Cover Letter
Dear Shareholder,
In advance of the Quarterly Shareholder Meeting (QSM) due to take place on 11** April 2024, please find
enclosed the POL progress update report.
As part of the standing agenda items this report includes an update on the four strategic priorities that
the Department would like POL to focus on in the 2024/25 financial year, being:
+ Effective financial management and performance, including management of legal costs, to ensure
medium term viability;
+ Addressing of POL’s Remediation matters and setting the business up for success in the future;
* Maintaining and improving POL’s capacity, capability, and resilience at all levels of the organisation;
+ Facilitate the sharing of information with UK Government Investments (“UKGI") and the Shareholder in
an open and transparent manner.
Whilst the QSM is a formal forum and a key mechanism in supporting the relationship between POL and
DBT, we will of course continue to keep the Department updated on progress against these specific
priorities through the regular 1:1s between the DBT Permanent Secretary/Chair and DBT Director
General/CEO.
We look forward to meeting with you soon.
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Shareholder Quarterly Briefing
11 April 2024
Post Office Limited - Legally Privileged
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Agenda for the meeting
Introduction 15.00pm - 15.05pm Carl Creswell Page 4
+ Approval of minutes from Previous meeting
Update against DBT’s 4 strategic priorities 15.05pm - 15.15pm Nick Read Page 6
Actions from last meeting: Update on HJ and CU 15.15pm - 15.55pm Martin Roberts, Simon Oldnall Pages 8-9
& Tracy Marshall (& Appendix)
Culture Update 15.55pm - 16.15pm Tim Perkins Pages 11 - 12
Strategic Platform Modernisation Programme (SPMP) 16.15pm - 16.40pm Chris Brocklesby Pages 14 - 19
Remediation Unit Update 16.40pm - 16.55pm Simon Recaldin Pages 21 - 25
Issues of Note /AOB as required 16.55pm — 17:00pm
Other Items included in Pre-read (see Appendix)
POL operational & financial performance Update Pages 28-31
Strategic Risks & Mitigations Page 33
HIJ Update - Further Detail Pages 35 - 42
CU Updtae — Further Detail Pages 44 - 49
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Actions from last meeting and Updates
—_ Actions from last meeting Update I owner [Status I
Share action plan for Project Ethos Update on Project Ethos to be provided in the next Quarterly Karen Ongoing
Shareholder Meeting, 11 April 2024 McEwan
&Tim
Perkins
2 Provide update on all CJ and Hi actions Progress Update on HIJ and CU to be provided in the next Martin Ongoing
Quarterly Shareholder Meeting, 11 April 2024 Roberts,
Simon
Oldnall &
Tracy
Marshall
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Update against DBT’s 4 strategic
priorities
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Update against Shareholder strategic priorities
1. Effective financial management and performance
We continue to make progress against addressing Shareholder priorities in
maintaining effective cost management. We have maintained close monitoring of
revevanticost Challenge (with Remco. approval of the principles with
regards to achievability). There is an equivalent f cost savings identified
in the FY24/25 Business Plan. ”
The principles established by the Opex Committee around in-year prioritisation of
spend and optimisation of return will also be applied to the change portfolio.
Following on from approval of the FY24/25 Business Plan there is continuous
improvement identified in managing contracts tightly and there is consideration
of engaging external consultants to assist with the reduction of the Central Cost
base. This will complement longer term 3-5 year planning which will rely on the
outcome of any reviewed clarity from DBT on its long-term policy position.
2. Addressing of Remediation matte!
There has been good progress made by the Remediation Unit as Post Office
works hard to compensate impacted postmasters. This includes work on the
issues affecting the suspension remuneration cohort together with preparation
for the payment process review, with the aim of improving Post Office operations
in line with Mr Justice Fraser's judgements and learnings from the Post Office
Horizon IT Inquiry.
Post Office continues to prioritise engagement with the Post Office Horizon IT
Inquiry and to prepare for the upcoming phases, namely phases 5-7.
3. Maintaining and improving capacity, capability & resilience
Board have now approved the Strategic People Plan, which is focused on three areas —
improving colleague experience, improving organisational capability and becoming a
more inclusive place to work. Alongside the development of the People Plan, a
restructure of the People team is currently underway. The primary aim of the
restructuring is to ensure there is capacity within the People team to effectively support
the business through the delivery of the People Plan.
In February, sessions were delivered to colleagues across the business on the Horizon IT
scandal. The sessions covered the human impact of the scandal and how today’s
colleagues must play a role in safeguarding its culture. To follow on from the sessions,
Post Office has launched a new Ethical Decision-Making Framework and a culture self-
check for colleagues known as the ‘Yes check’.
The latest employee engagement survey has now closed with results due in mid April
and a Postmaster and Strategic Partner survey is also underway. The outputs from these
surveys will be important factors in assessing progress on culture.
4. Facilitate the sharing of information in open & transparent manner
We continue to ensure that our teams work closely and collaboratively over the
coming months, and this includes sharing information openly with UKGI, DBT,
your Permanent Secretary, Director General and other officials.
We appreciate our collaboration on business case preparations and welcome
clear and consistent alignment on priorities in moving the agenda forward
collectively.
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Actions from last meeting
Update on HI] and Cl]
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Summary of approach to the Horizon Issues Remediation Programme
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@ OUR VISION: To improve the Horizon user experience and Postmaster service, by re-establishing a level of trust and confidence
in Horizon — specifically with regards to platform security, data integrity and supplier management.
What are the inputs?
=
(KPMG &
Norton Rose) to assess
ions & outcom
of Remote
ed Horizon Accounts
Where are we now?
Horizon Issues Remediation Programme mobilised to remediate
against 5 Hl) Themes. Three Phases of this programme have
addressed these themes
Postmaster IT Working Group actively involved in Horizon Change
with positive feedback helping rebuild trust and confidence.
"A rely good native we fet vee and
‘ce mir rear tng
(Pj Cheema, Lady branch)
What's next?
20 * 250 Q
Horizon improvements live across network supported by more consistent ways
of working to embed sustained Horizon Change
90,0004 isi.
Remaining Action arget Completion I
Design, test and implemented a new Audit solution for
Horizon enabling greater transparency on the transmission
etc of transaction records
Complete the migration of over a 1000 file transfers to the
new routing service
Branch accounting improvements proposed as part of HSI will
allow greater visibilty of individual discrepancies to Post
Masters, these will be looked
Build on the current the POC for the capture of counter
activity logs in order to make this data more readily available
February 2025
February 2025
March 2025 Not yet started
= *
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February 2025 (linked to
‘Audit SAN project)
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Summary of the Retail approach to the Common Issues Improvements
uous Improvement
ith Postmasters
partnersh
Responding to current issues &
concerns
tional & Cultural
ange
Addressing past failings
Where are we now?
inguin
Ongoing review of witness testimonies in phases 5 and 6 of Inquiry
‘Welcome to the Post y onwards
Office Hoon nq ’ 4h ‘a =
eee 0, ¢;: Continue to update and amend our suite of 12 postmaster policies,
ae ; i 7 4 including risks and controls framework, ready for sign off by RCC
and ARC next year. Preparedness
Understanding past and = for phase 7 of
aimcnalccies tp Implementing a refreshed postmaster engagement framework the Inquiry
including an Advisory Council and increased F2F approaches
+ Reviewing CU findings
LY a Review Retail Performance Dashboard to ensure we are capturing A reset of our
+ Responding to external the right metrics and can measure our deliverables. Regular relationship
reviews e.g Deloitte reviews by GE & Board with
+ Listening to Human Impact Ja a postmasters
sessions and further phases Carry out a review of our contracts to ensure they are easy to based on trust
of Inquiry follow, and reflect a partnership approach with postmasters Bntcontidence
+ Internal audit reports in the support
Continue to work with Group Assurance to ensure that any that we
‘ outstanding actions are implemented. ji
Cray Alll inputs grouped into 9 key themes, providing structure to Gaui
iews 1.
