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MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON TUESDAY 24
JANUARY 2023 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT 10:00 AM
Present: Henry Staunton Chairman (Chairman)
Carla Stent Non-Executive Director (CS)
Lisa Harrington Non-Executive Director (LH)
Saf Ismail Non-Executive Director (SI)
Elliot Jacobs Non-Executive Director (EJ)
Ben Tidswell Non-Executive Director (BT)
Brian Gaunt Non-Executive Director (BG)
Nick Read Group Chief Executive Officer (NR)
Alisdair Cameron Group Chief Finance Officer (AC)
In attendance: Rachel Scarrabelotti Company Secretary (RS)
Roshana Arasaratnam UKGI - Observer (RA)
Ben Foat Group General Counsel (BF)
Simon Recaldin Historical Matters Director (SR)
Diane Wills Historical Matters Legal Services and Public Inquiry
Director (DW)
Gemma Ludgate Inquiry Operations and Strategy Director (GL)
Kate Gallafent KC Blackstone Chambers — Inquiry Counsel (KGKC)
Zdravko Mladenov Group Chief Digital and Information Officer (ZM)
Jeff Smyth Enterprise Cloud & Data Transformation Director (JS)
Liam Carroll Procurement Director (LC)
Christian Spelzini Head of Legal Corporate, Banking and FS (Csp)
Sarah Clayton Head of Legal - IT & Procurement (SC)
Owen Woodley Group Chief Commercial Officer (OW)
Chrysanthy Pispinis Commercial Strategy & Planning Director (CP)
Apologies: Zarin Patel Senior Independent Director (ZP)
Tom Cooper Non-Executive Director (TC)
Action
1. Welcome, Officer Changes and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Chairman called for the
Directors to disclose any conflicts of interest. The Chairman advised the Board that he had
been a partner at PWC previously and received an annuity from PwC. ACTION The balance
of the Board noted this and requested that the Company Secretary be instructed to update RS
the Director’s Register of Interests in this regard. 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 Board acknowledged the attendance of RA as an observer at the meeting. As an
observer, the Board were aware that all contributions made by RA 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 RA and that it would reach its conclusion based on a
balanced and diligent assessment of all the facts available to it.
2. Minutes and Matters Arising
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TABLED and NOTED were draft Minutes from the Board Meeting of 6 December 2022. The
Board RESOLVED that the Minutes of the Meeting held on 6 December 2022 be
APPROVED as a correct record of the Meeting and be signed by the Chair.
The Board NOTED the action log and status of the actions shown, including the appended
report, ‘Equity, Diversity and Inclusion Commitments’.
3. Committee Reports (verbal)
3.1 Historical Remediation Committee
BT advised that there were 2 matters he wished to raise, requesting the substantive
discussion be had however when SR joined the meeting:
Confidential: discussion of legally privileged advice
°
3.2 Audit, Risk and Compliance Committee
CS advised as follows:
* The Committee had approved the Tax Strategy, a number of Postmaster Policies
and receipted the Annual AML Report;
* Deep Dives were presented on Identity and Strategic Partner Risk, with some
strategic partners remaining under close watch;
¢ The PwC audit on the Banking Framework Agreement Banking had highlighted
records management could be improved, and a concern had been raised regarding
the use of shared logins. ACTION NR outlined the management meetings
scheduled to further understand this issue and advised that an update would then NR/M
be provided to the Board; Kearsley
The Integrated Assurance Plan for SPM had been considered;
The Board needed to decide whether to proceed with publication of the ARA at
this time. CS outlined the issue, options, and advised that the strong
recommendation of the Committee and PwC was to proceed to publish. LH
provided her perspective as Chair of the Remuneration Committee on the issue.
AC replied that management had been in contact with the shareholder in
December, and the shareholder was content for the Company to proceed to
publish at our risk. The shareholder could always intervene if they had changed
their view; AC would send a note to C Creswell on this today. ACTION LH
requested a copy of the shareholder’s response from December and queried AC
whether the tone of the DRR needed to be revisited. AC advised that it was not
possible to amend the DRR. ACTION LH requested a note be circulated to the
Board on any impacts for NR personally as accountable officer. LH advised that if
BF/T Mcl
these two actions could be attended to LH would be comfortable to proceed to 77 Melnnes
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publishing. The Board RESOLVED to APPROVE management be authorised to
proceed to lay the 21/22 ARA in Parliament and file at Companies House.
4. CEO Report
TABLED and NOTED was the CEO report.
