UK Government
Investments
OFFICAL SENSITIVE - COMMERCIAL
Post Office Limited (POL) Quarterly Shareholder Meeting (QSM)
On 14 September 2023 at 14:30pm
Held as a hybrid meeting via Microsoft Teams and at POL offices
In attendance:
Apologies:
Carl Creswell, DBT Director (Chair) (CC)
Nick Read, POL CEO (NR)
Henry Staunton, POL Chair (HS)
Simon Recaldin, POL Remediation Unit Director (SR)
Asha Patel, POL Director (AP)
Owen Woodley, POL Deputy CEO (OW)
Diane Wills, POL Inquiry Director (DW)
Tim McInnes, POL (TM)
Kathryn Sherratt, POL Interim CFO (KS)
Chris Brocklesby, POL CTO (CB)
Beth White, DBT Deputy Director (BW)
Rebecca Stockbridge, DBT Manager (RS)
Lorna Gratton, UKGI Director, Shareholder NED (LG)
Roshana Arasaratnam, UKGI Executive Director (RA)
Rob Mackie, UKGI Executive Director (RM)
Ben Kennedy, UKGI Assistant Director (BK)
James Gourlay, UKGI Assistant Director (JG)
Alisdair Cameron, POL CFO (AC)
1. Introductions and Actions from the Last Meeting
e CC opened and welcomed everyone to the meeting.
e CC noted that the single outstanding action has been closed. This action called for “culture”
to be added to the agenda for the September meeting of the POL Board, which has been
done.
2. A. Update against DBT’s Four Strategic Priorities
e HS provided an update on progress against the Shareholder’s four strategic priorities as set
in the annual Chair's Letter.
1. Effective financial management and performance: HS noted there has been a good
start to the term for trading, with turnover and profit both up and with postmaster rem
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up to 51% of turnover. He updated on ongoing improvements to financial management
and controls, including efforts to prioritise spend and monitor savings, including
establishment of the new board Investment Committee which will be chaired by
Andrew Darfoor to oversee NBIT and other change initiatives.
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2. Addressing Inquiry disclosure remediation: HS assured the group that POL continues
to work tirelessly on this and noted that the additional work has meant costs have
increased. HS stressed the importance of a break from the past under an entirely new
management team none of whom were in post at the time of the historic issues.
3. Maintaining and improving capacity, capability and resilience: HS emphasised that
management, the board and the shareholder are all under huge stress, which would
only really pass when the Inquiry was finished and settled, and that the focus was
getting through the next 12 months.
4. Facilitating the sharing of information in an open and transparent manner: HS stated
that POL agrees with the Shareholder on this point and that resolve would be tested
during the funding discussions. HS reiterated the importance of having the accounts
signed by December, and his hope that PwC would agree that a strongly worded
comfort letter is sufficient. HS closed by noting this is the main thing worrying the Chair
at present.
CC thanked HS for his update and agreed it is a challenging time and that it was important to
continue to maintain productive relationships.
CC asked that Terms of Reference of the new InvestCo be shared with UKGI and the
Shareholder. TM confirmed that the TOR had been agreed with the InvestCo Chair and
would be shared the following week.
B. Simmons Review Recommendations on RemCo Governance
HS acknowledged there is a lot to do, starting with looking at the RemCo TOR with their
remuneration consultants Willis Towers Watson. Grant Thornton's wider governance review
will pick this up as well. HS committed to keeping the Shareholder informed as their work
develops.
CC noted that the Simmons report drew a line under certain issues and provided an action
plan to take forward. CC urged POL to ensure it was on the front foot and implementing the
actions with a view to the next set of accounts.
NR noted that the action plan had been approved internally and would be going to the Board
in September before going to the Shareholder in a letter, including the three TIS issues which
the Minister has asked for.
CC thanked NR and noted that the Minister continues to have a keen interest in this matter.
C. Approach to Inquiry Disclosure.
DW provided background to the disclosure issues which had arisen at the Inquiry over the
past several months, and updated the group on the 5 September hearing. DW was hopeful
that POL had done enough to mitigate the Inquiry’s (and Postmaster Core
Participants’ )immediate concerns and that we anticipated Sir Wyn confirming that Phase 4
could proceed.
DW noted that they have leaned heavily on their service providers in recent months, with
BSFf undertaking a root-and-branch review, and that POL has boosted resource within the
team. Efforts to determine fault/cause/liability for the errors is underway and being led by an
expert who has been recruited to work solely on this issue, along with an additional
eDiscovery expert to provide constructive challenge to KPMG.
