POL00448624
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Post Office Limited
Meeting of the Board of Directors
Agenda
4 June 2024 11:15 - 17:00 hrs 100 Wood Street, London
EC2V 7ER
Ben Tidswell (SID)
Nick Read (CEO)
Rachel Scarrabelotti (Company
Secretary)
igel Railton (Observer - duration)
* Andrew Darfoor (NED) I ¢ SimonJeffreys (NED) I Owen Woodley (Deputy CEO) _ I « Asha Patel (FP&A Director)
(Oberver - duration)
« Saf Ismail (NED) * ElliotJacobs (NED) I ° Chris Brocklesby (Chief * Barbara Brannon (Product Protfolio
Transformation Officer) Director)*
© Lorna Gratton (NED) Amanda Burton (NED) Liam Carroll (Procurement © Ross Borkett (Banking Director)
Director)*
© Brian Gaunt (NED) Simon Recaldin (Historical © Diane Wills (Inquiry Director)
Matters Director)
Apologies: Al Cameron © Dan O'Mahoney (Inquiry Karen McEwan (Chief People
Operations Director) Officer)
* Nicola Marriott (People © Chrysanthy Pispinis (Chief of
Director — Partnering) Staff)
© Sarah Gray (Interim Group © Rebecca Barker (Head of Risk)
General Counsel)
Simon Oldnall (Branch * Patrick Bell (Senior Legal
Technology Director) Counsel)*
© Stuart Keeping (Senior © Tim Perkins (People Director —
Managing Director, Teneo)* Services)*
© Kate Gallafent KC © Oliver Carlyon (Partner,
Fieldfisher)
«Laurence O'Neill (Head of Legal
— HR/IR)
NB: All Board Members and Attendees listed above have Confidentiality Undertakings accepted by the Inquiry in place, save
those marked with an *. Should the need to discuss confidential information in respest of the Inquiry arise, individuals without
a Confidentiality Undertaking in place will need to be excused for the duration of the discussion.
Welcome and Conflicts of Interest Noting Chair
Officer Changes Approval CoSec 11:15 - 11:20 hrs
Inquiry Undertakings Noting Chair
2. Minutes Approval Chair/ CoSec
(i) 25 March 2024
(ii) 29 April 2024 11:20 - 11:25 hrs
Matters Arising Noting
a. Committee reports (verbal) Noting
* Remediation Committee Chair/
© Audit, Risk and Compliance Committee Committee 11:25 - 11:50 hrs
. n Chairs
e Remuneration Committee
* Nominations Committee
© Investment Committee
4. CEO Report Noting & Input N Read 11:50 — 12:30 hrs
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POL-BSFF-WITN-019-0000004
Post Office Limited
Meeting of the Board of Directors
POL00448624
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8 July 2024 9:30 — 14:30
Agenda
5. Finance 12:30 - 12:50 hrs
Financial Performance Report Noting & Input A Patel
© Working Capital Facility increased usage wii
¢ FY24/25 unallocated!=*=""ichange spend oting
prioritisation principles Approval
* External Auditor tender exercise — outcome L carroll (all
and appointment items) C
© Contract and sourcing strategy matters Brocklesby/s I 1290 13:05 hrs
- Horizon continuity of service update Noting Oldnall/ P Bell/
- SPMP Assurance sourcing strategy Approval S Gray
- FM &Security Approval =
- Energy contract award Approve :
- Approval -
- Morson contract spend increase
T Perkins
Break 13:05 — 13:20 hrs
6. Strategic Review (verbal) Discussion S Keeping 13:20 - 14:00 hrs
7. Transforming Technology
© SPMP Update (spend and delivery to date) Noting C Brocklesby 14:00 — 14:40 hrs
8. Improving Branch Profitability
Banking Framework 4 Noting B Brannon/R 14:40 - 15:00 hrs
Borkett
9. 15:00 — 15:45 hrs
© Inquiry Update Noting D Wills/ D
= Phone ? Straten Approval Mahoney/ K
‘, _ . Ay I Gallafent KC/O
* Phases 5/6 Closing Submissions - delegation pprova Carlyon/ c cf
* RU Update Noting Pispinis
© OC2 disclosure — Working at Risk Approval
2 * 2 S Recaldin
© OC2 Contract risk — data indemnity Approval
© Postmaster advice service provider Approval
10. People and Culture K McEwan/ N
© Past Roles review (verbal) Approval Marriott/L 15:45 - 16:10 hrs
* Code of Business Standards atime ONalllfs Gray
K McEwan
11. Requests with Presentation
© Risk appetite schedule Approval S Gray/ R Barker I 16:10 — 16:30 hrs
12. Governance Items 16:30 - 17:00 hrs
¢ Update on GT Reports (verbal) Noting Chair/ CoSec
* Remuneration Committee ToR Approval CoSec
Sealings Report Approval CoSec
. Noting CoSec
Future Meeting Dates N
joting CoSec
© Forward Agenda
13. Any Other Business CoSec
Feedback on papers Discussion
14, Date of next scheduled meeting: Noting Chair
Papers requested to be taken as read, no presentation
a
a
Health & Safety Report
Technology Dashboard
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Meeting of the Board of Directors
Post Office Limited
Agenda
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3. 2024 Employee Survey results
4. ICO Publication Scheme
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POST OFFICE LIMITED
BOARD REPORT
Title: Appointments to Board Committees I Meeting Date: I 4 June 2024
RuiiiGe: Marie Malloy, Senior Assistant Sidebar: Rachel Scarrabelotti, Group
‘ Company Secretary Li * Company Secretary
Input Sought: Decision
The Board is asked to approve:
i. The appointment of Nigel Railton as a member and Chair of the POL Nominations
Committee, with the appointment effective 24 May 2024;
ii. The appointment of Nigel Railton as a member of the POL Remuneration Committee,
with the appointment effective 24 May 2024;
iii. IThe appointment of Brian Gaunt as interim Chair of the POL Remediation Committee
with the appointment effective 27 July 2024; and
iv. The appointment of Nigel Railton as a member of the POL Remediation Committee with
the appointment effective 27 July 2024.
Executive Summary
Pursuant to the Terms of Reference of the Nominations Committee, the Nominations Committee
can recommend to the Board new appointments to Committees, as required from time to time.
The Nominations Committee is due to meet on 4 June 2024 and this paper is premised on the
Nominations Committee being in a position to recommend to the Board the appointments the
subject of this paper.
The Board is aware that Nigel Railton has commenced as a non-executive director and interim
Chair of the Board, with the appointment effective 24 May 2024 and also that Ben Tidswell is
due to step down from the Board and his Committee memberships (Chair of the Remediation
Committee and a member of both the Nominations and Remuneration Committees) in July
2024.
Appointment of Nigel Railton - Nominations Committee
The previous Chair of the Nominations Committee, also Chair of the Board, departed the
company on 27 January 2024. Additionally, Ben Tidswell is a member of the Nominations
Committee and as mentioned above, is due to step down in July this year.
Under the Terms of Reference of the Committee, the Chair of the Company shall chair the
Committee.
Appointment of Nigel Railton - Remuneration Committee
The Board is asked to approve the appointment of Nigel Railton as a member of the
Remuneration Committee. The previous Chair of the Board served as a member of the
Remuneration Committee. In addition, Ben Tidswell is a member of the Remuneration
Committee and as mentioned above, his anticipated step down in July will create a further
vacancy on the Remuneration Committee. The vacancy is proposed to be filled by Nigel Railton.
1
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Appointments - Remediation Committee
Ben Tidswell is anticipated to step down from the Board circa 26 July 2024, leaving a vacant
position of Chair of the Remediation Committee. Brian Gaunt is proposed as interim Chair of
the Remediation Committee effective 27 July 2024, having served as a member of the
Remediation Committee since his appointment on 9 March 2023 (effective 14 March 2023).
As Brian Gaunt is an existing member of the Remediation Committee and his proposed
appointment as interim Chair will result in a vacant membership position, the Board is asked
to approve the appointment of Nigel Railton as a member of the Remediation Committee.
Current and proposed Board Committee membership
POL Committee I Committee Membership I Proposed change and date
Nominations Committee
1 Nigel Railton - Member and Chair
effective 24 May 2024
2 Ben Tidswell Stepping down c.26 July 2024
3 Saf Ismail
4 Lorna Gratton
5 Amanda Burton
6 Simon Jeffreys
Remuneration Committee
1 Amanda Burton (Chair)
P Ben Tidswell Stepping down c.26 July 2024
3 Brian Gaunt
4 Lorna Gratton
5. Nigel Railton - Member effective 24 May
2024
Remediation Committee
1 Ben Tidswell (Chair) Stepping down c.26 July 2024
2 Brian Gaunt Chair — effective 27 July 2024
3 Lorna Gratton
4 Nigel Railton - Member effective 27 July
2024
Audit, Risk and Compliance Committee
1 Simon Jeffreys (Chair)
2 Andrew Darfoor
3 Elliot Jacobs
4 Lorna Gratton
Investment Committee
1 ‘Andrew Darfoor (Chair)
2 Elliot Jacobs
3 Lorna Gratton
Confidentiality
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POST OFFICE LIMITED BOARD MEETING
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MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON MONDAY
25 MARCH 2024 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 12:15 AM
Present: Ben Tidswell Senior Independent Director (BT)
Lorna Gratton Non-Executive Director (LG)
Saf Ismail Non-Executive Director (SI) (Via Teams)
Elliot Jacobs Non-Executive Director (EJ)
Brian Gaunt Non-Executive Director (BG)
Simon Jeffreys Non-Executive Director (SJ)
Amanda Burton Non-Executive Director (AB)
Andrew Darfoor Non-Executive Director (AD)
Nick Read Group Chief Executive Officer (NR)
In attendance: Alison Hoyland Deputy Company Secretary (AH)
Owen Woodley Deputy CEO (Observer) (OW)
Kathryn Sherratt Interim CFO (Observer) (KS)
Jonathan Houston Associate Director, Grant Thornton (Observer) (JH) (Via
Teams)
Tim McInnes Strategy and Transformation Director (TMcl)
Kelly Goodwin Programme Director (KG)
Asha Patel Director of Strategic Financial Planning & Analysis (AP)
Tom Lee Group Financial Controller (TL)
Barbara Brannon Product Portfolio Director - Retail & Lottery, Government
& International Payments Services (BB)
Christian Spelzini Head of Legal (CS)
Simon Oldnall Horizon and GLO IT Director (SO)
Pete Marsh Retail Operations Director (PM)
Liam Carroll Procurement Director (LC)
Patrick Bell Senior Legal Counsel (PB)
Zdravko Mladenov Chief Digital Information Officer (ZM)
Sarah Bell Partner, Grant Thornton (SB)
Irina Velkova Partner, Grant Thornton (IV) (Via Teams)
Chrysanthy Pispinis Chief of Staff (CP)
Rachel Scarrabelotti Group Company Secretary (RS)
Diane Wills Public Inquiry Director (DW)
Dan O’Mahoney Inquiry Operations & Strategy Director (DO’M)
Neil Davey Remediation Unit Finance Director (ND)
Simon Recaldin Remediation Unit Director (SR)
Rt Hon Kemi Badenoch Secretary of State for the Department for Business and
MP Trade
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Action
11 Nomination of Chair
As provided for under paragraph 23 of the Articles of Association, the Board nominated BT
to preside as Chair of the meeting.
1.2 Welcome and Conflicts of Interest
A quorum being present, the Chair opened the meeting. The Chair called for the Directors
to disclose any conflicts of interest. The Directors declared that they had no conflicts of
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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 Board acknowledged the attendance of JH, OW and KS as observers at the meeting and
noted that any observations they made would not constitute advice, recommendations,
directions or instructions. The Board confirmed that it would take due care not to be unduly
influenced solely by a contribution made by any observer and that it would reach its
conclusions based on a balanced and diligent assessment of all the facts available to it.
In general declarations:
* SJnoted his Director role at CPS; and
« EJand SI noted their Postmaster roles.
Inquiry Confidentiality Undertakings
The Board noted that JH, LC, PM, BB, PB, KG, SB and IV did not have confidentiality
undertakings accepted by the Inquiry in place, and that these individuals would need to be
excused from the meeting should the need to discuss information confidential to the Inquiry
arise.
Minutes and Matters Arising
Minutes
TABLED and NOTED were draft Minutes from the Board Meeting of 01 March 2024. The
Board RESOLVED that the Minutes of the Meeting held on 01 March 2024 be APPROVED as
a correct record of the Meeting and be signed by the Chair.
Matters Arising
The Board NOTED the action log and status of the actions shown.
The Board agreed the actions marked for closure and noted follow up actions in relation to:
* Action #5: SI noted his disappointment that it was not proposed to provide WiFi access
for Postmasters as part of the CSS conversion in branches; LG suggested that an option
to allow Postmasters to opt in to cover the costs should be explored.
* Action #33: EJ noted his offer to support on the further work that needed to be
undertaken on BF4 and the return-on-investment analysis; the team had yet to follow
up with him.
* Project Boland: the Board asked for an update note.
* Action consolidation: the Board requested that the action log be reviewed, including to
consolidate related actions and better differentiate ‘ongoing’ actions.
Committee Reports (verbal)
Remediation Committee
BT provided an update on the most recent meeting and current focus of the Committee,
including in relation to:
* Criminal cases and the position on ‘concede ’and ‘non-concede’ cases and the progress
being made in the courts.
* Overturned conviction cases and the progress being made in relation to redress, while
the Government's plans in relation to mass exoneration are being finalised.
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HSS cases and the Government's decision to increase the minimum payment to £75K,
which was likely to generate increased numbers of late applications and should help to
expedite the payment of redress.
Morale within the Remediation Unit (RU) currently against the context of ongoing
external scrutiny and the uncertain forward landscape on remediation and redress.
The need for clarity from the Government on its role going forward and the associated
processes and procedures.
The Board noted that the work of the RU would be further discussed later on the agenda,
when the RU Director, SR, attended to provide his update.
Audit, Risk and Compliance Committee
SJ provided an update on the most recent meeting and current focus of the Committee,
including in relation to:
Risk tolerance, where good progress was being made in relation to relevant controls but
where POL was operating outside of tolerance in nearly a third of all intermediate risks,
an increase from January.
© The Board noted SJ’s view that risk appetite and tolerance levels may need to be
reviewed in the light of the current challenges POL was currently facing.
© Inrelation to Legal Risks specifically, the legal team had highlighted its concerns
in relation to elevated group-level legal risk and it was likely the team would
seek additional resources.
Cyber security had improved but there was still a lot more to do. The new CISO had
recently joined POL and an independent assessment by Deloitte had found that POL’s
cyber maturity had increased; a new higher target maturity had now been set for the
end of 2026.
The significant increase in DSA and FO! requests and the impact this was having on
response times. The Board noted that resources were being increased and that while
the ICO was currently being understanding, the position would be kept under review as
the high volumes were expected to continue.
The Internal Audit plan for 2024/25 which had been agreed and the effective assurance
work that was being progressed under the Group Assurance Director.
HMRC's. challenge. in relation to.IR35.and POL's assessment of contractors...
°
* IRRELEVANT
relation to the re-tender for POL’s external auditor.
The Committed had agreed it would not change its current policy in relation to stating
assets at current value.
Remuneration Committee
AB provided an update on the most recent meetings and current focus of the Committee,
including in relation to:
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* POUs overall reward strategy, where the Committee had discussed the need for it to be
closely aligned to POL’s social purpose and that it should be referenced in the Directors’
Remuneration Report in the Annual Report and Accounts, to provide the backdrop to
the different elements of POL’s remuneration framework.
* The STIP and LTIP schemes and the associated measures, which the Committee had
agreed in broad terms, subject to the Board’s approval of the 2024/25 and subsequent
discussions in the final measures and metrics.
Nominations Committee
BT provided an update on the most recent meetings and current focus of the Committee,
including in relation to:
« Postmaster NED recruitment and term extensions; the latter was awaiting Shareholder
approval, after which BT would follow up EJ and SI on the outcome.
* The Committee’s agreement to recommend to the Board that AB and SJ be appointed
to the Committee.
co The Board RESOLVED that the Committee’s recommendation to appoint AB and
SJ to the Nomination Committee be, and is hereby, APPROVED. [The Board took
the decision at this point in the meeting, rather than under the governance section
later on the agenda.]
«SID recruitment, which was currently on hold, pending the appointment of the Interim
Chair, when a decision on whether to resume the process or start it afresh would need
to be taken.
* Executive management succession planning, with particular reference to OW’s
departure later in the year.
© OWwas drawing up a proposed implementation plan and timetable to bring back
to the Committee for approval in due course.
© The Board would be kept apprised of the plans.
¢ The proposed appointment of Grant Thornton to undertake an external Board
performance evaluation for 2023/24.
© The Board was due to be subject to an external review in 2023/24, in line with
good governance practice that provides for external evaluations every three
years; it was agreed that Grant Thornton should be appointed to do the review as
an extension of its Governance Review work, given the obvious overlap.
Investment Committee
AD provided an update on the most recent meetings and current focus of the Committee,
including in relation to:
* The 2024/25 Change budget, which the Committee reviewed ahead of the Board
discussion on 1 March 2024 on the 24/25 business plan.
«Change initiatives, where risks were increasing across a good number of the ‘Platinum’
and ‘Gold’ projects, albeit no common themes could be discerned.
* The SPMP business case, which the Committee reviewed ahead of its submission to DBT
on 18 March 2024.
© The Board touched on a number of related matters, including: governance
oversight; the timeline for the rollout of NBIT and, in the interim, the maintenance
of Horizon under a contract extension with Fujitsu; future-proofing for a possible
new business model, the discontinuation of products and services, as well as the
possible introduction of new products and services; and ensuring hardware and
software compatibility.
The Board noted that the SPMP Business case would be further discussed later on the
agenda, when it would be able to ask the team about the business case and associated
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matters, including in relation to the proposed contract extension to Fujitsu to maintain the
Horizon system, pending the roll out of NBIT.
CEO Report
TABLED and NOTED was the CEO report.
NR spoke to the CEO report. Key points of note in the subsequent discussion were:
* POL continued to operate through a crisis, with ongoing heightened political and media
scrutiny and consequential impacts being felt across the business.
«Work was in hand to prioritise business and ensure accountabilities and responsibilities
were appropriately managed during the next phases of the Inquiry which were due to
resume in April and from which ongoing intense external scrutiny and internal
disruption to business as usual was to be expected.
* Clarity had yet to be provided by Government on its plans in relation to Postmaster
remediation and redress, particularly in relation to Government's role versus POL’s.
Current trading was strong and reinforced the understanding that customers remained
supportive of their local Post Office and its place in their local communities.
* Decisions on when advertising online products and services should resume would
remain under review against the prevailing environment.
* Negotiations in relation to Banking Framework 4 were in the early stages; the final
proposal was due to come to the June Board for approval.
* POLcontinued to retain its 100% market share for Banking Hubs and the first joint Post
Office/Banking Hub had opened in the last month. For now, the Banking Hubs were
profitable, though this would be closely monitored, including against market
developments, for example, the expectation that access to cash needs would decline
further over time.
* POL and the Shareholder would need to ensure they did not lose sight in the current
context of the need to continue to develop POL’s longer-term strategy and plans.
© Onrelated matters, BT noted the current plans for the POL’s strategic away days,
with plans for July reflecting the Inquiry timeline and limited management
capacity. July was likely, therefore, to be paper-light/free, with a focus on the
outputs from Phases 5 & 6 of the Inquiry to date and a look ahead to Phase 7, with
discussions on related matters, including governance and culture. A broader
forward looking strategic away day would be scheduled for later in the year, in
November or December.
The Board noted that a number of the key issues covered in the CEO report would be picked
up further throughout the agenda, including under the discussions on the 2024/25 business
plan and an associated Postmaster proposal.
Finance
FY2024/25 Business Plan
AP and TM joined the meeting.
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TABLED and NOTED was a paper, ‘FY24-25 Business Plan’.
KS spoke to the paper and noted that the 2024/25 plan reflected discussions to date,
including at the Board, at the Investment Committee and in 1:1 discussions with NEDs. Of
particular note was the inclusion of an overview of the Postmaster Proposition, which
provided a view across two priorities — to reduce Postmaster costs and grow Postmaster
income. This was a feature of discussions at the early March Board meeting where it was
agreed that while not all Postmaster upsides would be realised in FY24/25, it would be
helpful to understand and signal the trajectory and intent.
The plan was based on:
+ Anend of year trading loss of [mes
* Self-funded ‘other’ change spend of cl"), which had increased by=="h compared
to the plan discussed earlier in the month, largely driven by an additional :!
unallocated pot. The additional budget would. be. available
IRRELEVANT
— IRRELEVANT
t “IRRELEVANT. i . Budget allocation would be
Subject to an agreed business case and other considerations such as capacity and
practicalities of delivery. KS noted that while the associated benefits could not be
quantified at this stage (as this would depend on the initiatives agreed for funding),
ental upsides were expected to be realised, which would mitigate against the
trading loss.
. Other new supporting material included a reminder on the deprioritised activities that
would not be funded under the FY24/25 Plan.
The FY24/25 Business Plan would provide the backdrop to planning for FY25/26 and for
the longer term across a 3-5 year strategic outlook.
Key points of note in the subsequent discussion were:
* EJ commended the pack which he noted was very well produced and easy to navigate
and understand, but which nevertheless, in his view, amounted to a very disappointing
offer for Postmasters which he would find difficult to support; this view was shared by
SI.
« Both EJ and SI compared the remuneration position for Postmasters versus POL staff,
which in the case of the former included areas where the cost savings had yet to be
articulated (for example in relation to the lottery exit) and where future revenue was
set to fall and in the case of the latter included the prospect of bonuses.
* EJ and SI made further points around Postmasters funding past failings and that more
needed to be done to generate Postmaster profits and reduce central operating costs.
* On Postmasters funding past failings, BT noted this was no longer the case under the
separate Government funding arrangements. On more investment for profit generation,
BT noted that the challenges in this respect were well rehearsed and understood. OW
picked up on the specific prospect of Postmasters printing stamps and reminded
colleagues that this was a matter for Royal Mail, and while it had declined to take the
proposition forward to date, POL would continue to try and engage them on the matter.
On reducing central costs, KS and OW noted that further OD opportunities would be
explored, though this would need to be funded and the full benefits were unlikely to be
realised in FY24/25.
* BT emphasised that the plan only covered FY24/25 and that, at this stage, NEDs would
need to advocate for credible and specific alternatives or accept the recommended plan
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on the understanding there were no viable alternatives for FY24/25 and that further
opportunities to improve the proposition for Postmasters and cut central costs would
continue to be pursued in subsequent years.
* LG sought clarification on the criteria and process for allocating budget from the central
hange pot and asked for this to be shared with the Board as the framework was
developed. KS noted the current approach to prioritising and allocating Opex spend as
against business need and that a similar approach was likely to be adopted for ‘change’
spend. EJ suggested that a Postmaster lens should be applied to all budgeting work, with
business cases demonstrating how any initiative would contribute to a fair offer for
Postmasters.
* AD asked about when and how product and margins to improve profitability would be
considered and KS noted that this would be addressed as part of the longer-term
outlook and would be picked up initially under FY25/26 planning. EJ echoed AD’s points
on the need for an innovation/commercial mindset.
¢ On the Operational Excellence incentive for Postmasters, SI suggested that an 80%
compliance threshold may be too high and this should be adjusted for the first year; ME
noted that the lead time between the start of the FY and launch would provide for
training and ongoing support to put Postmasters in the best possible position, alongside
timely access to accurate data.
* ABsuggested that consideration should be given to Postmasters automatically receiving
a share in any end-of-year profits; LG noted that this would need to discussed with the
Shareholder if taken forward as a proposition.
Actions:
Criteria and process for allocating budget from the central i») change pot to be
developed and brought to the Board.
* Discussion on revenue generation/cost reduction plans (the art of the possible) to come
back to the Board.
KS —June
2024
Ks —June
2024
The Board:
« RESOLVED that the FY24/25 Business Plan be, and is hereby, APPROVED.
¢ NOTED that SI voted against the approval of the FY2024/25 Business Plan and that while
EJ did vote to approve it, he wished for his disappointment in relation to the Postmaster
offer be recorded and his expectation that a ‘fair offer’ for Postmaster lens would be
central to future planning.
Attendance at the Board meeting by the Rt Hon Kemi Badenoch MP, Secretary of State
for the Department for Business and Trade
JH left the meeting.
The Board welcomed the Rt Hon Kemi Badenoch MP, Secretary of State for the Department
for Business and Trade to the meeting.
After introductions, the Secretary of State (SoS) explained that she was very pleased to be
speaking to the POL Board, not least against the background of the current challenges and
significant external scrutiny to which POL was subject. While the heightened interest had
helped accelerate redress plans and brought renewed focus, and was to be welcomed from
that perspective, the SoS acknowledged the less than welcome impacts being felt too.
The SoS explained that she was keen to hear what was uppermost on the Board's mind and
how Government might best support POL looking ahead.
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Key points of note in the subsequent discussion were:
* Board members were relatively new, which meant they could bring a fresh perspective,
particularly in relation to the strategic outlook.
* Abalance needed to be stuck between looking back and remedying the past and looking
ahead and securing a viable and sustainable Post Office model for the future.
© There was a tension currently between POL’s social purpose and the commercial
imperatives at play and Postmasters, in particular, were losing out as a consequence.
* The Board reflected on their earlier discussions on the FY24/25 Business Plan and the
difficult trades offs that were being managed.
NBIT needed to be an enduring solution and would require appropriate funding.
© Once a greater share of the time could be given to the forward look, the Government
would need to play a central role in articulating the policy intent, against which POL
would then be able to set out its future strategy.
The SoS recognised the tension that arose from POL’s need to balance both its social
purpose and the commercial imperatives at play. While Government sentiment and
understanding was mostly aligned to POL’s social purpose and the role that Post Offices
played in communities, she recognised that the consequences of some decisions and the
impact on Postmasters’ livelihoods was probably less well understood in some places. In
noting the Board’s view that NBIT needed to be an enduring solution, the SoS emphasised
that POL’s bid for Government funding would be competing against many others, so the
case would need to be made on the widest grounds and cite the public and social interests
being served.
In closing, the SoS noted that she would be attending POL’s weekly 10@10 staff briefing
session later in the week, again to show the Government's support for POL and acknowledge
the scrutiny to which POL was currently subject. The SoS would welcome any follow up
points Board members may wish to make, and colleagues should reach out to her office
directly. The Board thanked the SoS and were very grateful for her time and continuing
support of POL.
Finance (Continued)
Financial Performance Report
AP joined the meeting.
JH rejoined the meeting.
TABLED and NOTED was the P11 Financial Performance Overview.
AP spoke to the einithe Key points of note in the subsequent discussion were: r
if "h ahead of budget, largely driven by the:
© Pit trading profit wasiamssan!, YTD} RELEVANT bove budget). The trading profit
had surpassed the 9+3 forecast, however, the full year outturn remained subject to
potential year-end adjustments.
© Growth and cost reduction opportunities (as discussed earlier in the meeting) in
2024/25 and beyond would continue to be explored.
2023/24 Outturn — Postmaster Proposal
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TABLED and NOTED was a paper “2023/24 Outturn — Postmaster Proposal”.
the anticipated trading performance outturn for the year. The payment would be over and
above (and separate to) Postmasters projected remuneration. If approved, the plan was to
announce the payment as part of the planned communications later in the week on the
2024/25 Postmaster remuneration package.
The Board:
RESOLVED that the proposals for a one-off payment to Postmasters be, and is hereby,
APPROVED, subject to first advising the Shareholder of the proposed payment.
Short Term Facility Amendment
TL joined the meeting.
TABLED and NOTED was a pape! Short Term Facility Amendment’.
Short Term Facility as an
© date, the facility
The paper, taken as read, set out that DBT provided
emergency same day facility for unexpected events in client settlements. T
IRRELEVANT
The Board:
© RESOLVED that the terms of the Amendment and any other documents ancillary to, or
to be entered into by POL in connection with, the Amendment or the transaction,
including bank mandates, subscription letters, utilisation requests and selection notices
(the "Ancillary Documents") be, and are hereby, APPROVED.
© DELEGATED AUTHORITY to any authorised person to execute the Amendment or
Ancillary Document which is not being executed as a deed and to any two Directors, or
any one Director and the Company Secretary, to execute and deliver any Ancillary
Document which is to be executed as a deed (in each case with any amendments,
variations or additions that he or she in his or her absolute discretion considers
appropriate).
Payzone
Payzone Integration
CS and BB joined the meeting.
TABLED and NOTED were the following papers:
(i) ‘Payzone Integration’;
(ii) ‘Payzone Integration Sourcing Strategy’;
(iii) ‘Legal Risk Note’;
(iv) ‘NED Pre-Board Briefing Note’;
(v) ‘DBT Written Consent (from POL)’;
(vi) ‘POL Written Consent (from Payzone)’;
(vii) ‘DBT Written Consent (from Payzone)’;
(viii) ‘Capital Contribution Documents’;
(ix) ‘Draft Dividend Resolution’;
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(x) ‘Business Transfer Agreement’;
(xi) ‘Direct Award Novation Agreements x5’;
(xii) ‘British Gas Novation Documents x2’;
(xiii) ‘the Power of Attorney’; and
(xiv) ‘Property Documents (including the Deed of Surrender, Tripartite Agreement and
New Lease)’.
The papers, taken as read, set out that the business rationale and integration benefits had
been reviewed and discussed at the Board meeting in January 2023, when the Board noted
that the integration would simplify the business model, as well as:
© enable technology transformation (specifically in relation to the de-risking of NBIT);
© support the network strategy and the acceleration of Drop & Collect rollout; and
© help mitigate and regularise known risks.
The Board approved the integration in principle at its meeting in January 2023, subject to
formal approval in due course when the relevant governance and process steps had been
determined.
Key points of note in the subsequent discussion were:
* EJ noted that integration would facilitate the acceleration of Drop and Collect roll-out
over time and noted previous references to the need to be able to access Payzone
software. This point was also picked up later on the agenda under the discussion on
second-device procurement.
* AD asked about the organisational design implications; BB noted that the people
integration considerations were fairly complex, as the Payzone roles did not map over
‘ona like-for-like basis. OW noted that organisational design opportunities would likely
arise over time.
« BT asked about the legal risks; CS noted that these were well understood and had been
fully worked through, not least given the long lead time.
The Board:
© RESOLVED that, subject to Shareholder approval, the Payzone Integration be, and is,
hereby APPROVED (the associated resolutions approved by the Board are set out in full
in Appendix A to the minute)
Payzone Letter of Support
The Board:
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© DECLINED to approve the Letter of Support for issue.
© DELEGATED AUTHORITY to BT and Si to review the position and decide on whether to
approve some form of the Letter of Support for signature and issue.
[Following the Board meeting, BT and SJ reviewed the position and BT confirmed that he and
SJ had agreed:
© POL should sign and issue a revised Letter of Support to Payzone; and
Kathryn Sherratt would have delegated authority to sign the letter, in her capacity as
Interim CFO.]
Contract and sourcing strategy matters
LC, SO, PM joined the meeting.
IRRELEVANT I xtension
. e contract for
IRRELEVANT I be, and are
hereby, APPROVED:
DELEGATED AUTHORITY to SEG to award the contract and to any two Directors, or any
one Director and the Company Secretary, to execute the contract modification.
Optima Health contract
TABLED and NOTED were the following papers:
(i) ‘Optima Health Occupational Health Services’; and
(ii) ‘Optima Health Occupational Health Services — Legal Risk Note’.
The Board: .
e RESOLVED that an extension to the current contract with I IRRELEVANT} under
regulation 72 (1) (b) be, andis hereby, APPROVED.
© RESOLVED that additional spend of: IRRELEVANT I under the contract with
be, and is hereby, APPROVED.
© DELEGATED AUTHORITY to SEG to award the contract.
Network consumables
TABLED and NOTED was a paper, ‘Sourcing Strategy - Network Consumables’.
The Board:
IRRELEVANT} with
an optional 2-year extension, and with a total contract value o e, and is
hereby, APPROVED.
© DELEGATED AUTHORITY to SEG to award the contract and to any two Directors, or any
one Director and the Company Secretary, to execute the contract.
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[IRRELEVANT I
TABLED and NOTED were the following papers:
(i) ‘TB Cardew contract’; and
(ii) ‘TB Cardew contract — Legal Risk Note’.
The Board: .
© RESOLVED that additional spend of"
way of a modification to the existing contract witf IRRELEVANT} under Regulation 72(1)(b),
be, and is hereby, APPROVED.
¢ DELEGATED AUTHORITY to any two Directors, or any one Director and the Company
Secretary, to execute the contract modification.
NOTED that POL planned to run a compliant procurement exercise to put a new contract
in place from September 2024.
In making more general observations across all the contract requests, the Board noted that
future request should include a note on service delivery performance/value add and KPIs.
Transforming Technology
TMcl, SO, KG, ZM and PB joined the meeting.
SPMP DBT Business Case Update
TABLED and NOTED was a paper, ‘SPMP DBT Business Case Update’.
TMcl spoke to the paper which provided an update on the progress being made in relation
to the SPMP funding business case which covered the costs of:
* Developing NBIT to replace Horizon.
© Sustaining Horizon while NBIT was being developed (anticipated to be by way of an
extension of POL’s contract with Fujitsu and which included investment in the core
software, infrastructure and branch hardware).
© Developing the next generation of Self-Service Kiosks, the rollout of new ‘2nd devices’
as anew mobile platform for Postmasters and a new Identity and Access Management
application.
Key points of note in the subsequent discussiot
* The business case extended the funding ta! and it had been submitted to
DBT on 18 March 2024, with final approval from HM Treasury expected in June 2024.
e AD had noted earlier in the meeting that the Investment Committee had provided
earlier scrutiny to the business case and its feedback has been reflected in the final
submission.
* £J asked about the extent to which the option to accelerate the roll-out had been
considered; TMcl noted that it was one of the options included in the business case and
starting with
Fujitsu extension
TABLED and NOTED were the following papers:
(i) ‘Fujitsu Horizon Agreement Extension’; and
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(i) ‘Fujitsu Horizon Agreement Extension — Legal Risk Note’.
SO spoke to the paper and explained the current position on the discussions to date around
the continuation of support services for the Horizon platform by Fujitsu beyond March 2025,
when the current contract was due to end. The extension was proposed to cover the
intervening period, before the roll out of NBIT. While discussions were ongoing, Fujitsu had
not yet made any commitment to continuing the support and against the context of the
current external scrutiny, was unlikely to do so without the express support of Government.
Subject to the position being settled, funding the contract extension formed part of the
SPMP business case, which the Board had discussed earlier in the meeting.
4 external independent legal and commercial
advice was being sought to further inform and quantify the risk.
* The Board noted that it was unsighted on the alternative to the build. antion.and_that,
_there..was.a_nntential_oravider..lt-sught.tasunderstand.the:...... IRRELEVANT
IRRELEVANT H
IRRELEVANT i — any
~ IRRELEVANT
. _..1 The procurement options had not
been well managed within the SPM Programme and the Board noted that had the
Programme team engaged procurement and legal colleagues at the appropriate point
and had an earlier procurement exercise been run, the risks and level of financial
exposure could have been reduced. EJ further noted the potential financial liabilities at
stake and referenced the Board’s earlier discussion on Postmaster remuneration.
Actions:
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with the Board. Closed
be undertaken and a deep dive review to be CB/SO&
undertaken by the Investment Committee. Investment
Committee —
16 May 2024
SPMP Drawdown request
TABLED and NOTED was a paper, ‘SPMP Drawdown request’.
The paper, taken as read, set out the drawdown request to continue funding the SPMP
programme to the end of July, after which point POL anticipated that its next SPMP funding
provision would be approved and in place.
Action:
— Routine reports on SPMP spend and delivery to come to each scheduled Board. cB
The Board RESOLVED that a drawdown of up t¢' be, and is hereby, APPROVED.
Second Device — Interim Business Case and Drawdown request
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TABLED and NOTED was a paper, ‘Second Device — Interim Business Case and Drawdown
request’.
The paper, taken as read, set out that as part of the universal service offering, POL was
obliged provide for a pre-paid bill payment facility for public utility services and that the
current legacy solution, Paystation, was being discontinued by the supplier at the end of the
contract in March 2025. To continue providing the service, POL planned to deploy a,
handheld “Second Device”. The funding drawdown request at this stage would allow for
“Second Device” hardware to be procured, while the technical solution was developed
under the SPMP. The paper explained that the drawdown was dependent on DBT approving
the reallocation of funds within the current interim funding envelope; should DBT not
approve the reallocation, the project would have to delay the hardware purchase until the
next SPMP business case was approved.
Key points of note in the subsequent discussion were:
e EJ asked if the “Second Device” would have 4G capability and/or be Wifi enabled; ZM
confirmed it would have both capabilities.
¢ As noted earlier in the meeting under the discussion on Payzone Integration, EJ sought
clarity on the software implications; ZM explained that the procurement of the “Second
Device” hardware did not extend to the software and back-office integrations around
the device, and the Payzone integration would provide for access to the necessary
Payzone capabilities.
In noting the ability to deploy PUDO and other products on the “Second Device” in the
future, EJ and SI noted that it would be helpful to have an overview of all the possible
and/or planned Post Office branch technology by way of a technology roadmap.
LG noted that the “Second Device” name was a placeholder and suggested that a more
user-friendly name should be considered; ZM confirmed that communication colleagues
were looking at this.
Action:
— Roadmap of possible/planned branch technology to be developed and shared with the
Board.
to DBT approving the reallocation of funds within the current interim funding envelope.
Grant Thornton Review (Verbal)
SB, IV, CP and RS joined the meeting.
Key points of note were:
* RS provided a brief summary of the impetus for the Grant Thornton (GT) Governance
Review which included:
© The Post Office Horizon IT Inquiry, Phase 6 of which would include scrutiny of
POL’s governance and current practices and procedures.
o The Simmons & Simmons report, which included as its first recommendation that
a review of the POL’s wider remuneration governance be undertaken.
© Employee sentiment in relation to governance as expressed in the employee
survey results.
© Preparation for the Ethos Programme.
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Discussion at the Board at this stage would include an overview of the draft findings and
recommendations and allow the Board to ask initial questions and make initial
observations, before agreeing next steps, including who should receive the draft report
in the first instance.
SB provided an overview of the scope which was to formulate an understanding of POL’s
governance and decision-making processes and structures at Board, executive
management and senior leadership level.
SB confirmed that GT had assessed the effectiveness of the governance structures and
processes against relevant governance standards that were comparable to typical
business operations equivalent to the size of POL, principally the 2018 UK Corporate
Governance Code and the Central Government Code, as well as the best practices of
organisations with comparable structures where GT considered there was no
equivalent, due to POL's particular constitution.
SB set out the prevailing context for GT’s findings, namely that there were a number of
tensions, particularly in relation to:
POU social purpose and its need to be a commercially sustainable organisation which
arose from POLs ownership structure (being government owned) and the competitive
operating environment within which it conducted its business.
The conflicts of interest that the Shareholder and Postmaster NED roles gave rise to.
Against the backdrop of these tensions, GT was of the view that there were five main
governance areas in need of resolution:
= Establishing a unified purpose and shared ambition around a longer-term vision and
strategy between POL and its Shareholder.
— Clarifying accountabilities.
