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Cover Letter
Dear Shareholder,
In advance of the Quarterly Shareholder Meeting (QSM) due to take place on 11‘ July 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 historic failures i.e. 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.
Yours Sincerely,
GRO
‘Nick Read
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Shareholder Quarterly Briefing
11 July 2024
Post Office Limited — Strictly Confidential and Legally Privileged
Post Office Limited - Document Classification: INTERNAL
Agenda for the meeting
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Introduction
+ Approval of minutes from Previous meeting
Update against DBT’s 4 strategic priorities
Strategic Risks and Mitigations
Strategic Review Update
Financial Performance Update
Strategic Platform Modernisation Programme (SPMP)
Remediation Unit Update
Issues of Note /AOB as required
11.00am - 11.15am
11.15am —- 11.25am
11.25am - 11.40am
11.40am - 11.45am
11.45pm - 12.00pm
12.00pm - 12.25pm
12.25pm - 12.40pm
12.40pm - 12:55pm
Carl Creswell
Nick Read
Owen Woodley
Owen Woodley/ Tim MclInnes
Asha Patel
Chris Brocklesby
Simon Recaldin
n/a
Page 3
Page 5
Page 7
Page 9 -10
Pages 12 - 16
Page 18 - 22
Pages 24 - 28
n/a
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Actions from last meeting and Updates
—_ Actions from last meeting Update ee ee
Share action plan for Project Ethos Update on Project Ethos to be provided in the April Quarterly Karen Completed
Shareholder Meeting, 11 April 2024 McEwan
&Tim
Perkins
2 Provide update on all ClJ and HU actions Progress Update on HI and ClJ to be provided in the April Martin Completed
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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Post Office Limited - Document Classification: INTERNAL
Update against Shareholder strategic priorities
EFFECTIVE FINANCIAL
MANAGEMENT and
PERFORMANCE
ADDRESSING OF
REMEDIATION
MATTERS
MAINTAINING AnD
IMPROVING
CAPACITY,
CAPABILITY &
RESILIENCE
FACILITATE SHARING
OF INFORMATION IN
OPEN AND
TRANSPARENT
MANNER
We have commenced execution against the FY24/25 plan which id ‘of incremental opex savings to be achieved against the previous year. At the end of P2 we
expect to be on track to deliver these. The FY24/25 plan included alms! pot for investment and change spend, to include prioritisation of transformation activity with a higher
prospect of financial return/cost reduction. The Board have been sighted on the allocation methodology of this I: ’as been approved for further DMB
exits.
The principles established by the Opex Committee around in-year prioritisation of spend and optimisation of return are being applied to the change portfolio, via the IADG . The
Chair-led Strategic Review (Teneo) is now looking at organisation design framework alongside phase two of the review, which is intended to identify transformational cost-out
opportunities.
There has been good progress made by Remediation Unit as Post Office works hard to compensate impacted Postmasters. This includes a number of areas covering
Overturned Convictions, Horizon Shortfall Scheme, and Suspension Renumeration Review. We are close to commencing the Payment Process Review, in line with Mr Justice
Frasers judgements and learnings from the Horizon IT Inquiry.
Post office continues to prioritise engagement with the Post Office Horizon IT Inquiry, and we expect to be impacted shortly by any work required for Phase 7 of the Inquiry
(Compensation), which may impact our operations during July and August 24.
We have welcomed three new members of the Executive team — Preetha McCann as Interim CFO, Neil Brocklehurst as Interim COO and John Dillon as Interim General Counsel
(Inquiry and Remediation). These appointments are interim whilst the Strategic Review is ongoing, and they provide improved capacity and resilience in the Executive team
prior to Phase 7 of the Public Inquiry. SEG have agreed a new set of organisation design objectives and principles, which will support further organisation change activity prior
to the completion of the Strategic Review.
The 2024 colleague engagement survey results have been shared with Board and with colleagues across the business. They show an overall fall in engagement driven by a
significant fall in colleagues’ pride in working for Post Office. Action planning is now complete across the business with each of the four business-wide actions falling under
one of the three strategic priorities in the People Plan (Colleague Experience, Capability and Inclusion). Individual action plans have also been developed at a functional level
and, for the first time, focusing on discreet populations within the business whose experience is markedly different to the experience of other colleagues ~ strain for senior
leaders, career progression for ethnic minority colleagues and inclusion for disabled colleagues.