future action and responses
+ Risk Universe assurance + Deep Dives on all9 themes Deliver a proposal to fairly recover losses from postmasters
Postmaster feedback right 3 Sepeeeryet phate hts penidces Increase the communication around the improvements that we
prec + Action plans in place with accountable owners have delivered 9
CONFIDENTIAL AND COMMERCIALLY SENSITIVE - FOR POST OFFICE INTERNAL USE ONLY
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Culture Update
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Culture transformation since 2019
The following are the core activities/deliverables that have transformed the culture of Post Office since 2019:
More Postmaster centric
Y Anestablished purpose and strategic
drivers that focus on outcomes for
Postmasters
¥ 2 Postmaster NEDs on the Board
v Aserving Postmaster on the
leadership team as Postmaster
Director
¥ Postmasters involved in Horizon
improvements and NBIT build
v Postmasters being surveyed on their
engagement
Y Senior leaders closer to Postmasters —
for example through Adopt an Area
and Regional Forums
v Specific Postmaster Support Policies
developed
Y More Area Managers to support
Postmasters
Y More training and better training
facilities for Postmasters
v Branch Hub giving Postmasters better
service
Y Dedicated Postmaster complaints
handling and issue resolution
More transparent
Y Improved communications from the
top of the business - 10@10,
Townhalls, annual colleague
conference, CEO coffee catch ups,
expanded senior leadership group
Y Wood Street relocation — no offices,
hotdesking, one floor
¥ Postmaster conferences and Regional
Forums
v Weekly emails to Postmasters
v Performance insight made available
on Branch Hub for Postmasters
¥ Sharing Postmaster Support Policies
with Postmasters
¥ Scandal awareness sessions held with
colleagues to understand the human
impact of the scandal and to consider
the cultural conditions and behaviours
that led to the scandal
Better at listening
v Restorative justice meetings with
victims
v Postmaster listening groups
v ‘Lead to Serve’ programme for 400
leaders
¥ 360 feedback as part of senior leaders
performance reviews
v Improved formal mechanisms — Speak
up review, establishing Group
Assurance, culture findings in Internal
Audit reports
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More behaviourally consistent
v New Ways of Working with growth in
colleagues recognising the behaviours
being demonstrated in Post Office
over time
v Embedding of the Ways of Working
into performance management
processes
¥ Informal recognition of the Ways of
Working through the WOW
recognition platform and regular
awards
v New Ethical Decision-Making
Framework
v ‘Yes check’ introduced for all
colleagues
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Continued progress and focus on culture transformation
Progress has continued over the last quarter (since the December QSM) and will continue in the next quarter
What has happened since December?
v New Strategic Executive Group formed
v New Leadership Team defined with demonstration of behaviours as
a selection criteria
v 4workshops held with businessfourzero in January to define the
core cultural framework for Post Office (known internally as the
‘Blueprint’).
v An event was held for the newly formed Leadership Team in March
to immerse the Leadership Team in the Blueprint.
v A Strategic People Plan has been developed and agreed by Board. It
is focused on three core areas — Colleague Experience, Capability
and Inclusion — and has three stages — Foundations, Growth and
Sustainability.
v Anew Ethical Decision-Making Framework has been launched
v Aself-check culture temperature check for colleagues called the
“Yes Check’ have been launched
v Scandal awareness sessions were held across Bolton, Chesterfield
and London (which was also live streamed and recorded) in
February to broaden the experience of restorative justice to all
colleagues.
v Outcomes from the Grant Thornton governance review have been
reviewed.
What is next?
v The Leadership Team will work through how to launch the
Blueprint throughout the business.
¥ The Blueprint will be shared with the Shareholder and the Board.
Vv The Code of Business Conduct will be updated and taken to Board
to incorporate the new Ethical Decision-Making Framework and
Blueprint.
v Amilestone plan is being developed with the new People
Leadership Team for the 2024/25 deliverables of the Strategic
People Plan.
v The colleague engagement survey has closed and full results will be
made available to Post Office in mid-April.
v A Postmaster engagement survey is underway with results
available in April/May.
v The new culture indicators will incorporate the latest results from
the colleague and Postmaster engagement surveys and will be
shared with the Board in June.
v Recommendations and an action plan from the Grant Thornton
governance review are now being developed.
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5. Strategic Platform Modernisation
Programme (SPMP) / New Branch IT
(NBIT)
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Release Status
We continue to make good progress with building the NBIT system but we have has some
delays with obtaining partner signoff
Scope Status
Deployed to Aldwych on 1% February (feedback
Release 2.0
overleaf)
Mails and Stamp functionality
Parcelforce mails, Saturday
Nas--waee § clelivery, security fixes and Replanned to April
functional defects
Addition of Banking functionality,
further security enhancements and
updates needed for independent
branches
Targeting late Summer — still dependent on
agreeing signoff criteria with Bank especially on
security topics
Release 2.2
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Pilot Branch Feedback “In General, loving the new system...needs to be slightly faster.”
rn ~— “The fact it prints labels is fantastic, no consumables is brilliant love
it.”
which is great.”
I I “Overall, LOVE it, really happy so far.”
i I “Balancing process is great, able to identify issues very quickly
i i “7 buttons to get to special delivery, 2 buttons on horizon so that is
anne a bit frustrating.”
“Dipti and Robert have been beautiful people to work with.”
“It's perfectly good so far, the loading time from BO to CT can be a
bit frustrating at times.”
“Feel excited about going on NBIT and look forward to using it.”
St
John’s “Was a bit anxious to start with but so pleased with the support.”
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Dual Running Pilot Framework
R2.0 — Jan 2024
Aldwych DMB
Live 1/2/24 until 2.1 into live testing
Switched off whilst 2.1 is in live testing
R2.1 - Mar 2024
Idwych DMB switched on April
St Johns DMB go live late April/May
3 more DMBs go live in following few
eeks
Anticipate needing to shutdown whilst
R2.2 in live testing
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R2.2 — Summer 2024
Anticipate live in late Summer
Engagement activity with banks is
ritical and expected to take 8 weeks
once system is tech ready
5 DMBs go live and stable
Steady expansion to 5 non DMBs —
optimistically this side of peak 2024
+ We expect further expansion into up to 40 more non DMB branches in 2025
* We have an initial short list of around 20 and will look to expand this over the forthcoming months based on previously
stated principles that reflect the network shape + 15 SPs.
* The scheduling of this will depend upon the Tech Delivery plan and the alignment of ongoing functoriality drops with the
branches - the approach for this is being developed.
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Financial Performance
We have underspent on our current business case by ~£3m and have not utilised optimism bias
or contingency
[Category September I October I November I December I January I February I March I Total
POL Perm/Contractors
IThird Party Resource Augmentation (Accenture/Coforge)
iThird Party other (AWS/Licences/Slalom)
= IRRELEVANT
Budget I
Variance I
Note: some of the underspend will be a timing issue due to delays
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Stakeholder Management & Governance
.
The Horizon Replacement Business Case was submitted to DBT on 18* March.
This business case will fund:
* The SPM programme until March 2026
* The development of a new Self Service Kiosk and relace of our 600 devices
* The rollout of anew mobile platform for Postmasters which will initial support bill payment
*« Anew Identity and Access Management solution
POL expect to present the business case to the DBT Investment Committee on 18* April and then to HMT for review before the
end of June. POL have received and responded to the initial Keyholder report. Some comments appear to be internally
inconsistent and do not reflect discussions with keyholders over the last 3 months. POL are concerned about the implications of
the ‘RAG’ rating which cannot now be amended.
The SPM Programme Management team are also supporting 3 different, concurrent reviews:
The IPA Gateway review which will be required to assist HMT with its funding decision
A separate review, sponsored by the Permanent Secretary and conducted by Public Digital
An external legal review of the Fujitsu extension which requires input from the SPM programme
Chris Brocklesby has submitted his SRO appointment letter to the Permanent Secretary for review and approval
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Fujitsu Extension
« POL have requested an extension of up to 5 years to March 2030 but we have still not received any formal
confirmation that that Fujitsu will agree to this despite discussions with multiple stakeholders in POL and HMG
* POL continue to work with Fujitsu to define the detail of the contract, adopting the following principles in order to
minimise the size of the extension:
* POL will adopt 3rd party contracts for services such as Payment & Banking beyond March '25 (e.g. Worldline)
* POL will directly procure software and hardware assets necessary to support Horizon resilience (e.g. Oracle
licencing)
* — Services within the overall agreement will be terminated at the earliest opportunity within the extension term
« Analternative, such as insourcing of Horizon support, will take up to 18 months
« Fujitsu expect a formal request for an extension from HMG (rather than POL) and have suggested that all aspects
of the commercial terms are agreed before this request is made. This is planned to be June
* Considering the risk to its ongoing operation, POL need confirmation of an extension as soon as possible and
have provided David Bickerton with suggested wording that could form the basis of an immediate request
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Remediation Unit Update
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Remediation Unit (RU) Update (formally known as Historic Matters Unit ‘HMU’)
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Executive summary
Please see below Trading update across all schemes
Hss
Convictions
Detriment
Original: 2,417
Late Apps: 1360
Post Offer: 2,676
CCRC: 700
OC: 102
SRR: 2,626
PPR: TBC
Stamps: 182
100%
24%
82%
66%
36% 63%
13% 28%
0%
100%
complete Partially complete foo
Notes on Status, Progress, and Issues: mas at: 21/3/24
Total Paid to Postmasters £156.2m (up from last time: £111.1m).
