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MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON TUESDAY 4 JUNE
2024 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 11:15 AM
Present: Nigel Railton Interim Chair (NRa)
Ben Tidswell Senior Independent Director (BT)
Lorna Gratton Non-Executive Director (LG)
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)
Nick Read Group Chief Executive Officer (NR)
In attendance: Rachel Scarrabelotti Group Company Secretary (RS)
Owen Woodley Deputy CEO (Observer) (OW)
Asha Patel Director of Strategic Financial Planning & Analysis (AP)
Liam Carroll Procurement Director (LC)
Chris Brocklesby Chief Transformation Officer (CB)
Patrick Bell Senior Legal Counsel (PB)
Simon Oldnall Horizon and GLO IT Director (SO)
Tim Perkins People Director — Services (TP)
Stuart Keeping Senior Managing Director, Teneo (SK)
Barbara Brannon Product Portfolio Director - Retail & Lottery, Government
& International Payments Services (BB)
Ross Borkett Banking Director (RB)
Diane Wills Public Inquiry Director (DW)
Dan O’Mahoney Inquiry Operations & Strategy Director (DO’M)
Chrysanthy Pispinis Chief of Staff (CP)
Simon Recaldin Remediation Unit Director (SR)
Kate Gallafent KC Blackstone Chambers (KG)
Oliver Carlyon Partner, Fieldfisher (OC)
Karen McEwan Group Chief People Officer (KM)
Nicola Marriott People Director — Partnering (NM)
Laurence O'Neill Head of Legal - HR/IR (LO’N)
Rebecca Barker Head of Risk (RB)
Sarah Gray Interim Group General Counsel (SG)
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Action
1a Meeting Chair, Welcome and Conflicts of Interest
A quorum being present, NRa opened the meeting. Given the very recent appointment of
NRa, the Board agreed that BT preside as Chair of the meeting. The Chair called for the
Directors to disclose any conflicts of interest. The Board noted EJ and SI’s role as
postmasters, EJ’s declaration that from the meeting date he would also operate a Banking
Hub and that EJ, SI and LG were potentially conflicted in relation to the Inquiry Phase 7
strategy matter. The Directors declared that they otherwise 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.
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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
solely by a contribution made by OW and that it would reach its conclusions based on a
balanced and diligent assessment of all the facts available to it.
Officer Changes
TABLED and NOTED was a paper, ‘Appointments to Board Committees’. The Board
RESOLVED that the following appointments be and are hereby APPROVED:
(i) NRa as a member and chair of the Company’s Nominations Committee
effective 24 May 2024;
(ii) NRa as a member of the Company’s Remuneration Committee effective 24
May 2024;
(iii) NRaasamember of the Company’s Remediation Committee effective 10 July
2024; and
(iv) BG as interim Chair of the Company’s Remediation Committee effective 10
July 2024.
ACTION The Board NOTED the intention for BT to be appointed to continue to support the
Remediation Committee and RS advised that she would take this forward. RS
Inquiry Confidentiality Undertakings
The Board noted that BB, LC, PB, SK, RB and TP 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 Meetings of 25 March 2024 and
29 April 2024. The Board RESOLVED that the Minutes of the Meetings held on 25 March
2024 and 29 April 2024, subject to an edit to the draft minutes of 29 April 2024 requested
by SI, be APPROVED as a correct record of the Meetings and be signed by the Chair.
Matters Arising
The Board NOTED the action log and status of the actions shown.
There were no comments on the open nor ongoing items. In respect of items proposed for
closure, key discussion points were as follows:
Sl queried whether item 1 ought to be closed. ACTION EJ noted the fall in volumes
of international mail and that a plan remained outstanding to re-capture this
market. The Chair requested that a new action be opened, and Board be provided
with a plan for rebuilding this market;
Sl questioned whether item 3 ought to be closed. EJ shared his view that if the
Company was proposing to provide evidence to support police investigations, then
this should come to the Board first. The Chair noted that if there appeared to be
criminal activity this generally needed to be reported through to the police and
ow/N
O'Sullivan
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there were issues in some instances of requiring pre-reporting to the Board, for
example in relation to suspicions of money laundering. In addition, the Chair
noted that the proposed process would allow investigations to be conducted by
the police, rather than the Company. ACTION The Chair requested that RS
circulate the paper that was provided to the Board and the minute extract from
the Board meeting of 31 October 2023 and that J Bartlett attend the July Board
meeting to clarify the proposed position;
© Sl queried the proposed closure of item 4 advising that he felt that there had not
been sufficient activities conducted in order to raise customer’s awareness of the
Company’s new relationship with Monzo. LG pointed out however that Monzo
customers did not wish to receive marketing materials so did not think that this
action could be progressed further;
* AB questioned the status of 2 actions being the NBIT buy/ build and the roadmap
of possible planned technology to be developed, both having been raised at the
Board meeting of 25 March 2024. It was noted subsequently that the NBIT buy/
build had been to the IC for consideration in May and that the roadmap was due
to come to the July 2024 Board meeting;
© ADasked about progress with the digital strategy. OW advised that a teach in had
been provided to Board members and that this would be considered as part of the
wider strategic review.