We continue to ensure that our teams work closely and collaboratively, and this includes sharing information openly with UKGI, DBT, your Permanent Secretary, Director
General and other officials.
We appreciate our continued collaboration on business case preparations and welcome clear and consistent alignment on priorities in moving the agenda forward collectively
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Strategic risks and mitigations
Update
Post Office Limited - Document Classification: INTERNAL
Key Enterprise Risks
The Strategic Executive Group (SEG) has conducted a review of both Enterprise and Intermediate risks. Our current focus is on the areas of greatest risk, namely Technology,
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Cyber-Security, Funding, and Operational (retail and franchise). It’s important to note that if these risks were to materialise, they could potentially disrupt our Post Office
operations. We are actively implementing strategies to mitigate these risks to ensure the continuity of our services
Enterprise Intermediate risk fest Position Inherent I Residual I Target to
Score I Score _I remediate
+ End of Horizon
support Agreement
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.
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.
Operational (retail & franchise)- Failure to
provide transparent and fair treatment to our
Postmasters, along with inadequate service and
support, resulting in decreased customer
satisfaction and hindering POL’ ability to
rebuild trust
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.
IRRELEVANT I
IRRELEVANT
* Formal discussions commenced with FJ on extension beyond March
25, terms currently not agreed. Depending on what extension
terms are agreed this could further impact the delayed NBIT/SPMP
programme.
* Cyber Security Maturity programme in progress. Board agreed
further funding. Additional work can be incepted with a request to
revert to the Board with a plan for additional activities which would
get us back into tolerance (i.e. to a minimum of——jon the cyber
ity scale).
lagreed for 24/25
+ Operational excellence programme i light, focus on
IRRELEVANT
is expected to reduce January 2025
Operational Excellence
+ Losses must be addressed in a fair and transparent manner to
support our postmaster, options to remediate this are being
presented to the Risk committees in September this year.
* Asigned off loss recovery policy is to be agreed.
i to Apr
Horizon Replacement, and is likely tobe received in July.
Discussions with DBT are ongoing re: timing of funding receipts
+ Prioritisation of programme spend (consideration of risk position)
+ Potential costs which may be incurred with regards to IR35 are not
yet confirmed.
IRRELEVANT.
Governance remains a key enterprise risk, with the need
for greater clarity around accountabilities and controls
around decision making in achieving strategic and
operational requirements and avoiding reputational
damage or breach of legal requirements.
Data Governance for unstructured data has been
frequently highlighted as a failing during the Inquiry; the
data governance framework is currently being rolled out
with the aim of increasing the overall maturity across the
business by Q2 24/25.
Internal Control Framework whilst Post Office has
embedded controls within Finance, Technology, Retail,
Supply chain and Strategic portfolio office, controls are
attested, mapped to risks within our risk tool and provide
visibility of the effectiveness of these controls. There are
other areas of the business that do not have controls in
place which could lead to non- compliance, breach of
regulations, ineffective risk management within the wider
business. POL approved a Draft Control Framework to be
implemented on a ‘best endeavours’ basis. This decision
was made at GE and ratified at the Audit, and Risk
Committee (ARC) in September 2022. The business is
working on presenting a revised draft for approval to the
Sept 24 ARC
People wellbeing, colleagues are being impacted by
external media attention, capacity of workload and the
ongoing inquiry . The results of the Employee Engagement
survey completed in Feb 24 have now been published for
the implementation of action plans to address areas
requiring improvement. A new Head of Wellbeing (a new
role in the People Structure) has been appointed.
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Strategic Review update
Teneo Strategic Review (1/2)
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The Post Office Strategic Review
Outputs
Teneo activities
STAGE 1: Situation Assessment,
Diagnostic and Hypotheses
Revisiting the purpose and vision for the Post.
Office
Setting principles for the Strategy
Market opportunities, dynamics and trends:
= Demand, technology and regulatory drivers
- Market sizing (by category, channel, segment)
‘Competitive landscape (current, emerging)
Performance diagnostic and key issues analysis
Growth/turnaround hypothesis development
‘Secondary desk research, report and forecast
analysis
Data request and gathering of market, consumer
and competitive data
~ Initiate top-up primary research (as needed)
Management and expert interviews
Stakeholder and postmaster consultation
‘Scenario and strategic options development
(portfolio, channel, etc.)