* Original HSS Applications — 2,417 Offers (100%) were issued, worth ~£112m, by the end of
November 2023.
+ Late HSS Applications — To date 1,360 late applications (+63 wow) have been received, of
which 607 have been assessed for eligibility and 538 are eligible. Of these, we have issued
259 offers, worth £14.5m.
+ Post Offer — Of 2,676 offers (~£126.5m) issued, we have received 2,218 accepts (+8 wow),
and made 2,204 payments totalling ~£102.4m after tax. To date, 136 disputes have been
resolved to resolution, of which 66 at stage 1 (prior to a Good Faith Meeting). Currently in
progress are 15 queries and 337 active disputes (a total WIP of 354, being 13.7% of responses
to date).
* Criminal Case Review Commission -700 POL convictions, of which 675 Potential Future
Appellants have been contacted. Of these, 193 appealed: of which 149 appeals had
outcomes: 92 were overturned, and 57 were unsuccessful. Additionally, 10 non-POL
convictions were overturned.
* Overturned Convictions — To date, 102 claims (93 POL + 9 other prosecutors) have been
received. These are being worked through, and to date we have paid out £40.4m, of which
£21m has been the £600k up-front offers.
+ Suspension Remuneration Review: So far, of the 2,626 eligible Postmasters we have sent
disclosure letters to 2,536 (97%), received 1,592 applications, issued 742 Offers, received 442
Accepts, and made 341 payments. 560 cases have been closed.
* Capture - We have written to DBT suggesting they appoint an independent forensic
accountant to review RU investigation work to date and perform any other due diligence work
required. This would be used to support a decision on what if any redress action is required.
+ POL Process Review: Following discussion at RC we have written to DBT asking them approve
the funding of the Pilot cases prior to the full set of funding conditions being met (e.g. process
assurance). Once this confirmation is received, we will begin the PPR pilot.
* Stamp Scheme: Offers issued on all 182 eligible claims. 167 payments made totalling £1m.
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Remediation Unit (RU) Update
Strategic Priorities
+ HSS - We have now completed the original applications cohort with all offers having been issued (2,417 offers issued).
+ We have acceptances from 2,056 of those and have now been paid and settled 2,050, the remaining 361 are in our dispute resolution process having either
raised queries or not willing to accept the current offer or awaiting further details.
+ Late applications -since the Bates vs PO drama we have seen a significant uplift in volumes of late applications received, with the current number sitting at
1,360 with this being received at a rate of between c50- 100 per week. There has been a gradual reduction with last week being 38 which is the lowest
number so far this year, but absolute volume is far higher than originally expected.
+ All budgets were originally built on an estimated 350 claims received, we then moved this up to 416 which we advised last report - and since we have again
revised this up to 1,500 but again this will likely need to be increased further.
+ Following the £75k fixed sum offer announcement the provision could be insufficient depending on total volumes received which are being assessed.
+ So far, we have issued 259 applications from this population. The current pinch points are eligibility checks, and Short Fall assessments - with both areas
being resourced to deal with far lower volumes than we now are seeing - discussions are under-way to address.
+ HSS Appeal -Ahead of Phase 5 of the Inquiry we reviewed what areas in HSS we may feel we may have some vulnerabilities around early cases in HSS
delivering fair outcomes.
. These broadly fall into 4 areas and have made recommendations that both POL and by extension DBT may choose to take in response.
. The 4 areas of potential are: Consequential Loss Guidelines, De-minimis, Absence of legal advice, and Discounting for evidential uncertainty.
. We raised with DBT the option of an independent appeal mechanism - where those not happy with their outcome due to the 4 mentioned reason or indeed
anything else could potentially have their case reviewed against set criteria.
. We still await a formal position on whether a ‘Independent appeal’ will be built into the process.
. If an appeal was implemented the advantage would be to start to conclude those cases still in DRP where we do not feel they will accept their offers as
they deem them unfair but have not submitted further evidence. Clearly where they do submit new evidence, we work with them via dispute resolution
processes.
+ £75K Fixed sum offer — This was announced recently in Parliament, replicating the fixed sum offer in GLO for HSS.
+ We await formal confirmation of funding, but in the meantime have started working through the steps needed to operationalise this work. This will broadly
fall into two pieces of work i) The back book ‘top ups’ ii) New applications.
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Remediation Unit (RU) Update
Strategic Priorities Continued
+ Back book top ups is progressing on the data, letters and process - we expect to be able to go live during April 24 subject to a funding letter being received.
+ Modelling suggested that c166 cases currently in dispute will benefit from this top up, of which a lower number we think will settle as a result of the top —
how many we do not yet know - current thinking is c50.
+ The £75k for new applications, we are working on an abridged process to speed up assessments and offers to those who accepted this minimum payments
value.
+ HSS Closure date - Whilst we have not yet finalised governance around an end date, this is being discussed between DBT & RC as March 25 as the date the
HSS scheme will cease
+ Given the large influx of new applications we have delayed any external communications on this — but we are mindful that it will need to be agreed and then
socialised well ahead of any final closure to be fair to applicant. We expect it could lead to a spike in volumes at the point we do break cover on this.
* Tax Top Ups —- Good progress made in this space; we are now live with this work. So far, we have issued 2,213 letters (up from 334 last report) and
received 1,524 (up from 78) response and made payments to 1,078 of those totalling £7.1m. We remain well ahead of the original plan.
+ GLO - We remain slightly ahead of the disclosure plan agreed with DBT and have made good progress in this space with 334 Disclosures now completed. We
continue to work closely with the DBT GLO operational team and work with them to identify which cases need disclosure, we expect to be complete by Aug
24.
+ Overturned Convictions — Following the recent announcement of the Mass exoneration legislation at a working level we expect those cases to go via a OC2
process sitting outside of POL. But what that looks like and POL’s involvement is still forming, we expect our own involvement to be large restricted to
Disclosure work.
* OC1, We remain focused on delivering on those cases received under the existing scheme and have now fully settled 37 cases - but the volumes of new
applications received is far slower than anticipated, with claimants now having an option to wait and see what OC2 may look like we expect this theme to
continue.
+ The spectre of OC2 coming has clearly had a destabilising effect on the current POL OC team and we maintain that we have built a viable scheme that
delivers fair and reasonable outcomes. We now have Sir Gary onboarded as the independent panel for any escalations on areas of disagreement, we have
principles agreed and a functioning operating model in place and have a track record of sending outcomes that have been accepted. What we do not have is
the volumes of claims that we had hoped at this stage.
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Remediation Unit (RU) Update
Strategic Priorities Continued
+ Restorative Justice - POL has undertaken c49 meetings with claimants across GLO, HSS and OC, (overwhelmingly GLO) in order for them to meet Senior
POL Executives (predominantly Simon Recaldin and Nick Read to date) and has received requests for c4 more days of multiple meetings that are being
planned across Q2 2024, we have also seen 2 other POL Executive members also attend these which we think is valuable to give a real insight into the impact
on these victims.
+ CCRC / Disclosure issues - Disclosure issues of new repositories in the Inquiry may have an impact on the Post Conviction Disclosure Exercise (“PCDE”)
this work remains under review and ongoing, in Scotland we have again been informed that they may act if we don’t act in a timely way on disclosure for a
particular case. We are engaged with our Scottish counsel in this regard.
Detriment
+ Suspension Renumeration Review ‘SRR’ - we have now sent 2,536 disclosure letters inviting people into this scheme, have had 1,592 applications
received. Have made offers to 742 Postmasters and received 442 acceptances to those offers. With £4.7m (£2.6m) of payments.
