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1 Minutes from 6 June 202:
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON TUESDAY 06 JUNE
2023 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 10:30 AM
Present: Henry Staunton Chairman (Chairman)
Lorna Gratton Non-Executive Director (LG)
Saf Ismail Non-Executive Director (SI)
Elliot Jacobs Non-Executive Director (EJ)
Ben Tidswell Senior Independent Director (BT)
Brian Gaunt Non-Executive Director (BG)
Simon Jeffreys Non-Executive Director (SJ)
Amanda Burton Non-Executive Director (AB)
Nick Read Group Chief Executive Officer (NR)
In attendance: Rachel Scarrabelotti Company Secretary (RS)
Andrew Darfoor Observer (AD)
Kathryn Sherratt Finance Director — Observer (KS)
Zdravko Mladenov Group Chief Digital and Information Officer (ZM)
Katie Secretan Strategic Partnerships Director (KSe)
Tim Mcinnes Strategy and Transformation Director (TM)
Asha Patel Financial Planning and Analysis Director (AP)
Martin Roberts Group Chief Retail Officer (MR)
Ben Foat Group General Counsel (BF)
Diane Wills Historical Matters Legal Services and Public Inquiry
Director (DW)
Gemma Ludgate Inquiry Operations Director (GL)
Simon Recaldin Historical Matters Director (SR)
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Action
L Welcome and Conflicts of Interest, Inquiry Undertakings and Officer Changes
Welcome and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Chairman called for the
Directors to disclose any conflicts of interest. EJ and SI noting their ongoing conflict of
interest in being practising Postmasters. The Directors otherwise declared that they had
no conflicts of interest in the matters to be considered at the meeting in accordance with
the requirements of section 177 of the Companies Act 2006 and the Company's Articles of
Association.
The Chair welcomed AD as an observer, as well as KS, and thanked KS for her contributions
in AC’s absence.
The Board acknowledged the attendance of AD and KS as observers at the meeting. As
observers, the Board were aware that all contributions made by AD and KS to the meeting
were observations only, and did not constitute advice, recommendations, directions or
instructions. The Board confirmed that it would take due care not to be unduly influenced
solely by contributions made by AD and KS and that it would reach its conclusion based on
a balanced and diligent assessment of all the facts available to it.
Inquiry Confidentiality Undertakings
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The Board noted that AP did not have a confidentiality undertaking accepted by the
Inquiry in place, so AP would need to be excused from the meeting should the need to
discuss information confidential to the Inquiry arise.
Officer Changes
TABLED and NOTED was a report, ‘Officer Appointments’.
The Board NOTED the expiry of term appointment and step down of L Harrington from the
Board on 1 June 2023.
The Board RESOLVED to APPROVE:
(i) Subject to shareholder approval and the completion of satisfactory due
diligence, Andrew Darfoor be appointed as a Non-Executive Director of Post
Office Limited for an initial term of 3 years and as a member of the Company's
Audit, Risk and Compliance Committee, with the Company Secretary
instructed to file a form AP1 with the Registrar of Companies at the relevant
time; and
(ii) The appointment of Ben Tidswell to the Nominations Committee effective 2
June 2023.
The Board RESOLVED to RATIFY the appointment of Amanda Burton as Chair of the
Company's Remuneration Committee effective 26 May 2023.
Minutes and Matters Arising
TABLED and NOTED were draft Minutes from the Board Meetings of 28 March 2023 and
24 May 2023. Subject to the Chair sighting BT’s amendments to the draft Minutes from 28
March 2023, the Board RESOLVED that the Minutes of the Meetings held on 28 March
2023 and 24 May 2023 be APPROVED as a correct record of the Meetings and be signed by
the Chair.
The Board NOTED the action log and status of the actions shown. EJ advised that the
activities set out in items 6 and 7 remained to be completed so requested that these
actions remain open. KS advised that she would consider item 1 and requested that this
item be re-assigned to KS in AC’s absence. LG advised that she had understood action item
1 had been raised in the context of NBIT, to see what products would remain profitable
over what time.
Committee Reports (verbal)
Historical Remediation Committee
TABLED and NOTED were the following papers:
(i) “Detriment B - Qualification Assurance Summary’;
(ii) ‘Detriment B Qualification Assurance Summary — Full Paper’; and
(iii) ‘Detriment B Qualification Assurance Summary — Full Paper Appendices’.
BT advised as follows:
* There were 3 issues that were being considered at HRC that may need to come to
Board:
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1. In relation to criminal cases, 3 further cases had been referred by the CCRC to
Southwark Crown Court.