Preparation of diagnostic and competition
deliverables
Growth opportunities workshop preparation and
facilitation
Strategic Options Workshop(s)
STAGE 2: Option evaluation and
jative definition
Description and analysis of key strategic options
Top-level financial analysis of strategic options
Prioritisation and definition of implementation
requirements
Recommendations on cost base! efficiency
optimisation
Preferred commercial roadmap
~ Technology enablers
~ Organisational enablers
Documentation of strategic growth levers
Modelling of selected strategic option(s) - Sales,
Margin, Cashflow (by product type, channel)
Iteration of commercial and technology roadmaps
Preparation of presentation and workshop
materials
Facilitation of business plan workshop
Stakeholder engagement
Business Plan Workshop(s)
STAGE 3: Business plan and Board
presentation
Strategic plan presentation including:
- Recommended strategy
- Implementation plan
- Technology and operating model implications
~ Investment implications
Modelling of 5-year financial plans, scenarios and
sensitivities
Board deliverables
Final modelling of selected strategic option(s)
Definition of key R&Rs, organisational enablers
and KPIs
Preparation of Final presentation materials
Preparation of Executive Summary
Board and stakeholder presentation
Final Presentation(s)
Teneo Strategic Review (2/2)
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Key issues
Reputation, Operating Product & Fit-for Purpose Stakeholder
Trust & Brand Model & Culture Service Portfolio Technology Management
* The Horizon scandal
and subsequent public
enquiry have resulted
in a significant amount
of negative attention
and caused
unprecedented
damage to the brand
Restoration of public
trust in the brand is of
the highest priority for
the Post Office
* Organizational
accountability is pivotal
to driving cultural
change; this requires
the right governance,
reporting, and
incentive structures
The Post Office's scale
means that
inefficiencies exist;
there is a need to right
size for the future
+ The Post Office
operates in many
markets’, each with
distinct challenges
around competitive
differentiation
+ The Post Office needs
to clearly understand
which markets it
should be competing in
to determine the future
of the portfolio
+ Replacement of the
core IT platform and
the development of a
strong omnichannel
Offering are key
objectives
+ The Post Office must
determine what is the
right balance of retail
vs. digital presence —
both now and in the
future
+ The Post Office
operates in a complex
ecosystem of
‘stakeholders; it plays
an important role in UK
Public life, is a key
partner to critical
‘suppliers (e.g. British
Gas), operates a
network of sub
postmasters and has a
duty to its UK
Government owners
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POL Operational & Financial
Performance Update
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KGI on 03.07.24
reviewed and discussed wi
P2 CFO Report: Executive Summary
P2 TRADING anp
CHANGE POSITION
LOAN UTILISATION
WRONGFUL
TRADING —
FINANCIAL
CONSIDERATIONS
EXTERNAL AUDIT
CONTRACT VALUE
P2 revenues of above budget, and 1% growth on prior year) were driven by a continuation of stronger banking deposits volumes, a higher annual Home
Insurance profit share from Aegeas received in May and higher credit card volumes driven by a loosening of Capital One credit policy. This has translated to Variable Rem of
[imsisventI (50% of variable revenue -in line with budget and prior year). Opex overheads were {wer} under budget in month as a combination of timing differences and
savings ~ translating to a P2 trading profit of nil, “above budget and in line with prior year. YTD we are at { trading profit (*ss"] above budget), however
indicative views of the 2+10 forecast suggest that this position will be eroded with significant unbudgeted costs and opex risks expected to crystallise. Actions have been
communicated with the Leadership Team to strengthen collective mindset and build deeper awareness of the position and implications of the forecast view and these will be
closely monitored every month
At the end of May, the WCF and NRF were both maxed at! respectively {m
the bank holiday weekend, peak trading levels of FX holdings (cls), lus of £2 coins
higher than forecast largely due to higher gross network cash arising from
). To help ease this liquidity pressure, the Board are requested to ratify
}) up until the end of
August-24. There continues to be a risk to higher loan and NRF utilisation due to the timing of cash funding receipts from DBT. In June, as been requested from DBT,
relating to April and May spend on Horizon Replacement, and is likely to be received in July. Discussions with DBT are ongoing re: timing of funding receipts.