+ Payment Process Review ‘PPR’ - funding is agreed. We expect the total cost to between £40m - £80m and currently planning to commence this work in
April 24. We are planning to commence a Pilot of 120 cases initially to test the principles, processes and provide assurance, this is awaiting DBT approval.
. Funding remains conditional on receipt of external assurance; we have requested that we can commence the pilot ahead of this being in place.
+ Capture issues - this is a legacy system that pre-dates Horizon, it was not a networked system and was effectively a spreadsheet database that helped
Postmasters reconcile their weekly returns. It was used during the 1990's.
+ So far, we have had c15-20 people come forward and claim they were impacted with issues similar to Horizon whilst using this system, and some may even
have been prosecuted.
+ We have investigated the data we do hold but given the passage of time there are gaps in that information base and so it is hard to conclude.
+ Ongoing investigations are taking place and we continue discussions with DBT on potential solutions or courses of action, it remains a live issue.
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Remediation Unit (RU) Update
Financials
+ The Full Year forecast is expected to be} }under Approved Funding with costs slipping onto FY24/25 (mostly PPR Database costs), the re-phasing of the
Tax Top Up team into FY24/25 and continued vacancies in Operations. Central internal resourcing costs and OC costs associated with the Upfront Offer being
the material overspends at the end of the year. .
+ Budget FY24/25 contains significant risks to the current 3YP indicating an increase of (masssvar above Approved Funding.
+ Increases are driven by the significant increase in HSS Late Applications (416 to 1,500), thé Post-Conviction Disclosure Exercise, Restorative Justice and uplift
in resources within the Operations team.
+ Note: Forecast excludes risks relating to mass-exonerations in OC, changes to the HSS Appeals Process and further associated additional disclosure
requirements - all to be quantified pending decisions.
By Programme
Horizon ShortfallScheme I}
Overturned Convictions I
core H
POL Process Review 1
Central
Operations
Programme Total
Tax Top Up i
Exit Costs I
Remediation Unit Total
25
POL-BSFF-111-0000007_0024
POL00448492
POL00448492
Appendix
POL-BSFF-111-0000007_0025
POL00448492
POL00448492
POL Operational & Financial
Performance Update
POL-BSFF-111-0000007_0026
POL00448492
POL00448492
Gl on 27.03
Post Office Limited - Document Classification: INTERNAL As reviewed and discussed wi
P11 Financial Performance - Executive Summary (1/3)
1 Total Revenue and. Tra
9 Prot
rowth on prior year. Mortgages, Savings, Loans revenue of
“budget). The incenti
following ‘confirmation from Bank of Ireland. Banking services revenue was ahead of budget in the month { [imnetevanT! {led by a volume recovery in Deposits; on a YTD basis Deposit
revenue has now caught up to be in line with Budget. Post Office Insurance revenue underperformed against both budget and forecast, with Travel and Protection insurance
sales continuing to be adversely impacte egative press coverage.
* This has translated to a Trading Profit o' in P11 and a YTD trading profit of £
943 Forecest Trading Profit (as presented to the Board on 1* March), however the fill year Guttari cortinues to be reviewed based on potential year end adjustments.
Mails Revenue
2 + P11 Mails revenue of
forecast, largely due to underperformance in 2nd class labels.
+ YTD Mails revenue is c.! IRRELEVANT ‘of budget, however h of Tracked and further expectation of RM price increases this is putting pressure on FY24/25 Mails
projections although partially offset by growth in nue streams with other carriers.
* Co d to prior year, total Mails revenue was uI in period, largely due to the impact of RM cyber attack on International volumes in the same period last year (estimated to
in the month). When adjusting for this the YoY growth is!--i with the decline in RM Labels, being offset by growth in Non-RM carriers.
line with budget, but
Banking & ATMs Revenue
Banking services revenue of
of budget due to higher deposit volumes and ahead of forecast due to higher volumes and higher ATVs across.
both budget and forecast due to an ATM classification issue with Vocalink which has impacted the commission rate applied. This is
expected to be resolved pre year-end, with the additional revenue missed from P11 to be recognised in P12.
Other Revenue
4 + Post Office Insurance revenue of [imeiaarlunderperformed against both budget with Travel and Protection it
sales notably down considered to be adversely impacted by POL press coverage. Travel Insurance sales have recovered slightly in P12,
the period, although slightly under forecast. Protection insurance remains more of a challenge with daily reviews of marketing and
significantly paired back since January.
+ Mortgages, Savings, Loans revenue of!,
higher interest rates for longer than ex,
+ Government Services Revenue of I i
student visa requirements preventing students from bringing dependents to the UK. The YT! 1
end of the year. 28
irance searches, online traffic and
p on budget in the first week of
I media activity which has been
POL-BSFF-111-0000007_0027
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL As reviewed and discussed wi GI on 27.03
P11 Financial Performance - Executive Summary (2/3)
5 Postmaster Remuneration (PM Rem)
+ P11 Variable PM Rem of }:R*® ‘than budget, from outperformance in high rem generating Mails and Banking products (Special Deli
above forecast, largely driven by Banking and Lottery (with final transactions occurring in the first week of P11). YTD Variable PM rem of!
revenue, an increase from I: in prior ‘year. This is driven by Banking (which has benefitted from two rate increases) and Mails, where the YoY revenue decline from Labels
(lower rem generating) is m generating) products which have remained stable.
+ YTD Fixed PM Rem of I budget predominantly from lower exceptional payments. There continues to be a conscious shift away from loss making and
poorly used branches, replacing outreaches with Drop & Collect and focusing fixed payments towards commercial branches. The Rem Strategy will continue to be assessed and
reviewed through FY24/25 and beyond.
6 Staff costs and Headcount
due to updated bonus accruals with further refinement and adjustments likely as we approach the year end. As at the end of P11, headcount i is 62 FTE shove budget — with 81
FTE over budget in Postmaster (due to delay in DMBs exit) offset by open vacancies in Supply Chain, CIO and People.
+ YTD staff costs of
assumptions I
that have been, and in some areas remain, unfilled across the business.
7 Non-staff cost _
+ P11 Non-Staff Costs of Iimeervavr} were { IRRELEVANT 'budget, and {i lower than the 9+3 forecast. This is driven by c.
spend across,.cammercial including reduced POI marketing from turning off social medi
confirmation, "! additional VAT recovery due to a higher recovery rate in Q3 and I"
related to timing differences.
of lottery provision releases, c. NIRRELEVANT}
pend (contracted and dependent on BOI
is considered to be genuine savings and
hannels and lower BOI Eagle ful
lower spend within CIO of which {*
‘budget, based on the latest forecast, we expect c. I than budgeted non-staff costs in P12.
This would be prior to any potential year-end adjustments.
8 Performance against agreed cost savi
* Based on the original construct of the
+ However, since the Remco have apy
latest forecast suggests that the full
+ Weare focusing on refining the evidence of these cost savings being achieved as part of year end processes.
‘hallenge, the
rr
POL-BSFF-111-0000007_0028
POL00448492
POL00448492
Gl on 27.03
Post Office Limited - Document Classification: INTERNAL As reviewed and discussed wi
P11 Financial Performance - Executive Summary (3/3)
9 Open Branch network
+ The network increased by 47 branches in February to finish at 11,783 branches. This increase was largely due to re-openings of Outreaches.
+ A further 18 Drop & Collect branches were opened in the month, with 552 trading and 575 Drop & Collect branches live by the end of February. Drop & Collect openings will
continue to grow through to the end of March, and we plan to have over 600 locations as we start the new financial year.
+ With the current forecast we are looking to maintain a stable network number through to the end of the financial year and into Q1 of FY24/25.
10I" Investment and Change Spend (excluding project Opex — to be included from P1 FY24/25)
P11 Change Spend of I ‘spends driven by
Iin VAT refunds (not controllable
proceeds fro! tin Remediation Unit.
* YTD spend o' budget with the full year forecast expected to remain below budget.
+ Based on the 9 he full year outturn for ‘Other Change Spend’ (net of sales proceeds) is reduced by!
rephased into FY24/25, removal of contingencies and savings/underspend in P11.
+ The implications of this rephasing into FY24/25 is being assessed with regards to the FY24/25 Budget (proposed /
from costs being
1 1 Security Headroom :
+ At the end Security Headroom of
commission and RU/Inquiry funding
+ The Baseline Budget for FY24/25 assumes ‘:
position throughout FY24/25. The lowest poi ‘maintained throughout the year).