NR reported that he had met with KPMG leadership that morning and expressed his
expectation that mitigation efforts will continue. NR noted that the priority now is to continue
collaborative working and operational excellence amongst POL, HSF, KPMG and Peters &
Peters, and that the focus would shift to cost recovery in future, but that POL was keeping
the point alive with the suppliers.
LG relayed the Minister's view that maximising cost recovery is a priority and that POL would
have the Shareholder’s full support in those efforts.
3. A. Operational and Financial Performance
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KS provided an update on current performance. Trading performance has been positive
YTD, driven by slight mails upside, positives in the platform business and some cost upside.
However the size of upside is very small vs wider funding challenges.
KS reminded the group of the importance of this positive performance given headwinds,
which she suggested is a testament to diversification and some positive outcomes against
challenging market conditions.
On banking, KS noted that the Shareholder will likely be interested in supporting and staying
informed on Banking Framework 4 negotiations, which are underway.
KS discussed projections of hitting full year budgeted trading profit given Bank of Ireland
arrangements and interest rates.
KS introduced Parcels Online as a first step in accelerating POL’s mails strategy and helping
in efforts to disentangle from Royal Mail, reporting that so far it is going very well. KS
reported that Royal Mail is keen to join subject to agreeing appropriate margins.
The group discussed the challenges of income from platform products not being shared with
postmasters.
The group discussed the £15.9m cost challenge, with KS flagging that the makeup and
bounds of the sum would likely change. CC urged that POL take care that the challenge be
met with genuine efficiencies and not underspends. KS reminded that the original
composition of the Board approved savings list included a combination of one-off cost
savings, recurring savings and cost avoidance - for the objective of redirecting to an increase
in Postmaster Remuneration. KS offered to take LG through the detail, including how they
are managing increasing costs in other areas which may offset savings.
LG asked about DMB exits being behind schedule. NR gave an overview of the challenges of
closing DMBs. The group discussed the merits of plans to close DMBs, and the difficulty of
prioritising it vs running the business.
. Funding Request Submission and Next Steps
TM updated on the challenging timescales to getting the accounts filed, and on the progress
of the business cases supporting the funding ask. TM asked that the Shareholder be mindful
of the pressure POL is under to deliver the Baseline NBIT business case at speed and the
limits of what is feasible. He asked that the Shareholder explore the possibility of pre-brief
meetings for CMA and Investment Committee.
The group discussed the process, next steps and challenges around funding and getting the
ARA signed, including work on the security-headroom waiver and comfort letter.
KS asked that Shareholder provide a date for signing the comfort letter.
. Assurance Required on Funding
CC thanked POL for their assistance with the useful Interpath report.
TM noted that POL is ready for Interpath to do the NBIT portion at the right time.
. Remediation Unit update
SR provided an update on OC, including progress on the remediation principles and process.
SR indicated he was pleased that a recent compensation case had gone “door to door” in
under a week which showed it could be done.
SR welcomed any proposition to get the full and final settlement efficiently to postmasters,
and hoped for comfort on the details of how the £600k fixed sum offer would work.
CC updated on the £600k fixed sum offer proposal which was going through HMT clearance
and could be announced any day. CC noted presentational risks with the proposition
including that £600k may be less than some recipients felt they were entitled to, but noted
that recipients were entitled to decline the offer and go through the full claims route if they
preferred.
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SR raised timings of any potential announcement with CC and the group discussed
parliamentary procedure, timings of comms, the need to brief the advisory board and legal
representatives.
B. Proposals for HSS Closure and Appeals Process
The group discussed the work to identify the issues with the scheme which is to be completed
before Phase 5 of the Inquiry.
The budget for the dispute-resolution process was based on 350 cases being received but
this now appears to be an underestimate. SR noted that POL is working at risk on the tax-
tops and GLO until funding is confirmed.
5. NBIT
CB provided a “report from the coal face” on NBIT development, including that Release 2 is
complete and has been through UAT with front-line staff. CB noted the upcoming challenge
of persuading Royal Mail and partner banks to provide their approval for their systems to
interact with NBIT. CB noted that a demo unit is available for use at Wood Street.
CB updated on the Accenture review, which was in week three of its seven-week run.
Accenture is on track to deliver the report for the October board and will focus on actionable
insights to take up moving forward.
