POL00448861
POL00448861
Post Office Limited
Meeting of the Board of Directors
Agenda
25 March 2024 12:15 - 17:30 hrs 100 Wood Street, London
EC2V 7ER
Ben Tidswell (SID) Nick Read (CEO) Alison Hoyland (Deputy Company Asha Patel (FP&A Director)
Secretary)
© Saf Ismail (NED) (via ‘* Simon Jeffreys (NED) I ¢ Kathryn Sherratt (Interim CFO) Simon Recaldin (Remediation
Teams) (Observer) (duration) Unit Director)
@ Lorna Gratton (NED) I « Elliot Jacobs (NED) ‘* Owen Woodley (Deputy CEO) © Diane Wills (Inquiry Director)
(Observer) (duration)
Brian Gaunt (NED) ¢ Amanda Burton (NED) I ¢ Tim Mclnnes (Strategy and Liam Carroll (Procurement
Transformation Director) Director)*
‘* Andrew Darfoor (NED) © Martin Hopcroft (Director of Health I * Simon Oldnall (Horizon and
& Safety, Environment & Business GLO IT Director)
Continuity)
‘Apologies: Al Cameron ‘© Sarah Bell (Partner, Grant Irina Velkova (Director, Grant
Thornton)* Thornton)* (Via Teams)
Barbara Brannon (Product Portfolio I ¢ Simon Parr (CEO, POI)*
Director)*
© Carl Roe (Head of IT and Change, © Tom Lee (Group Financial
POl)* Controller)
* Zdravko Mladenov (Chief Digital Dan O'Mahoney (Inquiry
Information Officer) Operations & Strategy
Director)
© Neil Davey (Remediation Unit © Chrysanthy Pispinis (Chief of
Finance Director) Staff)
Charlotte Johnson (Head of * Kelly Goodwin (Programme
Customer Complaints)" Director)*
* Pete Marsh (Retail Operations Martin Roberts (Group Chief
Director)* Retail Officer)
© Rachel Scarrabelotti (Group © Patrick Bell (Senior Legal
Company Secretary) Counsel)*
The Rt Hon Kemi Badenoch MP* © Christian Spelzini (Head of
Legal)
Jonathan Houston (Associate Director, Grant © Martin Edwards (Network Strategy
Thornton)* (via Teams for the duration) - & Delivery Director)
‘observing as part of the Board Effectiveness
Review.
NB: All Board Members and Attendees listed above have Confidentiality Undertakings accepted by the Inquiry in place, save
those marked with an *. Should the need to discuss confidential information in respect of the Inquiry arise, individuals without
a Confidentiality Undertaking in place will need to be excused for the duration of the discussion.
. Nomination of Chai Approval CoSec 12:15 - 12:20 hrs
Welcome and Conflicts of Interest Noting Chair
Inquiry Undertakings Noting Chair
2. Minutes Chair/ CoSec 12:20 - 12:25 hrs
1 March 2024 Approval
Matters Arising Noting
STRICTLY CONFIDENTIAL
POL-BSFF-130-0000029
Post Office Limited
Meeting of the Board of Directors
POL00448861
POL00448861
Agenda
3. Committee reports (verbal) Noting Chair/ 12:25 - 13:00 hrs
¢ Remediation Committee Committee
Audit, Risk and Compliance Committee Chairs
Remuneration Committee
© Nominations Committee
e Investment Committee
4. CEO Report Noting N Read 13:00 — 13:30 hrs
5. (a) I Finance
@ FY2024/25 Business Plan Approval K Sherratt/ A 13:30 — 14:00 hrs
Patel/ T McInnes
Attendance at the Board meeting by the Rt Hon Kemi Badenoch MP, Secretary of State for the 14:00 - 14:30 hrs
Department for Business and Trade
& Finance (cont.)
(b) [S Financial Performance Report Noting A Patel 14:30 — 14:45 hrs
© FY23/24 Outturn - Postmaster proposal Approval K Sherratt/ M
Edwards
Short Term Facility Amendment Approval TLee
6. Payzone
© Payzone Integration Approval B Brannon/C 14:45 ~ 15:00 hrs
Spelzini/T Lee
© Payzone Letter of Support Approval K Sherratt /T Lee
7. Contract and sourcing strategy matters
DXCEUC contract extension Approval S$ Oldnall 15:00 — 15:15 hrs
© Optima Health contract Approval M Hopcroft.
© Network consumables Approval P Marsh/ M
Roberts
* TB Cardew contract Approval N Read
[With L Carroll
for all reports}
8. Transforming Technology
© SPMP DBT Business Case Update Noting T McInnes 15:15 — 15:45 hrs
¢ Fujitsu extension Noting $ Oldnall/L
Carroll/ P Bell
© SPMP Drawdown request Approval K Goodwin
* Second Device — Interim Business Case and Approval ZMladenov
Drawdown request
9. GT Governance Review (verbal)
Noting & Input
$ Bell/ I Velkova
/C Pispinis/ R
Scarrabelotti
15:45 — 16:30 hrs
10. Rebuilding Trust
e Inquiry Update
© Inquiry FY24/25 Budget & Drawdown request
© Sensitive Issues request and ISC ToR
RU Update
© RU FY24/25 Budget & Drawdown request
e RCToR and Delegated Authorities Matrix
Noting
Approval
Approval
Noting
Approval
Approval
Dwills/D
O’Mahoney/ N
Davey
S$ Recaldin
16:30 - 17:00 hrs
STRICTLY CONFIDENTIAL
POL-BSFF-130-0000029_0001
Post Office Limited
Meeting of the Board of Directors
POL00448861
POL00448861
Agenda
11. I Items with presentation
© Group Customer Complaints Policy Approval CJohnson 17:00 — 17:05 hrs
© Health & Safety Report Noting M Hopcroft 17:05 — 17:10 hrs
PO! Accenture Managed Service Contract Extension Approval S Parr/ C Roe 17:10 - 17:15 hrs
12. Governance Items 17:15 — 17:30 hrs
© Board Effectiveness Review Update (verbal) CoSec
© Annual Governance Report Approval
e Sealings Report Approval
© Nomination Committee membership Approval
e Future Meeting Dates Noting
© Forward Agenda Noting
13. I Any Other Business
e Feedback on papers Noting Chair
14. Date of next scheduled meeting: Noting Chair
4 June 2024 11:15 - 17:00
Papers to be taken as read, no presentation
1.
2.
3.
4.
Technology Dashboard
Retail Performance Dashboard
Branch Layouts
Project Darwin:
Lesson learned Review
Business Transfer Update
STRICTLY CONFIDENTIAL
POL-BSFF-130-0000029_0002
POL00448861
POL00448861
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
MINUTES OF AN ADDITIONAL MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON
FRIDAY 01 MARCH 2024 AT 100 WOOD STREET, LONDON, EC2V 7ER AT 09:30 AM*
Present: 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: Alison Hoyland Deputy Company Secretary (AH)
Owen Woodley Deputy CEO (Observer) (OW)
Kathryn Sherratt Interim CFO (Observer) (KS)
Asha Patel Director of Strategic Financial Planning & Analysis (AP)
Karen McEwan Group Chief People Officer (KMcE)
Christian Spelzini Head of Legal Corporate, Banking and FS (CS)
Gemma Ludgate Inquiry Operations Director (GL)
Tom Lee Group Financial Controller (TL)
Apologies: Alisdair Cameron Group Chief Finance Officer (AC)
Action
11 Nomination of Chair
As provided for under paragraph 23 of the Articles of Association, the Board nominated BT
to preside as Chair the meeting.
1.2 Welcome and Conflicts of Interest
A quorum being present, the Chairman opened the meeting. The Chairman called for the
Directors to disclose any conflicts of interest.
The following conflicts of interest were noted in relation to the matters to be considered at
the meeting:
* NR was conflicted in relation to the agenda item on Rose 2: Board oversight and would
recuse himself from the discussion; and
© Sl_and EJ were conflicted in relation to the agenda item on Postmaster Non-Executive
Director Recruitment and would recuse themselves from the discussion.
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.
In general declarations:
+ Some attendees, including the Chair, participated in the meeting via Microsoft Teams and from their personal
addresses. In such circumstances, the Company's Articles of Association (Article 64) require that the location of
the meeting be deemed as the Chair's location. However, it was not deemed appropriate to record personal
addresses on the Company record. As such, the Registered Office is recorded as the meeting location.
Page 1 of 10
STRICTLY CONFIDENTIAL
POL-BSFF-130-0000029_0003
1.3
3a.
3.1
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
* SJ noted his Director role at CPS.
EJ and SI noted their Postmaster role
The Board acknowledged the attendance of OW and KS as observers at the meeting. As
observers, the Board was aware that all contributions made by OW and KS to the meeting
were observations only, and did not constitute advice, recommendations, directions or
instructions. The Board confirmed that it would take due care not to be unduly influenced
solely by a contribution made by OW or KS and that it would reach its conclusions based on
a balanced and diligent assessment of all the facts available to it.
Inquiry Confidentiality Undertakings
The Board noted that all attendees had confidentiality undertakings accepted by the Inquiry
in place, hence no individuals would need to be excused from the meeting should the need
to discuss information confidential to the Inquiry arise.
Minutes
TABLED and NOTED were draft Minutes from the Board Meeting of 30 January 2024. The
Board RESOLVED that the Minutes of the Meeting held on 30 January be APPROVED as a
correct record of the Meeting and be signed by the Chair.
The Board noted that a full review of Matters Arising would be reviewed at the next
scheduled meeting of the Board on 25 March 2024. In the meantime, AB asked for an update
on Project Boland, KS noted that the matter had been discussed at a high-level in the
quarterly Ministerial meeting held the previous day. The update noted that good progress
was being made in pulling together the analysis and had clarified that shortfalls and
discrepancy challenges arose in the context of a number of different circumstances, not all
of which would have resulted in a return of funds to POL’s P&L. KS explained that the
analysis would include a range of worked examples and that this would be shared with
Minister Hollinrake and the Board, once finalised.
People
People Structure and 3-year People Plan
TABLED and NOTED was a paper on ‘People Structure and 3-year People Plan’.
People Structure
KMcE spoke to the paper and explained that a full review of the People team structure had
been undertaken, with the support of an external People and Organisation Design
consultant. The recommendations from the review on a proposed new structure for the
People team were currently subject to consultation. Key issues being addressed included:
* Lack of capacity and capability.
© The inability of the People teams to partner the business effectively.
© Limited career progression.
KMcE noted that the restructure was fairly extensive and challenging as a result, but that it
was necessary. Under the proposals, four new Director new roles would be introduced to
support the areas of strategic importance identified in the Strategic People Plan, including
Page 2 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
POL-BSFF-130-0000029_0004
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
Wellbeing, Equity, Diversity and Inclusivity and Leadership and Talent. Two of the four roles
had been filled.
The proposed structure also sought to remove single points of failure and provide
progression routes for talent. The aim was for the new People team structure to be in place
towards the end of May.
The following key points were noted in the subsequent Board discussion:
© AD asked about the business partnering roles and KMcE noted that this was a necessary
central capability while line management capability was developed and strengthened;
KMcE noted that in a year to 18 months it should be possible to reduce, or remove, the
central resource once line management capability was sufficiently mature.
* AB sought assurance on whether the new structure would also tackle people control
and compliance failures; KMcE confirmed that it would and noted the People Strategy,
due for discussion next, the first pillar of which was about laying the foundations and
getting the basics right, which included core people processes, policies and systems etc.
© The Board noted the year 1 investment oft ind asked about the return on the
investment and how this would be quantified; the Board was keen to understand the
measures and metrics that would track progress and show the benefits.
KMcE noted that the underinvestment in the People function and strategic plans to date
and that the investment was overdue. Some benefits would be quantifiable, but in the
medium term, rather than the short term, for example, those that would flow from
future organisational restructure and from having the right capability in place to whom
matters could be delegated, where currently they were taking up executive
management time. Others would be more qualitative, for example, where anticipated
outcomes included enhanced capability.
© LG added that as well as a set of qualitative and quantitative measures on output
benefits, it would be helpful to have a milestone plan, against which progress could be
tracked.
People Strategy
KMcE spoke to the paper on the Strategic Plan, which encompassed both the approach and
the activities required to enable the People team to transform Post Office into ‘a great place
to work’ over a three-year period, to April 2027. It was focussed on three priority ‘or
strategic intent’ areas, each of which had a number of key deliverables:
© Colleague experience, including engagement, wellbeing, reward, core people processes,
policies, systems and data and analytics — to transform what people felt and experienced
throughout their time at Post Office.
© Capability, including leadership, talent development, attraction, performance
management and organisation design — to reimagine the approach to talent and people
capabilities to unlock the full potential of the organisation.
© Inclusion, a core priority that needed to be embedded across the entire organisation —
to deepen POL’s commitment and focus on equality, diversity and inclusion to become
a truly inclusive and safe place for all.
The plan would be delivered across three phases — foundation, growth and sustainability.
The foundational stage was about building trust and confidence in delivering the basics; the
growth stage would be based on moving beyond the basics, where listening to feedback and
responding and improving would be key; sustainability would be about consistency and
reliability, where POL would be working at best practice standards in key areas. The phases
Page 3 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
POL-BSFF-130-0000029_0005
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
were not consecutive, nor a reflection of how long some things would take, rather showed
the level of maturity that would be achieved by each deliverable.
KMcE explained that the Strategic Plan would mean that POL would be more systematic in
delivering the intentions, with clear milestones, owners and accountability.
As noted in the earlier discussion on the People team changes, it would be important to
measure the effectiveness of intended deliverables. KMcE set out that there would be three
overarching measures within the staff survey, against which the success of the delivery of
three strategic priorities would be assessed:
* Colleague experience would be measured using colleague advocacy score.
* Capability would be assessed with reference to the results on people being held to
account for their performance and behaviours.
* Inclusion would look at the scores on whether the Post Office is making a positive effort
and working towards being a more inclusive workplace.
Targets would be set, once a detailed milestone plan for delivery had been agreed with the
new People Leadership Team when it was in place.
The following key points were noted in the subsequent Board discussion:
© Sl was fully supportive of the Strategic Plan as articulated, but he would want to better
understand a few points of detail, including in relation to transforming the experience
for Postmasters and what improvements were being targeted, noting that Postmasters
they were not referenced explicitly in the Strategic Plan.
© KMcE stressed that Postmasters were very much a focus of the Strategic Plan, directly
and indirectly; in the case of the latter, an example would be the benefits that would be
derived from the improved capability of POL staff across a number of roles that
impacted Postmasters. KMcE would ensure the Strategic Plan made direct references to
Postmasters and that the People team would continue to join up with relevant
colleagues in POL, for example, in the Retail and frontline teams, to ensure they fully
understood Postmaster needs. EJ emphasised the need to make sure that the rationale
and narrative for the Plan was understood by Postmasters and what would be improved
and why.
© Inrelation to inclusion, SI noted that POL had some way to go, and cited by way of an
example that a number of upcoming Postmaster events had been arranged during
Ramadan. While the team had been responsive when this was raised and were
rearranging the dates, the issue should not have arisen in the first place. EJ echoed the
concerns in this regard.
© KMcE agreed the point; mitigating steps included the development of a diary of different
festivals, holidays and observances and plans to nurture more joined up working and
cohesion across the staff networks.
LG observed that the example had highlighted the need for a shift in cultural mind-set,
where those considerations had been a natural part of the planning because people
cared.
© BT suggested that a broad discussion should come to the Board on cultural change.
Actions
— Quantitative and qualitative measures to be devised against which outputs and benefits
could be tracked.
— Milestone plan to be shared with the Board, once finalised, and periodic updates on
progress to be tabled.
Page 4 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
KMcE (with
KS support)
KMcE
POL-BSFF-130-0000029_0006
3.2
3b.
3.3
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
— Strategic Plan to be updated to reflect the discussion points, including to reference
Postmasters explicitly.
— Board discussion on cultural change to be arranged.
Project Phoenix/Past Roles Review (verbal)
OW had followed up by email on an action he had taken from the January Board to provide
an update on the two separate programmes of work — Project Phoenix (investigations into
allegations by Postmasters of historical wrongdoing on the part of POL employees) and Past
Roles (a review of current employees who had previously undertaken certain past roles that
were involved in the investigation/prosecution of Postmasters to consider if any conflict or
perception of conflicts arose in relation to the their current role). An agenda item had been
added to the 1 March Board so that any developments since the update could be shared
and to provide an opportunity for Board members to ask questions.
KMcE explained that there were no significant developments since OW’s update, and that
both pieces of work were ongoing. KMcE did, however, note significant well-being issues
had arisen requiring very careful management.
The following key points were noted in the subsequent Board discussion, and were focused
‘on Project Phoenix investigations:
© EJ asked about the criteria for determining if colleagues should be suspended while
under investigation.
* KMcE explained that suspension would only be an appropriate step necessary for the
proper conduct of an investigation and/or if a colleague’s current role presented a direct
conflict or risk; those criteria had not been met for any of the cases under investigation.
© LG asked if the investigations would take account of any current conduct and/or
performance issues (including any concerns that might arise in the context of anyone
giving evidence at the Horizon IT Inquiry); KMcE confirmed that any such issues or
concerns would be taken into account.
* The Board noted that the current status of the investigations were as set out in OW’s
note and that the governance and decision-making arrangements now included a final
step whereby OW and KMcE would decide on the appropriate action to be taken, where
the Panel had concluded that there was a misconduct case to answer.
Action:
* Follow up note to be sent to the Board on the potential outcomes from the Phoenix
investigations and the criteria against which the different outcomes would be
assessed.
Rebuilding Trust
Inquiry Unit and Remediation Unit liabilities: Shareholder Approval
CS and GL joined the meeting.
TABLED and NOTED was a paper on ‘Retrospective spend approval’.
Further to the identification of the control failings at the January Board (which arose in the
context of the submission of a request for retrospective Shareholder approval under Article
8.1(X) for SPMP spend), the procurement controls had been strengthened to include a
Page 5 of 10
STRICTLY CONFIDENTIAL
KMcE
KMcE
KMcE
POL00448861
POL00448861
POL-BSFF-130-0000029_0007
41
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
specific step to check the Articles of Association and whether any relevant provisions were
triggered. This new process had identified the need to seek retrospective approval for
Inquiry and Remediation Unit spend to date and then to mid-May 2024. The approvals were
in line with DBT funding agreements and any associated risks for the technical breach were
deemed to be very low.
The following key points were noted in the subsequent Board discussion:
« BT suggested that it might be helpful to review of the Articles of Association and amend
them so that they better reflected the circumstances where DBT funding had already
been approved, for example.
* LG noted that work had begun on a review of the Shareholder Relationship Framework
Document and that amendments to the Articles of Association would flow from that.
In wider matters, NR noted the Board’s thanks to GL for her contribution, as her contract
would soon be coming to an end.
The Board RESOLVED to AGREE that the following approval requests be made to the
Shareholder under Article 8.3 of the Articles of Association:
i, Retrospective approval in respect of Inquiry Unit liabilities incurred to date
ii. Approval for an additional br Inquiry Unit spend (until mid-May 2024).
ili, Retrospective approval in respect of Remediation Unit liabilities incurred to date
(approximately! innetevas
iv. Approval for an additional
for Remediation Unit spend (until mid-May 2024).
Finance
FY24/25 Budget and Product Profitability
AP and TMcl joined the meeting.
TABLED and NOTED was a paper on ‘FY24-25 Budget and Product Profitability’.
In introductory comments, BT noted the Board was not being asked to make any decisions
at this point in the budget cycle, rather it was asked to consider the competing challenges
and share views on where the balance should be in relation to those competing challenges
and to identify possible further opportunities, both to save and invest.
KS spoke to the papers and explained that the starting position had been to present a break-
even budget, taking account of a number of different priorities, including the need to save
costs, self-fund investment, generate revenue, increase Postmaster remuneration and
operate in line with risk appetite and within the parameters of the working capital facility
and security headroom.
The Investment Committee had undertaken an initial review of change spend at its meeting
on 12 February and had advocated for more optionality and a clearer articulation between
non-discretionary and discretionary spend, having taken the view that the plans were risk
averse and that most of the change spend was non-discretionary in nature. LG had noted,
in particular, the Shareholder’s expectations in relation to DMB exits, the cost savings this
would generate, and the need to ensure this was not deprioritised, as well as the
opportunity to think more widely about investment funding opportunities. EJ had
Page 6 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
POL-BSFF-130-0000029_0008
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
highlighted the importance of investing in automation for Postmasters as well as the need
to for continuing innovation in relation to commercial and retail opportunities.
The following key points were noted in the subsequent Board discussion:
* The Board recognised the competing challenges and the prevailing context but felt that
the plans were not expressed with POU’s strategic intent sufficiently in mind and that it
was mostly business as usual.
« NR noted the dependency of the Government’s broader Policy Review and what that
meant for strategic planning at this stage. While POL and DBT’s engagement was
constructive in this regard, there was no firm policy vision yet on which to base realistic
longer-term planning. Once there was, the Board would be able to consider the longer-
term vision and opportunities as part of its forward strategic planning.
* Inrelation to Postmasters, SI noted that he would be unable to support a budget that
offered so little by way of automation and commercial opportunities looking ahead.