* The SH forecast assumes an unfunded variance of wsevant! of RU/Inquiry spend (over and above the }
contingency); these are subject to ongoing business case/ discussions and should this position change this would provide additional SH upside.
rent funding, resulting in a positive Security Headroom
30
POL-BSFF-111-0000007_0029
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
Profit Before Tax
Vi t
Actual Budget 913 Forecast reeiet © Variance to 943 YoY YoY % Actual Budget Variance YoY YoY %
Mails - RM
Mails - Non RM
Retail/Lottery & Gift Cards
Government Services
Banking Services
ATMs
International Money Transfer
Travel Money
Payment Services & Payzone
Voucher Encashment
Mortgages, Savings & Loans
Credit Cards
PO Insurance
Identity Services
Supply Chain/Other
Total Revenue
Cost of Sales
Postmaster Rem Variable Costs
Postmaster Rem Fixed and Other Costs
Merchant Commission
FRES
POCA Other Income
Gross Margin
Staff Costs
Non Staff Costs
Total Overheads
Trading Profit/(Loss)
Network Subsidy Payment
EBITDA
Depreciation
Interest
Exceptional Change Spend
Remediation Settlement/Reimbursement
Investment Funding
Profit/(Loss) On Asset Sales
Profit/(Loss) Before Tax
IRRELEVANT I
sy
POL-BSFF-111-0000007_0030
POL00448492
POL00448492
Strategic risks and mitigations
Update
POL-BSFF-111-0000007_0031
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
This report provides a high-level view of key risks
Management are working through options (i
feramaniauele (iv) enhancing
Cyber Security - We fail to prevent unauthorised and/or
inappropriate access to Post Office systems, potentially exposing
confidential data and a loss of service for Postmasters, Post
Office employees and our customers,
Technology - We fail to provide robust technology across our
branches and administrative sites, potentially causing service
disruption to our Postmasters, customers and Post Office
employees and non-compliance with Legal obligations.
Legal - We fail to meet current, changing or new regulatory and
legislative expectations, potentially leading to liability or other
loss or failure to take appropriate measures to protect
Postmasters, Post Office employees and our customers.
People - We are unable to attract, retain, recognise and reward
people commensurate with the workload, pressure and stress,
across our workforce, which adversely impact Postmasters and
Post Office employees.
Operational - We fail to ensure that our Postmasters have the
service and support required to operate an effective service,
potentially leading to a decrease in customer satisfaction.
Financial - We fail to effectively manage the business finances
in accordance with our requirements and financial constraints,
potentially leading to a loss of investment from the shareholder,
ability to operate a financially viable business and successfully
deliver the annual priorities.
Commercial - We fail to identify new commercial opportunities
and to effectively manage commercial partnerships, supply
chains, contractual requirements, changing consumer
preferences and banking requirements, potentially leading to the
withdrawal of products and services,
Top Enterprise Risks — Quarterly Shareholder update
which are currently bein
RAG key:
Red - Remediation plan off track.
Amber - Concerns that remediation plan
may go off track.
Green - Remediation plan on track.
+ Target maturity has provisionally been set to!~---I Initiated a Cyber programme which aims to
achieve this new target by the end of 2026. agreed for 24/25 to commence
the Security Maturity programme
A new CISO started on 18 March and is assessing current position and will confirm target
maturity and dates.
managed outside of agreed tolerance. Our current risk posture and the ability
Office vs Mr Bates and the Inquiry is having on th
management eeeidey (ji) review comms strategy (iii)
‘rity around inform:
nt crisis. The Po:
urity arrangements and
Interme
tolerance
IRRELEVANT
End of Horizon support Agreement. +
te risks outside
Formal discussions commenced with FJ on extension beyond March '25 for a period up to 5 years.
Signing of the contract is planned for October 24.
+ Current refresh programme will be substantially completed by March 2025.
+ FOIA/DSAR requests continue to increase. Post Office is unable to comply requests within
statutory timeframes. Funding required to increase resource.
+ There is insufficient budget and resource within the legal & investigations team to support the
business to manage legal risk and conduct investigations in a timely manner. Funding required to
increase resource.
+ Poor data management and governance creates significant challenges in complying with
disclosure requirements.
+ Improvements to organisational governance is required to ensure that organisational decisions
are robust, ethical, documented and reported to appropriate executive and board forums.
+ FAQs relating to Mr Bates vs Post Office drama is accessible to colleagues. Ongoing support
related to Inquiry matters, continual monitoring of issues raised by colleagues.
+ Processes now in place to ensure we are compliant with IR35 requirements for new and extended
contracts. Review to bring contractors within to IR35 and impact of this is being assessed.
IRRELEVANT I
+ Operational excellence programme in flight, focus on BAU improvement activity, note counter
trial, auto stock rem pilot, risk is expected to’
+ Re-shape the network in line with our target bluéprint to shift towards more sustainable
branches, supported by the investment in the 'Network Strategy Acceleration’ continuous
improvement programme.
+ Risk has increased, HMRC correspondence in recent months states their position and they have
issued a protective assessment letter, next steps are currently being worked through.
+ PO has launched a range of new Mails products over the past two years and continues to grow the
number of new carriers we work with. However, the market remains extremely challenging with
low margins. Due to funding constraints our ability to develop, market, and launch entirely new
products is not a current priority with focus on PO core products to reducing costs/maintaining
our market share,
POL-BSFF-111-0000007_0032
POL00448492
POL00448492
Hlj — Further Detail
POL-BSFF-111-0000007_0033
Post Office Limited - Document Classification: INTERNAL
POL00448492
POL00448492
HIJ Finding Theme(s): Bugs Errors Defects & Robustness I
HIJ Findings 1-3
[ Remediation Status: Activities Complete and sustained in BAU
I@
1. Overview of Theme
2. Key Activities /Deliverables
Bugs, errors or defects had the potential to, and
did cause apparent or alleged discrepancies or
shortfalls relating to Sub postmasters’ branch
accounts or transactions.
Bugs, errors or defects therefore undermined the
reliability of Horizon to accurately process and
to record transactions.
The extent to which any IT system can
automatically alert its users to bugs within the
system itself is necessarily limited, and although
Horizon has automated checks which would
detect certain bugs, there are types of bugs
which would not be detected by such checks.
Indeed, the evidence showed that some bugs lay
undiscovered in the Horizon system for years
HNG-X, the first iteration of Horizon Online, was
slightly more robust than Legacy
Horizon, but still had a significant number of
bugs, errors and defects. The experts are agreed
that HNG-A is robust, and far better than it was
in either its Legacy Horizon or
HNG-X form.
Established robust governance to proactively track and resolve Horizon Defects — led and owned by Post Office
Defect Review Forum
Bi-weekly session run
by POL with Suppliers
and stakeholders to
monitor defects status resolution
ais A
Embedded robust and formal identification & categorisation of Horizon defects — led and owned by Post Office
Defect Triage Defect Thresholds Defect Tooling
Bi-weekly meeting led Common set of limits Jira software tool used
by POL with Fujitsu to on accepted defect across POL to capture
discuss all system - volumesat each stage defects during testing
defects by severity of testing process
2
Defect Tracking
Defects logged and
tracked in Service
Now until resolution
Historical Defects
Closed backlog of
historical defects KELs
(Known Error Defects)
Defect Criticality
POL stakeholders
assess defect impact to
prioritise urgency for
KSS3
S
Defect Definitions
Consistently identify
system defects by
severity and business
impact fea]
4836 counters
following pilot
MW
107 counters and 20
Horizon servers
WW
with focus on Postmaster
impact
ais
Defect Comms
Issue Branch Hub &
Knowledge Article
within 2 day SLA once
defect raised
6-6 © x
Horizon Monitoring Solution gives independent view of Horizon health —_ Improved Solution Governance & change management reduce the risk of new BEDS
AppDynamics AeTe2y ATs: Horizon Solution Authority Reference Data
Completed pilot on Rolled out solution to Recesitinigemeiense Management
Enhanced processes &
controls for managing
reference data
=e
=s
=3
=%
3. Remaining Deliverables
Ongoing/continuous improvement based on reporting & controls attestation
POL-BSFF-111-0000007_0034
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
HJ Finding Theme(s): Management of Core Horizon Data (inch [ 1 Findings 4-6 lI Rem canationiocstastiin [cures ©
Reference and Third-Party)
[ 1. Overview of Theme ] [ 2. Key Activities /Deliverables
There is a material risk for errors in data Horizon Solution Review - CheeeryOn Enhanced Testing &
recorded within Horizon to arise in (a) data entry Engaged Postmasters to Horizon Improvements Horizon Recovery Scripts Streamlined look and feel of Release Management
(b) transfer or processing of data in Horizon in produce definitive list of Implemented Horizon Implemented improvements podemenyotelanty Improved governance
both the Legacy Horizon and HNG-X forms. Horizon issues with 147 improvements across to 64 Recovery Scripts helping Sameera coe and rigour in how we
Reference data is critical to the operation of User & Data Journeys (esky BieOCa ep lensubeidisctepanicies: donot hile aprhcnaahee el carry out Horizon testing.