RS
SGray/J
Bartlett
Committee Reports (verbal)
Remediation Committee
Key points advised by the Chair were as follows:
© the overriding theme of the Remediation Committee at present was uncertainty:
the requirements from the Ministry of Justice in respect of claimants under the
exoneration legislation were unknown and in relation to the HSS it was not known
when an appeals process may be available nor the likely uptake and funding for
the £75k minimum fixed sum offer to any Postmaster who had experienced a
shortfall;
¢ in relation to overturned convictions it was not clear the extent to which claims
would progress through the DBT Horizon Conviction Redress Scheme. The extent
of disclosure requests and the manageability of this in relation to the new scheme
were also unknown at present;
© finalising claims under the HSS could potentially have a long tail, although the
proposed introduction of an appeals process and the £75k minimum fixed sum
offer could assist to progress a number of cases;
* MrL Castleton had threatened to issue proceedings against the Company for fraud
* a third party was due to be appointed by the Shareholder to review the
information the Company had obtained in relation to the pre-Horizon Capture
system and provide an opinion on Capture being a cause of Postmaster detriment;
SJ noted the potential impact of the above uncertainties on disclosures in the ARA. NRa
queried whether there were some aspects of redress that might be resolved fairly quickly.
The Chair replied that once the uncertainty was resolved some items could be resolved
quite quickly however there were other aspects that may take some time to resolve such
as in relation to HSS claims. If there was a change in government, possible approaches to
the overall administration of the schemes may be reviewed.
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3.2 Audit, Risk and Compliance Committee
TABLED and NOTED was a paper, ‘ARC Meeting — 21 May 2024’. Key points advised by SJ
were as follows:
© there were a number of risks where the Company was operating outside of
tolerance and ARC had requested that the concept of ‘out of tolerance’ be
redefined;
the role of the RCC had been considered and the need for this to function as an
executive risk committee with papers focusing on management's analysis and
progress to resolution of open issues;
the ICO had issued a Practice Recommendation to the Company; SJ was
uncomfortable and shared his view that the situation needed to be closely
monitored. ACTION The paper on the ICO Publication Scheme was discussed with
the Board requesting a preliminary note on the applicability of the publication
scheme to the Company;
© On SPM, a Deep Dive had been requested at ARC for the Board. SJ requested that
Board members reflect on whether this would still be required, following the
updates due to be provided during the Board meeting;
with pressure on the first line, there were some internal audit actions that were
overdue. Deloitte were undertaking a privileged access management audit on
Horizon however access arrangements with Fujitsu needed to be resolved. NR was
exchanging correspondence with Fujitsu on this, and correspondence was also
being exchanged by the Company’s and Fujitsu’s general counsel;
© good progress had been made in respect of data governance however there still
remained significant work;
the Company’s relationship with POI had improved from a regulatory management
perspective;
© SJ.was discussing the position on the reporting of procurement risk exceptions
between ARC and the Board with LC as there seemed to be some inconsistency.
ACTION The Chair queried whether IA or an external needed to be engaged to
conduct a review of procurement governance. SJ noted that there seemed to be
issues with the first line consulting procurement. The Chair shared his view that
there were issues however in the process including with controls and that this in
turn led to further issues such as inadvertent overspend on contracts. NRa and SJ
agreed that IA needed to undertake a review of procurement governance;
an update on IR35 had been provided. There was discussion as to KPMG assisting
with the HMRC claim and NR advised that he was working with KPMG on this. LG
shared her view that there were cultural issues around the business accepting that
the Company was a public corporation and their risk attitude in respect of IR35
and procurement issues;
* areview of the external audit process for FY22/23 had been undertaken and SJ
had been introduced to the new proposed PwC audit partner.
SGray
J Appel
3.3 Remuneration Committee
The Remuneration Committee met earlier in the day; key points advised by AB were as
follows:
© proposed annual employee pay increases had been considered for non union
grades. There was no increase proposed for SEG level employees;
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© the FY24/25 STIP and FY24/26 LTIP schemes had received Shareholder approval,
meaning that all schemes were now approved at a Remuneration Committee and
Shareholder level;
amendments to the Remuneration Committee’s Terms of Reference and the STIP
and LTIP scheme rules had been ratified;
* revised levels of remuneration for the incoming POI Chair and NEDs were ratified; « mcEwan/T
© ACTION the results of the employee survey had been considered noting concerns _ perkins
raised in respect of leadership and communication. The survey results would be
presented at the July Board meeting and the Board would need to be provided
with an action plan.
3.4 Nominations Committee
The Nominations Committee having met earlier in the day, key points advised by the Chair
were as follows:
* _ potential changes to the senior executive leadership team had been considered.icpo}
i land the Committee had stressed to‘--~~
“NR that this role needed to be filled on an interim basis. The proposed COO, GC,
and Chief Retail Officer roles had also been discussed, with the Committee
requesting NR return to the Committee with a proposal focused on what could be
actioned as a matter of urgency;
with a new Board member required once the Chair (i.e. BT) stepped down, a Board
skills review would be undertaken then the results of this used to inform
recruitment. The SID role would be separated from the recruitment for a new
NED;
the Postmaster NED recruitment has been discussed and a longlist was to be
provided to Greenpark;
the Committee had approved the extension of certain roles within the PO! team
and agreed to a revision to the Committee’s Terms of Reference in respect of
consultation on proposed POI Board changes;
© in respect of the CFO position, noting the vacancy for this role on a permanent
basis, the Committee had agreed that the proposal could be commenced . AB
noted the potential remuneration approval required and that similarly this could
not be sought until after the election. SJ noted that there would need to be some
arrangements in place to assist through the ARA and year end process and thought
that T Lee could do this. AD shared his view that he thought the gap would be at
the strategic level.
