture of fear is developing. It is this final
point that we should be especially concerned about. Colleagues are fearful of putting their
heads above the parapet, of taking risks and soon, of admitting mistakes. Risk aversion
and paralysis is setting in, which will not help our commitment to transparency. Our one
safe port is our comprehensive support and response to the Inquiry and Compensation. If
we lose this and we endure the continued bleeding of the past into the current POL, then
we will have an even deeper problem with the brand, our people and our existing business.
It is against this backdrop that we delivered our three most important conferences of the
year, Colleague, Postmaster and NFSP. The Colleague Conference was largely positive.
The financial performance in 2022/23 had been encouraging. Revenue and income were up
on last year at £915m (+9%), although our Mails and PUDO business was down as a result
of industrial action and Royal Mail’s cyber incident. On the other hand, our Banking
business performed well, benefiting from an increase in withdrawals. The two core pillars of
our commercial business are now delivering comparable amounts in revenue (at 34% and
29% respectively), which itself prompts reflection as our business evolves.
However, as we were forcefully reminded at the PM and NFSP conferences, the current
state of PM Rem is becoming unsustainable. Postmaster remuneration increased by only
2% on last year. Further feedback from our Summer ‘Perfect Day’ campaign has shown this
is not sufficient in the face of rising bills and staff cost increases across the network for
Postmasters, who we know are feeling the bite of the cost of living crisis keenly. This was
clearly amplified through the PM survey results which were disappointing and almost
exclusively because of the lack of remuneration.
This June Board was positioned as an opportunity to explore our wider funding challenges.
This we will do, but we should not forget the solid performance in 2022/23. Our underlying
trading performance of £49m was robust, given the turbulent trading conditions. This
reflects the good progress we have made over the last decade towards sustainability, given
we made a loss of £119m in 2012 nearly a decade ago, yet it also masks wider challenges
that loom over the next two years, which I expect will form the centre of our discussions at
Board and our engagement with the Shareholder over the coming months.
Strictly Confidential
POL Board Meeting-06/06/23 37 of 229
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