«Neither SI nor EJ felt that the Postmaster remuneration assumptions were ambitious
enough, nor reflective of the commitment to future Postmaster profitability.
* In discussing the possible levers to increase Postmaster remuneration, in a sustainable
way, and taking account of both the variable and fixed elements, it was agreed that the
opportunities included increased automation and other wider initiatives which would
deliver, among other things, a reduction in the cost to serve and other efficiencies and
operating improvements. As such, the benefits and returns were likely to be realised
beyond the 2024/25 financial year.
* With that in mind, it would be important to ensure that the narrative on the wider
context was conveyed to Postmasters and that they were engaged and understood the
plans for future Postmaster sustainability and profitability.
* Ona point of detail, SI and EJ reflected that the ability for Postmasters to benefit from
the Operational Excellence incentive arrangements, would require access to much
better real time data and analysis.
* LG noted that there were opportunities to be less risk averse, reflecting the discussion
at the Investment Committee, for example, in areas where cost savings and returns on
investment had already been realised, and in the light of which it might be possible to
engage Government further on the working capital facility and security headroom
position. In noting particular areas that might then benefit from additional spend, LG
noted that cyber security should be a priority.
* In noting AD’s desire to see more investment in increased digital functionality and
capability, OW observed that as well as funding constraints, there were also time and
resource constraints, not least in the prevailing climate, that would impact the extent to
which further digital innovation could be advanced.
* NR noted that the resource and capability constraints more generally would be
addressed, in part, by the changes he had made to the leadership team, but that again,
this would take time to embed and for the benefits to be realised while other priorities
were the focus. NR noted the recent talk AB had given to the Strategic Executive Group
on working through crisis which had been very well received and which had touched on
the time it takes for organisations to recover from a crisis situation.
* The Board noted its earlier discussions on the People Strategy and the capability
improvements that would be achieved, including in relation to organisational design,
and from which further savings might well be achieved in due course.
KS was grateful for the Board’s input which would inform the final plans and budget due
to be presented for sign-off at the Board on 5 March. In the meantime, KS would
welcome any further feedback from Board members.
Page 7 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
POL-BSFF-130-0000029_0009
POL00448861
POL00448861
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
Actions:
— Budget and plans to be updated in the light of the Board feedback. KS/AP/TMcl
— Board members to follow up with KS on any other feedback/points of detail. NEDs
42 Corporation Tax — DBT Funding Offer
TL joined the meeting.
TABLED and NOTED was a paper, ‘Corporation Tax — DBT Funding Offer’.
KS spoke to the paper which set out that POL had received a letter from the Parliamentary
Undersecretary of State, Department of Business and Trade (DBT), Minister Hollinrake,
outlining DBT’s offer for funding to enable POL to settle corporation tax liabilities, should it
accept HMRC’s assessment of the tax treatment in relation to expenditure and funding for
Remediation Matters up to the end of the 2023/24 financial year.
The Board noted that the financial exposure was significant, with liabilities up to c. £70m to
the end of the 2023/24 financial year, with further liabilities arising beyond this period. The
Board agreed that, on balance, it should accept the DBT offer, but as SJ noted, the
opportunity to explain POL's position, and the complexities at play, should be taken as part
of the Annual Report and Account disclosures that would be made.
The Board:
— NOTED the corporation tax risks and current status.
— AGREED that DBT’s funding should be accepted.
5. Governance Items
5.1 Articles of Association
TABLED and NOTED was a paper on ‘Amendments to the Articles of Association’.
AH explained that since the paper was submitted, UKGI colleagues had indicated that they
would like to reflect further on the draft amendments.
The Board was:
— SUPPORTIVE of the direction of travel as currently drafted and AGREED that the
proposed amendments, once agreed with UKGI colleagues, should come to the Board
on 25 March when it would be asked agree the changes for submission to the
Shareholder for approval by way of special resolution.
5.2 Remuneration Committee Terms of Reference
TABLED and NOTED were papers on:
(i) ‘Remuneration Committee Terms of Reference Amendments’;
ii) ‘Remuneration Committee Terms of Reference — Tracked Changes’; and
(ii) ‘Remuneration Committee Terms of Reference — Clean’.
The Remuneration Committee had undertaken an annual review of its Terms of Reference
and proposed to make a number of amendments to reflect:
* The recommendations in the DBT Simmons & Simmons Report, as well as the A Burton
Report.
Page 8 of 10
STRICTLY CONFIDENTIAL
POL-BSFF-130-0000029_0010
5.3
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
* Managing public money responsibilities and remuneration guidance, as set out in the
Shareholder Relationship Framework Document.
«Changes to the Group Chief Executive Officer’s executive direct reports and the
establishment of a Strategic Executive Group.
The Board took the opportunity to note its thanks to AB for the work she had done since her
appointment as Chair of the Committee and the considerable improvements that had been
to strengthen the governance and oversight of remuneration matters.
The Board:
— RESOLVED that the amendments to the Remuneration Committee ToR be, and are
hereby, APPROVED.
Rose 2: Board Oversight: confidential and legally privileged.
NR recused himself from the meeting.
TABLED and NOTED was a paper, ‘Rose 2’.
AB set out the background, which involved a ‘Speak Up’ referral, subsequent to which an
Employment Tribunal (ET) Claim had been served, The investigation of the ‘Speak Up’
referral was being conducted by an external Barrister and was expected to be concluded at
the end of March/early April. The response to the ET claim was due on 4 March 2024.
An Investigation Steering Group, comprising AB and LG, provided governance oversight in
relation to the ‘Speak Up’ referral. The lawyers who were supporting POL in relation to the
‘Speak Up’ investigation had been instructed to represent POL in the ET claim and they had
advised on the approach and the governance arrangements. In relation to the latter, and
the governance arrangements, it was proposed that that in light of AB and LG’s involvement
in the ‘Speak Up’ Investigation, and that were not conflicted in the matter, they (alongside
the Chief People Officer) should be authorised to make material decisions and provide
instructions on behalf of POL in respect of the ET Claim.
In related matters, the Board noted the Business and Trade Select Committee’s interest in
the matter and the requests that it had made for certain documentation.
Noting NR’s earlier recusal, the Board RESOLVED to APPROVE:
— the recommended approach not to run a “reasonable steps” defence.
— the recommended approach for POL’s lawyers to represent both POL and POL’s Chief
Executive Officer (CEO), (subject to CEO’s agreement)
—_ the information sharing and governance arrangements proposed by POL’s lawyers.
Any Other Business
Nominations Committee Membership
BT provided an update on the current position in relation to the membership of the
Committee, in the light of the former Chair’s departure, and against the provisions of the
2018 UK Corporate Governance Code and the Committee’s ToR.
BT noted that while membership of all the Board sub-committees would need to be
reviewed in due course to reflect upcoming Board changes, including the appointment of an
interim Chair, the membership of the Nominations Committee would need to be addressed
Page 9 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
POL-BSFF-130-0000029_0011
POST OFFICE LIMITED BOARD MEETING
Strictly Confidential
in the nearer term. Both SJ and AB noted that they would be willing to join the Committee
and agreed to discuss the matter and follow up with BT. Thereafter, the Nominations
Committee would be asked to agree a recommendation to the Board for approval.
Postmaster Non-Executive Director recruitment
Before stepping out of the meeting due to their conflict of interest in the matter, BT noted
the representations that both EJ and SI had made in relation to the current context in which
POL was operating, the need for continuity and the time it takes for new Non-Executive
Directors to get up to speed.
EJ and SI recused themselves from the meeting.
BT noted that at its meeting on 27 February 2024, the Nominations Committee had agreed
that the terms of the current Postmaster Non-Executive Directors should be extended, one
by 3 months, and one by 12 months. It also agreed that a discussion on which Postmaster
Non-Executive Director would step down in September 2024, and which would step down
in June 2025, should be tabled at the 1 March 2024 Board.
The Board discussed the various dependencies and the balance of the issues and
considerations involved. It concluded that it was supportive of the Nominations
Committee’s decision on the duration of the term extensions and the sequencing. In
relation to when each Postmaster Non-Executive Director should step down, the Board
agreed that this should be based on an ‘in the round’ view, and take account of each of the
Postmaster Non-Executive Director’s performance in role and their ability to continue to
contribute to the Board in the light of knowledge, skills and experience required.
The Board agreed that in the interest of fairness and to give the discussion appropriate time,
the discussion would need to be carried over and that an informal meeting of non-conflicted
Directors of the Board should be arranged in the coming days.
In related matters, AB noted that further consideration should be given to what ‘transitional’
support might be provided to Postmaster Non-Executive Directors’ as they stepped down
from the Board.
Action:
— Aninformal meeting of non-conflicted Directors of the Board to be arranged.
— Further consideration to be given to ‘transitional’ support to departing Postmaster Non-
Executive Directors.
Board/SEG dinner
Action:
— A Board/SEG dinner to be arranged in the coming months, once some of the competing
priorities were resolved.
There being no other business the Chair declared the meeting closed at 12.16.
Date of next scheduled meeting
25 March 2024 12:15 — 17:30
Chair Date
Page 10 of 10
STRICTLY CONFIDENTIAL
POL00448861
POL00448861
Secretariat
All
POL-BSFF-130-0000029_0012
7. Transforming Technology:
Horizon Replacement
Update
b)
Post Office Limited Board Actions as at 15.03.2024
BT queried how accurate the costs estimated for
cash counts in branch at the time of NBIT
migration were and what analysis had been
undertaken, ZM advised that further analysis
could be undertaken.
Zdravko Mladenov/
Melanie Park
January
December 2024
14/09/2023: This action is in progress.
12/10/2023: This action remains in progress.
It’s worth reflecting that the cash count
process is being pushed out 12+ months
under the new timelines, thus giving a lot
more time to respond to this query. Given
that, changing the due date to just ‘2024’
might make sense.
14/11/2023: An action update will be
provided in December 2024 on cash counts
if/ when they have been completed.
POL00448861
POL00448861
7. Transforming Technology:I EJ noted that stamps could be printed on SSKs at IZdravko Mladenov December2023 I 14/09/2023: Similarly, to the above (action 7. I Open
Horizon Replacement present and shared his view that some sort of December 2024 I Transforming Technology: Horizon
Update automation for selling stamps by way of the Replacement Update
d) Postmaster printing these as required would be c), as part of the next NBIT scope discussion
the way forward. ZM thought this could be with the Board, the team will offer options to
achieved subject to contractual arrangements the stamp stock management.
and undertook to come back on this point with 12/10/2023: This action remains in progress.
options. 11/01/2024: The action remains in progress
and will only be addressed later in 2024, as
part of the wider scope review for NBIT.
19/02/2024: The question of stamps is likely
going to be part of the wider NBIT
discussions, which means this action won't
be resolved until later in the year.
7. Transforming Technology:I The Chair asked that ZM meet with EJ and Sl to I Zdravke Miadenov/ December2023 I 14/09/2023: The NBIT team plans to have theI Ongoing
Horizon Replacement assess whether there were any other items Kelly Goodwin 2024 engagement with EJ and SI on this topic in
Update within the NBIT proposed product mix that could late October/early November, after the NBIT
e) potentially be removed Diagnostic is completed. The results will be
reported to the Board in December
2023/January 2024.
Strictly Confidential Page 1of 17
POL-BSFF-130-0000029_0013
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
12/10/2023: Propose to move this action to
Kelly Goodwin. It’s worth reflecting that the
timeline for developing other products has
moved out indefinitely, thus giving a lot more
time to respond to this query. Given that,
changing the due date to just ‘2024’ might
make sense.
14/11/2023: No further update.
08/03/2024: As an update we are now
reviewing scope options as outlined in the
new funding request with the Commercial
and Retail teams and commit to presenting
the conclusions to Saf and Elliot in June 2024.
11.3 RMU Update
b)
10.1 Copper Stop Sell
Restorative justice meetings continued, and SR
would be returning to Board to request
additional funding for a wider restorative justice
program.
SI queried whether the Wi-Fi which would
accompany the conversion to fibre would be
‘Simon Recaldin/
Evelyn Hocking
Zdravko Mladenov/
June 2024
December 2023
(20/10/2023: Paper on next steps and funding
‘equest being presented to HMC on 24th
(October for current RJ process and wider
program plan being considered.
!19/01/2024: Kevin Hollinrake confirmed in a
letter of Sth January 2024, that Government
ould not fund Restorative Justice meetings.
RU are considering how the RJ process should
continue across POL and will present to GE in
February on proposals and next steps.
[11/03/2024: RJ meetings continue to be held,
predominantly by the RU Director, and
assisted by SEG colleagues when possible. The
current uncertainty surrounding the ongoing
involvement of POL in the Remediation
process, alongside other Government
decisions that are awaited, mean that.
decisions on the future shape and funding of
RJ cannot be made at this time. RU will report
10 the next Board.
12/10/2023: This action is in progress and
targeting a Board update before the end of
Ongoing
To close
Strictly Confidential
Page 2 of 17
POL-BSFF-130-0000029_0014
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
Strictly Confidential Page 3 of 17
POL-BSFF-130-0000029_0015
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
3.1 Remediation Committee
a)
SJ queried preparedness to deal with potential
media attention on this. NR took the point and
advised that at the next Board meeting he would
return with details of what management saw as
the media term strategy on this point and as
against the coming phases of the Inquiry.
Patrick Bourke/
Richard Taylor
January2024
Deferred to
March 2024
segregation and further authentication
of traffic, new access controls, etc. We
currently don’t have a solution for these
new requirements, which will drive a one
time cost of est.
est mmaienwriin new OPEX per year.
= Ensuring Post Office has the capability
and resource to manage a WiFi service to
Postmasters on a day-to-day basis. This
will create additional OPEX cost of est.
- ‘Rorie-time cost to architecturally design,
test and implement in a controlled
ich will likely be a CAPEX cost!
In total, we anticipate providing WiFi for
Po: nsumption in branch to add
est} IRRELEVANT jin new annual OPEX. Given
the wider budget challenges, we currently do
not plan to explore this option further, but
can certainly change course if directed by the
Board.
14/11/2023: A media strategy paper will be
submitted to the Board meeting in January
2024.
Before then, Patrick and Richard will arrange
to hold individual meetings with Amanda
Burton, Andrew Darfoor, Simon Jeffreys and
Henry Staunton to discuss the media
handling of the Inquiry.
16/02/2024: The meetings were all held, on
the back of which there is no need for a
media paper.
To close
Strictly Confidential
Page 4 of 17
POL-BSFF-130-0000029_0016
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
4. CEO Report
b)
BG advised that he had spoken to N O'Sullivan
last night and they had discussed whether
Postmasters could be provided with an ability to
offer customers a discount in cases of volume.
OW advised that he would pick up this point with
N O'Sullivan.
Owen Woodley/ Neill
O'Sullivan
In progress. Update in action log to be
provided for January Board.
19/01/2024: Two parts to this answer:
i) As part of the development of D&G we
are considering how/if discounts can be
offered by PMs for non-RM and RM
products.
ii) We are also answering the Q raised at
Board whether discounts can be offered
by PMs on RM products.
POL currently lacks the functionality to offer
discounts to specific customer groups,
necessitating technical development. The
next steps involve defining and developing a
potential ‘Loyalty scheme programme!
tailored to incentivise and reward Drop &
Go/ High-Volume customers.
08/03/2024: No further update available
currently. D&G still under review.
Ongoing
4. CEO Report
¢)
EJ noted the diminished levels of international
mail and queried the possibility of customs
paperwork being completed ahead of customers
coming into branch. OW advised that he would
pick this up with N O'Sullivan.
Owen Woodley/ Neill
O'Sullivan
In progress. Update in action log to be
provided for January Board.
19/01/2024: Phase 3 of ICDC includes the
ability to pre-populate your customs
information online for Royal Mail
international services, to allow a quick
transaction in branch via transfer of data to
Horizon via a QR code. This functionality will
also be integrated on the Drop & Go online
manifest. The next phase of development of
ICDC will be making it a multicarrier carrier
solution.
Given customs information only make up
some of the transaction, we'll be exploring
Ongoing
Strictly Confidential
Page 5 of 17
POL-BSFF-130-0000029_0017
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
the functionality to start a transaction online
by choosing a service, and completing all the
information needed, so that all that needs to
happen in branch is payment. This
functionality would be more profitable for
Postmasters as opposed to customers buying
postage online.
08/03/2024: Looking further forward we are
exploring how to offer the ‘omni-channel
experience’ beyond solely the customs
details which offers particularly exciting
opportunities for repeat customers
(especially in Drop & Go).
9.
4. CEO Report
8)
SI queried anticipated volumes from the sale of
Evri and DPD products in branch. NR advised
that a national forecast of anticipated volumes
could be shared.
Owen Woodley/ Neill
O'Sullivan
In progress. Update in action log to be
provided for January Board.
19/01/2024: In progress: Buy-in-Branch
forecasts are being reviewed as part of the
budget process and will be finalised mid-
January. In addition, a weekly trading report
for Buy-in-Branch is under final review. The
report (target date to go live w/c 29/01) will
detail volume and income trading by product
sold, by carrier rolled up from a branch. The
weekly report will likely form part of the
weekly trading pack.
08/03/2024: BiB volumes and income
produced for Budget. MI report built and in
use for KPIs including income and volume by
carrier, product, branch etc and reviewed
weekly at Trading meeting.
To close
10.
5.1 Financial Performance
Report
a)
OW advised that details could be provided to the
Board setting out anticipated categories of cost
savings for FY24/25. LG advised that this would
be helpful as LG was interested to see whether all]
cost savings that could be made without
investment had been taken out.
Kathryn Sherratt
18/11/2023: Action in progress. Verbal
update can be provided at the Board meeting
on 28/11/2023 as material is being prepared
for the meeting with the Minister on
5/12/2023 to address this topic.
Open
Strictly Confidential
Page 6 of 17
POL-BSFF-130-0000029_0018
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
22/01/2024: The first view of the business
plan will be presented to February Board
which shall provide an update on this.
11. [8.1 Procurement Requests I [Horizon Data Centre Operations and Central__I Kathryn Sherratt/ Tom 18/11/2023: This is under current review. I To close
a) Network Services.nluis HNG-X Test. RieslSQ lee 22/01/2024: Finance will revisit this question
advised that the: IRRELEVANT as part of the ongoing review of the business
sustain operations un’ plan ahead of February Board.
environments for a! IRRELEVAN’ 21/02/2024: The business decisions around
queried further whether the this activity are not sufficiently progressed to
accounted for over a number of years. KS enable accounting decisions to be made. The
advised that she would consider whether the accounting position will be assessed once the
costs could be capitalised. business decisions progress.
12. I 9.1 Disclosure of Evidence toI BT suggested that it could be valuable for Ben Foat/ John 11/12/2023: John is drafting a new policy to I Ongoing
Support Police Postmasters to look at the policies and process in I Bartlett/ Sarah Gray incorporate two existing policies and some
Investigations place and perhaps for a mock case to be run guidance which will include proposing a new
under these. LG suggested that the Postmaster approach to handling the newest form of
director could participate. Horizon data. Aiming to get this to Board in
January 2024.
11/01/2024: Disclosure of Evidence to
Support Police Investigations will be on the
Board agenda for 25" March 2024.
08/03/2024: Priority has been on Inquiry
matters, including drafting a statement for
the Inquiry. The report will be submitted to
the Monthly SEG Meeting on 22° May and
Board meeting on 04" June instead.
13. I 10.2 Post Office Brand The Chairman noted that the online aggregator IOwen Woodley/Chris 15/11/2023: The Digital Customer Channels I Ongoing
could assist with attracting the younger Broeklesby/ Neill (CX) have just delivered the Mails Online
generation. SM agreed and noted that the O’Sullivan/ Laura platform and are finalising build on new
establishment of the online aggregator as an app I Joseph Travel App. The Customer Experience Team
could assist. Sl agreed. OW advised that this will co-ordinate with Commercial on costs
would need to be costed and funds found. and plan.
14/12/2023: Digital have provided a
breakdown of options & recommendations to}
the Mails team for consideration. Neill and
Strictly Confidential Page 7 of 17
POL-BSFF-130-0000029_0019
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
14.
2. Minutes and Matters
Arising
queried the status of Action item 25 as a deep
dive on the Swindon deal had been anticipated.
OW advised that a presentation would be brought]
to the January 2024 Board in relation to this.
Owen Woodley/ Tim
Perkins
‘Owen to determine timings and next steps
once they have had an opportunity to review.
08/03/2024: No further update. Under
review and consolidation with other Mails
initiatives.
11/12/2023: Swindon deal Deepdive included
on the January Board agenda.
23/01/2024: The finalised paper on the
outsourcing of Swindon has not been
included for noting at the January Board as
we want to take some of the individual Board
members who raised concerns about the
process through the findings before sharing
with the whole Board. Given the impacts of
recent events on Board members’ time, we
have not felt able to do this, but plan to do so
cover February. As soon as we have completed!
these individual meetings, we will share the
paper with the whole Board, certainly prior
to the February Board papers being issued.
08/03/2024: ‘Project Darwin, lessons learned’
report submitted for noting to the Monthly
SEG Meeting on 13" March and Board
meeting on 25" March.
To close
15.
4. CEO Report
b)
SI shared his view that awareness in relation to
the Company's relationship with Monzo needed
to be increased. AB queried whether there were
some targeted communications that could be
undertaken for example with the universities.