Since the Wrongful Trading update provided to the Board in January-24, financial considerations have been assessed with regards to monthly financial information, funding
and support from DBT and utilisation of other facilities. In terms of substantive updates, the timing of receipts from DBT alongside other additional pressures in the business
(Inquiry, ===} redress payments, past roles, SPMP business case etc) is adding pressure on the utilisation and purpose of the WCF and thereby increasing the risk of wrongful
trading. The current fi plan for spending on operational costs of RU and Inquiry to the end of March 2025, shows an additional ~{m=«=! of committed funding will
be required above the {mesxrIalready committed. It is now clear that DBT cannot commit funding for uncommitted items until after the general election. There is also a
potential risk of delay to part of current funding arising out of POL drawing down the funding in arrears or if DBT asserts that POL are not complying with the funding
conditions.
ar.con - the estimated fee for first year of co ‘0 ensure overruns, scope changes and unexpected events
are catered for we are allowing for js=smriper year for the 6 years of the contract, giving a figure of IRRELEVANT I buffer. This buffer should cater for the economic and other
uncertainties that can affect the costs associated with long term contracts such as this. There is no spend commitment and every effort will be made to drive down the costs of
the annual audit.
The Corporation Tax risk arising as a result of HMRC’s stance on the funding, expenditure and payouts for Remediation Matters, is still being concluded with HMRC, with
POL awaiting DBT confirmation it will fund future liabilities as well as historical ones. The historical impact is estimated to be c. {=!~ £xxm and this may impact the FRES joint
venture. FRES have been made aware that some historical tax treatment decisions across the group may need reversing as a result of HMRC's proposal, albeit this is not yet
confirmed. FRES have been made aware ahead of signing their FY23/24 financial statements.
@ 13
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I on 03.07.24
Post Office Limited - Document Classification: INTERNAL As re’
wed and discussed wi
Summary Report - P2 Financial Performance (1/2)
1 MailsRevenue
+ P2 Mails revenue of [imretevant] was {inretevant} behind budget due to I underperformance in Royal Mail driven by the delay in Tracked roll-out (now expected to be fully
deployed by 10" July), a performance from non-R rs (slower than budgeted growth from Sales in Branch).
+ Total Mails revenue was 1% down year on year, with growth in non-RM carriers being more than offset by the decline in RM revenues ~ the full deployment of Tracked products in
July is expected to stem this decline
2 Banking Revenue
+ P2 Banking services revenue of {i ahead of budget (12% growth on prior year) due to a continued trend in higher deposit volume: and a positive
adjustment on the Banking Framework Fee IiRRELEVANT) This is offset by a (eT! Banking Hubs accounting adjustment from opex to revenue (net nil impact to Trading Profit).
+ Average Transaction Values, whilst 5% under budget in the scorecard (the phasing of which is being investigated) are more than offset by volumes — such that overall deposit
values are still above budget.
+ PO Insurance revenue of I
offsetting a decline in volumes.
* Credit cards revenue of
suggests this could generate ¢*
3 Other Revenue
ahead of budget of which }" relates to a higher annual Home Insurance profit share from Ageas (received in May), which is
head of budget, with continued higher volumes driven by a loosening of Capital One credit policy — an indicative 2+10 forecast
f budget upside in the year.
4 Postmaster Remuneration (PM Rem)
+ P2 Variable PM Rem of}. higher than budget, largely from stronger Banking performance.
+ P2 Variable Rem as_a percentage of Variable Revenue was 50.2%, 0.4% up on budget and 0.3% up on prior year.
+ Fixed PM Rem of I. lower than budget in month — driven by less branches receiving assigned office and exceptional payments.
5 Open Branch network
* The network decreased by 28 branches in May to finish at 11,744 branches, largely due to the flow closure of some Traditional and Outreach branches.
* 615 Drop & Collect branches were trading by the end of April, which is broadly in line with prior month.
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I on 03.07.24
Post Office Limited - Document Classification: INTERNAL As re’
wed and discussed wi
Summary Report - P2 Financial Performance (2/2)
6 Opex Overheads — Staff & Non-Staff Costs
+ P2 Staff Costs oft! lover budget, with the RMSEPP pension refund of i transferred to the pension asset in line with technical accounting guidance.