NR spoke to the report. Key items of note were as follows:
the proposed continuation of the strategic intent from FY22/23 into FY23/24;
the impacts of the December RMG Industrial Action and recent cyber incident on
the Company;
a dividend from BOI was anticipated next month. The Board would need to
consider this commercial relationship, set to expire in 2024, although there could
be a decision required earlier than this;
the current funding position, and the intention to request further funding from
the shareholder following the next Board meeting;
NR was to meet with the Minister for Postal Affairs Monday to discuss the
network further. The goal was not numerical in terms of the network, it was to
fulfil the access criteria, as NR had stated at the BEIS Select Committee. Whilst we
would finish the year with 11, 500 branches in the purest sense, NR had stated
publicly that Drop and Go’s would be included in the network calculation and
were a key part of our strategy going forward;
the position in respect of the Company’s own Industrial Action. Any increase in
colleague pay should align with Public Sector Guidelines. NR would find it deeply
difficult to offer more than a 5% increase when Postmaster remuneration was not
expected to increase. Management were assessing whether to make an
intervention for Postmasters now. Although the answer was likely no,
consideration was being given as to whether to make targeted interventions to
commercially sensitive branches. The intention was to review Postmaster
remuneration formally in April, as against the RMG price rises, so we could assess
impacts collectively;
an NBIT Rollout Update had been due to come to the Board however was not
sufficiently developed. ZM had done a good job on the build, and the training,
however it was the rollout that concerned NR, given we were time constrained.
LH emphasised that the change brought by NBIT would be business wide and
affected everyone. NR replied that he thought there was broad understanding
and acceptance of this. AC advised that he did not think that Retail or Commercial
quite understood that for the next 2 years that all that the Company would be
delivering was NBIT, and that management had not addressed as yet the
diminution in resource for BAU. EJ agreed with this and thought that the sense of
scale was not understood as yet. CS queried the right balance between external
and internal expertise for the rollout and whether this was in place. NR replied
that an external partner would be required;
As a Board we needed to ask ourselves whether culturally we thought we were
achieving enough. NR detailed his recent experience of meeting Mrs Henderson.
Mrs Henderson was clear that her experience of recovering compensation had
been very traumatic. NR had briefed J Davies on cultural changes that had been
affected, however there was further focus required. NR requested that the Board
keep close to this;
Board Members were anticipated to be called to the Inquiry. NR requested that
all Directors make sure they remained close with the work of the Inquiry and
requested re-reading of the CU and HU.
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In respect of IDG materials, BT observed was that the approach sometimes felt
perfunctory, and queried the outcome if the same approach was adopted in relation to
cultural transformation. Looking at IDG, was there a hole in the middle of this, what
connected all these points culturally? BT shared his view that the Board needed to be very
clear on what needed to be achieved culturally, rather than the Inquiry dictating this.
EJ raised the issue of Postmaster remuneration and the minimum pay increase for
employees of public sector bodies. NR took the point, however pointed to the strategic
imperative of securing additional funding from the shareholder, and the optics of
increasing Postmaster remuneration simultaneously.
In respect of cultural change, CS shared her view that the Board needed to be really clear
on what was required, and certain that our culture was correct ahead of taking action such
as recovering Postmaster debt. SI contributed that the Board needed to be working
backwards from where the Board wished the Company to be culturally, particularly in
respect of the Company’s checks and balances, and that the Board needed to ensure that
best practices continued beyond the conclusion of the Inquiry.
EJ noted the annual survey conducted on Postmaster satisfaction and queried whether this
would be conducted this year. LH replied that it would, as this was part of the data
required for the Remuneration Committee to determine scheme outturns.
Sl referenced page 43 of the CEO report and queried DXC not meeting their SLAs. ACTION
NR advised that he would ask ZM. SI queried page 42 of the report and queried why
consultation with the CWU was required. NR replied that we did not have much choice, as
we were unionised.
zM
ACTION LH noted point 50 and the papers collectively in the Board pack, and requested a
simple slide be produced to reflect the position on change spend. AC advised that this was AC
part of the pack in the Reading Room, however AC could move this to be an appendix to
the main Finance report.
BG queried whether a procurement process for the mails aggregator was required. NR
replied that it was and that this needed to be undertaken carefully. EJ queried the likely
time period. CS advised that this could take up to 6 months. EJ queried whether the fact
that our key service provider — RMG — was not operating at strength was an exceptional
circumstance which would allow us to move to appoint a third-party provider. ACTIONNR = wR
took the point and agreed to look into this.
Finance
Financial Performance Report
TABLED and NOTED were the following papers:
(i) ‘PQ — Performance Overview’; and
(ii) ‘Period 9 (December) 22/23 Financial Performance Review — Supporting Slide
Deck’.