OW advised that he would reflect on this.
Owen Woodley
19/01/2024: On Monzo, we are confirming.
the exact go-live date with the bank and
suppliers as we rely on them to implement
before we can go-live. This looks likely to be
the end of March due to some delays. We areI
starting discussions with the bank on launch
communications and aim to maximise the
opportunity (subject to the banks agreement
to do so).
19/01/2024 onwards: With the recent media
attention following the ITV drama we are
Ongoing
Strictly Confidential
Page 8 of 17
POL-BSFF-130-0000029_0020
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
waiting to time our more detailed discussions
on this topic as we risk them not wanting to
be associated with the brand in the current
environment.
16. 11.2 Ethos Programme OW noted work in relation to executive Owen Woodley June 2024 19/01/2024: The work is due to complete in I Ongoing
accountabilities was on-going and advised that March, and so the Board will need to be
this would be reported back on to the Board in updated post.
March. Added to the Board Forward Planner for June
2024.
17. 13. Any Other Business RS to arrange revised meeting dates and times. [Rachel Scarrabelotti/ January 2024: In progress. To close
Diane Blanchard 15/02/2024: The revised invites for the ARC,
RemCo and NomCo meetings have been sent
out
18. 1, Minutes BG noted the discussion under the update on the I Nick Read/ Karen 08/03/2024: No further action. The position I To close
work of the Nominations Committee andthe I McEwan will remain under review (including against
question that had arisen in relation to whether a Board membership changes and the views of.
NED should be selected for employee the Interim Chair) and to revert on the
engagement. BG was of the view that this might matter, if the prevailing context changed. The
be a useful appointment, not least in the current action is to be marked as closed.
climate. NR and KMcE were both comfortable
that the current arrangements were appropriate
but undertook to keep the position under review
and to revert on the matter, if the prevailing
context changed.
19. 1. Actions LG queried the status of Action 28 on DMB exits, I Kathryn Sherratt/ 19/02/2024: Included within the business To close
a) DMB Exits which had been marked for closure; LG noted the Secretariat plan is a view of the cost and benefits
imperative in relation to cost savings and against associated with an increase level of DMB
that imperative the need to be more ambitious closure in 24/25.
on timelines. KS noted the funding implications
that arose, and that further consideration would
be given as part of the business planning; anew
action would be noted.
20. 1. Actions LG queried the status of Action 32 on capturing IOwen Woodley June 2024 12/03/2024: Plans for developing a central I Ongoing
b) Branch layouts branch information on things like layout and any branch repository paper is being taken to the
lessons learned from previous initiatives, for 13th March SEG meeting by Martin Roberts
Strictly Confidential
Page 9 of 17
POL-BSFF-130-0000029_0021
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
reference in support of efficient and effective
future works/initiatives, not least NBIT. OW.
noted the update may not have captured the
work in hand to maintain a central repository,
but he would follow up with relevant colleagues
50 a more meaningful update could be provided
on what was being done and/or what needed to
be done.
and Pete Marsh and the 25th March POL
Board meeting.
Following an initial meeting on 7th March led
by Martin Roberts and Chris Brocklesby,
members of the IT, SPM, and Retail teams
will have a follow up meeting within the next,
4 weeks to discuss the proposed
improvements in more detail, assign an
accountable owner, understand resource and
budget implications and agree broad
timelines.
A more detailed plan, scope and timelines
will be presented back to SEG in June 2024 to
include resource and tooling requirements in
more detail.
21.
1. Actions
c) Digital strategy
AD noted the Board’s interest in better
understanding POL’s digital strategy in the
medium to longer term (including how that
supported the commercial and retail plans and
strategies going forward); AD did not think that
Action 38 necessarily captured that interest; OW
agreed that insufficient time had been allocated
to Board discussion on the topic and he would
arrange a ‘teach-in’ session for Board members.
Owen Woodley/
Secretariat
June 2024
08/03/2024: Jonathan Coleman and James
Parker from Customer Experience met with
Owen on 05/03/2024. It was agreed that
engagement via SEG would be in May with a
view to taking this to Board on June 4th. The
scope of this update is a teach-in on where
we are with Digital customer development,
our priorities for 2024 and Phase 1 of the
Digital customer strategy development (what
and why). This will then be complemented by
a follow up session later this year to cover
Phase 2 (the how).
Owen also mentioned to Jonathan and James
that they should engage with a couple of the
Board members directly in early May
(Andrew Darfoor and one other).
Diane Blanchard was emailed on 07/03
asking her to help to set up a teach in with
the NEDs. 11/03/2024 — Diane Blanchard has
Ongoing
Strictly Confidential
Page 10 of 17
POL-BSFF-130-0000029_0022
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
emailed the NEDS to ask if they want a
further session.
Action is ongoing whilst the teach in session
is being organised and pending a paper
coming back to the SEG in May and the Board
in June.
pre 2.2 Audit, Risk and In noting the position in relation to Fujitsu and —_I Internal Audit/ 08/03/2024: Having discussed the matter To close
Compliance Committee issues that had arisen in the context of Internal I Chris Brockelsby with Simon Oldnall, it is management's view
a) Fujitsu: audit engagementI Audit, the Board noted that a review of Internal that the Deloitte audit report, combined with
Audit access rights was being undertaken and the ISAE3402 report issued by Fujitsu’s
senior colleague engagement as between POL auditors, will provide sufficient assurance
and Fujitsu would remain an option if the matter cover privileged access management. Thus,
could not be resolved. there is no further need for internal audit
access to Fujitsu systems at this stage. Action
is proposed for closure.
23. 2.2 Audit, Risk and The next staff engagement survey was due to Karen McEwan 08/03/2024: Oral updates will be provided toI To close
Compliance Committee launch on 19 February and close in early March; the Board on emerging feedback and themes
b) Staff engagement the Board agreed that the timing would allow for and reviews tabled at Remco/Board (as
the Board to review a collated view of the appropriate), ahead of Phase 7 of the Inquiry..
headline results, ahead of Phase 7 of the Horizon 12/03/2024: The colleague engagement
IT Inquiry. survey launched on 21 February and is open
until 13 March. As of 12th March response
rates were at 80%. The first draft of the core
results will be shared on 9 April, with the final
report due on 23 April.
24, 2.3 Remuneration LG asked for a contact at Grant Thornton, with —_I Rachel Scarrabelotti/ UKGI has followed up with Grant Thornton. I To close
Committee whom UKGI colleagues could engage on matters I Chrysanthy Pispinis
a) Grant Thornton Review in relation to the Shareholder NED role and
appointment terms.
25. 2.3 Remuneration AB asked about the alternative LTIP 2021-24 and I Karen McEwan Completed. An update was provided atthe I To close
Committee whether this had now been communicated to Remuneration Committee on 7 February
b) LTIP communications participating staff; KMcE undertook to check the 2024.
point and provide an update. Verbal cascade w/c 12th Feb followed by
written confirmation issued to all eligible
participants w/c 19th Feb.
Strictly Confidential
Page 11 of 17
POL-BSFF-130-0000029_0023
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
26. 3. CEO Report The Board noted the duty of care owed by POL _I Karen McEwan/ Tracy Open
a) Duty of Care to and EJ emphasised the importance of ensuring I Marshall
Postmasters that relevant guidance and support materials
were available to Postmasters, noting the need
to provide that in hard copy, as well as through
electronic means, such as Branch Hub.
27. 3. CEO Report The Board welcomed the prospect of Martin Roberts/ Tracy '15/03/2024: Two key strands of activity have I To close
b) Postmasters as Postmasters having a greater role as Marshall/ been undertaken to date:
spokespeople. spokespeople. EJ and SI offered to support the IComms, with support 1) We have identified a group of circa 30I
initiative and help identify potential
spokespeople from across a regional spread;
consideration would also be given to the likely
support Postmasters may need, including media
training.
from Elliot Jacobs/ Saf
Ismail/ Martin
Hopcroft
postmasters who we will be using
from time to time to be spokespeople)
and appear on social media in
support of key campaigns. This is part
of our ‘postmaster centric’ approach
to communications.
2) In addition, we have been working
with a group of postmasters who
have expressed an interest in
undertaking their own campaign on
social media to promote the
importance of PO on the high street
and have agreed the following key
messages with that group, that we
will prmote through a series of
videos. These are expected to launch
in late March/early April.
Key messages:
'* OVERARCHING MESSAGE: Post Offices
independent small businesses run
by Postmasters to be there
for their communities. We're only paid
by the transactions carried out. If
customers don’t come in, we earn nothing.
Strictly Confidential
Page 12 of 17
POL-BSFF-130-0000029_0024
Post Office Limited Board Actions as at 15.03.2024
POL00448861
POL00448861
I> Postmasters and their branches are
important contributors to local
economies: We are community
hampions, business owners, employ local
taff and collectively make up a major
employer in the UK.
+ Essential role of Postmasters: We are proud
0 provide the essential services communities
need. There are a lot of people who feel more
comfortable doing transactions in person
ather than online, so Postmasters play not
lonly an important role but an essential one.
+ Post Offices are friendly places to visit: Our
ibranches are welcoming places to visit and
omewhere the public find helpful and friendly
faces to answer any questions.
'* Shop local to support your local branch so
it doesn’t disappear: Help your communities
hrive by shopping locally. Without
local branches millions of people could
be cut off from these vital services.
28.
4.1 Financial Performance
Report
a) 2024/25 Budget
AD noted the different imperatives at play and
the difficult choices that would need to be made
and suggested that it would be helpful to engage
NEDs ahead of the Budget discussions at the
February Board.
Kathryn Sherratt/ AshaI
Patel
19/02/2024: NEDs engaged ahead of
February Board meeting and NED briefings
are in the diary. Unable to schedule sessions
with Ben T and Elliot due to NED availability,
but they are welcome to join the below
sessions.
Thursday 22/02 - Andrew Darfoor
Friday 23/02 - Amanda Burton, Simon
Jeffreys
Monday 26/02 am - Saf Ismail, Brian Gaunt
Monday 26/02 pm - Lorna Gratton
To close
Strictly Confidential
Page 13 of 17
POL-BSFF-130-0000029_0025
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
29. 4.1 Financial Performance EJ noted the position in relation to branch Kathryn Sherratt/ AshaI 19/02/2024: The decrease in network To close
Report numbers and that branch closures were forecast I Patel numbers follows a peak after the Christmas
b) to rise in the coming months; AP noted this was trading period and is expected to decrease
against a rise over the Christmas peak period, but gradually for the remainder of this financial
that finance would keep this under review for year in line with the network optimisation
signs of a continuing downward trajectory. strategy. The current forecast from January
suggests a closing network count in March-24)
at a similar level to March-23 (11,684).
FY24/25 currently assumes 400 D&C
openings however since the January Board
we understand there is increased risk to
these with increasing RM competition. This
will be flagged within the FY24/25 Business
Plan.
30. 5.1 Project Rosebowl and SI suggested that it may be helpful to engage Martin Roberts/ Tracy 15/03/2024: Engaging with postmasters on a I To close
Duty of Care to Postmasters I Postmasters on a thematic basis, differentiating I Marshall/ Martin thematic basis has been built into our
a) for example, support in the event of a robbery, or Hopcroft ‘onwards communications campaign following
support for mental well-being; AB added Modern collaboration with the communications team.
Slavery.
From later in March we will start to rotate
the focus on support available and use our
communications channels, including the
Thursday email that is sent by Martin
Roberts, as a means of signposting what is.
available.
Modern Slavery has been added to this
activity.
31. 5.1 Project Rosebowl and AD asked about how success and outcomes Martin Roberts/ Tracy 15/03/2024: This is an ongoing action and Ongoing
Duty of Care to Postmasters I would be measured and TM noted that it would IMarshall/ Martin something that we will continue to measure
b) be important to be able to assess if processes _I Hopcroft ‘once new initiatives are implemented.
had been deployed and utilised as intended; the
means to track these measures would need to be
in place. TM noted that Postmaster feedback
would continue to provide an important
Strictly Confidential
Page 14 of 17
POL-BSFF-130-0000029_0026
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
qualitative understanding.
32. 6.1 Banking Framework 4 SI noted the need for further consideration in Saf Ismail/ Ross 01/03/2024: This has been noted in the deal I To close
a) relation to additional security costs against the I Borkett development and additional funding has
prospect of Post Offices holding more cash. RB been included within the deal focused on
noted that automation should help, but branch enhancements for our busiest
recognised the point and it would be included in banking branches.
the ongoing planning and considerations.
33. 6.1 Banking Framework 4 EJ noted that further thought would need to be I Elliot Jacobs/ Ross Open
b) given to the return on investment and offered to I Borkett
speak to RB offline.
34. 8.4 Witness funding LG asked about whether there were any Diane Wills Briefing note on Clawback provisions To close
a) clawback provisions and if so, in what appended to the action log.
circumstances.
35. 8.4 Witness funding LG and BT asked for a note on the funding Diane Wills/ Hannah See Appendix 1. To close
b) provided to date. Gledhill
36. 8.5 Inquiry Funding Request I BG noted that it would be helpful to see an at-a- See Appendix 2. To close
glance tracker as part of the updates on Inquiry I Kathryn Sherratt/ Neil
Spend. Davey
37. 9.1 NBIT AB noted the control failures and the Board Owen Woodley OW sent a note to the Board on 31/01/2024. I To close
a) Contract/procurement I noted their disappointment and asked for a note
controls ‘on the background and lessons learned and
mitigating steps that would be put in place. EJ
further noted that the matter had not been
flagged at the Investment Committee.
38. 9.1 NBIT LG noted that DBT/Shareholder engagement Chris Brocklesby/ Liam 29/02/2024: We have received an email from} To close
b) Shareholder engagement I should be prioritised so that there was an Carroll Ben Kennedy, UKGI commercial lead,
understanding ahead of any retrospective confirming DBT approval of the NBIT
approval request on the context, including the development partner spend with Coforge and
considerations that had been given on whether. Accenture under the DCF.
the spend was a Relevant Transaction for the
purposes of the Articles of Association and The approval covers the proi
Shareholder approval. the end of June 2024)mstswr) this is the
d to the end of March 2024
and a further! mreevevr! per month spend with
both Coforge and Accenture until the end of
June 2024 when the new framework should
Strictly Confidential
Page 15 of 17
POL-BSFF-130-0000029_0027
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
be in place. Board approved an uplift to the
value of lot 5 of the DCF in November 2023 to}
cover additional spend with Accenture.
We have a slot at the BET CAAG on 13 March
to seek approval to go to market for the
replacement development framework.
08/03/2024: Retrospective approval has beenI
received on the SPM Development Partner
spend from DBT. On the new development
partner procurement, we will be presenting
to the DBT CAAG on the 13th March for
approval to go to market. We then expect to
return for a further approval before contract
award.
39. 9.1 NBIT BG noted that ARC should have a role in Simon Jeffreys/ Marie Simon Jeffreys confirmed this would be To close
c) Contract/Procurement I providing assurance oversight. Molloy followed up at ARC.
controls
40. 12. AOB [Past Roles Review and Project Phoenix] NR set IOwen Woodley/ Karen OW sent a note to the Board on 9 February I Toclose
a) out the current considerations, explaining the I McEwan 2024.
distinction between the two processes and the Tabled for discussion at the Board on 27
difficult nuances involved. NR explained that on
Project Phoenix, GE was considering the position
in relation to the criteria against which potential
outcomes might be assessed; it had not yet
settled its view. The Board asked to have a
summary note, which may need to be subject to
Legal Professional Privilege, once the position
was settled; LG noted the need to consider the
cultural impact versus the key risks.
41, 12. AOB [Articles of Association (AoA): Written Secretariat Tabled for discussion at the Board on 27 To close
b) Resolutions] Against the context of the current February 2024.
position, where it was not possible currently for
the Board to do business by way of Written
Resolutions, as the AoA required the unanimous.
approval of Directors, LG proposed that the
Strictly Confidential
Page 16 of 17
POL-BSFF-130-0000029_0028
POL00448861
POL00448861
Post Office Limited Board Actions as at 15.03.2024
provision should be amended to facilitate
effective ways of working. The Secretariat would
take this forward with UKGI colleagues.
Appendix 1
To date, POL has paid out approx! 'to cover legal costs incurred by witnesses to the Inquiry. There are approx in invoices outstanding which are
being progressed through our approvals process and being assessed for reasonableness. These outstanding invoices relate to six witnesses. The precise
figures are set out in the table below. The Inquiry team, working with BSFf, will continue to seek to secure recovery of at least some of these costs from the
relevant D&O insurers.
Costs incurred to date (inc. VAT) Paid costs (inc. VAT) Outstanding costs (inc. VAT)
Appendix 2
The following tracker has been put together focusing initially on tracking against the i
the Board Meeting on 25" March and then in the Inquiry update papers afterwards.
will be included in the supporting Finance pack for
Inquiry Spend Tracker (£m)
MySovernment Funding (Apr 23 - Mar 25) I Lifetime I
Current Spend to
Projected
Spend from Apr 23
When will we reach? Original
Actual Planned
Spend to Spend to
Date Date
Apr23- — Apr23-
funding — Cont'gny) Mar25 — Mar25
Strictly Confidential Page 17 of 17
POL-BSFF-130-0000029_0029
Briefing Note — Clawback provisions in the Deed of Indemnity for the Board
From: Christian Spelzini, Head of Legal — Corporate, Banking & Financial Services
Date: 4 March 2024
Capitalised terms used, but not otherwise defined, shall have the meaning given to them in the Deed
of indemnity.
Executive Summary
Clawback Provisions
The Deeds of Indemnity provided to the Board of Directors from March 2022 onwards were drafted
to include a clawback provision such that, in the event POL made a payment in respect of a Liability or
Claim, and it was subsequently determined that the Liability or Claim arose out of or was attributable
to the Director’s Misconduct, the Director would be required to immediately repay such amount.
In order for the clawback provision to apply, a court, tribunal or regulatory authority must have
determined the Director's Misconduct (defined as any fraud, wilful default, wilful misconduct, reckless
conduct, dishonesty or act of bad faith).
Clawback and the Inquiry
The costs paid under the Deed of Indemnity for the Horizon IT Inquiry are for ‘reasonable legal costs
and expenses’ properly incurred and therefore not considered ‘Liabilities’ or a ‘Claim’ under the Deed
of Indemnity. The clawback provision does therefore not extend to costs paid out for the Horizon IT
Inquiry.
Furthermore I understand from the Inquiry team that, under the Inquiries Act, an Inquiry Chair is
prohibited from making any determination as to a person’s civil or criminal liability and therefore even
if there were an argument to be made that the clawback provision could extend to legal costs and
expenses paid out under the Deed of Indemnity, any determination made by the Inquiry would not be
considered as a ‘court, tribunal or regulatory authority’ determination and therefore the clawback
provision would not bite.
POL Legal BAU were not involved in the decision-making process in respect of funding for those
Directors without a Deed of Indemnity, employees and contractors and we therefore cannot comment
on the provisions or terms that might have been put in place to govern that funding.
POL00448861
POL00448861
POL-BSFF-130-0000029_0030
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Chief Executive’s Report Meeting Date: I 25 March 2024
Author: Nick Read, Group CEO Sponsor: N/A
Input Sought: Noting
This has been an extraordinarily challenging and turbulent period for the business, with
heightened political and media attention following the ITV drama Mr Bates Vs. The Post Office,
the February Business Select Committee and subsequent follow-up requests. Undoubtedly
there will be more negative publicity and intense scrutiny to come, including when Phases 5
and 6 of the Inquiry commence after Easter.
This has also been a very bumpy period for me personally, but it is very important to me that
the integrity of all processes such as the ongoing investigations are observed. These are
complex matters and where conflict might arise, decisions relating to disclosure on documents
(e.g., FOI SteerCo escalations) and Select Committee requests sit with the Deputy CEO.
We continue to operate in a crisis environment; this has invariably impacted the timelines for
implementing our refreshed operating model. That said, and in addition to the Deputy CEO and
CPO stepping into broader matters to support me, we are continuing to evolve how we operate
to manage the ongoing crisis. Amanda Burton very helpfully shared her experiences at Ratners
with the SEG; the Chief of Staff is leading a central co-ordination stand-up with leaders across
the business to ensure our stakeholder management (Postmasters, Colleagues, Customers,
Commercial Partners, Media) is robust and consistent; that actions taken have clear owners,
deadlines are met, and effort is not duplicated; any early signs of issues get managed as
required. Prioritisation continues, though this is challenging in an environment with so many
urgent matters. There are still gaps; immediate efforts are focused on recruiting an Interim
Communications Director. This crisis environment is likely to continue for some time and the
level of management resource is limited, with a recognition that the current approach is not
sustainable for the long term. We are working through options to address this.
I remain unwavering in my commitment to achieving the earliest possible redress and
restorative justice for victims of the Horizon Scandal, and to ensuring that the culture of the
Post Office continues to change so that the things that happened in the past can never happen
again. I therefore welcome the Government's announcement on legislation to enable the mass-
quashing of Post Office and CPS convictions for fraud, theft, and false accounting in relation to
the Horizon system between 1996 and 2018. The unprecedented bill will pass into law in
England and Wales in early summer, and I very much hope that this will also be extended to
Scotland and Northern Ireland as soon as possible.