Previous decisions had been made to
concede, then the Company had not proceeded to pay compensation; the optics
of this were challenging. BT provided further detail of the cases and options. SJ
reminded the Board that he was also a director on the board of the Crown
Prosecution Service. BT advised his expectation that a decision in relation to these
3 cases would likely need to be taken by the Board shortly. ACTION BT shared his NR
view that the Minister ought to be made aware of these cases and asked NR to
advise the Minister. SJ queried the potential level of compensation in relation to
the 3 cases. BT replied, providing a potential range, noting that any compensation
would be unfunded, and advising that there could be more of these types of cases;
2. With HSS, aspects of the scheme were being queried, and the HSS would be
considered in detail during Phase 5 of the Inquiry. A strategic approach was
required in order to get ahead of the issues raised and in preparation for Phase 5
of the Inquiry, however it was proving difficult to have the team focus on these
issues from a strategic perspective. Aspects of the HSS may need to be re-
administered and this could be very expensive;
3. On Operational Remediation, BT outlined the previously agreed approach of HRC
and Board to Pot B and the status on funding. There was a concern as to whether
progress on Pot B had been timely enough and BT referenced views expressed
previously by AC. If Board took the decision to ask Postmasters if there were any
other categories than those currently identified in Pot B, the potential exposure
was unknown and unfunded; this could create wrongful trading issues.
Under the CU it was found to be an implied term of Postmaster contracts that the
Company could not take repayment from Postmasters where unreconciled losses
‘existed unless a proper investigation had been conducted. If the question was
asked as to whether any other categories of Pot B existed, we should be able to
identify where Postmasters had repaid money and compensate them, without
investigating every case, as investigating every case was not thought viable. SJ
compared this to the approach in financial services where every case would be
investigated and advised that on the going concern point, SJ would rather unearth
a potential issue early, and thought that the Company should be proceeding
promptly. EJ contributed that Postmaster’s may not have access to adequate data
to make an assessment. BT replied that the issue was largely about short falls and
if it could not be established that the Company was entitled to any monies repaid
by Postmasters then compensation would be paid. On the funding point, LG
shared her view that it was not clear as to whether funding would be provided in
these circumstances; if no loss was proven, providing funding for compensation
may not be compliant with manging public monies.
SJ queried whether it would be possible to triage Pot B cases at all? BT replied
that triage had been successfully applied in relation to Pot A, however the
categories involved in Pot B were in relation to business-as-usual processes. EJ
advised that these categories were much more nuanced and provided an example.
BT advised that there was a risk that any funding received may not cover the
compensation payable in relation to the initial categories of Pot B where funding
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had been applied for. $I queried whether there was any way to be more proactive
with potential claimants in relation to Pot B. BT advised that the team were active
in this space and was very conscious of this point. SJ queried whether it was
possible to accelerate the receipt of funding. ACTION KS advised that she would
explore this. ks
3.2 Audit, Risk and Compliance Committee
In relation to the last ARC meeting on 16 May 2023, SJ advised as follows:
EJ had raised an issue in relation to the way stamp stock was being recorded. This
needed to be resolved and an action had been allocated;
BF had discussed the interrelationship of the ARC with the RCC, detailed the
proposed appointment of Grant Thornton to undertake an external review of the
Company’s corporate governance, and had also raised issues in relation to culture
particularly whether enough was being done to instil the correct culture at the
Company. The ARC had been specifically asked to escalate this matter to the
Board;
The Risk paper included an analysis of items sitting outside of appetite and
tolerance; there were many items. The next step that management needed to
take was an exercise to assess risk probability and impact. The ARC also needed to
be advised by management of what mitigations were in place;
There had been an increase in discrepancies in branch. A request had been made
for this issue to be returned to ARC, with further detail provided as to why these
discrepancies were arising. We needed to do everything to keep discrepancies to
a minimum;
The increase in FOIA requests had been raised, and the pressure this put the team
under to produce responses within the statutory timeframes;
Data governance and management was another challenging issue. A Data
Management Framework had been approved however this needed to be tailored
to the Company, in order to increase maturity in data governance;
The PWC report on the Banking Framework Agreement review had been
considered along with the recommendations. EJ had pointed out the increased
volume of cash that Postmaster’s were dealing with. EJ shared his view as to the
lack of automation in relation to cash counting and the need for this given the
greater volumes of cash that Postmasters were dealing with;
A Speak Up Champion needed to be appointed from the Non-Executive Board
Directors;
The Committee Evaluation Report for FY22/23 had been completed. Areas to be
worked on included achieving greater simplicity in papers along with management
recommendations, and the 3 lines of defence needed to be strengthened across
the business;
At the conclusion of the ARC meeting a closed session with the external auditor's
had been held; nothing was identified that the external auditors wished to bring to
our attention.