Horizon and that errors in reference data have developed and 39 system UpeneicEsey WAT occur in branches when Leaps More regular releases and
led to discrepancies in branch accounts. If data in improvements (ieee cee ea) emcaitmpialioesnptis aventerenean detailed regression testing
mitigate risk of Postmaster successfully on the counter : introduced
Horizon was wrong (due to bugs, errors or
detriment.
defects within Horizon) and did not reconcile to OQ oO I —
third party data, manual corrective fixes and v Py)
issue of manual TCs would be undertaken.
The measures and/or controls that existed in
Legacy Horizon and HNG-X did not prevent, . I
Securing Banking Data
detect, identify, report or reduce to an mol tation of a PCI Application AppDynamics
extremely low level any of the following risks Pe ae EUEINGL A Modernisation Reference Data Soeur Galecorcintanta
ccompliant Payment. Migration of 300 file Management 4836 counters following
Banking solution to better Management
a) data entry errors 8 transfer routes to modern Enhanced processes & imnratedtananalseral pilot of 107 counters & 20
. EEE ECHTANC secure solution. controls for managing P i ane
b) data packet or system level errors (including transaction data Replacement of the Perereniceicintel transactions for risk of
data processing, effecting, and recording the ae eee discrepancies
same) Fhe tori oer =
Er
c) failure to detect, correct and remedy — solution within POL tL EY Va
software coding errors or bugs domain
d) errors in the transmission, replication and 3 Remaining Deliverables
storage of transaction record data; and a 9
e) the data stored in the central data centre ~ By February 2025 we will have designed, tested and implemented a new Audit solution for Horizon enabling greater transparency on the
transmission etc of transaction records
not being an accurate record of transactions
_ - We will also have also completed the migration of over a 1000 file transfers to the new routing service
entered on branch terminals?
POL-BSFF-111-0000007_0035
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
HI) Finding Theme(s): Management of Privileged and Remote Access II 1419 Findings 7, 10, 11, 12,13 II Remediation Status: Activities complete and sustained in BAU \ v7)
[ 1. Overview of Theme I I 2. Key Activities /Deliverables ]
Fujitsu had the ability to insert, inject, edit or eure . AppSup/Break Glass
Global, SMART ID, PAM
delete transaction data or data in branch ee oararet aon, Cloud Security exrerne Rencmal nn Process
n cates, lore robust and frequent Account Reviews oye + Performed Penetration
accounts, implement fixes in Horizon to affect Embedded robust ‘IML’ and Process revised with
- 1 Horizon Data Centre * Reviewed 250 Horizon Testing on Model Office
transaction data or data in branch accounts, or User Recertification processes & eater emphasis on PM
a Security Reporting e.g. Global ID back office and Data Centre G .
rebuild branch transaction data without the nieces, CREECH LD for Horizon applications in Ohta j communication and rigour
knowledge or consent of SPMs. Patera imran accounts POL Cloud which Fujitsu eplnmesnsite riar around audit
7 , independent Horizon
Failed logins, Break glass + Reduced Privileged Lae Security Audit
A it:
POL could only inject transaction data etc. cots accounts of eae
WN
466]
utilising its Global User role, which permitted =s counter @ Py c
the injection of transactions without the = oy Gl Gr 2
knowledge or consent of SPM, but only if the
said Global User was present in the branch
The Balancing Transaction Tool Fujitsu Service Now Controls Training
specifically to insert a transaction into branch Over 200 IT Controls POL IT Control Owners Controls Adoption Surveys
accounts. Permission controls upon the use of consolidated and moved to AEM DRT) POLIT Control Owners Independent Audit
the remote access facility were considered into ServiceNow how to use ServiceNow Adoption Survey on new To validate the
inadequate. Whilst existing, the roles very wide process and training — effectiveness of the
and not controlled, included but not limited to positive feedback received remediation approach
the lack of any proper logs.
3
Whilst some Privileged User Logs exist, the a rd it I Q
1
465]
content of the logs was considered inadequate
(i.e. recording when a user logged on and off but
not what they were actually doing.)
3. Remai
ing Deliverables
Post Office and Fujitsu were unable to provide a
clear and precise answer to what is, in essence, a - Ongoing/continuous improvement based on reporting & controls attestation
very simple question — How often was the
remote and privileged access facility utilised by
POL and Fujitsu?
POL-BSFF-111-0000007_0036
Post Office Limited - Document Classification: INTERNAL
POL00448492
POL00448492
HIJ Finding Theme(s): Management of Discrepancies & Shortfalls
HIJ Findings 9,14, 15
Remediation Status: In Progress
®
[ 1. Overview of Theme
2. Key Activities/Deliverables
‘SPMs had limited access to reports and data, as
well as a limited knowledge regarding POL’s
complex back-end systems. Therefore, SPMs
ability to investigate apparent/ alleged branch
shortfalls/ discrepancies was equally limited.
PMs did not have access to many reports
relating to different aspects of running a branch
(such as currency exchange, stock etc.). There
was also availability restrictions on transaction
logs (some only available for 6 weeks). SPMs
could print these out on paper till rolls, but these
were not user friendly.
Ultimately, SPMs required the cooperation of
POL to help investigate discrepancies, a term
that was also an important implied terms
identified from the Common Issues Judgment.
‘SPM cannot dispute a discrepancy, or any figure
‘on Horizon, or record on Horizon that they have
raised a dispute.
There have been over 100,000 TCs issued each
year since 2006 to counter errors due to bugs
etc. POL does not have comprehensive records
of how many TCs that have been challenged by
‘SPMs have been upheld
Transaction Acknowledgments ("Tas”) are also
used to make corrections to branch accounts —
Tas are now automated following the “Ping” fix —
a SPM has no options whether to accept Tas,
they have to be accepted in branch.
Buttons
Review & Dispute
Introduced to allow PM to
create a dispute and have
a discrepancy investigated
Discrepancy Management
Improved how
discrepancies are handled
and investigated including
upskilling Investigation
Support Teams and
refreshing our case
management processes
®
=_
TC Volumes
Actively managed, trend
analysis completed, currently
showing a 26% decreasing the
volume of TCs disputed
hs
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
P8 PO P10 P1t
TC Volume
P12 P1 P2 P3 P4 PS PE PT PB
—Vvolume
3. Remaining Deliverables
The branch accounting improvements proposed as part of HSI will allow greater visibility of individual discrepancies to Post Masters, these
will be looked
POL-BSFF-111-0000007_0037
Post Office Limited - Document Classification: INTERNAL
POL00448492
POL00448492
Causes of Shortfalls in Branch Accounts
HIJ Finding Theme(s): Reliance on Fujitsu to Identify Defects and
HI) Findings 8
Remediation Status: In Progress
®
[ 1. Overview of Theme
2. Key Activities/Deliverables
POL had access to data and systems that were
not available to SPMs via a range of Horizon
reports and POL's own management information
systems. POL could also use standard database
reporting tools to retrieve/ analyse information
about branch transactions and request audit
data from Fujitsu.
The only source of actual key stroke information
(what buttons had been pressed in branch) was
found within the Fujitsu audit data — Credence
does not provide this.
Whilst POL did have access to “the causes of
alleged shortfalls in branches, including whether
caused by bugs etc” such information had to be
obtained through Fujitsu — POL was “plainly
reliant upon Fujitsu for diagnosis of whether the
occurrence of shortfalls was caused by bugs/
errors or defects within Horizon”.