3.5 Investment Committee
Key points advised by AD were as follows:
the IC met on May 16 and focused on SPM. There were uncertainties in respect of
this project across a number of issues including funding. Two external reviews had
been completed in respect of the project and both concluded red ratings. The
build/ buy point had been considered, although the build approach without the
necessary inhouse expertise seemed flawed. NRa shared his view that the
conversation on buy/ build was the wrong question and thought that the question
was build/ build and then the question was whether to build internally or
externally. There needed to be a number of conditions met for a successful
internal build however such as a stable business, good governance and quick
decision making. With the Company not fulfilling these conditions the view of NRa
was that a third party should be commissioned to build. NRa advised that he saw
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3 options, firstly SPM could carry on as was, secondly a third party could be
engaged to build the new system, and thirdly that Horizon could be brought in
house. All of these options needed to be carefully considered;
the dashboard reporting to the IC showed 17 red platinum projects. A number of
these were outside appetite although there was a lack of clarity around the
definition and terms were not used consistently throughout the business. AD
noted issues in respect of the copper stop project including management of the
contractor and communications.
The Chair noted that the paper on SPM included in the pack seemed surprisingly positive.
AD replied that the release plan had been reviewed at IC and progress against this. Whilst
SPM could continue on it was not certain that this was the right course and would lead to
the end result the business wished to achieve.
CEO Report
TABLED and NOTED was the CEO report. Key points advised by NR were as follows:
* _anumber of People issues had emerged. There was an urgent need to provide
stability of resource for the business in order to deliver for current Postmasters
and on remediation matters. The employee survey results showed a decrease in
the pride the senior leadership team felt in working for the business and an
increase in stress. The strategic review however was felt to be a positive step
forward in improving employee sentiment and experience;
© mails performance was mixed with uncertainty over IDS ownership and USO
requirements. ACTION LG queried whether representations in respect of the
proposed change in ownership of IDS would be made to the investment security NR/ OW
unit. NR advised that that could be explored;
¢ NR had met with the Voice of the Postmaster Group last Tuesday and attended the
NEFSP Conference with Minister Hollinrake on 12 May. Concerns raised by
Postmasters were around how the Company was going to rebuild the brand and
protect Postmasters’ businesses. OW noted an eagerness from both the Voice of
the Postmaster and the NFSP to stand alongside the Company to press for change
and it had been agreed that some joint working sessions would take place such as
‘on governance to determine if there was anything we could jointly campaign for.
ACTION SI requested data in relation to the performance of Parcels Online be provided to
the Board as soon as possible. LG requested the revenue structuring for Parcels Online be OW/N
provided as well and also queried the status of revenue sharing with Postmasters in O'Sullivan
relation to Parcels Online.
SJ queried progress on the engagement of media advisors. NR advised that a tender
exercise would be conducted this month as the current advisors’ contract was due to
expire in September and further advised that interviews were being conducted for a
permanent corporate affairs director. SJ noted the need for messaging to be prepared and
circulated ahead of the commencement of Phase 7 in respect of how much had been
achieved. NR advised that rule 9 requests for corporate witness statements on behalf of
the Company had not been received as yet and that Phase 7 of the Inquiry was anticipated
to start on 16 September, so corporate witness statements would likely not be required
until 1 September.
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AB noted the group assurance update and the status of the ClJ and HU assurance reviews
and queried the plan to improve the position. NR advised that he had Deep Dives on this
scheduled for Friday and that he was meeting with A Mathur to discuss.
AB queried whether the strategic review would this cover Postmaster remuneration. NRa
advised that it would. K McEwan/T
Perkins/ M
ACTON SI requested that the results of the employee and Postmaster surveys be Roberts
presented to the July Board.
Finance
51 Financial Performance Report
TABLED and NOTED was the P11 Financial Performance Overview. AP joined the meeting at
13:22 and spoke to the Report’s executive summary. There were questions and discussion
on the POI home insurance and whether the forecast had been adjusted for this.
5.2 Working Capital Facility increased usage
TABLED and NOTED was a paper, ‘Working Capital Facility increased usage’. The Chair
advised that he was uncomfortable with the proposal and noted that the buffer had only
been approved for reduction in more time limited circumstances previously. ACTION AP
advised that monies had been receipted from the Shareholder yesterday so she would
check with Treasury as to whether the approval request to reduce the buffer was still
required. The Chair advised that the Board could consider a reduction in the buffer for a
more time limited period if required.
APatel
The Board RESOLVED that the approval sought be and is hereby DECLINED.
5.3 ‘thange spend prioritisation principles
TABLED and NOTED was a paper, ‘FY24/25 unallocated! GRO fhange spend prioritisation
principles’. Socmeenet
5.4 External Auditor tender exercise — outcome and appointment
TABLED and NOTED was a paper, ‘External auditor tender exercise — outcome and
appointment’.