The Chair raised the possibility of separating the audit committee from the risk
and compliance committee and shared his view that whilst this could potentially
result in additional managerial time, if the separation would strengthen the
Company’s governance, then this would be valuable. SJ spoke to changing the
approach, to consider material items that were likely to affect the Company and
what mitigations could be put in place to reduce the risk profile. AB agreed with
the need for a top-down view and for a focus on the significant issues that were
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likely to affect the Company. LG advised that she agreed with SJ that the ARC
papers and presentations were not solutions focused; whatever forum the Board
had going forward the discussions needed to be focused on solutions. NR took
these points, noting that there were capability issues within some of the teams,
that the Company was subject to increased regulatory requirements given access
to cash issues, and that employees were very risk averse against the backdrop of
the ongoing Inquiry. That said, NR was of the view that there would be merit in
separating the audit from the risk and compliance committee. AD asked whether
there was a chief risk officer. NR advised that there was not, however queried
whether this was a role that should be appointed. AD noted that if a separate risk
committee was to be formed, then the Board needed to ensure that management
was correctly resourced to support the committee. AB contributed that if a COO
was going to be recruited, then support to the risk committee could form part of
that job description, as opposed to having another person. ACTION The Chair took
an action to investigate the proposal with the management team and SI and to
bring the matter back to the Board.
Chairman/NR
ish
Remuneration Committee
AB advised as follows:
* ABhad attended her first Remuneration Committee meeting on 2 May 2023
where the metrics proposed for the STIP for FY 23/24 were discussed. The metrics
would need to come back to the Remuneration Committee for further
consideration, along with those for the LTIP FY23 — 26;
© AB had attended a second Remuneration Committee meeting on 11 May 2023
where the Transformation Incentive Scheme had been considered;
© The next Remuneration Committee meeting was scheduled for 20 June 2023,
although this could be rescheduled depending on the timing for the DBT Select
Committee.
The Chairman thanked AB for the review she had conducted, particularly in such a short
period of time.
Nominations Committee
The Chairman advised as follows:
* The Nominations Committee at their meeting earlier in the day had discussed
options ahead of the Postmaster Non-Executive Directors term expiry. Currently
the Postmaster Non-Executive Directors were due to step down at the same time,
however there could be the possibility, subject to Shareholder approval, of
extending one or both of their terms, and then having the incoming Postmaster
Non-Executive Directors appointments commence at different times. Options
would be presented to the Nominations Committee later in the year. SI queried
the contribution of the Postmaster Non-Executive Directors on the Board. NR
replied that it had been very important in contributing to operational rigour;
© The Committee Evaluation Report had also been considered, and there had beena
recommendation around the Committee obtaining a better understanding of
succession requirements particularly in relation to the Group Executive. ACTION
This was a whole Board issue and a session on succession planning would be
scheduled for the autumn. In addition, Board members would be provided with
more opportunities to meet members of the Group Executive and the Senior
Leadership Group.
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4. CEO Report
TABLED and NOTED was the CEO report.
Key points advised by NR were as follow:
it had been a very intense period since the last Board meeting, compounded by
key colleague absences. Progressing through the next few weeks would be crucial
including attending the DBT Select Committee, then processing the outcome of
the DBT remuneration governance review. There were concerns around
remuneration and issues around morale. There was a need to get back on the
front foot in terms of engaging with the media; this was a central issue for
Postmasters - media coverage affected their businesses;
the level of revenue that had been delivered for FY22/23 was strong, trading was
stable, we had had our best month in 12 months in terms of Postmaster
remuneration, and the 4 core businesses were solid;
in relation to Transforming Technology, work remained to evaluate other options.
NR was contemplating engaging externals to undertake a review of NBIT to assess
status, and to bring a soft reset, as NR did not feel that he had sufficient visibility.
NR spoke to the separate workstreams that had been instigated, and the different
capabilities that would need to be introduced into the business to deliver NBIT. NR
had met with Fujitsu last week and was hopeful of reaching agreement with
Fujitsu for an additional limited extension to allow further time for NBIT delivery,
although Fujitsu remained clear that they wished to exit;
deposit limits remained a challenge. NR spoke to the issue of Postmasters
counting the cash, entering the transaction, then receiving a rejection, so the
Postmaster did not then receive any remuneration despite the time expended;
branch discrepancies remained a significant and unsustainable issue. A new
programme had been established with M Parks to reduce the volume and value of
branch discrepancies.
Key discussion points were as follows:
AD advised that he was struck as he read through the Board pack by the re-
‘occurrence of words such as fatigue and exhaustion and queried what was being
done to ensure that key people at SLG level were retained. NR advised that he
was due to meet with AB and the Reward Director in a few days’ time and would
be discussing this. Retention payments had been made at Christmas last year and
these may need to be revisited. KS shared her view that there was a fragility in the
workforce with employees having been under pressure for a sustained period.
Whilst we had had a positive colleague conference, the issues in the press had an
impact. AB advised that the relationship with the brand for employees should not
be underestimated; there needed to be more positive stories externally and
internally;
BT queried how well we were set up for crisis management. NR replied not as well
as we needed to be; the internal external facing communications advisors were
more junior than NR was used to, so NR was using external organisations to assist.