— Clarifying the application of foundational governance documentation against the
prevailing context and changing circumstances.
= Clarifying decision making and associated objectives, roles and responsibilities at
enterprise level.
— Improving working relationships and ensuring cultural alignment between POL and
its Shareholder.
In discussing the draft findings and recommendations, the Board noted that the
constitutional structure of POL and the current prevailing context, which included the
current position in relation to Government funding, were very much a part of POLs
current governance challenges, many of which were, therefore, outside its control.
The Board agreed it would be helpful to consider the findings and recommendations,
based on an understanding of what was within POL’s sphere of influence and as part of
that, what was a priority — versus what was not within POL’s sphere of influence and
what would need to change.
GT noted that some of the key elements of the prevailing context had not been
documented, nor communicated sufficiently, to provide evidence of this narrative.
Encouragingly, GT noted a number of improvements were underway, including in
relation to remediation, remuneration and people and leadership management and that
key internal control and risk frameworks and documentation were in place.
In discussing the next steps, the Board noted the dependencies in relation to the Post
Office Horizon IT Inquiry and agreed that the Board and OW and KS as observers should:
— receive the draft report;
— discuss the content of the draft report in a follow up session; then
— decide the next steps, including with whom the report should be shared more
widely and when (the Board noted that it may be necessary to share the report
internally sooner, rather than later, albeit only in so far as deemed strictly necessary
at that stage).
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Actions: ; ; RS—Closed
— Draft GT Governance Review report to be shared with the Board and observers. Secretariat —
— Follow up Board discussion to be arranged. ‘April 2024
10. Rebuilding Trust
10.1 Inquiry Update
DW, ND and DO’M joined the meeting. JH left the meeting.
TABLED and NOTED was a paper, ‘Post Office Horizon IT Inquiry: Update’.
DW spoke to the paper which provided an update on:
Engagement with the Inquiry.
* POL's closing submissions for Phase 4.
The release of Deloitte from their confidentiality obligations to POL.
* The new Letter of Engagement with HSF.
Key points of note in the subsequent discussion were:
* DO’M had joined the team as POL’s new Inquiry Operations and Strategy Director.
© POWs Inquiry Team was engaging with the Inquiry team in relation to POL’s written
closing submissions for Phase 4, and the position the Inquiry Chairman had taken in
relation to the inclusion of references to a Prosecution Expert’s report; POL was of the
view that the Inquiry Chairman’s position was based on a misunderstanding and
stemmed from a miscommunication on the part of the Inquiry’s legal counsel.
© The preparations for the next Phases of the Inquiry, due to recommence on 9 April 2024,
including the constructive engagement between POU’s Inquiry team and the Inquiry’s
legal counsel on disclosure and how the teams could best work together to meet the
Inquiry’s upcoming hearing schedule.
¢ The morale and well-being of the Inquiry team and wider POL colleagues and the
support being provided, including under the extended Optima Health provision.
10.2 Inquiry FY24/25 Budget & Drawdown request
TABLED and NOTED were the following papers:
(i) ‘Inquiry FY24-25 Funding Drawdown request’; and
(ii) (Inquiry Supporting Budget/ Financial Pack’.
The paper, taken as read, set out a drawdown funding request for the Inquiry Unit to cover
costs to the end of September 2024.
Key points of note in the subsequent discussion were:
The Board sought assurance that costs were being managed and on the steps being
taken to oversee and track costs; DO’M was of the view that the previous assurances
that had been provided on this regard could be relied upon and that there were robust
controls and processes in place.
© The expectation that POL’s Inquiry Unit costs would start to drop off after September
2024, subject to there being no significant change to Inquiry work and the associated
timetable.
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The Board RESOLVED that a drawdown ot
Government approving the release of the I"
Articles of Association.
be, and is hereby, APPROVED, subject to
contingency under Article 8.1(X) of the
Sensitive Issues request and ISC ToR
TABLED and NOTED were the following papers:
(i) ‘Sensitive Issues request and Inquiry SteerCo ToR’;
(ii) ‘Appendix 1 - Inquiry SteerCo ToR — Clean’;
(iii) ISC Delegated Authorities Matrix’; and
(iv) ‘Inquiry SteerCo ToR - Tracked Changes’.
The Board:
© RESOLVED that the amendments to the Inquiry Steering Committee’s Delegated
Authorities matrix and ToR be, and are hereby APPROVED.
DELEGATED AUTHORITY to the SID and an Independent NED to make decisions on
Speak-Up matters and the redaction/release of information to the Inquiry.
RU Update
SR joined the meeting.
TABLED and NOTED were the following papers:
(i) ‘Remediation Unit Programme Update’; and
(ii) ‘RU Finance Update’.
SR spoke to the paper which provided an update on:
© The current position in relation to remediation, including OC, HSS, SRR claims and GLO
disclosure.
© The ongoing uncertainty in respect of management and delivery of OC and HSS claims
and the associated negative publicity around the speed of redress payments and the
challenging environment within which RU is operating as a consequence.
Plans to further accelerate the payment of redress.
Key points of note in the subsequent discussion were:
* The Government's plans in relation to mass exoneration.
The need for clarity from the Government on its role in relation to redress going forward
and the associated processes and procedures.
RU FY24/25 Budget & Drawdown request
TABLED and NOTED was a paper, ‘RU FY24-25 Budget & Funding Drawdown Request’.
The paper, taken as read, set out a drawdown funding request for the Remediation Unit to
cover costs to the end of September 2024.
The Board RESOLVED that a drawdown ot
Government approving the release of th
Articles of Association.
be, and is hereby, APPROVED, subject to
contingency under Article 8.1(X) of the
Remediation Unit’s Delegated Authorities Matrix and Remediation Committee’s ToR
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TABLED and NOTED were the following papers:
(i) ‘Remediation Committee updated Terms of Reference - Report’;
(ii) ‘Remediation Committee Terms of Reference - Clean’; and
iii) ‘Remediation Unit delegated authorities matrix’.
The Board RESOLVED that the amendments to the Remediation Unit’s Delegated Authorities
Matrix and the Remediation Committee’s ToR be, and are hereby APPROVED.
Items with presentation
Group Customer Complaints Policy
TABLED and NOTED were the following papers:
(i) ‘Group Customer Complaints Policy - Report’; and
(ii) ‘Group Customer Complaints Policy’.
Action:
— Plain language review to be undertaken by communications on the customer facing CJ — Closed.
aspects of the policy.
The Board RESOLVED that, on the recommendation of the Audit, Risk and Compliance
Committee, the Group Customer Complaints Policy be, and is hereby, APPROVED.
Health & Safety Report
TABLED and NOTED was a paper, ‘Health & Safety Report’.
POI Accenture Managed Service Contract Extension
TABLED and NOTED was a paper, ‘PO! Accenture Managed Service Contract Extension’.
The paper, taken as read, set out an approval request to extend a contract that Post Office
Insurance (PO!) had with Accenture to provide a range of managed support services.
The Board RESOLVED that the extension of the contract with: IRRELEVANT
with a total spend for all the managed services over the life of
be, and is hereby APPROVED.
Governance Items
2023/24 Board Effectiveness Review Update (Verbal)
The Board noted earlier in the meeting, under the discussion on the work of the
Nominations Committee, that Grant Thornton would undertake the 2023/24 Board
Performance Evaluation.
Annual Governance Report
TABLED and NOTED were the following papers:
(i) ‘Annual Governance Report’;
(ii) ‘Register of Interests’;
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(iii) ‘Delegated Authorities’;
(iv) ‘Matters Reserved to the Board — Clean’;
(v) ‘Mattes Reserved to the Board — Tracked Changes’;
(vi) ‘Annex 1 to the MRB’;
(vii) ‘Nominations Committee ToR - Tracked Changes’;
(
(ix) ‘Current Conflicts of Interest Policy’.
i) ‘Remuneration Committee ToR — Clean’; and
The Board RESOLVED that the amendments to:
— the Delegated Authorities from the Board;
— the Authorised Signatories;
— the Matters Reserved to the Board, including the Spend Approval Limits; and
— the Nominations Committee Terms of Reference.
be, and are hereby, APPROVED.
12.3. Sealings Report
The Board APPROVED the affixingof the Common Seal of the Company to the document
set out against item numbered 2242 - 2247 in the Register of Sealings.
Action:
— Clarification to be provided to EJ on the context of the Deed of Release #2243. Secretariat =
Closed.
12.4 Nominations Committee Membership
TABLED and NOTED was a paper, ‘Nominations Committee Membership’.
The Board approved the appointment of AB and SJ earlier in the meeting, under the
discussion on the work of the Nominations Committee.
12.5 Future Meeting Dates
The future meeting dates were NOTED.
12.6 Forward Agenda
The Forward Agenda was NOTED.
13. Any Other Business
Feedback on papers
There being no other business the Chair declared the meeting closed at 18.20
14. Date of next scheduled meeting
4 June 2024 11:15 — 17:00
15. Papers to be taken as read, no presentation.
TABLED and NOTED were the following papers:
(i) ‘Technology Dashboard’;
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(ii) ‘Retail Performance Dashboard’;
(iii) ‘Branch Layouts’;
(iv) ‘Project Darwin — Lesson Learned Review’; and
(v) ‘Project Darwin — Business Transfer Update’.
Chair Date
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MINUTES OF AN ADDITIONAL MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON
MONDAY 29 APRIL 2024 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 16:45 PM?
Present: Ben Tidswell Senior Independent Director and Nominated Chair of the
meeting (BT)
Lorna Gratton Non-Executive Director (LG) (until 18:30)
Saf Ismail Non-Executive Director (SI)
Elliot Jacobs Non-Executive Director (EJ)
Brian Gaunt Non-Executive Director (BG)
Simon Jeffreys Non-Executive Director (SJ)
Amanda Burton Non-Executive Director (AB)
Andrew Darfoor Non-Executive Director (AD) (until 18:00)
Nick Read Group Chief Executive Officer (NR)
In attendance: Rachel Scarrabelotti Company Secretary (RS)
Owen Woodley Deputy CEO (Observer) (OW)
Chrysanthy Pispinis Chief of Staff (CP)
Karen McEwan Group Chief People Officer (KM)
Nicola Marriott HR Director (NM)
Charlotte Cool Corporate Affairs Director — Interim (CC)
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Kathryn Sherratt Interim Group Chief Finance Officer (KS)
Action
11
1.2
Nomination of Chair?
As provided for under paragraph 23 of the Articles of Association, the Board nominated BT
to preside as Chair of the meeting.
Welcome and Conflicts of Interest
A quorum being present, the Chair opened the meeting. The Chair called for the Directors
to disclose any conflicts of interest. EJ reminded the Board of his and SI’s potential for
conflict as 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 invited CC to introduce herself and welcomed CC to the Company.
The Board acknowledged the attendance of OW as an observer at the meeting. As an
observer, the Board was aware that all contributions made by OW 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
* Participation in the meeting was entirely via Microsoft Teams from participants’ personal addresses. In such
circumstances the Company's Articles of Association (Article 64) require that the location of the meeting be
deemed as the chairman's location. However, it was not deemed appropriate to record personal addresses on
the Company record. As such, the Registered Office is recorded as the meeting location.
? This meeting is an addition to the scheduled meetings so standard items such as minutes and matters arising
have been carried over to the meeting on 04 June 2024.
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solely by contributions made by OW and that it would reach its conclusions based on a
balanced and diligent assessment of all the facts available to it.
13 Inquiry Confidentiality Undertakings
The Chair noted that CC did not have a confidentiality undertaking accepted by the Inquiry
in place and asked Board Members and other attendees to be conscious of this and to
advise the Chair if they needed any assistance on this point.
2. Past Roles Review
TABLED and NOTED was a paper, ‘Employee Review Categories April 24’.
Key discussion points were as follows:
© NRintroduced the matter noting the time the strategic executive group had
devoted in the past few days to considering this issue;
NRsummarised the new categorisations and employee populations under review:
- In respect of category one, comprising 5 current employees due to give evidence
at the Inquiry within Phases 5 and 6, a consistent approach was required in respect
of these individuals ahead of and after the Inquiry to prevent conflicts arising;
- The second category (previously known as Past Roles) involved reviewing all
current employees within the Remediation Unit prioritising those who undertook
activity relating to the subject matter of the Inquiry in past roles;
- the third category included and expanded on the scope of Project Phoenix and
would focus on addressing any misconduct allegations arising against current
employees as a result of evidence given at the Inquiry in later Phases, in addition
to evidence provided at the Human Impact Hearings. NR outlined the population
and noted that the population could increase with other current employees
potentially coming within scope for investigation as a result of the evidence heard
in Phases 5 and 6;
© NRemphasised the need for a consistent and fair approach as well as acting
quickly. NR also noted the volume of documents disclosed to the Inquiry and that
these potentially could be utilised to assist with consistency of approach;
NM advised that she wished to provide the Board with an update on the current
status, work undertaken to date and take the Board through proposed next steps.
NM reiterated the 3 categories and the employee populations within these. NM
spoke through the work undertaken in relation to Project Phoenix noting the
evidence collation and review process which had involved consideration of in
excess of 95,000 documents. There had been delays as the ACI team wished to
engage with the Postmasters who had provided evidence at the Human Impact
Hearings that had led to the current employee misconduct allegations. These
meetings had taken a significant amount of time to arrange, and it was not until
February 2024 that the first meeting with an affected Postmaster had occurred;
© Sl queried why! IRRELEVANT! had not been suspended. NM advised that the
approach taken was to let the misconduct process and the investigation reach
conclusion; to suspend otherwise was considered very high risk from an
employment law perspective. SI expressed his views on this approach and advised
was receiving comments in from Postmasters who were concerned that
{IRRELEVANT} remained in the business. SI shared his view that this was a cultural
issue and that the Company could not move on until individuals in this category
exited the business. NM took the point however advised that in the ongoing
investigation into}, Ino evidence had been found to support the
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allegations and there was no evidence to date of gross misconduct. The Chair
pointed out that there was the evidence the Postmasters had provided in the
Human Impact Hearings, so cautioned against the position of stating there was no
evidence to support the allegations. The Chair noted that the investigations being
conducted were internal and queried if there should be external assurance
conducted to validate the approach taken;
© Sl referenced the meetings with Postmasters who had made allegations against:
IRRELEVANT y and queried the level of explanation provided regarding the
investigation process. NM noted employer's duties to protect an employee; in
light of this the approach advised to Postmasters had been more general. SI
queried whether the process could be simplified. NM advised that engagement
had been had with Postmasters via their legal advisors as this is how the
Postmasters had advised that they wished to be engaged with. S! queried whether
there was a time scale for conclusion of the investigations. NM replied that the
team had not wished to push too hard given the sensitives for Postmasters in re-
counting events. That said, engagement with all the Postmasters who had made
allegations in relation tq!RRELEVANT! were due to be completed by end of June.
The team were similarly looking to complete meetings with Postmasters in relation
to other cases;
© LG queried whether there was another approach that could be considered for
employees within category 3. Rather than allegations of misconduct could the
manner of the way these employees provided evidence at the Inquiry be
considered and whether this was in line with Post Office’s current culture and
values. NM took the point and advised that the exercise could be widened to
include the way evidence was provided by these witnesses at the Inquiry;
© =ABraised the lack of external communication, noting the significant amount of
work that had been undertaken on these issues, and queried whether some
communication could be made. The Chair took the point however suggested that
this point be considered later in the meeting as part of the overall actions;
* The Chair asked NM to provide an overview of category two. NM spoke through
the category outlining the work that had been undertaken to assess for conflicts
arising from roles associated with the activity covered by the Inquiry and current
roles and detailed the employee population that this work had identified. NM
noted proposed re-structuring however this had not been actioned due to the
need to retain the workforce given the high number of new applications to the
HSS; ;
NM spoke to the position o1 LEN explaining that whilst presence at an
earlier event had come to light, the activity undertaken would not have picked this
up as it assessed only past roles in relation to certain activities. The Chair noted
that the risk analysis undertaken in relation to employees in the Remediation Unit
would not have picked this up; _.
* NM outlined the position in relation to! and advised that! IRRELEVANT had
been removed from the Remediation Unit approximately 12 months ago. A
revised approach in respect of! T's was being considered. Discussion
followed as to the consistency of approach;
There was discussion between EJ and NR regarding potential employee
suspensions pending the end of the Inquiry, then carrying out investigations;
© Noting the point made by AB, EJ queried whether the external communications on
this issue could be to the effect that a plan had been endorsed to address these
issues;
Discussion moved to the proposed approach for employees within category 1 with
NM outlining the proposals. Caution needed to be applied so as not to impact on
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any other employees due to give evidence at the Inquiry, so if an investigation was
required following an employee having given evidence, the employee may be
suspended, and the investigation would commence after the conclusion of the
Inquiry. ACTION AB questioned whether there were learnings from other inquiries
that could be taken on the approach to employees within category one. The Chair
thought that there was merit in considering other approaches and asked that this
be looked at;
NM detailed the proposed approaches in relation to the different employee
populations within category 2 noting the benefits and risks involved. For the
‘red’ employees, it was proposed that a preferencing exercise was run to
understand the appetite for voluntary redundancy or re-deployment. If neither of
these options were taken a forced change in employment would be affected or as
a last resort the employee would be dismissed. In respect of the I~-inon red
employees that were employed between 1999 and 2017 the proposal was to
preference for voluntary redundancy along with re-deployment, trying to obtain
re-deployment as much as possible. NM noted the potential impact of this
approach on the workload of the Remediation Unit and the disruption that could
follow on the timing for compensation payments to Postmasters. NM further
noted the prospect of seeking feedback to understand the preferences of this
group which could then be built into the approach to try to mitigate the impact on
the Remediation Unit. The team could then return and advise further the
proposed approach. BT clarified that the Board was not being asked to commit to
the entire proposal until the team had further data on this point. SI queried
whether re-deployment was appropriate for ‘red’ individuals within this
population as opposed to exiting these individuals from the business. EJ agreed
with SI that re-deployment was not appropriate for individuals classified as ‘red’.
There was discussion regarding how the proposed approach would be executed
with EJ querying whether the exercise could be conducted at one time and once
and the Chair querying the continuation of this population in the business during
the consultation period. NM reminded the Board that there were no allegations of NM
wrongdoing in respect of the ‘red’ population within the Remediation Unit and
that this group were ‘red’ only because they undertook roles historically linked to
the subject of the Inquiry;
ACTION AD queried the potential costs of the voluntary redundancies and advised
that the Board would need to be advised of this. The Chair summarised the
discussion: subject to AD’s query as to cost and the budget funding this, the
preference was to exit thei~=} individuals who had been assessed as ‘red’ andthat mM
otherwise there was support from the Board as to the proposed approach to the
category two population generally;
ACTION NM advised that there were also approximately mployees who were
not employed in the Remediation Unit who held roles in the past related to
activities covered by the Inquiry which may come into scope and be constituted as
‘red’ for exactly the same reason as the:zJin the Remediation Unit. The Chair
requested that once analysis had been undertaken that the team return to the
Board and explain the profile further. EJ queried the criteria for a ‘red’
classification. NM advised that the only reason for a RAG rating of red was that
between 1999 and 2017 the employee undertook a role the subject of the Inquiry
and again reiterated that there were no allegations of wrongdoing in respect of
this group. LG shared her preference that employees who were within the wider
business who were found to be ‘red’ be offered voluntary redundancy. SI agreed
with LG and the Chair confirmed that there were no objections to this approach;
NM
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Discussion moved to category 3 and the proposed approaches. NM spoke to the
recommendation to continue through the case reviews under Phoenix including
escalating into the misconduct process where appropriate. The Chair queried how
investigations could be continued at this time in relation to this population when
the Inquiry was ongoing and noted the concern discussed in relation to category 1
in this regard. NM replied that the distinction here was that the population were
not being investigated as witnesses. The Chair replied that he thought there was a
consistency point and the recommendation outlined would make communications
more difficult and undermine the approach of not investigating others until the
end of the Inquiry. NR took the point. LG queried whether some members of this
group were categorised as ‘red’. NM replied that there was one individual so far
although KM noted that there could be others; _
Information arising from the Inquiry in respect oft
discussed. SI shared his view as t liremaining in her current post. The
Chair shared his expectation that these employees would come out of the business
at this time, if the material warranted that. SI agreed with this as did OW and it
was confirmed to LG that! coming out of the business was presently
being considered. OW confirmed that if there were issues employees would be
taken out of the business until the end of the Inquiry;
ACTION The Chair turned to discussing next steps and the need for a front footed
message explaining the approach. NR advised that would not be straightforward
to construct however undertook to revert with a draft for the Board’s
consideration within the next day. The Chair noted the pieces of correspondence
where replies on this issue were needed and that these might offer vehicles for
communication. The Chair emphasised the desire of the Board for action and
communication. SI offered his support to review the draft communication to
Postmasters and advised that different content might be required for the different
stakeholder groups;
In relation to the materials emerging at the Inquiry where employees had been
named, AB queried whether any conversations had been had as to their
expectations; these employees could wish to leave. OW took the point however
shared his concern of the perception if subsequent evidence of misconduct was
found and we had entered settlement agreements with these employees. AB
pointed out that claw back could be considered.
NR/CC
The Board RESOLVED that:
(i)
(ii)
(iii)
The proposed approach as set out in the paper in relation to category 1
employees be and is hereby APPROVED;
Subject to the Board being provided with details of and being satisfied as to
costs and funding, the proposed approach as set out in the paper in relation to
category 2 employees be and is hereby APPROVED save that the~employees
with the red categorisation would in preference exit the business rather than
be re-deployed; and
The proposed approach as set out in the paper in relation to category 3
employees be and is hereby APPROVED however with any investigations
conducted following the conclusion of the Inquiry.
NW, KW and CC left the meeting at 18:12.
Draft Grant Thornton Governance Report
CP joined the meeting at 18:13. Key discussion points were as follows:
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The Chair shared his view that there was some scope for adjustments in the report
which remained in draft, including taking out some of the detail in the report and
refining the recommendations;
When asked by the Chair, no Board members indicated that they disagreed with
the findings in the draft report;
© The Chair provided his further comments on the draft report being that the
assessment of compliance with the UK Corporate Governance Code was not
helpful including the presentation of this and that inclusion of the alternative
governance model was similarly not helpful. Also the draft report was now
outdated in many respects. The Chair advised he was aware that some board
members had some comments on the committee sections of the draft report;
* EJ queried whether the Board was clear as to the objectives of the draft report.
The Chair advised that he thought the conclusions reached in the draft report were
helpful and correct however the Board needed to consider the best way to make
sure the contents of draft report were helpful particularly for key stakeholders
including the Shareholder and Postmasters;
The Chair asked CP for her views. CP advised that she thought it was right to
separate the findings from the recommendations; the Board could disagree with
the recommendations however it was important that the Board determined the
approach and established the recommendations they supported and those they
did not along with a clear rationale as to why. The Chair shared his view that the
recommendations needed to be properly aired with the Board; some of the
recommendations were unrealistic while others were good;
LG advised that she would send her comments on the draft report to the Chair. LG
queried the evidential basis of some sections of the draft report and shared her
view that the draft report could be more practical. LG agreed that the alternative
structure section could be removed from the draft report and suggested instead a
recommendation be inserted for the Company to speak to the Shareholder in
respect of this point. LG also thought GT had not taken the context in certain parts
of the report, given the corporate governance model applied to the Company was
common across government;
¢ SJadvised that he agreed with LG’s comments. Additionally SJ noted that some of
the recommendations were being attended to already, however the draft report
did not acknowledge this;
© ACTION The Chair asked Board members to provide their thoughts on the draft
report in a note to the Chair and asked SJ to cover the sections in the draft report —_ Board
on ARC and AB for the Remuneration Committee and the Chair would ask AD todo I= Members.
the same for IC. The Chair asked that CP and RS then provide the feedback to GT.
CP noted this however expressed concern that this approach would mean that the
actions in the draft report would not be progressed. The Chair shared his view
that the feedback to GT would likely be very specific and more around
presentation, given that the Board did not disagree with the findings;
© ACTION AB advised that she was not quite clear on the history in respect of how
and why the report was commissioned. CP advised that a note could be prepared —cp/rs
for the Board in respect of this, however noted that the former Chair had provided
support for the activity. LG left the meeting at 18:30.
4. Any Other Business
The Chair advised that he was hopeful of an announcement being made very soon in
respect of the Shareholder’s selection of an Interim Chair. Discussion followed as to
potential interactions with the Interim Chair ahead of formal appointment.
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There being no other business the Chair declared the meeting closed at 18:34.
Date of next scheduled meeting
4 June 2024 11:15 — 17:00.
Senior Independent Director
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1. I Any Other Business Further consideration to be given to All Open
‘transitional’ support to departing Postmaster
Non-Executive Directors.
L 2. Minutes and Mi Project Boland: the Board asked for an update I Kathryn Sherratt Open
Arising note.
b): Project Boland
3. 5.1 FY2024/25 Business Discussion on revenue generation/cost Kathryn Sherratt TBC Open
Pla reduction plans (the art of the possible) to come
Revenue generation/cost back to the Board.
saving proposals
Ongoing Actions
Action I MINUTE REFERENCE ACTION ACTION OWNER I DUE DATE STATUS )PEN/
4.
Transforming Technology:
Horizon Replacement
Update
+ BT queried how accurate the costs estimated
I EJ noted that stamps could be printed on SSKsI
for cash counts in branch at the time of NBIT
migration were and what analysis had been
undertaken. ZM advised that further analysis
could be undertaken.
at present and shared his view that some sort
of automation for selling stamps by way of
the Postmaster printing these as required
would be the way forward. ZM thought this
Zdravke- Mladenov/
Melanie Park
(Chris Brocklesby/Kelly
Goodwin
could be achieved subject to contractual
January
December 2024
Cost Estimates for NBIT Transitio
14/09/2023: This action is in progress.
12/10/2023: This action remains in progress.
It’s worth reflecting that the cash count
process is being pushed out 12+ months
under the new timelines, thus giving a lot
more time to respond to this query. Given
that, changing the due date to just ‘2024’
might make sense.
‘Ongoing
These actions
will all be
addressed
under the
‘SPMP/
NBIT
development-
they go to
transition
assurance
scope,
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
Open Actions 2.3
Action I MINUTE REFERENCE ACTION ACTION OWNER I DUE DATE STATUS PEN/
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
arrangements and undertook to come back
on this point with options.
The Chair asked that ZM meet with EJ and SI
to assess whether there were any other itemsI
within the NBIT proposed product mix that
could potentially be removed.
14/11/2023: An action update will be
provided in December 2024 on cash counts
if/ when they have been completed.
Stamps:
14/09/2023: Similarly, to the above (action 7.
Transforming Technology: Horizon
Replacement Update
¢), as part of the next NBIT scope discussion
with the Board, the team will offer options
to the stamp stock management.
12/10/2023: This action remains in progress.
11/01/2024: The action remains in progress
and will only be addressed later in 2024, as
part of the wider scope review for NBIT.
19/02/2024: The question of stamps is likely
going to be part of the wider NBIT
discussions, which means this action won't
be resolved until later in the year.
25/03/2024: OW noted on the prospect of
Postmasters printing stamps that this was a
matter for Royal Mail, and while it had
declined to take the proposition forward to
date, POL would continue to try and engage
them on the matter.
NBIT Scope:
14/09/2023: The NBIT team plans to have
the engagement with EJ and SI on this topic
in late October/early November, after the
NBIT Diagnostic is completed. The results
will be reported to the Board in December
2023/January 2024.
12/10/2023: Propose to move this action to
Kelly Goodwin. It’s worth reflecting that the
timeline for developing other products has
moved out indefinitely, thus giving a lot
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
more time to respond to this query. Given
that, changing the due date to just ‘2024’
might make sense.
14/11/2023: No further update.
08/03/2024: As an update we are now
reviewing scope options as outlined in the
new funding request with the Commercial
and Retail teams and commit to presenting
the conclusions to Saf and Elliot in June
2024.
May 2024: SPMP Update (spend and
delivery to date) will be submitted to SEG on
20" May and to Board on 04" June 2024.
24/06/2024: Meeting with Kelly Goodwin,
Saf Ismail and Elliot Jacobs to discuss NBIT
proposed product mix.
POL00448624
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11.3 RMU Update
b)
Restorative justice meetings continued, and SR
would be returning to Board to request
additional funding for a wider restorative justice
program.
Simon Recaldin/
Evelyn Hocking
June 2024
20/10/2023: Paper on next steps and funding
Fequest being presented to HMC on 24th
October for current RJ process and wider
program plan being considered.
I19/01/2024: Kevin Hollinrake confirmed in a
etter of 5th January 2024, that Government
ould not fund Restorative Justice meetings.
RU are considering how the RJ process should
continue across POL and will present to GE in
February on proposals and next steps.
/11/03/2024: RJ meetings continue to be held,
predominantly by the RU Director, and
assisted by SEG colleagues when possible.
[The current uncertainty surrounding the
ongoing involvement of POL in the
Remediation process, alongside other
Government decisions that are awaited,
mean that decisions on the future shape and
Ongoing
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junding of RJ cannot be made at this time. RU
ill report to the next Board.
24/05/2024: The the funding arrangements
fare not yet finalised. The costs of RJ are
currently being carried by RU as BAU spend
and not DBT funded spend. The estimated
junding requirement for the current year is
1 This spend is currently being tracked
hrough our Finance & Funding Forum for
Fesolution.
Restorative Justice Meetings continue to be
held, by the RU Director and assisted by SEG
kolleagues (in addition to NR, MR, OW, CP
and KS have now all attended, with others
planned across July and August). To 24/5/24,
53 meetings have now been held (which POL
hhas funded, Ito date, as exceptional
spend via the OC Programme, albeit not
accepted by DBT). There is still uncertainty
around the ongoing involvement of POL in
he remediation process, which means
Kecisions on the shape (meetings, and
possible other initiatives) and long term
junding still cannot be made at this time.
Additionally, we have sought an update from
he Inquiry on their Legacy Project initiative,
and they have advised that they will continue
10 ‘shape the legacy project in the coming
months’. Finance are sighted on the
estimated costs of the meetings currently
Fequested and planned to August24
remainder to be funded from pending
alternative agreement from Central Finance).
e would suggest that considerations for
jurther activity and a wider restorative justice
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2.3
rogramme, in the long term this should be
wned, reside (and be funded) outside of RU.
4, CEO Report BG advised that he had spoken to N O'Sullivan IOwen Woodley/ Neill In progress. Update in action log to be ‘Ongoing
b): Volume discounts last night and they had discussed whether O'Sullivan provided for January Board.
Postmasters could be provided with an ability to
offer customers a discount in cases of volume.
OW advised that he would pick up this point
with N O'Sullivan. offered by PMs for non-RM and RM
products.
ii) We are also answering the Q raised at
Board whether discounts can be offered
by PMs on RM products.
POL currently lacks the functionality to offer]
discounts to specific customer groups,
necessitating technical development. The
next steps involve defining and developing a
potential ‘Loyalty scheme programme!
tailored to incentivise and reward Drop &
Go/ High-Volume customers.
08/03/2024: No further update available
currently. D&G still under review.
21/05/2024: A Drop & Go ‘Discovery’
project has now been approved by
Investment Approvals & Delivery Group
(1ADG) and will begin over the next week or
so. Variable pricing is one of the elements
that will be analyzed and considered as part
of this exercise to establish the next stage
of Drop & Go improvement and investment.
19/01/2024: Two parts to this answer:
i) As part of the development of D&G we
are considering how/if discounts can be
7. 10.2 Post Office Brand The Chairman noted that the online aggregator [Owen Woodley/Cheis 15/11/2023: The Digital Customer Channels I Ongoing
could assist with attracting the younger Brocklesby/ Neill (CX) have just delivered the Mails Online
generation. SM agreed and noted that the ‘I O’Sullivan/ Laura platform and are finalising build on new
establishment of the online aggregator as an _IJoseph Travel App. The Customer Experience Team
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
app could assist. Sl agreed. OW advised that
this would need to be costed and funds found.
Page 6 of 8
will co-ordinate with Commercial on costs
and plan.
14/12/2023: Digital have provided a
breakdown of options & recommendations
to the Mails team for consideration. Neill
and Owen to determine timings and next
steps once they have had an opportunity to
review.
08/03/2024: No further update. Under
review and consolidation with other Mails
initiatives.
14/05/2024: No further update from CX at
this stage. The Digital team have provided anI
initial cost summary view to the Mails team
for consideration. The action sits with
Commercial in terms of investment decision
and.ntiotitisatian... 7
IRRELEVANT
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
Action I MINUTE REFERENCE ACTION ACTION OWNER I DUE DATE STATUS OPEN/ 2.3
No. (ONGOING
8. 3. CEO Report = The Board noted the duty of care owed by I Karen McEwan/ Tracy 15/03/2024: This is an ongoing action and I Ongoing
a): Duty of Care to POL and EJ emphasised the importance of I_I Marshall /Martin something that we will continue to measure
Postmasters and Project ensuring that relevant guidance and Hopcroft once new initiatives are implemented.
Rosebow! support materials were available to
Postmasters, noting the need to provide
that in hard copy, as well as through
electronic means, such as Branch Hub.
— AD asked about how success and outcomes
would be measured and TM noted that it
would be important to be able to assess if
processes had been deployed and utilised
as intended; the means to track these
measures would need to be in place. TM
noted that Postmaster feedback would
continue to provide an important
qualitative understanding.
9. People Strategy: Milestone plan to be shared with the Board, Karen McEwan 15/05/2024: The milestone plan for 24/25 I Ongoing
Plan and measures once finalised, and periodic updates on progress will be finalised and reviewed over June by
to be tabled. the new Head of People Strategy, Planning
and Governance.
10. 2. Minutes and Matters 2. Minutes and Matters Arising - 25 March 2024! Chris Brocklesby 15/05/2024: The project team are managing I Ongoing
Arising Action on CSS and WiFi access: SI noted his the CSS timeline closely to the mandated
a): CSS and WiFi Access disappointment that it was not proposed to end date of March 2025 and do not
provide WiFi access for Postmasters as part of currently have the capacity to design the
the CSS conversion in branches; LG suggested network segmentation and security
that an option to allow Postmasters to opt in to requirements necessary for a Postmaster
cover the costs should be explored. wifi solution. This can be undertaken once
all branches have been converted — when
we could explore the possibility of defraying
the incremental costs and ask Postmasters
to opt in and charge them for the service.
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Post Office Limited Board Actions as at 24.05.2024 [Open and Ongoing Actions]
Costs involved will depend on the number
opting in. For example, if 5000 Postmasters
wanted the service then the price would be
an upfront fee of £80 and an annual charge
of £140.
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11.
8.4 Second Device — Interim
Business Case and
Drawdown request
Roadmap of possible/planned branch
technology to be developed and shared with the
Bard.
Chris Brocklesby/
Simon Oldnall
17/05/2024: A short paper to cover off the
action will be prepared for the Monthly SEG
on 26th June and Board on 09th July.
Ongoing
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Post Office Limited Board Actions as at 23.05.2024 [Actions marked for closure]
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Action
MINUTE REFERENCE
4. CEO Report
c): International mail
ACTION
EJ noted the diminished levels of international
mail and queried the possibility of customs
paperwork being completed ahead of customers
coming into branch. OW advised that he would
pick this up with N O'Sullivan.
ACTION OWNER
Owen Woodley/ Neill
O'Sullivan
DUE DATE
STATUS
In progress. Update in action log to be
provided for January Board.
19/01/2024: Phase 3 of International
Customs Data Capture (ICDC) includes the
ability to pre-populate customs information
online for Royal Mail international services,
to allow a quick transaction in branch via
transfer of data to Horizon via a QR code.
This functionality will also be integrated on
the Drop & Go online manifest. The next
phase of development of ICDC will be making
it a multicarrier carrier solution.
Given customs information only make up
some of the transaction, we'll be exploring
the functionality to start a transaction online
by choosing a service, and completing all the
information needed, so that all that needs to
happen in branch is payment. This
functionality would be more profitable for
Postmasters as opposed to customers buying
postage online.
08/03/2024: Looking further forward we are
exploring how to offer the ‘omni-channel
experience’ beyond solely the customs
details which offers particularly exciting
opportunities for repeat customers
(especially in Drop & Go).
26/04/2024: ICDC Online was launched on
the 26th March - includes the ability to pre-
populate customs information online for
Royal Mail international services. This
To close
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functionality will also be integrated on the
Drop & Go online manifest. The next phase of
development of ICDC will be making it a
multicarrier carrier solution.
Volumes are increasing week-on-week.
Each one of these saves the branch
performing the data capture, and hence
saves time in branch for clerks and customers
~ to the tune of 2-3minutes per transaction.
21/05/2024: We continue to progress
towards offering ‘omni-channel’ journeys for
all our Mails customers and expect the next
stage to be through Drop & Go. This is
currently expected to be the top priority
investment that follows from the recently
IADG approved ‘D&G Discovery’.
5.1 Financial Performance
Report
a)
OW advised that details could be provided to the
Board setting out anticipated categories of cost
savings for FY24/25. LG advised that this would
be helpful as LG was interested to see whether all
cost savings that could be made without
investment had been taken out.
Kathryn Sherratt
18/11/2023: Action in progress. Verbal
update can be provided at the Board meeting
on 28/11/2023 as material is being prepared
for the meeting with the Minister on
5/12/2023 to address this topic.
22/01/2024: The first view of the business
plan will be presented to February Board
which shall provide an update on this.
25/03/2024: Addressed in the final
presentation of the 24-25 Business plan.
To close
9.1 Disclosure of Evidence toI
Support Police
Investigations
BT suggested that it could be valuable for
Postmasters to look at the policies and process in
place and perhaps for a mock case to be run
under these. LG suggested that the Postmaster
director could participate.
Ben Foat/John
Bartlett/ Sarah Gray
11/12/2023: John is drafting a new policy to
incorporate two existing policies and some
guidance which will include proposing a new
approach to handling the newest form of
Horizon data. Aiming to get this to Board in
January 2024.
11/01/2024: Disclosure of Evidence to
Support Police Investigations will be on the
Board agenda for 25** March 2024.
To close
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EO Report
b):Bank engagement
SI shared his view that awareness in relation to
the Company's relationship with Monzo needed
to be increased. AB queried whether there were
some targeted communications that could be
undertaken for example with the universities.
OW advised that he would reflect on this.
Owen Woodley
08/03/2024: Priority has been on Inquiry
matters, including drafting a statement for
the Inquiry. The report will be submitted to
the Monthly SEG Meeting on 20" May and
Board meeting on 04" June instead.
19/01/2024: Oni reve} we are confi
the exact go-live date with the bank and
suppliers as we rely on them to implement
before we can go-live. This looks likely to be
the end of March due to some delays. We areI
starting discussions with the bank on launch
communications and aim to maximise the
opportunity (subject to the banks agreement
to do so).
19/01/2024 onwards: With the recent media
attention following the ITV drama we are
waiting to time our more detailed discussions
on this topic as we risk them not wanting to
be associated with the brand in the current
environmen
sc.evart has now gone live and.
made an excellent start. We conducte
Marketing are providing some material for
branch to advertise the launch of the service
locally.
To close
11.2 Ethos
Programme/Executive
Accountabilities
OW noted work in relation to executive
accountabilities was on-going and advised that
this would be reported back on to the Board.