+ P2Non-Staff Costs of i were { year to date adjustment on Banking Hubs (offset with revenue adjustment); (( lower branch
stationery volumes, which were 30% iess than prior year, with higher volumes expected to come through in later periods, ( 3) lower marketing and digital spend of which
) is a saving from switching vendor and remainder timing of spend; (/ss«=™«!) lower Commercial spend, from Mails, Passport postage and Lottery exit costs not required;
( timing of spend within CFO and Property.
+ YTD Non-Staff costs are under budget, however based on the 2+10 forecast, this is expected to reverse by P4 with
next 2 months. This forecast will be reviewed by the Opex Committee on 24" June and SEG update to follow.
higher than budget costs expected over the
7 Performance against agreed cost savings
+ The FY24/25 budget identified fine2«0] of incremental cost savings to be delivered across
+ The 2+10 forecast indicates that we will exceed these cost savings on a net basis by
will continue to monitor these each month.
ne of the STIP metrics in FY24/25.
I of exceeded savings, partially offset by !
f unmet savings. We
Investment and Change Sps .
+ P2 YTD Change Sparel of IRRELEVANT! below Budget driven by
8 ni n pend in Replacement of Horizon programmes.
contingency for ClO and SPM pr
+ The 2+10 full year forecast of
contingency). This is offset by an’
Replacement of Horizon programma (of which I is a reduction in
verspends in POL funded “Other Change spend”.
9 Security Headroom
* Atthe end of P2, Security Headroom of
{finnevevant] of RMU and compensation funding in P2 that was forecast to be accrued in P2 .
“assets gained) and
joan receivable write off + i=
* Indicative SH forecasts based on 2+10 show a low point of tin December (below the Board approved; buffer) driven by changing assumptions in payables and working
capital movements. We continue to monitor these impacts on SH as part of the monthly forecasting processes.
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KGI on 03.07.24
Post Office Limited - Document Classification: INTERNAL
Profit Before Tax
YTD
ra
Actual Budget bedoiale YoY YoY % ‘Actual Budget Variance YoY YoY %
Mails - RM
Mails - Non RM
Banking Services
ATMs
Voucher Encashment
PO Insurance
Mortgages, Savings & Loans
International Money Transfer
Travel Money
Payment Services & Payzone
Credit Cards
Retail & Gift Cards
Government Services
Identity Services
Supply Chain/Other
Total Revenue i
Cost of Sales i
Postmaster Rem Variable Costs I
Postmaster Rem Fixed and Other Costs i
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
16
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Post Office Limited - Document Classification: INTERNAL
Loan and NRF Utilisation
Utilisation of the DBT WCF at the end of P2 was EERIE with NRF ot BRMAR Total Net funding position at the end of P2 of ERAEMAGE was MMBF higher than
forecast predominantly due to higher gross network cash of c.
-Large surplus of cash in the network following the bank holiday weekend
-A surplus of £2 coins in the Birmingham cash centre of {igamamall
-Peak trading levels of FX Holdings across the network at GARuac0
**Subject to Board ratification we are utilizing an additional {gee of the of WCF from 12th June until the end of August**
IRRELEVANT I
Available NRF Available WCF sm Additional NRF Board Approved Buffer Loan and NRF Utilisation _****** Loan and NRF Forecast
17
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Strategic Platform Modernisation
Programme (SPMP) / New Branch IT
(NBIT)
Release Status
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We continue to make good progress with building the NBIT system.
We have split Release 2.2 into two parts to allow earlier deployment to a non DMB.
Scope
Parcelforce mails, Saturday
*l\-e4.11, delivery, security fixes and
functional defects
Status
Complete
Functionality to support
EES 4 ¥2-) independent branch pilot (alongside
other dependencies)
Planned for end July. Testing progressing well
with only 5 defects outstanding.
Addition of on-line Banking
functionality
Release 2.2b
End 2024 but still subject to defining signoff
criteria with the banks. Positive discussions with
Lloyds to use them as our 1st test partner
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Pilot Status & Volumes
We have now deployed to 5 DMBs.
Our plan continues to be to deploy to our first Postmaster branch by end 2024.
