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Minutes of the Strategic Executive Group (“SEG”) meeting held at
100 Wood Street, London, EC2V 7ER on Wednesday 26 June 2024 at 11:00 am
Present:
@ Nick Read (Chair) Neil Davey (joining at 14:00 - deputising for the CFO)
¢ Owen Woodley © Asha Patel (leaving at 14:00 - deputising for the CFO)
Karen McEwan © Chris Brocklesby
© Nicola Marriott - deputising for the Chrysanthy Pispinis
CPO
¢ Sarah Gray — deputising for the GC
Other Attendees: Alison Hoyland (Deputy Company Secretary)
Other attendees as shown against agenda items.
Apologies: Ben Foat, Kathryn Sherratt, Karen McEwan from 13:00
Action
1. SEG Actions:
© SEG noted the action log, including the progress on actions and agreed those marked for
closure.
Pre-discussion:
The following was noted:
« The recent data breach was due to be discussed later on the agenda.
© The Strategic Review being undertaken by Teneo was expected to conclude in October.
The ICO had published its Practice Notice in relation to POL’s FOIA performance, but had
since taken it down, due to not giving enough advance notice to POL.
¢ The latest position in relation to POHIT Rule 9 requests and Phase 7 preparations.
2, Finance and Planning
2.1 CFO report, to include:
— P2 finance report
— Working Capital Facility increased usage
— External Auditor appointment
— Risks
TABLED and NOTED was the CFO paper.
P2 finance report
Key points of note discussed were:
¢ P2 revenues of po TIRRELEVANT. were driven by a continuation of stronger
banking deposits volumes, a higher annual Home Insurance profit share and higher credit card
volumes.
* This has translated to variable remuneration for Postmasters o
revenue and in line with the budget and the prior year).
{budget in the month as a combination of timing
differences and savings — translating to a zero P2 trading profit, {
line with the prior year.
«YTD, trading profit stood ai
forecast suggested that this position would be eroded with significant unbudgeted costs and
Opex risks expected to crystallise. An update would be provided to SEG after the next Opex
Committee review on 24 June.
and in
however indicative views of the 2+10
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e SEG agreed the messaging needed to be reinforced around the fact there was no budget to
meet unbudgeted costs and that there remained tough cost challenges to meet in-year. SEG
had a leading role in ensuring both challenges were understood within their respective
functions.
SEG RESOLVED to APPROVE the submission of the P2 finance report to the Board.
WCE & Wrongful Trading
SEG RESOLVED to APPROVE, the submission of the Wrongful Trading position to the Board for
Action:
¢ Senior Legal Counsel, Banking and Finance, to be consulted each month on WTA position
ahead of submission to the Board and Board to have access to periodic external legal advice.
External Auditor
SEG RESOLVED to APPROVE the submission of the!
POL’s external auditor to the Board for ratification.
ith fees
Risks
Key points of note discussed were:
* Corporation Tax risks arising as a result of HMRC’s stance on the funding, expenditure and
outs for Remediation Matters a { : : :
contractor population. The Board challenge remained — which was to eradicate the IR35 risks,
which included associated costs — so the Board update would include a recognition of the
additional costs challenge that arose as a consequence. Associated to this was the need to
reduce the reliance on contractor resource.
Contract and sourcing strategy matters
TABLED and NOTED were the contract papers.
2.2 Travel management sourcing strategy
Liam Carroll/ Martin Hopcroft
Key points of note were:
¢ The proposed sourcing strategy for the procurement of a travel management services provider
* SEG noted the backdrop of the Strategic Review, and the need to allow for flexibility within
POL’s contracting decisions in the meantime.
SEG RESOLVED to APPROVE the submission of Travel management services sourcing strategy to
the Board for approval.
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Estates management sourcing strategy
Liam Carroll/ Pete Marsh (via Teams)
Key points of note were:
© The proposed sourcing strate
for the procurement of estates management services was for
a maximum i "I with an estimated total contract value of;
e There was! IRR N :
SEG noted the backdrop of the Strategic Review, and the need to allow for flexibility within
POL’s contracting decisions in the meantime.
SEG RESOLVED to APPROVE the submission of Estates management sourcing strategy to the
Board for approval.
Commercial Fleet Maintenance
Liam Carroll/ Pete Marsh/ Patrick Bell
SEG RESOLVED to APPROVE the contract award of Commercial Fleet Maintenance and
Associated Services to Fraikin Ltd, following the completion of a compliant procurement.