NOTING ARC’s RECOMMENDATION, the Board RESOLVED that PwC appointment as
itors for the Company for a period of” with an option to extend for a
[GRO from the financial year ended 30 March 2025 be and is hereby APPROVED.
AP left the meeting at 13:26.
Contract and sourcing strategy matters
5.5 Horizon continuity of service update
TABLED and NOTED was a paper, ‘Horizon Contract Extension/ Horizon continuity of
service update’.
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This paper was deferred for consideration until Agenda item 7.
5.6 Strategic Platform Modernisation Programme (SPMP) Assurance sourcing strategy
TABLED and NOTED was a paper, ‘SPMP Assurance Support Partner Sourcing Strategy’.
The Board RESOLVED:
(i) that the sourcing strategy as set out in the paper for selecting a provider of
Assurance Support to the SPMP programme be and is hereby APPROVED;
(ii) that authority be DELEGATED to the Strategic Executive Group to determine
the contract award and finalise contract terms with a maximum contract value
up toI GRO be and is hereby APPROVED; and
(iii) any authorised signatory be authorised to sign the resultant contract be and is
hereby APPROVED.
57 Facilities Management and Security
TABLED and NOTED were the following papers:
(i) ‘Facilities Management & Security - Administrative Correction of Public
Notices’; and
(ii) ‘Facilities Management & Security — Legal Risk Note’.
The Board RESOLVED:
{i) The administrative correction to contract award notices as set out in the paper
in relation to existing contracts with Kings Security and Atalian AML be and is
hereby APPROVED;
(ii) The variation of the Kings Security contract extension term from}
jor the point at which the contract would exceed I !GRO} whichever is
ner, be and is hereby APPROVED; be
(iii) Any authorised signatory be authorised to sign the resultant variation in (ii)
above.
5.8 Energy contract award
TABLED and NOTED were the following papers:
(i) “Energy Contract Award - CCS re-opt in for procurement of Gas and Electricity
to the POL Estate’; and
(ii) ‘Energy contract award — Legal Risk Note’.
The Board RESOLVED:
(i) The contract award to the existing evergreen CSS framework ‘Supply
of Energy 2’ (RM6251) for,
(i) that authority be DELEGATED to the Strategic Executive Group to
determine the contract award and finalise contract terms be and is
hereby APPROVED; and
(iii) any authorised signatory be authorised to sign the resultant contract
be and is hereby APPROVED.
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Morson contract spend increase
TABLED and NOTED were the following papers:
(i)
(ii)
‘Morson contract spend increase - Contingent Labour’; and
‘Morson Contract — Legal Risk Note’.
Consideration of this paper was deferred to later in the meeting.
Strategic Review (Verbal)
TABLED and NOTED was a paper, ‘Strategic Review: Update for the Board’.
SK joined the meeting at 13:35 and NRa introduced the session. Key discussion points
were as follows:
SK provided an overview of the proposed approach Teneo wished to take in
respect of the strategic review, outlining the different roles of teams at Teneo and
the 3 phases of the work model;
SK outlined experience gained from the National Lottery strategic review
conducted by Teneo. AD queried how much the growth experienced post review
was from new products as opposed to existing products. NRa advised that the
growth was predominately attributable to new products. AD queried further
whether the review would look at existing products as well as new products for
the future. SK confirmed that new and existing products would also be considered
as part of the review;
SK advised that at the end of the review a plan would be provided to execute
against. It was key that the plan was easily understood, and employees were
engaged on the plan in order to execute. NRa contributed that defining the key
pillars for the review were very important along with how we aligned to execute.
NRa shared his view that there were 3 key enablers — re-setting technology, re-
designing the operating model and ensuring governance was in place throughout
the business;
SK emphasised the need for the review to be data led and NRa agreed that it was
very important for this to be adopted as a philosophy for the review. There would
be engagement with stakeholders throughout the process so that they were on
board with the plan;
BT queried the start line for the review given there were so many areas of the
business that were not functioning. AB asked whether Teneo were making an
assumption that the network requirements could be changed. SK advised that
Teneo were not making any assumptions at present and in response to BT’s query,
advised that Teneo needed to understand pragmatically what could be achieved.
NRa contributed that he thought the review exercise needed to start
unconstrained then work through the cost of trade offs. AD advised that he was
supportive of the idea of different scenarios being presented to the Board
throughout the process. SK advised that phase 2 of the review would distil out
choices that needed to be made. In addition, one of the criteria that would inform
the plan was affordability and different scenarios would come back to the Board to
choose between in phase 3;
EJ queried who the review was being conducted for. NRa advised that it was the
Board and spoke to the obligations of directors in respect of ensuring the strategic
direction of the Company and the need for the Board to have a clear view on this;
EJ noted the significant number of change programmes in flight at present and
queried whether any of these would be paused during the review period. SK
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advised that ordinarily Teneo would discourage the pausing of activities during the
review;
* EJ shared his view that the messaging in respect of the review needed to be very
considered given the business was very delicate at the moment;
* AD queried the extent to which postal operations in other countries would be
considered as part of the review. SK advised that Teneo had not planned on
undertaking significant international benchmarking given the different operating
model of the Company;
© NRnoted the previous work undertaken by McKinsey which had not been
executed in whole due to Covid and the Inquiry and shared his view that there had
not been capacity or capability in the business the last few years to execute. SK
agreed that it was important to understand how much change an organisation
could take and NRa noted the need to prioritise and put in place the right
structure and operating model in order to effect change;
* SK outlined the approach proposed for the strategy review at the Board strategy
day;
e¢ ADasked for further details about the team that would support SK on the review.