The position on Postmaster losses was discussed, including the use of the dispute button,
and the difficulty in obtaining subsequent Postmaster engagement with the service centre.
Whilst the team undertaking investigations were exploring options to deduct from
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Postmaster’s remuneration where the Postmaster had engaged and accepted the alleged
loss, management were uncomfortable with this proposal at present. CS queried solutions
in relation to the use of the dispute button. AC advised that it was proposed that the loss
did not move from an accounting perspective until the Postmaster had spoken to the
service centre. ACTION SI queried whether a statement of account could be sent to
Postmasters where there was an alleged loss, at the same time as the Postmaster’s
M Roberts
remuneration statement. SI felt this could provide a more proactive response from
Postmasters and allow Area Managers to intervene. EJ agreed with this proposal. ACTION
Sl also requested out of hours service centre capability be introduced. EJ shared his view M Roberts
as to why Postmasters were not engaging with the service centre; this was for reasons of
concerns around Company culture, and this needed to change. CS cautioned that the
Board would need to be alive to ensuring that this process was improved and queried
whether the cultural dynamics of this circumstance had been sufficiently corrected, and
whether the process needed to be remodelled and rebranded to be more empathetic to
Postmasters. EJ raised the possibility of the NFSP playing a role here, as independent
support for the Postmaster. EJ referenced the significant amount of cash Postmasters
were handling and that this increased the risk of error. EJ also noted that whilst
Postmaster losses remained significant, monies were returned subsequently from third
parties, such as banks, and this needed to be considered.
FY 22/23 Outturn (Verbal)
AC spoke to this item, advising the anticipated position at FY22/23 end.
Three Year Strategic Plan Update (Verbal)
AC outlined the risk of significant cost increases in respect of NBIT, the Inquiry, and Belfast
fortification. Technology costs were being driven up by rising inflation. AC’s expectation
was that the funding request to the shareholder would be for an amount materially in
Arecommendation would be brought to the Board in this respect at the
ting.
Spending Permissions
TABLED and NOTED was a report, ‘Spending Permissions — Key Projects’.
AC spoke to the paper, advising that the shareholder had always indicated they would
continue to support the Company as necessary via the provision of funding and letters of
support. Management had signalled to the shareholder that on the basis of current
forecasts the Company could breach security headroom next year. The shareholder had
indicated that they wished for the Company to maintain the delivery of NBIT, full
participation in the Inquiry, and 11, 500 branches. It was proposed that a letter be issued
to the shareholder following the Meeting to advise of the continued delivery of these
items and the corresponding spend. CS queried whether we needed to request a date for
aresponse from the shareholder. BT advised that to pass the legal test in respect of
wrongful trading he did not think that we needed to ask this question at this point in time.
BT reiterated the legal test and the possible outcomes and risks associated with providing
a date for a response at this time. AC suggested that the letter state that following the
next Board Meeting further correspondence in respect of funding would be issued to the
shareholder, and that this could provide a date. RA advised that she had no objections to
the proposed letter. ACTION In respect of any potential waiver regarding security AC/ RA
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headroom, RA requested that the mechanics of this be reviewed, so everyone was clear on
sequencing.
The Board RESOLVED:
(i) Recruitment and spend be continued in respect of vital projects be and is
hereby APPROVED; and
(ii) Management be authorised to issue correspondence to the shareholder to
advise the shareholder to this effect.
Historical Matters
Inquiry Update
BF, GL, DW and KGKC joined the meeting at 11:56. RA left the Meeting at this time.
TABLED and NOTED were the following papers:
(i) ‘Post Office Horizon IT Inquiry: Update’;
(ii) ‘Appendices to the Post Office Horizon IT Inquiry: Update’; and
(iii) ‘Briefing Note on the Inquiry’s confidentiality undertakings’.
BF introduced the papers, as well as KGKC, DW and GL.
KGKC proceeded to provide an update to the Board. Key points were as follows:
* KGKC advised that she had been first instructed in respect of the Inquiry in
October 2021. KGKC had been advised that there would be 3 months of hearings,
and that these would be completed by June 2022. Subsequent to this, there had
been a number of re-iterations of the Inquiry timetable. There was a current
pause in Phase 3, which was not anticipated to complete until the end of May.
Phase 4 was not expected to finish until the end of July, which made Phase 6 look
probable for next year, with Phase 7 being completed by the summer of 2024;
* The considerable delays to the timetable were due to a number of factors
including late disclosure requests and poor scheduling of witness time. The
Inquiry was scrutinising evidence much more thoroughly than anticipated,
including in relation to evidence provided by witnesses. This made it more difficult
for counsel involved, as well as witnesses and the solicitors preparing;
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SR joined the Meeting at 12:44.