Transforming Technology
Technology papers
TABLED and NOTED were the Technology papers.
SPMP Business Case
Chris Brocklesby/ Samantha Swann
SPMP Business Update:
Key points of note discussed were:
® Horizon Replacement funding was in place to June 2024, and Horizon Extension funding to
March 2025.
The business case for funding beyond June 2024 had been delayed, due to the need to address
the recommendations arising from the DBT approval process (from IPA and Public Digital) —
and latterly, due to the General Election.
@ POL was working with DBT to develop an action plan to respond to the recommendations.
e Inthe meantime, DBT has agreed to let POL spend money previously ringfenced for Horizon
Extension workstreams on SPMP and related activities to provide funding to support Horizon
Replacement until mid-December 2024.
¢ The DBT Permanent Secretary had indicated the Board should be asked to sign off the action
plan (it was proposed to ask the Board to delegate this to the Investment Committee).
e The outputs of the Strategic Review could have a bearing on the business case and that would
need to be reflected in due course; in the meantime, it was likely necessary to keep the
programme run-rate spend to a minimum.
SEG RESOLVED to APPROVE the submission of the business case and DBT funding update to the
Board for noting.
Funding:
SEG RESOLVED to APPROVE the submission of the SPMP Drawdown fundin;
the Board for approval.
Branch Identity and Access Management (IDAM) solution - Business Case and Drawdown
Chris Brocklesby/ Samantha Swann/ Paula Jenner (via Teams)
Key points of note in the discussion included:
¢ The drawdown request was within the envelope of current DBT approved funding.
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The IADM solution remained a ‘no regret’ initiative, including as against any likely outputs
from the Strategic Review.
SEG RESOLVED to APPROVE the submission of a request to replace the current end-
IDAM
‘to the Board for approval.
wn
Chris Brocklesby/ Samantha Swann
Key points of note in the discussion included:
* The drawdown request was within the envelope of current DBT approved funding.
* The Second Device programme remained a ‘no regret’ initiative, including as against any likely
outputs from the Strategic Review.
SEG RESOLVED to APPROVE the submission of a request for!
approval had been provided as part of the Horizon Replacement Business Case, to the Board for
approval.
Branch Technology Refresh
Chris Brocklesby/ Samantha Swann
SEG RESOLVED to DECLINE the submission of the paper on the Branch Technology Refresh to the
Board, noting it was not in line with the Board action to provide a roadmap and overview of all in-
branch technology.
Horizon continuity of service
Chris Brocklesby/ Samantha Swann/ Patrick Bell/ Liam Carroll
Subject to Legal Professional Privilege
Key points of note in the discussion included:
.
Fujitsu was yet to formally commit to an extension of the Horizon agreement (of any length)
beyond March 2025 and it was understood that any such commitment was dependent on a
formal request from Government.
* This dependency would not now be met until after the General Election.
«Against this advice, the options were:
a. A5-year extension with Fujitsu
b. A 2-year extension with Fujitsu — with an additional 3-year option
c. A 2-year extension with Fujistu, after which the Fujitsu resource would be brought in-
house; this was a reserve option under (a and b).
e All options should be put to the Board, with no direction on a recommendation.
SEG RESOLVED to APPROVE the submission of the Horizon Continuity of Service paper to the
Board to agree the preferred option.
SME Strategy and Branch Automation
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Martin Edwards/ Barbara Brannon
Key points of note in the discussion included:
* The strategy was welcomed and POL had a good story to tell.
© There was no financial commitment as yet.
@ The communication plans should include Postmasters.
3.7 Next Generation Mails Automation
Martin Edwards/ Barbara Brannon
Key points of note in the discussion included:
¢ The drawdown request was within the envelope of current DBT approved funding.
@ The NGMA programme remained a ‘no regret’ initiative, including as against any likely outputs
from the Strategic Review.
SEG RESOLVED to APPROVE the submission of a request for
Change Portfolio
TABLED and NOTED were the change portfolio papers.
3.8 Back Office Operational Modernisation — sourcing strategy and Drawdown
Chris Brocklesby/ Caitlin Johnson/Paula Jenner (via Teams)/ Liam Carroll
Key points of note from the discussion included:
® The backdrop of the Strategic Review, and the need to allow for flexibility within POL’s
procurement activity in the meantime.