NBIT Pilot - Items Sold By Branch
Weekly
* The branches have been stable with no Severity 1 or 2 incidents raised.
+ Lessons learnt are being fed back into the programme teams to update the NBIT software, training etc.
+ Weare also now planning to rollout the new NBIT kit early to most branches
Financial Performance
Approval Table
A- Per Business Case (incl OB)
Horizon Infrastructure
SPMP Hardware Commitments
sPMP
SDES
Contract Extension
m Bias/indexation
Total Spend (incl OB excl Contingency)
Less funding already received - previous settlement
Less funding already received - FY23/24
Revised Funding profile
POL funded overspend on RDEL
_ Treasury Request
B- Current position (incl OB)
Horizon Infrastructure
SPMP Hardware Commitments
spMP
SDES
Horizon Contract Extension
Optimism Bias/indexation
Total Spend (incl OB excl Contingency)
Less funding already received - previous settlement
Less funding already received - F¥23/24
Revised Funding profile
POL funded overspend on RDEL
[Treasury Request
C- Variance (Current Position - Budget)
Horizon Infrastructure
SPMP Hardware Commitments
spMP
SDES
Horizon Contract Extension
Optimism Bias/indexation
Total Spend (incl OB excl Contingency)
Less funding already received - previous settlement
Less funding already received - FY23/24
Revised Funding profile
POL funded overspend on RDEL
‘Treasury Request
IRRELEVANT
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Notes
We have underspent on our current business case
underspend of linnetevant for the full year.
We have not utilised optimism bias or indexation
from April to July.
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Funding
Original Funding
Additional Funding Agreed in 2023 i
Total I Gite had not been spent as of the end of February
Includes Optimism Bias I when the business case was submitted in March
Total funding committed to date is of which
Total Spent by end of Feb 2024
Total Funds Remaining (inluding OB)
Assuming that Opt! run out in Janua
FY23/24 Apr-24 May-24 _Jun-24 _Jul-24__—_—Aug-24 ~—Sep-24 Oct-24 Nov-24_ _Dec-24_ _Jan-25__—-Feb-25_—Mar-25
Culmulative Forecast/Actuals exc OB i
cna IRRELEVANT
Variance
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Stakeholder Management & Governance
* We have agreed flexibility of our current funding to allow our transformation projects to continue until early December — thank you
* We have been advised to revise our next funding request to fund the Horizon replacement programme until end of FY25
with DBT to understand the route to approval.
. We are working
* We have now produced action plans to respond to both the IPA and Public Digital reviews.
* Onthe IPA review; we have re-engaged with the IPA consultant who conducted the original review and have an Assurance of Action Plan (AAP)
booked for the 1st week of August. At that meeting we need to present an update on a number of governance actions which reside with DBT and
the IPA
* On the PD review; DBT have asked for Board review and approval of our action plan. We have proposed to Board that this is actioned through an
ad hoc meeting of the POL Investment Committee
* We have also progressed the action on gaining more organisational and cultural buy-in to the programme through:
+ Regular updates at 10@10, internal communications and newsletters
* Embedding business reorientates at all levels within our programme governance
* ‘Open day’ in Wood St to speak to the programme team and see NBIT (Chesterfield and Bolton planned)
+ Leadership training planned on agile transformation on 25th July
* Business change team being recruited to progress impact analysis across all POL departments by end 2024
* — Review of vision and scope once the Strategic Review to reflect wider agenda outside of pure system replacement.
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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.
* The formal letter requesting the extension will not be delivered until the new Government is in place.
* Weare also awaiting feedback from Fujitsu’s Group Board meeting on 1st July.
. eels have signed off the inclusion of a commitment to insource Horizon support if the deployment of NBIT is delayed past March
* External legal review of the proposed extension has been received by the POL Board along with a number of potential options on how to
move forward. Feedback will be provided in the meeting.
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Remediation Unit Update
Post Office Limited - Document Classification: INTERNAL
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
Original: 2,417
Hss
Late Apps: 1,856
Post Offer: 2,728
CCRC: 700
Convictions
Oc: 110
SRR: 2,521.
Detriment
PPR: TBC
Stamps: 182
MI as at 20/6/24
24%
82%
67%
42% 64%
28% 41%
0%
Complete Partially complete
100%
100%
ToDo
Notes on Status, Progress, and Issues: m1 as at: 20/6/24
Total Paid to Postmasters £180.9m (up from last time: £156.2m).