There was an opportunity to re-engage with the press. BT noted that a lot of the
press was very counter-productive to the good outcomes that we were trying to
achieve in terms of delivering compensation and our relationship with
Postmasters; we needed to get balance back;
ACTION AB queried whether the Board had considered changing the brand, to
separate from the past but also to represent what we wanted to become. EJ
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contributed that the brand colours were an issue and contributed to an
association with RMG. AB noted that whilst changing the brand was an enormous
undertaking, questioned whether the brand stood for what the Board wanted to
build. The Chair requested that an action be assigned, and this matter be returned
to Board later in the year;
* ACTION EJ referenced the scratch card balance sheet position and queried if that
was the balance of the scratch cards that were currently owned. KS advised that
whilst this was what had been provisioned that the actual position could be an
improvement on this. EJ queried whether the provision was in respect of the Ks
previous financial year. KS advised that she would check;
© EJ spoke to the Postmaster survey results. A considerable amount of effort had
been invested however many of the key metrics had not improved. NR advised
that small group sessions would be held with Postmasters to understand what had
driven the results. ACTION EJ queried whether a half year pulse survey could be
conducted with Postmasters. NR advised that this could be looked into;
¢ EJnoted that Postmaster remuneration was up 2% yet strategic partners was up
4% and queried the delta. We needed to replicate what we did with strategic
partners for Postmasters. NR advised that MR was aware of this and was looking
at what could be implemented;
* EJ queried the status of the review of former employees who had re-joined. NR
advised that whilst the review by the People team remained ongoing the
sentiment was that we needed to be much more aggressive on this;
* SI noted that the international mails business had been suppressed after the RMG
cyber incident. ACTION EJ queried whether people were not sending international
mail anymore or were they not sending international mail via the Post Office
anymore. SI advised that we needed to get under the skin of this issue now, ahead
of Christmas. NR advised that this could be looked into;
* ACTION SI shared his view that the opportunity with travel was the best that ithad I © Woodley/L
ever been, and queried whether it was possible to provide more in terms of travel Joseph
aides to train staff to provide a consistent message;
¢ LG queried who was standing in, in the CPO’s absence. NR advised that he had
asked the Reward Director to step up as Acting CPO. LG advised that she was very
conscious about the culture question and reporting on this at the Inquiry. ACTION pugkin/ J
NR advised that J Lang was leading on culture. LG requested that J Lang present to Lang
the Board on culture;
© AB observed that there was nothing in the CEO Report on customers. NR took the
point.
R Taylor
M Roberts/T
Marshall
© Woodley/ N
O'Sullivan
5. Financial Performance Report
TABLED and NOTED were the following papers:
(i) “P1 — Performance Overview’; and
(ii) ‘Period 4 (April) 23/24 Financial Performance Review — Supporting Slide Deck’.
KS spoke to the papers advising that P1 and P2 had both seen solid performance. One of
the challenges was understanding what this meant for the rest of the year —in April we
had Easter and in May we had 3 bank holidays, so it was difficult to see any trends.
ACTION KS advised that the report would be revised to provide greater insight into what
was going on in the business and how this was driving results. Ks
SJ left the meeting at 12:45.
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Transforming Technology: Horizon Replacement Update
TABLED and NOTED were the following papers:
(i)
(ii)
(iii)
(iv)
(v)
“Horizon Replacement and Funding Context’;
‘Horizon Replacement Update’;
‘Horizon Replacement Update - Annex 1’;
‘Horizon Replacement Update - Annex 2 Excluding Contingency’; and
‘Horizon Replacement Update - Annex 2 Including Contingency’.
kSe, AP, TM, MR and ZM joined the meeting at 12:48.