The funding drawdown for FY24/25 was considered ‘no regret’ and would provide for the
procurement exercise to be run.
SEG RESOLVED to APPROVE the submission of the request to re-tender the Back Office contract
via the FTS Restricted Procedure for amaximum ~ ito a maximum value of {:
and a request for 0 the Board for approval.
Data Enablement Programme Drawdown
Key points of note from the discussion included:
© The backdrop of the Strategic Review, and the need to allow for flexibility within POL’s
procurement activity in the meantime.
The funding drawdown for FY24/25 was considered ‘no regret’.
SEG RESOLVED to APPROVE the submission of the proposed strategy of replacing and
consolidating legacy data systems with a modern data platform and re-platforming Master Data
Management and a request for I to the Board for approval.
3.9 Cyber Security Programme [Business Case]
Chris Brocklesby/ Neil Bennett
TABLED and NOTED was the Cyber Security Paper.
Key points of note from the discussion included:
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¢ Taking account of affordability, the revised proposed approach had been developed as a
minimum viable scope of essential features.
Further recommendations and associated finding would come to SEG and Board for approval
in due course. In the meantime, NB was engaging with the CISO at Camelot to understand the
approach that had been taken there, having understood from the new Interim Chair that
Camelot had sought to strengthen its cyber maturity and there may be lessons to be learned
etc.
© The CISO, NB, highlighted that the!”
of remediation activity would be higher over the long term.
IRRELEVANT “and total cost
SEG RESOLVED to APPROVE the submission of the Cyber Security Programme Business Case to
the Board for approval.
IT Capabilities Framework
Chris Brocklesby/ Samantha Swann/ Liam Carroll
TABLED and NOTED was the IT Capabilities Framework paper.
Key points of note from the discussion included:
The sourcing strategy would provide for a network of technology suppliers from which POL
could draw down (other than for NBIT)
There was no spend commitment.
SEG RESOLVED to APPROVE the submission of the IT Capabilities Framework sourcing strategy,
covering a maximum 4-year term (2+1+1) and for a maximum value of £45m, to the Board for
approval.
Rebuilding Trust
Inquiry Update (Verbal)
Diane Wills / Dan O'Mahoney
The verbal update was NOTED, covering:
i, Phases 5&6
ii. Witness support legal costs
iii. Disclosure remediation costs
iv. Internal and external communications and media interest
v. Data disclosure
vi. Phase 7 preparations
SEG RESOLVED to APPROVE the submission of the Inquiry update to the Board, noting that the
Inquiry — emerging themes/lessons from Phases 5&6, and preparations for Phase 7 were also due
to be discussed at the Board awayday on 9 July.
Finance Update
Diane Wills / Dan O'Mahoney/ Neil Davey/ Liam Carroll
TABLED and NOTED was the finance update.
Key points of note discussed included:
e Retrospective Shareholder approval under the AoA was being sought in relation to the
committed RU and Inquiry spend.
judget was currently forecasted to cover spend to early September 2024.
@ POL was working with DBT on cost forecasts and permitted modifications to the funding
subsidy to allow spend to continue until the end of this funding window ending in March
2025, as well as funding plans for the next funding window.
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SEG RESOLVED to APPROVE the submission of the finance update to the Board for noting.
KPMG/ eDiscovery Services Contract
Simon Recaldin / Dan O'Mahoney/ Neil Davey/ Liam Carroll
TABLED and NOTED was the KPMG/ eDiscovery Services Contract paper.
SEG RESOLVED to APPROVE the submission of the sourcing strategy for the procurement of
eDiscovery services for RU & Inquiry until November 2026 with a maximum total contract value
of £12m to the Board for approval.
RU Update
Simon Recaldin
TABLED and NOTED was the RU update covering:
i. Overturned conviction cases.
ii. Progress in relation to the Horizon Conviction Redress Scheme.
iii. Horizon Shortfall Scheme cases.
iv. GLO disclosure.
v. Suspension Remuneration Review cases.
vi. Progress in relation to the POL Process review pilot.
SEG RESOLVED to APPROVE the submission of the RU update to the Board for noting.
HSF Contract Strategy Paper
Simon Recaldin/ Liam Carroll
TABLED and NOTED was the HSF Contract Strategy Paper.
Key points of note during the discussion included:
¢ The contract extension and sourcing strategy approach would allow for a procurement process
to test the market for alternative providers for RU legal support.