¢ NR’s meeting with IEEE and her experience of obtaining OHC
compensation was discussed, including EEE 's very negative experience
of the Company’s external counsel. BT advised that the Company were moving to
a remediation approach and working through a process to determine what our
principals were. The problem would still remain however that the shareholder
would request evidence in respect of each claim. SR agreed with this and
referenced the public monies point. ACTION AC shared his view that we needed
to formally request the shareholder to change their approach now. SR agreed BF/SR
with this, and thought that this request could be made in tandem with moving to
the remediation approach;
The Chair advised that he had had a session on the Inquiry with the shareholder
who had suggested that the Company focus on the later Phases. The Chair did not
think that this was the correct approach and asked KGKC for her view. KGKC
advised that,
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KGKC advised that she would be pleased to update the Board at any time. The Chair
thanked KGKC and KGKC left the meeting at 12:59.
Inquiry Budget
TABLED and NOTED was a report, ‘Inquiry Cost Options’.
The Board noted that the recommendation was for an alternative firm to be instructed for
Phase 5 onwards but with HSF to be retained for targeted strategic advice to mitigate the
risk of discontinuity arising from changing law firm mid-way through the Inquiry.
BF spoke to the paper advising that whilst it was subject to further refinement it clearly
conveyed the significant increase in cost, the reasons for which had been set out by KGKC
in the immediately prior session and in previous papers provided to the Board.
BF referenced the need to make arrangements for alternative legal representation in
relation to Phase 5 of the Inquiry because of HSF’s risk of a future conflict in relation to
Phase 5 of the Inquiry and advised that, given the possibility of this, Board approval was
sought to authorise management to commence a tender process for an alternate firm.
The Board noted this, as well as the potential cost savings associated with appointing an
alternative firm for Phase 5 onwards and the chance to reset the legal partnership, as set
out in the Paper.
BF advised that Board approval was also sought to delegate authority to the CFO to
approve (1) Inquiry costs for the period up until the next Board Meeting and; (2) FTE costs
for the life of the Inquiry Programme.
LH queried when the revised budget would be returned to the Board. BF advised that this
would tie in with the 3-year plan and be returned to Board on 9 March.
The Board RESOLVED:
1. Management authorisation to commence a tender process for an alternate
external law firm to HSF for Phases 5, 6 and 7 of the Inquiry be and is
hereby APPROVED;
2. HSF be retained for targeted strategic issues arising in relation to Phases 5, 6 and 7
of the Inquiry; and
3. Authority be DELEGATED to the Company's CFO to approve Inquiry spend for the
period up to the next Board Meeting and for FTE costs for the life of the
Programme be and is hereby APPROVED.
DW and GL left the Meeting at 13:03.
HMU Budget
RA re-joined the Meeting at 13:04.
TABLED and NOTED was a report, ‘Historical Matters - HMU Funding Request’.
SR spoke to the paper, providing the Board with an update on the current financial
position of HMU, the continued cost challenges being conducted, and the potential
opportunities to achieve cost efficiencies. Funding was requested for HMU activities for
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the next 2 months, and the team would return to the next Board Meeting to request
funding for activities for the FY23/24.
The Board RESOLVED:
(i) the drawdown of funding for HSS Pre Offer delivery costs £4.028m including IVAT
and Late Application costs be and is hereby APPROVED;
(ii) the drawdown of funding for HSS Post Offer delivery costs £791k including IVAT
and Late Application costs be and is hereby APPROVED; and
(iii) the drawdown of funding for CCRC/DGA delivery costs £1.7m including IVAT be
and is hereby APPROVED.
HMU Update
TABLED and NOTED were the following papers:
(i) ‘Historical Matters Programme Update’; and
(ii) “HMBU Finance Update’.