+ Original HSS Applications — 2,417 Offers (100%) were issued, worth ~£112.2m, by the end of
November 2023.
+ Late HSS Applications — To date 1,856 late applications (+27 wow) have been received, of
which 1,349 have been assessed for eligibility and 1,180 are eligible. Of these, we have issued
311 offers, worth £17.8m.
+ Post Offer — Of 2,728 offers (~£130m) issued, we have received 2,256 accepts (+5 wow), and
made 2,242 payments totalling ~£.109.6m after tax. To date, 147 disputes have been resolved
to resolution, of which 70 at stage 1 (prior to a Good Faith Meeting). Currently in progress are
17 queries and 376 active disputes (a total WIP of 393, being 14.8% of responses to date).
* Criminal Case Review Commission —700 POL convictions, of which 675 Potential Future
Appellants have been contacted. Of these, 201 appealed: of which 164 appeals had
outcomes: 99 were overturned, and 65 were unsuccessful. Additionally, 10 non-POL
convictions were overturned.
+ Overturned Convictions - To date, 110 claims (100 POL + 10) have been received. These are
being worked through, and to date we have paid out £47.8m, of which £25.2m has been the
£600k up-front offers.
+ Suspension Remuneration Review: So far, of the 2,521 eligible Postmasters we have sent
disclosure letters to 2,406 (95%), received 1,749 applications, issued 1,027 Offers, received
749 Accepts, and made 717 payments. 1,042 cases have been closed.
+ Capture — We are now providing Kroll with information to assist them with their investigation.
DBT aim to publish the Kroll report in the Autumn. POL will not be shown any draft report
prior to publication.
+ POL Process Review: We have everything we need to start the pilot mailing next week. There
is a live debate around launching this initiative so close to the GLO data breach so the pilot
may be delayed.
+ Stamp Scheme: Offers issued on all 182 eligible claims. 167 payments made totalling £1m.
We've received 3 new claims which have been assessed as ineligible.
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Remediation Unit (RU) Update
Strategic Priorities
+ Past Roles - RU continue to work collaboratively with the business on the issue of Past Role. This being the concern about the risk of having previous POL
employees that were working in POL during the relevant Horizon Inquiry period, that are now part of RU working on the Redress schemes. There has also
been questions raised by the AB in this regard and this matter is currently at POL Board level for resolution.
+ HSS - As previously advised, we have completed the original applications cohort with all offers having been issued by end November 2023 (a total of 2,417
offers).
+ We have acceptances from 2,065 of these claimants and have paid and settled 2,062. 289 of the remaining 352 are in our dispute resolution process and the
remainder of the 352 have not yet replied or have raised queries.
+ Late applications -following the Bates vs PO drama we saw a significant uplift in volumes of late applications received, with the current number sitting at
1,883 (new applications initially being received at a rate of over 100 per week). There has been a gradual reduction in new applications with just 24 received
last week, the lowest number so far this year, though absolute volume is far higher than originally expected.
+ All budgets were originally built on an estimated 350 late claims received. We then moved this up to 416 and are now forecasting a total of 8,500 late
applications if PMs who have not applied are mailed later this year.
+ So far, we have issued 313 offers to applicants from this population. 194 have accepted, 180 of which have been paid. 88 are currently in dispute the
remaining either have queries or are yet to respond.
+ The current pinch points are eligibility checks, insolvency checks and RFIs responses though we’re seeing improvements in all three areas.
+ HSS Appeal -Ahead of Phase 7 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.
. We expect this will now be post-election that we get clarity. 7
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Remediation Unit (RU) Update
Strategic Priorities Continued
+ £75K Fixed sum offer - While the £75k Fixed Sum Award for HSS has been announced by the Government, work remains to make this operational
including all party sign off of the ‘£75k Principles’ and Offer letter as well as final agreement on how to position the likely government-led appeals process
+ Back book top ups is progressing on the data, letters and process - we expect to be able to go live during July 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 applied for this minimum payment
value. We expect to save c£42m via this ‘in-house’ process if the volumes are as expected vs sending these via Panel and assessment route.