© As per the earlier discussion on RU and Inquiry finances, retrospective Shareholder approval
under the AoA was being sought in relation to the nr
SEG RESOLVED to APPROVE the submission of the HSF contract strategy request to the Board for
approval.
Disclosure to support police investigations
Sarah Gray/ John Bartlett
TABLED and NOTED was the paper on Disclosure to support police investigations/ Passing of
material to law enforcement.
SEG DECLINED to APPROVE the submission of the paper on disclosure support for police
investigations to the Board, noting further work and assurance was required in relation to Horizon
data assurance.
Data Breach Incident
Sarah Gray/ Chris Russell/ Simon Recaldin/!
GRO
TABLED and NOTED was the briefing note on the Group Litigation Order (GLO) Settlement Deed
Data Breach Incident.
Key points of note from the discussion included:
The breach involved the release of personal and sensitive data by POL staff contained in an
unredacted version of the GLO.
Given the nature of the data, POL had reported the breach to the ICO.
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SEG RESOLVED to APPROVE the provision of } IRRELEVANT __ provision to all impacted
individuals for‘
Action:
.
The breach had been subject to media coverage.
The proposed_remediation steps, aside from fixing the control failures, comprised the
provision of }
compensation offer.
“TRRELEV,
IRRELEVANT
POL should look to take remediating steps swiftly.
Any ICO fine might take account of POL’s response, and it could be reduced if the response
was judged to be appropriate.
At the upcoming meeting of ARC, colleagues would need to be ready to speak to the incident
and the control failures — and the steps being taken to address the control failures which would
likely include introducing a categorisation policy for documents with restrictions on what
action can be taken.
The Board would be kept updated.
jat a cost of up to
Subject to discussion with the the compensation approach and offer to come back to
SEG (by email would be permissible, depending on timing) — and an additional Opex to be
arranged to determine affordability.
SG-
ASAP
5.2
People and Culture
Postmaster Survey Results/Action Plans
Shaun Kerrison/Tracy Marshall
TABLED and NOTED was a paper on the Postmaster survey results and action plans.
Key points of note from the discussion included:
The Postmaster and staff survey results and action plans would be discussed at the Board
awayday on 8 July, ahead of the discussion on the new proposed Culture Dashboard.
The update to the Board should show the link between the actions and feedback more
clearly and how the presentation should be consistent with how the staff survey results and
action plans were being presented.
SEG RESOLVED to APPROVE the submission of the Postmaster survey and action plan to the
Board away7day, subject to the amendments discussed.
Culture Dashboard
Tim Perkins
TABLED and NOTED was the Culture Dashboard.
Key points of note discussed were:
.
.
The dashboard recognised that culture change was critical to POL’s success and would provide
the Executive and the Board with better oversight across a number of relevant of key MI points.
The indicators had been developed with the Institute of Business Ethics and were in line with
best practice ethical culture reporting.
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* The dashboard would be presented bi-annually.
© It would be presented for the first time at the Board strategy away day.
* The dashboard would continue to be iterated and improved, including from Board feedback
on what MI / analysis it wished to see.
SEG RESOLVED to APPROVE the submission of the Culture Dashboard to the away day for noting.
Organisational Design: principles, objectives and targets
Tim Perkins
TABLED and NOTED was a paper on organisational design (OD), principles, objectives and targets.
Key points of note discussed were:
¢ The OD objectives and principles would inform the work on reducing central costs, providing
for consistency of approach, but also allowing for flexibility in some areas, eg on spans of
control for certain roles.
* The process would be managed centrally, again to ensure consistency and ensure cross-
function oversight.
¢ In train plans could continue, but would need to be sense-checked with the people team to
ensure they were in line the new OD objectives.
The objectives should be consistent with any outputs from the Strategic Review, but this would
be kept under review.
* Comms to staff would need to balance the need for transparency, with the need to avoid
undue concern.
Action:
e Any in-train plans to be discussed with people team to determine if they remain consistent
with wider OD considerations/objectives.
SEG RESOLVED to APPROVE the OD objectives and principles.
Past Roles review
Nicola Marriott
Note subject to Legal Professional Privilege
NM provided a verbal update on the proposals that would be put to the Board for approval in
relation to Past Roles review.
Key points of note discussed were:
The proposals would cover the employment/restructuring options and associated risks in
relation to permanent colleagues in the Remediation Unit.
e The options were developed against the backdrop that no misconduct issues had arisen to
date, rather the concerns were more around perception and optics.