Despite all these challenges, our financial performance remains very strong, and customers are
remaining loyal to Post Offices, with customer sessions back at 10m last week, +4% WoW and
+9% YoY. I hope that in these times, relationships between Postmasters, their communities
and customers are being strengthened. Our brand tracker reveals that while trust in the Post
Office brand has fallen sharply since January, a majority believe that Post Office provides
important services in their local community and satisfaction in the channel remains strong. This
1
Confidential
POL-BSFF-130-0000029_0031
POL00448861
POL00448861
is also borne out by Vox Pops (qualitative customer views) revealing that the Horizon scandal
has reminded customers of how essential the services our Postmasters provide are, and the
importance of our business in their futures. With banks closing customers want to see our
services expanded, and local solutions improved, for truly convenient and personalised retail
solutions.
The SEG has worked on developing a long term blueprint for the business, providing a refreshed
purpose and framework for our strategy and behaviours. We are holding an event at the end
of March, getting the new Leadership Team to look forward together and create plans to
continue driving our business and cultural transformation. We have also refreshed and
simplified our ethical decision-making framework, which will be followed by an update to our
Code of Business Conduct.
While performance this year has been fantastic, as we know from the Business Plan, next year
will be a lot more challenging, and we will need to continue to face into tough choices.
REPORT
Finance
Financial Performance P11 and YTD
1. P11 total revenue was:
Bank of Ireland (Bol) incentive commission of bove budget and } iH
YoY. This incentive commission is only recogn in th ifs in P11 each year when
it becomes virtually certain following confirmation from Bol; outperformance against both
budget and prior year is a factor of interest rates being higher for longer than expected.
oY, largely driven_b’
2. P11 Mails revenue of {1
February continued _t
(estimated to be
as in line with budget and YoY, noting that last
the impact of the RM cyber-attack on International volumes
in the month); when adjusting for this the YoY growth is i
3. YTD the delayed launch in Royal Mail’s competing RM Tracked 24/48 (RM T24/48) products
is temporarily benefitting Special Delivery volumes, with an offsetting impact in Labels
and Acceptance. Stamps volumes have continued to show resilience against the RM tariff
increase compared to expectation. With the launch of T24/48 expected in April - subject
to ongoing discussions on how this will be rolled out - as well as further expectation of RM
price increases, this is putting greater pressure on FY24/25 Mails projections, although
partially offset by growth in revenue streams with other carriers.
4. Media reported positively this month on the record growth in personal cash withdrawals
in February. Indeed, Banking services revenue grew 10% in the month to} i
month, head of budget. This was due to both higher deposit and withdrawal
volumes, which are continuing into March. Average transaction values remain under
budget due to deposit limit regulations, however this has been fully offset by
outperformance in volumes - leading to a YTD position in line with budget.
5. Conversely, negative press coverage is considered to have had an adverse impact on
Travel and Protection insurance searches, online traffic, and sales - with PO Insurance
revenue oj! inderperforming against both budget
Confidential
POL-BSFF-130-0000029_0032
POL00448861
POL00448861
We are seeing signs of slight recovery in Insurance sales in March (4% ahead of budget
in week 1). Protection insurance remains more of a challenge with daily reviews of
marketing and social media activity which have been significantly reduced since January.
6. Stronger revenue performance across high PM Rem-generating products (e.g., Special
Delivery and Stamps) as well as implementation of higher banking rates, have positively
impacted Variable PM Rem, wit
YoY) accounting for yf variable revenue (vs PYTD). This is a positive and
encouraging strategic outcome with the YoY decline from Labels (lower Rem generating)
being offset by other (higher Rem generating) products which have remained stable. Fixed
Rem payments YTD of below budget predominantly from lower
exceptional payments. This is aligned. to the strategy of consciously shifting away from
loss making and poorly used branches, replacing outreaches with Drop & Collect (D&C).
7.
in P12. YTD they are! der budget, however an.an underlying basis adjusting for
certain budget assumptions, staff costs would be c.ir"iunder budget - driven by unfilled
vacancies across the business.
8. Overall is has translated to a Trading profit of in P11 and
down on PY. The full year outturn continues to be
end adjustments.
rat the end of February wa rbwer than forecast
‘ound timing of cash receipt on BOI incentive commission
The
9. Security Headroom of
resulting from assumpti
and RMU/Inquiry funding. The forecast assumptions are to be revised accordingl
Baseline Budget for FY24/25 assume: MU/Inquiry contingency funding an¢
Horizon replacement funding, resulting in a positive Security Headroom position
throughout FY24/25. The lowest point would be anTn Dec-24 (noting a recommended
buffer of ‘maintained throughout the year).
10. In these remaining weeks of the financial year, we are focussing on closing out the year
appropriately in advance of the year end audit, as well looking forward with much focus
on finalising a robust and deliverable FY24/25 Business Plan.
Taxation matters
11. Corporation tax: in February POL received an offer from DBT to provide funding in
respect of corporation tax liabilities that may arise as a result of liabilities and funding
associated with Remediation Matters and Inquiry. POL has responded to accept the offer,
albeit noting a number of matters which require clarification and assurances, including
assurances around longer term future funding, not just historical as was originally offered.
Management have provided the underlying taxation model on the financial risk, as assured
by KPMG, to DBT and are now working through specifics with DBT ahead of a formal
funding agreement being provided.
12. IR35: HMRC issued correspondence to POL in December 23, challenging POL’s
assessment of contractors and therefore potentially crystallising a liability in respect of
historical contractor engagement. Management are working with HMRC to gain further
clarification of their challenge and will act accordingly, potentially negotiating a settlement
position. Contemporaneously the policy and process for contractor engagement will be
Confidential
POL-BSFF-130-0000029_0033
POL00448861
POL00448861
reviewed and updated to address the risks arising. These matters are being discussed at
Audit and Risk Committee in March, to agree the approach.
Commercial
Mails and Parcels
13. P11 Mails income was flat
ith two thirds of the uplift driven by
trend, with the RM cyber-attack
14. YTD overall Mails income was ‘0 budget, largely due to the delay in launching
RM Tracked in-branch, and the growth in PUDO volumes across all carriers. We plan to
launch RM 124/48 in branch in early April, however as these are non-USO services,
commission is applied ex-VAT, impacting income and Rem. We are conducting further
analysis into the potential cannibalisation of existing products and impact on our income.
We also plan to include these services on Parcels Online during Q1, opening up our online
option across the whole of the UK.
15. Non-RM PUDO volumes remain strong with both collections and returns ahead of forecast;
boosted by further branch roll-out.
i. The number of live branches now stands at: Amazon 7.6k; DPD 4k; Evri 2.5k;
DHL 92;
ii. DHL Click & Collect will be rolled out beyond Northern Ireland to c. 500 branches
across the UK from April;
iii. There is a potential delay to the roll out of the next 500 branches with Evri while
we prove the buy-in-branch proposition;
iv. Our Mails strategy is progressing well, and we have had positive engagement with
additional carriers. However, roll-out of new carriers will require additional
investment and we have limited budget.
16. Buy-in-Branch and Parcels Online are performing behind expectations. We have plans in
place to help boost performance, drive sales capability, and raise awareness in-branch
and with customers.
17. RM has formally announced its partnership with Collect+, rolling out drop-off and return
services to 5k stores starting in March. RM Click & Collect will be rolled out in a future
phase, with timing to be confirmed.
18. There has been an additional delay in the launch of the digital ICDC solution for RM
International items requiring customs data capture to P12.
19. Work continues on our response to the Ofcom consultation on the future of the USO,
ensuring our customer and Postmaster views are taken into consideration. Ofcom plans
to publish its findings and proposed actions in the summer.
Cash and Banking
20. Banking had a strong P
Total revenue was u
deposits. Banking generated an ai "}
target vs. budget). Deposits have made a stronger than expected recovery since
Christmas, with average deposit values recovering slightly compared to the downward
trend in 2023, driven by business customers.
nd trading profit of
. budget, driven by a strong performance in
Confidential
POL-BSFF-130-0000029_0034
POL00448861
POL00448861
21. The FCA is completing its review on the implementation of deposit limits by banks and is
Preparing to release a report.
i. We responded to the FCA’s consultation on Access to Cash in February, strongly
supporting most of its proposed approaches, while seeking clarity on some aspects
of the new rules. We understand that other financial institutions are much less
supportive and see the FCA’ interpretation of the legislation as over-regulating;
ii. While the FCA has identified some areas for improvement, it appears broadly
comfortable with the approach taken by banks. Whilst limits will not be removed,
we continue to lobby for review of the implemented limits and encourage changes
over time;
iii. I The introduction of a customers’ ‘remaining allowance’ on some customer receipts
has been well received and we are encouraging all banks to introduce this. Under
BF4 we will be implementing changes to pricing for failed deposits to allow more
remuneration to be paid to Postmasters who have already counted the cash before
a decline occurs;
iv. The FCA is considering all responses and an industry roundtable will be held in
April to discuss the findings.
22. Some 40 Banking Hubs are now open, with an additional 10 expected by the end of April
and a strong and growing pipeline for the rest of the year. As well as permanent hubs,
there is a growing need for temporary banking hubs until a long-term solution is found in
communities. We are supporting the industry with these also, further adding to our
revenue growth. We retain 100% market share for Banking Hubs
23. LINK has implemented the first pilot of its self-service deposit scheme, with Lloyds the
first bank to go live. It is likely to take most of this year for the top 10 banks to integrate
with it. LINK remains a likely competitor in high volume locations and is being considered
as part of our BF4 strategy. We continue to make good progress on our own self-service
deposit solution and expect the first pilots live in September, with Cash Access UK
expressing an interest in piloting these.
24. We have commenced the commercial negotiations on BF4 with members. Banks are
considering our proposals and we expect to start bi-lateral engagement during the second
half of March.
Financial Services, Int
25. P11 revenue wa s. budget and sl
Mortgages/Saving: ive ‘true up’ off irreces offset a slower performance
in Protection and Travel due to the current suspension of social media spend and lower
demand respectively. YTD revenue was: 's. budget, with all areas performing well,
particularly Mortgages/Savings and Loans. P11 trading profit was'iresevar; vs. budget and
TD, again driven by Mortgages/Savings and Loans.
ey, and Payments
hind on forecast. A
26. Our budget for FY24/25 assumes business-as-usual marketing and campaign activity
across all Platform businesses, especially Post Office Insurance. Should PR/media be
restricted due to phases 5 and 6 of the Inquiry, that poses a material risk to budget
delivery (especially for POI).
27. The sourcing strategy for a new Loans provider is going through governance, and we are
preparing to launch a market scan/RFI process.
Confidential
POL-BSFF-130-0000029_0035
POL00448861
POL00448861
Retail & Lottery, Government, and Ide: Services
28.
closed P11! vs. budget. Although Lottery products ceased trading on 31 January,
we have continued to see small sales values during P11, driven by delayed exit activity by
some branches including completing final sales accounting for scratch cards sold prior to
exit.
29. Government Services revenue was ‘elow budget in P11 and flat YTD.
-Passports performance was u, judg and UKVI down
“ti vs, budget. UKVI volumes have been hit strongly by changes to Government policy
reducing the numbers of migrants entering the UK and hence needing to obtain a Biometric
Residents Permit (BRP). This reduction will increase from April when there are further
changes to policies for health workers not being able to bring dependents to the UK and
restrictions linked to income earned.
30. Identity Services revenue was in line with budget in P11 and YTD. In- ‘Bran fh
vs. YTD budget. The strong performance is due to increasing volumes from GOV. UK Gne
Login, and the go-live for HM Armed Forces Veterans ID Cards.
31. UKVI has confirmed that it is introducing digital biometric residents permits and will cease
issuing paper permits by the end of 2024. This will remove any need for a branch service
from PO and hence end.ouzr. ice offering by 31 December, impacting our FY24/25 UKVI
revenue forecast of j!RRELEVANT; We await further information from UKVI regarding the
migration plan to its digital service and the direct impact on FY24/25 income.
32. HMPO: Ongoing positive negotiations for a {!RRELEvANTiew deal with HMPO to commence
September 2024. PO aims to improve its current deal with a minimum volume guarantee
from HMPO to mitigate the risk to fixed costs and to drive better working behaviours in
the promotion of branch services.
I Postmaster & Network
Delivering our Network Strategy
33. Network coverage remains strong with 11,783 branches trading in February, including 552
Drop & Collect (D&C). We expect to end the year close to 11,800, building up some
headroom to deal with the challenges to network numbers expected next year (as set out
in the 2024/25 business plan).
34. Our continuoys-imoreyement programme to address loss-making franchise branches has.
35. We also completed the exit of Clapham Common and Southall DMBs on 6th March,
generating: nnualised benefits. We are now finalising plans for our 2024/25 DMB
Programme in light of ongoing funding discussions.
Hard to Place
36. We are continuing to work with the remainin Hard to Place (HTP) Postmasters to find
a resolution for their branches: either securing a replacement (which would enable the
6
Confidential
POL-BSFF-130-0000029_0036
POL00448861
POL00448861
exiting Postmasters to leave with a payment worth 26 months remuneration); or enabling
them to exit without a replacement with a lower payment of 12 months.
i. Of the 82, we are onboarding 34 replacement branches, and are engaging nearby
retailers for the other 48 locations ahead of the deadline of 31 March;
ii. IThe NFSP is continuing to push for a change to the scheme rules, in particular
extending this deadline and increasing the payment for branches who leave
without a replacement. We should expect continued media and stakeholder
attention on this topic as the NFSP intensify their lobbying activities over the
month ahead.
Central Operations
37. There were 10,441 calls into BSC in the first two weeks of P11, +16% vs. forecast, with
20% of calls driven by Lottery exit. Performance returned positive to target in weeks three
and four. Overall SLA performance for the period was 52% of calls answered within 60
secs against a target of 70%. Postmasters waited on average 187 seconds to speak with
an agent.
38. In P11 66% of discrepancy investigation cases were resolved within 20 days vs. a target
of 70%. The number of open cases increased significantly to 835 at period end (+31% vs.
P10), driven by significantly higher ‘review or dispute’ button usage following the media
attention, and Lottery exit.
39. Cases awaiting action by the Postmaster Account Support Team were down 15% vs. P10,
with 1,017 cases open at the end of P11.
40. Aged open reconciling items reduced by a further 27% MoM, with 1,550 items open vs. a
target of 2,400, and a start of the year number of 2,180.
Postmaster Engagement
41. Our activity to date has included a live event in January hosted by me, and a further
listening group session with 20 Postmasters to understand their key concerns and issues.
We are planning a follow up group session in March to provide an update on progress.
42. Over the coming months, we will hold a series of Postmaster events across the UK. These
will be hosted by me and other members of the SEG, to listen to Postmasters and address
their questions directly.
43. It is important that we continue the momentum on Postmaster engagement and
communications and as such, we will be holding more in-person and virtual events. These
will complement our usual Regional Forums, Listening Sessions and Postmaster
Conference as well as a Postmaster-centric approach to communication campaigns.
44. On 26 February, SEG members held a face-to-face meeting with representatives from the
Voice of Postmaster (VOP) group and CWU. The meeting was requested by VOP following
their meeting with Minister Hollinrake on 7 February. VOP has gained momentum as a
result of media attention and its campaigning activity, resulting in a membership of
>1,000 Postmasters. We had a productive meeting, providing them with an opportunity
to voice their concerns with key issues raised around branch profitability, welfare support
and mutualisation. We plan to hold quarterly meetings going forward between SEG and
representatives from VOP, NFSP and CWU, with the next session arranged for 29 May.
Confidential
POL-BSFF-130-0000029_0037
POL00448861
POL00448861
45. The annual Postmaster engagement survey was launched by our new Postmaster
Experience Director, Mark Eldridge, on 8 March and will be open for three weeks. The
survey results will help us to understand sentiment across the network and prioritise any
improvements over the next year.
46. Our training metrics continue to trend positively in P11. New postmaster confidence after
e-learning stands at >90% whilst confidence after classroom training stands at 100%.
The average time taken to onboard a new postmaster has increased over the last two
months to 136 days, predominantly due to new applicants taking five weeks longer on
average to complete their initial business plan, perhaps as a result of recent media
attention.
Retail Field Teams
47. During February, the retail field team completed a total 3,148 branch visits, providing
support to Postmasters and maximising the opportunity from new buy-in-branch carriers.
1,190 Operational Excellence visits were completed, focusing on Lottery exit, effective
cash management, transaction corrections and review or dispute usage.
48. We are progressing with embedding improved ways of working in Retail Operations
following the move of the Strategic Partnerships team to this function.
49. The DMB field team supported employees at Clapham Common and Southall as a result
of the closure of these branches on 6 March.
50. The Network Provision team continues to support the delivery of outreach branch
efficiencies and the removal of branch exceptional payments, with combined saving of
Strategic Partnerships (SPs)
51. SPs had a continued strong performance in P11 and YTD
excluding lottery. P11 REM (excluding lottery) wa:
52. We held our first partner forum of the year on 1 February, giving us the opportunity to
address concerns around Horizon following the ITV drama. This was supported by an
update on Horizon IT and future technology plans. There was above average attendance
across all our key partners and positive feedback on the content and transparency from
the presenters.
53. We have held several training workshops to support partners, covering travel products
and buy-in-branch to increase the uptake of new mails carriers. We also held cash centre
visits with SPs to drive better understanding of our operational processes. High attendance
at these group sessions enables us to drive understanding of our products and processes
across our SP estate, delivering improved efficiencies vs. individual branch visits.
54. Henderson Retail held its annual Post Office awards supported by POL, FRES and
Blackhawk, recognising the achievements by employees across its 74 branches.
Supply Chain
55. Weekly average of cash inflows in P11 wasi'
traditionally the lowest inflow period of the year.
week, in line with expectations during
Confidential
POL-BSFF-130-0000029_0038
POL00448861
POL00448861
56. YTD 99.4% of available deposits were processed on Day A in cash centres, ahead of target.
Productivity in cash centres improved in P11 to 14.31 pouches/hour, above the run rate
of 13.43/hour.
57. CIT achieved QofS of 97.7%above the target of 95%.
58. Bristol Cash Management Call Centre grade of service was 73% (target 70%) and
customer satisfaction was 100% for the period. Weekly call volumes were slightly up on
last period at 520 calls/week.
59. We received 22 Complaints in P11, +7 MoM. YTD complaints were down by 272, 56.5%
lower than last year.
60. We had 25 security incidents in P11 including five robberies, one more than in P10, and
seven burglaries (down 10 from P10).
61. The Supply Chain Leadership team ran face-to-face updates and Q&A sessions in March,
informing colleagues about all aspects of PO performance, and a Postmaster engagement
event was also hosted in Newcastle CViT depot.
62. The project work for transition of stock to iForce continues. Swindon Staff have been
briefed and joint statement issued with CWU regarding roles that can be released early.
63. Following an external audit, we achieved ISO 9001/45001 reaccreditation, confirming that
our operations and processes are operating to a high standard as we continue to serve
Postmasters, branches, and SPs with all of their cash and stock requirements.
Customer Experience
64. We are delivering several travel initiatives:
i. We have launched a travel money card campaign, ‘TMC for all’, in branches,
supported by a customer prize draw;
ii. IThe new Post Office Travel app has been fully launched with 100% of our existing
700k customer migrated to the new app. This was supported by colleague
engagement roadshows in Chesterfield and Wood Street;
iii. We have produced the summer travel campaign assets and we are developing a
media plan to be launched in May.
65. We are implementing a re-launch plan for Mails buy-in-branch as part of a four-stage
campaign to support mails strategy implementation.
66. We are developing our future digital strategy, engaging with senior stakeholders to gain
feedback and support.
67. Insurance outsourcing consolidation remains on track with staff expected to transfer to
Webhelp in early April.
68. The ‘We are Post Office’ social media application used by Postmasters is being migrated
to a new provider, Hootsuite, in April.
Confidential
POL-BSFF-130-0000029_0039
POL00448861
POL00448861
[ Strategy & Transformation
DBT Funding and Policy
69. Following approval of POL’s funding requests for RM/Inquiry and Horizon Replacement in
December, discussions remain ongoing with DBT in two particular areas:
ith the HSS and OC. Discussions
with DBT on these revised forecasts commenced in early December and are
ongoing. While we are optimistic about being able to access the contingency,
additional funding is less certain, and this therefore poses risks to Security
Headroom discussed in the FY24/25 Budget paper;
ii. With respect to Horizon replacement, on 18 March we submitted a business case
seeking I rfunding for FY24/25 and ‘or FY25/26. Beyond FY25/26 the
forecast spend for the remaining lifetime of Horizon Replacement is
(subject to finalisation). We expect to begin deployment of the New Branch IT
system by mid-2026, running through to the end of 2028. This would require up
to a five-year extension of our contract with Fujitsu to March 2030. The business
case is now with DBT for approval in April, ahead of HMT approval in May/June.
There has been extensive engagement with DBT and HMT in the lead-up to this
submission and a session with the Board Investment Committee was also held on
11 March, with feedback reflected in our submission. A wider update on this
funding process will be shared in a separate discussion at Board. In addition,
discussions are ongoing with DBT on the December funding request to try to
manage changes in POL’s forecasts: i.e., to move spend between the workstreams
that make up this request and to allow spend to move between financial years.