+ HSS Closure date - We have not yet finalised governance around an end date for HSS, discussions having stalled following the announcement of the
General Election. DBT have confirmed that an end date won't be decided on until perhaps the Autumn, after a potential new Minister is brought up to speed.
At the moment all parties are keen to agree an end date of 31 March 2025, but pressure may come to bear to move this out if the end date announcement is
delayed too long.
* Tax Top Ups - In relation to the Tax Top-Ups (TTU), 2,252 letters have been issued to date of which 1,916 acceptances have been received and 1,851
payments made totalling c.£13.2m.
+ Overturned Convictions — HCRS, the DBT scheme to provide redress to the convictions quashed via the Parliamentary bills, is currently scheduled to launch
at the end of July-24. POLs principal involvement with the scheme is in providing identification and disclosure to DBT/MoJ for individuals covered under the
scope of the bills, enabling the contact and subsequent claims management for the HCRS cohort. POL Phase 1 disclosure has commenced and is on track to
be delivered prior to go live date, as planned.
+ Prior to HCRS go live, OC continues to manage its current (and assumed final) cohort of 110 claims, 48 of which are now fully settled. The current DBT
position is that the residual 62 OC claims will remain with POL to reach full and final settlement although, the establishment of a new Parliament in early July-
24, may see a change of policy. Despite the current uncertainty, claims are still being received and processed by OC, with 2 new Pecuniary and 1 non-
Pecuniary claims, in addition to 3 upfront offer requests, submitted in June-24.
+ We anticipate that the once the Ministerial appointments are in situ and HCRS live, clarity will be provided by HMG on the future strategy for OC, enabling a
replanning and restructuring to take place in Aug-24.
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POL00448500
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Remediation Unit (RU) Update
Strategic Priorities Continued
+ Restorative Justice - To 27th June, POL has undertaken 57 meetings with claimants across GLO, HSS and OC, (overwhelmingly GLO) for them to meet
Senior POL Executives. Further meetings (c.10) are planned for July and August. POL is considering how to proactively engage with the Inquiry and other
victim representatives on other enduring Rj initiatives.
+ CCRC / Disclosure issues The Government's introduction of the Post Office (Horizon System) Offences Act 2024 has meant that all convictions in scope of
the legislation have now been overturned. POL has paused disclosure to those previously identified as Potential Future Appellants (“PFA’s”) whilst the
Government completes its exercise of identifying and writing to those exonerated. RU Legal are co-operating with the devolved administrations in respect of
their exonerations.
+ There remains one appeal in the Court of Appeal (Criminal Division) that POL believe will be outside the scope of the legislation and one live appeal in
Scotland in which a determination under the Scottish legislation is awaited. POL continues to comply with its statutory disclosure duties to the CCRC and
SCCRC where appropriate, although both Commissions have paused their investigations in respect of cases potentially caught by the respective Acts.
Detriment
+ Suspension Renumeration Review ‘SRR’ - we have now sent 2,406 disclosure letters inviting people into this scheme, have had 1,749 applications
received. Have made offers to 1027 Postmasters and received 749 acceptances to those offers. With £8.7m (£4.7m) 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
at the beginning of July 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; this is currently progressing and will be complete prior to the launch of the mass mailing in
Q4.
. We are working with the wider POL business to consider how claims both pre and post Horizon which are not in the current RU scope should be addressed.
A paper will be submitted to SEG for consideration.
. Capture issues - this is a legacy computer package 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.
. Following an initial investigation by POL, DBT have appointed Kroll as independent forensic accountants to assess Capture and assist DBT in assessing if
there needs to be a compensation scheme. DBT expect to publish the Kroll report in the Autumn.
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Remediation Unit (RU) Update
Financials
+ The impact of the Horizon Conviction Redress Scheme is expected to be cost neutral in FY24/25 with costs being front-loaded to earlier in the year. However,
costs for FY25/26 have been removed with the end of the OC1 scheme.
+ Note, forecast costs associated with Restorative Justice a
have been removed from the DBT-funded element of the Remediation Unit.
FY 24/25 3YP
FY22/23
FY23/24
By Programme
Horizon Shortfall Scheme
Overturned Convictions
Iccrc
POL Process Review
Central
Operations
Programme Total
Tax Top Up
Exit Costs
Remediation Unit Total
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