¢ The Board would be asked to agree the preferred option to be taken forward, so the paper
would be presented as an options paper, but with no recommendation.
Optics and the perception concerns aside, given the expected increase in volume of RU work,
the key two risks to be managed related to POL’s susceptibility to challenge under employment
law and crucially the pace of redress being adversely impacted.
Ultimately, the decision would be based on the Board’s appetite to risk.
SEG RESOLVED to APPROVE the submission of the Past Roles review to the Board for approval.
Improving Branch Profitability/Commercial
Postmaster contracts
Sarah Gray/ Neil Wallis/ Tracy Marshall/ David Southall
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TABLED and NOTED was a paper on Postmaster contracts.
Key points of note discussed were:
¢ The context included the interim steps POL had taken in response to the CU in relation to legacy
contracts by way of a Contract Restatement communication, sent to Postmasters in 2019.
It was now proposed to incorporate the necessary changes into the contracts themselves, and
in time, the plan would be to rewrite the standard contracts to be more user-friendly.
The scope of the current project only extended to the incorporation of the CU-respondent
changes.
The second phase, re-write and simplification, would also need to into take account relevant
outputs from the Strategic Review.
SEG did not think submission to the Board was required for Phase 1, which the team could
progress, though noted that the issue of Postmaster contracts may be touched on at the Board
away day as part of the wider Inquiry discussions.
* The team should engage the Postmaster NEDs and begin the wider communication piece with
Postmasters and relevant representative bodies.
POI Aggregators
Paul Dashwood/ Simon Parr
TABLED and TAKEN AS READ was the paper on POI Aggregators.
SEG RESOLVED to APPROVE the submission of the POI Aggregators paper to the Board for
approval.
Items for presentation/noting
FOI Weekly Tracker
TABLED and TAKEN AS READ was the FOI update.
7.2
Group Assurance Dashboard
TABLED and TAKEN AS READ was the Group Assurance Dashboard.
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Corporate Responsibility Strategy
TABLED and TAKEN AS READ was the Corporate Responsibility Strategy paper.
SEG RESOLVED to APPROVE the submission of the Corporate Responsibility Strategy paper to the
Board for noting.
Retail Performance Dashboard
TABLED and TAKEN AS READ was the Retail Performance Dashboard (p2).
SEG RESOLVED to APPROVE the submission of the Retail Performance Dashboard (P2) to the
Board for noting.
Technology Dashboard
TABLED and TAKEN AS READ was the Technology Dashboard.
SEG RESOLVED to APPROVE the submission of the Technology Dashboard to the Board for
noting.
Speak Up and Assurance and Complex Investigations Report
TABLED and TAKEN AS READ was the Speak Up and Assurance and Complex Investigations
Report.
SEG RESOLVED to APPROVE the submission of the Speak Up and Assurance and Complex
Investigations Report to the Board for noting.
Health & Safety Report
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TABLED and TAKEN AS READ was the Health & Safety Report.
SEG RESOLVED to APPROVE the submission of the Health & Safety Report to the Board for
noting.
7.8 Welsh Language Scheme
TABLED and TAKEN AS READ was the Welsh Language Scheme paper.
SEG RESOLVED to APPROVE the submission of the Welsh Language Scheme paper to the Board
for approval.
7.9 SEG-subcommittee reports
7 TABLED and TAKEN AS READ were the:
= Retail Committee report
— _ IADG report.
8. Governance Matters
8.1 Payzone Liquidation
TABLED and TAKEN AS READ was the Payzone Liquidation paper.
SEG RESOLVED to APPROVE the submission of the Payzone Liquidation paper to the Board for
review and approval for submission to the Shareholder consent.
8.2 ICO Publication Scheme/Practice Notice Update: Briefing note and action plan
TABLED and TAKEN AS READ was the ICO Publication Scheme/Practice Notice Update.
SG confirmed post-SEG she was content to APPROVE the papers for submission to the Board for
noting.
8.3 SEG ToR
The SEG RESOLVED to APPROVE amended ToR.
8.4
Draft July Board agenda
The draft agenda was noted.
8.5
20 May Monthly SEG minutes
The minutes of the meeting held on 20 May 2024 were APPROVED as a correct record of the
Meeting.
Any other Business and Date of next scheduled meeting.
The next monthly SEG meeting was on 24 July 2024.
There being no further business the meeting closed at 18.00
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