Owen Woodley
19/01/2024: The work is due to complete in
March, and so the Board will need to be
updated post.
To close
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Post Office Limited Board Actions as at 23.05.2024 [Actions marked for closure]
30/01/2024: NomCo approved the CEO Direct
Report changes and noted the newly
established SEG.
March 2024: 3-year People Plan and People
Structure discussed at Board meeting on 01
March 2024.
6. 1. Actions LG queried the status of Action 32 on capturing IOwen Woodley June 2024 12/03/2024: Plans for developing a central To close
b) Branch layouts branch information on things like layout and any branch repository paper is being taken to the
lessons learned from previous initiatives, for 13th March SEG meeting by Martin Roberts
reference in support of efficient and effective and Pete Marsh and the 25th March POL
future works/initiatives, not least NBIT. OW. Board meeting.
noted the update may not have captured the Following an initial meeting on 7th March led
work in hand to maintain a central repository, by Martin Roberts and Chris Brocklesby,
but he would follow up with relevant colleagues members of the IT, SPM, and Retail teams
so a more meaningful update could be provided will have a follow up meeting within the next
‘on what was being done and/or what needed to 4 weeks to discuss the proposed
be done. improvements in more detail, assign an
accountable owner, understand resource and
budget implications and agree broad
timelines.
A more detailed plan, scope and timelines
will be presented back to SEG in June 2024 to
include resource and tooling requirements in
more detail.
25/03/2024: Paper on Branch Layouts and
plans for a central repository tabled at Board
‘on 25" March 2024.
7. 1. Actions AD noted the Board’s interest in better Owen Woodley/ May 2024 17/05/2024: Teach in sessions now held with I To close
c): Digital strategy understanding POL’s digital strategy in the Secretariat NEDs on 07/05/2024 and 14/05/2024.
medium to longer term (including how that May 2024: The consensus view is that we’ve
supported the commercial and retail plans and discharged the original action via the 2x
strategies going forward); AD did not think that board engagement sessions. The team plan
Action 38 necessarily captured that interest; OW to return to Board in the early Autumn once
agreed that insufficient time had been allocated we have a clearer understanding of the
to Board discussion on the topic and he would roadmap to delivery.
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arrange a ‘teach-in’ session for Board members.
8.
6.1 Banking Framework 4
b)
FY24/25 Budget and Product!
Profitability
EJ noted that further thought would need to be.
given to the return on investment and offered to
speak to RB offline.
Budget and plans to be updated in the light of
the Board feedback.
Elliot Jacobs/ Ross
Borkett
Kathryn Sherratt/ Asha
Patel/ Tim McInnes/
NEDs
25/03/2024 Board Meeting: EJ noted his offei
to support on the further work that needed
to be undertaken on BF4 and the return-on-
investment analysis; the team had yet to
follow up with him.
19/04/2024: Elliot and Ross to speak on
Friday 3rd May.
14/05/2024: Elliot and Ross met and
discussed where the team are with BF4
negotiations, and in particular automation
investment. This action can now be closed.
Addressed in the 24-25 Business plan at the
25" March Board meeting.
To close
To close
10.
FY24/25 Budget and Product]
Profitability
Board members to follow up with KS on any
other feedback/points of detail.
Kathryn Sherratt/ Asha
Patel/ Tim McInnes/
NEDs
Addressed in the 24-25 Business plan at the
25" March Board meeting.
To close
11.
People Strategy
Quantitative and qualitative measures to be
devised against which outputs and benefits could
be tracked.
Karen McEwan/
Kathryn Sherratt/ Tim
Perkins
15/05/2024: Quantative and/or qualitative
measures have been developed for all
deliverables in the 2024/25 People Plan.
There have also been headline quantitative
targets set for the 3 priorities in the Strategic
People Plan (to be achieved by the end of
FY26/27 as measured in the colleague
survey):
On Colleague Experience: eNPS above 0
(currently -25)
On Capability: People are held to account for
their performance and behaviours at Post
Office >= 70%
To close
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On Inclusion: Post Office is genuinely making
a positive effort and working towards being a
more inclusive workplace >= 80%.
12.
People Strategy
Strategic Plan to be updated to reflect the
discussion points, including to reference
Postmasters explicitly.
Karen McEwan
15/05/2024: The plan has been updated and
references to Postmasters have been
included throughout the plan. Specifically, a
golden thread has been put through the plan
that states that the ‘Great Place to Work for
all’ ambition will be ‘delivered by a People
Team set up to enable Post Office to
transform its culture and deliver for
Postmasters’.
To close
13.
People Strategy
Board discussion on cultural change to be
arranged.
Karen McEwan
15/05/2024: This is planned for the July
Board Away Day.
17/05/2024: This is likely to need to be
informed by the outputs from Phases 5&6 of
the POHIT Inquiry (as noted by BT at Remco
on 29/04/2024).
To close
14,
15.
People Strategy: Past Roles
and Project Phoenix
Any Other Business
Follow up note to be sent to the Board on the
potential outcomes from the Phoenix
investigations and the criteria against which the
different outcomes would be assessed.
An informal meeting of non-conflicted Directors
of the Board to be arranged.
Karen McEwan
Secretariat
09/02/2024: OW sent an update note to the
Board.
29/04/2024: Discussed at additional Board.
11/05/2024: KMcE sent first of regular notes
to the Board.
04/06/2024: There has been continued
dialogue with the Board on Project Phoenix
which will be covered in a Past Roles update
to the June Board.
Board call held on 06" March 2024 (not a
formal Board meeting).
To close
To close
16.
17.
Any Other Business
2. Minutes and Matters
Arising
c)
‘A Board/SEG dinner to be arranged in the coming
months, once some of the competing priorities
were resolved.
Action consolidation: the Board requested that
the action log be reviewed, including to
consolidate related actions and better
Secretariat
Secretariat
A Board/ SEG dinner has been scheduled for
4 June 2024.
Action Log has been updated: Actions have
been consolidated, and two separate action
logs created. One for open and ongoing
To close
To close
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Post Office Limited Board Actions as at 23.05.2024 [Actions marked for closure]
differentiate ‘ongoing’ actions. actions, the other for actions marked ‘to
close’.
18. 5.1 FY2024/25 Business Criteria and.process for allocating budget from _I Kathryn Sherratt June 2024 04/06/2024: On June Board agenda To close
Plan: the central {change pot to be developed
Change spend allocation and brought to the Board.
principles
19. 7. Contract Approvals In making more general observations across all I Liam Carroll/ SEG 22/04/2024: Following the November 2023 I To close
the contract requests, the Board noted that Members Board, all procurement papers for SEG and
future request should include a note on service Board are now prepared by the business
delivery performance/value add and KPls. rather than the procurement team.
Procurement will advise the business that all
procurement papers, where applicable,
include a note on service delivery
performance/value add and KPIs. This
request has also been cascaded to all SEG
members to ensure that they are aware.
20. 8.2 Fujitsu extension Note on the procurement law risks being Legal Circulated to the Board on 26 March 2024. To close
examined by external advisers to be shared with
the Board.
21. 8.2 Fujitsu extension NBIT ‘buy versus build’ analysis to be undertaken I Chris Brocklesby and I Investment Scheduled for the POL Board Investment To close
and a deep dive review to be undertaken by the ISimon Oldnall Committee - 16 I Committee on 16 May 202.
Investment Committee, May 2024
22. 8.3 SPMP Drawdown Routine reports on SPMP spend and delivery to I Kelly Goodwin/ Chris SPMP updates to Board will include spend To close
request come to each scheduled Board. Brocklesby and delivery MI — see update to June Board.
23. 9. Grant Thornton Review Draft GT Governance Review report to be shared I Rachel Scarrabelotti Circulated to the Board on 26 March 2024. To close
a) with the Board and observers.
24, 9. Grant Thornton Review Follow up Board discussion to be arranged. Secretariat April 2024 Additional Board meeting scheduled for 29 To close
b) April 2024.
25. 11.1 Group Customer Plain language review to be undertaken by Charlotte Johnson Cladvised that the next steps were a To close
Complaints Policy communications on the customer facing aspects communications plain language review.
of the policy.
26. ‘I 12.3 Sealings Report Clarification to be provided to EJ on the context I Secretariat. Completed, To close
of the Deed of Release #2243.
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POST OFFICE LIMITED
BOARD REPORT
Title: Chief Executive’s Report Meeting Date: I 4 June 2024
Author: Nick Read, Group CEO Sponsor: N/A
Input Sought: Noting
Iam pleased to welcome Nigel Railton as our new Interim Chair to lead the business through
the next 12 months. His energy and experience in retailing, governance reform and business
transformation, coupled with his direct approach will be invaluable to Post Office during what
will be a transitional period.
Following the announcement of Deputy CEO Owen Woodley’s planned departure from the
business at the end of August, I have decided to re-create a Chief Commercial Officer (CCO)
role with responsibility for all our products and propositions. I am very keen to make an internal
appointment to this role. We have lots of talented commercial individuals in the business and I
am very confident that we will find a successful candidate amongst them. I am also very pleased
to welcome Charlotte Cool as our Interim Group Director of Corporate Affairs, Communications
and Brand at this critical time, and as we navigate the coming months of the Inquiry.
With Phases 5 and 6 of the Inquiry now well under way, this continues to be an incredibly
challenging time, with a significant increase in media reporting and scrutiny. During these
combined phases, we will see 65 individuals providing evidence, including current colleagues,
politicians, senior ex-colleagues, Fujitsu employees and campaigners. I remain fully committed
to supporting the Public Inquiry so that we get to the truth of what happened, why and who
was responsible. Most importantly, I am committed to ensuring we continue to deliver redress,
in order that victims of the scandal can find some semblance of closure.
It is critically important that redress and Restorative Justice are served quickly and fairly to all
those individuals who have been affected by the Horizon Scandal, that we rebuild trust and
restore public confidence so that we can continue to fulfil our social purpose. That is why my
focus - supported by our Strategic Executive Group, our Board, our Postmasters, and our
partners - has been to continue to renew our culture and transform our business. We will shortly
be launching refreshed behaviours to the business.
As I look back on 2023/24, it has been a very difficult year, and whilst we have faced — and
continue to face —- many challenges, it is also important that we celebrate our many successes
as well. Not only did we exceed our revenue, trading profit and cost targets but we made
Progress in other areas particularly cultural change and our relationship and support for
Postmasters:
i. We held our Postmaster conferences in May and November. These are always great
opportunities to engage with our Postmaster community, where we can connect with the
issues that are important to them and have a very valuable dialogue. The subsequent
Postmaster survey, launched in the aftermath of the ITV drama, reflected the progress
1
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we have made to rebuild our relationship with Postmasters. We followed these up with a
series of listening events this year.
ii. We launched Parcels online and buy-in-branch with new partners DPD and Evri, a
first in 360 years of Post Office history. By offering multiple carriers, we are providing
our customers and Postmasters with more choice and convenience, bringing us closer to
our vision of a one-stop shop. Over the past year we have extensively extended the
number of new carrier propositions across the network from around 7k to nearly 40k.
iii. I Following the ‘Save our Cash’ campaign, we were delighted that the Financial Services
and Markets Bill, was given Royal Assent in June 2023; a huge moment for Post Office,
,-belning to shore up our role in providing access to cash. _
IRRELEVANT! the UK’s largest digital bank with over 9 million customers nationwide,
This is excellent news for our customers, who will rowbe
able to access jmssevry deposit facilities conveniently, and for our Postmasters, as it
broadens the appeal of branches across the network.
v. We have made good progress alongside our partners Cash Access UK in rolling out
Banking Hubs across the UK. Our Postmasters have really stepped up and embraced
operating all 51 of the Banking Hubs alongside their own branches. To go from single
figures to more than 50 in just over_a.vear is an amazing achievement.
vi. We signed a new contract with i
Products to be sold in branches until
Postmasters would receive fair remuneratio! , and that our costs for providing the
services were covered. It is a huge success that we will be continuing to provide these
services which are of such value to our customers and Postmasters.
vii. The National Lottery licence changed hands to Allwyn Entertainment, and we ended
our direct involvement. It was all hands-on deck to manage the transition, and we
achieved an excellent completion rate, with network feedback highlighting Postmasters’
gratitude to the field team.
viii. It has also been a challenging 12 months for NBIT. A combination of funding, leadership
and missed delivery deadlines have plagued the programme. Yet in February, we went
live with pilot release 2.0 in Aldwych, a significant capability increase from the first pilot
phase. I’m pleased to say that Release 2.1 is now live in both our Aldwych and St Johns
DMBs, and I look forward to sharing updates in the coming weeks. We also continue to
work with Postmasters on the design, build and training for the NBIT system.
ix. We continued our partnerships with charities such as BBC Children in Need and
the Trussell Trust, raising thousands of pounds, whether through charitable fundraising
or supporting donations through our branches, helping those who need our support the
most.
I recently had the pleasure of meeting with Ofcom following our response to its Call For Inputs
into the future universal postal service, to impress upon them the impact of proposed changes
on our customers, Postmasters and communities. Whilst acknowledging Royal Mail’s significant
financial sustainability concerns, we have made a strong case for introducing new measures to
improve the reliability and affordability of the postal service, which are fundamentally important
to our customers. Building a relationship with Ofcom is particularly critical in light of the
potential takeover_of. our.
_closely..includina
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Trading performance at the start of the new financial year has been mixed even beyond the
timing of Easter and shorter weeks which make year-on-year comparisons difficult. In Mails,
although we grew revenue, there was a drop-off in stamps in April due to high levels of buy-
forward ahead of the Tariff increase at the end of last year. Yet, Labels are also down against
an ambitious P1 budget. In Banking, ATVs are now stable, and we have seen double-digit
volume growth in deposits as well as good growth in withdrawals and exchange. April was a
record month for cash withdrawals and deposits, with; processed through the Post
Office network, demonstrating the growing importance of our services in providing access to
cash for customers and businesses across the UK. Customers are still coming into our branches,
they continue to value our unique proposition at the heart of communities, and our network
availability continues to exceed 11,500 branches.
We have had very strong response rates to our Colleague, Postmaster and Strategic Partner
surveys compared to previous years. The completion rates were: 86% for colleagues; 83% for
Strategic Partners; and 28% for independent Postmasters. While the results are very much
reflective of the environment we have been operating under in the past few months, this rich
data and feedback is critical to enabling our cultural change and shaping our future. We have
shared the results right away with teams across the business, and functional action plans are
being submitted by end of June.
Focus within the business is, unsurprisingly, turning to Phase 7 of the Inquiry. This will be a
critical phase for today’s Post Office. We will need to face into some extremely difficult decisions
as we have had too over the past few weeks. The strategic review announced by Nigel will no
doubt help us define the trade-offs that we must make and the uncomfortable truths that we
cannot ignore if we are to deliver a sustainable long-term vision for the business, and also one
that gives optimism and belief to our colleagues and Postmasters. The Board will no doubt need
to consider this within the context of the Grant Thornton governance review. With so many
different stakeholder groups and perspectives to consider, it is clear that we will not be able to
please everyone. However, we must do what is right, and I and the whole Strategic Executive
Group look forward to working with Nigel and the Board to address those tough choices and to
deliver a bright future for Post Office.
REPORT
Finance
FY23/24 Full Year — Draft Financial Performance —
1. Total revenue of as achieved over the full year FY23/24 which was"****""! above
budget and 3.1% growth on PY, recognising that we had an extra week of trading this
year. Much of the budget upside was largely a result of uncontrollable and unexpected
factors such as the Bol Incentive Commission, the delay in the launch of competing Royal
Mail products and the unexpected re-issuing of 700,000 expired energy vouchers - whilst
a positive impact for the year, unfortunately none of these are expected to repeat in the
FY24/25 Budget.
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2. FY23/24 Mails revenue of j!RRELEVANT; was cine) ahead of budget and overall 2.8% growth
on prior year - with the delayed launch in Royal Mail’s competing Tracked 24/48 products
temporarily benefitting Special Delivery volumes with an offsetting impact in Labels and
Acceptance; Stamp volumes continued to show resilience against the RM tariff increase
compared to expectation and in the last month of the year we saw higher volumes in both
International and Stamps as a result of a buy forward impact ahead of another tariff
increase in April.
3. The media reported positively in Q4 on the record growth in personal cash withdrawal:
indeed total Banking services revenue in FY23/24 of; saw growth of 8.4%)
ahead of budget) due to both higher deposit and withdrawal volumes. Whilst we saw
deposit limit regulations impacting average transaction values throughout the year, there
is evidence that this is flattening out and the positive trend in cash continuing into
FY24/25.
4. Conversely, we saw the negative press coverage having an adverse impact on Q4 PO
Ansurance Revenue - noting that despite this, FY23/24 revenues ai
sevaNT! Over budget and 13% growth on prior year. We saw Travel Insurance sales recover
slightly in the last month however Protection insurance sales were still lower despite media
channels being turned back on by the end of the year. This remains an area of challenge
with daily reviews of marketing and social media activity which has been significantly
paired back since the ITV Drama aired in January.
5. Stronger revenue performance across high PM Rem generating products such as Special
Delivery and Stamps as well as implementation of as banking rates, have positively
ted Variable Postmaster Remuneration with + jenerated in the year
above budget and 9% growth on prior ee accounting for 51.9% of variable
revenue (vs 49.5% in the prior year). This includes a i additional one-off payment
(~15.% of March trading which was paid out to Postmasters in April). All in all, this is a
positive and encouraging strategic outcome with the YoY decline from Labels (lower Rem
generating) being offset by other (higher Rem generating) products which have remained
stable.
6. Fixed PM Rem ot vay from
loss making and underutilised branches! I This
coupled with ongoing reviews of all fixed payments has delivered an overall reduction in
both the number of payments made, and average value of payments made year on year
and versus budget. The Rem Strategy will continue to be assessed and reviewed through
FY24/25 and beyond.
7. FY23/24 full year Staff I over budget, however, on an
underlying basis were under budget - taking into consideration year-end
adjustments, Bank Hub recharges, changing DMB budget assumptions and the unutilised
CIO salary increase provision. This underlying position was driven by the vacancies that
have been, and in some areas remain, unfilled across the business and continue to be
monitored.
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8. Based on the original construct of the J!tevant; operating cost challenge, the initial full year
view suggest we have achieved: with a gap of wmener). However, since the Remco
have approved the fungibility principles of classifying ‘genuine and intended’ savings
NT} challenge, ‘onfident that there is at least
ind intended savings to fulfil th } challenge e.g. intentionally
these results t
budget andi under prior year). This is still a draft position that is subject to post-
year end checks and the annual audit.
10. The Security Headroom (SH) position of! {IRRELEVANT at the end of March included £50m of
higher client payables than forecast - largely driven by banking deposits. This swing in
particular, highlights the susceptibility of SH to significant working capital movements
(albeit a positive impact in this instance) and supports the need to operate within the
commended SH Buffer. Looking into FY24/25, thi obs point currently forecast
the year).
FY24/25 P1 - Flash Results
11. At the time of writing, the business is currently working through the P1 performance
with prior year). Included within this, Mails revenue
budget from underperformance in Labels, driven by lower Second Class volumes and the
delay in full deployment of RM Tracked 24/48 products to June-24. However, Total Mails
revenue was 1% up YoY, with growth in non-RM carriers offsetting the decline in RM
revenues.
12. Banking services revenue of jad 9% growth year and year and was}
ahead of budget due to higher deposit volumes, a continued trend from Q4 FY23/24, as
well as higher ATVs which have stabilised across both personal and business banking.
13.
As a percentage ariable Revenue this was 49.7%, in line with budget but slightly down
on 50.3% in PY due to the exit of Lottery.
14. Staff cost and non-staff cost overhea:
of lower costs, partially offset by:
investigating these variances and thei implications, applying 2 a lens of which of these can
be ‘banked’ vs. timing differences.
15. This has translated to a soli
0.9m above budget and j "r=! above prior year.
Trading Profit, which is
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[ Commercial
Mails and Parcels
16. Total Pi Mails revenue was I IRRELEVANT } behind budget and +1% vs. PY. Trading
Profit was in line with Budget and +1% vs. PY.
17. Overall performance showed mixed results vs. an ambitious P1 budget, largely due to
front-ended stretch on Labels. We expect to see improved trading to budget for the rest
of Q1.
i. The Labels performance was impacted by delays in RM Tracked rollout as well as
lower than expected Second Class Label volumes.
ii. ISpecial Delivery saw gains from the late RM Tracked deployment, favourable price
variances, and potential volume migration from Signed For Labels after the
reduction in the compensation cover.
iii. I Pre-tariff buy-forward of Second-Class stamps in P12 was higher than normal
leading to a higher than expected drop off in post-tariff purchasing in P1.
iv. International revenue fell short of budget primarily due to lower than expected
volumes of International Priority services.
18. The launch of RM Tracked on 2 April was delayed due to the commercial risk from the
services including VAT and our commission applied ex-VAT. New commercials were
successfully negotiated with RM that enabled us to launch the service. Currently there are
138 branches live with rollout of Tracked to branches (subject to a RM workaround of
5 ing closely monitored. We are
IRRELEVANT
19. The digital ICDC solution for RM International items requiring customs data capture was
successfully launched in P1 with the roll out for Parcelforce planned in the coming months.
20. Non-Royal Mail revenue exceeded budget due to a strong PUDO performance, partially
offset by shortfalls in Buy-in-Branch. The number of live branches now stands at: Amazon
7,600, DHL 512, DPD 4,000 and Evri 2,500, with a plan to expand to a further 1,600 in
the summer. We have had positive engagement with additional carriers however these
new carriers will require additional investment and we have limited budget.
21. There is a risk that the introduction of Tracked products could cannibalise sales of Special
Delivery and Evri products in branches.
i. While Tracked 24/48 are anticipated to be popular, its impact on the overall branch
mix will only be clear after a few trading periods. The Network team, alongside
the Mails team, has carefully planned the launch, providing training and guides to
help Postmasters protect existing income and optimise new opportunities from
IRRELEVAN
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22. RM now has 700 stores live in the competing Collect+ network for drop-off and return
services, with the intention to roll out to 5,000 locations by summer. RM Click & Collect
will be rolled out in a future phase, with timing to be confirmed. RM has also gone live
with 200 parcel lockers in partnership with Quadient, with the aim to have 1,500 in place
by the end of the year.
23. After submitting our response to the Call for Inputs into the future of the USO in April, we
held a follow up meeting with Ofcom to ensure our customer and Postmaster views are
taken into consideration. Further meetings with Ofcom are being planned.
an IRRELEVANT
Cash and Banking
25. Banking had an excellent P1, generating revenues of
b
26. J
volumes benefiting from continued bank closures. falso went live in April for
deposits, averaging 27k new deposits per week fro ding start. The month-end
week in April saw the highest volume and value for deposits ever.
27. 50 Banking Hubs are now open, with a strong pipeline of openings planned this year. We
estimate 100 will be open by Christmas. We retain 100% market share for Banking Hubs.
28. The FCA has concluded its specific activity on anti-money laundering controls through the
Post Office and will continue to monitor through business-as-usual activities. Their work
has resulted in numerous improvements to bank controls, as well as the blunt deposit
limit implementations. The FCA‘s analysis is that friction has been added to the deposit
Process without materially adversely affecting customers, to make it hard to launder
through our network. While we still hear feedback from some Postmasters about
customers hitting their limits, the feedback has quietened. We continue to encourage
banks to review and adjust their limits in response to customer feedback. The FCA will
now turn its focus on the PayPoint network.
29. The banks continue to make progress in developing their deposit machine service, albeit
slowly. Lloyds and Natwest have integrated to the new service, with Barclays working on
theirs. Other banks are expected to follow but the pace is slower than expected. We
continue with the development of our own deposit ATMs but are impacted by the same
slow engagement of banks. This has picked up in the last month and we hope to baseline
plans for integration shortly.
30. The industry is focused on the upcoming implementation of the new Access to Cash
regulations which are expected to be published by the end of June and become live in
October. We are preparing for the new reporting requirements the FCA will have over us,
and engaging with LINK and the banks on how changes to our network will be notified and
addressed.
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31. BF4 negotiations will continue through this summer as the banks want more time to
consider the proposal alongside the new regulations. The banks want clarity on what Post
Affice.will_and.won't.da.to.ciionart.tham.in.maatina these.naw.culac.-This.awill facus.an-oue,
IRRELEVANT
Financial Services, International Money, and Payments
32. P1 revenue was: , +1% vs. budget and slightly (-1%) behind previous year. Trading
profit was +2% vs. budget and +6% vs. PY. r
i. Credit Cards performance was +173%
ii. Bill Payments revenue was negatively impacted by : @ [imrevevant} accounting item
which will be reversed in P2.
iii. Insurance revenue was in line with budget. A strong Travel performance was offset
by below-plan Home and Motor sales driven by product providers significantly
increasing pricing in a rapidly hardening market.
iv. Travel Money and International Money Transfer (IMT) revenues were very slightly
behind budget.
33. Home and Motor Insurance pricing continue to be a challenge.
i. Motor is likely to be addressed in coming weeks as a key panel member addresses
capacity issues.
ii. IHome is very challenging with 13.5% rate increase already deployed and another
12% expected over the balance of the calendar year, but a materially higher profit
to budget) will be a mitigating factor.
34. The branch summer Travel campaign launched on 13 May and sales are picking up as we
head towards Travel peak.
35. ‘ontract ends at the end of September and planning for the
negotiation of a renewed deal is underway.
36. The procurement process for a new Loans provider continues. An initial set of meetings
with potential raat of completed, and an Invitation To Tender (ITT) is due to be
37.
Retail & Gift Cards, Government, and Identitx Services
38. Retail & Gift Cards: P1 revenue was i" ever profit was
above budget. P1 P&L has income missing th xternal income accrual
due to the materiality threshold policy. This will be posted in P2 once the YTD value
exceeds the limit. Giftcards’ trading performance was +4% vs. budget due to positive
performance of Amazon and third-party cards (Apple, M&S and John Lewis being our top
sellers). The YoY revenue for retail and giftcards is up 5%.
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39. Government Services revenue was flat against budget in P1. While Passports’
performance was in line with budget with paper perf< ing better than digital in P1 and
+8% YoY, the DVLA perf ice was down 7% (" due to Vehicle Tax sales decline.
UKVI performance was i!RRELEvaNT! (13%) vs. budget in P1 and down 19% YoY due to changes
to visa requirements preventing students and care workers from bringing dependents to
the UK. Other Government performance closed P1 i above budget led by stronger
than expected Security Industry Authority (SIA) performance - 33% up vs budget and
29% up YoY.
40. Identity Services P1 revenue wa: below budget largely due to an 85% drop in
the Document Certification Service (DCS) volumes from The Commission on Graduates of
Foreign Nursing Schools (CGFNS International). This is as a result of Home Office changes
to care worker visa policy banning dependents from coming into the country.
41. UKVI has confirmed that it is introducing digital biometric residents permits and will cease
issuing paper permits by the end of 2024, thereby removing any need for a PO branch
service after that date. UKVI has yet to share information on the migration plan to its
digital service and the direct impact on PO income.
42. inuing positively for a new
We are looking to improve our
to mitigate ri fir
RELEVANT
43. In June we will be launching a new initiative - ‘National Check your Passport Day’, to
encourage citizens to ensure their passports are valid for summer holiday travel and to
renew them at the Post Office if not.
Postmaster & Network
Delivering our Network Strategy
44. Network coverage remains strong with 11,772 branches trading at the end of April,
including Drop & Collect (D&C). The headroom above 11,500 branches will help us
with the challenges to network numbers expected this year (as set out in the 2024/25
business plan).
45. Last year, 468 branches closed, corresponding to a rate of 4.0% which was in line with
2019/20 and 2020/21, making the intervening years outliers. Churn rate in commercial
branches was at 3.4%, compared to 5.4% for loss-making branches (7.9% churn rate
within traditional branches).
46. We ended FY23/24 with: high risk notices to leave (the same number as the prior
year). “Financial Reasons” remain the greatest driver of churn. The number of leavers
“Selling my business - not acquiring a further Post Office” more than doubled YoY,
reflective of a particularly challenging general retail market.
47. Our continuous improvement programme to address loss-making franchise branches has
delivered nnualised benefits to date.
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48. Staff announcements on the proposed closures of Manchester and Eccleston Street DMBs
took place on 30 April, with closures due in August 2024. Public consultations are taking
place between 1 May and 12 June. To date we have received 96 responses to the public
consultation in Eccleston St and 12 in Manchester. Local MPs were also briefed and adverts
for self-funded Locals in both areas are now live on “Run a Post Office” website.
49. SEG have approved an additiona ‘unding for two proposed closures and one offsite
franchise in principle. The SEG al: ed the question of bringing forward Inverness due
to the high cost of maintaining the roof in line with health and safety requirements.
Hard to Place
50. The deadline for potential new applicants closed on 31 March (extended from 30
September 2023).
i. Out of the 69 Hard to Place (HTP) branches, we have replacements in onboarding
for 38 branches, and 27 branches without a current solution. The remaining four
branches are currently in process with a potential solution.
ii. Of the 27 branches without a solution, 12 have already confirmed the date they
would like to leave with the 12-months payment and the other 15 PMs are still
deciding.
iii. The NFSP is continuing to push for a change to the scheme rules, in particular
extending the deadline of 31 March and increasing the payment for branches who
leave without a replacement. We should expect continued media and stakeholder
attention on this topic as the NFSP intensify their lobbying activities over the
month ahead. Based on the discussion in November we assume the Board would
not wish to revisit these decisions.
Remuneration
51. Remuneration for April trading is expected to bi
last year, but the underlying position excluding Lottery is
ri, down £0.7m vs. the same period
«ri higher.
52. We estimate that Postmasters across the network are now earning i'm
Lottery.
p.a. more from
53. Postmasters are now able to view all their data for the forthcoming Operational Excellence
Incentive (OEI) on Branch Hub. Over the last two weeks we have also held engagement
sessions with most of our strategic partners to launch OEI. We will be setting up an OEI
disputes panel in advance of August launch, consisting of two Postmasters and two POL
representatives.
Central Operations
54. The 2024/25 Air Traffic Control plan has been checked against the Business Plan and
baselined at Retail Committee and will now be circulated to the business for reference.
55. Demand into BSC was 5% under forecast. Performance remained strong throughout P1
with 81.8% of calls answered within 60 seconds (target increased from 70% to 75%) and
Postmasters waiting on average 51 seconds to speak with a member of the team.
56. Open reconciling cases are at their lowest level since reporting commenced in P1 2023/24.
Volumes reduced 12% on prior period to 1,354, 61% lower than P1 last year and 25%
below target.
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57. Investigation case resolution moved closer to target in P1 with 65% of resolved cases
closed within 20 working days (target 70%). Open cases increased 29% period on period,
rising to 1,032 (target 500) at period end. This is due to a change in measurement and
process. The new process is still in its infancy and will be constantly reviewed to ensure it
is working effectively for all. As a result, the number of cases awaiting triage fell 82% vs.
P12 to 61 open cases.
Postmaster Engagement
58. The Postmaster NED application process has now closed. 25 Postmaster applications which
are being reviewed ahead of the next stage with Green Park.
59. Two very successful listening groups were held in London and Leeds, with c. 60
Postmasters asking direct questions to Me, Owen and other senior leaders, covering the
broad topics of: Remuneration; PUDO; Postmaster engagement and inclusion in decision
making/change management; network structure and models. Plans are in place for further
localised events across the country over the next few months.
60. The annual Postmaster Survey results received with 1,917 completed surveys (our best
response rate yet at 28% of Postmasters). Two key KPI’s measured, with ‘Top 2’ box
scores (from a range of 1-7):
i. Relationship 22% (up 3% YoY)
ii. Support 29% (up 5% YoY)
61. The contract reform project is underway to update the wording in contracts.
Retail Field Teams
62. During April, the retail field team completed a total 4,025 branch visits, made up of 2,816
Commercial Excellence visits and 1,209 Operational Excellence visits.
i. Commercial Excellence visits have focused on Mails, maximising the ‘Buy in
Branch’ opportunity, and making sure that we are well set up to trade the travel
market.
ii. Operational Excellence visits have continued to be driven by NORM data,
supporting branches with effective cash management, transaction corrections and
with review and dispute usage. The field team have also supported the launch of
the Operational Excellence incentive with Postmasters whilst on visits.
63. In March we held three team events (Area Managers and Strategic Partnerships team,
DMB Branch Managers, Operations teams) to ensure that all teams are well set up to
deliver on our plans for 2024/25. The events focused on upskilling our teams on key
commercial and operational areas, particularly in mails and included sessions focused on
personal development. Overall, feedback was positive from attendees.
64. We have launched a new tool for use by all field teams ‘Branch on a Page’. This is our first
step towards simplifying our approach to branch visits and consolidating a number of
reports into one place, providing a 360 view of a branch. The first version includes
operational excellence data, with further development underway to bring in travel,
banking and mails reporting.
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65. We launched Tracked 24/48 into our DMB estate on 23 April, then into Rymans and a
small number of independent branches on 30 April. We plan to launch this into the rest of
the network in two phases in May and June.
66. Perfect day on 14'" May saw a 121% increase in participation from colleagues. This
remains a great opportunity to engage Postmasters and assess the impact of the Travel
summer campaign and marketing collateral.
Strategic Partnerships (SPs)
67. P1 finished +1% vs. target and +3% YoY. Sessions finished +4% YoY supported by the
opening of 8,818 PUDO access points last year, bringing new customers into our partner
branches. P1 trading REM came through +2% YoY, excluding Lottery.
68. Our annual Strategic Partner Engagement Survey ran in March and delivered another set
of excellent results. All metrics improved YoY with overall engagement improving to 4.2/5
and our partners rated the engagement they receive from Post Office as better than other
partners they work with scoring at 3.9/5 (+0.5 YoY). This is an outstanding result given
the backdrop of the Inquiry and related media and demonstrates the strength of the
relationships that have been built with our partners over the past year.
69. Our quarterly partner forum was held in April, providing the opportunity to update partners
on Post Office full year results, mails developments and travel opportunities for the peak
travel season. For the first time we introduced a ‘spotlight’ on a partner following
engagement survey feedback. The updates were well received, with above average
attendance across all our key partners and positive feedback on the content and
transparency from the presenters.
70. Following the launch of the Op Ex incentive as part of the REM announcement, training
sessions with all partners have been completed, enabling them to maximise the
opportunity to achieve a full REM payout from September.
oT and Chain
Weekly average of cash inflows
above the 2023/24 average of jinnetevanry/Week.
Yweek, indicating an upward trend and
72. YTD 100% of available deposits were processed on Day A in cash centres, ahead of the
95% target. Productivity in cash centres continues to improve with P1 at 15.32
pouches/hour, above the average for last year of 13.7/hour.
73. CIT achieved QofS of 98.61% in P1, ahead of the 95% target and last year’s performance.
74. Bristol Cash Management Call Centre grade of service was 72.68% vs. a target of 70%
and customer satisfaction was 86.67% for the period.
75. We received 17 Complaints in P1, down from last period, with no “Staff Attitude”
complaints for the period.
76. We had 36 security incidents in P1, up by 14 YoY. There were five successful robberies
(same as last period) and 16 successful burglaries (up eight from P12).
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77. Project Darwin (Swindon stock outsource) has moved from green to amber owing to tight
IT testing timelines as a result of project delays. However, the first leavers have exited
and the programme is in flight.
Customer Experience
78. On 13 May we launched our new summer travel marketing campaign “Get Holiday Ready”.
Alongside branch materials, we are raising awareness with customers through press and
radio (launched on 27 April), supported by social and digital media over the summer
months.
79. We launched the #SocialMasters social media advocacy programme at the start of April
to replace “We are Post Office”. In April we saw a 46% increase in Postmasters signing up
(from 150 in March to 219 in April), of which 203 were active users. We have an extensive
engagement plan in place, encouraging more branches to get involved and use the
resource.
80. We are continuing the consolidation of insurance contact centres.
[ Strategy & Transformation
DBT Funding
81. Discussions with DBT on Funding for SPMP are ongoing. Having submitted a Programme
Business Case in mid-March in line with guidance agreed with DBT in December 2023, the
request was given a Red rating by DBT “keyholder” officials. Two assurance reports were
commissioned from the Infrastructure Projects Authority (IPA) and Public Digital and both
have reported; the IPA have also assigned a Red rating and the Public Digital report has
no rating though together they make a total of 28 recommendations. The DBT Investment
Committee - a key decision point prior to HMT approval - was unable to make a decision,
deferring approval to the PermSec. We understand the PermSec has requested that POL
Prepares an action plan for both the IPA and Public Digital reports before he agrees to the
Programme Business Case being submitted to HMT. This makes securing funding before
current approvals expire at end-June now impossible and so we are working with DBT on
a way forward to ensure already approved spend for later in FY24/25 can be used on SPMP
while discussions are continuing.
82. While this resolves an immediate pressure, it loads significant risk onto SPMP which, until
funding visibility is secure, cannot re-engage and ramp up activity in line with the plans
submitted to DBT. The more time passes, the less deliverable the plan we submitted to
DBT for approval becomes. Finally, it is clear that DBT are unsighted on the process we
must now follow to secure an approval and while they are being supportive / collaborative,
it is particularly challenging that they seem to be working out what the process looks like
“live”. It is worth noting that both the IPA and Public Digital recommend proceeding with
Horizon Replacement since not proceeding presents POL with far greater risk and our
current pace of progress is not aligned to this position.
Strategic Review
83. Following Nigel’s appointment earlier this month a Strategic Review for POL is being stood
up and is expected to commence work in very early June. Further information on this
review will be covered under a separate Board agenda item. The current plan is for it to
report in three phases, in late June / early July, in late July / early August and in late
August / early September. The intent is for the work to be developing in time for the
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submission of witness statements to the POHIT Inquiry for Phase 7 and to be reporting
before the start of this phase. The second phase of DBT’s policy review with Grant
Thornton is ongoing, and we expect that POL’s Strategic Review will be a complement to
this.
Change Spend
84. P1 change spend for active projects was
Budget, with the variance mainly due
contracts. Of th variance to budget, I» im relates to Optimism Bias and
Indexation contingency amounts which were in budget (per HMT business case
requirements) but were not utilised, and the remainder is predominantly driven by delays
or rephasing of spend.
[Inquiry
Inquiry Phases
85. Phases 5 and 6 commenced on Tuesday 9 April and focus on the critical issues of
governance, culture, ethics, procedural issues and ‘who knew what when’. Currently three
weeks in, there has been some slippage to the Inquiry's timetable.
86. The Inquiry team continue to focus on Phase 7. The Board will be invited to sign off the
Proposed approach on 4 June.
87. The POL Inquiry team are anticipating that the Rule 9 for the corporate statement will be
received in June, with submission to the Inquiry in July. A paper will be prepared for the
4 June Board to seek any decisions required for this, engaging stakeholders outside of the
meeting as necessary to help facilitate this.
Disclosure Remediation
88. POL's approach to disclosure has matured since previous Phases; our most recent
productions to the Inquiry have stripped out all exact and near duplicate documents, which
reduces the volume of information being disclosed to the Inquiry significantly.
89. Residual challenges remain with the large number of documents which are still being
produced through the remediation of issues identified in 2023, as well as more discrete
issues relating to documents relevant to Phase 5 and 6 witnesses. The Inquiry are applying
a critical lens to any disclosure issues.