CB updated on spend minimisation, including the narrowed focus on mails, banking and
stamps and the limited 50-branch pilot deployment. CB noted the balancing act required to
retain knowledge in this environment and outlined three phases: (1) Stood down whole teams
(mostly at Accenture) working on future releases; (2) Going activity by activity, serving notice
to contactors where necessary; (3) Looking at programmatic structure and where there are
efficiencies to be found in duplicate resources/management. CB continued that there may be
more savings to be found, including in procurement where procurements not needed
immediately have been shifted to the right. CB noted that the STP and RTP programmes
have reverted to a single SPMP, and that there was a need to remotivate and reenergise
remaining resources to avoid needed people leaving.
CC thanked CB for his update and thoughtful and considered approach, and recommended
that CB have an introductory meeting with Jason Kitcat the DBT CTO.
CC asked about negotiations with Fujitsu. CB outlined current arrangements with Fujitsu:
Support runs to March '25 while Infrastructure expires in March '24. A request to extend
Infrastructure to March '25 will come to the October board. The procurement strategy beyond
March ’25 will kick off early next year to extend those two contracts. To date POL has told
Fujitsu that they would like a flexible agreement going forward without a precise end date, but
Fujitsu would like to see a funded and well-planned SPMP so they know POL is serious about
replacement. In short Fujitsu is happy to collaborate if they know POL is working to get out.
LG suggested that NAO will likely scrutinise this area at some point and that POL, the
Shareholder and UKGI should be mindful of this in decision-making and record-keeping.
NR noted that NBIT is being onboarded onto the Government Major Projects Portfolio and
asked what this means. The group discussed. LG noted that it provides external validation to
HMT which may be helpful. TM expressed his hope that this will smooth things along.
6. People and Culture Change
OW introduced the Ethos programme, including the programme's guiding beliefs and five
workstreams. POL plan to start rolling out initiatives in early 2024, starting with an internal
conference in April. The programme is expected to last for months and years.
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e CC asked that the action plan be shared for ClJ/HlJ follow-up.
e LG queried whether people would find it to be much of a change. OW responded that it will
be a massive change and that some people may choose to leave the company, but the
business needed to hold people to account and continue to address cultural issues.
e The group discussed the benefits of 360 performance reviews, which will now become a
formal part of the performance rating.
Strategic Risks and Mitigation
« This agenda item was not reached.
AOB
None.
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Actions:
Actions Log :
Action Owner Status Update
15 I POL to share ClJ/HIJ action plan as part of Ethos Programme POL Open
CB to consider a meeting with Jason Kitcat to discuss NBIT .
14 . Joint Open
delivery plans
DBT to provide an update on progress toward producing a
18 comfort letter. DBT Peer
26/09/23 — A pre-brief has been arranged for
42 I DBT to explore the possibility of business-case pre-brief DBT 5 keyholders, but is not possible for the
meetings for CMA and Investment Committee Lee committee itself.
KS to take LG through the detail of their costs challenge plans,
11 I including how they are managing increasing costs in other areas POL Open
which may offset a savings (e.g. increased headcount costs)
10 Post-Simmons action plan to be shared with Minister, including POL o
an update on the TIS issues which the Minister was interested in pen
26/09/23 — The TOR were provided to UKGI
as part of the September board pack.
9 I InvestCoTerms-of Reference-tobe shared POL Clesed
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08/06/23 — NR agreed ‘Culture’ will be added
to the POL Board for Sept.
POL Closed
08/06/23 — Action was agreed to close,
POL to organi ting with UKGIand BEIS 4 iowth
plan-for SPMP-g pprovals- POL Closed
08/06/23 — Action was agreed to close, as POL
POL-musttal to BEIS and UKGI before-any_ further funding is- has already made an announcement on this
f POL Closed
08/06/23 — Action was agreed to close as POL
has already provided an update
eo Update to Jan 2023— Pol te provide she URGHs_ POL Closed
Jan.
08/06/23 — CC proposed to close this action,
. . . as the HMRC letter has now been shared with
Overturned -historical convictions
*« =POLto-share-the-rel Het ived-f POL Closed DBT
HMRC with BEIS and UKGI.
08/06/23 — Action was agreed to close
Postmaster Detriment Rot B-PROL k-with BEL funding
proposal
+ Update+0Jan-2023—POL to respondte BEISL DBTROL Closed
the Rot A-fundi of £46
-Ap PI
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08/06/23 — CC suggested due to the ongoing
work on this action, to close this action and
UKGLa respond te Tim Parkers Leteron the work that POL has
was agreed by colleagues
done totransform the cultural and process aspects of the
busi i p to-the Inquiry.
. 0 2023 et Ti UKGI Closed
Parker's letter after the POL Board in Jan.
* RAindi ion-with-JD- Ituralaspect
BEIS Closed
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