Defect Review Forum
Bi-weekly session run by
POL with Suppliers and
stakeholders to monitor
defects status
Defect Tracking
Defects logged and
tracked in Service Now
until resolution
Defect Criticality
POL stakeholders assess
defect impact to prioritise
urgency for resolution
S an A
Enhanced Testing &
Release Management
Improved governance 4836 counters following
and rigour in how we pilot of 107 counters & 20
carry out Horizon testing. oonre
More regular releases and
detailed regression testing
introduced
= AW
i)
AppDynamics
Rolled out solution to
Issue Branch Hub &
Knowledge Article within
2 day SLA once defect
3. Remaining Deliverables
- We need to build on the POC for the capture of counter activity logs in order to make this data more readily available, this activity is now
being delivered within the current project to replace the Horizon Audit SAN
POL-BSFF-111-0000007_0038
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
Monitoring Remediation
Technology Subcommittee — Monthly reporting
Monthly reporting is now in
place that highlights
measures including
Branch impacting
defects/problems
Horizon stability Technology
Volumes of changes Dashboard
applied to Horizon
IT Operations, NBIT and Key Projects
Use of privileged or
remote access
These are reviewed at
IT Leadership, GE and
reported to Board POST
OFFICE
POL-BSFF-111-0000007_0039
POL00448492
POL00448492
Post Office Limited - Document Classification: INTERNAL
Monitoring Remediation
Horizon Problems (defects) — Monthly reporting
An executive summary of Horizon ied es
problems (defects) is prepared r
monthly and circulated to STOTT TIE Appendix Latest Status of Open Problems (as at 01/12/2023) @
operational, legal & Historical pone
matters areas leon bail
This pack provides a snapshot
based on current Service Now data
of open problem records, an nl mI nm il
assessment of criticality & rember @
resolution status. cantare tne staf Ope ters 01/12/2023)
This process is measured through a
series of KPIs aimed at ensuring
transparency and prompt
resolution of Horizon issues
POL-BSFF-111-0000007_0040
Post Office Limited - Document Classification: INTERNAL
Monitoring Remediation
IT Controls Framework
We have refreshed the
overall IT controls
framework. This has resulted
in over 227 new controls
being implemented
These go through cycles of
attestation and review to
ensure compliance/flag
issues where additional work
is required.
DUSNGY @ ven
My Contos
© comowo
© cum
My Control Complies
nx
Cemotnnt
<
onto
3 Setermine ed pry complance mth ned pry contact
IT Controls by Status
compliant = 199 (87.67%)
on compliant =26 (11.45%)
Not Applicable =2 (088%)
POL00448492
POL00448492
My aresatone
POL-BSFF-111-0000007_0041
POL00448492
POL00448492
Cl) — Further Detail
POL-BSFF-111-0000007_0042
1, Overview of Theme
Post Office failed to give postmasters
the opportunity to fully understand the
contract.
1.POL failed to show Postmasters the
full terms of the Postmaster contracts
prior to contracting / signing.
2.POL failed to provide clear, easy to
understand and uniform Contract
documentation to Postmasters
3.POL failed to make Postmasters aware
of potentially onerous or unusual terms
prior to contracting
Post Office was criticised for its
training of postmasters, specifically in
the following areas.
1.POL failed to provide adequate
training, especially when new working
practices were introduced
2.POL didn't provide additional training
when requested
3.POL didn't deliver a uniform approach
4,POLdidnt provide adequate training on
dealing with discrepancies
5.POL didn't assess postmaster
competency after training
CU Finding Theme(s): ClJ 1 and 2 — Po
stmaster Onl
rding and Training
POL00448492
POL00448492
7]
The postmaster contract is simpler, all documentation has been reviewed and contract terms restated to postmasters
postmasters and
their teams with a
A digital platform with
learning collateral for
classroom training is
now a pre-requisite for
procedures for training
to ensure uniformity of
(Conditional ») ( Clearer YC Review of Simpler journey (" Contract +)
Agreement shared documentati Operations Manual Guided by a Support Restatement
10 weeks prior to Simpler, bite-size Easy to understand Advisor, the process Terms added,
transfer. Legal advice documentation is information on the day has been simplified, modified or removed
recommended shared electronically to day running of a and includes a ‘guide to in 2020, with
during the Onboarding Post Office branch completion’ communications to
journey €—— postmasters
\ J =) J oy
The postmaster learning journey has been overhauled, providing postmasters with much improved support when they first join PO and
on an ongoing basis
Blended learning (" Learning Classroom Training New Training Policy ) ( Operational )
approach management extended Clearly sets out our Training Guide
Providing system 3 to 4 days of processes and Setting out step by
step processes for all
front and back office
Anyone can attend
refresher classroom
sessions on front and
back office processes
Classroom and
learning material on
how to investigate the
cause of a loss and
Ne = /
seek support
X
20 managers support
branches in their first
6 months, and address
and residual training
ds FS.
L needs SLE
Now assessed at every
stage of the learner
journey and
interventions
undertaken if reesei
range of options to_ I branch teams tg gry, any new postmast approach tasks FEF
suittheirneeds 9) veces EP) (I JD 2] )
Rewatachiar —) imesizain Business Support Postmaster ( Recticoty
training courses Discrepancy courses Managers Competency Satisfaction
Measures at every
stage of the process
to identify areas for
improvement[=s1
44
POL-BSFF-111-0000007_0043
1. Overview of Themes
POL's ways of working in relation to
audit (now renamed Branch Assurance)
were criticised for not being supportive,
not engaging with postmasters and not
operating in good faith and
transparency.
1.POL failed to fully engage with
postmasters during the assurance
process.
2.POL structure included a multi-skilled
team of trainers and auditors.
3.POL failed to refrain from exercising
“any discretion arbitrarily, capriciously or
unreasonably”
4.POL failed to “exercise any discretion
in accordance with the obligations of
good faith, fair dealing, transparency, co-
operation and trust and confidence”; and
5.POL failed to take reasonable care in
performing its functions and/or
exercising its functions within the
relationship’.
CW Finding Theme(s): Cl) 3 - Branch Assurance
Engagement with postmasters before and during a Branch Assurance visit
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(~ >)
Postmaster
feedback
For continuous
improvement and to
establish that process
has been followed
S y
Rational Document
introduced
Outlining the reason
for the visit, this is
shared with the
postmaster
Kaa
y
y
S
Scripts introduced
to give a consistent
approach, explains the
outcome addresses
questions and allows
issues to be raised
All visits pre-
arranged
No unannounced
Visits, allowing the
postmaster to be
ren
X J
Postmaster verifies
cash and stock.
Supports full
transparency and
postmaster
involvement
£
Structure changes and
improvements in training and Quality Assurance
( At least 2 advisors +)
at each visit
Removed dual role
( @aiiyacsmm )
Introduction of a Mindset training was introduced
Allows one advisor to dedicated Branch delivered to the Team Consistent
lead the visit and be Assurance team, with in 2020. Induction and deployment of QA
responsible for Team Leaders and training plans are in including
engagement admin support place. documentation and
& 4 2 cs spot checks
NS im )\ 6. )\__ a= ys
Improved Ways of Working
(oan > ; —
Policy introduced Documentation and Supportive visits Case management
Sets the minimum processes reviewed Aimed to support introduced
operating standards For consistency, clarity Postmasters with Microsoft Dynamics
relating to network “pealiNnei Son issues identified by the records all branch
monitoring and branch postmaster Network Monitoring assurance activity
assurance Cee Analysis team
foal ee EE a i?
S yN = J\ =) y
45
POL-BSFF-111-0000007_0044
covery and
tion Disput
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9g
1. Overview of Themes
2. Key Activities/Deliverables
POL was heavily criticised in its lack of
support of postmasters facing
discrepancies, lack of dispute options
and oppressive loss recovery practices.