SK outlined his team and their skills and advised that Teneo would consult with
market experts as needed. LG queried what percentage of his time SK would
devote to the review. SK advised that whilst the briefing materials stated 40%, it
was more likely to be 60%;
SJ queried what the plan would look like. SK advised that this would consist of a
costed set of strategic initiatives with business plans underneath;
Slasked what the plan was to engage with Postmasters in respect of the review.
SK advised that Teneo were very keen to engage with Postmasters throughout the
review and that he was in conversation with OW on this.
SK left the meeting at 14:28.
Transforming Technology
SPMP Update (spend and delivery to date)
TABLED and NOTED was a paper, ‘SPMP Update Paper’.
CB joined the meeting at 14:30 with SG, SO, LC and PB. Key discussion points were as
follows:
© CB spoke to the paper outlining progress since the last update to Board;
SJ queried the spectrum of services available on the current release. CB advised
that R2.1 still had limited functionality — whilst customers were purchasing a
service via R2.1 this was only for a small sliver of services;
* CBnoted that ongoing engagement with Postmasters had been well received, that
the programme remained within budget, and that there had been good progress
on recruitment;
* ACTION AD queried the position in relation to contractors outside IR35 working on
the programme. CB advised that he had been liaising with KM on this and there
were circa 35 contractors who needed to be converted. A decision needed to be
taken on any rate increases and CB would discuss this with KM. AD advised that
he would like to understand the cost implications of any proposed rate increases;
C Brocklesby
© CBnoted next steps included upgrading the software in order to provide to an
independent branch by the end of the summer and for banking through a PED
which the team were looking to achieve in 2024;
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Sl referenced the recent articles in Computer Weekly and queried the mood in the
team. CB outlined the 2 articles which had covered the potential Fujitsu contract
extension and the IPA review. CB advised that the articles had not been well
received and a number of questions had come in from Fujitsu and the banks;
In relation to the IPA review, SJ asked CB whether he was confident that he could
go through and answer all the points in the review satisfactorily. CB noted that
the Company had funding for the programme until the end of June 2024 and that a
business case had been submitted for funding to take the programme through to
2026. As part of this 2 reviews were undertaken including that of the IPA. The IPA
team were not system building experts and gave the programme a red rating in
CB’s view due to the profile of the Company and the complexity of the
programme. In terms of the 7 recommendations of the IPA, there were only 2 that
CB thought those working on the programme could do something about being an
improved integrated plan and reviewing risk appetite. The other review, being the
Public Digital Review, had highlighted the need to obtain better digital expertise
and better expertise on the government green book. SJ commented that the 2
reviews covered quite different ground to the Accenture report. CB agreed and
advised that the IPA review was very top down;
CB advised that funding for the programme was now signed off until December
2024 and that the team were working back from that to map out steps to secure
programme funding in place beyond December;
‘SJ queried how far through the build would be in December. CB advised that there
would still be a significant build work remaining to be undertaken at this point.
Horizon continuity of service update
Key discussion points were as follows:
SO spoke to the paper outlining the proposal for a 5-year exit plan for Fujitsu. SO
advised that the Board were being asked to include in the strategy a stage where if
NBIT was not completed within the term of the extension that the Company would
put in place an alternative approach to supporting the Horizon platform to make
sure that Fujitsu was still able to exit at the 5-year point. SJ queried what the
alternative approach would constitute. SO advised that the Horizon platform
could be brought inhouse or procurement undertaken for external support for the
platform. SO estimated that it would be 18 months to 2 years when a decision
would need to be taken on this point;
EJ queried whether we should we not be working towards this scenario. CB
advised that a high-level plan and cost to execute had been prepared however the
team did not want to go down that path at present given the commitment Fujitsu
were requesting;
NRa queried whether there were any termination points in the proposed
extension. SO replied that there were not, and CB contributed that there were
core services that would be provided for the entire term however there were
certain services that could be terminated;
ACTION NRa queried the maximum cost for the contract extension. SO replied cB/so
and advised that he would check the cost if all services aside from the core
services were removed;
SI queried why the extension was not proposed for 3 years given the programme
build was tracking to complete in 2026. CB advised this was proposed in order to
provide some contingency. SI tested this further and pointed out the risk of the
Company being on a new platform yet still paying service fees to Fujitsu. CB
reiterated the point in respect of seeking a contingency;
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© ACTION NRa queried whether we had tried to negotiate a break clause. OW
advised that the team could take this away and look at a 5-year extension with a 3-
year break right;
© Sinoted that the communications on the extension needed to be executed with
precision in relation to Postmasters and the public. CB advised that he understood
this;
* LG queried whether options to contract directly for everything we could had been
fully explored. SO advised that this had been discussed and that he had reached
out to Oracle;
ACTION NRa asked for a session with SO to discuss what owning the source code
encompassed;
¢ Legal Professional Privileged advice PB outlined the worl i so
Ow/CcB/SO
* SO advised that the intention was to present the proposed final extension
arrangements with Fujitsu to the Board at the July Board meeting.