70. The first phase of DBT’s policy review has concluded and a second phase, also led by Grant
Thornton (GT), has now commenced. We have had a kick-off discussion with GT and will
be supporting this work. Reassuringly this phase is focused far more on Post Office policy
rather than the first phase which looked more at cutting costs (which we have been
engaging with DBT on for a number of years).
71. POL’s London Economics commissioned work is also nearing completion and this is
expected to be finalised in the Spring.
Change Spend ; .
72. YTD change spend for active projects wa: excl. settlement), aNTt
interim budget, with the variance mainly due” to reprofiling of sp on Horizon
replacement and Technology projects, partially offset b’ d Inquiry cost. P11 YTD
incremental change benefits for active projects was above budget due to
movements in recurring costs, cost reduction and revenue growth activities.
10
Confidential
POL-BSFF-130-0000029_0040
POL00448861
POL00448861
Inquiry
Disclosure
73. A disclosure meeting was held on 28 February 2024. Senior colleagues from POL Inquiry
team, BSF, KGKC and KPMG attended to meet with the Inquiry. The purpose of the
meeting was to look forward and agree on how we work together to meet the Inquiry’s
hearing schedule, starting in April. Several practical arrangements relating to disclosure
were agreed, including direct communication between KPMG and the Inquiry’s Senior
Information Officer.
Phase 4 Closing Submissions
74. The Inquiry informed POL’s Inquiry team, via a written statement on 29 February, that it
will disregard any reference to the prosecution expert’s report in POL’s written closing
submissions for Phase 4.
75. Sir Wyn was critical of the way in which the report was submitted; in his view without
Proper communication, and without inviting the inquiry to formally accept it. POL Inquiry
team do not consider this criticism to be warranted and ISC have therefore agreed to us
writing to the Inquiry, inviting it to reconsider the position.
Funding
76. A funding request will be submitted for Board approve larch 2024, to request funding
up to the current approved Government amount of LIRRELEVANT!for RU and Inquiry, including
the contingency fund), currently forecast to last to end September 2024.
77. Significant spend for the next six months includes disclosure remediation, witness
Preparation, and Phases 5 to 7 hearings and preparation.
HSF
78. The POL Inquiry team have finalised the new Letter of Engagement with HSF. The original
engagement came to an end on 5 March 2024, and a new contract was signed to cover
the period 6 March to 19 April 2024 and includes tasks, largely disclosure related, that
HSF will complete, and provides POL with the right to request new work if required.
Remediation Matters Unit (RMU)
Strategic issues as at 12 March (note that things changing quickly)
79. Key strategic issues include:
i. Ongoing uncertainty in respect of management and delivery of OC and HSS
claims; negative publicity around the speed of redress payments; uncertainty
around a potential Appeal Process; as well as reaction to not only the ITV drama
but also the Government Select Committee on 27 February. These circumstances
combine to present a challenging environment within which RU is operating;
ii. Significant replanning is currently being undertaken to enable RU to further
accelerate the payment of redress to PMs whatever scheme they have applied to.
Consideration is being given to a range of options to address head on the challenge
to further expedite payments;
iii. I Following feedback at the Government Select Committee, RU will refer to redress
instead of compensation wherever possible going forward. This responds to the
claim from Postmasters that they are being repaid money they gave to Post Office,
while being aware that some HoL’s are compensatory in their nature;
11
Confidential
POL-BSFF-130-0000029_0041
POL00448861
POL00448861
iv. In OC, RU await a decision from Government regarding future delivery of claims,
while in HSS 1,146 Late Applications had been received by 29 February.
Overturned Convictions
80. As at 29 February, 102 convictions have been overturned, with 35 full and final
settlements reached and more than ~£38m in compensation made to claimants.
81. DBT’s agreement, and subsequent 26 February announcement, of the POL proposed
£450k top up payment (on receipt of pecuniary claim), is a positive development. Early
indications from claimant representatives is that this will accelerate claim submission for
the 54 outstanding pecuniary claims, and the OC team stands ready to progress on receipt
HSS
82. As at COB 29 February 2024, of the 1,146 late applications, 697 were received following
the Mr Bates vs The Post Office Drama in January.
83. Late applications continue to come in, coupled with enquiries about the HSS from current
and former Postmasters, branch employees and strategic partners. For now, POL
continues to decline HSS applications from assistants/employees since the HSS eligibility
criteria requires applicants to have held a direct contract with POL.
84. A growing number of Postmasters who have settled their HSS claim are also asking to
have their claim reopened and such requests are being declined.
85. An interim Late Applications plan has been proposed by HSF, given the rise in volumes,
to allow all parties to be measured against more realistic targets. This interim plan is
expected to be superseded by a new, formal plan once a decision is reached about
implementing the £75k full and final fixed sum offer in HSS. A decision on this is
anticipated by early April 2024.
86. We are working towards the next DBT/HMT target which is to have issued outcomes to
95% of all late applications received by 30 September 2023 on or before 31 March 2024.
We are at 85.7% having issued 241 Offers and 52 ineligible outcomes to this population.
GLO
87. The DBT contract has been signed and was published by 4 March. POL has provided input
on redactions.
88. Freeths have requested that POL provide a Short Fall Analysis teach in to support their
understanding of the information provided. POL have advised that a specific session can
be held if Freeths are able to provide a list of queries in advance to support training
requirements.
89. The GLO disclosure / Short Fall Analysis plan and corresponding resource plan have been
reviewed with input from DBT due to the claims which have accepted the £75k. Decisions
required by DBT include the level of resource required to mitigate any actions going
forwards once the main disclosures and SFA’s have been completed.
90. POL remains on target with disclosure and Short Fall Analysis requests with 294 disclosure
requests and 86 SFA requests completed.
12
Confidential
POL-BSFF-130-0000029_0042
POL00448861
POL00448861
Criminal
91. There are 6 live appeals in the Court of Appeal Criminal Division - two are opposed and
the disclosure deadlines have been met. The other two are in their early stages and are
likely to be opposed. Two cases have only recently been lodged with the Court of Appeal
Office.
92. In Scotland, there remain two live appeals, one of which is opposed and listed for a
substantive hearing on 24th April 2024. Disclosure is being prepared in relation to the
other appeal and this is listed for a procedural hearing on the same date. There is one
contested live appeal in Northern Ireland, for which disclosure has been provided.
93. There are now three Criminal Case Review Commission references currently at Southwark
Crown Court. Two of those are Magistrates’ Court deceased cases where the families of
the appellants have now decided that they do wish to continue with the appeals
notwithstanding the Government announcement. The case is due to be listed in April 2024
and involves complex legal issues.
Suspension Remuneration Review
94. As at 22 February, 539 offer letters have been sent, of which 285 have been accepted.
Payments have been made on 238 of the accepted cases totalling £3.8m. The majority of
the remaining 47 cases awaiting payment are with Treasury for approval. Process changes
have been made to avoid these delays moving forward. Consequential Loss (CL) claims
are starting to rise, with an increase of +7 this week to 27 albeit from a low base.
POL Process Review
95. The CMA published their report on thi PR funding on 22 February. It remains open
for one week for comment before being finalised.
96. There is a proposal for a PPR de minimis level Of ere.evanr! efore interest to be applied to
PPR. The PPR options paper will be discussed at RC on 20th March 2024. We anticipate
this high enough to cover the majority of claims made across the ten areas of
actual and potential detriment identified. This will make the process simple for both
postmasters and the RU operations team and greatly reduce the length of the scheme.
We aim to launch a small pilot in March/April to ascertain the reaction to the offer and test
the remediation process.
Capture
97. RU continue to investigate the Capture software package.
i. Capture was introduced in late 1992, aiming to replace the manual cash and stock
records kept by Postmasters, simplifying the process, and reducing error rates;
ii. It was not mandatory and appears to have been used in a minority of branches
while most Postmasters kept manual records;
iii. Capture did have bugs/defects, but it appears they were communicated to users,
sometimes with workarounds or news of future updates;
iv. Based on the information known to date, it appears less likely that Capture would
have caused serious detriment to Postmasters by itself, in fact there is some
evidence that Postmasters found it helpful;
v. At this early stage, the potential for detriment appears more likely to have been
caused by the use that was made of Capture data in audits and investigations into
13
Confidential
POL-BSFF-130-0000029_0043
POL00448861
POL00448861
the difference between Capture reported balances, centralised paperwork and/or
cash and stock in branch;
vi. Postmasters were on the same contracts from 1991 as they were during the
Horizon period i.e., they were expected to make good any shortfalls and were
suspended without pay while investigations took place.
98. Pre-1999 there is very little information to support claims as there is no transactional data
to investigate shortfalls. Therefore, if claims are to be remediated, we will be heavily
dependent on information provided by Postmasters.
99. RU legal is investigating POL’s potential liability for the claims that we have already
received.
Finance Update: 23/24 Approved Funding & 3YP
100. At P11, RU i: der Board Approved Funding YTD despite significantly higher HSF
costs associated with Late Applicants to the HSS scheme. Underspend is due largely to
cost slippage of PPR resourcing and assurance into 2024/25.
101. The Full Year forecast is expected to b under Board Approved Funding,
again due to costs slipping into 2024/25 and, notably, the re-phasing of the Tax Top Up.
102. The forecast for 2024/25 has been significantly impacted by recent events and a resultant
surge in HSS applications. This is expected to continue, although estimates still currently
assume a scheme closure date of September 2024. Risks are being held should this date
be extended further.
103. Risks associated with further late applications, OC exonerations and HSS £75k payments
are not yet quantified and remain outside of the current budget forecast.
Legal, Compliance, Assurance and Company Secretariat (LCAS)
Legal & Compliance teams
104. There are a number of material investigations into senior members of the organization
and investigations that have relevance to the Inquiry and NBIT. The volume, complexity
and sensitivity of material investigations has necessitated externalisation which has an
associated cost. Management continues to review internal vs. external resourcing.
105. Regarding Project Columbo (potential incorrect classification of contractors as o1
IR35), in worst case potential exposure to arrears and peter. is estimated at:
(up from;
that any Settiement would be funded by the shareholder.
106. There remains insufficient resource in AC&I team to progress investigations quickly, the
process of which is being scrutinised in the media.
107. Since the start of 2024 there has been a huge increase in the number of FOIs and DSARs
received (23 & 11 respectively in January 2023 vs. 131 & 84 in January 2024). An
emergency four-week team has been established to handle these cases.
108. We are meeting with the Information Commissioner's Office (ICO) every two months and
continue to have an excellent relationship with them. The ICO are currently understanding
14
Confidential
POL-BSFF-130-0000029_0044
POL00448861
POL00448861
of the situation and will continue to liaise with us on our timeliness. However, if timeliness
trends continue to dip, there is a risk that POL is brought into special measures.
Group Assurance Team
109. The status of POL control environment is RED predominantly driven by:
i. Status of continuous assurance within Retail which is significantly behind;
ii. I Significant increase in overdue management actions within Retail (including those
related to CIJ);
iii. I This will be reported to RCC and ARC in March.
110. HIJ Assurance: Per IDG instructions, this review should have commenced in January,
however the Technology team are still struggling to accumulate evidence. The status of
this will be formally communicated from 20 March.
Company Secretariat Team
111. The Grant Thornton Governance review has now been delivered in draft form and the
Board are asked to consider the paper and the recommendations in relation to this.
112. The external Board and Committee Evaluation will be progressed by Indigo Independent
Governance (Indigo). As per the scope of work approved by the Nominations Committee,
Indigo will be building on the work already completed by Grant Thornton. At this stage,
the draft evaluation report is anticipated following the end of the financial year, with the
report then to be presented to the June POL Board.
113. UKGI have indicated that the review of POL’s Articles of Association along with the
Shareholder Relationship Framework Document has been instigated. We will work closely
with UKGI over the coming months to finalise redrafts of these core documents along with
any consequential changes to other constitutional documents such as Matters Reserved
for the Board and Committee Terms of Reference.
Technology
Core Service Performance
114. Branches unable to trade: The branch-down figure improved from an average of 13 in
January to 8 in February. This has been achieved through new ways of working supported
from our IT suppliers. The second-line branch team now provides enhanced support as
soon as a branch is identified as unable to trade; the team contacts the branch, provides
detailed fault diagnostics, and liaises with suppliers to ensure the engineer attending is
fully prepared to resolve.
115. IT Major Incidents: In February, there were six Major Incidents, four of which had a
direct impact on branches including network connectivity issues affecting up to 450
branches, and failed transactions for Scottish Power and Allied Irish Bank.
116. IT Service Desk Update: There were 6,062 calls into our Technology Service Desk in
February with 94% of calls answered. 76% were answered within our 60-second SLA and
abandoned calls stood at just 6%, a vast improvement on previous months and YoY.
Customer Satisfaction remains high at 4.43/5.
Cyber Security
117. Our cyber operations continue to provide effective defence against attacks despite an
increase in activity. Over the last month, our Security Operations Centre (SOC)
15
Confidential
POL-BSFF-130-0000029_0045
POL00448861
POL00448861
successfully closed 713 incidents spanning a range of security challenges such as malware
attacks, phishing attempts, unauthorized access, denial-of-service attacks and
vulnerability exploits. The average time taken to resolve each incident was c.5 hours. Over
the past six months, our SOC has closed and mitigated a total of 3,617 incidents.
118. We have also dealt with two major cyber incidents in this period:
i. Service Now: We were notified of a data vulnerability within ServiceNow’s core
functionality. Investigations confirmed that no POL confidential business data had
been exposed, and further controls were put in place;
ii. VPN software attack on POI: Post Office Insurance was notified by its supplier,
Avanti, of a new zero-day vulnerability that allowed unauthenticated threat actors
to execute commands on appliances with elevated privileges. These vulnerabilities
were actively exploited by a suspected Chinese espionage threat actor. During this
breach, infrastructure data including IP addresses, user accounts, and firewall
configurations were accessed. We took immediate action, taking down the service,
resetting user accounts and passwords and performed a supplier recommended
patch before redeployment.
Horizon Live Services & Fujitsu Contract
119. Horizon service remains stable with no major issues for live services.
120. Discussions around extension of services to support Horizon beyond 2025 remain ongoing,
however no firm commitment has been made by Fujitsu at this stage. A more detailed
update will be presented to Board in March.
121. Commercial discussions on the PCR risks around the contract extension are underway and
a steerco to govern this extension has been created.
122. HIJ remediation programme closure is underway: an Internal Audit of Phase 3 is now
complete, and an overall green rating has been agreed.
SPMP / NBIT
123. Overall, the SPM programme remains behind schedule, but conditions are improving
through remediation and reset actions.
124. NBIT Release 2.0 has successfully transitioned into live operation in Aldwych without
major incident. Performance and user experience reports have provided useful feedback
on system and physical operating processes required for NBIT-Horizon dual operations.
125. Release 2.1 has entered the Tech Proving phase, with planned deployment into Aldwych
in late March.
126. Diagnostic review remediation is entering its final planned month of activity, with steady
progress being made.
127. The Horizon replacement Business Case is being finalised, and the first draft has been
shared with DBT stakeholders for review.
Supplier Management
128. DXC: Submission drafted for SEG approval to:
16
Confidential
POL-BSFF-130-0000029_0046
POL00448861
POL00448861
i. Invoke the two-year extension (to September 2026) under regulati 72; and
ii. Approve a modification of thi act for an additional spend 7: bringing
the total contract value to
129. Microsoft Enterprise Subscription Agreement (ESA): SEG paper approved for three
year renewal from May 2024 at ¢ ‘a. There is potential to lower costs / volumes
by implementing recommendations from our Technical Assessment and negotiating
further discounts - this work will conclude by end of April.
130. Scc:
i. NBIT Hardware Contract: Target volume of all Branch & POS equipment and
peripherals to support SPMP is on track for full delivery by April, valued at
per the initial contract. Procurement is underway for second devices (XAC), related
to payment terminals for Payzone bill payment;
ii. NBIT Application Development (& Related Services): The sourcing strategy
approved in November 2023 has been updated to reflect a value over a four-year
‘This was presented to GE and Board in January;
iii. Next Generation SSKs: Tender documents have been prepared subject to the
final version of the requirements. A proof of concept is under review, and
Procurement is now expected in June.
131. Worldline / Ingenico: Paystation end of life (EOL) in March 2025 remains unmitigated.
Options including NBIT second device and/or supplier service extension are being
explored.
Data
132. The Data Enablement Programme has received partial funding, with full funding subject
to Board approval in June. New technical team members are being onboarded to support
the further development of the Future Data Platform, with the aim of developing data
feeds from Horizon and MDM into the platform over the coming months.
People
Leadership, Culture & Wellbeing
133. The People Team continues to provide solid support to the business, navigating across the
challenges of both a limited structure that is in a transition period, and the current
extraordinary circumstances and disruptions.
134. Welfare sessions have been held with Postmaster-facing colleagues and safety guidance
has been issued to all colleagues. Post Office logos have been removed from laptops to
protect people’s anonymity when in public spaces.
Colleague Engagement
135. Inquiry witness support continues in the run up to phases 5 and 6, with guidance shared
with Inquiry and People teams to ensure a consistent approach.
136. Wellbeing support, including a 24/7 helpline and counselling where required, has been
extended to former employee witnesses to the Inquiry.
17
Confidential
POL-BSFF-130-0000029_0047
POL00448861
POL00448861
137. The colleague engagement survey was launched on 21 February and was open until 13
March. The survey response rate was 82% (3,055 colleagues completed the survey). The
first draft of the core results will be shared on 9 April, with the final report due on 23 April.
138. A new exit survey process has launched, allowing us to better understand and report on
the reasons for leaving the business. The first report will be shared in mid-March.
139. The WOW! Benefits/recognition platform continues to be successful with 89% activation.
140. Following on from the ‘Meet the NEDs series’, work continues to define the format for the
‘Meet the SEG’ series.
Equity, Diversity & Inclusion (ED&I)
141. ED&I strategy 2024-2028 is under review and due to launch in April.
142. The second ED&I Summit took place with Nick Read and Karen McEwan. Key findings
include an improved agenda across networks, a clear strategic roadmap, refining
objectives for senior leaders, the role of the executive sponsors and clarity of reporting
against measures of success.
143. Three events were held to celebrate International Women’s Day in collaboration with
Affinity, our colleague network for gender equality: a fireside chat with Karen McEwan; an
internal panel Q&A with representatives from all of our Network Groups to support our
intersectionality agenda; and an external speaker, Sunita Harley, who shared her own
career story as well as practical tips on building confidence.
Talent
144. Work has completed on a Career Framework, focusing on ‘what’ is delivered in role. This
will complement the Leadership Behaviours Framework that will focus on ‘how’ the role is
delivered.
145. The eight-week end of year PDR review process opens for all management grades on 18
March. An SLP pre-calibration performance review will take place on 20 March and Senior
Leadership colleagues will also complete a 360 WOW process.
146. A defined performance and development review process for non-management grades will
be launched in line with the 2024/25 performance year.
Reward
147. Initial plans for STIP and LTIP 24 are being finalised following RemCo feedback. Following
Board approval of the financial budgets for 2024/25 in March, RemCo will receive the final
scheme proposals for approval, to enable earlier communication to participants.
148. Project Assurance - approval from HM Treasury and the Strategic Executive Group has
now been granted and the mediation session with RMPP is scheduled for 27 March.
Organisational Design
149. Consultation commencing on first line Technology TOM changes from 6 March.
150. Workshop on end state SPM vs. Horizon to take place mid-March to ensure alignment in
Programme vs BAU setup.
18
Confidential
POL-BSFF-130-0000029_0048
POL00448861
POL00448861
151. Retail Organisational Design/Target Operating Model to be completed by mid-March with
execution throughout 2024/25 after approval from GCRO/Deputy CEO.
152. The CWU ballot on 3.75% pay offer closes on 28 March. Unite pay discussions are ongoing.
Ethos and People Strategy
153. The SEG has finalised work on a cultural blueprint for Post Office. A Leadership Team
event at the end of March will be a pivotal moment for this new team to connect with each
other and with the cultural blueprint and then start to launch and embed leadership
behavioural changes.
154. Horizon Scandal sessions have been attended by >1,000 colleagues, raising awareness of
the human impact of this scandal, and broadening the experience of restorative justice. A
supporting e-learning module will launch on 15 March.
155. Two core elements of the Post Office’s ethical toolkit/framework have been developed
which will be incorporated into an updated version of the Post Office Code of Business
Conduct and brought to Board in June for approval.
156. A detailed milestone plan for ‘Creating a Great Place to Work for All’ 2024/25 will be
completed by early April.
Wider Updates & Key Issues
157. The Pay Zone integration project is ongoing with TUPE consultation finishing on 17 April
and legal integration due to complete by 1 May.
19
Confidential
POL-BSFF-130-0000029_0049
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Cover Page
FY24/25 Business Plan 25th March 2024
Asha Patel — Strategic Financial Planning & Analysis Director Sponsor: Kathryn Sherratt, Interim CFO
Input Sought: Approval for FY24/25 Business Plan
The purpose of this report is to provide a summary of the FY24/25 Business Plan for which we are requesting Board approval.