1.POL failed to support postmasters to
investigate discrepancies, or to
investigate themselves to understand the
causes
2.POL failed to be transparent about the
causes and extent, of shortfalls
3.POL needs to make decisions based on
fact and not exercise discretion
arbitrarily, capriciously or unreasonably”
4.POL must take reasonable care in
performing its functions, particularly
those which could affect the accounts
5.POL failed to allow the dispute of any
shortfall or TC from the Horicon system,
forcing postmasters to ‘accept’ the
discrepancy
6,POL made assumptions that a shortfall
was the fault of the postmaster
7.POL attempted to recover losses
without agreement or investigating
8.POL deducted from remuneration
without considering financial impact
Anew operating model was created to support postmasters with their investigation of shortfalls, or for Post Office to investigate for them
77
Dedicated teams
supporting with
transaction corrections
and shortfalls, to
la
Case management
and QA introduced
Microsoft Dynamics
records all shortfall
( ReamesenieintTe)
and education
Collateral and training
produced for
Standard checks
are carried out to
ensure Horizon did not
cause the discrepancy,
~
Findings shared
A report is created to
share with the
postmaster, explaining
y
support the cases, and these are supporting and that PO carried the rationale for the
postmaster to find the reviewed postmasters to out its obligations resolution of the case.
ED Oy ia) investigate their ry
No as) \_ =) J \—_own shortfalls
Loss recovery practices were reviewed, resulting in the cessation of civil recovery and forced deduction from remuneration
Improved processes
Focus on support for
the postmaster, and
finding the reason for
a shortfall, including
pro-active support
calls Q
S
la
Old recovery
practices ceased*
Payments no longer
deducted from
remuneration, unless
requested. There is no
civil recovery. £
S
Policy introduced
Sets the minimum
operating standards
relating to postmaster
account support
(i
4
~
Training for a new
mindset
A suite of training on
culture and practices
has been delivered
ads
(— >)
Revised
documentation
Discrepancy letters
revised into a
supportive tone, not
demanding payment.
&
XX J
Physical mechanisms were introduced to allow postmasters to dispute shortfalls, supported by improved processes.
Launch of the
Review or Dispute
button on Horizon
Including the removal
of a £150 minimum
limit on disputed items
C
Ne
~
~
(ive
reviewed and
scripts created
Documentation and
scripts focus on the
dispute options for
4
postmasters
\
Committee
Was created to review
the facts of complex
cases and review any
disputed findings
S
( Gswiss )
Va
Communication to
postmasters
Focusing on how to
dispute a shortfall or
transaction correction
on
4
S _4
(
Branch Impacting
Problems (BIPs)
To ensure
transparency, branch
impacting problems
are published on
Branch Hub
S a)
(“Established Loss Recovery Future plans to address: )
Planning in place to develop and implement a recovery process, via deduction + Failed promises to pay
from remuneration, shortages that: + Independent review process where Postmaster doesn't agree with a 46
+ have been investigated and found to be postmaster error, and review outcome
(+ _have been agreed with the postmaster, but remain unpaid + Leavers process D,
POL-BSFF-111-0000007_0045
1. Overview of Themes
POL Failed to support postmasters
throughout the suspension and
termination process and asserted too
much control:
1.Suspended postmasters were
excluded from their premises and were
denied access to information
2.PMs were not paid remuneration
during the period of suspension
3.POL failed to consider ‘appropriate
period of notice’ and failed to ‘consider
relevant factors relating to
individual circumstances’
4.Cll criticised POLs right to ‘terminate
with immediate effect’ as provision in
Contract allowed POL to treat minor
breaches as though they were
repudiatory breaches
5. Ways of working ~ POL must exercise
its discretion in good faith and must not
suspend or terminate a PMs contract
a. “arbitrarily, irrationally or capriciously”;
b. without “reasonable and proper
cause”; and/or
c. in circumstances where POL was in
material breach of duty in respect of
matters which POL considered provided
the right to suspend.
CU Finding Theme(s)
CU 7 & 8- Suspen
ns and Terminations
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9g
Improved governance across decision making
( >)
New policies for
suspension and
termination decisions
Clearly sets out
procedures to follow
and decision making
framework
L Hy)
(a >)
Suspension Decision
Governance
Committee
Provides ongoing
oversight on all
decisions to suspend
S a,
(— Legal Assurance
All decisions to
terminate assured by
POL Legal, providing
confirmation that the
grounds have been met
and the matter deal
\_with in good faith
Contract Termination
Decision Committee
Decision making
committee for all
decisions to terminate,
includes SEG and
Postmaster bra
representation #9]
\__ representation
Decision Review
Panel
A route for a
postmaster to
challenge a decision to
terminate, includes
Postmaster
End to end process and procedure improvements, supporting the postmaster journey
based on average fees
over the previous six-
month period.
L £)
premises
Can access premises,
but not the secure
L area. Oo J
provided with all
information in
connection with the
Remuneration paid ) Suspended +) Information pack Improved ») Contract )
during suspension postmasters are not introduced documentation Management Team
Monthly payment is excluded from Postmasters are Tone and consistency restructure
of application
updated. Postmasters
signposted to
wellbeing support.
=
Aiding consistency of
decision making
Suspension is only considered where absolutely necessary
250
200
150
s
2017/2018
ONFIDENTI
2018/2019
2020/2021
Suspensions
E INTERNAL USE
Terminations
2021/2022
2022/2023
* a I [ ia
4 3 i7 20 17
0 [I lea] —_ = —— —
2019/2020
2023/2024
47
POL-BSFF-111-0000007_0046
1. Overview of Themes
Post Office culture was one of secrecy
and Post Office was oppressive in the
way it dealt with postmasters.
1.POL had a “Culture of secrecy and
excessive confidentiality generally ... but
particularly focussed on Horizon” and
“the subject matter of the litigation”
2.POL's approach to asserting/enforcing
its legal rights against certain Operators
as “oppressive” and found that POL
“impose{d] [the] draconian effect [of the
Contracts] upon [Operators] and
behave[d] with impunity and
coppressively”
3.CU criticised POL's relationship with
the National Federation of
Subpostmaster (NFSP). The CU found
that the NFSP was “not an organisation
independent of the Post Office” and “the
Post Office effectively controls the NFSP_
CU Finding Theme(s): CU 9 — Culture and Governance (Postmaster)
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9g
Engaging with Postmasters is business as usual now and they are much more involved in decision making
y
Two Postmaster
NEDs
Joined in 2021,
bringing the
postmaster voice
into the business at
Board level br
la
New Postmaster
Director
Introduced in 2021, a
serving postmaster
embedded into the
Retail team to drive
improvements,
XN
Other engagement
methods
introduced
Adopt an Area,
regional forums and
a monthly change
forum
Listening groups
Now take place
regularly and face to
face, a chance for Pms
to speak to leaders
and network
pe
NFSP relationship
Revised Agreement
in place to give more
independence with
new ways of
working established
Support provided to p
ostmasters more generally has improved, supporting them to their businesses
(~ >)
Increase in Area
Managers
Every Post Office now
has a dedicated Area
y
Introduced to provide
data to PMs and help
them understand their
Branch Insight ies! )
»
Operational
Excellence initiatives
Provision of note
counters, incentives to
“
Improved
remuneration
Higher proportion of
income passed on to
Working groups to
address known errors
Via weekly emails and
operational updates,
Manager to support operational perform key daily and PMs, significant
them gee performance monthly tasks remuneration
AY Fes a increases £
XX ys ) Ne \ J
And there are two way communications channels in place now for us to update, listen and respond
(-
Regular updates on \( Improved >) Recamee = \I( Recep
known errors communications Complaints Research Survey
New complaints policy
introduced and
and monthly development of communicated to PMs measure overall
communications to Branch Hub — SLAs in place to sentiment
PMs 2 respond effectively ie
\ 6-e)\_ A. VY)
Annual survey and
pulse survey to
How would you describe the relationship you have
with Post Offi
1296]
2 149%]
Jan-21—Jan-22.-Mar-23— Pulse - 23
48
POL-BSFF-111-0000007_0047
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Monitoring Performance Across the Postmaster Lifecycle:
KPls across each stage of the
jpostmaster lifecycle are measured
and reported on a monthly basis,
from onboarding, through to
contract terminations.
The Retail Committee and SEG
review the dashboard on a
monthly basis, with Board review
every quarter.
Each metric is assigned a RAG
status and corresponding actions
and accountable owners to
address any gaps
POL00448492
Retail Performance Dashboard Summary Period 11
Discrepancies and Postmaster Accounts
4864 I £48M 4
Postmaster Onboarding
° rece 4006¥ £1.4M¥
HTTTTTTT 8584 £34M4 -£510KY
49
CONFIDENTIAL
AND COMMERCIALLY SENSITIVE - FOR POST OFFICE INTERI
POL-BSFF-111-0000007_0048