The Board RESOLVED that:
(i) Subject to seeking a 3-year break provision, the proposed strategy for an
extension of up to 5 years of the Horizon support contract with Fujitsu from 1
April 2025 until 31 March 2030 be and is hereby APPROVED; and
(ii) The inclusion of a binding commitment to Fujitsu that an alternative approach
to supporting the Horizon platform through commencement of a programme
to insource/ re-procure elements be activated if there is not sufficient time
within the term extension to fully migrate from Horizon to NBIT be and is
hereby APPROVED.
CB, SO, SG and PB left the meeting at 15:10.
Morson Contract Spend Increase
T Perkins joined the meeting at 15:11. Key discussion points were as follows:
© The Chair advised that the Board needed confidence that there was a series of
structures and controls in place in respect of contract management. SJ asked LC to
outline the control that was missed that resulted in this issue. LC replied. The
Chair asked if there was an error with the information that had gone to the Board.
LC advised that the Board had been advised of the incorrect value of the contract.
SJ asked LC to outline the controls that were in place. LC advised that there
needed to be improved co-ordination between legal, procurement and the
business and spoke through the processes that had been put in place and the
checks in place via the CAF system as well as the manual checks that were
conducted;
* LCnoted that tracking spend against contracts was the responsibility of the
business. OW shared his view that a contract management team needed to be
established. EJ queried the percentage failure rate of contracts that exceeded
contract value. LC advised that this was 1 — 2%;
* ACTION SI advised that he would ask IA to conduct an exercise to identify which
controls were in place and how these were missed in the case of this contract and
others; SI/J Appel
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© The Chair advised that it was not a satisfactory position for at each Board meeting
for the Board to have reports of things that had gone wrong in terms of process
and controls. SJ noted that last week ARC had been advised that there were no
procurement breaches so there was some inconsistency in reporting;
ACTION The Chair and NRa queried in which business units the issues were
occurring. LC advised that this information had been published to ARC. The Chair
suggested that IA perhaps start with this information. NRa agreed with OW’s
earlier point that a formal contract management function might be the answer; LC
agreed advising his view that contract management was required rather than
merely contract administration. The Chair further advised that he would like some
assurance that this issue had been looked at holistically;
* ACTION LG advised that she had spoken to TP about the managed service
provision of the contingent labour contract last week and had requested that Si/ A Mathur
when the contract was re-tendered that any IR35 risk be articulated and that this
risk be reported back through ARC, then Board;
© ABraised a concern in respect of the number of contractors engaged and asked —_—T perkins
that the business start to reduce the number of contractors used.
LC and TP left the meeting at 15:23.
Improving Branch Profitability
Banking Framework 4
BB and RB joined the meeting at 15:24.
TABLED and NOTED were the following papers:
(i) “Banking Framework 4 (BF4)’; and
(ii) ‘Banking Framework 4 (BFA) — Legal Risk Note’.
Key discussion points were as follows:
RB spoke to the Access to Cash regulations which were due to be published on 1
July 2024 along with the expectations as to which entities may be inside these;
The Chair queried whether there was an any nervousness that the delay would
allow the banks to chisel the commercial deal. RB shared his view that whilst he
thought this would be attempted that the reality was that the banks would need
us more and more following the introduction of the Access to Cash regulations. A
key question would be how our network aligned to assist the banks’ compliance
with the draft regulations and how we could fill the gaps to ensure the best
alignment;
*® OWadvised that we had not priced into the deal taking on any regulatory
compliance for the banks;
LG queried how the Company’s network was not in alignment with the new
regulations about geographical coverage. RB advised that in terms of geographical
proximity, 2 of the same restrictions applied as per the Company’s network
requirements, however these geographical proximity requirements under the
regulations were proposed to be measured differently;
* EJ queried whether there was a sense as to where the gaps might fall as against
the current network and banking hubs. RB advised that the gaps may be present
based on where the Company was closing branches. LG queried whether a
banking hub could be established within a 3-month period. RB replied that a
temporary one could be. LG queried whether we could offer to meet the
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regulatory obligations of the banks for a certain price. OW took the point however
advised the difficulty in the Company having no rights to decide where banking
hubs would be placed. Despite this OW advised that it could be considered
progressing the negotiations on the basis of pricing in the cost of compliance with
the regulations. RB advised that the team were starting a piece of work on this
point. NRa contributed that if the Company did not lean in and support the banks
with their requirements there would be a disruptor who would;
* RB noted that there was a lot of push back on the term of 5 years; OW noted that
this requirement was being maintained at present.
BB and RB left the meeting at 15:35.
Rebuilding Trust
Inquiry Update
SR, DO’M, DW, KG and OC and CP joined the meeting at 15:40.
Legal Professional Privileged advice.
TABLED and NOTED was a paper, ‘Post Office Horizon IT inquiry: Update’. Key discussion
points were as follows:
* DWupdated on timing advising that Phases 5 and 6 were to be extended until 31
July 2024 and noted that there were some witness hearing dates yet to be
confirmed, including in respect of B Foat and M Edwards. Phase 7 was not
expected to start before 16 September 2024 and was likely to last for 4 to 6 weeks;
* —DWadvised that the Board had reserved to itself decisions in relation to the topics
for closing submissions and requested delegated authority for NR, or OW if NR was
not available, to approve the final topics for the Phases 5 and 6 closing
submissions. The Chair suggested that given the revised timing that this matter be
deferred for consideration to the July Board meeting.