This Plan is the Executive’ 's Recommended Plan for FY24/25 which presents a Trading loss of!
nchanged from the February Board version, and which se
t self-funded
‘unallocated
pot to progress certain programmes, subject to ‘Capacity and practicalities of delivery e.g. “DMB Exits, reducing risk tolerance (e.g. Cyber Security), OD Programme, Innovation/Digital
Strategy and contingency requirement. As confirmed by UKGl, this additionall™ssve} should it be funded from the Working Capital Facility, does not breach the Purpose. Clause.,
provided that Security Headroom remains positive. The benefits associated with this spend are not included in this plan however would provide incremental upside to the {iRR#=vanr!
trading loss and determined as and when the pot is allocated.
This Plan has been prepared against the backdrop of Strategic Priorities (slide 5) recognising that this will need further development and guidance from the Executive, Board and the
Shareholder as part of the 3-5 Year Strategic Vision.
Based on Board feedback this Plan also includes a holistic overview of the Postmaster proposition (slide 15), recognizing both Postmaster Income as well as Postmaster time and
cost to serve — and ensuring alignment and collaboration across this journey.
Next steps:
An approved FY24/25 Business Plan will provide a stepping stone for further development of the below:
Preparation for the FY25/26 Spending Review Summer 2024
3-5 Year Business Plan including Strategic Vision and Horizon Scanning Board Strategy Day
POL-BSFF-130-0000029_0050
Post Office Limited - Document Classification: INTERNAL
FY24/25 Business Plan: Contents
POL00448861
POL00448861
Additional slides included in this Plan since the February Board
are highlighted in red
pte Page A iter Page
Headlines
+ NEW: Business Context (including Strategic Priorities)
* — Executive Summary
+ Key Assumptions underpinning the FY24/25 Business Plan
Historical overview
Current Financial Year vs Budget
Summary P&L - Profit Before Tax
Revenue: FY24/25 vs FY23/24 and Phasing
NEW: Postmaster Proposition
Operating costs by Activity
FTE Headcount by Activity
Operating Costs by BU: FY24/25 vs FY23/24
Trading Profit: FY24/25 vs FY23/24
Trading Profit: FY24/25 vs 3 Year Plan
* Total Change & Investment Spend and Risks
+ NEW: Other Change Spend (‘self funded’)
* Security Headroom projection
+ Facility Headroom projection
+ Top 5 Enterprise Risks
Supporting Analysis
Revenue
+ Assumptions: Volume vs Price
+ — Revenue related Opportunities and Risks
29
30
Postmaster Remuneration
+ Variable PM Rem: FY24/25 vs FY23/24
+ Variable PM Rem % of Variable Revenue
+ Assumptions: Fixed PM Rem
Network Shape
+ Expected changes in the network from Apr-24 to Mar-25
+ Network split by branch format
Operating Expenses
* Staff Costs summary
* Non- Staff Costs summary
* Detailed list: Incremental Cost Savings and Increases
+ Risks related to Operating Costs
Product Profitability
* Purpose and Methodology
* Key Findings and Limitations
* Overview of FY24/25 by Business Unit
+ Proposed Reclassification of Non-Staff Costs to Cost of Sales
+ Proposed Reclassification of NSC to COS (Impact on Margin)
+ Allocation of Overheads Methodology
Appendix
+ Key Activities for FY24/25
* Deprioritised Activities not included in the FY24/25 Plan
+ Further detail on Operational Excellence incentives
+ Change spend benefits
+ Breakdown of Costs by Activity: Detail
* Product Profitability by Product
* Security Headroom drivers
+ Sustainable affordability: Implications on FY25/26
32
ee)
34
36
37
se)
40
41-42
43
45
46
47
48
49
50
52
Ee}
54
55
56-57
58-61
62
63
POL-BSFF-130-0000029_0051
POL00448861
POL00448861
FY24/25 Business Plan
1. Headlines
POL-BSFF-130-0000029_0052
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Business Context (1/2)
= FY24/25 is the final year of POL’s current three-year
— POL submitted a three-year plan with its original funding request, however since the funding granted to POL was materially less
than what it had sought, this plan was not carried forward. No revised three-year plan was subsequently developed.
funding agreement with DBT, that was reached in early 2022
— Our current view of FY24/25 today is therefore very different to what we thought it would look like in 2022 with a funded plan.
In addition, wider market and economic pressures have also impacted POL and Postmasters in unforeseen ways.
— The costs and wider consequences of RM and the POHIT Inquiry also presented further challenges, taking the limited funding
POL had away from its business activities and Postmasters and by impacting decision making and risk appetite.
= In addition to setting the priorities for the upcoming financial year, FY24/25 also sets the context for our next funding request. And
with an upcoming General Election it is also an opportunity to start framing a longer-term vision for a new government
— From a trading perspective this means supporting revenue and exploiting growth opportunities, cutting our costs where we have
the scope and funding to do so and building Postmaster remuneration in the right way and as much as we can afford.
= POL management are confident that the plan detailed in this paper is focused on these commercial priorities, as much as possible
within the constraints the business faces today. However it does not go as far as we would like it to
— Critically this plan is not sustainable, and it does not represent the foundation for a compelling long-term vision. Revenue is
falling, margins are declining, investment is constrained and Postmaster remuneration is not growing
= In light of this we do believe that the plan represents a starting point for a wider discussion on POL’s long-term future, for which
we continue to welcome DBT engagement and which the Minister acknowledges.
POL-BSFF-130-0000029_0053
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Business Context (2/2) - Strategic Priorities
Informed by the business context, the strategic priorities outlined on this page are intended to frame POL’s plans for FY24/25 as well as
stakeholder engagement on our long-term future. A longer term strategic vision is considered vital for alignment between POL, Postmasters
and DBT enabling clarity over what the future path is and ‘why’ — which would then underpin all discussions around ‘how’ this vision should be
implemented.
For CUSTOMERS For POSTMASTERS For Post OFFICE
THE SERVICES OUR CUSTOMERS WANT A COMPELLING AND PROFITABLE A SIMPLER, LOWER COST, MORE
AT A CONVENIENT LOCATION AND TIME FRANCHISE OFFER TO OUR POSTMASTERS. STREAMLINED AND RESILIENT BUSINESS
= Launching new services with a 4th = Giving Postmasters tools to run their = Shifting the network mix towards
carrier for in-Branch sales, new eBay Branches better, by deploying more viable locations, by exiting
propositions and money remittances Second Device and cash automation DMBs and growing Drop & Collect
= Securing continued access to cash in = Investing in replacing Horizon, with = Reducing central costs through
Branches and investment in cash piloting of NBIT starting in tactical interventions, simplification
automation through BF4 Postmaster-run locations and functional efficiencies
= Enhancing customer experience in = Improving supporting services for = Building capability and colleague
mails with improvements online, in Postmasters through Branch Hub engagement across POL, and driving
Branch and for integrated journeys enhancements and cyber investment continued cultural transformation
\ooro renner nner in on nn -2-2 2227-227 ---- "
‘ THERE IS CURRENTLY APPETITE WITHIN DBT TO LOOK AT q
I MUTUALISATION WHICH IS A USEFUL DISCUSSION POINT I
For OuR SHAREHOLDER ‘ = le aes '
A Mole ciooncanrena mnie sie I TO ENGAGE ON THE FUTURE OF POL. AN INDEPENDENT I
I___REPORT ON THE FEASIBILITY OF AMUTUALISATION —!
I WOULD HELP TO DEFINE A PATH AS TO WHAT THIS MIGHT 1
H i
' i
A MORE SUSTAINABLE BUSINESS
POL-BSFF-130-0000029_0054
POL00448861
POL00448861
Executive Summary (1/3)
Headlines
The FY24/25 Budget is projecting a Trading Loss of a ‘base’ position aligned to} i of ‘other change’ activity.notina that additional ‘growth’ or ‘efficiency’ related investments could
realise benefits that improve this trading position. Ré ‘are to decline byjinag= equivalent to a i IRRELEVANT iloss in revenue due to the exit of Lottery in Jan-24; excluding Lottery
this is decline, Total PM Remuneration is expected to be ai FWhich includes {***"*"or Operational Ex payouts. Variable PM Rem as a % of Variable Revenue is expected
to be at { Texcluding Lottery). Whiist the Operating cost base is expected to be broadly flat year on year, this is driven by{ of projected cost increases, fully
offset byjmecvan NT jre expected to meet the Remco savings criteria). Opportunities to reduce the cost base further have been identified through this process, with
assessmet and executability included within this Business Plan.
of cost reductions (of whict
ivestment required, imp!
Mails Revenue
Mails revenues are expected to decline by year on year, with’ yeduction in Royal Mail revenue partially offset by/
The Royal Mail projected year on year decline is considered to be volume driven with the introduction of competing RM Tracked products
and shift to lower margin Acceptance prod ll as a 52 week (vs 53 in FY23/24).
Non-RM revenue is expected to grow by TIRRELEVAN’ igrowth) driven by higher volumes across all areas with improved maturity of branches, as well renewed efforts to relaunch and refocus on
Buy-in-Branch services from Q4 23/24 onwards. The ability to grow further these propositions further is constrained by funding and FI capacity, which limits what can be deployed.
growth in Non-RM carriers.
‘ting Special Delivery volumes , continued decline in Labels
Banking Revenue
Banking revenues are expected t
Deposits are budgeted to grow by!
and growth through inflationary increases. Banking
The Banking Framework fee is expected to hit the:
based on how the fee is calculated.
Financial Services, Travel and Insurance Revenue
Travel Insurance revenue is expected to decline by ({
underwriting performance. Delivery of these reve!
Travel Money revenue is budgeted to increase by
decline in cash than the Travel Money business.
: will be more targeted, however, driving higher profits overall.
due to RPI uplifts, whereas our FRES profit share is expected to be!
ecause the FRES business is more exposed to the overall
Other Revenue .
Retail, Lottery & Gift Cards revenue is declini "Idue to the exit of Lottery in Q4 FY23/24.
Payment Services revenue is reducing by {1 1S We are not expecting a repeat of the small amount of EBSS payout roll over that we benefitted from in FY23/24.
Government Services revenue is down I IRRELEVANT/oY with the UKVI contract coming to an end in FY24/25 and no extension planned.
POL-BSFF-130-0000029_0055
POL00448861
POL00448861
Executive Summary (2/3)
6 Postmaster Remuneration (PM Rem)
FY24/25 Variable PM Rem will reduce by der for the Operational
Excellence (OE) Incentive. Excluding these impacts on a like for like basis, Variable PM Rem is expected to increase by jime.cvarr figned to Variable revenue incr {ieeecevanriand is assumed to be at
‘jof variable reyenue I Ay “I excluding Lottery). Within this average, overall Mails rates aré€xpéCtéd to increase slightly due to product mix, whilst Banking rates are
RELEVANT 5 due to shift in mix towards lower rem generati ‘e drivers whilst Average Transaction Values (ATVs) are assumed to remain flat.
its are budgeted to reduce by ‘ito a total off mrevevanridriven by the cessation of Major Branch Support as OE ramps up, assumed 6% churn in branches that receive
Assigned Office payments (with no inflationary increases assumed) and lower in-yéar Strategic Partners payments. It does include des crease in Other Fixed payments to cover an anticipated increase
in hardship volumes following the exit of Lottery and Living Wage increase.
Network Shape
7 FY24/25 is expected to commence with 11,776 branches in the network. Churn is forecast at!™*5®*""I broadly in line with the rate for 23/24. The network plan assumes the planned exit of 7 DMBs,
10 loss-making branches on exceptional remuneration and 45 ‘Hard to Place’ branches. It also assumes 200 net Drop & Collect (D&C) openings and the targeting of 70 Mains & Locals openings, co-
funded by postmasters. Subject to carrier agreements, the plan could deliver up to 200 additional D&C, creating the headroom for 200 Outreach exits. This will be managed to reflect evolving
market & financial conditions subject to quarterly review. Overall, the network in March 2025 is forecast to be close to 11,600, remaining above the 11,500 target.
Operating costs and Headcount
8 Operating costs of
reductions, of whic!
cfor 3A and 4 grades. There is potential opportunity against this dependent
net basis, with (100) FTE reduction within Remediation Unit and (98) FTE
explanations are provided on page 40.
i linked to delivering DBT policy and the remaining
on the outcome of Union negotiations. Average projected FTE headcount of are projected to reduce by (163)
reduction through the closure of the Swindon S\ chain site; this is pi ffset by planned increases in People, CIO and CFO for which
Activity Based Costing analysis suggests of the otal opex costs, I of operating costs are considered to be ‘Central’ overheads,
due to branch discrepancies — a reduction offzz.s« lear on year.
Product Profital
9 The objective of Product Profitability is to understand a truer profitability for POL products and services taking into account direct costs, indirect costs and allocation of central overheads; and to leverage
these results as a tool to support, validate and enhance commercial and network decision making across the organisation, such as descoping options for NBIT. The analysis in this report is based on a
purely mathematical exercise using the FY24/25 Trading Profit - it has not been reviewed by Commercial leads for commentary or input. It does not include an allocation of items below Trading Profit
such as NSP or investment cost, nor does it calculate the Postmaster cost to serve — these have been identified as limitations.
The key findings show that all commercial business units are projected to make a positive variable contribution in FY24/25 and where possible these should continue to be benchmarked to competitor
products in commercial assessments. At the notional profit level, before the allocation of central overheads, Mails is projected to be loss making — assumed to be due to the following reasons: i) The
network cost base for delivering Royal Mail products and services is aligned to a revenue base that is declining year on year (e.g. Labels and Stamps) — removing these increasing network costs in line
with revenue requires some time and investment; i) With the implementation and delivery of the Mails Strategy, Non-Royal Mail revenues are growing but this is expected to take time to ramp up;
growth in this area will require investment; i) Variable Postmaster Remuneration % on Mails (including new Non-RM Mails products) is significantly higher than other BUs such as Banking - this nepds
to considered when reviewing the Remuneration Strategy in the Summer.
POL-BSFF-130-0000029_0056
POL00448861
POL00448861
Executive Summary (3/3)
1 0}: Investment and Change Spend
Total Change Spend for the FY24/25 budget is projected to
I for projects categorized in Replacemant-a¢acizan (incl. SPMP), freeusmrifor Remediation Unit & Inquiry,
ned to be self-funded by POL}. Of thisI IRRELEVANT js considered to Bé"Mfaintenance’ related (Non-
DMB Exits, reducing risk tolerance (e.g. Cyber Security), OD Programme, Innovation/bigh
from the Working Capital Facility, does fh the Purpose Clause provided that Security Headroom remains positive. The benefits assaciated with this spend are not iiciled in this plan however
would provide incremental upside to th trading loss and determined as and when the pot is allocated. There is also an additionafmeehcrease in FY24/25 due to deferral/slippage from
FY23/24 - required to complete implementation of ongoing programmes - the cashflow impact of which is expected to be limited.
11 [Security Headroom and Facility Headroom - and sensitivity analysis
assumes DBT funding of.
RU/Inquiry spend (over and ‘above thel ontingency) — should this position change this would provide
Facility Headroom assumes a WCF off ‘oughout the year, and an NRF facility of
Ithe NRF permanently reducing down to’ his would pr ity upside in H2 based on current assuriiions. There are no breaches of Facility Headroom forecast for FY24/25 with the
lowest point in Dec-24, which i="! away from entering the! ‘oard approved buffer. This could be mitigated by a request to the Board to reduce the buffer t This request was
lundertaken in FY23/24.
1 2 Risks & Opportunities
Risks & opportunities to the FY24/25 Trading Loss position include those that are trading related (page 30) as well as operating cost related (page 44). These are not included within the FY24/25
budget as there is a probability associated with these crystallising. There are also risks identified to Change spend (page 21), including RU & Inquiry which will be mandatory and ‘self-funded’ should
DBT funding not be made available e.g. to cover administration of the £75k payments, 1,500 late HSS applications, exoneration impacting Overturned Convictions, potential extension to the Inquiry
timelines and Capture related investigation, legal fees and compensation payments.
POL's current position of highest areas of Enterprise risk exposure remain in the following areas: Cyber Security, Technology, Legal, People & Operations (Retail & Franchise). There are 18 out of 81
intermediate risks outside of tolerance all of which have a remediation plan to bring into tolerance by an agreed target date (November ARC). However due to increased focus on the Inquiry, Media
attention, increased pressure on colleagues itis expected that several risks will remain outside tolerance for longer. Further funding from the!msa:an/additional pot could be allocated to these
programmes dependent on capacity to implement in order to bring these risks within tolerance sooner.
POL-BSFF-130-0000029_0057
Post Office Limited - Document Classification: INTERNAL
Key Assumptions Underpinning the FY24/25 Business Plan
Self-funded
‘Other Change
Spend’
DBT Funding
Revenue
Postmaster
Proposition
Network Numbers
Inflation RPI
Pay Award
FTE Headcount
Cost Savings
Loan Facility
Interest rate
Depreciation
{S322 of self-funded change investments following GE prioritisation of which
faintenance’: largely non-discretionary that is necessary, contracted or nugatory spend or (avoiding sunk costs)
iciency’: investments that enable cost reduction
i {DBT funding of which:
I Network Subsidy Payment (to subsidise cost of the uncommercial network required due to the Network Access Criteria)
nnevevanru/inquiry (as part of the “agreement
RU/Inquiry Contingency (subject to final agreement)
for Replacement of Horizon (as part of the agreed Investment funding)
} for SPMP (subject to receipt of funding letter)
52 week trading vs 53 week in FY23/25
+ Mails: Average 8% decline in Royal Mail volumes across product portfolio
Banking: Deposits 1% volume growth; 2% inflationary; Withdrawals 0% volume growth, 7% inflationary; Banking Framework Fee:im.micap
Mortgages, Savings Loans: BO! average rate of 4.5% (vs 5.25% Jan-24); BO! Agreement:fic: guaranteed minimum commission lif’2024 & 2025.
Travel Insurance: 9% volume decline due to SEO position P2 (vs P1 in FY23/24) and price'Tiiéi@ases of c.10% for aggregators (reducing aggregator volumes)
Government Services: UKVI contract ending in FY24/25 with no extension planned
investment) in SSKs (excluding DMBs/SPs)
pro-rated for Sept-implementation;
fated for expected incredsemibrdship Volumes (Min Wage; Lottery exit)
Opening at 11,776 branches; churn in commercial branches of c.3.5% (flat on FY23/24). Planned exits of 7 DMBs, 10 loss-making branches on exceptional remuneration and 45 ‘Hard to
Place’ branches. Openings of 200 Drop & Collect (D&C), the targeting of 70 Mains & Locals openings, co-funded by postmasters.
Closing forecast of c.11,600 ~ remaining above 11,500 target.
Subject to carrier agreements, a stretch plan could deliver up to 200 additional D&C, creating the headroom for 200 Outreach exits
RPI — 3.6%; CPI - 2.5% Source: Forecomp. October.pdf (publishing service. aov.uk); For work performaned by Fujitsu - contractual indexation of 6%
Yor CWU and Unite employees axacwfor 3A and 4 grades
Average FTE headcount of 3,547 FTE projected to reduce by (163) FTE on a net basis, with (100) FTE reduction within Remediation Unit and (98) FTE reduction through the closure of the
Swindon Supply Chain site; this is partially offset by 39 planned increases in People (20), ClO(14) and CFO (5).
budgeted cost savings that could meet the Remco definition of incremental year on year savings that are actively pursued
throughout the year, and Notes Relief Facility (NRF) offmacnrI in H1 reducing to [=n H2
nd DBT WCF at a fixed rate o
Freneuevanr ¥ Budgeted Capex assumed to depreciate over average UEL of 7 years
POL00448861
POL00448861
Page 21
Page 25
Page 29-30
Page 15
Pages 32-34
Page 36-37
Page 7
Page 39
Page 39
Page 41
Page 26
Page 13
Page 13
POL-BSFF-130-0000029_0058
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Historical Overview (1/2): Revenue vs Operating Cost base
Since separation with Royal Mail, Mail revenues have declined by ind revenues from Government Services (including POCA/Voucher Encashment) have declined
Despite this and excluding the sale of Telco in FY20, ork revenues have remained broadly flat in comparison to FY13/14 levels due to the creation of
additional revenue streams through the Banking Framework and Non-Royal Mail revenues with other carriers.
However over the last few years, Operating Costs (Staff & Non-Staff costs) as a percentage of revenue and income have been increasing — a position that is
unsupported by the P&L, unaffordable and unsustainable.
Activity Based Costing analysis estimates that 52% of the FY24/25 Operating Cost base is focused on delivering key areas of DBT policy of sustaining the network (37%)
and cost of cash access (15%) — with the Network Subsidy Payment remaining at{weaswelsince FY19/20. There is every opportunity to “right size” the business through
i egic prioritisation and delivering sustainable efficiencies.
51%
49% I
{ 46% I 47% i
) I I I
IRRELEVANT I
10
mmm Revenue and income ami Total Operating Costs Operating Costs % of Revenue and Income
POL-BSFF-130-0000029_0059
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Historical Overview (2/2): Actuals vs Budget
Revenue has outperformed Budget for the last three years, which includes the variability of the BO! incentive commission. In the last two years
this variability has been significant due to unpredictability in the BOE interest rates.