Data and Disclosure
90. The Inquiry Team has completed POL’s e-Data assurance review which, combined with
the previous hard copy data and e-Media reviews provides POL with a high level of
confidence and understanding of its Data Universe.
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91. The recently concluded workspace consolidation project delivers a range of benefits
including reduced duplication and quicker, easier, and more effective searching of data
both for the Inquiry and, in the future, for other business as usual purposes.
Third party suppliers
92. The Inquiry Team continues to engage with ISC on the strategy to deploy with each of our
key 3rd party suppliers (HSF, KPMG and P&P) in relation to costs associated with disclosure
errors.
Media and Communications
93. Media interest in the Inquiry remains high, with live commentary running almost daily.
The Inquiry team is working closely with Corp Affairs to agree lines to take in advance and
separately to support rapid responses, where coverage is inaccurate.
[ Remediation Matters Unit (RMU)
Strategic issues
94. The key strategic issues are;
i. All permanent colleagues in RU, excluding the RU Legal Team, have this week
been asked to complete a ‘preference letter’ to assist in understanding the appetite
for redeployment or Voluntary Redundancy, in order to better understand how RU
reorganises to ensure redress can be paid to Postmasters as quickly as possible.
ii. RU continue to assist MoJ by providing responses to data requests relating to the
Bill. The most pressing request relates to PM employment start and end dates,
which the MOJ have requested to be provided within a week (an extremely tight
timescale).
iii. A revised methodology to include P&A frauds and other similar offences within the
number of pre-Horizon investigations, prosecutions and convictions, has been
agreed. This decision will affect the outcome of any comparison drawn between
pre-Horizon and post-Horizon conviction figures.
Overturned Convictions
95. As at 8 May, OC comprised 103 Overturned Convictions and 7 Prosecuted Not Convicted
(PNC) claimants. Initial interim payments of £163k have been made to 99 of the OC
cohort, with the remaining having received an offer, are pending application, or settled
via upfront offer prior to payment. Some 42 of the OC claimants have reached full and
final settlement, with 38 via £600k upfront offer acceptance, four via full claim
assessment, and one PNC. In total c.£43m has been paid in redress via OC, comprising
c.£26.5m in full and final settlements and c.£16.5m via interim payments to live claims.
96. Discussions with Legal representation regards OC proactive disclosure have continued,
with full information example packs sent to representative Law firms. Initial feedback on
the pack content was that it provides sufficient detail with which to assess the applicability
of the upfront offer or particularise an assessed claim. To date, all OC claimants who have
submitted particularised pecuniary claims have either received SharePoint file disclosure
and branch file disclosure or will be provided this disclosure when POL issues its pecuniary
offer.
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97. POL understands that the planning and standing up of the DBT Horizon Conviction Redress
Scheme (HCRS) continues to progress at pace, although the specifics regarding timings,
approach, and any transition period (from OC) have not yet been communicated. POL’s
current working assumption (for FY24/25 budget planning purposes) is in line with the
HMG statements, that the Post Office (Horizon System) Offences Bill will be passed before
the 24 July 2024 Parliamentary recess and, accordingly, that HCRS will also be
Operationally ready to manage the resulting redress claims.
HSS
98. At the end of April 2024, POL had received 1,649 late applications of which 846 have had
eligibility confirmed and 372 outcomes have been issued to late applicants.
99. 1,219 of the 1,649 late applications were received in 2024. Prior to this, POL was receiving
applications at an average rate of c.20 a month and were resourced accordingly. While
the pace of new applications has slowed since the peak in January 2024, we are still seeing
c.35 new applications a week. Resource requirements are being reviewed in light of this
and the expected further uplift in application volumes following: a) the £75k fixed sum
offer announced in Parliament on 13 March 2024; and b) POL’s expected mailout
reminding PMs who have not yet applied to the Scheme to submit an application.
100. A growing number of PMs who have settled their HSS claim are also asking to have their
claim reopened. The expected introduction of an Appeals Process may allow previously
settled claims to be re-opened, though discussions as to the exact nature of the appeal
Process continue.
101. The implementation of the £75k Fixed Sum Offer is dependent on a number of key
activities, not least of which is the funding commitment letter from DBT.
GLO
102. POL remains on target with disclosure and SFA requests. 401 disclosure requests have
been completed against a target of 400, and 143 SFA requests have been completed
against a target of 138.
103. Freeths have expressed positive views about the information contained in SFA’s provided
and have now requested that POL provides a view on the potential outstanding amount
the Postmaster is due in redress. This reflects the level of trust which has been built
between Freeths and POL.
104. The GLO operational resource plan is being reviewed against workload and against the
assumed workload and resource required in OC2 to ensure a clear and understood way
forward can be agreed.
Criminal
105. Continued assistance is being provided to the MOJ in response to data requests relating
to the Bill. The most pressing request relates to PM employment start and end dates.
106. There remain 5 live appeals in the CACD, all of which are opposed by POL. Only one of
these appeals has been given a listing for a substantive hearing, which is due to take place
in the w/c 22 July 2024.
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107. There are 5 live appeals in the Crown Court (referred by the CCRC). These have been
listed on 22 May 2024. A further 2 are expected to be referred and listed on the same
date. All of these referrals are “concede” cases.
108. The references of the two deceased appellants’ convictions are listed for legal argument
regarding jurisdiction on 21 May 2024. The Attorney General served representations on 8
May 2024 and has appointed Counsel for the hearing.
109. There remains one contested live appeal in Northern Ireland. It is anticipated that this
case will fall within scope of the Bill.
110. In relation to Scotland, the Crown have asked a series of questions in relation to a HSS
claim linked to a live appeal. Senior Counsel drafted a response which was reviewed both
internally and externally and then sent to the Crown on 9 May. It is hoped that this will
allow the Crown to take a decision in relation to the appeal which will bypass the need for
POL to decide whether to assert privilege over a number of documents that relate to a live
HSS claim. The latter is a decision for HMC/RC and a paper on this is currently being
drafted.
111.A new appeal is expected to be referred by the SCCRC to the Scottish High Court
imminently.
112. POL continues to prioritise competing disclosure requests. There have been some delays
in meeting agreed deadlines with the SCCRC and internally in relation to HSS applicants.
Parties are being kept updated and P&P are confident that the majority of the end-of-May
deadlines will be met.
113. MPs has requested all of the material that POL have submitted to the inquiry. P&P have
drafted a substantive response which is currently being reviewed by POL Legal.
Suspension Remuneration Review
114. As of 13 May 2024, 974 offer letters have been sent, of which 640 have been accepted.
Payments have been made on 590 of the accepted cases totalling £7.84m. CL claims have
risen to 57.
POL Process Review
115. The launch of the POL Process Review (PPR) has been delayed:
i. We had difficulty in finding a firm willing to take on the assurance work on the PPR
data and process. Deloitte, who assured these aspects in the SRR, declined the
instruction for PPR. We now have a way forward with Mazars undertaking the work
and reporting under the POL Internal Audit banner. Pinsents will perform the legal
assurance required on consequential loss principles, although we anticipate few
consequential loss claims.
ii. DBT have asked several questions regarding how claims below the £1.2k de
minimis are validated. We have now agreed a way forward and DBT have
approached HMT to request that the pilot redress payments are exempted from
certain of the funding agreement terms. We now hope that the pilot mailing of
120 postmasters will take place in May.
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116. The aim of the pilot is to test our communications, application process and the nature and
level of claims made. We will then build the learnings from the pilot into the final PPR
operating model with the aim of launching the main process in Q3 2024.
117. A separate paper is being presented to SEG on areas that fall outside the scope of PPR.
This includes how claims made for shortfalls in the HNG-A period leading up to the review
and dispute process being introduced in April 2021 should be managed. Currently, HNG-
A claims are outside the scope of HSS. It also includes non-Horizon wrongful termination
claims. We believe that a collaborative approach between RU and BAU teams can provide
a solution to review these cases and recommend how they should be addressed.
118. We are finalising a proposal on how we address postmasters who we have asked to pause
making payments against their pre-April 2021 outstanding balances. The paper will also
make recommendations on what should happen to pre-April 2021 balances that are still
outstanding where no payments have been made.
Capture
119. Our investigation into the Capture software package has continued since the last report.
We believe that the maximum number of users was 2,500 based on the number of copies
of an update disk made in 1998. We now have a list of circa 25 ex postmasters who may
have suffered detriment and say they used Capture software. Hudgell claims to be
representing 35 Capture users and we have asked them to provide their list.
120. DBT are in the process of appointing an independent forensic accountant to review the
information we have obtained, perform any additional work required and opine on Capture
being a cause of postmaster detriment.
121. Two Capture users have requested the CCRC to review their prosecution cases. We are
working with Peters & Peters to provide the information the CCRC require.
122. Currently, Capture cases are not included in the draft mass exoneration legislation.
Finance Update Budget 24/25
123. At P1, RU are i™=™""I under budget due to the timing of mediation/arbitration events.
Whilst this is currently forecasted to catch up, the risks associated cost profile of the HSS
£75k Offer mean this expected to change significantly. Moreover, the impact of OC Mass
Exonerations and the formation of the Horizon Convictions Redress Scheme (HCRS) are
still to be understood and quantified and remains outside of the current budget forecast.
Legal, Compliance, Assurance and Company Secretariat (LCAS)
124. LCASR continue to be concerned that they have insufficient funding and resource to
effectively deliver the required service in line with Boar appetite and professional
standards. LCASR has requested additional funding of I from Opex Committee, of
which as been secured to date. The Engagement Survey results for LCASR
highlight the additional level of strain the function feels compared to the PO norm (a 14
point difference).
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Group Risk
125. Our Risk Register continues to highlight the following areas:
i. Technology: End of Horizon support agreement and suboptimal Belfast datacentre
resilience levels; moving the network from copper to fibre; branches being unable
to process Paystation transactions. As noted at RCC, SPMP programme
deliverability should be considered as a key risk.
ii. Cyber Security: Inability to prevent and recover from cyber or ransomware
attacks.
iii. I Legal: Non-compliance with legal and regulatory risks; inability to retain or attract
talent and poor business planning / sub-optimal engagement by business.
iv. Governance: Ineffective enterprise governance in place.
v. Financial: Tax exposure from IR 35.
vi. Data Management: Management of data across the organisation is poor and leads
to a number of risks including legal non-conformance and missed opportunities
e.g. to leverage technology to create efficiencies.
vii. Operational: Inability to improve branch profitability; inability to identify,
investigate, resolve and treat discrepancies with fairness in the network.
viii. People: Adverse impact on people’s wellbeing.
Group Compliance
126. On 30 April 2024, POL was notified by the ICO that it will be issued with a Practice
Recommendation (PR) due to non-compliance with deadlines for responding to FOIs. The
ICO have submitted questions to POL. These together with the responses from POL (which
are due on 17 May 2024) will form the basis of the PR. The ICO will provide us with a copy
a couple of days before it is published on the ICO website (anticipated to be end of May).
Public Affairs and Comms are briefed. Detailed plans are being worked through to bring
POL into compliance with the Publication Scheme.
Group Legal & A&CI
127. There are several ongoing material investigations involving or connected to senior
members of the organisation or key projects such as RU and NBIT. The volume, complexity
and sensitivity of material investigations has necessitated external support which has an
associated cost. Management continues to review internal vs. external resourcing.
Group Assurance
128. The status of the risks and controls assessed by Group Assurance for legacy matters
remains RED and has significantly deteriorated since our last update in March,
predominantly driven by Retail.
129. Retail have closed only c.15% of the actions identified in the 2023 CIJ Assurance reviews
which aimed to ensure POL can demonstrate sustainability and impact on PMs. Group
Assurance believe this highlights a risk that POL may not be able to demonstrate
conformance to CIJ.
130. The HIJ Assurance review recommenced on 2 May, however none of the 4/15 HIJ areas
and related artefacts provided by the Technology team has passed the assurance test.
131. SPMP Assurance:
i. Progress on delivering the initial four reviews is very slow and a risk remains that
we may not be able to deliver the assurance program owing to either capacity or
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lack of expertise within SPMP Assurance. Recruitment has commenced to hire two
additional resources within SPMP Assurance, and this risk is being closely
monitored.
ii. Whilst key building blocks to assess the risk profile of SPMP (vis-a-vis the release
strategy) is now in place, this has not been brought together in a homogeneous
manner to provide a response to ARC.
iii. Both PD/IPA Reports highlight systemic issues in the programme and signal that
they have low confidence in delivery in its current state. IPA state ‘it is clear that
POL does not have the artefacts and compliance information for reviewers to reply
on’. We are considering whether it would be sensible to pause all Assurance
activities (4-5 in flight) as they have provided an opinion on what our outcome
would have been. If agreed, Assurance resources would be diverted to ensure
business response to these reports is robust and objectively assessed.
Company Secretariat
132. The draft Grant Thornton (GT) Governance review has been shared with the Board and
currently no further.
133. GT's external Board and Committee Evaluation is expected imminently and will be
considered at the June or July 2024 POL Board meetings.
134. UKGI have indicated that the review of POL’s Articles of Association along with the
Shareholder Relationship Framework Document has been instigated. We await revised
drafts from the Shareholder team.
[ Technology
Core Service Performance
135. Branches unable to trade: The branch-down figure has stabilised from a peak of 13 in
January down an average of 8 over the last three months. The Enterprise Operations
second-line support team has integrated into the Copper Stop programme to help control
and minimise the impact on branches that have been affected by the switch-over to new
fibre network links. Through this close working we have been able to reduce the number
of branches unable to trade and provide dedicated 1-2-1 support for Postmasters.
136. IT Major Incidents: In April there were nine major incidents, six of which had a direct
impact on branches. These included: two directly linked to reference data changes; one
that lost a full day’s trading across the SSK estate; two caused by Scottish Power; and a
loss of in-branch Evri transactions due to a failed change.
137. IT Service Desk Update: There were 7,215 calls into our Technology Service Desk in
April with 95% of all calls answered. 80% were answered within our 60-second SLA and
abandoned calls at only 4% which is the lowest the desk has seen in two years. Call wait
times were 56 seconds and Web Chats 49 seconds. Customer Satisfaction remains
excellent at 4.37/5.
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Cyber Security
138. The global cyber threat continues to grow with a number of high-profile vulnerabilities and
successful attacks being published in recent months. Our cyber operations have provided
effective defence against incidents experienced despite that continued increase in the
global threat, with 1,425 incidents being closed in the month. This is an increase vs. recent
lerability that was being
_used_in the estate. The
months as a result of additional monitoring
actively.exnloited.alobally.was.identified.on..
__ IRRELEVANT
139. In February, we conducted two phishing exercises: a traditional password reset simulation
and a more complex holiday policy change exercise. The results indicate that our current
approach to awareness is insufficient, with 28% of people clicking on the more complex
link. The cyber security maturity programme contains several initiatives aimed at
improving this.
critical
140. A new Chief Information Security Officer (CISO) joined on 18 March and has assessed the
planned maturity programme, making some further amendments to ensure that plans are
included for all areas where our current cyber security provisions are inadequate. The
business case for this improvement programme is due to be presented to the next Board
in June
Horizon Live Services & Fujitsu Contract
141. Horizon service remains stable with no major issues for live services. The risk around
additional use of some user journeys (being put under pressure by additional mails
transactions) are being actively managed.
142. Discussions with Fujitsu on an extension to Hori: ipport services are ongoing with no
clear commitment by Fujitsu to extend beyond } DBT and broader government
are supporting these discussions, and a formal request has been made by POL to generate
a request from HMG that Fujitsu extend the agreement.
143. Contingency and transition planning is underway to ensure a successful exit from FJ
services over time. Overall legal advice on the PCR aspects of the extension is due to be
updated to POL Board in June.
144. Phase 7 POHIT Inquiry preparation is underway.
SPMP / NBIT
145. Overall, the SPM Programme continues to struggle. Some progress has been made on the
finalisation of the integrated plan and future release model, although residual uncertainty
persists due to ongoing business case resolution and approval.
146. This reporting period has been dominated by the facilitation and production of the two
external reviews conducted by the Infrastructure Project Authority (IPA) and Public Digital
(PD) in support of the new Horizon replacement business case approvals. The output
reports of both are now published to SEG and working groups have been created. This
ongoing activity will be supported by SPM staff over May and June.
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147. Delivery continues unabated with the go-live of Release 2.1 into the Aldwych DMB on 1
May. A subsequent go-live was successful in St Johns on 9 May. While there is a minor
delay to the plan, we are making progress towards the target rollout to five DMBs by the
end of Q2.
Supplier Management
148. Accenture: Back office and CDP re-procurement board paper, as part of the BOOM
programme, has been moved from June to July Board. It is acknowledged (with all key
stakeholders) that this will reduce the time available to develop and run the tender/re-
procurement as the contract end date is ITSSM continue to work closely
with the programme on the business case with a view to obtaining additional resources to
support the requirement drafting and tender process to mitigate the shortened period.
149. CDP application suppart.charaes.are _beina.negotiated for a prepa ment deal:
i. Charges are} I with a proposed reduction for the
vear.if.prenaigneeeeeeeeeeeeeeeeeeeeeeeeer nn
150. Ricoh: POL will be IRRELEVANT i(no further
extension options available - {IRRELEVANT _} Ricoh proposal received on 9 May
is not in line with current POL expectations and budgets. Ricoh and POL teams continue
to negotiate, reiterating POL requirements.
151. Barcode Warehouse: An extension eCAF is in progress for managed service portable
PDAs and printers for Swindon. Procurement has approved this and Cosec approval is
anticipated by 10 May.
152. DCX: Following SEG and Board approval of the contract extension in March, the EUC
People
153. The rebuild of the People team following their restructure continues. New appointments
are starting to land which is easing workload pressures.
Equity, Diversity & Inclusion (ED&I)
154. Anew Head of ED&I will join from 1 July to strengthen capability and resource in the team.
The ED&I strategy 2024-2028 is due in July 2024.
155. ED&I survey results (within the Annual Colleague Engagement survey) will be shared with
colleagues in May and shared with the Board in June.
Talent
156.A revised performance matrix will be released following the launch of Leadership
Behaviours at the Colleague Conference in June.
157. Graduate Scheme applications remain aligned to last year with over 2,600 submissions
across Technology, Commercial, Retail, People & Finance. Assessment centres will be held
in the summer to recruit 11 graduates to join the business.
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158. A Sustainable Leadership Programme will be delivered later in 2024/25 to support
development needs of the leadership population.
159. Compliance completion rate across all mandatory modules is 98.6%.
160. Post Office Manager programme Cohorts 1 and 2 concluded in May.
Reward
161. STIP 24/25 will be launched in late May. For senior leaders, this features 75% weighting
towards Postmaster-aligned metrics (cost control, product diversification and mails and
banking revenue), and 25% on improving colleague engagement. LTIP 24-27 is being
finalised for Remco approval in June.
162. Project Assurance mediation took place on 27 March, where we settled with RMPP Trustees
in respect of disputed costs.
Organisational Design
163. The consultation period for the new People structure has now finished and recruitment for
the new roles continues.
164. The revised Technology TOM is now in place to reduce duplic
opportunity for consolidation of Band 4 roles. There has been:
benefit from removal of direct and contractor resources at SLP/
nd create further
rf; annualised cost
to date.
165. A high-level overview of the central cost opportunities in 2024/5 was presented to the
Minister in April. This was accompanied by an overview of the cost of organisational change
for Post Office as a result of Union agreements.
166. A baseline assessment has now been completed of the existing organisation. The baseline
measures taken include spans of control, organisation layers, proportion of managers in
the headcount and the number of grade compressions and 1:1 reporting relationships.
Ethos and Colleague Engagement
167. The new cultural blueprint for Post Office was presented to the Leadership Team in March.
The blueprint will be embedded in the 2024/25 business plan and deliverables and
launched to colleagues in June.
168. The Code of Business Conduct will be presented to the Board for approval. This
incorporates the new blueprint, ethical decision-making framework and ‘Yes check’.
169. Annual Colleague Engagement results will be shared with all colleagues on 15 May. Action
plans will be completed by 28 June and results taken to Board in June
Wider Updates & Key Issues
170. Action relating to all categories of employees linked to alleged wrongdoing or past roles
delivering in line with approved scope and timelines.
171. Pay Zone integration project completed, and colleagues transferred to POL on 1 May 2024.
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172. A Contractor Review Project has commenced as a result of risks around IR35, and
procurement issues have been identified with the existing contingent labour contract. A
plan to modify the existing contract and sourcing strategy will be presented to Board in
June. The Audit and Risk Committee will be updated as the project progresses.
173. Unite pay award likely to be put to ballot in time for June implementation. Final offer of
3.75% in line with CWU, against an expectation from Unite of 7% pay increase.
Conclusion
Even in the wake of the Public Inquiry and the intense scrutiny the business finds itself under,
there remain positives. Trade and footfall continue to hold up, suppliers want to do business
with us and Postmaster sentiment remains resilient. Yet, colleague morale at a senior level is
buckling. This should come as no surprise. The revelations and subsequent media reporting on
the behaviour and leadership of our predecessors has flowed through and damaged today’s
business. We have struggled to differentiate the past from the present. Postmasters recognise
this too and it was clear that the future strategy of the Post Office, the investment in brand
rebuilding and the fear for their own businesses were the central themes at the NFSP conference
attended by Minister Hollinrake and I. We will need to focus upon this as the Inquiry finishes
its oral evidence in the autumn.
Yet, the building blocks are there - mails, banking and travel all have positive strategic
outlooks, even if we will not enjoy the platform product dividends of last year nor the bill
payments surge of the previous two years. Nevertheless, we will roll out ‘buy in branch’,
accelerate ‘parcels online’, Banking hubs and further automation into the Network alongside
our operational excellence incentive.
The immediate focus however will be on Phase 7 and ensuring we can convey to the Inquiry
and the media that we are addressing the shortcomings of the past. Additionally, we must
make progress with the Horizon extension and an NBIT funding solution. The strategic review
will be a good opportunity to establish alignment with our Shareholder and get real clarity and
support for our longer-term vision, purpose and the strategic intent of the Post Office. The
finalising of the Mass Exoneration Bill will also enable us to accelerate our support for
Government and their plans for Postmaster redress. This will ensure justice is delivered more
quickly.
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Post Office Limited - Document Classification: INTERNAL
Cover Page
P1 — Financial Performance Overview Meeting Date: I 4t June 2024
Autho' Asha Patel — Director of Financial Planning & Analysis Sponsor: Kathryn Sherratt, Interim CFO.
Input Sought: Noting
The purpose of this slide deck is to provide details and analysis on the Period 1 financial performance.
The Board are asked to note the P1 performance — which at the Board’s request now includes a monthly update on financial
considerations for wrongful trading.
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Executive Summary — P1 Financial Performance
metinctnting, the Ast! Board approved buffer, and ajiesevaxr; drawdown against the additional Notes Relief Facility (NRF), at
which there is an increased risk of incurring Base rate interest. Whilst Security Headroom remains positive (as funding has
been agreed by DBT and therefore accrued), the WCF is likely being used to fund change spend — against its intended
purpose and therefore potentially a breach of the purpose clause. The timing of cash receipts has been escalated to the
relevant people at DBT with ongoing discussions to find a solution to help ease pressure on our cash position.
LOAN
UTILISATION
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, £75k
redress payments, past roles, sPMP business case etc) is adding pressure on the utilisation and purpose of the WCF. Whilst
there are ongoing discussions timing of cash receipts, the Board, under a separate paper, are requested to
reduce the WCF buffer from I to help ease the pressure on the WCF. With the announcement of the
general election, there is consideration whether this may impact DBT’s ability to commit funding for uncommitted items.
WRONGFUL
TRADING —
FINANCIAL
CONSIDERATIONS
of budget largely driven by opex overheads being der budget - the full WE implications of wwitte will be identified
TRADING and through a 2+10 forecast that will be conducted across the business in June.
CHANGE POL funded ‘other’ change spend o inder budget largely due to timing/ invoicing delays on Project Darwin
POSITION (outsourcing Swindon) and ATM Banking Strategy ese are expected to b ught up in Q1 with no projected impact on
budgeted benefits. In May, the SEG approved ai~* rawdown against the 4 unallocated ‘change pot’ to fund further
DMB Exits, with consideration to objective allocation principles, and to optimise the value of the cost reduction programme.
@.
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Wrongful Trading — Financial Considerations
with
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gards to Horizon r
+ — Considering the following financial items:
o Review of financial information
o Funding and support from DBT
o Other facilities
We have identified 1 material financial change from the wrongful trading assessment presented to Board on 30" January 2024:
+ There is a risk to higher loan and NRF utilisation due to the timing of cash funding receipts from DBT. The table below shows POL has paid out
spend, with funding not yet received from DBT.
+ Kséparate paper is being presented to Board to request the!
receipt delays and remove pressure on the WCF.
funding for Horizon replacement was requested in April, agreed with DBT on 3 May and/is.d
I WCF buffer be reduced by,
+ No further material financial changes from January Board have been identified.
Total
Funding
Funding
Accrued
Funding
Received
Funding Type Spend
£m Incurred
RMU/Inquiry !
(Shortfall)
Spend
Incurred
Cash Funding
(Shortfall)
IRRELEVANT
to be received on 3" June.
until the end of Mar 2025, to mitigate any funding
Funding
(Shortfall)
Total
Funding
Funding Funding
Received Accrued
Horizon Replacement
Investment Funding I
Total
IRRELEVANT I
Note: Spend incurred reflects cash outflow by POL
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Summary Report (1/3)
1 Total Revenue and Trading Profit.
+ POL achieved P1 revenue of; IRI above budget, and in line with prior year. We continue to see stronger banking deposits volume and ATVs performance, offset by
sundernerformance in Labels, driven by lower 2nd class volumes and the delay in full deployment of RM tracked 24/48 product to June-24. This has translated to Variable Rem of
[isrssnr} which is 49.7% of variable revenue ( h budget, but slightly down on,the.50.3% in prior year due to the exit of Lottery).
+ Opex overheads were !* under budget, with!" of lower costs partially offset by!" of unbudgeted costs. The business is currently investigating the implications of these
variances applying a lens of which of these can be ‘banked’ vs timing differences.........
+ This has translated to a good first month performance with Trading profit ofI IRRELEVANT ‘above budget and:
"4 up on prior year.
Mails Revenue . - .
2 + P1 Mails revenue of! i below budaet.of which fitrever} was due to the underperformance in Labels, driven by lower 2" class volumes and delay in full
deployment of RM tracke: was due to the adverse impact of the pre-tariff buy forward experienced in the prior month.
* Compared to prior year, total Mails revenue was up 1% in period, with growth in non-RM carriers, offsetting the decline in RM revenues.
+ Despite being under budget in P1, Labels has tracked in line with budget for the first week of P2 and is expected to remain in line for the rest of the month based on current
trends.
Banking Revenue « re
3 + P1 Banking services revenue oft! growth on prior year) was ! ahead of budget due to higher deposit volumes - a continued trend from Q4 23/24, as well as
higher average transaction volumes, which after a period of decline last year, appear to have stabilised. This is across both personal and business banking.
Other Revenue _
4 IRRELEVANT
+ Credit Cards,revenue o'
to generate "=!" budget upsidein.the year.
+ Post Office Insurance revenue of"**“4""! was overall in line with budget. Travel insurance sales exceeded budget across all channels noting that we will soon be entering peak
season. This has been offset by Home and Motor insurance with rate increases by insurers impacting new business sales; P2 trading is expected to be challenging in this area.
+ Allother revenue areas were broadly in line with budget in P1.
bed
e«"lahead of budget, with higher volumes being driven by whilst this continues this is expected
5 Postmaster Remuneration. (PM.Rem)...
* P1 Variable PM Rem of !RRELEVANTI ae t higher than budget, largely from strong banking performance partially offset by underperformance in Mails-RM.
+ P1 Variable PM.rem.as.a.nercentage of variable revenue was 49.7% in, line with budget, but slightly down on 50.3% in prior year due to exit of Lottery.
+ Fixed PM Rem} IRRELEVANT I lower than budget for the month and i™*#=! lower than the prior year; this is driven by the continuing trend that sees less branches receiving
assigned office and exceptional payments.
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Summary Report (2/3)
6 Opex Overheads — Staff & Non-Staff Costs
under budget, with with a one-off RMSEPP pension refund of
received in the month, along with i"
lower Mails project opex
irements, the "I
of lower costs, which includes lower Mails costs {ester lower one-off branch discrepancies
(£0.4m) lottery exit costs not required and (' other items. This has been partially off: ! of unbudgeted costs within Supply Chain !
projects £0.2m and Bank Hub costs which have been directly driven by increased revenue {**
* The full year implications of these unders and overs will be identified through a 2+10 forecast that will be conducted in June.
Performance against agreed cost.savings
+ The FY24/25 budget identified fenezeur] of incremental cost savings to be delivered across POL. This forms one of the STIP metrics in FY24/25.
7 + There is no indication at this time on any changes to budget assumptions in delivering these savings; Following the 2+10 forecast we will be tracking and reporting on these
throughout the year.
Open Branch network
8 * The network decreased by 33 branches in April to finish at 11,772 branches, largely due to the flow through of higher churn in March.
* 616 Drop & Collect branches were trading by the end of April. This was a net 10 increase in month due to the closure of 22 underperforming Drop & Collects in March.
+ The network is forecast to be stable across Q1.
Investment and Chang penny
9 * P1 Change Spend is below Budget driven by [0m
provision for vacant leaseholds and onerous property contracts,
") underspend on Remediation and Inquiry programmes and "I variance on Replacement of Horizon
programmes...
. nt of the/m="""! gross underspend in “Other Change” was driven by a delay in the start of consultation (from April to May) Project Darwin (outsourcing Swindon) as this will now
be done via a joint approach with iForce. As a result, the voluntary redundancy cost accrual is delayed. This is not on the critical path, so there is no impact on budgeted benefits and
cash payments are still expected in August.
variance to budget,
requirements) but were not utilised,
Q
&
5
lates to Optimism Bias and Indexation contingency amounts for CIO and SPM programmes which were in budget (per HMT
“jis a correction to accounting provisions and the remainder is predominantly driven by delays or rephasing of spend.
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Summary Report (3/3)
1 0 Security Headroom & Loan Utilisation pony
+ At the end of P1, Security Headroom of i* ener] “I lower than budget with imeem] flow.thtauah of lower actual Trading Profit from March andi of RMU
compensation which is to be reimbursed by DBT in May. With client payables at the end of P1 of @®=™"!within 2% of the budget, this is a positive indication of working
capital budgeting accuracy.
* On Loan Utilisation, the Net funding position at the en [mesviers over budget with drawdown against the
maintained) and drawdown against the additional NRF ati" - which incurs higher interest at 5.25% Base rate.
+ -The.nrimary reason for necting to draw down against this additional NRF is due to (==8%""; of pavments incurred across RU/Inquiry and Replacement of Horizon programmes
my from FY23/24 andi"*=""I from P1) for which POL has not yet received funding from DBT. {ween} funding for Horizon replacement was requested in April, agreed with DBT
on 3rd May (and therefore accrued), however is only due to be received on 3rd June. This has been escalated to the relevant people at DBT with request for a temporary
weekly review of spend to enable timely payments.
Board approved buffer
+ Ina separate paper being presented to the Board in June, we are requesting the Board to.annrave.a. reduction to the Board Approved buffer from June 2024 until
March 2025. This would enable a temporary increase in the WCF available for use, from IRRELEVANT h to cover any additional risks from delays to funding.
Wrongful Trading — Financial Considerations
11 + Inresponse to the Board request for any material update against the Wrongful Trading assessment presented to Board on 30th January 2024, we have considered financial
items including review of financial information; funding and support from DBT and other facilities. This does not include other legal considerations such as contract awards.
+ From a financial consideration, one material financial change has been identified from increased risk to higher loan and NRF utilisation due to the timing of cash funding
receipts from DBT - as identified above.
+ Whilst we are accruing investment funding that has been committed by DBT (with positive impact to SH), we note that the cash has not yet been received against cash
payments that have already been incurred. This is putting extra pressure on our net funding and working capital facility (WCF) — with negative impact on facility
headroom.
+ Anincrease in the available WCF facility from'_ “I will help to mitigate this risk and remove pressure on the WCF.
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Post Office Limited - Docu!
Scorecard
It is intended that over the course of this financial year these metrics will be underpinned by a Strategic Review.
3Month —12-Month
Period 1 Rolling Rolling
Average Average
Budeee % Variance RAG to Varianceto RAG to Prior
uceet I toBudget I Budget I Prior Year Year
POL Scorecard - FY24/25
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Profit Before Tax
Vari te
hewwal Budget YaNaneeto oy Yor %
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 i
Postmaster Rem Variable Costs j
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
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Investment & Change Spend
P1 Change Spend is MeN LICE below Budget driven by MMM gross underspend in “Other Change” (self funded by POL) offset > ee to the
accounting provision for vacant leaseholds and anezous property contra underspend on Remediation and Inquiry programmes and variance on
Replacement of Horizon programmes. Of cr to budg Jates to. Optimism Bias and indexation contingency amounts for CIO and SPM
programmes which were in budget (per HMT requirements) but were not utilised, MMMM is a correction to accounting provisions and the remainder is
predominantly driven by delays or rephasing of spend.
Period 02 ras] In month variance to Budget
Vs Budget
Project Groupings Actual Budget Period 01 Net Other Change Spend variance to Budget of ('*"5--V\""'driven by:
‘Other Change Spend - Top 10 Budget I
FY24/25 Accounting," CT vacant leaseholds & CT onerous property contracts error in budget
‘Other Change Spend - ClO submission.
(Other Change Spend - Commercial
‘Other Change Spend - Retail Gross Other Change Spend
“sr of Whi
: , - Darwin (Swindon Cash Centre outsourcing) Delay in the start of consultation
Other Change Spend - Supply Chain (from April to May) as this will now be done via a joint approach with iForce. As a result,
Other Change Spend - Other Net other the Voluntary redundancy cost accrual is delayed. This is not on the critical path, so there
Gross Other Change Spend I R R E L EVA N T Change Spend °°. impact on budgeted penefits
“Accounting H colin - ATM Banking Strategy {#=.="}; P1 Cennox costs (the supplier of fit out services for
prissamdutienn sale of Aacets ' ATMs) did not materialise 3) due to re sues with Cennox invoicing being
————— delayed or disputed, In addition, there were ") P12 accrual reversals relating to
Net Oshar Change Spanc Cennox costs and (=""«4) adjustments relating to PO closures/year end cleanse.
Remediation - Lottery Transition (=="""') lower lottery exit costs (savings) due to commercial
POHIT inquiry agreement reached with Camelot that exempts POL from costs included in the initial
Remediation & POHIT Inquiry budget.
I - Other smaller variances of {*") across several Commercial, Retail and ClO projects,
predominantly phasing related.
Strategic Technology Programme . 7 udget of = 3
emediation.& Inquiry variance to Budget of {"*=-©"}) mainly driven by Remediation
Horizon Replacement CIO projects
is li RU and Inquiry projects {'=*"") due the timing of HSS mediation/arbitration events now being moved to
Replacement of Horizon later in the year.
[Total Change Spend i . 7
ad IRRELEVANT. Replacement of Horizon variance to Budget of (£4.9m) of whicl
‘The Replacement of Horizon budget, based on the financial business case submitted to DBT for funding - Strategic Platform Modernisation (£2.1m) due to delays in delivery of elements of
approval included Indexation and Optimism Bias, adjustments required by DBT and HMT for any Replacement hardware and 3rd party work coupled with underspend due to unfilled vacancies. This
programme seeking government funding. These amounts, which have been profled over the 12 months pe penn I declare aed vo OMe earn
in FY24/25, are not specific to underiying activity, and therefore have no “actual” spend against them. If B (paella a ie
these costs crystallise in the year, these will be captured in forecasts of underlying spend, or else will be - Indexation and Optimism Bias (£2.6m)
phased out as the year progresses, - Other smaller variances in CIO projects of (£0.3m).
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Security Headroom
urity Headroom in 1 of SSMMMGE was ERB ower than budg
which is to sed by DBT in May. Client payables at t
IRRELEVANT
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Loan and NRF Utilisation
Net funding position at the end of P1 was {jgmmp higher than budget due to the following
: higher gross network cash
feta higher receivables of which is accrued investment funding on eat across other receivable lines, namely prepayments and client receivables
drivers of lower Security Headroom (March-24 Trading Profit and RMU compensation)
IRRELEVANT
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POST OFFICE LIMITED
BOARD REPORT
weds Working Capital Facility Increased Meeting
Title: usage Date: 4th June 2024
Tom Lee, Group Financial ‘
Author: Controller; Sponsor: sail pew Group. Chler
Peter Mitchell, Group Treasurer. uence icer
Input Sought: Approval
The Board is asked to approve a temporary increase in the level of the
POL has access to a} rretevanr! I Working Capital Facility (“Facility”) provided by DBT, used mainly
to fund cash inventory in ‘the network. As pel asury policy and.at.the Boards request, we
have a pre-agreed maximum Facility usage o' Nt! leaving ai! "} buffer for exceptional
circumstances. This buffer was reduced to ;"=T! from November 2023 to March 2024,
allowing up to i 1 to be utilised in order to cover increased pressures on cashflows from
both peak trading and potential timing impacts of payments made for Remediation Matters,
Inquiry and SPMP, where DBT funding is provided in arrears.
Since April 2024 the buffer returned to {ms 4 with a maximum facility usage of
again, however the growing volumes and values of payments made in relation to Remediation
Matters, for which funding is received 4-8 weeks in arrears, is creating increased
pressures on the cashflow position. Management are in discussions with DBT to increase
the frequency of the payments, to either weekly in arrears or to fund in advance. However,
given it may take time to obtain DBT agreement and the cash outflows are ii
management are seeking approval for a temporary increase in the facility usage to i"
Should the funding frequency / approach alter, it is not envisaged this facility increase will be
required until we hit peak trading at the end of the calendar year (November 2024).
This supports the request to increase the facility to;
peak trading impact should have also declined.
It should be noted that the timing of DBT cash receipts is putting pressure on both the
utilization and purpose of the i WCF, noting that whilst Security Headroom remains
positive (as funding has been agreed by DBT and therefore accrued), the WCF is likely being
used to fund change spend - against it’s intended purpose, potentially a breach of the
Purpose clause.
Strictly Confidential
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As per the latest forecast below, we currently envisage the addition: ‘sT being utilised in
August and December. If the timing of DBT cash receipts is unchanged or if there is a spike in
ressure on the facilit
The Board is therefo:
requested to approve an increase in the available Working Capital Facility
from June 2024 to March 2025 through reducing the Board approved
(IRRELEVANT
buffer from
Strictly Confidential
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BOARD REPORT
stle: FY24/25 unallocated =="! change Meeting
Title: spend prioritisation principles Date: 04. June 2024.
: Asha Patel, FP&A Director 35 r
Author: Tim McInnes, S&T Director Sponsor: Kathryn Sherratt, Interim CFO.
Input Sought: Noting
As a follow up to the Board approval of the FY24/25 Business Plan on 25'" March, the Board
has_requested to understand the criteria and process for allocating the POL funded, central
change pot in FY24/25. This paper sets out this criteria and process.along with a case
example of how these principles have been applied to a request on the i™=="")
Executive Summary
As background, an OpEx Committee was established in September 2023 as a vehicle to provide
a centralised view of in-year Operating Cost trends, to improve oversight and tracking of cost
challenges and to support more effective decision-making on spend prioritisation and / or re-
allocation with the application of objective criteria (Appendix 1). It has achieved these three
objectives.