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9.2 Phase 7 Strategy
TABLED and NOTED were the following papers:
(i)
(ii)
‘Phase 7+ Strategy’; and
‘Phase 7+ Strategy Appendices’.
Key discussion points were as follows:
DW spoke to the paper and the requests made in relation to sharing of the draft
GT governance report. The Chair outlined why the draft GT governance report had
not been released as yet including that there were some items that the Board
thought were factually incorrect, that the report was not action oriented enough
and that the recommendations in relation to structural changes were not thought
to be plausible. There was no disagreement from the Board as to the findings in
the draft report, it was more that the draft needed to be re-positioned so as to be
most helpful. A revised draft was to hand. The Chair noted that the Board were
due to discuss the revised draft report later in the afternoon, and, subject to that
discussion, his expectation was that the Board would approve some sharing of the
report. DW asked if the feedback that the Board had provided on the draft report
could be shared also. The Chair agreed that it could, including that that could be
taken from minutes;
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Given SI and E)’s earlier declaration of their conflict of interest, SI and EJ recused
themselves and abstained from voting. The remaining Board members otherwise
RESOLVED that the:
{i) High-level Phase 7 strategic objectives as set out in the paper be and are
hereby APPROVED; and
(ii) approach to the corporate witness statement and proposed communications
strategy as set out in the paper be and are hereby APPROVED.
Phases 5/6 Closing Submissions — delegation
TABLED and NOTED was a paper, ‘Phase 5 & 6 — Closing Submissions Delegated Authority’.
This item of business was deferred earlier in the meeting for consideration to the July 2024
Board meeting.
Remediation Unit (RU) Update
TABLED and NOTED was a paper, ‘Remediation Unit (RU) Programme Update’. Key
discussion points were as follows:
* SR advised that he was in the process of preparing his fifth witness statement for
submission to the Inquiry in respect of remediation matters and spoke through the
similar patterns that were now emerging through the data with graphs flatter than
originally;
* SRoutlined a Scottish appeal case where the Company had been criticised for the
level of disclosure and the Company had subsequently agreed to waive legal
professional privilege over circa 57 documents;
© ACTION In respect of HSF’s contract, headroom was expected to remain until the
end of July. SR advised that there was pressure to change supplier and that he
would come back on alternative suppliers to HSF. The Chair asked for a clear
recommendation on this issue to be brought to the Board;
* AD queried at what point the Board would have sight of those who wished to
accept a voluntary redundancy as against redeployment across RU. The Chair
advised that this was next on the Agenda and that SR would stay for this item.
Overturned Convictions 2 (0C2) disclosure — Working at Risk
TABLED and NOTED was a paper, ‘Overturned Convictions 2 (OC2) Disclosure — Working at
Risk’.
SR spoke to the paper and the paper for Agenda item 9.6 advising that in relation to any
case that passed through the mass exoneration legislation that the Company could have
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an obligation to provide disclosure. A contract was proposed with DBT in this regard in the
same form as the GLO disclosure contract and approval was sought to enter into the same
form of contract. The Chair noted that the indemnity that would be contained in the
contract and the caps on liability were the same as previously approved by the Board in
relation to the GLO and invited Board members to raise any issues.
The Board RESOLVED:
{i) Entry by the Company into a OC2 disclosure contract in the same form as the
GLO disclosure contract be with any authorised signatory of the Company
authorised to sign be and is hereby APPROVED; and
(ii) The Company be authorised to work at risk incurring costs up to a maximum
value of! in relation to planning and providing the disclosure
requirements for the OC2 cohort pending signing of the contract mentioned at
(i) be and is hereby APPROVED.
Overturned Convictions 2 (0C2) Contract risk — data indemnity
TABLED and NOTED were the following papers:
(i) “Overturned Convictions 2 (OC2) Contract risk- data indemnity’;
(ii) ‘Appendix 1’; and
(iii) “Appendix 2’.
This matter was considered with Agenda item 9.5, see above.
Postmaster advice service provider
TABLED and NOTED was a paper, ‘Postmaster advice service provider — Citizens Advice’.
The Chair queried whether there was still a need for this contract following the passing of
the mass exoneration legislation. SR advised that occasional calls were still received and
that these had peaked following the Mr Bates v The Post Office ITV programme. The Chair
further queried whether the MoJ could fund this service now given it would mostly be for
their benefit. SR advised the nature of the queries being received and shared his view that
he thought it unlikely.
The Board RESOLVED that the direct award to Citizens Advice to provide independent
advice to ex postmasters under a contract with a maximum value of £173,540.75 for a
period of 11 months with any authorised signatory of the Company authorised to sign be
and is hereby APPROVED.
CP left the meeting at 16:28.
People and Culture
Past Roles review (verbal)
LO’N, SG, KM and NM joined the meeting at 16:31.
Legal Professional Privileged advice.