FY19/20 ee Na ee FY 22/23
Cc D: No Board approved Budg Exc. UKGI stretch (STIP aligned)
Tan Sn eS
IRRELEVANT I
Trading Profit i
Revenue
Source: Actual Revenue and Trading Profit from ARA; Budget figures and operating costs as per CFS, Management Accounts
FY19/20 FY20/21 FY 21/22 FY 22/28
No BOI Incentive BOI Incentive: £1m > Budget BOI Incentive: £12m > Budget BOI Incentive: £23m > Budget
Revenue
(exc BO!
Trading Profit I
(exc BOI Incentive) i
POL-BSFF-130-0000029_0060
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Current Financial Year: FY23/24 Forecast vs Budget
FY23/24 Revenue and Income is expected to be EE higher than Budgeted — largely driven by opportunities arising from external factors.
Last March, the business agreed to increase PM Rem through implementation of $ReMtih of cost challenges, towards which significant focus
has been shifted in ensuring this was delivered. Since thef{iqitJ the business has performed better than forecast in P10 and P11 by CRgtiMjat a
Trading Profit level, largely due to higher than forecast banking volumes and values, along with lower cost outturn than forecast. The full year
outturn is being assessed along with any potential year-end adjustments.
Significant focus on controlling the cost
base and meeting thet
Of which in revenue:
a "1 RM Mails (RM delay in Tracked/RM higher pricing)
SMSL (higher interest rates for longer)
waevar} Travel related (Summer Peak, SEO1, Insurance, FRES)
{not exiting DMBs)
‘ Payments (re-issue of EBS vouchers) /
Unbudgeted Revenue + Income Total PM Rem
FY23/24 Budget ‘Trading related cost increases
Unbudgeted cost increases FY23/24 943F
Unbudgeted cost reductions
12
POL-BSFF-130-0000029_0061
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 Summary P&L: Profit Before Tax
FY24-25 vs 3YP Headlines
23-24 Fy2a-25
943 Forecast __ Budget
+ Tha EY24/25 Budget is projecting a Trading Loss of (seven a ‘base’ position aligned
‘other change’ activity noting that additional ‘growth’ or ‘efficiency’ related
's could realise benefits that improve the trading position.
Mails - RM %
‘Mails -Non RM
Banking Services
ATMs
‘Travel Money
Mortgages, Savings & Loans
International Money Transfer
Credit Cards
PO Insurance
Payment Services & Payzone
Retail, Lottery & Gift Cards
Government Services
Identity Services
Voucher Encashment
Supply Chain/Other
‘Total Revenue
Cost of Sales
The largest driver of the year on year movement is a projected reduction in revenues of
equivalent to a Hecline, although like for like excluding Lottery this is a
lecline.
Total PM Remuneration (V:
is expected to be Variable { 7 variable revenue). This includes (mss ifor
Operational Excellence inc: yyouts. On a like for like basis (exci @ Lottery and
534 trading week in FY23/24) Total PM Rem is projected to grow by {macu/oY,
The Operating cost base is expected to be broadly flat year on year, driven by (el
of projected cost increases, wholly offset bywcaumniof cost reductions (of whichI”
are expected to meet the Remco savings crherray*
Postmasters Rem Variable Costs '
Postmasters Rem Fixed and Other Costs
Merchant Commission be reclassified as Cost of Sale. Whilst this has no impact
‘Gross Margin and income). Any reclassification would be overlayed after the FY23/24 year end to
Staff Costs ' ensure like for like comparison. Opportunities to reduce the cost base further have been
Non Staff Costs i identified through this process, with assessment on funding required, implications and
[Total Overheads 1 executability included within this Business Plan.
aan Depreciation costs of {nnscvmr}ncludef acter ifor existing assets and a further!)
Neroa Sosy Panes relation to fins ‘pf budgeted capex spend (assumed to depreciate over an average
Depreciation i useful economic life of 7 years).
Interest
Exceptional Change Spend
Investment Funding
Profit On Asset Sales
Profit Before Tax
KPIs
Total PM Rem
Total PM Rem % Total Revenue
Variable Rem 9 Variable Revenue
Total Opex % Revenue and Income
Interest costs are largely determined i
rate Off peavey XPECted to increase biimreuswridue to afi
averade Durrowing position (lower pay
of the WCF at an average
expected increase in the
igher banking deposits.
FY24/25 Investment funding of fassisvanr) this base Budget 2
RUAnquiry (as part of the fren ment) plus a further ses} conting
agreement), fx r Replacem lorizon (as part of theagréed Investment 4
funding with and a furtherimrevevantfor SPMP,
POL-BSFF-130-0000029_0062
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 vs FY23/24: Revenue trajectory and phasing
FY24/25 Revenue offitauamms expected to be a (£E48m) reduction on the FY23/24 Outturn. Mails revenues are expected to be impacted by further re-baselining of the
Royal Mail business with a continuing decline in Parcels volumes, largely offset by the Mails Strategy as revenue with other carriers is projected to grow. Bank of Ireland
(MSL) revenues are projected to decline in line with lower and more stable interest rates and the shifted construct of the recently signed agreement. Net Banking
revenues are expected to continue to grow organically in response to bank closures and through the further Banking Hub openings. Revenue phasing is fairly consistent
YoY, with a gradual reduction month on month. The lower BO! MSL incentive can be seen with reduced P11 revenue in FY24/25 compared to FY23/24,
IRRELEVANT
Lottery Revenug. RM Banking MSL Pot Government Ser
23/24 943 bec Malls- Non RM ATMs ir Payment Services Iden 24/25 Budget
——=Total Revenue 23-24 = = Total Revenue 24-25
POL-BSFF-130-0000029_0063
POL00448861
POL00448861
FY t Office L 34/° Document Classification: INTERNAL
4/25 Postmaster Proposition
The FY24/25 Plan takes a holistic approach to improving postmaster & partner profitability
REDUCING POSTMASTER COSTS GROWING POSTMASTER INCOME
An
& ROLLING OUT AUTOMATION & NEW TECH: Cel INCREASING REMUNERATION
= Investing. "fo deploy note counters to 2.8k branches, saving = Total rem forecast to grow by! IRRELEVANT } ona like for like basis*
PMs at least ti ipa in staff costs. including:
y “(excluding DMBs and Strategic Partners) on developing new = Launch of Operational Excellence Incentive, providing
mails self-service kiosks, ready Q4. 2.5k branches could benefit on opportunity for branches to boost rem by up to 5%
self- ura basis, savin “i staff costs. = RMG products increasing in line with tariff or CPI
= 20% increase in DVLA rem
Ial SupPoRTING SALES GROWTH:
* Expanding Evri to 1.6k branches; extending DHL C&C to 1k branches
and launching DPD International.
{© STREAMLINING PROCESSES:
oo. . . a " TMC extended to 3.3k branches, supported by rem boost for new
= Continuing Commercial & Operational Excellence visits to help earisales
optimise sales, improve back-office processes & reduce discrepancies.
in 10 branches in 2024/25.
initial investment for ‘2nd device’ platform, which will provide
greater flexibility to serve customers from retail till.
A wo. . * Branch marketing campaigns planned for 5 key points through year.
= Further improvements to Branch Hub, making it easier for branches
to access services in one place. ee RESHAPING THE NETWORK:
= Launch of ‘auto-rem-in’ for secure stock, reducing branch workload = ~3m customer sessions & rem consolidated in core branches
and risk of discrepancies. through smart of management of churn — not always replacing
branches like-for-like and using D&C to in-fill gaps.
jin 2024/25, for a more meaningful comparison we have adjusted this figure to remove: a) lottery, on the grounds that most
and b) the impact of the 53-week year in 23/24, given this is not relevant to PMs’ weekly earnings and ongoing profitability.
*While in absolute terms rem is forecast to fall by,
branches are now receiving this income direct from Allw\
POL-BSFF-130-0000029_0064
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 Total Cost base — by Activity
f POL's cost base today is focused on key areas of DBT policy, with $aagedriven by back office central costs
FY24/25 BUDGET COST BAS'
IRRELEVANT
Back office
Cost of
cash access:"
Strictly Confidential
16
POL-BSFF-130-0000029_0065
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 FTE Headcount - by Activity
60% of POL’s headcount today are focused
MARCH-25 BUDGETED HEADCO!
CENTRAL POL EMPLOYEES DMB AND SupPLy CHAIN PZ AND POI CONTRACTORS
1,808 FTE 1,466 FTE 108 FTE 165 FTE
Revenue
supporting: 9%
Sustaining
the network: 38%
Back office
central: 30%
Cost of
cash access: 23%
Strictly Confidential 17
POL-BSFF-130-0000029_0066
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 Budget: Total Operating costs and YoY movement
n by inflation and
of which:
FY23-24 FY24-25 Y Savings Reductions Cost
943 Budget (Active) (Passive) increases jf
Notes
Opex costs by BU
. I IRRELEVANT are expected to remain flat year on year -
driven by "tof st increases offset by! fe
reductions, of which!
‘incremental’ and ‘genuine and intended’ savings in the sense that they
are actively pursued.
Any cost avoidance or cost saving already achieved in FY23/24 should
not be double counted again as a ‘cost saving’ in FY24/25. Based on
this guidance, the remaining [i of budgeted cost reductions are
excluded as largely due to one-off costs in FY23/24 not expected to
repeat.
Commercial
Retail
cio
9 IRRELEVANT
Centrally Managed
Strategy & Transformation
Communications i
Total POL
facing,
POL-BSFF-130-0000029_0067
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 vs FY23/24: Projected Trading Loss of (
more stable interest rates as part of the extended BO! deal) as well as projected increases in the o ‘ost base offset by year on year cost r
savings. Opportunities to improve this position through implementing ‘efficiency’ related actions that reduce the cost base, are set out in this business plan.
Operational Excellence
Incentive
(20.0)
POL-BSFF-130-0000029_0068
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
FY24/25 Budget: Comparison to the 3 Year Plan
The current FY24/25 Budget projection of a Trading Loss of {Suga is a [SERimprovement to the fiiaitrrading Loss presented in the June-23 3YP. It is
largely driven by a het improvement in Revenues (which includes assumptions on revenue loss not materializing), a BygaMifreduction in Fixed Rem payments
driven by the Network Strategy, offset by alga increase in Variable PM Rem and a netlagastaaed increase in the operating cost base
POL-BSFF-130-0000029_0069
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Total Change & Investment Spend
Risks
FY22/23 FY23/24 FY24/25 3YR
/ / d Risk to overall change spend (linked to contractors
Total Change Spend, £m [yaa B Total used on change spend programmes) from IR35 change
Other Change Spend — Self funded to policy as well as the overall retrospective tax
provision — subject to ongoing negotiations with
. HMRC and People Team policy changes. DBT Letter of
Replacement of Horizon Support in FY22/23 recognises this risk and the
Total P potential funding requirements.
Remediation & POHIT Inquiry
*Toté iprevevant OS Separately reported to Board
o 7 Risks to RU/Inquiry change spend (which will be
mandatory if unfunded a: posed to ‘options’):
. Administration of sae spayments
. Administration of 1,500 late HSS applications
. Administration of Exoneration impacting
Overturned Convictions
* Extension to the Inquiry timelines
* Capture related investigation, legal fees and
compensation payments
FY24/25 Other Change Spend by Portfoto FY24/24 Other Change Spend by Category
IRRELEVANT
IRRELEVANT
spend from opex to capex TBC (however
opportunity for reduction in opex)
POL-BSFF-130-0000029_0070
POL00448861
POL00448861
Other Change Spend (1/3): Comparison to Prior Years
The FY24/25 budget offi for Other Change Spend is comparable to prior years (excluding sales proceeds and accounting adjustments), of which is
considered ‘Maintenance’ related, MMMMEfficiency’ related to support cost reduction plans and a further{{AMEMMMspend to be allocated; it also reflects a fur
deferral of spend from FY23/24 (net nil cash impact)
~ TRRELEVANT
Belfast Exit Belfast Exit Copper SS DcF
ATMs Hi DcF Darwin
HI PUDO. ATMs Copper SS
Starling Branch Hub PEDs PEDs
PCI-DSS Proj.Test Env DMBs
2021/22A 2022/23A 2023/24F 2024/25B
24125 Other Change Spend of [= -oceeds of sales of assets and accounting adjustments
22
POL-BSFF-130-0000029_0071
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Other Change Spend (1/3): Movement between versions
4 (net nil ca
Investment
Project £'m Implications
FY24/25 Indicative: Other Change GE Endorsed Plan on 20" December 2023
Investment included within FY24/25 Business Plan for 2800 note counters + Maintenance spend;
Time saving and cost benefit to Postmaster estimated at {=nsmpr branch (dependent on deposit
Cash automation: Note counters ‘olumes) as well asim=ciewlin year expected reduction in losses due to counterfeit notes.
Payzone ' Payzone investments to be reported at the POL level post integration — net nil cash impact
Deferral/delay from FY23/24
Other
FY24/25 Business Plan: Other Change As reviewed by February Investment Committee
Data Centre Fortification IRRELEVANT; Due to deferral from FY23/24 there is knock on deferral expected into 25/26
ARQ Process Audit SAN
Deferral/delay from FY23/24
FY24/25 Business Plan: Other Change Allocated to projects
Additional spend to be allocated across programmes and assessed over the course of the year e.g.
! Further DMB Exits, Risk reduction (Cyber Security/ POL Data Enablement as required), Digital/
Additional Spend Pot : Automation, OD programme and any other contingency required
FY24/25 Business Plan Final: Other Change Proposed FY24/25 Change Spend for March Board approval
23
POL-BSFF-130-0000029_0072
Post Office Limited - Document Classification: INTERNAL
Other Change Spend (3/3): Top Projects by Category
The FY24/25 budget ofaie: Other Change Spend includes{igsaatzconsidered to be ‘Maintenance’ related and {iiuumgefficiency’ related to support cos
reduction plans. An additional unallocated budget of f#
Top 10 Maintenance Projects
1 Data Centre Fortification
2 Copper Stop Sell
3 PED Replacement Devices
Portfolio
Technology
Technology
Technology
POL00448861
POL00448861
s included to be deployed as appropriate over the course of the year
FY24/25 Budget Description
Deliver additional resilience and replace end of service life infrastructure in the Belfast Data Centres
Replacement of Copper lines with Fibre lines in branch network as BT Openreach is ceasing Copper lines
Current devices reached end of life in Dec 23 and no longer supported. Project to replace these devices
4. Project Test Environment FY23 Technology Maintenance of POL test environment
5 Back Office Operational Modernisation Technology Transformational programme for Core Platforms (some unfit for business needs)
6 Cyber Security Maturity Technology Cyber attack prevention
7 PCI Compliance Technology Process and technology changes to achieve compliant status
8 ATM Banking Strategy Commercial Bringing existing ATM's under POL ownership and Management
9 ARQ Process and Audit SAN Technology i Moving Storage Area Network (SAN) audit from Fujitsu into POL control
10 POL Data Enablement Programme Technology i Programme to drive data maturity and improve POL's data capabilities end to end
11 Central Change Team FY24 Central H Strategic Portfolio Office team and associated costs of Change portfolio oversight
12 Multi-Function Devices Commercial Develop the bank grade Self-Service Multi-Function Device (MFO) software and deploy 10 pilot devices
13 Network Maintenance 2023/24 Retail Replacement of branch churn to maintain network requirements
14 POI Reg & Compliance 24/25 Commercial Post Office Insurance change capacity across Duck Creek & the pricing platform
15. Property CAT - Compliance 24-25 Retail i } Annual programme of Compliance, Legal, Health and Safety Maintenance/Repair/Life Cycle capital programmes
Other : j H
Total Maintenance Project Spend - ;
Portf Fy aateaet Description
1 Supply Chain} fF Outsourcing of the Swindon Cash Centre to a 3 party supplier
2 Future DMB (Directly Managed Branches) Retail i Closing/franchising/replacing DMBs
3 Operational Excellence Commercial H I Investigation of the root cause and creation of an action plan to reduce branch losses/discrepancies
4 Network Strategy Acceleration (NSA) Retail Improvements to POL network commercial viability
5 Network Strategy - Hard to Place Branches Retail Closure, compensation for Hard to Place branches
Other :
Total Efficiency Project Spend : H
Growth Projects Portfolio FY fet Description
Mails Strategy — multiple projects ‘Commercial Projects include eBay Click & Collect, Mails Continuous Improvement, PUDO & Sales Rollout & Maintenance, In Branch Sales
Other canner Projects include British Gas — simplify retailer proposition, Travel App/Website upgrades, New Loan Provider
Total Growth Project Spend
Additional budget
Total FY24/25 Spend
Additional spend to be allocated across programmes and assessed over the course of the year e.g. Risk reduction (Cyber Security/
I POL Data Enablement as required), Further DMB Exits, Digital/ Automation, OD programme and any other contingency required
24
POL-BSFF-130-0000029_0073
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Security Headroom
The Baseline Budget assumes {MMMMBRMU/Inquiry contingency funding (subject to ongoing discussions) andbaiaaad Horizon replacement funding (subject to receipt
9f funding letter) resulting in a positive Security Headroom position throughout FY24/25. The lowest point would fiery Dec-24 (noting a recommended buffer
maintained throughout the year). The SH forecast assumes an unfunded variance of c {gagi¥fchange spend on SPMP (over and above the ind
CEREEREPE RU/Inquiry spend (over and above the ARMIN greed and feta ontingency) — should this position change this would provide additional SH upside
Funding Assumptions £m Qi a4 FY23/24 Qi
IRRELEVANT
ee
mended
buffer
Apr-23 May-23 Jun-23 Jul23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25
N
a
em Actual seeeee Forecast
POL-BSFF-130-0000029_0074
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Facility Headroom
The Baseline Budget assumes a WCF offen throughout the year, and an NRF facility of RRBRBIin H1 and GRA H2. There are ongoing discussions regarding
increasing the WCF b¥GGSISMMME with the NRF permanently reducing down to {iit This wauld provide FH upside in H2 based on current assumptions. There are no
breaches of Facility Headroom forecast for FY24/25 with the lowest point in Dec-24, which I -—- from entering the YASRMMBoard approved buffer. This can
be mitigated with a request to the Board to reduce the buffer tdiiiatatatk his request was undertaken in FY23
IRRELEVANT
a I) rT) Tai Rag aa Sep 2 OTT Nova Bees iano bas” Wiaro5
Available NRF Available WCF mint Additional NRF Board Approved Buffer **#*e* Loan and NRF Forecast,
26
POL-BSFF-130-0000029_0075
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Top 5 Enterprise Risks
POL's current position of highest areas of risk exposure remain in the following areas: Cyber Security, Technology, Legal, People & Operations (Retail & Franchise), There
are 18 out of 81 intermediate risks outside of tolerance all of which hav
diation plan to bring into tolerance by an agreed target date. Target dates to bring into
tolerance were agreed at the ARC in November, however due to increased focus on the Inquiry, Media attention, increased pressure on colleagues and a change spend
review in progress it is expected that several risks will remain outside tolerance for a longer period of time, this is indicated by the revised target date within the table below.
Top 5 Enterprise Risks Intermediate risks outsi st Position Target to bring into
(Reviewed by ARC) of tolerance tolerance
Cyber Security
Other key risks to consider (s.t risk assessment);
+ There is a lack of funding to enable the business to
deliver its strategic and operational requirements within
yt
‘We fail to prevent unauthorised and/or inappropriate access to
Post Office systems, potentially exposing confidential data and
a loss of service for Postmasters, Post Office employees and
our customers.
Technology
‘We fail to provide robust technology across our branches and
administrative sites, potentially causing service disruption to
‘our Postmasters, customers and Post Office employees and
‘non-compliance with Legal obligations.
Legat
‘We fail to meet current, changing or new regulatory and
Legislative expectations, potentially leading to liability or other
loss or failure to take appropriate measures to protect
Postmasters, Post Office employees and our customers.
People
‘We are unable to attract. retain, recognise and reward people
‘commensurate with the workload, pressure and stress, across.
‘our workforce, which adversely impact Postmasters and Post
Office employees.
The volume of work exceeds the resource capacity of the
‘organization impacting wellbeing
Operational
‘We fail to ensure that our Postmasters have the service and
support required to operate an effective service, potentially
leading to a decrease in customer satisfaction.
Inability to prevent Cyber or Key achievements to date include delivery of operational and executiv
ransomwareattacks
‘Suboptimal Belfast
datacentre resilience levels
Non-compliance with
Statutory & Regulatory
Requirements
‘Adverse impact on people's
wellbeing
Inability to identity,
investigate, resolve and
treat discrepancies with
fairness in the network
ransomware response playbooks: mapping of as-is and to-be data backup
standards for all high priority systems
90% of Belfast components are at EOSL. Following the completion of the
planned refresh activities (March 2025) this will reduce to c60%,
Inability to adequately implement Historical Matters remediations and deliver,
improvements to Horizon issues. Following IDG review in October there has
been a request to review the backlog of Horizon System improvements and
other potential scope with a view to funding these to further mitigate this risk.
Post Office is in breach of its duties of disclosure (re: the Inquiry) due to poor
data management and governance; Post Office is unable to comply with
requests within statutory timeframes. There is insufficient resource within the
{egal and investigations team to support the business to manage legal risk and
conduct investigations in a timely manner. Risk is expected to be outside until
further funding is put in place.
FOIA requests have dramatically increased and compliance with legal
timeframes may not be met. Risk is expected to be outside for longer than initial
indications of June 2024.