It is now recommended to widen the scope of the OpEx Committee to include POL funded
change spend, which includes an unallocate: "i pot, and to rebrand it as the ‘Prioritisation
Committee’. Membership is assumed to remain the same (i.e. Interim CFO (Chair), Deputy
CEO, FP&A Director, S&T Director, Chief of Staff).
— Ensures consistent oversight of Operating Costs, Exceptional Spend and Capital
Expenditure which is critical at a time when POL faces cash-constraints and potential
Security Headroom risks
— Ensures decisions can be made centrally and in a consistent manner regarding all cash
pressures. This will therefore now also include managing non-OpEx change spend over-
and under-spends more proactively
— Focuses IADG‘s role on approvals within the prioritised funding envelope not approval of
the envelope, and the monitoring / oversight of delivery across the change stack
The prioritisation decisions are expected to apply the same criteria used by the OpEx
Committee, however for the allocation of the £10m Change pot specifically the SEG recommend
a different weighting to the criteria (set out below) with greater weighting applied to the
Additional Spend Pot
FY24/25 Business Plan Finat: Other Change
Strictly Confidential
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The SEG recommended criteria for allocation of th I pot are therefore as follows against
eight metrics to derive a weighted prioritisation sore for each request.
year plan (i.e. which is assumed to be consistent and aligned with the Strategic Drivers) =
Management Time How much senior (SEG and Leadership Team) time the spend consumes 10%
SLots
The Prioritisation Committee, informed by these composite scores, would then be able to make
an objective decision on allocation of the pot.
Other considerations that the Prioritisation Committee will reflect on include timing of the
request being made, whilst appreciating “first come frst serve’ is not an allocation principle,
simultaneous information of all requests on the coencal I is decisions will be staggered based
on the best-known information at the time of allocation.
Worked Example
An example of application of these objective criteria i femecvet request against the irra! pot,
for Further DMBs in FY24/25 for 2 futher exits : and 1 franchise
(Golders Green). This request achieved a composi see Appendix 2)
- considered to be high scoring particularly with regards to strategic alignment and financial
payback.
As such approval for funding for this request from the: pot was approved by SEG on 8"
May 2024 (as a proxy for Prioritisation Committee whilst it is being set up) subject to IADG
approval for the change activity.
Strictly Confidential
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Appendix 1
Prioritsation criteria for Opex Committee (which is proposed to apply to the Prioritisation Committee
decisions excluding the}
The extent to which we consider the spend to be necessary from a license to operate
perspective, e.g. to meet regulatory requirement
Licence to Operate 20%
The extent to which the spend aligns with one or more of the strands of POL's Strategic
Strategic Alignment Drivers and, at the appropriate time, supports delivery of the wider strategy and 3-5, 20%
vear plan (.e. which is assumed to be consistent and aligned with the Strategic Drivers)
Dependencies The extent of the knock-on impact or implications from cutting or not incurring spend 15%
Rey ‘The ability and speed at which given spend can provide a financial benefit e.g. revenue en
generation, cost saving, etc.
Management Time How much senior (SEG and Leadership Team) time the spend consumes 10%
" 1 1Lots
Timing Flexibility ‘The extent to which the required timing of spend can be varied 10% ome
sabit Little
‘Scope Variability The extent to which the scope of requested spend can be flexed 10%
Strictly Confidential
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Appendix 2
Further DMB/==="I Reques'
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: Composite score against Objective a
TD
Merrie Descnir SCORE Ne
rae oF 5)
Financial Payback
‘Strategic Alignment
Licence to Operate
Dependencies
‘Management Time
Timing Flexibility
Scope Variability
Total Weighted Score
The ability and speed at which given spend can provide a financial
benefit e.g, revenue generation, cost saving, etc
The extent to which the spend aligns with one or more of the
strands of POL's Strategic Drivers and, at the appropriate time,
supports delivery of the wider strategy and 3-5 year plan (le. which,
Is assumed to be consistent and aligned with the Strategic Drivers)
The extent to which we consider the spend to be necessary from a
license to operate perspective, eg, to meet regulatory requirement
The extent of the knock-on impact or implications from cutting or
not incurring spend
How much senior (SEG and Leadership Team) time the spend
The extent to which the required timing of spend can be varied
The extent to which the scope of requested spend can be flexed
Strictly Confidential
20%
15%
15%
10%
75%
75%
Includes asset sale proceeds
Some of the properties have
os H&S issues/require urgent
maintenance
06
oa
0225
03
3.975
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BOARD REPORT
: External auditor tender exercise "
Title: ~ outcome and appointment Meeting Date: I 04 June 2024
Tom Lee, Group Financial
Author: Controller _ ; Sponsors Kathryn Sherratt, Interim
Antony Ray -Specialist Senior Chief Financial Officer
Procurement Manager
Input Sought: Approval
The Board is asked to approve ARC's decision to recommend for approval to the Board the
appointment of PWC in the role of external auditor for the Post Office Limited group of
companies (“POL”), with the appointment being for a period of 4 years, with the option to
extend for a further 2 years, commencing with the financial year ended 30/3/2025
(“FY24/25”).
Executive Summary
e Strategic Executive Group —- 20 May 2024
e Audit and Risk Committee - 21 May 2024
The current external audit contract expires in October 2024, which covers the FY23/24
financial year. The incumbent auditor is PwC, who will have been in place for 6 years at the
end of the contract. An FTS (Find a Tender Service) procurement exercise was undertaken
using the Restricted Procedure. Owing to the complexity of the POL audit and the need to
ensure a quality audit is produced respondents were limited to Tier One firms as defined by
the Financial Reporting Council (FRC).
Pre-market engagement activity was undertaken during which all potential firms except for
PwC advised they did not wish to participate in the procurement. The reasons were primarily
linked to actual or potential conflicts of interests, due to other work undertaken or the
ongoing Statutory Inquiry, and the risk associated with the audit (high risk client). PwC were
therefore the only bidder in the process. A formal tender process was still undertaken,
including bid submissions and presentations with associated scoring by POL assessors. PwC's
bid was strong in all regards and the fee quote was competitive, with the estimate being in
line with current year audit.
Board are requested to approve ARC's decision to appoint PwC as the external auditor for a
period of 4 years with the option to extend for a further 2 years. Finalisation of the contract
will be undertaken by management and Board are requested to delegate authority to the
Interim CFO for finalisation and signing of the contract, and that any two Directors or any
Director and the Company Secretary have authority to execute the contract.
Confidential
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BOARD REPORT
Horizon Contract Extension/
Title: Horizon continuity of service Meeting Date: I 4" June 2024
update
Chris Brocklesby, Chief
Transformation Officer
Authors: I Simon Oldnall, Branch IT Director Sponsor:
Input Sought: Noting and approval
Board is requested to:
i. Endorse the proposed strategy for an extension of up to fi
support contract with Fujitsu from; I IRRELEVANT
ii. Approve the proposal to include within the extension a binding commitment to Fujitsu
that an alternative approach to supporting the Horizon platform through
commencement of a programme to insource/re-procure elements, will be activated,
at the point where POL do not have confidence that we will have sufficient time within
the term to fully migrate from Horizon to New Branch IT (NBIT)
iii. Note the interim update on the commercial and legal risks provided via Hogan Lovells
& POL Legal teams.
iv. Note the proposed timeline and approach for securing the extension to the current
support contract.
ears of the Horizon
Executive Summary
1. As previously submitted the current contract for services to support Horizon expires at the
end oft iF
2. Since November 2023 POL have been engaging with Fujitsu with a view to extending this
contract by years beyond the current term to this extension will provide
a. Continuity of support for Horizon until such time as we can decommission the current
platform
b. Time to complete the build and rollout NBIT
c. Time to transition services away from Fujitsu so that these can either be replaced by
NBIT delivered services or decommissioned as they are no longer necessary
3. Based on the current timeline for NBIT our proposed extension period is for up to
(as this gives a window for the 3 objectives above together with some contingency).
4. To demonstrate commitment to Fujitsu that this will be the final extension request our
proposal is to include within the Heads of Terms a binding commitment to Fujitsu that
Plan B, insourcing the Horizon services, will be activated at the point where POL do not
have confidence in our ability to fully migrate from Horizon to NBIT within the term of the
extension.
Report
Approach to securing an extension
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5. It is anticipated that this extension will be executed in the form of a contract change,
subject to an assessment of the lawful basis for doing so under the Public Contracts
Regulations 2015 (PCR). A preliminary assessment and summary of legal advice to date
is set out in the accompanying legal risk note (which has been uploaded to the Reading
Room).
6. The POL team have been working with Fujitsu to define the requirements that will form
the contract change; these will take the form of:
a. A services roadmap that lays out the timing of exit from any of the sub services
provided under the agreement and reduce the service charges over the term of the
extension
b. Atechnology roadmap that underpins the services and shows where investments will
be necessary in the form of completion of inflight projects (such as the Application
Modernisation Programme) or where Fujitsu will require POL to make additional
investments to mitigate the risks of End of Service Life (EOSL) components on the
current platform
7. The team have additionally commissioned a review of the current Fujitsu agreement to
ensure that it meets the needs of the extension purposes outlined above (for example
embedding termination assistance, exit planning and support more formally).
8. The team will meet twice weekly with Fujitsu with a view to developing the detail for the
contract change, work on which will commence shortly afterwards and continue in parallel.
9. As previously reported, as a precursor to executing the contract change note, POL are
required to secure approval from the DBT Commercial Assurance and Advisory Group
(CAAG).
10. It should be noted that Fujitsu are yet to formally commit to an extension and have made
clear that for an extension to be given there must be
a. A formal request from HMG to extend services
b. Agreement from the Fujitsu Board in Japan that the extension is acceptable
11. To address the former of these POL CEO sent a letter on 10 May 2024 to DBT requesting
that they issue a letter to Fujitsu formally requesting this extension.
12. POL are also now in receipt of a letter from Fujitsu dated 15 April requesting clarity on
how POL intends to take preparatory steps for the conclusion of the agreement on 30
March 2025.
13. A response to this letter has not been provided to date, however from discussions with
the Fujitsu contract team it is clear they are looking for commitment that this extension
will be the final extension request from POL.
14. Itis proposed that POL include within the extension Heads of Terms a binding commitment.
to Fujitsu that it is our strategic intent to activate Plan B, insourcing the Horizon services,
at the point where we no longer have confidence in our ability to fully deliver NBIT by
December 2028.
Update on Procurement Risks
11. The accompanying legal risk note provides an update on the legal risks that were
identified in the March papers.
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Next Steps & Timelines
12. Assuming FUJITSU are prepared to agree an extension and the extension legal advice
expected in June and final assessment of PCR risks prove favourable, the current indicative
timeline for completion of the extension is as follows:
«© 17/05
* 14/06
* 14/06
© 21/06
« 12/07
« 19/07
* 09/08
Requirements shared with Fujitsu
Finalised PCR risk assessment
Target for POL/Fujitsu to agree Heads of Terms
Submission to SEG/Board for approval
CCN finalised and ready for signature
Request to DBT CAAG for approval of the extension
CCN executed
13. It should be noted that we do not yet have a clear view on the elapsed time required for
FUJITSU governance approvals and this is a risk to the indicative timeline set out above.
14. Should the extension legal advice expected in June prove unfavourable, or if Fujitsu are
not prepared to commit to an extension, a proposal to activate Plan B, insourcing the
Horizon services, will be presented to Board in July.
Confidential
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BOARD REPORT
SPMP Assurance Support Partner
Sourcing Strategy
Steve Hepburn, Procurement and
Author: Sourcing Strategy Lead / Chris Sponsor:
Duddy, Procurement Specialist
Meeting Date: I 4 June 2024
Chris Brocklesby, Chief
Transformation Officer
Input Sought: Decision
« Post Office Board is asked to endorse and approve this sourcing strategy for selecting a provider of
Assurance Support to the SPMP programme. This approach has been endorsed by Kelly Goodwin
(SPMP Programme Director) and Anshu Mathur (Group Assurance Director).
« The sourcing strategy was endorsed by SEG at their meeting on 20 May 2024. Board is asked to
delegate contract award, finalising contract terms to SEG and authorise any 2 Directors or any
Director Company Secretary to execute the contract.
e = There is ci forecast for this work in the current business case, but until the requirements are
finalised. and. bids. received...it isnot. possible to. forecast.a_final.cast..This.will.be a‘ IR!
IRRELEVANT _
broad
we are contingent on market appetite to support ‘SPMP Assurance.
Executive Summary
The programme restructured and set up an objective internal assurance function with a dotted line to
Group Assurance in June 2023 and a SPMP integrated assurance strategy and approach was approved
by POL Audit & Risk Committee in September 2023. A key component of this strategy was the creation
of the SPMP Integrated Assurance and Risk Universe which comprises 17 areas which range from
technical delivery, design, and development to programme roll out and implementation across the Post
Office network of branches.
The proposed approach has been designed in consultation with the Group Assurance Director based on
their experience of the market and approved by SPM Programme Board and Steer Co. The preferred
Procurement option would be to release a single FTS procurement but as this would take 4-6 months
to complete, the business would prefer to split the procurement activity into two phases.
* Phase 1 - Review and validate the work completed to date on the assurance framework, via G-
Cloud 13, and;
* Phase 2 to let, in parallel, an FTS procurement that meets the enduring needs of the
programme. There is a risk that if the supplier of Phase 2 is different to the supplier selected for
Phase 1 that some re-work may be required.
Report
1. I The replacement for Horizon, New Branch IT (“NBIT”) has been in development for 2.5 years. In
this time, the programme has been subject to a number of reviews, led and governed by the
programme, such as external penetration testing, internal programmatic focussed audits, a
financial model review by Ernst & Young, an Accenture Diagnostic review performed in 2023 and
more recently the IPA and Public Digital reviews in May 2024.
2. The SPMP programme is now seeking to procure and implement a suitably accredited assurance
supplier to support the delivery of the Assurance plan which currently comprises 509 inherent
risks and circa 34 Statements of Work:
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Assurance Descri
1. Validation of POL Compare and validate our Assurance Universe against industry best
SPMP Integrated practice, particularly with a focus on potential adverse impacts on
Assurance & Risk Postmasters, non-conformance with legal and regulatory requirements
Universe and the core principles of past issue judgements. The completeness and
adequate coverage of the universe is paramount to ensure the
foundation and coverage of assurance is adequate and therefore this is
a key first deliverable.
2. Validate focus of Validate POL’s assumption of where external assurance is needed, and
assurance effort and I provide a cost estimate on the basis of:
provide Rough «The external assurance being performed under a hybrid model, i.e.
Orders of Magnitude under the supervision of POL Assurance Teams, particularly Group.
« External Assurance work packages to be scoped in a manner which
incorporates E2E coverage to deliver assurance efficiencies with
minimal scope caveats.
« Issuance of formal Assurance opinions.
3. The core requirement is for a third party to provide formal attestation that the programme can
demonstrate that robust assurance principles are in place and activated, and that assurance
coverage is adequate and objective. A deeper level of assurance activity will also be undertaken in
areas of high risk that have been identified.
4. Such third party must be able to assist with reviewing the assurance universe and strategy,
ensuring that they are fit for purpose, as well as scoping and costing identified areas of high risk
that would require a deeper level of assurance interrogation.
5. A phased approach to the procurement may be most suitable to allow for the immediate ask for
support in reviewing the Assurance Universe, whilst determining the scope, number and cost of
deeper assurance work that is needed on an on-going basis. This could allow for the immediate on-
boarding of subject matter experts (SMEs) to be appointed.
6. The recommended approach is as follows:
Approach Procurement activity
Phase 1 - Quick « Review the current SPMP Integrated Assurance & Risk
wins (asap) Universe (support element)
Phase 2 - « Create the invitation to tender (ITT) with a detailed set of
Assurance requirements derived from the universe and a plan for
SME assurance that can be provided to the market, including
commercial protections for both the bidder and POL on ‘how’
assurance outcomes will be presented.
7. This approach will ensure the that the business requirements are met of comparing and validating
the Assurance Universe against industry best practice, particularly with a focus on potential
adverse impacts on Postmasters, non-conformance with legal and regulatory requirements and
the core principles of past issue judgements.
Identification of a Procurement Procedure
8. A pre-market exercise was undertaken to provide an overview of the Post Office intention to
launch a procurement exercise for support with assurance related activities relating to SPMP.
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9. Feedback from the sessions can be summarised as follows:
* There is nervousness around the level of ‘warranty’ and/or commercial protections the Post
Office would impose on the supplier for acting in the role of Assurance Partner
+ All suppliers were acutely aware of the public scrutiny that the Post Office is currently under
and all stated that they would require senior level (Board) approvals from within their
organisations before committing to responding to any tender proposal that was issued.
+ Since the market engagement has concluded, 5 of the original 10 suppliers have chosen to
withdraw from the process.
+ This leaves the following suppliers potentially in scope of any potential procurement activity;
PA Consulting, EY, Crowe Consulting, and Protiviti - although the FTS Restricted process is
open to the entirety of the market.
High Level Sourcing Strategy
10. As noted above, the route to market is agreed as a combination of a G-Cloud 13 Procurement for
Phase 1 activities followed by an FTS Restricted Procurement Procedure to allow for specific terms
and conditions to be agreed to alleviate supplier concerns regarding reputational risk and
accountability to be addressed.
+ As the market engagement sessions proved, there are very few suppliers in the market that
have the capability (and willingness) to want to deliver this service.
+ The intent is to procure services from one provider who will then enter into sub-contracts
with others where specialist skills (i.e. in-depth code validation) would be required.
11. The high-level award criteria is proposed to be 70% solution, 30% price. Pricing will be outcome
based and tied to delivery of assurance artefacts. There will also be a rate card included in the
contract to allow for any work that cannot be procured on an outcome basis, should that be
required.
Financial Impact
12. Finance have confirmed that the overall budget for the Assurance workstream to FY26/27 is £3.7m,
but the overall cost of the activity will not be known until the procurement exercise has been
completed. This contract will be let with no commitment to spend, but also have sufficient headroom
to accommodate additional assurance activities should they be required.
Risk Assessment, Mitigations & Legal Implications
13. There are no anticipated PCR risks as we will be following compliant processes.
14. There is a risk that there will be limited market interest in any tender we release due to the potential
reputational risk that assuring a replacement for the Horizon platform and partnering with Post
Office at this time presents, however, if this risk were to materialise then the Group Assurance
Team may have to procure external SMEs via FTC using contractors to deliver the Assurance plan.
This is not a preferred route to Assurance and is considered an extreme contingency.
Next Steps & Timelines
15. Commence G-Cloud13 and Invitation to Tender processes as prescribed under Public Contracts
Regulations.
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POST OFFICE LIMITED
BOARD REPORT
Facilities Management &
Title: Security - Administrative
Correction of Public Notices
Meeting
th
Date: 4" June 2024
Martin Roberts, Chief Retail
Officer
Author: Steve Norris (Head of Property) I Sponsor:
Input Sought: Decision
Board is requested to:
e Approve the proposed action required to carry out an administration correction to
ntract-award notices in relation to the existing contracts with ind
e ,Annrome. annesarh to vary the Kings Security contract extension term fromIIRRELEVANT TY
{___ IRRELEVANT I (which aligns to the 2020 public contract advertisement notice)
total contract spend, whichever is sooner.
o The purpose of varying the contract extension term is that at the rate of current
contract spend.Post. Office. wauld exceed.thi rected public award notice
value approx. I... IRRELEVANT 3 at which.point further
spend would not be compliant with PCR 2015. However, the} IRRELEVANT! of
extension does allow for the mobilisation of 3 resource intensive contracts within
Retail Property to be separated from one another which was part of the original
intent of the allowed contract extension.
SxECUUVE Summary
An Auaust.2021. Post. Office let senarate contracts ta.
_IRRI LE
2. The scope of the contracts included Business as Usual (BAU) and non-BAU Spend
(reactive maintenance and related project works). This scope was set out in all tender
documents and formed part of both Technical and Commercial evaluations.
3. When publishing the public contract award notices for the contracts, the value at which
the contracts were raised reflected the BAU only spend, excluding a forecast of non-BAU
(reactive maintenance and project spend) spend, the public contract award notice values
are therefore too low, creating a risk of future non-compliance with PCR 2015.
4. It is propos
notices to;_ im
advertisement notices, which were inclusive of a forecast of project spend.
Report
1. In 2020 through to 2021, Property and Procurement carried out the Procurement, all Lots,
the scope included both Business as Usual (‘BAU’) and non-BAU spend (reactive
maintenance and related project works), with both forming part of both Technical and
Commercial Evaluations.
Strictly Confidential
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2. The contract advertisement notices included 3 Lots with estimated values set out in TED*
as follows:
a. Loti -
c. Lot3-
3. Following com
4. In March 2021 Board approved contract awards upto:! for the 3 contracts. Board
notes also reflect the understanding that the scope included non-BAU spend.
5. The public contract award notices were published with total contract values reflecting only
BAU spend (excluding non-BAU spend), and are therefore inadvertently low, creating a
risk of future non-compliance with PCR 2015.
6. It is therefore proposed this administrative error is corrected, by;
a. the public award notice is corrected to reflect the public
tice (detailed in 2a of this paper)
b.
c. he public award notice is corrected to reflect the public
advertisement notice (detailed in 2c of this paper)
7. Additionally, SEG ed to approve iati . the compliant contract
extension with; IRRELE
spend indicates that tl
year.
8. All the contracts remain under spend and scope monitoring, should th
forecasted to be met sooner, then the services will be re-procured.
Financial Impact
9. There are no impacts to budgets from this corrective action.
10. Finance have confirmed budget and are sighted and understand the proposal.
Risk Assessment, Mitigations & Legal Implications
11. A separate risk note has been provided to the contract owner. The risk of challenge is
considered low. There is no impact on the AoA. The legal risk note has been uploaded to
the Reading Room.
Stakeholder Implications
12. Property, Procurement and Legal are aligned on this course of action.
13. There are no immediate impacts on Postmasters of this activity.
Next Steps & Timelines
14. Subject to SEG (May) and then Board (June) approving this approach, Property shall
raise eCAFs to reflect the above and Procurement will amend the public notice position.
Strictly Confidential
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POST OFFICE LIMITED
BOARD REPORT
Energy Contract Award - CCS re-opt Meetin
Title: in for procurement of Gas and pate: 9 4" June 2024
Electricity to the POL Estate “
. so _ . Martin Roberts - Group Chief
Author: Steve Norris - Head of Property Sponsor: Retail Officer
Input Sought: Decision
framework ‘Supply of Energy 2’ (RM6251) for a further! eeeee..MRRELEVANT al
{ with a forecasted value oft" ‘0 provide Gas and Electricity to the
mainland UK Post Office network (DMB’s, Secure Warehouses and Administration sites).
* and to delegate finalising contract terms and contract award, to SEG and authorise any 2
Directors or any Director and the Company Secretary to execute the contract which results
from the Procurement described herein.
Executive Summary:
1. In September 2022 Board approved the sourcing strategy for Gas & Electricity via an opt-
in to the CCS framework (RM6011).
2. Property and Procurement are recomm
‘Locked 6 Basket’ starting from April thi
certainty to Post Office through a CCS hedged market approach of.
3. Post Office are required to confirm to CCS by the_
wishes to opt-in to the forthcoming CCS procurement.
4. The values referred to herein are estimates only_a
* The total value for a further 36-months is
4 per annum for Electricity
} per annum for Gas.
ina.that.the. business re-opts.into the CCS
hat Post Office
be subject to variation.
Report
5. Post Office is responsible for ensuring the supply of gas and electricity for the DMB’s,
Secure Warehouses and Administration Offices. Franchisees maintain their own
arrangements for energy and therefore these do not form part of any POL agreements.
6. Energy is a very complicated marketplace, constantly fluctuating and subject to
macroeconomic global events and so ensuring Post Office have a competitive but
importantly a hedged rate by which we can budget is important. This is in line with Post
Office Ltd low risk appetite.
7. The CCS Energy framework for all public sector clients has an estimated value of up to
, this agreement is expected to be the largest UK public sector energy contract ever
‘Gwarded, with a range of enhancements designed to support public sector organisations.
8. The framework is used by 55% of public sector organisations, including Local Authorities,
Health Trusts, Education sector and Emergency Services.
10. An assessmi
indicated a
1
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procured to CCS basket rates XXX For Post Office this would mean cost avoidance
of upto ~ per annum however tracking market movements over time against rates
that would also have moved is complex and resource intensive.
a. When opting into CCS in Apri Post Office were able to reduce spend on external
market hedging services by per annum.
11. Benefits to Post Office of being part of the framework are:
a. Post Office spend o per annum is included in a CCS market approach of
with Post Office benefitting from that scale.
b. This basket supports the business’ requirement to maintain cost certainty which is
advantageous for volatile commodity costs. This is in line with Post Office Ltd low risk
appetite.
There are no committed volumes required from Post Office.
. Post Office receive regular reports on energy prices and how they impact our budgets.
e. Access to educational webinars, bulletins and events providing insight on key energy
market developments.
f. Access to a variety of renewable requirements.
g. Access to a named account manager and a dedicated customer service team at each
of our suppliers.
12. Further value is realised by not directly managing a resource heavy procurement that are
time consumina.and expensive and would not yield better results than the CCS who are
leveraging "="! of spend.
13. Post Office has been in the CCS Locked 6 basket since 1st of April 2023. CCS procurement
has been efficient, and the services provided by the suppliers awarded under framework
have performed well.
14. The 36-month term is recommended as it avoids mobilisation periods of other significant
FM and Security Property contracts.
15. Under the CCS Framework, to opt-in to the basket starting in April 2025, we must inform
CCS by no later than 16'" September 2024. The period of notice required by CCS allows
them to include Post Office demand securing our desired cost certainty.
16. Other ‘baskets’ are available from CCS but longer term baskets have less flexibility.
Financial Impact
17. ,.Finance_are.siahted.and_have confirmed budget for electricity, and gas from April thei= I
I_ IRRELEVANT _iand agreed the forecast of "== "
Risk Assessment, Mitigations & Legal Implications
ao
18. Acompliant opt-in to the CCS will be executed, there are no known or expected PCR 2015
risks at the outset of the exercise.
19. Aseparate risk note has been provided to the contract owner, that considers AoA 8.1(AA).
The risk of PCR challenge is considered low. The legal risk note has been uploaded to the
Reading Room.
20. This following process was agreed with CoSec.
a. The Call-Off under the CCS Framework which was signed previously is ‘Evergreen’,
meaning it continues until we compliantly terminate. The call-off ‘survives’ expiry of
Frameworks and allows migration to appropriate replacement frameworks.
b. Therefore, there is no requirement for Post Office to sign a new Call-Off following
receipt of approval to proceed from SEG/Board. However, following appropriate
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SEG/Board approval to proceed, Property shall submit an internal eCAF for approval
and (once approved), Procurement shall raise appropriate Public Award Notices..
21. Post Office can terminate wit }of the opt-in
period. Property will review in advance of this period each financial year to confirm CCS
framework is performing for Post Office.
Next Steps & Timelines
22. Subject to SEG and Board approving the contract awards Post Office will confirm to CCS
the opt-in to the CCS Energy procurement, execute the contracts and CAF process and
publish the award notices.
* CCS Energy and Commercial Benefits 2022/2023 Report 2022/23
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POST OFFICE LIMITED
BOARD REPORT
Title: Morson contract spend increase - Date: 04 June 2024
Contingent Labour
Audion Tim Perkins, People Services sponser Karen McEwan, Group Chief
Director People Officer
Input Sought: Approval and Noting
Board is requested to:
Morson Human Resources Ltd t/a Morson Talent
i. Approve the modification of the above-named. Contract. under Reg 72(i)(e) and (8) for
an additional forecast spend of}. IRRELEVANT. _.. when a new Contract will
be awarded.
ii. Note onward approval to DBT Commercia
the value of the contract will be more than;
Re-procurement: Managed Service Provision of Contingent Labour
iii, Approve a tender exercise under CCS Framework. Agreement. RM6277, Lot 7, Managed
up toler) EOE
iv. Note approval to DBT CaaG as contract value is more thani"
v. Board is asked to delegate contract award, finalising contract terms to
any 2 Directors or any Director and the Company Secretary to execute the contract.
Intelligent Resource Ltd (“IR”)
v. Board have previously approved the commission element of the IR contract
will not be exceeded by the contract end date of 31% March 2025), but not the fall value
of the contract (including the payments made to contractors) which is forecast to be
vi.
Articles of Association
vii. I Note that the projects which utilise the contingent labour contracts which fall within the
definition of Relevant Transaction under Article 8.1(X) of the Articles of Association will
seek separate approvals for their expenditure.
Executive Summary
ised
ae ISEG agreed the following:
* Continuation of the use of the Morson contract whilst the issues are resolved
e¢ Publication of the contract award notice to regularise the PCR _ issue
Please note that this was published on10th May 2024.
e SEG approved this paper for onward submission to the Board at their meeting on 20 May
2024.
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The key approvals required are to:
e Amend the existing contracts for contingent labour.
e Agree this re-procurement sourcing strategy for a new managed service provision for
contingent labour, noting that forecast spend on this contract is
Report
Morson Human Resources Ltd t/a Morson Talent
1. Given the existing and planned spend on the Morson contract a modification of Contract
under Regulation 72(1)(e) and (8) is required and needs Board approval. Performance of
Morson under the existing contract is good.
2. This Regulation does not require the publication of a notice on Contracts Finder or FTS.
3. The financial analysis confirms that this modification will take the forecast spend,
assuming a new Contract is awarded by I and therefore
Post Office is required to also seek DBT CAAG approval before @xéciting the contract
modification.
Re-procurement: Managed Service Provision of Contingent Labour
4. Options open to Post Office for this re-procurement are set out in Appendix B.
5. Board is asked to approve the recommended option Appendix B (b) for a tender exercise
under CCS Framework RM6. Managed Service Provision for a period of
for a forecast spend of up t
6. RM6277 is a compliant rou
procuring Contractor Services.
7. Board is asked to delegate contract award, finalising contract terms to SEG and authorise
any 2 Directors or any Director and the Company Secretary to execute the contract.
market under the Public Contracts Regulations for
Intelligent Resource Ltd (“IR”)
8. Intelligent Resource (IR) were the supplier of contingent labour to Post Office before the
contract with Morson was awarded.
9. To ensure continuity of service of some contractors, Board approved a direct award via
Regulation 32 to IR with a total contract.value_o: for continuing to pay the
contractors engaged through IR unti Current.contractors engaged
through IR will be expected to leave Post Office on or before; IRRELEVANT or transfer
to the new supplier of contingent labour. This is being managed through the Contractor
Review Project.
10. This £750k approval related to the commission paid to IR and did not include the value of
the contingent labour itself, which is farecast to be by the Contract expiry date. Post
Office will not breach the approved: "="! spent on commission by:
11. Board is asked to note the Publication of the Contract Award Notice for the IR contract on
and forecast through to the
Contract expiry date, _
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Financial Impact
11. The financial analysis of spend on contingent labour has now been completed.
12. The details of the existing and planned spend on contingent labour is included in Appendix
13. The planned spend on contractors beyond! IRRELEVANT has been calculated and is
based on the following assumptions: =
a. Replacement of Horizon spend is per the business case to DBT
b. RU/Inquiry contractor spend.camns.cown in FY25/26 per latest forecast
c. Other Change Spend is T_} on_an estimation of 23/24 actuals
d. BAU contractor spend remains flat at £2.1m i
e. A 35% contingency
14. Under the current CCS Framework Agreement for Interim Contractors (RM6160) the
following obligations apply:
a. Post Office is obliged to give at least 4 weeks' notice in order to transfer Contractors
to a new Agency without incurring a transfer fee. If Post Office do not do this a
transfer fee will be incurred (which will be equivalent to the Supplier Fee element of
the total charge rate that would otherwise have been paid had the correct notice
been given).
b. If an assignment is 12 weeks or more (notice can be given after 8 weeks to comply
with the 4 weeks' notice required) Post Office must honour payment of Service
Provider fees for the balance of the minimum 12-week period (including notice). Post
Office will therefore need to pay the outgoing Service Provider for the balance of fees
due as well as to the new Service Provider, if this is not managed.
Risk Assessment, Mitigations & Legal Implications
15. At the same time as dealing with the issues outlined in this paper, Post Office is also
running a project to review existing contractors and reduce its IR35 risk.
16. The quantity of change impacting the contingent labour workforce may lead to a number
of risks including:
a. Failure to manage the changes effectively on an individual contractor level;
b. The cumulative impact of changes on individual contractors leading to retention
issues, which in turn will impact knowledge transfer and delivery;
c. Capacity issues in the Talent Acquisition team should there be more change than is
initially anticipated — this may also impact non-contractor resourcing; and
d. Failure to meet required deadlines for exiting contractors leading to further non-
compliance.
17. The risks outlined in 14 (a) and (b) above are mitigated by i) planning the notice period
into the timetable, should the incumbent not be successful, and ii) a transfer plan will be
agreed between outgoing and incoming Service Providers and iii) planning the run-off of
any Contractors working on Contracts longer than 12 weeks with the outgoing Service
Provider.
18. ALegal Risk note addressing all PCR related risks has been uploaded to the Reading Room.
Stakeholder Implications
19. The stakeholders primarily impacted by the recommended actions in this paper are:
a. Existing contractors working in Post Office - they may be impacted by the contractor
review and any change in service provider.
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b. The existing suppliers of contingent labour (Morson and Intelligent Resource) - their
existing contracts with Post Office will finish on 30th November 2024 and 31st March
2025 respectively.
c. The shareholder - who needs to approve the approach taken.to modify the existing
contract for contingent labour, approve the plan to spend: at) on the new contract
for contingent labour and approve any Relevant Transactions.
d. Others will also be impacted, notably:
i. Post Office employees who manage contractors and also those working in Talent
Acquisition, Finance, and Procurement.
ii. Beneficiaries of work completed by contingent labour in Post Office — this might
include Postmasters and customers.
Next Steps & Timelines
20. The tender outcome report will be submitted to SEG following the further competition,
based on the price and quality ratio and Award Criteria applied, together with
recommendation to award to the Preferred Bidder.
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Appendix A
POL Contractor Spend by FY
Total 4
ém FY23/24 —FY24/25 FY25/26 FY26/27_ _—*FY27/28 years
~- IRRELEVANT
SPM
SDES & Horizon 6 2 1 1 11
RU/Inquiry
Other
“oe IRRELEVANT
POL Contractor Spend by Year (for new contract purposes)
Start 01-Dec-24 01-Dec-25 01-Dec-26 01-Dec-27
End 30-Nov-25 30-Nov-26 30-Nov-27 30-Nov-28 Total 4 years
BAU
Change
SPM
SDES & Horizon 3 2 a 1 8
RU/Inquiry
Other
=— IRRELEVANT
Total (inc.
Contingency) I
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POL-BSFF-WITN-019-0000004_0106
Appendix B
Procurement Options considered with their relative advantages and disadvantages are shown
in the table below. The recommended option is (b) which is for a further competition under
@
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RM6277.
Ref Option Advantages Disadvantages I Recommended
a. Post Office Restricted I Need to review POL P-Suite Longer timescales No
Tender terms and conditions Suppliers may offer
/schedules to suit rates above capped
Can bespoke to POLs framework rates
requirements (scale)
b. I Further competition I Medium Timescale Suppliers may improve Yes
under RM6277 Terms and Conditions agreed framework rates (but
Some flexibility to supplement I not above capped
the specification rates)
c. Further competition Medium Timescale Could stimulate better No
under RM6277 - Terms and Conditions agreed rates but CCS advised
Electronic Reverse Some flexibility to supplement _I this could be at the
Auction the specification expense of quality
under this Lot 7
d. I Direct award under Shorter timescales Maximum framework No
RM6277 Terms and Conditions agreed rates only
No flexibility to supplement the
specification
e. Other available ESPO — has Neutral & Master IESPO -Split across 2 No
Frameworks Vendor Providers. Includes Lots 1a & 1b (two
Morson jtenders)
YPO — has managed services )YPO- Does not include
options (Lot 2) IMorson
Health Trust Europe (HTE)-has ICurrent framework has
a master vendor framework max. ext'ns to
24/01/25. Not suitable
ito POLs timeline Does
Inot include Morson
6
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Strategic Review ai o
Update for the Board
Post Office Limited
4th June 2024
ini Teneo
~~
POL-BSFF-WITN-019-0000004_0108
Background and proposed project approach
Background
+ Post Office Limited has invited Teneo to carry out a comprehensive Strategic
Review of the business and develop a clear plan for the future
+ The Post Office faces a range of challenges, including:
— Historic damage to reputation and brand trust following the Horizon
scandal and subsequent public enquiry
— Structural decline in the core Mails and Retail business
~ Significant competition across a range of markets in which it operates,
and a need for product and service portfolio optimisation
— Need to reset and rebuild POL's partnership with sub-postmasters
— Need to balance development of digital services while sustaining the retail
network and relationships
~ Inefficiencies in operations and inappropriate overhead structure
— Insufficient clarity on stakeholder expectations, particularly around the
balance of economic and societal goals
— Need for technological overhaul of core systems, with substantial delays
and overspend on Horizon replacement
+ Asignificant amount of work has been undertaken / is ongoing (including the
POHIT enquiry) to address some of these issues
~ This review represents an opportunity to build on previous work and
weave together the existing programmes of change already underway
ii Teneo
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Project approach
* Teneo will undertake a thorough review of the Post Office to understand its
current position, clarify its core objectives, identify opportunities and risks,
prioritise initiatives, and develop a clear plan to realise the chosen strategy
* We propose the work be carried out in three key stages over a c.12-week
period:
— Stage 1 (4 weeks) - Assessment of current situation and diagnostic, where
appropriate drawing on existing or ongoing POL analysis
— Stage 2 (4 weeks) — Clarification of purpose and objectives and
prioritisation of options and initiatives to support the development of the
business
~ Stage 3 (c.4 weeks) - Development of a strategic roadmap and 5-year
plan for presentation to the Board and key stakeholders
* Teneo has achieved significant success in similar engagements, such as the
Strategic Review of The National Lottery, and brings:
~ Proven depth of capability in strategic planning and business
transformation
~ Experience of situations where a balance of societal and economic
objectives must be found
~ Ability to draw upon capabilities from within the wider Teneo team,
including Strategic Communications, Government Affairs, People, and
Financial Advisory
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We aim to address a range of key questions for the Post Office to develop a clear plan for
the business over the next five years
Key Questions (non-exhaustive)
© #
Reputation, Product & Branch Operating Fit-for Purpose Stakeholder
Trust & Brand Service Portfolio Proposition Model & Culture Technology Management
+ Hows the Post Office + How are each of the Post + Whatis the right network to «Is the current operating + How will technology support + How do we ensure
viewed in the wake of the Office's businesses meet future needs? model and organization fit for the future operations of the stakeholder support for the
Horizon scandal? performing? purpose? Post Office? strategy?
+ How could the Post Office's
+ What actions must the Post + Who does POL compete value proposition for + Where do inefficiencies exist + How do we ensure new + How do we ensure that
Office take to restore public against and how can it (sub)postmasters evolve ina and how can they be ‘systems (e.g. Horizon (sub)postmasters' interests
confidence? differentiate in each? sustainable way? removed? replacement) are ft for are properly reflected?
purpose and future proof?