Key discussion points were as follows:
© ADasked for an update on the responses of the red Past Roles in respect of the
expression of interest exercise. NM advised that of the 23 red Past Roles all had
responded with 10 preferencing voluntary redundancy, 2 re-deployments, and the
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others wishing to stay in role. AD queried the redundancy entitlements of this
group. NM replied that the majority of red Past Role individuals were entitled to 2
years redundancy plus payment in lieu of notice and that the team were working
through in parallel what the re-organisation could look like;
SI noted that whilst progress was being made on the Past Roles review generally
expressed concern on timing and how quickly we could execute. The Chair advised
that there had been learnings about how complicated these issues were, and NM
needed to finish her work. NM spoke to timing for next steps advising that the
team needed to understand what the revised structure needed to look like and
was hopeful of being able to come back with a proposal in July. NM spoke to the
preferencing exercise for all 108 employees in RU and advised that restructuring
could potentially be required in order to deal with this population;
NM noted the decision previously in respect of the category 1 individuals that they
remain out of the business until they gave evidence. NM noted that B Foat and M
Edwards continued to remain out of the business however the dates they were
due to give evidence had been delayed. The Chair noted that it would be difficult
to know if there would be a problem until they gave evidence. SI contributed that
it would only likely be a short window until their evidence would be re-listed for
hearing. OW advised that the circumstances of the 2 individuals would be
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considered and a decision made based on pre-existing employee policies. SI
queried when the Board would receive an update on the approach to B Foat to
which NM replied the weekly update.
DW, D’OM, KG, OC, L’ON, KM and NM left the meeting at 16:55.
Code of Business Standards
TABLED and NOTED were the following papers:
(i) ‘Code of Business Conduct update - Report’;
) ‘Updated version of the Code of Business Conduct’;
(iii) ‘Short form version of the Code of Business Conduct’; and
(iv) ‘Existing version of the Code of Business Conduct’.
The Board RESOLVED that that revised form of Code of Business Conduct be and is hereby
APPROVED.
Requests with Presentation
Risk appetite schedule
TABLED and NOTED was a paper, ‘Risk appetite schedule’. RB joined the meeting at 16:57.
Key discussion points were as follows:
© SJadvised that ARC were agreeable to the proposed changes to the Group Risk
Appetite scale;
ACTION SI noted the approved risk appetite statement areas and asked if
Postmasters could be added to this. RB replied and advised that she would send SI SG/RB
further information setting out how Postmasters were incorporated;
NRa noted the categories for risk appetite statements seemed reasonable at
present however that these may require revision following the strategic review.
The Board RESOLVED that the proposed changes to the Group Risk Appetite scale be and
are hereby APPROVED.
Governance Items
Update on Grant Thornton Reports (verbal)
Key discussion points were as follows:
The Chair noted that the revised draft GT Governance and Board Effectiveness
Reviews had only just been received ahead of Board however the revised formats
were improved;
SJ advised that in his view there were still some things which GT had not amended
which SJ felt were factually incorrect. The Chair took the point however shared his
view that there were diminishing returns on further comments being provided;
© ABcontributed that she thought quite a bit of the draft reports were fair. The
Chair noted that the findings were not disagreed with;
© ADnoted that the report was point in time and shared his view that the Board
should focus on which recommendations they were going to adopt and what they
were going to do about these. NRa agreed. ACTION AB suggested that the
recommendations be placed in an action tracker and include the Board’s response.
RS
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The Board RESOLVED:
{i) The draft and final GT Reports (Remuneration, Governance and Board
Effectiveness) be provided to the internal Inquiry team members and external
BSFf and counsel members as set out in the paper;
(ii) The draft and final GT Reports (Remuneration, Governance and Board
Effectiveness) be provided to the Strategic Executive Group; and
(iii) The draft and final GT Reports (Remuneration, Governance and Board
Effectiveness) be provided to internal employees who would be assisting
directly with advising on and implementing against the recommendations set
out in the GT Reports.
Remuneration Committee ToR
TABLED and NOTED were the following papers:
(i) ‘Remuneration Committee Terms of Reference Review’; and
(ii) ‘Remuneration Committee ToR - Clean’.
The Board RESOLVED that the revised Terms of Reference for the Remuneration
Committee in the form tabled be and are hereby APPROVED.
Sealings Report
The Board APPROVED the affixingof the Common Seal of the Company to the documents
set out against items numbered 2248 - 2254 in the Register of Sealings.
Future Meeting Dates
The future meeting dates were NOTED.
Forward Agenda
The Forward Agenda was NOTED. NRa advised that he would not be able to attend the
Remuneration Committee meeting on 23 July 2024.
Any Other Business
There being no other business the Chair declared the meeting closed.
Date of next scheduled meeting
8 July 2024 9:30 - 14:30.
Papers requested to be taken as read, no presentation
TABLED and NOTED were the following papers:
(i) ‘Health & Safety Monthly Report’;
(ii) ‘Technology Dashboard’;
(iii) ‘2024 Employee Survey results/ Engagement Survey - Report’; and
(iv) ‘ICO Publication Scheme’.
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Senior Independent Director
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Voting Results for POL Board Minutes from 04.06.2024 (approved on 08.07.2024)
‘The signature vote has been passed. 1 votes are required to pass the vote, of which 0 must be independent.
Vote Response Count (%)
For 1 (100%)
Against 0 (0%)
Abstained 0 (0%)
Not Cast 0 (0%)
Voter Status
Name Vote Voted On
Tidswell, Ben For 09/07/2024 17:52
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