Risk has increased. Early indication was that the risk would be within tolerance
March 2024; However recent media coverage, increasing workloadto support
the inquiry has extended the remediation period,
‘The Operational Excellence Programme in progress split across 2 areas:
BAU improvement activity
Network wide change projects
risk appetite and or to the standard, expected of a public
corporation ~ with the addition of diss! change spend
pot this could be directed towards programmes as
required.
Fujitsu does not agree to extend the contract beyond
its current contractual requirement (without which Post
Office ceases to operate).
Governance remains a key enterprise risk, with the need
for greater clarity around accountabilities and controls
around decision making in achieving strategic and
‘operational requirements and avoiding reputational
damage or breach of legal requirements.
Long term strategic commercial sustainability is at risk
if investment is not made in development of commercial
propositions, should there be capacity to do so and
funding available - in particular in relation to the Mails
Strategy which would enhance the current proposition
for longer term Mails prospects. The benefits from these
investments are subject to ongoing assessments.
Data Governance for unstructured data has been
frequently highlighted as a failing during the Inquiry; the
data governance framework is currently being rolled out
with the aim of increasing the overall maturity across the
business by Q2 24/25
27
POL-BSFF-130-0000029_0076
POL00448861
POL00448861
2. Supporting Analysis:
Revenue
POL-BSFF-130-0000029_0077
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Revenue Assumptions: Volume vs Price
ining Royal Mail volum a. driven largely by inflationary price
rises. Insurance revenue to de r volumes.
Revenue £m Volumes m Price £
Royal Mail revenues continue to
decline with decreased YoY volumes.
almost all RM products, but notably
Special Delivery (migration to new
Fy24/25—FY23/24 YoY Fy24/25FY23/24 YoY Fy24/25FY23/24 YoY
Budget 9+3F Variance 9+3F Variance Budget 9+3F Variance
Mails RM (excl. Mailwork & Annual Fee)
Parcelforce
Special Delivery
International Priority & Standard Tracked 24/48 product) and Labels
Stamps (declining baseline, loss of week 53,
Lobels . ;
Ee aetvities I migration to Non-RM Buy in Branch).
Acceptance '
Pe ll i+ YoY revenue and volume growth
Mails Other
Total Malls RM i across Non-RM Mails, due to the
‘Malls Won-RM growth in the number of branches
Mail Nor- RM
Clik and Cole ' :
. {across Amazon, DPD and Evri.
Returns
Drop-off Purchase
Online Platform
Sale in Branch
Total Malls Non RM.
Banking Services (exc. Framework)
Deposits
Withdrawals
Change Giving
Banking Other
‘Total Banking Services
Post Office Insurance (POI)
Travel
Banking Services YoY revenue
growth from increased deposit
volumes and inflationary price rises
Travel Insurance volumes are (9%)
down YoY driven principally by a loss
in SEO position from P1 to P2 and
10% RPI increases for aggregators,
Home . sa
Motor which we anticipate will reduce
Protection Aggregator volumes.
Other
Total POL
Protection price 5% up driven by
improved mix of distribution channels
Note the price above is a simplified average ‘price’ based on revenue and volume, in order to provide a broad sense check of the product areas. with increase in contact centre
This does not consider the multiple price/commission structures in place for each product. channels which drive higher averages g
premiums
POL-BSFF-130-0000029_0078
Revenue Related Opportunities & Risks
Opportunities not included in the FY24/25 plan relating to Trading
Opportunity
POL00448861
POL00448861
FS-INS-TM-IMT.
FS-INS-TM-IMT.
Banking & ATMs
FS-INS-TM-IMT
Banking & ATMs
Payment Services & Payzone
FS-INS-TM-IMT.
FS-INS-TM-IMT
FS-INS-TM-IMT
Payment Services & Payzone
FS-INS-TM-IMT.
FS-INS-TM-IMT.
Other
FS-INS-TM-IMT
Total Trading Opportunities
Risks not included in the FY24/25 plan relating to Trading
Bu
Mails,
FS-INS-TM-IMT
Banking & ATMs
FS-INS-TM-IMT
FS-INS-TM-IMT
FS-INS-TM-IMT
Government Services.
FS-INS-TM-IMT
FS-INS-TM-IMT
Payment Services & Payzone
Other
FS-INS-TM-IMT
Total Trading Risks
Interest rates do not fall as expected impacting MSL commission.
MoneyGram new deal negotiation to start in early 2024,
Banking Services ATV and volume growth could be higher than assumed.
‘MoneyGram plans to have a stable number of Send transactions for the year. POL currently waiting for supportive data on three initiatives that could bring in an extra revenue of £1.4m.
10 Additional Temporary Bank Hubs would create additional revenue from Cash Access UK.
British Gas Cheque Replacement - BG are looking to improve speed of service, replacing cheques with Payout.
Ageas Home Insurance profit share could be higher than budgeted.
ligher web Travel Insurance trading driven by P1 SEO position
MoneyGram & Western Union Send transactions volumes
Potential to renegoiate Evri/Payzone relationship which is due to cease after April.
Improved Motor trading from price optimisation
Lower RPI within FRES would increase our profit share
Potential opportunities across all areas ofan each and les, -
New loans partnership with new provider‘ iW deal with Ageas Home Insurancd wecsn
“Eonsumer duty costs in FRES P&L look high - represents fmeccvawists for POL in FRES profit share.
Risk én}
Royal Mail may deploy products via Paypoint branches, which would disintermediate POL.
If there is no Western Union contract renewal by Oct 24,
Banking Framework Fee
‘MoneyGram and Western Union Send and Receive volumes
Impact of further OMB exits on Protection Insurance.
Travel Insurance sales performance re SEO position, digital capability and demand.
UKVI, HMPO & DVLA
Protection Insurance provision, Motor insurance market volatility, Home insurance contact centre transition delayed.
Pet insurance profit share not received due to adverse performance.
Energy - Switch to Smart PAYG
Potential risks across all areas of £0.2m each and less.
General Recession & Inflation putting pressure on net rates and reduced demand; additional DMB exits resulting in revenue loss; pricing changes within Travel money do not drive additional volume/share.
30
POL-BSFF-130-0000029_0079
POL00448861
POL00448861
3. Supporting Analysis:
Postmaster Remuneration
POL-BSFF-130-0000029_0080
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Variable Postmaster Rem: FY24/25 Budget vs FY23/24 9+3
em by {WEEN offs yout. Excluding both
PM Rem folie IRRELEVANT
Notes
o _Lottery exit decrease total income by
°
is expected to increases by; ti due to the changing ‘product mix — in
particular the shift from in-branch “sales (labels) to online pre-paid parcels
and returns, which are remunerated at a higher share of income. The
introduction of Tracked 24/28 further increases the share of income going to
postmasters, even with the assumed remuneration rates at 1 percentage
point below 15 and 2" class labels.
o The FY24/25 Variable Rem Budget includes an assumption of
Operational Excellence (OE) I Incentive payout. This is based on an assumed
come average payout offiRRELevantiof the maximum award (an improvement
nt conformance levels).
On an annualised basis this would generate of remuneration, which
has been pro-rated for 8 months based on the assumed launch date of
32
POL-BSFF-130-0000029_0081
Post Office Limited - Document Classification: INTERNAL
in FY23/24. It is noted that overall Mails rates are
In percentage terms Variable Rem is budgeted a’
Variable Postmaster Rem % of Revenue
IRRELEVANT
23/24 943 Forecast 24/25 Budget 25-26 Plan
Pillar
Mails - RM
Mails - Non-RM
Retail, Lottery & Gift Cards
Government Services
Identity Services
Variable Variable
Revenue Rem
Variable Variable
Revenue Rem
Variable Variable
Revenue Rem
Var
Rem/Rev
%.
Mails, Retail, GS & ID
Banking
[ATMs
IVoucher Encashment
Banking & ATMs
International Money Transfer
[Travel Money
Credit Cards
Bol
PO!
FS-INS-TM-IMT
Bill Payments
Central Commercial
Variable Total
Fixed Remuneration
Total
Variable (Exc! Lottery}
IRRELEVANT
of Revenue; As a like for like comparison, excluding lottery from FY:
ected to increase slightly whilst Banking rates are expected to fall due to product mixes
POL00448861
POL00448861
24, this istéaieal point increase on
Notes
Banking Variable PM Rem % is expected
to fall from mreevanriin FY23/24 toi" "in
FY24/25 dué toproduct mix.
This is because Average Transaction
Values (ATVs) - which are a bigger driver
for rem than volumes - are assumed to
stay flat, causing a lower overall share of
banking variable income going to rem.
However, this is more than offset by the
} for Operational Excellence
incentives explained on the previous slide,
which could effectively be viewed as
banking-related rem (but is shown under
the ‘Central Commercial’ line).
As explained on the previous slide, RMG
remuneration as a share of mails income is
expected to increase by !~-ipercentage
point.
DVLA remuneration.rates are set to
increase by} IRRELEVANT! in line with
additional incor tiated as part of the
contract extension.
We are also proposing to invest
higher remuneration for the Western
Union & Moneygram cash to account
products, to match market rates and boost
sales incentives.
33
POL-BSFF-130-0000029_0082
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Fixed Postmaster Remuneration
Budget assumed for Fixed PM Rem payments, a = ar on year reduction driven by the cessation of Major Branch Support as OE ramps up,
fi
hurn with no inflationary increases in reducing Assigned payments and lower in-year Strategic Partners payments. This is offset by a
increase in Other Fixed payments for an unallocated pot to cover an anticipated increase in hardship volumes following the exit of Lottery and Living Wage increase.
24/25 e ance to Notes
Budget 943
fo Number of branches recieving AOP's assumed to reduce inline with trend. Inflationary increase not applied
fn 24725 due to te invoduey > Ope Igeted for in variable PM + Our continuous improvement programme to
Jo Base inline with current run rate, adjusted for 23/3 mate, end for Network Strategy address loss making and poorly used branches
"I annualised savings,
overlay: . + has now generated
[24/25 overlay for Network Strategy, H *
Payments 125/26 overlay for Network Strategy "=" with a further jine f in-year savings
Jo Budget included smnmpot of urlaTIBEHt#Y spend, it is anticipated this could be need forecast in 2024/25.
+ Network numbers will be maintained through
the use of Drop & Collect to in-fill gaps in
erlay:
payvsrverlay for Network Strategy”
i 125/26 overlay for Network Strategy coverage, as set out in section 4.
IRRELEVANT fo tine wits current tena * Outreach remuneration incorporates a 7%
Jo Inline with current trend
increase in rates to reflect NLW increases and
ne with current trend
‘ fuel costs.
Henderson contract} vjffset by Morrisons.and.Goge (mid:pounties and Lincolnshire) deals that were We have assumed the fixed payments to
stcagilttians covered by provision’ arigd over from 22/25, few payment to Coop sroup. Community (SPSO) branches are not
Holi k Jo Inline with trend + inflation (in line with living waged "7 increased in line with inflation, although these
NI Jo Inline with trend + inflation (in line with living waget i] branches will benefit from the introduction of
Operational Excellence Incentives.
Total Fixed Remuneration
24/25 Budget
POL-BSFF-130-0000029_0083
POL00448861
POL00448861
4. Supporting Analysis:
Network Shape
POL-BSFF-130-0000029_0084
POL00448861
POL00448861
eee changes in the network from April 2024 to March 2025
Iving market & financial
Subject to carrier
Churn is forecast ai IRRELEVANT}roadly i in line
We expect agreements, we Our network
to start the with the rate for 23/24. Weare. also. aim to deliver up in March 2025
aan with. I is forecast to
{IRRELEVANT I
be close to
openings, co- D&C, creatin
funded by headroom f
postmasters
openings
Mar-24 Commercial Loss-making Planned exits Hard to Place D&c Mains & Local Mar-25 Stretch D&C Outreach Mar-25
churn churn exits openings —_ openings exits
36
iwithin ‘Other change spend’
MB exits include 2 being closed in March-24 with a further—~planned in FY24/25 as part of tl
POL-BSFF-130-0000029_0085
POL00448861
POL00448861
Expected changes split by branch format
% change
DMBs
+ We have funding to deliver'~-DMB exits during 2024/25, plus the} idue ‘to cease trading in March 2024.
We are exploring the opportunities to fund additional exits but thesé are not included at this stage
* Funding constraints mean we're only replacing aroung"™*==""k
postmaster co-funding. Ideally, we would replace around half of exiting Mains to maintain commercial
performance
Mains
* Ideally we would be maintaining Locals numbers to protect commercial performance, but funding
constraints mean we're only replacing around a quarter, again with a dependency on postmaster co-
funding.
Locals
. D&C will be our main lever to maintain network numbers and offset churn in full-service branches, while
also strengthening our competitive position in the PUDO market in urban areas
+ Our baseline will b ‘D&C openings, with a stretch target of
+ Churn in Community branches continues to run ata higher rate, and this figure also includes an assumption
of 45 planned ‘Hard to Place’ exits agreed with the postmaster
Traditional
bre & IRRELEVANT
Outreach + We'll continue to work with postmasters to reduce Outreach costs through optimising opening hours and
routes. If headroom on network numbers allows we will consider up to additional Outreach exits
Total + Overall, the network is expected to reduce by/emehext year, but remains well above the 11,500 target
a7
POL-BSFF-130-0000029_0086
POL00448861
POL00448861
5. Supporting Analysis:
Operating Expenses
POL-BSFF-130-0000029_0087
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Staff Costs & FTE - by Business Unit
FY23-24 Fv24-25 FTE incl. FTE incl. YoY Mvt in FTE I Of which in FY24/25: I etm I
os Re ek Contractors Contractors March 25 vs
. 31/03/24 30/03/25 March 24 Contractors
Commercial Open Vacancies I i
Retail : i
Gal Maternity Leave Backfill H IRRELEVANT
cro TOTAL I ;
People i !
XK
LAS ; i a
Remediation Unit Hi
Releasing opportunity within these categories
I should require a consistent POL wide approach
Centrally Managed
Strategy & Transformation
Communications i
Total POL
Retail - reduction in FTE YoY largely due to closure of Swindon Supply Chain site, with associated benefit flowing through staff costs.
CIO - YoY FTE increase including 3 x SNOW developers/admin, 4 x cyber security roles, and 14 budgeted senior manager vacancies. Costs reducing YoY due to transfer
of Data Governance to S&T, along with cost savings from role reductions and leavers not replaced, outweighing the impact of new roles.
CFO - FTE increase YoY due to new roles for increased ARA support, Payzone activity and maternity cover.
People — FTE increase resulting from people structure review (13 roles removed and 33 new roles added).
Remediation Unit - FTE decrease driven largely by reduction in number of contractors. All RU FTE/contractor spend is project related, hence no staff costs within opex.
Centrally Managed — planning assumption of between I IRRELEVANT I pay award depending on grade (ci
accruals also held here which are assumed flat with FY23/24.
‘Short term and Long term incentive plan bonus
39
POL-BSFF-130-0000029_0088
Post Office Limited - Document Classification: INTERNAL
Non- Staff Costs — by Business Unit and by type
BU (£m
9+3 Forecast
Commercial
Retail
cio
CFO
People
LCAS
Centrally Managed
Strategy & Transformation
Communications
IRRELEVANT
Total POL
FY23-24 FY24-25 YoY YoY
Non Staff Costs by Type (£m) is rs
9+3 Forecast Budget £m %
Staff & Agent Related Costs J
Consultancy & Advisory Services
Finance & Losses
IT Infrastructure & IT Services
Legal Costs
Managed Services
Marketing & Communications
Postage
Property & Facilities Management
Other Operating Costs
Total POL
A
A
m
=
>
za
I
Contractual costs
Non-contracted/discretionary
TOTAL
Fixed
Variable
TOTAL
Of which in FY24/25 I_I
Training
Recruitment
Travel and Subsistence
Department Away Days
TOTAL
}IRRELEVANT!
POL00448861
POL00448861
Further work will be
continued in assessing
the pipeline of these
contractual costs in
relation to 3-5 year
horizon scanning
Releasing opportunity
within these categories
should be based on a
consistent POL wide
approach.
Further work is being
conducted on
presenting Non-Staff
costs on an ‘Activity
Based Costing’ view.
40
POL-BSFF-130-0000029_0089
Post Office Limited - Document Classification: INTERNAL
FY24/25 ‘Incremental’ Cost Savings — actively pursued
As per the Remco guidance the achievability of ‘cost savings’ will be assessed on a definition of an ‘incremental reduction’ on the FY23/24 forec.
pursued. As such any cost. avoidance o
st saving already achieved in FY23/24 cannot be double counted again as a ‘cost saving’ in FY
POL00448861
POL00448861
st that is actively
5. A draft of this list is
presented below totallin Rasta
BU Incremental Cost Savings
Credit Cards
Mails
Payment Services
IT - costs reduction
Mails segregation
Travel Money
Total Commercial
Retail Iforce outsourcing benefit
Retail Property efficiencies
Retail Losses
Retail DMB
Retail External Stock processing
Retail X reduction
Retail CX Perm employees
Retail Staff churn
Retail Utilities
Retail Supply chain efficiencies
Retail Postmaster reduction
Retail Fuel hedge
Retail Network reduction
Retail FTE reduction
Retail SP reduction
Total Retail
IT Contractor replaced with FTE
Pol Contact centre spend (Travel/Home)
Pol Centrally held cost challenge
EKYC change from Digi to YOT!
RRELEVANT!
BU
clo
clo
clo
clo
clo
Total ClO
People
People
People
People
People
People
People
People
People
People
People
Total People
LCAS
S&T
POL Total Cost savings
Incremental Cost Savings
8 roles eliminated from FY 24/25
Leaver roles not replaced
Counter rationalisation
Removal of Tech Bar
Success Factors retendering
GIP Insurance renegotiation
ED&l rewards reduction
D&I audit removal
Campaign Materials
Benefits platform reduction
Insights reduction
Job board scope reduction
Removed Post Office Manager Prog.
Policy changes
D&I team upskilling + Bitc Leadership Training
Kit Changes and Other
Compliance attrition
Contractor to perm
POL-BSFF-130-0000029_0090
Post Office Limited - Document Classification: INTERNAL
FY24/25: Year on Year cost increases
POL00448861
POL00448861
RPI/Indexation
Retail- Cx Marketing & Communication: Inflationary contract pressure
Retail- Cx Travel increases
Retail-Cx T/infeastructure: Additional software
Retail- CX Mfrastructure: Digital strategy development
Retail- Cx MT/Infeastructure: Customer Charter
Retail- CX H/infeastructure: University
Retail- Cx HT/Infeastructure: Development Ops costs on app/website
Retal-CX. Marketing & Communication: Additional 020 costs
Retail- Cx Marketing & Communication: Sales force platform
Retail- Cx Marketing & Communication: Additional Mails support
Retail- Cx Marketing & Communication: Customer Strategy initiatives
Retail -CX ‘Additional cost for Dynamics Integration & Channel Engagement
Retail Cx Cost challenge
Total Retail - CX
Property Rent increases
Property RPI/Indexation
Property Building fabric
Property DMB Refresh programme
Property Increase in Equipment replacement
Property Legal cost increases
Property Facilities management increases
Property Cost challenge
Total Retail - Property
Supply chain ‘Outsourcing costs - supply chain
Supply chain RPI/Indexation
Postmaster DMB staff cost increase for COSA requirement
Postmaster RPI/Indexation
Postmaster Losses: Supply Chain branch robberies
Postmaster Travel
Postmaster Correct VAT treatment of NFSP
Central Prior year credits not repeating
Central Delayed costs from 23/24
Central ‘Accounting change
Central Branch Hub transfer + Branch Hub support
Central ‘Accenture support replacement - in house costs
Central ‘Automation & NM Programme Opex
Central Legal cost: SP contract Extension
Central Marketing & Communication: Retail conference
Central RPI/Indexation
Total - Other Retail
em
Bu Cost increase
Commercial Banking inflation + Santander LOC
Commercial ATMs
Commercial Cost challenge
Total Commercial
cio Full year impact of new joiners in FY 23/24
cio Full year impact of NSC commenced in FY23/24
cio Vacancies
cio RPI/Indexation: Fujitsu 5.2% indexation
cio RPI/Indexation: Licences including Microsoft 9%
cio RPI/Indexation: Other
cio Project Opex impact: CSS
10 Project Opex impact: IDAM
cio Project Opex impact: BOOM
10 Run rate: Business demand Microsoft/SNOW licences/AWS
cio New costs: Licences for Forgerock and E-fota
10 Ucences challenge
ery Support for Branch Hub
eu Increase in tooling/AWS consumption
Total C10
cro Non-repeat of vacancy savings from FY23/24
cro Filling of current vacancies
cro New roles and cover (e.g. maternity) where gaps identified
cro Insurance ~ RPI increase and Insurance Premium Tax
FO External Audit ~ RPI increase, plus additional assurance activity,
Fo Internal Audit ~ returning to fullscope
cro
People Fully staffed Org
Peopie Delayed costs from 23/24
People RPI/Indexation
People Success Factors Upgrades
People Internal Advocacy/ ED&I Groups
People DRI Sponsorship Agenda
People Ethos transfer in
People
Centrally Managed _Staff cost increase: Baste Pay
Cost challenge
Data Governance team transferred in from BTU
Indexation/ Increased demand expected for Oasis record retentions
Strategy & