POL00021560
POL00021560
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
MINUTES OF AN ADDITIONAL MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON
WEDNESDAY 23 JANUARY 2019 BY TELEPHONE AND AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT I
18.00 hrs I
Present: Tim Parker Chairman (TP)
Ken McCall Senior Independent Director (KM)
Shirine Khoury-Haq Non-Executive Director (SK)
Carla Stent Non-Executive Director (CS)
Alisdair Cameron Group Chief Financial and Operating Officer (AC)
In Attendance: Jane MacLeod Company Secretary (JM) I
Veronica Branton Head of Secretariat (VB) I
Rob Houghton Group CIO (RH) I
Ben Cooke ClO — Back Office, Technology Transformation (BC)
Michael Clements Finance (MC) I
Ray Panditharatna DMW (RP) I
Apologies: Tim Franklin Non-Executive Director (TF)
Tom Cooper Non-Executive Director (TC) I
Paula Vennells Group Chief Executive (PV) I
ACTION
1, 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 ir
accordance with the requirements of section 177 of the Companies Act 2006 and the
Company's Articles of Association.
2. BACK OFFICE TRANSFORMATION
AC introduced the paper which set out the processes, risks and mitigation plans being
worked through in order to take the “Go/ No go” decision to migrate PO Limited’s financia
processes from POLSAP to Transtrack CWC (CWC), enabling the current system, POLSAP, tc
be switched off. It was planned to take the “Go/No go decision” on 24" January 2019 anc
for 28" January 2019 to be the first day operating on the new system.
Agents’ pay was already being processed on the new system and cash processing was being
carried out at the Belfast data centre. It was noted that no changes were being made tc
branch systems.
DMW had been engaged as an assurance partner and their latest report had been providec
as an appendix to the paper. The Back Office Team (BOT) testing approach was deemec
appropriate and a suitable plan was in place to address the outstanding points they hac I
identified. I
Three issues of concern had been identified in December 2018, since when further work hac
been undertaken:
© Systems performance: sufficient progress had been made to enable a “go” decision
© — Reconciliations: CWC was correctly recording the value of cash in supply chain but there
were problems with how that value was being reported through to SAP CFS.
Nevertheless, as the differences could be identified automatically and a process hac
been agreed to explain, resolve and rectify these differences, we were satisfied that the
risks could be managed
Page 1 of 3
POL00021560
POL00021560
°
I
I
I
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
e Cash forecasting’: a decision had been taken to stop working on a fully automatec
system within CWC and to build an alternative system using Power BI in order not tc
delay the “Go live” decision. The Power BI system would not be available until late I
February 2019 so standard planned orders for Sterling, which had already beer. I
communicated to branches, would be issued. These manual systems could be operatec I
for an extended period and branches would be able to make changes to orders by
telephone and urgent cash deliveries could be sent overnight by Royal Mail Specia.
Delivery. Payments to suppliers could be made manually. It was noted that manua.
processes would be more costly and we could end up with more cash in branches thar.
needed, although our processes for managing cash had improved. However, the cost
of a further month’s delay would be circa £1.5m, would take us closer to year end anc
we would remain on a system which was fragile. On balance, management believed the
risk of delay appeared to outweigh the risk of migrating to the new system, subject tc
the final “Go/ No go” checks being satisfied.
A number of points were raised, including:
© What were the critical issues outstanding? What were the major risks? Was there <
roll back position? It was reported that the relevant PO Business teams were confident
that should the “Go live” fail, alternative arrangements could operate reasonably wel
for two to three weeks. In practice there were manual processes which had beer
deployed previously. Were this to happen, the customer impact would be limitec
because, as noted, changes were not being made to branch systems and arrangements
were in place for the delivery of additional cash overnight via Royal Mail Specia
Delivery. Next day foreign currency orders could be impacted. We had a short window
within which we could choose to roll back and we could reconcile back to cash at any
point
Did we have a plan for the introduction of Power BI? It was confirmed that we did anc
were reasonably confident that it could be in place in about four weeks
¢ What was the difference between go live tomorrow and in two weeks? It was reportec
that delaying now would require an extension of four weeks because we would have
to align with month end. Delay entailed more operational risk with POL SAP anc
additional costs. We might also have to re-run the training we had already providec
because this needed to be reasonably close to the “Go live” date. Proceeding also hac
the advantage of allowing us to deal with the issues that arose as the new systerr
started to operate and find fixes for them
e — If something changed our view on how long it would take to put Power BI in place
would we choose to delay? It was reported that a delay in the region of two and a halt
to three months would not be viable and would represent a “red line” for the “Go/ Nc
go” decision
© Were the support team in place and ready to operate the new system? It was reportec
that training had been provided for the whole of supply chain, the system had beer
live for some time in Belfast and a number of improvements had been made. Back
office and finance had also received training
* Had any systemic problems been identified? It was confirmed that no systemic
problems had been identified but that we were producing end of day cash reports ir
Belfast and counting the cash at the end of each day but that these reconciliations were
not always reporting correctly to SAP CWS. This might be partly due to timing
differences but we were seeking to identify the root cause
1 The process by which the inventory management team set out how much cash should be sent to and recovered from each
branch, communicating this information to Supply Chain Operations via CWC and to branches via Horizon.
Page 2 of 3
POL00021560
POL00021560
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
Board Directors were satisfied that appropriate testing work had been undertaken anc
suitable assurances received. S K-H noted that she was comfortable with the informatior
provided on the manual processes and the approach to User Acceptance Testing (UATs),
and had discussed the assurance report with DWM.
The Board AUTHORISED the delegation of the “Go/ No go decision” to the CFOO and the
Group ClO.
Date
Page 3 of 3
POL00021560
POL00021560