Key discussion points were as follows:
ZM outlined what Horizon was, why we were replacing this, previous attempts to
replace Horizon, and what had been achieved so far under the current NBIT
project;
AD noted the spend to date and queried what we thought it would have cost to
get to this point and what the delta was caused by. ZM advised that whilst he did
not have the precise number, ZM thought this was around £55m. The delta was
caused mainly by the extension of scope and unpacking the Horizon black box;
there was no business knowledge of this. BT queried the complication of the
Horizon black box given we were replacing this. ZM advised that for NBIT there
was a statement of requirements, and the technology was being built according to
this. Sometimes we could build those requirements straight out, other times we
needed to understand the processes as they occurred in Horizon so we could use
this in the technology building and replicate the processes if appropriate;
ZM spoke to the challenges faced, including the scale of defects, deployment
complexity, and the level of internal and external assurance that was required;
EJ noted that the release date for R2 had been pushed back due to the number of
bugs identified and queried whether we were too being risk adverse. ZM advised
that the launch of R2 would need to be signed off and pass an internal gating
process; there were a high number of people internally who would need to sign
off. EJ queried the level of internal confidence in NBIT and what could be done to
assure people internally that the platform was robust. ZM replied that the
releases had been scheduled to cumulatively build confidence, for example by
starting with Drop and Collect. Additionally we were being transparent in relation
to any issues with the system to prove internally and externally that once the
defects were fixed that the system was robust;
The Chairman asked about network health and the potential activities for path
clearing. MR replied, detailing the proposed increase in branch assurance
resource to identify issues. BT noted that whilst this seemed like an obvious thing
to do, BT was not clear as to how issues identified would then be attended to. EJ
queried what happened in other organisations and if there would be some sort of
amnesty, given there would be issues identified. EJ cautioned that we also needed
to be careful as to how any path clearing activities were positioned with and
perceived by Postmasters. NR agreed with this. MR replied that for the majority
of Postmasters, who were following procedure, the path clearing activities would
not be an issue. The path clearing activities would be approached carefully and
sensitively with the message that the Company was here to support; however, it
may be identified that there were some branches that could not progress on the
journey. AB contributed that most Postmasters would not condone bad practices,
given Postmasters were seen as pillars of the community. In the case of
unacceptable behaviours, we needed to be clear and uncompromising on this. KS
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noted that branch discrepancies were on a system that Postmasters did not trust,
so the messaging could be that we wanted to have a clean handshake going onto
NBIT;
* EJ shared his view that we needed to publicise more with Postmasters how well
NBIT was progressing. NR took the point however advised he was being cautious
given the delivery trajectory was uncertain. SI advised that following the
installation of R1 into his one of his branches that he had had a lot of Postmasters
visit; once R2 was released into the network we should make visible to
Postmasters the branches where this was located so they could visit;
¢ Inrelation to path clearing, SI queried engaging further resource when from a
costs perspective we needed to be leaner. SI also queried whether we had in fact
the internal capabilities for this. MR took the point, however advised that if we
did not invest in the short term to prepare for NBIT, we would continue into the
future as at present. ACTION In relation to the cost of path clearing, LG clarified
that what was in the papers was the cost of the activities not the consequences.
LG shared her view that a request for funding for the consequences needed to be
included in any funding request made to the shareholder. KS noted this, however
pointed out a potential corresponding disclosure required in the Company's
Annual Report and Accounts;
* ZMspoke to reasons for estimated NBIT costs increasing since the March Board,
advising that almost half of the cost increases were independent of NBIT. BT
referenced the potential exposure to the additional costs of maintaining Horizon
with the moving out of the R2 release date and queried whether there was any
way in which these additional costs could be avoided. ZM replied that the only
way to avoid this exposure was to deliver earlier, and noted decisions that the
Shareholder could take, for example in relation to the network size, that would
influence this outcome;
«EJ queried whether in 3 years’ time the business would still be able to function on
Horizon. ZM replied that the business as it existed today could, however the issue
was that the ability to process change was limited whilst we stayed on Horizon.
Additionally the only basis on which Fujitsu would provide an extension beyond
March 2025 was if we could evidence that we were continuing with NBIT in order
to exit Horizon. A third party to operate the Horizon system would likely prove
very difficult and expensive. EJ queried the ability to run the Horizon system in
house. ZM replied that whilst running Horizon could be moved in house, it would
mean administering a system no-one internally understood and the consequences
could be catastrophic including the potential cessation of trading;
© BG noted that whilst it was important for the Board to consider all the options and
to provide these to the Shareholder, there was the risk was that the Shareholder
could defer NBIT implementation given the timing for the next general election.
BG shared his view that a decision needed to be taken on this by the current
government, and not left for the subsequent government. LG took the point
however advised that it was very difficult when estimated costs had risen circa
40% in 2 and a half months. TM replied to this;
« ZMspoke to the veracity of the re-baselined plan. Up until the 28 March 2023
Board Meeting the view had been come what may, we needed to have exited
Horizon by March 2025. The view now was that NBIT delivery by March 2025 was
not feasible, and a more conversation timetable had been adopted. A 20%
contingency had also been included as well as adjustments for optimism bias,
structural re-organisation and assurance;
ACTION AB queried whether descoping or rescoping could be an option given the
wide variation in branch product offerings and formats. ZM replied that whilst this
™
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was an option, it would not significantly save on costs. That said, ZM advised that ZM
the team were assessing going live without approximately 10% of products and
that the team would bring this option back to the July Board. Additionally we
could look at options to change our processes, for example, in relation to the stock
management of stamps;
ACTION The Chair queried the level and type of assurance that the Board would be 714
provided with. NR shared his view that this would comprise internal and external
assurance and advised that this could be returned to the Board with options at the
July Board meeting.
MR left the meeting. A recess was taken between 14:15 — 14:30.
Finance
3 Year Plan Update
TABLED and NOTED were the following papers:
(i)
(ii)
“3YP Update’; and
‘3YP Update — Appendices’.
Key discussion points were as follows:
KS outlined the process and outcome of the previous spending review, and how
the landscape had changed since this time;
‘AD queried the funding cycle. TM replied that this was typically 3 years, however
any funding provided could be for a lesser period, perhaps even 1 year, given the
upcoming election;
AP spoke through the proposed 3YP noting changes as against the draft 3YP that
had been presented to the Board on 28 March 2023, the reasons for the
anticipated decline in revenue and income, and the expected position on
Postmaster remuneration;
AD noted that in looking to compare the anticipated performance with
competitors there were no other like for like competitors, so queried the approach
to peer bench marking. TM replied that peer bench marking was very difficult, so
the Company's historical performance was generally looked at;
EJ queried the forecast on cash and banking and also Postmaster remuneration.
AP replied that the plan would be refined as required, and was not a budget;
ACTION AB asked for further detail on why it was so expensive to deliver cost
savings. TM replied, referencing costs associated with exiting DMBs, reducing
head count, and downsizing the network. LG asked whether these activities were
included in the 3YP. NR replied that they were not, on the basis of capacity. LG
shared her view that these should be included as options in 3YP, and that funding TM
should be applied for in respect of these activities;
AB queried whether there were any change spend activities that could be stopped.
TM replied, advising that where there was optionality, the spend had already been
removed from the change budget;
AP outlined how the working capital facility agreement with the shareholder and
security headroom functioned. There was discussion on the restriction around
receiving external funding, and how further funding from the shareholder could
potentially proceed by way of loan;
AP detailed the timing for a potential breach of security headroom and advised
that approval to reduce the current’ Jbuffer on a permanent basis down to
ould be sought. KS took the point, however reflected that perhaps rather
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than doing this, increasing the value of the facility in order to maintain the buffer
could be an option. BT shared his view, that maintaining the
represented a point of sensitivity, so BT was not clear as to why we would look to
AD noted the implications of receiving the outstanding
funding i in relation to the sign off of the FY22/23 accounts;
. AB. queried how much our suppliers relied on signed accounts. i ARF
L IRRELEVANT
e ACTION BG raised the i: issue of
KS/AP
Subject to the incorporation of LG’s comments as set out above, the Board RESOLVED that
the 3 Year Plan in the form tabled be and is hereby APPROVED and RESOLVED to
RECOMMEND the 3 Year Plan to the Shareholder for APPROVAL.
7.2 Funding Update
TABLED and NOTED were the following papers:
(i) “DBT Funding Submission’;
(ii) “Funding Update - Annex 1 Sustainability Paper’;
(ii) ‘Funding Update - Annex 2 POL Funding Outline’;
(iv) ‘Funding Update — Annex 3’; and
(v) ‘Funding Update Annex 4 - Memorandum Wrongful Trading’.
Key discussion points were as follows:
© TM spoke to the papers outlining the anticipated movements in security
headroom;
* TM advised that the 3YP forecasts did not include provision for a number of
material known risks, which TM proceeded to detail, and also did not include any
activity at scale to take costs out of the business;
* TM advised that a request for additional funding was proposed to be submitted to
the Shareholder, in order to formally commence the process and discussions. In
relation to the quantum of the request, LG shared her view that funding should be
sought for the known material risks TM had identified, as well as the larger scale
activities to take costs out of the business, as there would be no option to then
request additional funding;
* TM noted that the Shareholder wished to discuss sustainability as part of any
additional funding request and spoke to 5 main components that could place the
Company on a path to sustainability. AD queried whether sustainability could be
improved if the Shareholder’s policy position was evolved. TM replied that at the
Board Strategy Day last year we had proposed a network of around 9,000
branches setting out locations and the format. BT noted that a revised network
shape would likely assist in increasing Postmaster remuneration via re-distribution.
TM - outlined the number of loss-making branches, the amount of the subsidy and
the cost of maintaining the loss-making branches;
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© BT noted that the government had anticipated a higher spend on historical
matters; what had occurred was that government had spent significantly less and
we had spent more. BT suggested that this point be drawn out in any funding
submission;
*¢ ACTION Noting the comments of LG above, KS advised that she would circulate a KS
revised paper to the Board.
Subject to the incorporation of LG’s comments as set out above, the Board RESOLVED that
the funding submission to the shareholder in the form tabled be and is hereby APPROVED
and RESOLVED to RECOMMEND the funding submission to the Shareholder.
73 Drawdown Requests
TABLED and NOTED was a report, ‘SPMP June to September 2023 Funding drawdown’.
The Board RESOLVED funding in the amount of £47.931m with immediate drawdown for
the SPM Programme for the activities and deliverables as set out in the report for the
period 1 June 2023 to 30 September 2023 be and is hereby APPROVED.
8. Rebuilding Trust
81 Inquiry Update
SR, BF, GLand DW joined the meeting at 16:27.