Key discussion points were as follows:
e Inrelation to overturned historical convictions, SR spoke to the potential future
appellant triage review that was being conducted, which was due to conclude next
month. So far, it appeared that 12% of cases were cases that the Company may be
able to concede. Once the review exercise was complete, a decision would need
to be taken as to how the results of the review exercise were utilised, for example,
writing to the individuals and advising them. Despite a number of previous
approaches, any such approach might not result in a significant number of new
cases. BT suggested that management refer the review results to the CCRC and
request the CCRC undertake any subsequent approaches. LH agreed with this;
« SR was of the view that we needed to start a conversation with the shareholder as
to why the number of appellants was low and map out all the reviews and
approaches that had taken place to encourage potential appellants to come
forward. In respect of the path to obtaining compensation, remediation was more
of an engaged process, so for those who would engage with us, it would be a
better experience;
¢ SR advised, in respect of overturned historical convictions, that 2 of the Public
Interest Only cases had been settled the previous day. SR was delighted with the
outcome for Postmasters. There was one case in this category which remained
outstanding. BT advised that there could be another case in the pipeline. Whilst
there may be very little appetite to prosecute in the Crown Court, the Company
had a duty to ensure that people who were guilty remained guilty. AC cautioned
that if a decision was taken at HRC to prosecute, then this would need to be
returned to the Board for consideration;
e Inrespect of Postmaster detriment suspension payments, correspondence had
been issued last week to Postmasters.
GLO Disclosure
TABLED and NOTED was a report, ‘GLO Disclosure’.
SR spoke to the paper. NR emphasised the management time and management
bandwidth that would be required to facilitate this request. SR advised that the Board and
management would need to stay close to this exercise to ensure consistency with our
outcomes.
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The Board RESOLVED that the provision of document disclosure and shortfall analysis in
favour of the shareholder, required for individual cases within the GLO Ex-Gratia Payment
Scheme, be and is hereby APPROVED, on the basis that such activity be fully funded by the
shareholder.
SR and BF left the Meeting at 13:29. A short recess was taken.
Approval Requests
Belfast Data Centre Fortification
The Chairman reconvened the Meeting at 13:45 at which time ZM and JS joined.
TABLED and NOTED was a report, ‘Belfast Data Centre Fortification’.
JS spoke to the paper. Key discussion points were as follows:
In respect of tha=="'requested to compile contingent options if a Data Centre
support contract extension with Fujitsu could not be obtained, LH queried who
would be undertaking this work and what this work would provide us with; the
cost seemed significant. JS replied, advising timeframes, that the work would
need to be sourced externally via a non-compliant award, and how the requested
had been calculated. LH advised that she was uncomfortable with the
proposed level of spend and was concerned whether the exercise would deliver
what we needed. JS replied that the outcome of the review would be a plan we
management could then execute;
CS advised that it would be useful to understand who the alternative service
providers were and what their conditions would be. JS detailed alternative service
providers that he had spoken to informally. CS queried why we didn’t simply ask
these firms to provide us with a proposal. JS advised that part of the work
proposed would be providing an analysis on the market options. LH emphasised
the importance of knowing that the alternative service provider could execute.
The Board RESOLVED:
(i)
(ii)
(iii)
Funding in the amount ofiir icapex for the Data Centre Fortification
Project to deliver the scope presented at the Board Meeting of 27 September
2022 be and is hereby APPROVED;
Funding in the amount offs:«ito compile contingent options should a Data
Centre support contract extension with Fujitsu not be forthcoming be and is
hereby APPROVED; and
to delegate authority to GE (who in turn delegate authority to IADG), to
approve drawdowns in relation to (i) and (ii) above.
Application Modernisation
TABLED and NOTED was a report, ‘Application Modernisation’.
JS spoke to the paper. Key discussion points were as follows:
EJ queried whether there was any risk on the cost. JS replied that there was,
however the requested spend could accommodate 3 or 4 months of delay
expense;
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e LH questioned the level of governance around technical decisions. JS advised that
there was a single SteerCo in place, which included decisions within delegated
authority in relation to NBIT. LH advised that she was more concerned about the
degree of oversight. ZM replied that both he and JS sat on the SteerCo and that
there was robust oversight.
The Board RESOLVED:
(i) Funding in the amount of I pex andi exceptional)
with immediate drawdown for the Application Modernisation programme for
February, March and April 2023 be and is hereby APPROVED;
(ii) Funding in the amount o' for the Application Modernisation
programme for the period May 2023 until September 2024 be and is hereby
APPROVED;
(iii) To delegate authority to GE (who in turn delegate authority to IADG), to
approve drawdowns in relation to (ii) above.
Copper Stop Sell
TABLED and NOTED were the following papers:
(i) ‘Copper Stop Sell’; and
(ii) “Copper Stop Sell — Reading Room Appendices’.