+ What do stakeholders want + What additions to its portfolio. + What should be the Post + What governance and + Is the current ownership
to see from the Post Office are needed and what should Office's contractual reporting structures are + How should we partner with structure appropriate?
(e.g. make money vs. serve be removed? relationship and needed? suppliers to achieve this?
the community)? renumeration strategy? + What is the most
+ What is the right balance of + What is the right size for the + How can technology be appropriate funding
+ Does the Post Office's physicalretail vs. digital + How do we manage for Post Office (now and in the leveraged to remove model?
purpose and vision need to services? Whalis the right variability in branch future)? inefficiencies and human
evoive to balance societal vs size of the retail estate? proftabilly and adapt our error?
economic benefits? offer to cater for different + Where is upskilling required?
formats?
A strategic review must unambiguously address these (and many other) questions;
the output of this work must be pragmatic, with a focus on implementation
ii Teneo 3
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Scope
nd Approach
We are taking a three-stage approach to the Strategic Review, which we anticipate will take
12-14 weeks
The Post Office Strate:
g Setting principles for the Strategy Prioritisation and definition of implementation ~ Implementation plan
3 py Market opportunities: dynamics and trends requirements ; = Technology and operating model implications
5 = Demand, technology and regulatory drivers > Recommendations on cost base/ efficiency = Investment implications
3° ~ Market sizing (by category, channel, segment) & optimisation @ ~*~ Modelling of 5-year financial plans, scenarios and
* Competitive landscape (current, emerging) g Preferred commercial roadmap S sensitivities s
* Performance diagnostic and key issues analysis g ~ Technology enablers S —* Board deliverables S
* Cashiliquidity analysis S ~ Organisational enablers x FS
* Growth/tumaround hypothesis development = g g
fn
* Secondary desk research, report and forecast s Documentation of strategic growth levers ‘5 * Final modelling of selected strategic option(s) 3
7 analysis & Modelling of selected strategic option(s) - Sales, % _* Definition of key R&Rs, organisational enablers c
B — * Data request and gathering of market, consumer fa Margin, Cashflow (by product type, channel) 8 and KPIs =
= and competitive data 3 Iteration of commercial and technology roadmaps £ * Preparation of Final presentation materials Ss
= ~ Initiate top-up primary research (as needed) = @ Growth opportunities workshop preparation and % + Preparation of Executive Summary es
% — * Management and expert interviews iy facilitation f° _ Board and stakeholder presentation
8 ©. Stakeholder and (sub)postmaster consultation a Facilitation of business plan workshop
S — * Scenario and strategic options development Stakeholder and (sub)postmaster
BK (portfolio, channel, etc.)
* Preparation of diagnostic and competition
deliverables
ii Teneo 4
STAGE 1: Situation Assessment,
Diagnostic and Hypotheses
Revisiting the purpose and vision for the Post
Office
STAGE 2: Option evaluation and
e defi
Description and analysis of key strategic options
Top-level financial analysis of strategic options
STAGE 3: Business plan and Board
presentation
Strategic plan presentation including:
- Recommended strategy
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Scope and Approach
1 PRELIMINARY
Week commencing (dates indicative’): I 27/05 I 3/06 I 10/06 I 17/06 I 24/06 I 1107 8/07 I 15/07 I 22107 I 29107 I 5/08 I 12/08 I 19/08 I 26/08+
Post Office Strategic Review wo wi w2 w3 wa ws we w7 we ws wio wit wiz I wi3+
High-level Project Phasing Intra =~ =~
Interim output: Diagnostic» Options: Strategic pian @ Draft @ Updated g Final
Reyontpm Mobilisation _co™Pelitve review report assessment workshop plan draft plan
Working group meetings * A * * * * * ni * * * * * * x *
Steering group meetings ard * Board ok x Boa
Hg _Dssroaest Submit Post Office to fulfil
2° scheduling
BI Initial hypothesis generation g
1 Review of existing data and reports 2 g
Fd 3 Market research (primary & secondary) g &
é H Commercial, Operational and Financial diagnostic meetings a e8
© Option long list development A x 3
1B) Workstream-speciic option description / prioritisation He g
i Develop overa strategic made and business case template Bes
& Detaled opton analysis (inal, implementation z $3
A 4 requirements, enablers, dependencies) 2 g
@ Develop preliminary strategic roadmap 3’ g
BER Preparation and output from workshop :
BI se recenere onto on faery neatngs
3 & Finalise plan
& Prepare Board materials
Bi Teneo notes: 1. subjectto procurement tmeines and agreement wth Post fice a
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Stuart Keeping will oversee the project, supported by senior subject-matter experts; the
core delivery team would be led by Elizabeth Irvine-Cadman
Resources
* Stuart Keeping will be
responsible for the overall
quality of the work. He has over
25 years of experience across
strategy consulting and general
management, with significant
experience in strategic
transformation
+ The project delivery team will be
managed day-to-day by an
experienced Teneo Director,
who will be supported by a team
of four Consultants
+ Teneois investing additional
management during Phase 1
Timetable
+ Weare assuming a formal start
date of 3 June but propose
mobilization activities
commence from 28" May
ii Teneo
Team member Role
Stuart Keeping + Overall project direction, key meetings and presentations, and thought leadership
Senior Managing Director
+ Coordination of Teneo's work with internal Post Office work and other advisors’ work
+ Subject matter expertise
* Specialist in operating model/ organisational design and cost take out
Tim Nixon
CEO, Management Consulting
Gee Lefevre + Subject matter expertise
Senior Managing Director
* Specialist in consumer retail and demand forecasting
* Day-to-day management and working with all workstream leads
Elizabeth Irvine-Cadman + Lead for working group meetings and workshops.
Director + Organisation of strategic planning
+ Oversight of deliverable production
* Additional leadership during Phase 1
+ Day-to-day management in Weeks 1 and 2
Kabir Seehra
Senior Manager
+ Structuring of diagnostic analysis and market review
+ Lead for management interviews and external primary research
Adam Mellul ? inn
* Manage financial modelling of strategic options
Senior Consultant
+ Management of deliverable production
Consultant Team
* Day-to-day project work, research & analysis
Jesse Mathews
Tian Xia
Philipp Jiang
Additionally, Teneo Financial Advisory will review liquidity and funding, led by Ben Davies (SMD) and Alissandra Moone (Director)
* Interview management and output (key issues, strategic options per workstream)
* Preparation for small group meetings and workshops
+ Development of PMO process and templates
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Section 04
Appendix:
Introduction to Teneo and
Relevant Experience
ii Teneo
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Introduction to Teneo and relevant experience
Teneo is a global advisory firm, combining an international network with deep sector and
local expertise
» Teneo advises the CEOs, Boards and other leaders of
the world’s largest companies, organizations and
investors
+ We help clients address their most pressing financial,
reputational, and transformational challenges and
opportunities...
+ ...and provide clients with a unique set of services not
offered anywhere in the world under one roof, and a
non-replicable group of diverse, highly talented senior
professionals
a 43 Offices
B& 4,700+ reont
4 ,200+ ciients
ii Teneo 8
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We bring together top professionals to offer a unique blend of capab
fashion across five key business areas
STRATEGY &
COMMUNICATIONS
MANAGEMENT
CONSULTING
PEOPLE
ADVISORY
RISK
MANAGEMENT
FINANCIAL.
ADVISORY
ii Teneo
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ies in an integrated
Our Business Segments
Strategy & Communications
Global strategic advisory and communications business focused on helping
clients achieve major business objectives, manage their reputations and
enhance stakeholder value.
Management Consulting
Providing expertise and leadership that companies need to drive strategic
change at critical inflection points that demand CEO focus and cross functional
attention.
Financial Advisory
Advising clients on strategies and actions to create, protect and realize value
across the full spectrum of transactions and industries.
Risk Advisory
Anticipating and mitigating risks associated with geopolitics, physical security
and cybersecurity to ensure business continuity and resilience.
People Advisory
Assessing current organizational needs and identifying what and who is needed
in the future to build thriving, sustainable organizations.
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A
A
ITl
re
<
>
=
—I
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fi leneo
Stuart Keeping
Senior Managing Director
Stuart.Kee GRO
+44 SS
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POST OFFICE LIMITED
BOARD REPORT
@
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Title: SPMP Update Paper Meeting Date: I 4t June 2024
. Kelly Goodwin - SPM Programme . Chris Brocklesby - Chief
muro Director epansar Transformation Officer
Input Sought: For Information
An update on the progress of the SPM programme since the funding request on the 20" of
March 2024. The programme currently has funding until the end of July by which time it is
anticipated the next funding request will be approved by Department for Business and Trade
(DBT) and HM Treasury.
Funding Approvals to Date
Date Period covered Stream
Mar-21 Mar-21 to Jun-21 SPM i
Jul-21 Jul-21 to Dec-21 SPM I
Nov-21 Jan-22 SPM
Jan-22 Feb-22 to Mar-22 SPM
Mar-22 Apr-22 to Jun-22 SPM
Jun-22 Jul-22 to Sept-22 SPM
Sep-22 Oct-22 to Jan-23 SPM
Jan-23 Feb-23 to May-23 SPM
Jun-23 Jun-23 to Sept-23 SPM
Jul-23 Feb-23 to Oct-23 RTP. i
Sept-23 Sept-23 to Mar-24 SPM (incl. RTP) i
Current I Mar-24 to Jul-24 _I_SPM (incl. RTP)
IRRELEVANT I
Introduction & What has been Delivered since March 2024
1. Key Programme Milestones achieved
Since the March board approval, there have been some significant programme milestones
achieved:
a. The pilot is now live in three branches - Aldwych in London, St Johns in Leeds and
Melville Rd in Brighton and positive feedback has been received.
b. Release 2.1 is also now live in these branches - R2.1 delivered full Parcelforce
functionality to the counter terminal; fixed high impact defects deemed critical for
continued R2.1 branch rollout and added in a new component allowing NBIT to
consume Business As Usual reference data.
2. Reviews of the Programme
a. Work continued in acting upon the findings from the Accenture Programme Diagnostic
Review which involved reorganisation and remediation work across the entirety of the
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programme. This work has now drawn to a close as a separate initiative but work from
the longer-term remediation items will continue to be tracked through pre-existing
programme channels.
b. In April, the programme went through two additional reviews instigated by our
shareholders as part of the business case approval process. The Infrastructure and
Projects Authority (IPA) review and the Public Digital review.
The IPA review is a pre-requisite to the programme’s onboarding to the Government
Major Projects Portfolio (GMPP), and in support of approvals for the Horizon
Replacement Business Case (HRBC), the IPA conducted gateway assurance of the
programme.
The Public Digital review was a direct instruction from the Permanent Secretary as part
of the DBT funding request. The report produced 22 recommendations and the
programme are now putting these into action and in parallel sharing the action plan
with DBT.
3. Postmaster Engagement
There have been several activities this period to engage Postmasters and start to
demonstrate some of the capabilities of NBIT.
A demo van pilot took place in South Wales, showing Postmasters the NBIT capability, in
total 48 sessions were held across the 3 weeks. Feedback was very positive. This has now
paused as the programme review the learnings and take our proposal for expansion to
Retail for approval.
A workshop was held with the National Federation of Sub Postmasters (NFSP) to show the
current demo of the NBIT functionality, inform them of the current test strategy and get
feedback. This was the first workshop in over a year and a positive response was given to
everything discussed. They were particularly pleased with the demos of the latest Back
Office functionality in development - an area that is critical to demonstrating how we are
developing NBIT to address historic Horizon issues.
The NFSP conference retail show took place on Sunday 12th May. The programme took
two demo devices and demonstrated these in the exhibition hall to over 100 postmaster
delegates. This was the first time for most attendees that they have seen the system. This
was positively received, and feedback was collated and fed into the programme for
consideration.
4. Integrated Assurance Plan
The programme has been working closely with Group Assurance to mature the assurance
approach around the programme focussing on priority areas and developing a risk profile
of current and future releases. Requirements have been developing with statements of
work now written for the 34 areas. Terms of reference have also been written for five
priority requirements - 1. Defects and risk management, 2. Security and User Access, 3.
Transaction Readiness, 4. Retail Readiness and 5. Business Requirements.
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A sourcing strategy has been developed and internal approval is being sought to onboard
an assurance delivery partner to validate the assurance universe and support delivery of
the 5 priority areas. We have agreed to delay these first 5 assurance reviews until we
have implemented the action plan from the IPA and Public Digital reviews.
5. SPM Away Day
The programme hosted an away day to get programme members and other interested
parties together to refresh the programme. There were keynote speakers by a range of
senior leaders in Post Office covering how the programme fits into the wider Post Office
ambition as well as what the programme is aiming to achieve, followed by some break out
sessions to gather inputs from the audience on the plan and deployment approach. There
was a good turnout of just under 180 people and it was a positive experience. It was an
important occasion to regenerate the team. The key feedback was to increase awareness
of SPM through increased communication at meetings such as the Town Hall.
Current Work in Progress
There are several activities still underway as part of this funding request which we are looking
to complete prior to the next request:
6. Further rollout to Directly Managed Branches (DMBs): two further DMBs (Glasgow,
and East Croydon) have been identified for additional rollout across May and June 2024
with the intent of bringing NBIT live operations to up to five branches.
7. Integrated Assurance Plan: The programme has been working closely with Group
Assurance to mature the assurance approach around the programme focussing on priority
areas and developing a risk profile of current and future releases. This work is ongoing
and an interim written update on the release risk profile was taken to the Assurance and
Risk Committee (ARC) in May.
8. R2.2 Planning: Agreement was reached at Steerco to break down R2.2 into phases to
expedite the resolution of known errors and potential security vulnerabilities in the current
code set.
9. IPA and PD recommendations: Work has started to address the recommendations out
of these two reviews, this will be a focus for the rest of this funding period and likely
beyond.
Shareholder Engagement & DBT Approval
10. The business case approval process has progressed, albeit at a slower pace than originally
expected due to continued engagement with DBT following the outcome of the IPA and
Public Digital reviews of SPMP. The Permanent Secretary has asked for further details on
how POL will address the recommendations made. It is not currently clear when the DBT
or HMT approval process will be complete. We now have a weekly meeting with DBT, IPA,
UKGI and Cabinet Office to navigate the approval process.
Given the uncertainty around DBT / TAP approvals and the additional complexity caused
by the General Election, it is unlikely that approval will take place as originally planned
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(by June 2024). As such we are working with DBT/UKGI Stakeholders to reallocate existing
funding to ensure that we can meet existing and short-term commitments up to end
November.
However, further delays will create difficulties for SPMP, including delivering our current
plans to our current budget. This may impact on our recruitment campaign to scale up
resources and capability as well as short term commitments across our supply chain.
Update on Financials
11. In the period between April 2024 and July 2024, the programme requested approval from
the Board to speni . Our current forecast is to underspend by The costs
break down as follows:
Category April May June July I Total
Tech Delivery
Deployment and Training Costs
Business Change
Service & Support
Programme Costs
— IRRELEVANT
Total* (Actuals and Forecast)
Approved Budget
Variance
*Total amount is made up of April actuals and May to July forecast
The actual and forecast variance is a result of increased legal and testing support offset
by the re-profiling of POL vacancies, coaching support, licences and tooling to later
months.
Update on Recruitment
12. In the Business Case submission, we forecasted a total of 83 vacancies between March
and June. Out of those vacancies we have offered against 41 of them (49%), 16 have
recruitment activities ongoing (19%), 13 (16%) have been pushed back due to planning
work which has given a more up to date and accurate view of timescales/requirements, 2
(2%) are no longer required, and 11 (13%) have further action required. Of the 13%
awaiting further action this includes roles requiring evaluation, and several other roles
where a decision is being made around which supplier is a best fit against our requirements.
13. We have recruited two new members to the Programme Leadership team. In the last
month we have onboarded a new Technical Delivery Director and Business Change and
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Readiness Director who are both POL colleagues and have extensive retail experience in
Sainsbury’s and Asda respectively.
Next Steps and Timelines
14. An update on progress against the deliverables underlying the funding drawdown will be
presented to the July Board, alongside a wider update on funding discussions (i.e. a large
part of which will relate to progress on discussions with DBT and HMT on SPMP).
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POST OFFICE LIMITED
BOARD REPORT
Title: Banking Framework 4 (BF4) Meeting Date: I 4" June 2024
Owen Woodley, Group Chief
Author: Ross Borkett, Banking Director Sponsor: Commercial Officer and Deputy
CEO
Input Sought: Noting
The Board is asked to note:
i. The new extension timeline for BF4 negotiations
ii. A further update and the final offer will be provided to Board in October 2024 prior to
the final offer going out on 15th November 2024
Executive Summary
Substantial progress has been made during the BF4 bilateral engagements with framework
members since releasing the commercial offer in March 2024, despite increased pricina.causina.
them to have concerns. and making the discussions challenging. BF4 pricing opened ati! L
timeframe to allow time to react to Access to Cash (A2C) regulations which are due to be
published on 1* July 2024._All framework members. are.in.support.of this request and therefore
POL have agreed to a! IRRELEVANT ____.Iwhen the final offer will now
go out.
As a long-term strategic partner to the banks, this is the preferred approach for closing a deal
that will achieve optimal pricing for POL and Postmasters. The original plan was to address
Access to Cash Regulation impacts using the existing contract change control mechanisms, but
this is not the wish of the banks. Instead, the banks prefer extended discussions over the
summer that will likely focus on coverage, capacity (physical and opening hours), accessibility
and treatment of vulnerable customers. The banks will want POL to be as closely aligned to
their new obligations as possible. Therefore, POL will need to consider how to balance these
additional requests and commitments with what we are willing and able to offer, recognising
that the banks will have to look at alternative solutions where we cannot support them. POL
will not align completely to the new regulations, and this is a position that has been made clear
to the framework members.
The Banking Team continues to be confident a deal can be struck that delivers a significantly
improved position for POL and Postmasters, while continuing to support banks with their A2C
obligations.
Strictly Confidential
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Report
A. What has happened since January?
1. We commenced initial all-bank contractual negotiations in November 2023 and have made
substantial progress.
2. Following January Board, we issued our commercial proposal in March, and we have
subsequently met with many banks through bi-lateral discussions. We set our opening
price position 6.4% above the top end of the target range we presented at Board with the
plan to make concessions and land towards the top end of the range.
3. Bank engagement occurred later than we had planned - the banks took longer to consider
our overall proposal than we anticipated, and in-depth discussions did not commence with
most banks until April.
4. As expected, these engagements have been very challenging. Firstly, our overall price has
been very badly received, with some members showing significant disappointment while
others have demanded greater transparency and justification of cost increases, including
demands for reductions in our price. In particular, Santander continue to push for changes.
5. In addition, we received lots of questions about our investment and automation plans and
our cost of cash proposal, both of which we have worked to provide more clarity to the
banks on.
6. Regarding cost of cash, we have listened to feedback from banks on how the mechanism
works and adjusted this in an updated proposal in April.
7. There has been a lot of pressure to offer options on the term of the agreement. Numerous
banks either want another 3-year deal or want the option to consider one. Others are
more open to a longer-term arrangement but only if they see adjustments in other parts
of the deal. We have firmly pushed back on this, and the deal remains based on 5 years
only.
8. At the end of April
to BF3 to consider
Proposal as neither a continuation of BF3 nor the concept of a}
or Postmasters. .
9. However, part of our rationale for significant price increases was based on our support to
the banks in meeting the new access to cash regulations. While it is frustrating that banks
have not engaged earlier on this topic, it is a core part of the deal and a set of topics we
would need to negotiate this summer anyway in advance of regulations taking affect in
October (originally planned to do so under BF3 and BF4 change control). Following
discussion internally and with the banks, we are proposing that more time is created to
negotiate the A2C regulations this summer before concluding the deal before October
Board. Banks would have until March 2025 to complete their governance and BF4 would
commence in January 2026 as originally planned.
10. We believe this is the best route forward to concluding the deal successfully. A proactive
approach to solving the concerns of our largest clients is beneficial to the long term, more
strategic partnership that we seek.
IRRELEVANT
B. What is the current state of negotiations?
11. -Sessians have been held with all members that have requested bilateral engagement.
IRRELEVANT have been a notable excantion in this regard, mirroring their BF3 approach of
providing little feedback to POL. :"*"*“"; have focused on forthcoming A2C regulation,
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IRRELEVANT
nge th it have “emerged i nt
level of price increases (particularly the Framework Fee); ofurther clarity sought on the
investment case.for.autamatian:..members..want.to understand cost of cash (CoC)
mitigations andi IRRELEVANT I the change-giving proposition is
problematic. The 5- year deal term remains unappealing to many members, exacerbated
by the quantum of pricing change and our new collar mechanism, although we do not
regard this as insurmountable and have rejected counter proposals on term.
13. CoC concerns appear to have been alleviated by a commercial update issued in mid-April,
addressing members’ feedback and outlining a ~20% reduction in cost pass-through via
optimising our banking float position and an outlook of lower interest rates. We plan to
issue an update shortly with further details on our business case for automation and are
starting to see some initial traction on engagement to integrate to our MFD solution.
14. Despite the challenging negotiations, the tenor of bilateral discussions indicates there is
grudging acceptance of our currently tabled commercial offer, with some members
starting to look to their internal governance.
15. Our Board approved J 2024 was to seek closure on
target price range of: e opened negotiations a’
above the top of th 9 one.cancession.throuah..
proposal, with the current price proposal set a XE AN _.
range. This positions us well for this final phase of negotiations this summer. These price
-Movements_are. shown. in.Appendix 1, with the resulting member level pricing impacts for
IRRELEVANT I
16. Based on the feedback from bilateral sessions, we have modelled potential commercial
concessions for the Framework Fee cap, change giving price tiers and MED. Inigration
volume guarantees as part of our closing strategy, totalling a maximum of (===)
BFA4 term. In addition, we may need to make additional commitments. ‘with regards
network coverage or services as part of the new A2C regulations.
17. Therefore, we are not minded to enact any of these levers yet. Firstly, despite the strength
of negative feeling from some members on our offer, we remain unconvinced if these
“gives” are absolutely necessary to close out the deal. Secondly, with the extension of
negotiations through this summer, we don’t want to act too early, especially if we need
headroom to react to the new regulations.
18. In parallel, our legal workstream has made good progress on closing out the negotiations,
with the contract already in a mature state through various iterations. 90% of the contract
is now complete, with the remaining 10% focused on addressing the banks’ regulatory
concerns. The outstanding areas are as follows:
i. Treatment of manual cash deposits within the payment agent remit (please see draft
Legal Risk Note Annex 1 for more detail). This follows from the FCA expressing its
view that POL is acting as PSD agent of the banks/Electronic Money Institutions for
all services including manual cash $00
eigen in banks are taking their own legal advice on the treatment o'
manual cash deposits, but this is a position they have risk accepted before. This
should not be a barrier to concluding negotiations as it can be addressed under
change control;
ii. Material Sub-Contracting - Members have flagged the requirement to be closer
aligned with the Prudential Regulation Authority (“PRA”) (S2/21) Supervisory
12.7
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Statement in respect of material outsourcing. An agreement in principle has been
reached that should result in an acceptable compromise position and amendments
will be made to both BFA3 and BFA4; and
iii. I Access to Cash regulations - the Members have also requested closer alignment with
the new A2C regulations - we await the banks’ input/ requirements as part of the
discussions planned this summer.
C. What is the plan to close negotiations?
19. Our original plan had been to close negotiations in May and issue the final BF4 commercial
and contract offer at the end of June, subject to POL Board approval. The FCA regulations
are due to be published by July and will come into force in October and we had intended
to address these throvab.chanae.cantral....,
20. With the request from. IRRELEVANT for a delay and feedback from UK Finance that
other members have expressed support for an extension, we are proposing a compromise
to allow time this summer to continue negotiations on the alignment of BF4 and A2C
regulations. The proposed extension timeline can be found at Appendix 3.
21. The original timelines were set out in our contract, and therefore this change requires that
all members agree to any changes via the Change Management Note mechanism. We are
progressing this change through the current Banking Framework governance.
22. POL and framework members will enter further discussions related to the impacts of A2C
regulations during an extension period out to the end of September 2024. Members will
be required to collate a consolidated list of topics by early July that will be worked through
during a series of scheduled deep dives and the scope of these discussion will be limited
to the A2C regulations only. It is not intended to reopen other areas of the contract for
debate. We will need to decide if and where we want to make further commitments with
regards these topics, especially where it makes strategic and competitive sense to do so.
23. POL will then complete internal governance during October, returning to Board on 29th
October and will then issue the final BF4 Contractual and Commercial Contract to the
members by 15th November 2024. Banks will have to notify POL of their intention to sign
up to BF4 or leave the framework on 31st March 2025, compressing their notice period to
exit from 12 to nine months.
24. There is a risk that further time this summer will not result in an agreement in aligning
with the new regulations. The newly proposed final submission date of 15th November is
a “hard stop” date - we will issue the BF4 proposal at this point even if negotiations are
ongoing. Beyond this date risks a lack of service continuity and will create significant
uncertainty from 1st January 2026 for Postmasters which we cannot allow.
25. Whilst an extension is frustrating it should be recognised that there has been a lot of
Progress towards preparing for the current offer to go out and the intention from the team
is to close out other aspects of discussions as planned. The two exceptions to this are
Agent Status (impacting Schedules 2 and 4) and Management Information (Schedule 4).
These are due to be resolved by October 2024 but will be changed controlled into BF4 if
an extension to the negotiation timeline is not agreed. Please see the Legal Risk note for
further details.
D. What will these further negotiations focus on?
26. Firms that are designated to adhere to the A2C regulations will need to be ready to do so
by October this year. Post Office will continue to play a central role in helping the banks
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meet these obligations, along with their own remaining bank branch networks, the LINK
ATM network and the creation of new solutions such as Banking Hubs and deposit-taking
ATMs.
27. The banks will want clarity on what Post Office will and will not meet with regards the new
regulations, and where the risks of changes to our network could leave them in breach of
their obligations. They will likely push for us to provide them more certainty, something
we will likely struggle to do with the nature of our franchised, retail network.
28. Initial conversations have tended to focus on four main areas; coverage (physical and
opening hours), capacity, accessibility and treatment of vulnerable customers. There are
clear indications that the designated firms will want contractual commitments from POL
to maintain the existing coverage model for banking services where they will have a
requirement to the regulator.
29. This places two fundamental challenges for POL where the designated banks will not want
to be exposed to increased regulatory risk: 1) if and when a Post Office closes, the banks
are likely to expect POL to stand up banking services in that location within three months,
as per draft regulations; 2) when POL is deciding whether to reopen a closed Post Office
or looking at future network coverage, POL will have to include an assessment on the
impact of losing that access to cash. The banks will likely push for more commitment to
keep a loss-making Post Office open if needed to meet the regulations.
30. This will result in two considerations for us: firstly, how we become a more banking
focused network to support our biggest clients in exchange for our higher fees; and
secondly, consideration of where we may strategically want to do more for the long-term
competitiveness of the network. For example, where we plan to re-open a Post Office, we
may want to consider implementing a temporary service to meet the access to cash
regulations to avoid the banks being forced to implement an alternative cash service,
making it harder to attract a new Postmaster to that location.
31. However, we will not be able to align completely with the new regulations - a position we
have been very clear on to date.
32. With our current commercial position above our target range this may be something we
want to consider as we progress through these discussions over the summer, or we may
want to increase our price in exchange for more commitment for the banks. We will work
closely with the Retail team as we finalise these negotiations.
33. In parallel, we plan to formally engage Cash Access UK in the renewal of our Banking Hub
deal. We have started informal discussions and internal planning and plan formal
engagement on this topic in June. Alignment of these discussions could be helpful as they
all result in access to cash solutions that the banks will need.
34. The closer we get to October, the more focused the banks will be on securing services to
meet the new regulations and to avoid FCA fines.
E. What are the major risks we face?
35. Whilst we believe an extension is the right approach to follow at this stage (as outlined
above), it also presents several risks that will be carefully monitored and managed through
our fortnightly internal Steering Committee:
i. There is a risk that members link what they deem as an excessive Framework Fee to
A2C/network provision guarantees and demand more for the price. We will need to
remain very clear and firm about what our price covers (and does not).
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ii. There is a risk that an extension could reopen the door on elements of BF4 that have
been locked down, or members use the time to chip away at the deal that is currently
on the table. We will need to remain firm on what the scope of this additional time is
for. The proposal we make remains in POL’s control.
iii. A2C regulations may be delayed and members may try to put pressure on a further
extension. All indications are that the regulations are proceeding on time, and we will
be clear with banks that our November date is a hard stop. We also believe it is
possible to progress much of these negotiations with the draft regulations.
Financial Impact of Board Approved Pricing Range
Postmaster Remuneration
Cost of cash
Supply chain staff costs
Allother banking specific costs
== IRRELEVANT
Central overhead allocation (ne.
fixed PM rem element)
EBT margin % :
‘Aug. EBT across period i j
facility costs. Bottom-up modelling has now separated a significant CoC contribution from other POL products (e.g., ATMs, FX, and
payments), optimised the position for the,
has resulted in a reduced CoC position of
revenue target range.
2k banking float and has been updated with lower revised BoE interest rates. This
I to pass on to BFA members in 2026. However, we have maintained our overall
2. The Board approved revenue range and resulting EBT will allow for further increases in Postmaster remuneration, to be confirmed
as part of wider remuneration strategy discussion this year.
Risk Assessment, Mitigations & Legal Implications
36. A draft legal risk note has been added to the reading room for review. This reflects the
current position of negotiations and will be updated further in October to reflect the final
Position.
Next Steps & Timelines
37. We plan to implement the BF4 extension subject to all framework members agreeing and
enter A2C regulations related discussions to the end of September. We will return for final
Board approval in October and will continue to operate within the Board negotiating range
agreed in January.
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Appendix 1: Pricing Adjustment Waterfall Chart
Pricing adjustment waterfall chart. Pricing in £m relating to total impact over a 5-year term.
Appendix 2: Member level comparator
POLED
ston
IRRELEVANT
Bank by Bank Pricing Comparator. Shows changes to BF2 (grey) or BF3 (blue) pricing that each
framework member will experience in the first framework year of BF4 (2026). Figures adjusted for
inflation and based on 2026 volumes.
7
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IRRELEVANT
BF4 Extension Timeline.
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POST OFFICE LIMITED
BOARD REPORT
Title: Post Office Horizon IT Inquiry Update Meeting Date: 04 June 2024
Author: Diane Wills - Inquiry Director
SUBJECT TO CONFIDENTIALITY UNDERTAKINGS — NOT FOR FURTHER
CIRCULATION
This document contains information which is confidential to the Inquiry. It must
not be discussed or shared with anyone who does not hold a confidentiality
undertaking accepted by the Inquiry.
SUBJECT TO LEGAL PROFESSIONAL PRIVILEGE
Input Sought: Noting
Board is requested to note in particular:
i, The update on Phases 5 & 6
ii. The challenging position on recovery of witness costs from the D&O insurers
Executive Summary
The Inquiry is now halfway through Phases 5/6, having taken evidence from a range of POL
witnesses past and present, including the highest profile of these, Paula Vennells and Angela
van de Bogard. The overarching themes which continue to be explored by the Inquiry include
governance, leadership culture and whether and to what extent POL covered up knowledge of
remote access and faults with Horizon to protect the Company’s reputation. In the
accompanying paper on Phase 7, we highlight how POL’s current approach to these issues may
play out in the latter stages of the Inquiry and how this informs our strategic approach.
Disclosure activity remains a major cost driver for the Inquiry and we are currently carrying a
pressure of c£6m as a result. The team is working with major suppliers to drive down costs in
our remaining contacts, reviewing our resourcing, and revisiting risks and opportunities to
understand whether these can be revised. A reforecast of the budget will be completed once
these changes are agreed, with a view to reducing the anticipated overspend. A further update
will be brought to the Board in July.
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Report
PHASES 5/6
1. The Inquiry has broadly kept to schedule in respect of the first 7 weeks of Hearings, albeit
it has struggled on occasions where there was more than 1 witness in a single day. A small
number of witnesses have been re-scheduled for a variety of reasons, but all are currently
(or likely to be) scheduled within the original timeframe of end July for the completion of
oral evidence for these phases.
2. The Inquiry will take a break of one week after week 7 (27 to 31 May) and will commence
again on 04 June with Ben Foat. The majority of ex and current POL/Royal Mail employees
and Board members have now provided oral evidence, and the remainder of the Inquiry
will hear from Second Sight, POL external Legal Advisors, UKGI and politicians in the main
through weeks 8 to 15.
4. Oral closing submissions are currently scheduled for 26 July. No date has been confirme:
for written submissions, which for Phase 4 were roughly two weeks after the end of
hearings. However, informal discussions between POL and Inquiry KCs suggest that the
Inquiry is considering receiving closing submissions on Phases 5/6 after Phase 7, which
would put these out to Q4 2024. As with earlier phases, we are likely to propose making
written submissions only as that offers the opportunity for more expansive submissions
and are preparing on the basis that these will follow the Phase 4 timeline of c 2 weeks
post Hearings concluding.
WITNESS SUPPORT
5. Two thirds of Phase 5/6 POL witnesses have provided their oral evidence to the Inquiry as
of 20 May. There is still a chance the Inquiry will call additional witnesses to provide a
written statement only, but the Inquiry have yet to provide further information on this.
6. Our Witness Liaison Manager has noted the improvement in witness engagement with the
support on offer in Phase 5/6 versus Phase 4. This is likely due to a combination of, i)
improved communications outlining our contact details and detailing the support available
and, ii) the intensely stressful environment in which witnesses are required to give
evidence. We are also seeing witnesses reaching out more after giving evidence for further
support and to give their thanks.
7. The Witness Support Team are now the first point of contact for any POL employees who
are not witnesses but are referenced in the Inquiry and concerned about their risk of
exposure. Should anyone reach out, they are directed to a small team who can then help
with their individual concerns.
8. As flagged to the Board in April's report, recovering witnesses’ legal costs via POL’s D&O
insurers is proving challenging for Phase 5/6 witnesses. For witnesses falling under our
2019/20 policy (sometimes referred to as the Allianz policy), the insurer is asserting that
it cannot determine the extent of cover until they have seen the witness’s Rule 9 request
and responsive_witness statement, which is not published until the d. r i
oral evidence.
to receive this advice in July and a recommendation wi
decision as to how POL proceeds.
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9. In parallel to counsel's targeted advice,
COMMUNICATIONS
14. The communications team is monitoring and recording themes emerging each week from
the Inquiry which gain significant traction in the media, and these are being shared with
the Phase 7 team. As hearings progress, repeated themes are emerging: culture (attitude
towards postmasters, expected behaviours such as professional curiosity, reading emails),
governance (information flow, UKGI oversight, relationship with government) and the tone
of apologies made by witnesses.
15. The process for engaging with current employee witnesses ahead of their evidence (either
directly or through their ILRs) to understand their media preferences has worked well. The
aim is to create a clear mechanism for the press office to respond directly or pass on any
right of replies to individuals, reducing workload and enabling the business to swiftly
correct any factual inaccuracies around roles, dates of employment, if relevant.
16. The overarching Phase 5 & 6 communications strategy remains to not comment on
evidence or events of the past, unless there is a significant inaccuracy which impacts on
Post Office today.
PHASE 7
17. The proposed Phase 7+ Strategy is set out in a separate paper and so is not repeated
here.
18. We have received a S.21 notice from the Inquiry seeking sub-postmaster contact details,
and details of all those who have applied for redress via the Horizon Shortfall Scheme. We
do not know the exact purpose of the request but infer that the Inquiry wish to engage in
postmaster outreach activity as part of Phase 7.
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SUPPLIER CONTRACTS
19. We continue to operate with Herbert Smith Freehills (HSF) under the letter of engagement
dated 06 March 2024, which has been continually rolled forward by joint agreement, since
reaching its original expiry date of 19 April 2024. Agreement is expected to be reached
by both parties no later than w/e 26 May 2024 on a new LoE, which sets out the remaining
Discrete Matters to be delivered by HSF and includes additional wording (by POL) that
applies stronger governance to the financial management of HSF cost controls. The
intention is that HSF will no longer be required on any Inquiry matters after 12 July 2024,
with this date being cited in the new (draft) LoE as the final expiry date with HSF for the
delivery of Inquiry related matters.
FINANCE
20. The Inquiry team have worked up a new forecast since the ;!RRELEVANT:
presented at March Board.
21. The latest view of the forecast this year is £45.6m, rease of what was presented
in March. A big part of this increase is driven by HSF still doing disclosure work,
which was due to finish in May, now expected to be July. Whilst BSFf are forecasting a
ramp down of their disclosure team )), the remainder of the increase is a net
re mainly driven by the associated 3rd party activity with KPMG related to disclosure
work outlined by HSF and BSFf above.
22. Work continues with the Shareholder around funding above the current . committed
funding for the Inquiry and Remediation Unit which is currently expected to run out in
August this year. An update will be presented to the Board in July.
udget that was
poco
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Phase 7+ Strategy
04 June 2024
Jeff King, Senior Legal Counsel Inquiry
Diane Wills, Inquiry Director
es
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POST OFFICE LIMITED
BOARD REPORT
. Phase 5 & 6 - Closing Submissions .
H a Meeting Date:
Tita Delegated Authority I bd 04 June 2024
Author: I Dara Carton - Inquiry Delivery Lead I Sponsor: Nick Read - CEO
SUBJECT TO CONFIDENTIALITY UNDERTAKINGS ~ NOT FOR FURTHER CIRCULATION
® This document contains information which is confidential to the Inquiry. It must not be discussed or
shared with anyone who does not hold a confidentiality undertaking accepted by the Inquiry.
Input Sought: Approval
Board is asked to approve:
i. the recommendation that in the event that consideration of the list of topics for the
Phase 5 & 6 closing submissions could not be brought to a periodic scheduled Board
meeting, the DELEGATION of authority to Nick Read, and Owen Woodley in Nick
Read's absence, to finalise the list of topics for Phase 5 & 6 closing submissions.
Executive Summary
On 11th July 2023 the Board approved the updated terms of reference for the Inquiry
Steering Committee, including the delegated authority matrix. Under the delegated authority
matrix, provision relating to the written closing submissions for Phases 1 — 6 is set out as 9.3
follows:
i.. Approval of topics for closing submissions for phases 1-6: POL Board
ii. Approval of content of skeleton closing submissions for phases 1-6: ISC
iii. Approval of final closing submissions for phases 1-6: Inquiry Director
On 28 November 2023: The Board RESOLVED that, in the event that consideration of the list
of topics for the Phase 4 closing submissions could not be brought to a periodic scheduled
Board meeting, the DELEGATION of authority to Nick Read, and Owen Woodley in Nick Read’s
absence, to finalise the list of topics for Phase 4 closing submissions was approved.
ISC approved this paper for onward travel to Board on 23/05/2024
There remains considerable uncertainty as to when written closing submissions for phases 5
and 6 will be scheduled. Whilst there is a single afternoon on Fri 26th July currently slated for
oral closing submissions, there has not been any firm commitment from the Inquiry Chair as
to when written closing submissions should be received by the Inquiry, and indeed, through
informal channels there are some indications that closing submissions for phases 5/6 could be
rolled over and aligned to the conclusion of Phase 7 in late 2024.
In provisionally working to an end of July/early August timeframe for closing submissions, it
is expected that topics would need to be agreed by middle to end of June, to facilitate work
on skeletal and detailed submissions in the timeframe.
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Oral closing submissions to date have been very restricted in time
the Inquiry Chair and can be useful for POL to hear from other CPs,
and then adjust/refine written closing submissions thereafter.
In accordance with the terms of reference for ISC, Board has reserved to itself the approval
of the topics proposed to be contained in POL’s closing submissions at the end of each Inquiry
phase. Whilst the preference is for closing submission topics to be presented and approved by
Board on 9th July, due to uncertainty over timings of closing submissions, the lead times for
Papers into Board, and leaving sufficient time to complete skeletal and detailed closing
submissions once topics are agreed, this recommended option re delegation provides the
maximum amount of flexibility in the current circumstances.
Should delegation of authority arise the Board will certainly have visibility of the closing topics
on 9th July.
Report
1. The approval of topics for closing submissions across all phases is a matter reserved to
Board. ISC’s Terms of Reference provide:
3.
Responsibilities
A. Responsibilities of the ISC:
1. Decisions on the strategic approach to Inquiry and Third Parties including
to:
a. Approve the content of skeleton closing submissions for each phase (approval of
topics must first be approved by Board);
2. The Inquiry Team’s current understanding of the timing of the Phases 5/6 closing
submission hearings is that they are expected to start late July and into August at the
earliest. Evidence will continue to 26th July 2024 based on the current schedule. There is
generally a break of around a week between the end of Phase evidence and the start of
closing submissions.
3. It is therefore likely that July Board (which is scheduled to sit on 9 July 2024) will come
too late for the approval of topics for closing submissions and the June Board is too early.
Whilst a full assessment of the matters on which POL’s closing submissions will be
expected to contain cannot properly be determined until all of the evidence has been
heard, substantive progress will need to be made on the agreement of topics in parallel
to the hearings, pending confirmation from the Inquiry Chair as to the approach to closing
submissions.
4. The Inquiry Team has considered whether delegation might be made to SEG for the
purpose of approving the topics for Phases 5/6 closing submissions, however concerns
around the timing of Board apply equally to SEG. Similar to Board, the timing (26th June
2
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and lead times of papers into SEG (21st June) make this a less dynamic option than the
recommended approach of delegation. The need for flexibility is paramount in light of the
fact that Inquiry timings are uncertain and are not within POL’s control.
Financial Impact
5. None
Risk Assessment, Mitigations & Legal Implications
6. The failure to make alternative provision in respect of approval of Phases 5/6 topics for
closing submissions risks POL’s ability to make submissions at the end of this important
phase of the Inquiry. This risk can be mitigated by pre-empting the need for topics to be
approved by a single individual, ensuring maximum flexibility as clarity on the timings of
Phases 5/6 end continue to emerge.
Stakeholder Implications
7. N/A
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POST OFFICE LIMITED
BOARD REPORT
Title: Remediation Unit (RU) Programme I Meeting 4 June 2024
Update Date:
Author: I Simon Recaldin, Remediation Unit I 6 oso: Simon Recaldin, Remediation Unit
‘ Director ls : Director
Input Sought: Noting - Board is asked to Note:
The key strategic issues highlighted in the Executive Summary below:
All permanent colleagues in RU, excluding the RU Legal Team, have this week been asked
to complete a ‘preference letter’ to assist in understanding the appetite for redeployment
or Voluntary Redundancy, in order to better understand how RU reorganises to ensure
redress can be paid to postmasters as quickly as possible.
RU continue to assist the Ministry of Justice (MoJ) by providing responses to data
requests relating to the Bill. The most pressing request relates to employment start and
end dates, which the MOJ have requested be provided within a week within an extremely
tight timescale.
A revised methodology, to include Pension & Allowances (P&A) frauds and other similar
offences within the number of pre-Horizon investigations prosecutions and convictions,
has been agreed. This decision will affect the outcome of any comparison drawn between
pre-Horizon and post-Horizon conviction figures.
Executive Summary
Overturned Convictions:
de
As at 8 May 2024, OC comprises 103 overturned convictions and 7 Prosecuted Not
Convicted (PNC) claimants. Initial interim payments (£163k) have been made to 99 of the
OC cohort, with the remaining having; received an offer (1), pending application (2) or
settled via upfront offer prior to payment (1). 42 of the OC claimants have reached full
and final settlement (38 via £600k upfront offer acceptance and 4 via full claim
assessment) and 1 PNC. In total ~£43m has been paid in redress via OC (comprising
~£26.5m in full and final settlements and ~£16.5m via interim payments to live claims).
Discussions with Legal representation regards OC proactive disclosure have continued,
with full info example packs sent to representative Law firms. Initial feedback on pack
content was that it provides sufficient detail with which to assess the applicability of the
upfront offer or particularise an assessed claim. To date, all OC claimants who have
submitted particularised pecuniary claims have either received SharePoint file disclosure
and branch file disclosure or will be provided this disclosure when POL issues its pecuniary
offer.
POL understands that the planning and standing up of the DBT Horizon Conviction Redress
Scheme (HCRS) continues to progress at pace, although the specifics regarding timings,
approach and any transition period (from OC) have not yet been communicated. POLs
current working assumption (for FY24/25 budget planning purposes) is in line with the
HMG statements, that the Post Office (Horizon System) Offences Bill will be passed before
the 24 July 2024 Parliamentary recess and, accordingly, that HCRS will also be
Operationally ready to manage the resulting redress claims.
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HSS:
4. At the end of April 2024, POL had received 1,649 late applications of which 846 have had
eligibility confirmed.
5. 372 outcomes have been issued to late applicants, comprising 291 Offers and 81 ineligible
outcomes and POL continues to work through the eligibility assessment of remaining
applications.
6. 1,219 of the 1,649 late applications were received in 2024. Prior to this, POL was receiving
applications at an average rate of c.20 a month and were resourced accordingly.
Application volumes were expected to reduce further in 2024. While the pace of new
applications has slowed since the peaks in January 2024, we are still seeing c.35 new
applications a week.
7. Resource requirements are being reviewed in light of this and the expected further uplift
in application volumes following a) the £75k fixed sum offer announced in Parliament on
13 March 2024 and b) POL’s expected mailout reminding PMs who have not yet applied to
the Scheme to submit an application. There may be some delays in processing applications
while the resource is onboarded/trained.
8. A growing number of PMs who have settled their Horizon Shortfall Scheme (HSS) claim
are also asking to have their claim reopened. The expected introduction of an Appeals
Process may allow previously settled claims to be re-opened, though discussions as to the
exact nature of the appeal process continue.
9. POL is considering what suitable SLAs it can introduce, similar to the Group Litigation
Order (GLO), to monitor the speed of claim to Offer, though is cognisant of the fact that
the HSS is different from GLO in many regards, not least the unknown volume of HSS
claims. Once the £75k Fixed Sum Offer approach is fully agreed, POL will be in a better
position to return to this important question.
10. The implementation of the £75k Fixed Sum Offer is dependent on a number of key
activities, not least of which is the funding commitment letter from DBT.
GLO:
11. POL remains on target with disclosure and SFA (Shortfall Analysis) requests. 401
disclosure requests have been completed against a target of 400, and 143 SFA requests
have been completed against a target of 138.
12. Freeths have expressed positive views about the information contained in SFA’s provided
and have now requested that POL provides a view on the potential outstanding amount
the Postmaster is due in redress. This reflects the level of trust which has been built
between Freeths and POL.
13. DBT have provided POL with new assumptions in respect to the number of claims
submitted per week. This now sits at c. 2.5/week and therefore some resource will be
required until October to complete these rather than the expected July/August.
14. The GLO operational resource plan is being reviewed against workload and against the
assumed workload and resource required in OC2 to ensure a clear and understood way
forward can be agreed.
Criminal:
15. Continued assistance is being provided to the MOJ in response to data requests relating
to the Bill. The most pressing request relates to employment start and end dates. Urgent
work is being undertaken on this and the MOJ have been kept updated with progress.
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16. There remain 5 live appeals in the Court of Appeal Criminal Division (CACD), all of which
are opposed by POL. Only one of these appeals has been given a listing for a substantive
hearing, which is due to take place in the w/c 22 July 2024.
17. There are 5 live appeals in the Crown Court (referred by the CCRC (Criminal Cases Review
Commission)). These have been listed on 22 May 2024. A further 2 are expected to be
referred and listed on the same date. All of these referrals are ‘concede’ cases.
18. The references of the two deceased appellants’ convictions are listed for legal argument
regarding jurisdiction on 21 May 2024. The Attorney General served representations on 8
May 2024 and has appointed Counsel for the hearing.
19. There remains one contested live appeal in Northern Ireland. It is anticipated that this
case will fall within scope of the Bill.
20. In relation to Scotland, the Crown have asked a series of questions in relation to a HSS
claim linked to a live appeal. Senior Counsel drafted a response which was reviewed both
internally and externally and then sent to the Crown on 9 May. It is hoped that this will
allow the Crown to take a decision in relation to the appeal which will bypass the need for
POL to decide whether to assert privilege over a number of documents that relate to a live
HSS claim. The latter is a decision for HMC/RC (Horizon Matters Committee / Remediation
Committee) and a paper on this is currently being drafted.
21. A new appeal is expected to be referred by the SCCRC (Scottish Criminal Cases Review
Commission) to the Scottish High Court imminently.
22. POL continues to prioritise competing disclosure requests. There have been some delays
in meeting agreed deadlines with the SCCRC and internally in relation to HSS applicants.
Parties are being kept updated and P&P are confident that the majority of the end-of-May
deadlines will be met.
23. Metropolitan Police Service (MPS) has requested all of the material that POL have
submitted to the inquiry. P&P have drafted a substantive response which is currently being
reviewed by POL Legal.
Suspension Remuneration Review:
24. As of 13 May 2024, 974 offer letters have been sent, of which 640 have been accepted.
Payments have been made on 590 of the accepted cases totalling £7.84m. Consequential
Loss (CL) claims have risen to 57.
25. Work continues to finalise letters for the more complex cases and deceased letters are
now under way leaving Insolvency, Corporates and Partnerships still to formalise.
26. Consequential Loss cases are being made by postmasters on c. 8% of offers made and
offer letters on the first 4 have were sent on 10 May 2024 with a further 4 expected to
be sent by 24 May 2024.
POL Process Review:
27. The launch of the POL Process Review (PPR) has been delayed:
a. We had difficulty in finding a firm willing to take on the assurance work on the PPR
data and process. Deloitte, who assured these aspects in the SRR, declined the
instruction for PPR. We now have a way forward with Mazars undertaking the
work and reporting under the POL Internal Audit banner. Pinsents will perform the
legal assurance required on consequential loss principles, though we anticipate
few consequential loss claims.
b. DBT have asked several questions regarding how claims below the £1.2k de
minimis are validated. We have now agreed a way forward and DBT have
approached HMT to request that the Pilot redress payments are exempted from
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certain of the funding agreement terms. We now hope that the pilot mailing of
120 postmasters will take place in May.
28. The aim of the pilot is to test our communications, application process and the nature and
level of claims made. We will then build the learnings from the pilot into the final PPR
operating model with the aim of launching the main process in Q3 2024.
29. A separate paper is being presented to SEG on areas that fall outside the scope of PPR.
This includes how claims made for shortfalls in the HNG-A period leading up to the review
and dispute process being introduced in April 2021 should be managed. Currently, HNG-
A claims are outside the scope of HSS. It also includes non-Horizon wrongful termination
claims. We believe that a collaborative approach between RU and BAU teams can provide
a solution to review these cases and recommend how they should be addressed.
30. Weare finalising a proposal on how we address postmasters who we have asked to pause
making payments against their pre-April 2021 outstanding balances. The paper will also
make recommendations on what should happen to pre-April 2021 balances that are still
outstanding where no payments have been made.
Capture:
31. Our investigation into the Capture software package has continued since the last report.
We believe that the maximum number of users was 2,500 based on the number of copies
of an update disk made in 1998. We now have a list of circa 25 ex postmasters who may
have suffered detriment and say they used Capture software. Hudgell claims to be
representing 35 Capture users and we have asked them to provide their list.
32. DBT are in the process of appointing an independent forensic accountant to review the
information we have obtained, perform any additional work required and opine on Capture
being a cause of postmaster detriment.
33. Two Capture users have requested the CCRC to review their prosecution cases. We are
working with Peters & Peters to provide the information the CCRC require.
34. Currently, Capture cases are not included in the draft mass exoneration legislation.
Finance Update:
Budget 24/25
35. At P01, RU are £0.4m under budget due to the timing of mediation/arbitration events.
Whilst this is currently forecasted to catch up, the risks associated cost profile of the HSS
£75k Offer mean this expected to change significantly. Moreover, the impact of OC Mass
Exonerations and the formation of the Horizon Convictions Redress Scheme (HCRS) are
still to be understood and quantified and remains outside of the current budget forecast.
Legal Fees
36. The inclusion of Legal Fees reporting came from an Internal Audit report recommendation.
IA recommended SEG should be sighted on outstanding amounts, including _i iced
amounts without a PO. As at the 8 May 24, RU has outstanding invoices of
external lawyers and there are no material invoices without a PO number.
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Outstanding Legal Fees as at 8 May 2024
Table 1 - Invoice Ageing by Work Date (Workstream & Supplier) as at 8 May 2024
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BOARD REPORT
Overturned Convictions 2
Title: (OC2) Disclosure - Working at I Meeting Date: I 4 June 2024
Risk
. Jacki Adams (Operations . . ‘
Author: Director) Sponsor: Simon Recaldin (RU Director)
Input Sought: Approval
Board is requested to approve:
i) That POL work at risk for costs up to in relation to both planning and providing
the disclosure requirements for the OC2 cohort until such time as a contract is signed.
This work would include recruiting 3 individuals to produce ‘Phase 1’ information from May
(as soon as names are disclosed by the Ministry of Justice (MoJ)) to ensure relevant
information can be provided on scheme start up, associated Internal/External legal costs and
associated Project Costs.
Executive Summary
Horizon Matters Committee approved v1.0 of this paper on 9" April 2024.
Remediation Committee noted v2.0 of this paper on 24*" April 2024.
On 13‘ March 2024 the government introduced legislation to enable postmasters wrongly
convicted as a result of the Horizon scandal to have their convictions quashed. On this date,
they also announced that the Department for Business and Trade would be responsible for
delivering the new Horizons Convictions Redress Scheme (“OC2”) which will make redress
payments for those who have been affected.
As such, DBT have requested the support of the Post Office to provide disclosure information
for Postmasters to enable them to provide redress payments as quickly as possible. POL has
been informed that DBT’s intention is to open the scheme at the end of July/beginning of
August. POL is therefore required to provide a project and resource plan to fulfil the
requirements outlined by DBT and to support DBT to deliver the OC2 scheme successfully.
Report
1. To date POL has been running the Overturned Convictions Scheme (“OC1”) and has been
providing disclosure of certain items to OC Claimants and their representatives in order to
support redress claims.
2. DBT have advised that they aim to have their redress scheme - OC2, open for claims by
the end of July/early August although this date could potentially move.
3. The cohort size has been estimated at somewhere between 700 - 808 claimants.
4. No clear requirements have yet to be presented to POL in respect to disclosure
documentation but from early conversations it would appear that there will be at least 2
levels of disclosure;
a. Phase 1 - asmall number of documents which will enable claimants and their legal
reps to determine whether to accept the £600k offer and
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b. Phase 2 which will include all required documents for a full review of a claim where
the claimant rejects the £600k offer.
c. An additional batch of disclosure could also form part of the request from DBT.
This relates to disclosure claimant legal reps may need to enable them to advise
their clients on signature of the document currently being considered to confirm
admission to the compensation scheme. This will likely relate to criminal disclosure
and the need for such disclosure is yet to be confirmed.
5. Although not yet confirmed with DBT, Phase 1 documentation is likely to consist only of
Claimant ‘Rem Packs’ which include
a. Personnel data
b. Remuneration data including DFR’s (deductions from remuneration)
c. P60 and P45 data
6. Three individuals will therefore be recruited to provide this data for the cohort
7. While planning and resourcing/recruitment is ongoing, the OC2 ‘at cost’ contract will be
drafted and negotiated with DBT, the template and learnings for which will be drawn
from the Group Litigation Order (GLO) contract to reduce timescales.
8. Subject to BAU legal agreement, the plan is to have POL’s external legal advisors DACB
engaged to support the delivery of the contract, following their substantive work on the
GLO contract.
Financial Impact
9. RU will be working and resourcing/recruiting at risk. The delivery of OC2 will be on a cost
neutral basis.
10. Given requirements are not yet clear from DBT, a cost estimate is difficult to ascertain.
osts have been included up to August 24.
11. Finance confirm that costs incurred to date are accounted as Opex (rather than
Exceptional/Change spend like the rest of RU) and if amounts are unrecoverable from DBT
that they impact the Trading profit figures of POL.
Risk Assessment, Mitigations & Legal Implications
12. There is a risk that the contract will not be signed, and POL will not be paid for the cost it
has incurred supporting the OC2 Scheme. This risk is considered to be low as DBT do not
have an alternative to obtain the data they require to fulfil their obligations under the OC2
Scheme. This can be mitigated by working with DBT to provide an OC2 contract as soon
as possible. To note, working at risk took place on a substantive basis in relation to the
GLO contract and POL recently had its first invoice discharged in full.
13. There is a risk that POL will not be able to deliver the disclosure requirements at the pace
required by DBT and the Claimants and their reps. This can be mitigated by working at
risk and standing up the project and associated resource as soon as possible — noting that
POL can only action what is possible with the resource available, with the provision of
appropriately detailed requests from DBT/claimant reps and within the limited timeframes
provided to it by DBT.
Stakeholder Implications
14. It is within the interest of both POL and DBT to complete the contract and delivery the
OC2 scheme as quickly as possible.
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Next Steps & Timelines
15. Requirements and timeline for ‘go live’ to be agreed with DBT
16. Once the above have been agreed, a productivity plan can be created and resource
requirements understood and recruited to
17. Initially 3 individuals will be recruited to support the production of ‘Rem Packs’ to enable
claimants to determine whether to accept the £600k
18. External legal advisors to be contacted to determine estimate for contract work to be
completed asap.
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POST OFFICE LIMITED
BOARD REPORT
a Overturned Convictions 2 (OC2) Meeting
Tim Contract risk- data indemnity Date: + Jame 204
Author: Jackie Adams - Head of Operations Sponsor: I Simon Recaldin - RU Director
Legally privileged
Input Sought: Approval
Board are requested to approve:
i. Provide agreement in principle to the inclusion of the Data Indemnity provision detailed
below in respect of the contract between POL and DBT (once finalised), where POL will
deliver data and certain services to enable DBT to deliver the pending OC2 scheme (also
known as HCRS).
ii. To note and accept in principle, the risk to POL arising from the indemnity and the
mitigation in place regarding the data indemnity issue (please see Risk Note under
Appendix 1). Appendix 1 contains the risk note that was drafted by POL’s external
lawyers who assisted with Group Litigation Order (GLO) contract negotiations and whilst
the risk note relates to the GLO contract, the risk re: data indemnity remains the same
(noting the potential increase to claim / disclosure volume). A further paper will be
submitted once the contract is finalised in the usual way to highlight any
associated/additional key points or risks.
Executive Summary
Whilst there has been no specific previous governance on the OC2 contract risks to date, the
risks associated with the GLO disclosure project, and the linked contract have been discussed
at length and accepted previously. The data indemnity point caused substantive delay to the
sign off of the GLO contract. Previous GLO contract approval via the POL governance route was
challenged due to the presence of an indemnity clause between POL and DBT. The Head of RU
discussed the matter with senior members of both the Remediation Committee and DBT in
order to seek a resolution. DBT made representations to His Majesty's Treasury (“HMT”) who
own the policy, but they were not prepared to remove/amend it any further and it remained as
negotiated. The matter was raised by Ben Tidswell at Board and their view was that if DBT
would not amend the indemnity clause, there would be no choice but to execute the contract
as drafted.
Horizon Matters Committee (HMC) noted on 7‘ May and accepted in principle, the risk to POL
arising from the indemnity and the mitigation in place regarding the data indemnity issue
(Appendix 1 refers). HMC noted that a further paper will be submitted once the contract is
finalised in the usual way to highlight any associated/additional key points or risks.
HMC further noted that the risk profile was similar to the GLO contract with the main difference
being the expected volume of disclosures (double in quantum) and that data being transferred
was expected to be more sensitive. Paper to be updated accordingly prior to submission at
SEG.
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On 13‘ March 2024 the government introduced legislation to the parliamentary legislation
process, to enable postmasters wrongly convicted as a result of the Horizon scandal to have
their convictions quashed. On this date, they also announced that the Department for
Business and Trade would be responsible for delivering the new OC2 scheme, which will make
redress payments for those who have been affected.
As such, DBT have requested the support of the Post Office to provide disclosure information
for Postmasters to enable them to provide redress payments as quickly as possible. POL has
been informed that DBT’s intention is to open the scheme at the end of July/beginning of
August. POL is therefore required to provide a project and resource plan to fulfil the
requirements outlined by DBT and to support DBT to deliver the OC2 scheme successfully. This
paper seeks early approval to agree to the inclusion of the data indemnity clause so that this
particular risk and potential blocker can be accepted in early course, pending commencement
of contract negotiations and process design.
Report
1. Work is shortly to commence regarding the OC2 contract, which will underpin the at cost
services that POL will provide to DBT to ensure they are able to operate and deliver OC2
scheme. This will, in the main, be by way of provision of relevant disclosures to enable
claimants to assess and formulate their claims.
Data related Indemnity
2. DBT have now expressly confirmed they will be utilising the Government Mid-Tier
Contract, owing to a) this being standard/mandated government process and b) the
contract that is to be used for any service to DBT under £20,000,000. The contract was
utilised to provide the legal framework for delivery of the GLO disclosures for the DBT GLO
scheme. The contract contains a number of different clauses and schedules which will be
discussed further in a later paper, once the core terms and schedules are agreed in
principle and finalised.
3. A particular noteworthy clause from a risk perspective is a “one way” indemnity. POL are
likely to be asked (again) to provide an indemnity to DBT in respect of a data breach. This
was ultimately agreed by POL on a reluctant basis under the GLO contract, subject to an
adjacent cap (noted at paragraph 15 below). The clause is as follows:
"The Supplier indemnifies the Buyer against any and all Losses incurred if the Supplier
breaches Clause 18 or any Data Protection Legislation”.
4. The standard clause within the contract (clause 18 for the purposes of the GLO contract)
refers to various standard obligations on the parties by reference to statutory obligations
that require compliance in any event.
5. It is noted the original drafting (on the basis the contract is a template with standard
government centred drafting) used for their standard supply contracts, contains an
unlimited indemnity (“any and all losses”) subject to any cap, as contained within the
adjacent Award Form, also forms part of the contract.
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6. After robust/lengthy negotiations it was agreed that DBT, as part of the GLO contract,
would reduce this unlimited indemnity to a cap from (initially) £10m down to £5m. It is
likely that the new contract will mirror many of the terms as noted within the GLO contract,
including the indemnity cap. Therefore, it is anticipated and assumed that any breach
related indemnity would be capped to the same sum of a maximum of £5m.
7. Despite multiple requests for the indemnity to apply to both parties equally or for it to be
removed in its entirety, HMT have previously refused as part of the GLO negotiations. It
is therefore considered this is the ‘best’ the clause will be in terms of any further
negotiations, and this is line with the early indications from DBT to POL during initial
discussions re: OC2.
8. The risk note as annexed under appendix 1 sets out the key considerations associated
with the clause as it was presented within the GLO contract. The risks are the same subject
to any OC2 specifics that may be included within the pending contract.
9.
- as a result of the (unrelated)
‘insurance renewal being agreed. POL’s broker has been notified and has observed the risk
without any additional comment or issue. This is annexed at Appendix 2.
Financial Impact
10. No direct and tangible impact now, save for in the event of a breach of contract (relating
to a data specific issue) triggering the £5,000,000 indemnity. In the event of a claim under
POL’s insurance policy and a claim under this (assuming this would apply) - a £1,000,000
excess applies.
11. To note, contract related costs (and working at risk) are dealt with separately within the
OC2 working at risk paper.
Risk Assessment, Mitigations & Legal Implications
Data Indemnity clause
12. The risks are much the same as they were with the GLO contract, and these are noted
below. The two key additional points of note would be the fact that the volume of
disclosures could be higher (which mathematically increases risk on a volume basis) and
the fact the data being transferred (if and where it includes criminal prosecution matters)
is considered more sensitive than the standard disclosures, which bring with it a
reputational risk in the event of a data breach is:
13. Rebecca Major, Head of Legal for DP advised that
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14. Asa form of mitigation, POL has insurance cover relevant to the financial risk. The relevant
cludes a liability section which is up to the full policy
he only point of note is that POL’s aggregate claim
limit could be impacted in the event of multiple claims - though this risk exists in a BAU
context in any event. As noted above, Brokers are aware of the contract and had no further
comment in context of POL’s policy. The liability section of the relevant policy includes
coverage for Damages and claims expenses that arise out of a claim made against POL
that arise from a Privacy Liability event and/or a system security breach. A privacy Liability
event is then defined as a Privacy Breach and a violation of Privacy Laws. Privacy breach
is noted to be (among other things) the unauthorised collection, theft, retention,
disclosure, use or destruction of Private information.
15. In this particular case if POL (as an example) were to involuntarily disclose private
information, then the damages arising out of this ought to be covered (obviously subject
to all other terms and conditions of the policy). In another case, if POL’s information is
accessed by an unauthorised party (hack) and therefore is breached, then the same
coverage to the above would apply.
16. It is further noted there is nothing to stop POL pursuing a claim against DBT under a
contract for a breach of any data protection related issues (with POL needing to establish
negligence / failure to meet a legal obligation in the usual way, where the breach has been
caused by DBT) but that it is simply there is no automatic indemnity provision available
to POL if agreement in principle to the indemnity clause is provided
17. Failure to agree a contract as soon as possible will cause the ‘working at risk’ period to
POL to be extended from a payment point of view, as POL cannot seek recovery of their
expenditure until such a time there is a formal signed contract in place. This is mitigated
by seeking early approval on a provision basis at this stage, to streamline the process as
much as is possible from POL’s point of view once the contract is finalised.
Stakeholder Implications
18. The RU consider it essential to commence works to enable the supply of data to DBT to
resolve claims made by the participants in OC2.
Next Steps & Timelines
19. Board submission on 4" June 2024.
20. Commence contract negotiations with DBT.
Uploaded to the Reading Room:
1) OC2 Contract risk - data indemnity - Appendix 1
2) OC2 Contract risk - data indemnity - Appendix 2
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BOARD REPORT
weds Postmaster advice service provider I Meeting
TE: ~ Citizens Advice Date: 4-J0ne)2024
Author: Simon Recaldin, RU Director Sponsor: oe Chief People
Input Sought: Approve
Board is requested to approve:
i. a direct award ta_Citizens_ Advice to_nrevide_indenendent advice to.ex. nostmasters
to the value of. _ IRRELEVANT _
Executive Summary
This is the third direct award contract to Citizens Advice each for a period of 11 months
First contract was put in place via a direct award under th:
procurement directors
A second Contract was then entered into using the procurement directors discretionary
authority as per POL procurement process on the basis that under the original contact the
micro site was not easily visible for .most.PMs and.ex PMs.to find — therefore. -the. initial service
didn’t work as needed, duration -: IRRELEVANT
Report
1. The Select Committee recommended the formation of an independent body to enable
support for Potential Future Appellants (PFA’s) who are reluctant to engage with POL.
2. The services include:
a) Contact centre agents, open 5 days a week via a dedicated telephone number.
b) Access to information on the providers website providing reassurance about the
overall process.
c) Help to gather any evidence that may be required, should the PFA require this.
d) Guidance on how to find a solicitor dealing with this matter.
e) Plus advice and guidance in a number of areas including: emotional support tools,
benefits, work, debt and money, housing along with many other areas.
3. The KPIs built into the existing contract is for a weekly update call with Citizens Advice
so that case volumes, performance and outstanding cases are addressed.
4. POL have seen an extensive and time consuming PFA triage exercise undertaken to
identify cases, that based on the paperwork POL holds Post Office would not oppose any
appeal should it be brought. In addition to this, early 2024 events (the TV drama that was
shown in January and secondly the Government announcement of a mass exoneration of
POL convictions) could not have been foreseen, especially the unprecedented decision to
overturn all POL convictions (subject to certain parameters).
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Risk Assessment, Mitigations & Legal Implications
5. Anotice will be published on Contracts Finder.
6. No further contracts are envisaged for this service, if needed a procurement exercise will
be run.
Stakeholder Implications
7. Horizon Matters Committee (HMC) have approved all contracts including this new contract.
Next Steps & Timelines
8. Finalise contract with Citizens Advice and undertake POL governance incl CAF (Contract
Approval Form).
9. Publish contract award notice.
9.7
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BOARD REPORT
Title: Code of Business Conduct update Meeting Date: I 04 June 2024
Author: Tim Perkins, People Services SaeaEr Karen McEwan, Group Chief.
= Director lis . People Officer
Input Sought: Decision
The Board is asked to review and approve an updated Code of Business Conduct.
Executive Summary
This paper provides a summary of changes that have been made to the Post Office Code of
Business Conduct (‘the Code’). The last major changes to the Code were made and approved
by the Board in June 2023. The Ethos programme reviewed the existing Code and found a
number of errors within the document, which was also criticised by external commentators.
The review of the Code was, therefore, pulled forward.
Critically, the updated Code includes the new behaviours and priorities, the updated Ethical
Decision Making Framework and the ‘Yes check’. A ‘short’ version has been introduced
alongside the ‘full’ Code to make the Code more accessible for more colleagues. The look and
feel of the document has also been refreshed to make the document more professional in
style.
SEG approved the updated Code of Business Conduct on 20" May 2024.
Report
1. I What updates and been made and why?
a. Two versions of the Code of Business Conduct have been developed. There is a ‘full’
document and a ‘short’ document.
i. The intention of the ‘short’ document is to create something that is more
accessible for all colleagues.
ii. The ‘short’ document contains an ‘I’m in’ link for colleagues to demonstrate
their commitment to the Code.
iii, IThe ‘short’ document has a summary of the purpose, strategy and behaviours
alongside links to the key policies of Post Office.
iv. The ‘full’ document contains fuller details on each of these elements and has
all the components recognised as international good practice by the Institute
of Business Ethics (IBE).
v. All comments on updates to the Code from point (b) refer to the ‘full’
document.
b. The opening statement has been changed from being solely from Nick Read as
Group Chief Executive Officer to being from all the members of the Strategic
Executive Group. This is to support the changes made to the Group Executive and
to ensure that tone from the top is broader than just from one individual.
c. The order in which policies are presented in has changed to reflect the likely
relevance to the largest number of colleagues. For instance, all colleagues are
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responsible for protecting data, whilst not all colleagues work with suppliers, so
‘Protecting Post Office information’ comes before ‘Working with suppliers’.
d. The refreshed Priorities and Behaviours from the Blueprint work undertaken by the
SEG has been incorporated into the ‘Our Culture’ section.
e. The updated Ethical Decision Making Framework approved by the SEG on 6" March
2024 has replaced the previous Ethical Decision Making Framework. There are now
also references to the new ‘Yes check’ launched in February 2024.
f. All policy areas have been reviewed by Subject Matter Experts from across the
business.
g. The errors in the previous document (spelling errors, grammar errors and broken
links) have been rectified.
h. A new look and feel has been developed for the document ensuring professional
publishing standards are met. The previous version had simply been a PDF of a
Word document and the quality of the publishing undermined the importance of the
document.
Risk Assessment, Mitigations & Legal Implications
2. The Code brings together key information from already existing company policies, any
risks or legal implications will be assessed during the review of each of those individual
policies.
Stakeholder Implications
3. Where there are any ‘key policy’ changes (within policies we refer to in our Code), the
Code may need to be updated to ensure it is aligned.
Next Steps and Timelines
4. Following approval the Code is to be:
- Published on the intranet, PeopleHub and the external corporate website.
- Communicated during a weekly 10 at 10 or a monthly Townhall.
- Emailed to all existing employees from Karen McEwan and made available
electronically for Supply Chain and Branch colleagues who do not have email
addresses.
- Included in onboarding for all new employees as part of onboarding (paperwork and
induction activities)
An animation is being developed to support the launch of the new Code of Business
Conduct and will be used across multiple communications channels.
All the activities above will be done in line with the launch of the behaviours and
priorities to colleagues in mid June 2024.
Appendices in the Reading Room
1. Updated version of the Code of Business Conduct (note links not live yet)
2. Short form version of the Code of Business Conduct (note links not live yet)
3. Existing version of the Code of Business Conduct
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BOARD REPORT
Title: Risk appetite schedule Meeting Date: I 4 June 2024
Sarah Gray, Interim Group
General Counsel
Author: Rebecca Barker, Head of Risk Sponsor:
Input Sought: Approval
The Board are requested to approve the proposed changes to the Group Risk Appetite scale,
which was previously approved at the March RCC/ARC for submission to the Board in June
2024.
Executive Summary
The concept of risk appetite plays a pivotal role in modern enterprise risk management. It
involves defining the extent to which an organisation is willing to embrace risk while pursuing
its strategic objectives. Effective risk management should support informed decision-making in
line with this risk appetite, ensure confidence in the response to risks, transparency over the
principal risks faced and how these are managed.
Risk appetite and tolerance levels support the reporting of risk to our senior leadership team
and onward reporting to our risk committees.
Risk Appetite & Tolerance
1. We have introduced and embedded into the Service Now Governance and Risk tool
(corporate risk registers) approved appetite statements across the following areas:
- Governance
- People
- Commercial
- Technology
- Information
- Cyber Security
- Legal
- Operational
- Strategy
- Financial
- Environment, Social and Governance (ESG)
2. Risk appetite is the main steer for the first line to understand the amount of risk which
Post Office is prepared to accept, tolerate or be exposed to at any point in time. It is
essential to review risk appetites for several reasons;
- Changing Business Environment - The business environment is dynamic, and
external factors (such as economic conditions, technological advancements, and
regulatory changes) can significantly impact an organisation’s risk landscape. Regular
reviews ensure that risk appetites remain relevant and aligned with the evolving
context
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- Internal Changes - The business undergoes internal changes, restructuring, or
shifts in strategic priorities. These changes may alter the organisation’s risk profile.
Regular reviews help adapt risk appetites accordingly
- Learning from Experience - The business continues to learn from past incidents
and near-misses. By reviewing risk appetites, they can incorporate lessons learned
and adjust risk tolerances based on real-world experiences
- Performance Evaluation - Risk appetite statements serve as benchmarks for
evaluating performance. Regular reviews allow organisations to assess whether they
are operating within acceptable risk limits and achieving desired outcomes.
- Stakeholder Expectations - Stakeholders (including boards, investors, regulators,
and the public) have expectations regarding risk management. Regular reviews
ensure that risk appetites align with stakeholder expectations
- Compliance and Reporting - Regulatory requirements often mandate risk appetite
reviews. Organisations must demonstrate compliance and transparency by
periodically assessing and documenting their risk appetite
The proposed review dates are detailed in appendix 1 which we are seeking approval at
the Board. The review of risk appetites will be led by the Central Risk team and include
the Senior leadership team and business area leads.
3. As part of our continuous improvement to risk management we are also seeking
approval to adjust the Corporate Averse appetite scale from 1-5 to 1-6 (appendix 2).
The change would enable risk owners to accept as opposed to mitigate the risk, this
reduces the amount of resource and costs to mitigate something that would still be
unlikely to materialise. Introducing this change would result in a further 41 risks being
in an accept state which will also discourage risk owners forcing a lower score, which
isn’t a risk culture we wish to promote. The change would benefit the prioritisation of
financial / personal resources across other risks that require action.
The Group Risk Policy is scheduled for the annual review in November 2024.
Rebecca Barker, Head of Risk
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Appendix 1 —- Risk appetite review schedule
Risk Category Risk Theme:
Ineffective Environmental strategy ~ transitional sk
oc BAR Physical Impact of ciate change = (PO Branches) ~ physical risk
ee EE RCMEG MONSON paca vast ot ciate change ~ (PO Sites) = pnjcea ek
Strategy
Operational
Marketplace &
Reputation
‘Contract & Transaction Management Obligations
‘Statutory & Regulatory requirements
Disputes and Litigation
Legal
Technology
IRRELEVANT I
tology)
ineffective management of Commercial Partnerships
‘Adverse Trading Performance
People Lick of Visibility of Talent, Inadequate Succession & Development Planing
Inadequate HR processes
Inadequate Reward & Recognition Schemes (inc systems & communications)
Ineffective Corporate Governance Framework
Ineffective Corporate Governance Structure
Inadequate Policy and Process Governance
Inadequate oversight and assurance of Governance Framework
Liguidty and funding
‘Stakeholder confines
Material misstatement in financial reporting
HAS working practices
Financial
Open 1-25 Will take risks and accept the possibility of failure.
We choose the highest option with the highest return.
Will accept risks could materialise and the achievement of (some) strategic objectives could be compromised.
Flexible 1-20 Will take justified risks.
Will accept some risks materialising subject to being able to proactively manage their adverse impact.
Will accept (under certain conditions) risk could materialise the achievement of (some) strategic objectives
could be compromised.
Neutral 1-15 Prefers on balance safe delivery to risk taking,
Will accept some risks could materialise but only if adverse impact is limited and heavily outweighed by benefits
Would prefer ideally not to accept risks materialising if this meant the achievement of (some) strategic objectives
could be compromised.
Cautious 1-10 Will take a conservative approach to risks.
Will accept some risks materialising but only if activity is essential and the possibility of and extent of failure is
limited,
Would be somewhat reluctant to accept risks materialising if this meant the achievement of (some) strategic
objectives would be compromised.
Averse 1-6 Will avoid nearly all risks where at all possible
Will always select the lowest option with the lowest risk
Would be extremely reluctant to accept risks materialising if this meant the achievement of (some) strategic
objectives would be compromised.
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BOARD REPORT
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Title:
Remuneration Committee Terms of
Reference Review
Meeting Date:
4 June 2024
Author:
Alison Hoyland, Deputy Company
Secretary
Sponsor:
Amanda Burton, Committee Chair
Input Sought: Approval
The Board is asked to approve revised Terms of Reference (ToR) for the Remuneration
Committee.
A marked-up copy of the substantive changes to the ToR, which fall under section 3, are
attached in the appendix and a clean copy of the revised ToR is contained in the Reading Room.
Executive Summary
1. The Board approved updated Remuneration Committee ToR on 1 March 2024 to:
reflect relevant findings in the A Burton Report and DBT’s subsequent Simmons &
Simmons Report (published in June and August 2023 respectively);
align to managing public monies responsibilities and remuneration guidance as set out
in the Shareholder Relationship Framework Document; and
reflect the changes to the CEO’s executive direct reports and the establishment of the
Strategic Executive Group.
2. Since then, the Remuneration Committee has agreed:
i. a change to reflect the findings from an independent Speak Up investigation concluded
in April 2024 to make it clear that any changes to the remuneration packages for
Executive Directors require Shareholder approval and that no payments shall be made
until that approval is received; and
some minor changes to remove duplication and correct punctuation.