TABLED and NOTED were the following papers:
(i) ‘Post Office Horizon IT Inquiry: Update’; and
(ii) ‘Post Office Horizon IT Inquiry - Appendices’.
Key di
DW noted that the engagement of Burgess Salmon had been completed and that
the appointment of Grant Thornton as governance expert was anticipated to be
finalised shortly. DW had had a conversation with the shareholder as to their
governance review on remuneration, and the proposal was to link up the experts.
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ACTION AB queried the contents of the terms of reference for Grant Thornton.
DW advised that these could be circulated to the Board; DW/ RS
Bartlett
8.2 Inquiry Drawdowns FY23/24
TABLED and NOTED were the following papers:
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(i) ‘Post Office Horizon IT (POHIT) Inquiry Funding Paper’; and
(ii) ‘Inquiry Funding - Supporting Financial Pack’.
Key discussion points were as follows:
© GLspoke to the paper and the request, noting that the current significant cost
drivers were holding;
© The Chair queried the ask in terms of additional resource. DW replied that for
most of last year having a small team was acceptable. Now however work
pressures had increased significantly and DW was really seeing the impact of this.
Both Inquiry Heads of Legal had resigned in the last 2 months and there were
absences due to sickness. The Inquiry team was not structured correctly, with a
stronger in-house team required rather than being reliant on externals. There
were currently 28 people in the Inquiry team and another 19 positions were
proposed, with the roles being filled in order of strategic priority. Some of the
positions could potentially be filled internally, and some of the positions would be
on a contract basis, with the team scaling back after the Inquiry hearings had
concluded;
EJ queried how the costs for other participants in statutory Inquiries and the size
of participants teams compared. NR replied that our costs were significantly less
than for other public Inquiries;
© AD questioned how certain the Inquiry team were that they could recruit the right
19 people. DW advised that she had had preliminary conversations with people
who might be interested to apply to work for us and was reasonably confident of
filling the positions;
The Chair advised that the Board appreciated the pressure DW was under and how
DW was holding up. The Chair asked that his sentiment be passed to the Inquiry
team. LG noted the appreciation of the UKGI team to the Inquiry team for the
transparency and the information provided in relation to the proposed Inquiry
costs drawdowns for FY23/24.
The Board RESOLVED that the delegation of authority to the Group Executive, who in turn
delegated authority to the Historical Matters Funding Meeting, in relation to the
drawdown of funding for Inquiry costs in the maximum amount of £36m for the period 1
June 2023 to 31 March 2024 for Inquiry activities as set out in the paper be and is hereby
APPROVED.
Waiver of Legal Privilege — Third Parties
TABLED and NOTED was a report, ‘Application of POL’s waiver of legal privilege to requests
from the Inquiry sent to third parties’.
HMU Update
TABLED and NOTED were the following papers:
(i) ‘Historical Matters Programme Update’; and
(ii) ‘HMBU Finance Update’.
Key discussion points were as follows:
© SR spoke to the GLO disclosure process that had been established with the
Shareholder. In the interim approximately 307 DSARS had been issued; it was
simply not possible to support this volume of requests in the statutory timeframe
and a breach situation seemed unavoidable. We had asked the Shareholder to
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raise this with Freeths; Freeths were not willing to withdraw the requests. ACTION
BF referenced next steps in relation to reporting the anticipated breach to ICO. A
more detailed note would be issued on this for the Group Executive and the Board. BF/SR
* SR referenced the Advisory Panel that had been formed by the Shareholder and
the request for HSS principles to be shared. In the absence of a non-disclosure
Agreement the HSS principles were unable to be shared, however the Advisory
Panel was due to meet and be briefed by the Independent Panel;
© SRspoke to the risk of the principles to be set for the GLO to be a read across into
the HSS, which could mean that we may need to re-open the HSS. The
Shareholder was aware of this;
© SR outlined the nature of and current status of Operational Remediation Pot B. An
application for funding in relation to a number of Pot B categories had been made
to the Shareholder and it was anticipated that a response to the funding request
would be received in September. In the meantime, preparatory work to
administer Operational Remediation Pot B continued, with the plan to add
additional categories to a website overtime. At the end of this process there was
an option to ask Postmasters if they could identify any further categories of
Operational Remediation. External advice had been provided that launching all
categories of Operational Remediation Pot B at once would be preferable. This
was not the recommendation of management who proposed that the phased
approach be maintained. BF spoke to the level of evidence required and the
burden of proof. EJ advised that he would not be able to participate in any
decisions in respect of Operational Remediation Pot B given his expectation that
he may make claims. LG queried the reasoning for the phased approach. BT and
SR replied. AB noted that the phased approach would mean multiple
communications to the Postmaster recipients and that this could be cumbersome
from their point of view. BT took the point, however advised that given the
complexity of cases and the quality of data held, he remained of the view that the
phased approach was preferable. No objections were raised to continuing with
the phased approach;
© SR spoke to the complaint that had been made to the SRA regarding 36 Post Office
lawyers. The complainant had also suggested in an article that the people who
were responsible for administering the HSS should be prosecuted. This was very
troubling to the HMU team who were working very hard on and had belief in the
HSS. Additionally, the team were very concerned about the integrity of their
reputations, and SR was equally concerned about his professional reputation. SR
advised that he was asking for the support of the Board in this situation, and that
he was due to speak to NR to discuss ways to be more front footed with the
media.