ZM spoke to the paper, outlining the advantages and risks associated with each of the
options as set out in the paper. Key discussion points were as follows:
LH queried whether the proposed spend could be accommodated within the
current change spend budget. AC replied that there would be overspend on
change spend as against the current 3YP;
BT advised that he was concerned about the expense of the proposal. LH replied
that the proposed Opex component was due more to Verizon, who proposed a 2
visit instal. LH thought that only 1 visit was required, and that better pricing could
be then achieved for this element;
e EJ queried whether Post Offices telephone numbers would be ported. ZM replied
that they would be, and confirmed that new handsets would be provided;
¢ ACTION LH advised that a plan to retrieve this equipment if branches closed would _M Roberts
need to be in place;
* EJ questioned whether an app could be created for contacting Postmasters to
reduce the number of handsets. ZM advised that the feedback he had received
was that Postmasters did not wish to be contacted on their mobiles.
The Board RESOLVED, subject to the Company being able to negotiate acceptable Opex
charges for a 3-year extension of the current connectivity contract with Verizon, funding in
Tito transition the entire Company's estate to new fibre connection
be and is hereby APPROVED.
SPMP Funding Request
TABLED and NOTED were the following papers:
(i) ‘SPMP February - May 2023 Funding drawdown’;
(ii) ‘SPMP Appendix A - IADG Deliverables Progress Oct-Jan’;
(iii) “SPMP Appendix B - Deliverables for February-May 2023’;
(iv) “SPMP Appendix C - Financial Breakdowns’; and
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(v) ‘SteerCo Submission - SPM Drawdown Submission Feb-May’.
LH queried the timing for release 2, understanding that this had been January, however,
was now March. NR advised that this had always been scheduled for March. EJ queried
whether there were any versions planned for release between 2 and 3. ZM replied that
there were not. BT asked about the switch from Android to Windows. ZM advised that
whilst the decision had come with a cost, the switch meant NBIT was working a lot better.
The Board RESOLVED funding in the amount of; capex andi
exceptional) with immediate drawdown for the SPM programme from February to
2023 be and is hereby APPROVED.
ZM and Js left the Meeting at 14:29.
Procurement
LC joined the Meeting at 14:30.
TABLED and NOTED were the following papers:
(i) ‘Procurement Report’;
(ii) ‘Procurement Report Appendix 1 - Commercial - Pay-out Services Secure
Printing’;
(iii) ‘Procurement Report Appendix 2 - Marketing - Creative Agency Services’;
(iv) ‘Procurement Report Appendix 3 - Supply Chain - Cash Distribution Services’;
(v) ‘Cash Distribution Services - Legal Risk Note’; and
(vi) ‘Cash Distribution Services — Procurement Risk Exception Note (PREN)’.
Supply Chain — Cash Distribution Services
LC spoke to the paper. NR detailed the recent Industrial Action, which comprised action
short of a strike. This resulted in supply chain utilising G4S far more than was originally
planned and was unforeseen. LC advised that there was only one other service provider
aside from G4S and this supplier had stated that they would be unable to assist at this
time. BT queried whether the legislation provided any flexibility in these circumstances.
NR advised that it did not. The Board considered this factual matrix in making its decision.
The Board RESOLVED:
(i) the non-complia: ct award to G4S for cash distribution services with a
contract value of {svi for the period 1 January 2022 until 31 March 2023 be
and is hereby APPROVED;
(ii) the delegation of authority to the Group Chief Retail Officer to finalise the
terms of the contract be and is hereby APPROVED; and
(iii) any two Directors, or a Director and the Company Secretary, be authorised to
sign the resulting contract and any ancillary documents.
Commercial — Pay-out Services Secure Printing
LC spoke to the paper.
The Board RESOLVED:
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(i) an increase in spend under the contract with HH Global fro 4
be and is hereby APPROVED; and
(ii) any two Directors, or a Director and the Company Secretary, be authorised to
sign the consequential amending contract and any ancillary documents.
Marketing — Creative Services Agency
LC spoke to the paper. EJ shared his view that the proposed contract spend was high. CS
queried how we measured the return on these spends and whether there was a real
benefit. AC replied that the work was effective, with many of the campaigns being
conducted on social media. ACTION NR undertook to arrange for creative planning to be
presented to the Board mid-year. NR clarified that whilst the maximum contract spend
m= over the contract period, the committed spend was in the vicinity of!
annum.
The Board RESOLVED that a change in sourcing strategy for the above service, be and is
hereby APPROVED on the following basis:
extensions);
(ii) additional optional scope of retail design, group communications, and social
media design and production; and
(iii) an increase from total contract value of
LC left the Meeting at 14:35.
Approval Requests with no presentation
Payzone Integration
TABLED and NOTED were the following papers:
(i) ‘Payzone Integration Exploration’; and
(ii) ‘Payzone Integration Exploration — Legal Risk Note’.
OW and CP joined the Meeting at 14:37, and SC and Csp at 14:42.
Key discussion points were as follows:
¢ OW spoke to the paper, outlining the acquisition of Payzone and the current status
of the entity. CP detailed the interface with NBIT, the need for the second device,
and the resulting public procurement issues;
¢ LH queried the costs of maintaining benefits currently in place for Payzone
employees. CP advised that these costs were included in the paper, and that
benefits were being moderated at present;
e LHasked what the proposal was in relation to branding. CP replied that it was
intended to maintain the existing branding for both Payzone and the Company;
¢ OW noted that given the issues at present that the business was facing, that if a
decision was taken to integrate, the team would return with a plan on the timing
for implementation;
© Sl queried whether any savings were likely in terms of staff costs, and whether the
integration would enable the acceleration of the network strategy. OW advised
that he thought there could be an opportunity to reduce staff costs, however
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analysis would need to be undertaken. In respect of the network strategy, CP
replied that integration would assist to deliver the 2,000 Drop & Collects by 2025.
The Board RESOLVED:
(i) the integration of Payzone Bill Payments Limited into Post Office
Limited be and is hereby APPROVED; and
(ii) management be authorised to make an application for shareholder
approval for (i) above.
Payzone Letter of Support
TABLED and NOTED was a report, ‘Payzone Letter of Support’.
BT commented that the proposed wording of the Letter of Support was quite wide. AC
replied that PwC had been very firm on this. BT advised that he was concerned with the
commitment in the proposed letter when the status of the entity was still under review.
OW shared his view that Project Apollo had been a thorough investigation thus far into the
contents of the entity.
The Board RESOLVED:
(i) the provision of a Letter of Support in the form tabled from Post Office Limited
to Payzone Bill Payments Limited be and is hereby APPROVED; and
(ii) the delegation of authority to the Company’s Chief Financial Officer to sign
and issue the Letter of Support to Payzone Bill Payments Limited, with any
such minor amendments as the Company's Chief Financial Officer in his
absolute discretion thinks fit be and is hereby APPROVED.
OW, CP, Csp and SC left the Meeting at 14:52.
Projects Darwin and Bluebell
TABLED and NOTED were the following papers:
(i) ‘Project Bluebell - Supply Chain Change Programme’;
(ii) “Project Darwin’; and
(iii) ‘Project Darwin - Legal Risk Note’.
AC spoke to the Project Darwin paper. EJ queried the proposed rent for the leaseback. LH
replied, advising that the location was popular, particularly given access to the airport.
The Board RESOLVED:
(i) entry into an agreement for the sale of Unit 4 Wheatstone Road, Swindon, SN3
_SHG to Hadleigh Real Property Limited for an initial offer price in the vicinity of
iseewr) (subject to change during legal negotiations) and a leaseback term of 18
months with a rental spend of £1,616,149.50 over that term (the “Agreement
For Sale”) be and is hereby, /RRELEVANT;
(ii) the delegation of authority to the Group Chief Retail Officer to finalise the
terms of the Agreement for Sale and leaseback, in accordance with the heads
of terms and risk analysis set out in the paper be and is hereby APPROVED;
(iii) management be authorised to seek shareholder approval to:
a) enter into an agreement for the 18-month leaseback of
Unit 4 Wheatstone Road, Swindon, SN3 SHG from
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Hadleigh Real Property Limited following the sale of the
property to them (‘Lease”); and
b) enter into a multi-year deal with a 3PL for outsourcing on
the basis that the deal may exceed):
(iv) authorisation be provided to any 2 Directors, or any Director and the Company
Secretary to execute the Agreement for Sale and Lease and any ancillary
documents.
AC spoke to the Project Bluebell paper. EJ raised the issue of employee awareness of the
proposal. NR replied that management would need to communicate the decision to
colleagues.
The Board RESOLVED:
(i) the sale and lease back of the London cash centre on
break, at a sale price of circa! in line with the paper, and with authority
otherwise delegated to GE to agree the final sale and lease back terms be and is
hereby APPROVED; and
(ii) the sale of Manchester Depot to co-l locate with G4S at their site in Manchester on
the basis of a minimum sale price of } and in line with the paper, and with
authority otherwise delegated to GE to agree the final sale terms and approve the
lease terms with G4S, be and is hereby APPROVED.
IRRELEVANT
8.4 Money Market Funds
TABLED and NOTED were the following papers:
(i) ‘Money Market Funds’; and
(ii) ‘Money Market Funds — Legal Risk Note’.
AC spoke to the paper.
The Board RESOLVED:
(i) the opening of a Money Market Fund (“MMF”) with HSBC and depositing of surplus
funds from the Energy Bills Support Scheme (“EBSS”) and the equivalent Northern
Ireland Energy Scheme (“NIES”) be and is hereby APPROVED;
(ii) to delegate authority for 12 months from the date of the Meeting to the Company’s
Chief Financial Officer for opening additional MMFs provided they are in accordance
with the Group Treasury policy;
(iii) management be authorised to seek approval from the shareholder to open the
MMFs; and
(iv) that the surplus funds, referred to above, be deposited without notice to the
relevant energy companies who are facilitating delivery of the EBSS and NIES.
9. Horizon Issues Judgment Phase 3
ZM joined the meeting at 14:58.
TABLED and NOTED were the following papers:
(i) ‘Horizon Issues Judgment (Hi) Remediation update’; and
(ii) ‘Horizon Issues Judgment (HIJ) Remediation update — Appendices C & D for the
Reading Room’.
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10.1
10.2
11.
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The Chair advised that the Board were seeking assurance from management as to the
progress of HU remediation. ZM introduced the paper and spoke to the remediation
approach that had been adopted in relation to the 15 findings. The 15 findings could be
grouped into 5 themes, and good progress had been made against 4 out of the 5 themes.
However, 3 of the 15 findings related to data management. Given the Company’s financial
constraints, this theme remained to be progressed, although management were
attempting to rapidly build a set of activities to enable at least an amber rating. As to the
second question, whether Horizon was fit for purpose, there were many difficulties with
this, including that there was no industry benchmark to measure this against. LH shared
her view that it was not possible to fully assure an IT system.
BT queried how management would ensure focus on the HiJ remediation items that
required prioritisation. NR replied that this scope would need to be defined in IDG and
brought back to the Board for consideration. Additionally a better cadence of reporting to
the Board in respect of the work of IDG needed to be achieved. RA requested that the
shareholder be kept updated on progress in respect of the work of IDG. NR agreed and
noted that it would be particularly important to communicate to the shareholder the
decisions around what we had and had not completed due to our financial position.
ZM left the Meeting at 15:12.
Noting Papers with no Presentation
Health & Safety Report
TABLED and NOTED was a paper, ‘Health & Safety Monthly Report’. AC noted that whilst
there was not a higher incidence of robberies, the losses from the robberies perpetrated
were higher, and these were being investigated by law enforcement agencies. EJ shared
his view that incidents of aggression and assault against Postmasters and their staff were
rising. This was not being measured as the vast majority of cases were not being reported.
AC agreed and advised that management did not have a lot of data; practically
Postmasters would call the Police directly for assistance, and the feedback had been that
Postmasters did not wish to provide this data. SI shared his view that fuller data on this
issue was required and queried whether reporting functionality could be introduced on
Branch Hub. ACTION EJ requested that virtual training on dealing with situations of Ac/M
aggression and assault be provided to Postmasters and their staff, along with options to _—-Hopcroft
acquire body cameras, as a Postmaster cost. ACTION AC advised he would raise the AC
feasibility of reporting via Branch Hub.
Common Issues Judgment (CJ) Dashboard
TABLED and NOTED were the following papers:
(i) ‘ClJ Dashboard P9 Cover Paper’; and
(ii) ‘CJ Dashboard P9’.
Noting and Governance Items
Board Evaluation
TABLED and NOTED was a paper, ‘Board Evaluation 2021/22 — Progress against
recommendations’. RS spoke briefly to the paper, advising that whilst progress had been
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made as against some of the recommendations, that the issue of the role of the
shareholder representative had not been resolved.
Sealings Report
The Board APPROVED the affixing of the Common Seal of the Company to the documents
set out against itemsnumbered 2163 — 2169 inclusive in the Seals Register.
Future Meeting Dates
The future meeting dates were NOTED.
Forward Agenda
The Forward Agenda was NOTED.
Any Other Business
This being CS’s last Board Meeting ahead of stepping down, the Chair thanked CS for her
service to the Board.
Date of next scheduled meeting
9 March 2023 9:30 — 12:30.
There being no further business the Chairman declared the meeting closed at 15:22.
Chairman
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Voting Results for Board Minutes from 24.01.2023 (approved on 28.03.2023)
‘The signature vote has been passed. 1 votes are required to pass the vote, of which 0 must be independent.
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Vote Response Count (%)
For 1 (100%)
Against 0 (0%)
Abstained 0 (0%)
Not Cast 0 (0%)
Voter Status
Name Vote Voted On
Staunton, Henry For 04/04/2023 20:56
POL-BSFF-WITN-013-0000088_0017