3. The Remuneration Committee is due to ratify its agreement to the changes at its meeting
on the morning of 4 June 2024, immediately before the Board, so that ratification will be
confirmed on the day.
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Appendix
TRACK CHANGED VERSION OF PROPOSED REVISIONS TO SECTION 3 OF THE REMUNERATION
COMMITTEE TERMS OF REFERENCE
Remuneration Package: Executive Directors, Members of the Strategic
Executive Group, Group boards
3. Approve the remuneration package and_total remuneration, as well as the terms
conditions of employment including any variations thereof for proposed Executive
Director, Strategic Executive Group (including any interim appointments to the Strategic
Executive Group), and Subsidiary board appointments (excluding Group board
appointments which are in addition to an executive's primary role and where no
additional remuneration applies). This may include, but shall not be restricted to:
i. Base salary
ii. STIP
iii, LTIP
iv. Pension Provision
v. Contractual terms such as notice periods.
The recommendations shall align with the Group Remuneration Policy approved by the
Board, the Public Sector Pay and Terms Guidance (PSPTG) (subject to any modifications
agreed in the Shareholder Framework Document) and the HMT Senior Pay Guidance (a
requirement for all public corporations).
The Committee must make a recommendation to the Shareholder and Shareholder
approval is required in respect of the remuneration policy and packages for Executive
Directors including any changes to the remuneration packages and total remuneration
for Executive Directors and no payments to Executive Directors may be made unless
prior Shareholder approval has been provided.
The Committee must make a recommendation to the Shareholder and Shareholder
approval is required in respect of the proposed remuneration of any person who is a
director of a Subsidiary Company who is not an employee of a member of the Group
(unless that company is regulated by the FCA).
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BOARD REPORT
Title: Sealings Report Meeting Date: I 04" June 2024
. Rubia Khanom, Company . Rachel Scarrabelotti, Company
Sarieke Secretariat Administrator BRensors Secretary
Input Sought: Approval
The Directors are invited to consider the Register of Sealings and to approve the affixing of
the Common Seal of the Company to the documents set out against items numbered 2248 -
2254 inclusive in the Register of Sealings.
Executive Summary
For the Directors to resolve that the affixing of the Common Seal of the Company to the
documents set out against items numbered 2248 - 2254 inclusive in the Sealings Register are
hereby confirmed.
12.3
Strictly Confidential
POL-BSFF-WITN-019-0000004_0169
Date Created
Post Office Limited
POL00448624
POL00448624
Company Number
24/05/2024 Register of Sealings 2154540
‘Seal Number Date of Date of Persons Attesting Destination of
1 File Ref. Sealing Authority __I Description of Document To Document Document
2248 / 20/03/2024 15/03/2024 I Agreement for sale relating to leasehold property known as 18 StPeters _ I Alison Hoyland, Deputy Company ‘Womble Bond Dickinson and Karima
Agreement for ‘Square, Ruthin LL15 1YL between POST OFFICE LIMITED (Company —_I Secretary Karger
Sale No. 02154540) whose registered office is 100 Wood Street, London,
United Kingdom, EC2V 7ER (Seller) and POWERLINE PROPERTY
LIMITED (Company No. 06137674) whose registered office is 63 Mwrog
Street, Ruthin, Denbighshire, LL15 1LB (Buyer).
Powerline Property Limited will pay Post Office Limited £100,000 for the
assignment of the lease dated 31st March 2013 for a term of 999 years
between (1) Royal Mail
I I Estates Limited and (2) Post Office Limited.
22497TR1 Form I 20/03/2024 15/03/2024 I ‘TR1 - HM Land Registry Transfer of whole of registered title in relation to I Alison Hoyland, Deputy Company Karima Karger and Womble Bond
18 St Peters Square, Ruthin LL15 1YL (title Number: CYM588024) Secretary Dickinson
between Transferor: POST OFFICE LIMITED and Transferee:
POWERLINE PROPERTY LIMITED. Consideration of One hundred
thousand pounds (£100,000). Limited title guarantee.
2250 / Capital 20/03/2024 15/03/2024 I Notice of an election to use an altemative apportionment in accordance __I Alison Hoyland, Deputy Company Karima Karger and Womble Bond
Allowances with section 198 Capital Allowances Act 2001 relating to sale of leasehold I Secretary Dickinson
Election interest in 18 St Peter's Square, Ruthin LL1S 1YL for the consideration of
£100,000 between Post Office Limited
100 Wood Street, London, EC2V 7ER (seller) and Powerline Property
Limited
63 Mwrog Street, Ruthin, Denbighshire, LL15 1LB (buyer).
2251/ Power of I 25/03/2024 25/03/2024 I Power of Attorney made by Post Office Limited, following Board approval I Rachel Scarrabelotti, Company Norton Rose Fulbright and Company
Attorney
Strictly Confidential
‘on 25/03/2024 in relation to the proposed transfer of the entire business of
Payzone Bill Payments Limited (company number 11310918) (Payzone)
(a wholly-owned subsidiary of Post Office Limited), including all its assets
and liabilities, to Post Office Limited (the Integration).
The Power of Attorney appointed Barbara Brannon (Commercial Director)
as the Post Office Ltd's true and lawful attorney (the Attomey) with the
authority in Post Office Ltd's name and behalf to do all or any of the
following:
(a) agree, sign, execute as a deed, initial and/or deliver all
agreements, letters, notices, acknowledgements, consents, waivers or
other documents that the Attorney may consider necessary or desirable in
connection with the Integration, including without limitation the documents
teferred to in the schedule to this power of attorney, (together the
Documents);
(b) agree any amendments to the Documents that the Attorney
may consider necessary or desirable in connection with the Integration;
and
(©) generally to do all acts and things that the Attorney may
consider necessary or desirable in connection with the Integration.
Secretary
Secretariat
12.3
POL-BSFF-WITN-019-0000004_0170
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12.3
‘Seal Number
1 File Ref.
Date of
Sealing
Date of
Authority
Description of Document
Persons Attesting
To Document
Destination of
Document
2252 / HMRC
03/04/2024
03/04/2024
HOLD FOR HMRC Standstill Agreement/Deed. Further information to
formalise execution arrangements wk commencing 1st April 2024.
‘Alison Hoyland, Deputy Company
Secretary
HMRC
2253 / MINUTE
OF EXTENSION
& VARIATION
22541 Director's I
Deed of
Indemnity
24/04/2024
16/05/2024
Strictly Confidential
49/04/2024
24/05/2024
MINUTE OF EXTENSION AND VARIATION OF LEASE between
CASTLECROFT SECURITIES LIMITED incorporated under the
Companies Acts (Company No SC088688) and having their registered
office at King James VI Business Centre, Riverview Business Park,
Friarton Road, Perth PH2 8DY (Landlord) and POST OFFICE LIMITED
incorporated under the Companies Acts (Company No 02154540) and
having their registered office at 100 Wood Street, London, United
Kingdom, EC2V 7ER (Tenant) in relation to Suite A, Riverview House,
Friarton Road, Perth, PH2 8DF.
The Landlord and the Tenant have agreed that the Lease shall be
extended for the period from 16 March 2024 to and including 15 March
2027 (Extended Period). The Tenant binds and obliges itself to pay to the
Landlord by way of rent during the Extended Period £16,447 per annum
together with, in addition, all Value Added Tax properly chargeable
I thereon by equal monthly instalments.
Director's Deed of Indemnity between Post Office Limited and
Railton. Executed under Company Seal.
Alison Hoyland
Alison Hoyland, Deputy Company
Secretary
Karima Karger, Legal and Womble
Bond Dickinson
Company Secretariat, safe keeping
POL-BSFF-WITN-019-0000004_0171
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POST OFFICE LIMITED
BOARD REPORT
Title: Future Meeting Dates Meeting Date: I 04'" June 2024
Rubia Khanom, Company Rachel Scarrabelotti, Company
Secretariat Administrator Secretary
Author: Sponsor:
Input Sought: Noting
The Directors are requested to note the future meetings dates scheduled in respect of Post
Office Limited Board and Committee meetings.
2024
Date Time Meeting
Wednesday 29 May 2024 I 08:30- 10:30 I Remediation Committee
Tuesday 04 June 2024 I 09:00 - 09:30 I Nominations Committee
Tuesday 04 June 2024 I 09:30- 11:00 I Remuneration Committee
Tuesday 04 June 2024 I 11:15- 17:00 I Board
Wednesday 12 June 2024 I 08:30- 10:30 I Remediation Committee
Monday 01 July 2024} 14:00- 17:00 I ARC
Monday 08 July 2024 I 09:30- 14:00 I Board
Monday 08 July 2024] 14:30 - 18:00 I Board Strategy Away Day - 1
Tuesday 09 July 2024 I 08:30- 16:00 I Board Strategy Away Day - 2
Wednesday 17 July 2024 I 08:30- 10:30 I Remediation Committee
Tuesday 23 July 2024 I 14:00 - 16:00 I Remuneration Committee!
Wednesday 21 August 2024 I 08:30 - 10:30 I Remediation Committee
Tuesday 17 September 2024 I 13:00- 15:00 I Investment Committee
Wednesday 18 September 2024 I 08:30 - 10:30 I Remediation Committee
Wednesday 18 September 2024 I 14:00- 17:00 I ARC
Tuesday 24 September 2024 I 10:00- 11:00 I Nominations Committee
Tuesday 24 September 2024} 11:15- 17:00 I Board
Wednesday 16 October 2024 I 08:30 - 10:30 I Remediation Committee
Tuesday 29 October 2024 I 09:00- 17:00 I Board
2 As agreed, the cadence of RemCo meetings is being changed and being de-coupled from Board meeting scheduling and will
now be aligned to the unique activities of RemCo. Moved from 24 September 2024.
Strictly Confidential 1
POL-BSFF-WITN-019-0000004_0172
POL00448624
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Wednesday 06 November 2024 I 10:00 - 12:00 I Remuneration Committee?
Wednesday 13 November 2024 I 08:30- 10:30 I Remediation Committee
Thursday 14 November 2024I 14:00- 17:00 I ARC
Tuesday 26 November 2024} 10:00- 11:00 I Nominations Committee
Tuesday 26 November 2024 I 11:15- 17:30 I Board
Tuesday 10 December 2024 I 10:00- 12:00 I Investment Committee
Wednesday 11 December 2024 I 08:30 - 10:30 I Remediation Committee
2025
Date Time Meeting
Wednesday 22 January 2025 I 08:30- 10:30 I Remediation Committee
Monday 27 January 2025 I 14:00- 17:00 I ARC
Tuesday 28 January 2025 I 09:00- 17:00 I Board
Monday 10 February 2025] 12:00 - 14:00 I Investment Committee
Wednesday 19 February 2025] 08:30 - 10:30 I Remediation Committee
Tuesday 25 February 2025 I 09:00- 12:00 I Board
Tuesday 25 February 2025 I 12:30- 13:00 I Nominations Committee
Tuesday 25 February 2025 I 13:00 - 14:30 I Remuneration Committee
Wednesday 19 March 2025] 08:30 - 10:30 I Remediation Committee
Tuesday 25 March 2025 I 09:00- 12:00 I ARC
Tuesday 25 March 2025] 12:15- 17:30 I Board
12.4
2 As agreed, the cadence of RemCo meetings is being changed and being de-coupled from Board meeting scheduling and will
now be aligned to the unique activities of RemCo. Moved from 26 November 2024.
Strictly Confidential
POL-BSFF-WITN-019-0000004_0173
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Post Office Limited
Board Governance Map & Forward Plan 2024/25
28/01/2025,
[09/07/2024]
a
}09/07/2024I 10/07/2024] 24/09/2024I29/10/2024I 26/11/2024I
Strategy
25/02/2025,
ser frome Notes
POL-BSFF-WITN-019-0000004_0174
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25/02/2025,
pertbeta mm Notes
POL-BSFF-WITN-019-0000004_0175
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[09/07/2024]
G 25/02/2025,
item Origin of Request owner ‘Action Required I04/06/2024I09/07/2024I10/07/2024I 24/09/2024] 29/10/2024I 26/11/2024] 28/01/2025 I 75/02/2025 5/03/2025 Notes
stra
POL-BSFF-WITN-019-0000004_0176
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tem I Origin of Request I owner [nee pie
nomen
nl
a
10/07/2024) nn wm maa pmo Notes
IRRELEVANT
POL-BSFF-WITN-019-0000004_0177
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25/02/2025,
pertbeta pom Notes
IRRELEVANT
POL-BSFF-WITN-019-0000004_0178
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POST OFFICE LIMITED
BOARD REPORT
Title: Health & Safety Monthly Report Meeting Date: I 4" June 2024
Martin Hopcroft,
Author: Director of H&S, Environment and Sponsor:
Business Continuity
Kathryn Sherratt,
Interim Chief Finance Officer
Input Sought: Noting
The Board is asked to note the contents of the report.
Executive Summary
We continue to support our people, including signposting colleagues to EAP support and
arranging bespoke workshops for a number of teams who are particularly anxious due to the
heightened media attention during the Public Inquiry. We have asked colleagues to report
incidents of abuse or harassment and our Security, Business Continuity and H&S teams have
reviewed and tightened up access and visitor procedures at our central offices. We have put
additional support in place from Kings Security and their expert personal protection advisors,
Harrier Global, who will review and test our building resilience and will provide advice and
guidance to individuals who are at higher risk of being targeted by media. Mental Health
Ambassadors are receiving annual refresher training and we are extending the network of MHAs
in June to extend support to our field team colleagues.
We have strengthened the end to end support Postmasters receive following a serious incident
in branch eg. robbery. The process will ensure a review is undertaken at 1, 3 and 6 months
post incident with an offer of trauma support where required. Through a Summer campaign
we will continue to raise awareness of wellbeing resources available to Postmasters and staff.
Following a low number of accidents being reported during February (2) and March (1) we saw
an uptick in April and 8 incidents reported, 1 leading to absence following a fall in a car park.
Over the past year there has been an increase in minor accidents reported by Directly Managed
Branches, all of which were investigated and learnings and best practice shared with colleagues.
We continue to develop our people and implement a range of initiatives to mitigate risk. ATM
and Cash Vans in Transit (CViT) attacks remain extremely low compared to pre-pandemic
levels. Robberies in April were slightly higher than expected levels for the time of the year (6
vs 5) and higher than previous year (5). YTD 23/24 there were 65 robberies vs 80 expected
and lower than previous year (73). 35% were unsuccessful, an improvement on 22/23 (33%).
Report
1. At Appendix 1, we summarise KPI performance over the last four years. Whilst the volume
of YTD accidents reported were higher at P12 than in 22/23 (50 vs 41), accidents in Supply
Chain are at their lowest reported levels for over 4 years. More serious lost time related
accidents were slightly lower across the business and days lost reduced by 56% in 23/24
(9 accidents leading to 143 days vs 10 leading to 328 days). In Supply Chain there has
been a 60% reduction in lost time incidents and an 88% reduction in lost days.
2. Over the past couple of years, accident causation in DMBs has been mainly due to falls
indoors, however, we saw a reduction in 23/24. However, whilst accidents due to striking
1
Strictly Confidential
POL-BSFF-WITN-019-0000004_0179
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@
against objects or equipment, including bumping into or stepping onto objects, reduced in
22/23 we noted a marked increase in 23/24. We will continue to strengthen safety culture
in DMBs, adopting good practice, including use of safety champions, improved reporting
and applying learnings from accident and near miss investigations.
3. The H&S Team are progressing a programme of Individual Risk Assessments for 24/25,
as approved by Safety Board. The workplace, DSE and Lone Worker risk assessments are
being completed by Retail teams and will be issued to all business areas during Q1.
4. The Security Intelligence Team maintains ongoing collaboration with law enforcement and
industry partners feeding into our daily operational assessments of crime and weekly
tactical analysis discussions to stay ahead of emerging trends and to adopt best practices
for mitigating threats and risks. There were 106 branch security health checks conducted
during period 1 (April), providing support to Postmasters and branches.
5. Due to the recent media attention, we have reviewed and strengthened the security and
visitor procedures at our central buildings. We have also asked our partner Kings Security,
and their security and strategic protection partner, Harrier Global, to review our
procedures, provide specialist advice to the Security team and colleagues and test our
building resiliance.
6. Robberies during P1 (April) were slightly up against the expected level for this time of the
year (6 vs 5), and when compared to last year (5). In 2023/24 there were 65 robberies
vs 80 expected levels and 73 previous year. The volume of incidents of serious abuse
reported in 23/24 reduced to 350 compared to 420 in 22/23. There were 36 reported
incidents (28 POL and 8 Retail) during the period vs 32 last month. New self-help guidance
and support is held on the Branch Hub site.
7. In P1 (April) there were 0 PO CViT robbery related incidents. Attacks remain consistently
low since pre-pandemic years. There have been 136 CViT cross pavement observations
conducted during the month and 1952 during 2023/24. Security awareness campaigs
have focused on CViT ‘Safety on the Road’ as well as completing the deployment of the
Security Notice boards in CViT & Cash Centre depots. Upgraded body worn cameras are
being rolled out to all depots over the next few months. They will remain mandatory on
high and very-high risk routes, with a strong encouragement for all other routes.
8. There were 0 PO ATM attacks in April. There were only 2 ATM attacks in 2023/24 which
was unprecedented compared to pre-pandemic levels. Intelligence gathering continues
regarding industry attacks. Current threats have resulted in asking branches to reduce
ATM cash holdings in hot spot areas due to increases in industry attacks using stolen
firefighting equipment. There have been 14 industry ATM attacks in period 1 (22 last
month) which outturned at 192 attacks in 23/24 (172 - 2022/23, 213 - 2021/22, 326 -
2020/21) and mainly targeted Cardtronics (33%), Tesco (15%), NCR (15%). POL were
0.5% of industry.
9. We have reviewed the Supply Chain Safety Plan, robbery risk assessment and cross
pavement risk profile and are progressing a number of initiatives including; rolling out a
replacement upgraded body camera, enhancing the Safety Champion role and
2
Strictly Confidential
POL-BSFF-WITN-019-0000004_0180
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@
implementing recommendations from the Occupational Health musculoskeletal / fatigue
review in CViT. During recent viewing of CCTV footage downloaded from CViT vehicles to
investigate traffic incidents, a number of near misses due to driver distraction were
identified. To address legal and Union concerns about privacy, we are rolling out new
vehicle telemetry with AI technology that can intervene in such situations. We have issued
new driver standards and the Road Risk Policy and following a succesful pilot, we are
extending the inititiave to increase the value of cash being carried in cash transfer boxes
to reduce the time crews spend outside the vehicle to reduce risk in line with industry.
10. A ‘people risk’ for mental wellbeing has been recorded due to an increase in ‘at work’
stress reported in some business areas. Stressors include excessive workload due to
insufficient resource; the pressure of responding to the Inquiry on top of the day job;
alongside additional ‘personal’ pressures colleagues may have to deal with e.g. cost of
living. We have communicatied with colleagues across the business following the Bates
vs Post Office TV drama and we are providing additional wellbeing guidance to those who
engage Postmasters and customers. We are providing bespoke wellbeing support to
employees and a dedicated Wellbeing Assistance helpline and counselling for ex-employee
witnesses to the Inquiry.
11. We have launched an online wellbeing resource with content suitable for Postmasters,
their owners and staff. We are issuing quarterly campaigns and work closely with the
retail teams and NFSP to signpost and to help raise awareness of the new resource.
Financial Impact
12. The financial impact of the above initiatives has been evaluated / budgets confirmed.
Risk Assessment, Mitigations & Legal Implications
13. Our highest risks include; violence and abuse aimed at postmasters and employees. The
security and health and safety teams will continue to strengthen mitigation; the potential
change to our risk profile due to increasing levels of cash in the network and; the ongoing
impact on colleague wellbeing due to the impact of the Inquiry, either directly or indirectly.
Stakeholder Implications
14. Training should be provided to new directors and, where required, directors, management
and colleagues of Group subsidiaries.
15. Information - directors should consider the H&S information that flows to the Board to
support directors, subsidiary directors and management teams carrying out their duties.
Next Steps & Timelines
Safety Sub-Committee is held bi-monthly, next meeting scheduled 12" June 2024. Board and
GE H&S reports will include updates, recommendations and decisions made by the Sub-
Committee.
Strictly Confidential
POL-BSFF-WITN-019-0000004_0181
@
Appendix 1 - Safety Board Dashboard
Accidents P1 (24/25) and Security P1 (24/25)
Health & Safety 4yr Performance
POL00448624
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Year/KPI 20/21 I 21/22 I 22/23 I 23/24 23/24 I 24/25
P12 YTD P12 YTD P12 YTD I P12 YTD PL PL
YTD. YTD
All accidents 40 50 41 50 2 8
Allaccidents / 1000 employees 118 15.2 I 121 14.0 06 2.2
ome 227 I 269 I 235 36.5 1.0 4.0
‘Support 0.7 24 0.6 12 0.0 05s
Supply Chain 15.3 I 23.5 20.1 13.6 13 37
Lost Time related accidents 5 16 10 9 0 1
Lost Time related accidents / 1000 15 49 29 25 0.0 03
employees
*LTIER (lost time accidents/100,000hrs) 0.083 0.281 0.169 0.147 0.000 I 0.188
Days lost due to accidents 28 484 328 143 0 15
Days lost / 1000 employees 8 147 97 40 0 4
*LTR (Accident days lost/100,000 hrs) 0.5 8.5 5.5 23 0.0 2.8
Days lost due to robbery (assault and 46 - ss é é a
trauma)
*LTR (Total days lost/100,000hr inc trauma) I 0.7 8.9 9.9 23 0.0 2.8
RIDDORS (Employee) 3 6 4 5 0 1
NOTE: Whilst the number of days lost following an incident (assault / trauma) rose in 22/23 when compared to
21/22 (255 vs 23), this was due to one incident with a resulting long-term absence. NOTE:
*It should be noted
that one single lost time accident increases LTIFR markedly by approx. 0.200 per month, LTIFR is the number of
incidents / 100,000hrs and should always be read alongside the Lost Time Rate (LTR) which is the number of lost
days / 100,000 hrs and an indication of the seriousness of the accident.
Period 1 (April) CViT robberies 0
vIT Losses
= 2018/2019 17 I attacks remain consistently low since
~~ maya Ge] Pre-pandemic.
janie 136 CViT cross pavement observations
pe nzn/2024, © I conducted during the month.
cane FORE =] Upgraded body worn cameras are
. being rolled out to all depots over the
Se ee ee] =e 2022/2023 3 I next few months. There will be enough
2023/2024 for every route, They wal rina
irae (oes chai > I mandatory on high and very-high risk
, routes, and strong encouragement for
all other routes.
Industry CVIT attacks lower, 3 vs 4 last month. Based on
current figures, the FYF is 36, similar to recent years
Industry Hotspots — the Met, West Midlands, Manchester and
GMP (over the last 13 months)
Industry by Company, G4S 17, POL 7, Loomis 7 (over the last
13 months)
Strictly Confidential
POL-BSFF-WITN-019-0000004_0182
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Commentary
Sever iene Period 1 (April 2024)
anaes © Robberies were higher vs expected levels for the
time of year (6 vs 5) and higher than last year (5).
© Of the 6, 4 were successful and 5 weapon enabled
* = £144k losses
© 145 branch security health checks conducted providing
Postmaster support:
© Security procedures failed in 50% of incidents (48% last
month), leading to 97% of the losses (23% last month
‘* Incidents of note for the period: Brabazon - Robbery,
£137k, a person has been arrested
Retail robberies reported, 2 vs 2 last month
2023/24 Full year
Robberies in 23/24 were lower vs expected levels, 65 vs 80, and
lower than last year, 73. Of the 65, 42 (65%) were successful
(66% previous year), 23 were attempted. FY losses were lower
vs expected levels, £424k vs £546k, and lower than £1.05m
previous year. 2293 branch health checks were carried out over
year.
Injuries Sustained Commentary
Period 1 (April) ~ 1 x Injury
Minor scratches suffered during scuffle at branch robbery.
Abuse & Aggression
36 reported incidents during the period — 28 POL focused, 8
retail focused. Of which, 28 were product related (15 mails
related, 7 general abuse for no apparent reason, 6 other
product related). 5 of the 8 retail were shoplifting related
Abuse, Aggression & Violence Learning Module is due to be
released 24th June.
2023/24 Full year
There were 13 incident injuries reported in 23/24, slightly up
‘on previous year (12).
‘Abuse & Aggression — During 2023/24, there was a reduction
in serious abuse reported compared to 2022/23 (350 vs 420).
ATM Losses Commentary ~ Period 1 (April) -
2018/2019 I _61 ATM incidents were 0
2019/2020 I _ 36 There were 2 ATM attacks in
2020/2021 I 17 23/24 and 1 in 22/23 which is
unprecedented compared to
2021/2022 I _5 higher levels during the pre~
2022/2023 1 pandemic years.
. na re rn vm 2023/2024 I _2
There remains industry focused ATM activity in key areas,
Current threats have resulted in asking branches to reduce
‘ATM cash holdings in hot spot areas due to increases in
industry attacks using stolen firefighting equipment
#14 industry ATM attacks in the period (22 last month). Based
. ‘on current figures, the FYF is 168, similar to recent yrs
*Cardtronics (33%), Tesco (15%), NCR (15%), POL 0.45% (over
the last 13 months)
Le ‘Hotspots, Thames Valley, Met, West Midlands,
° Cambridgeshire, Hampshire
Strictly Confidential
POL-BSFF-WITN-019-0000004_0183
Technology
Dashboard
May 2024
POST
OFFICE
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POL-BSFF-WITN-019-0000004_0184
IT Operations and People Topics
IT operations — branch
‘Comments: There were 6 Major Incidents in April which was an increase of 2 from March. Unfortunately, 3 of these
were on the back of failed changes which has been addressed directly with the implementation teams, 3 had direct
impact to the network impacting the abilty to trade through SSKs and access to Scottish Power and Evri transactions
were most impactful. We are working with technology teams and partner organisations to understand the root cause and
prevent further recurrences,
42 month
Jan24Feb-24 ‘Apr-24 average
# major IT branch incidents ner 6 6 cas
MiRaised Resolved a ss =
# IT branch incidents (non-major), (k) 6 3.533
WiRaised —__-MlResaved _ —
‘% Horizon uptime 100% 100% 100% 100%
(New definition used from Sep-23 onwards) mm = =
# average branches down (start of day) 13 8 7
= —_ —_
# branches down for over a week 14 14 Fj 9
= = ss —
# formal complaints (closed 7 G 5 ? 7
complaints by Postmaster on the
handling of their Incident) Si ==] II a
IT operations ~ colleague and back office
‘Comments: There were 3 Back-Office incidents, all had a direct impact on our client's access to data files through our
Post Office Data Gateways (PODG) . FRES and Santander were impacted by two and the third incident was related
PODG not being available due to a Database failure Impacting multiple clients. All were resolved very quickly with all
files were made available to clients.
42 month
Jan-24 Feb-24 Mar-24 Apr-24 average:
# major colleague IT incidents 22 22 WE 1313
Raised Resolved —_ ae SS oe
# IT colleague incidents (non-major), (k)
Raised Resolved iu
07 06 0706
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Comments: The next Technology colleague barometer survey will be launched in May. Tech will review and create
Engagement Pians in line with POL wide Engagement Results. Total training budget approved for FY 2024-25 is
£60,000 15.2
100% 62962% 63% 66% 65% 66% 64%
Workforce satisfaction trend over ace ee
time (score calculated from bimonthly 50%.
Technology barometer) a
QVARKKKLKFRRKLRRKRRARAT
eee ees eT SAS BESTE
PeaPR2 PSF SLR IE
# perm / FTC vacancies 12 month
open Filled Jan-24 Feb-24 Mar-24 Apr-24, average
10 10 72 a ey 149
% number of Contractors
{including NBIT contractors)
a @ 2 x
=
% YTD training budget spent (note
that this figure can go up and down as
budget is released throughout the year)
POL-BSFF-WITN-019-0000004_0185
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Cybersecurity, Technology Risks and Horizon Change and Defect Management
‘Comments: 1 branch high security incident was identified — POL Cisoo devices that were vulnerable to a critical / zero-
day vulnerability were upgraded to prevent attacks on POL network and branches, SPM high vulnerabilities decreased
this month as teams must remediate vulnerabilities before banking activation whereas BAU high vulnerabilities increased
due to installation of user applications such as Firefox on supporting cloud infrastructure used by FJ
‘Comments: Risks are actively being managed and mitigated and Technology has no ‘Very High’ risks to note.
As the Branch Technology roadmap evolves risks will be raised, managed and mitigated, Current priority high risk is
‘associated to delays in funding approval from DBT for Technology Change. Technology function is working with Finance
15.2
12 month
a me men ren pao and SPO to mitigate any impacts to inflight Programmes.
# high security incidents 22
Mootegn MBeeeh Do 110 By coe] ° 12 month
league rar _ = -_ = = # intermediate Technology risks Jan-24 Feb-24 Mar-24 Apr-24 average
# open pen test findings a2 46 44 a7 2 i
10 14 Very high
ICitical Ie High ed nn ee ee] nn 6 0 5 5 r
‘# AWS vulnerabilities (SPM — Prod)’ 2199 2768 2794 2879
7 10 10 9 1132 High
se ae we el H Ee 8 o
# AWS vulnerabilities (BAU — Prod)? 9 367 6 323 4325 4511 14 498
critical High _ — — - - _ feta
‘Average 11 menth average 2-Average is & month average ote at = = =
Hoi
on change and defect management
‘Comments: Volume of APADC / reference data changes increased in April due to large decommissioning of products that have been turned off from Horizon. There was 1 privileged access from FJ this month for the following — A monthly clear down of
branch database tables. This month There was no emergency account access usage within the Belfast Data Centre
Defect management saw 2 potential financial impact closed — a) Regarding the ‘bt flip’ issue, following a review of Fujitsu options, all options would cost a very high price and not guarantee stopping FJ state memory corruption, this has been raised and
accepted as a risk record, b) Worldline fix deployed to resolve issues with Payment and Banking transactions getting declined when a travel money card transaction fails at the exact same time as another transaction is processed.
12 month
Jan-24 Feb-24 Mar-24 Apr-24 average
# changes made to reference
data and AADC (Automated S08 420 24g 42285
Payments Advanced Data a I I = i I a
12 month
Jan-24 Feb-24 Mar-24 Apr-24 average
uses of Fu’s account for ops ¢
processes (privileged access) I 3
a
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#FJ implemented platform 8 113 4 1 79 # uses of emergency account
changes? = == == by Fi for system changes? 1 2 ° 3
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4. Romoto access mots donot include the reporting ot road only access to individual counters,
the reguar executors of chi)
reporting is avalabo via the normal weekly eocurity reporting and ISMF 2. Number of uso of he 'broak past’ account used when
12 month
Jan-24 Feb-24 Mar-24 Apr-24 average
#defects Potentialfin. impact m0 = of Om At
Raised
TiResoived Nofin.impact 35 32 Sim 23 32
g i Criticality score >30/58 4, a 0 ih a
$ qs Under investigation
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ujtsu are doing changes / updates! maintenance tothe syst; sometimes thos
ro outothoure (e.g,
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BOARD REPORT
Title: 2024 Employee Survey Meeting Date: I 4'' June 2024
results/ Engagement Survey
edie: Tim Perkins, People Services esses Karen McEwan, Group Chief
‘J Director a 7 People Officer
Input Sought: Noting
The Board is requested to:
i. Note the results of the 2024 Colleague Engagement Survey that have been
discussed at the Remuneration Committee.
Executive Summary
Post Office completed an Engagement Survey at the start of 2024 and 86% of colleagues
responded to the survey.
Engagement has fallen and this is driven by a decrease in the sense of pride colleagues have
in working for the business. Given the external pressures on the business this was to be
expected, and despite those external pressures colleagues remain motivated to do the best
job they can and to remain at Post Office in the long term. Senior colleagues are under
significant strain and this, coupled with poor internal communications, seem to be
compounding a lack of confidence in senior leaders. Colleagues are looking for a refreshed
strategic direction and for it to be communicated effectively across the business. Indeed,
when colleagues understand the strategy, they feel more confident delivering for
Postmasters, partners and customers. Colleagues experience of line management and
technology has improved and Post Office is seen by the majority of colleagues to be an
inclusive place to work.
The results were shared with all line managers on 7" May and presented to the full business
on 15" May at the Colleague Town Hall. Action plans will be completed by 28" June with a
potential future Pulse Survey in August or September 2024.
Report
1. Post Office completed an Engagement Survey over three weeks in February and March
2024. The survey is run end-to-end by Ipsos, Karian and Box (IK&B) through the Qualtrics
contract.
Completion rate
2. The completion rate for the survey was 86%. This was an increase on the completion rate
of the last Pulse Survey (at 65%) and the last full Engagement Survey in 2022 (at 36% 15.3
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when Union activity impacted the completion rate). This level of completion is ahead of
UK norms for completion of engagement surveys and means that the outcomes of the
survey can be seen to be very representative.
Headline results
3. The overall outcome report (Appendix A which has been uploaded to the Reading Room
was shared with the Strategic Executive Group (SEG) on 23 April 2024. It has also been
shared with the Remuneration Committee for onward noting at Board on 4" June 2024.
4. The key headline results from the 2024 Engagement Survey are as follows:
a. The engagement index has fallen 11% to 57%. This has been driven by a 22%
decrease in colleagues feeling proud to work for Post Office. There has been a
direct ‘switch’ from colleagues feeling proud of working for Post Office to not
feeling proud of working for Post Office between the Pulse Survey and this survey.
Our survey providers have noted that this ‘switch’ is unusual as pride normally
erodes over time with colleagues migrating from positive to neutral and then to
negative responses. This outcome and ‘switch’ was to be expected given the
amplified external pressures on Post Office.
b. Whilst all drivers of engagement have fallen, colleagues’ motivation to do the best
job they can remains 12% higher than UK norms at 73%. This suggests that
whilst colleagues do not feel proud of working for Post Office, they are determined
to contribute to the transformation of the business.
c. 58% of all colleagues plan to be at Post Office for longer than 5 years - typically,
even for businesses with high engagement, intention to stay for over 5 years only
tends to reach the high 20s. So, whilst pride in working for Post Office has fallen,
this has not translated into more colleagues planning to leave the business. More
colleagues who plan to leave cite concerns about Post Office’s future and culture
than previously, with fewer colleagues citing reward.
d. The level of strain felt by senior colleagues at Post Office is substantially different
to the level of strain felt by more junior colleagues and this is impacting their
wellbeing. The predominant descriptions of the Post Office culture for junior
colleagues are ‘friendly’ and ‘supportive’, whilst for senior colleagues they are
‘pureaucratic’ and ‘political’. The barriers which have the highest impact on strain
have decreased for junior colleagues, whilst increasing for senior colleagues.
Proximity of senior colleagues to governance processes is likely a cause of strain
and job and organisation design should be reviewed for senior colleagues.
e. The strain that senior leaders are under is also likely having an impact on their
ability and capacity to lead brilliantly. This, along with the very public issues
surrounding senior leaders at the time of the survey, may be a root cause for the
lack of confidence that colleagues have in senior leaders. 35% of colleagues said
they had confidence in senior leadership, down 4% from 2022 and down 5% from
2023. This fall in confidence might have been expected to be greater for this
survey, but the lack of confidence in senior leaders is a long-term issue for Post
Office and is significantly behind UK norms where 69% of employees have
confidence in senior leadership.
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f. Poor internal communications are driving a lack of colleague confidence in both
Post Office and the senior leadership. 43% of colleagues suggest that the one
thing they would do to make Post Office a better place to work is to either ‘improve
internal communication’ or ‘be more honest and transparent’. In most businesses,
suggestions to make the business a better place to work tend to centre on
improving pay and benefits or improving progression opportunities, so the
overwhelming feedback on communications at Post Office suggests this is a real
area of opportunity.
g. Colleagues are asking for a refreshed strategic direction and for it to be
communicated effectively. This can be found in the verbatim comments of
colleagues, but is also visible in the decline in colleagues views on whether the
vision for 2025 and strategic priorities motivates them (-12% vs 2022 to 32% of
colleagues). This question makes up one of the four drivers of colleague
confidence in senior leaders and is both the largest declining driver against 2022
and the worst performing versus UK norms. It is also critical to note that when
colleagues understand their role in relation to Post Office’s strategy, they are
much more confident that they can support Postmasters, partners and customers.
81% of colleague who understand their role in relation to Post Office strategy are
confident in supporting Postmasters, partners and customers against only 26%
of colleagues who do not understand their role in relation to Post Office strategy.
h. Colleagues experience of their direct line managers and the technology they use
in their jobs have both improved. Colleagues have a broadly positive experience
of their direct line manager, particularly in relation to having regular check ins
and caring about wellbeing and it has improved on all measures since 2022.
Technology remains the biggest barrier colleagues feel they face at work, but this
has fallen from 59% finding it a barrier in 2022 to 42% finding it a barrier in 2024.
i. The colleague experience at Post Office is generally seen as equitable with 17%
of colleagues having no improvements to suggest in relation to ED&I (and 8% of
colleagues thinking that ED&I has gone too far at Post Office). However, the
underlying responses suggest that more can be done to improve the experience
of some groups of colleagues. Colleagues with a disability are less likely to feel
included at Post Office, colleagues from ethnic minority backgrounds are less
likely to feel that they can progess their career at Post Office and senior women
are much more likely to have received an unwanted comment at work than senior
men.
Next steps and timelines
5. The proposed timeline following the issuing of the survey results by IK&B is detailed below:
a. 23" April - Outcome report shared with SEG and ‘Create New Confidence’ group.
b. 1%* May - SEG reviewed the headline results and approved the proposed next
steps.
c. 24 May - Headline results were shared with Leadership Team.
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d. 7" May - Access to Dashboards became available to all line managers. This has
enabled line managers to begin building local action plans. There are standardised
template for action plans.
e. 15'* May - Business wide update at May Town Hall on survey results and next
steps.
f. 4" June - Outcome report to be shared with the Remuneration Committee for
onward noting at Board.
. 28" June - Business and local action plans to be finalised and submitted.
. July Board Away Day - deep dive into culture using the outcomes from the
colleague and Postmaster engagement surveys.
i. July - Survey dates and question set for Pulse Surveys to be agreed with SEG.
j. August/September - Potential timeline for Pulse Survey completion. This will be
under a new contract, so there is an opportunity to reset timeliness of results with
a new provider/under a new contract.
6. In addition to having business-wide and local (functional) action plans, we will also be
developing action plans for three specific populations whose experience of working at Post
Office differs from the norm. The purpose of this is to indicate that the results from the
engagement survey are being addressed in a different way to the past, and this approach
also indicates a move away from a siloed mentality within the business. The additional
populations we will be developing action plans with are:
a. Band 4 and SLP colleagues - with a specific focus on the strain that these
colleagues have reported being under.
b. Colleagues with a disability - with a specific focus on the level of inclusion that
these colleagues experience.
c. Colleagues from an ethnic minority background - with a specific focus on career
progression within Post Office.
sa
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POST OFFICE LIMITED
BOARD REPORT
1CO Publication Scheme a dune 2024
Kate Dixon, Legal Counsel (FOI & Sarah I Gray, Interim Group
DP. General Counsel
The contents of this paper are legally privileged and confidential.
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