BG left the meeting at 18:01.
8.5 HMU Drawdowns FY 23/24
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TABLED and NOTED was a report, ‘Historical Matters - HMU Funding Request’.
SR spoke to the paper and the request. LG noted there were some outstanding queries on
behalf of the UKG! team however was agreeable to the matter proceeding.
The Board RESOLVED that the delegation of authority to the Group Executive, who in turn
delegated authority to the Historical Matters Funding Meeting, in relation to the
drawdown of funding for HMU costs in the maximum amount of £26.1m for the period 1
June 2023 to 31 March 2024 for HMU activities as set out in the paper be and is hereby
APPROVED.
SR, BF, DW and GL left the meeting at 18:03.
9. Approval Requests
9.1 Code of Business Standards
TABLED and NOTED were the following papers:
(i) “Our Code of Business Conduct update’;
(ii) ‘Our Code of Business Conduct v9.3’; and
(iii) ‘Code of Business Standards - Previous Version’.
The Board RESOLVED that the revised Code of Business Conduct in the form tabled be and
is hereby APPROVED. NR noted the importance of demonstrating adherence to the Code.
9.2 Glory Global Contract
TABLED and NOTED were the following papers:
(i) ‘Glory Global — Delegated approval for Teller Cash Recyclers contract’; and
(ii) ‘Glory Global Contract - Legal Risk Note’.
The Board RESOLVED:
(i) A maximum contract value in the amount of £26m for the Teller Cash Recycler
contract with Glory Global Solutions over the maximum 7 years of the contract
be and is hereby APPROVED; and
(ii) the delegation of authority to any one Director to approve future purchase
orders and the exercise of any extensions under the Teller Cash Recycler
contract with Glory Global Solutions be and is hereby APPROVED; and
(ii) the delegation of authority to any authorised signatory of the Company to sign
and issue lease schedules and any notice of extension of the Teller Cash
Recycler contract with Glory Global Solutions be and is hereby APPROVED.
10. Procurement
TABLED and NOTED was a paper, ‘Procurement Report’.
The Board RESOLVED:
(i) that the procurement strategy for Fulfilment Services with an initial contract
term of 3 years and 2 optional 1-year extension periods up to a maximum
value of £20m over the 5-year period, be and is hereby APPROVED; and
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{ii) to delegate authority to any authorised signatory of the Company to sign the
resulting contract and any ancillary documents.
11. Health & Safety Report
TABLED and NOTED was a paper, ‘Health & Safety Monthly Report’.
Presentation of this Report was deferred to the September Board Meeting. EJ referenced
Action item 6 which remained to be concluded and called for additional Health & Safety
training to be made available for Postmasters.
12. Noting Papers with no Presentation
12.1. Technology Dashboard
TABLED and NOTED was a paper, ‘Technology GE sub-committee Dashboard’.
13. Noting and Governance Items
13.1 Board Evaluation Report
Presentation of this item was deferred to the July Board Meeting.
13.2 HRC Terms of Reference and Historical Matters Delegated Authorities Matrix
TABLED and NOTED were the following papers:
(i) ‘Historical Remediation Committee Terms of Reference — Cover Paper’;
(ii) ‘Historical Matters Delegated Authorities Matrix Update’;
(iii) ‘Historical Remediation Committee Terms of Reference — Clean Version’; and
(iv) ‘Historical Remediation Committee Terms of Reference — Tracked Changes
Version’.
The Board RESOLVED:
(i) The amended form of the Historical Remediation Committee Terms of
Reference as set out in the papers be and is hereby APPROVED; and
(ii) The amended form of the Historical Matters Delegated Authorities Matrix as
set out in the papers be and is hereby APPROVED.
13.3. Sealings Report
EJ queried sealing entry 2188 on the Register of Sealings. NR advised that additional office
space had been taken on a temporary basis to assist with NBIT requirements. The Board
APPROVED the affixing of the Common Seal of the Company to the documents set out
against itemsnumbered 2182 — 2194 inclusive in the Seals Register.
13.4 Future Meeting Dates
The future meeting dates were NOTED.
13.5 Forward Agenda
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The Forward Agenda was NOTED. The Chairman advised that the content of the Forward
Agenda would be discussed in July.
14. Any Other Business
There being no other business the Chairman declared the meeting closed at 18:12.
15. Date of next scheduled meeting
11 July 2023 9:30 - 14:00.
Chairman Date
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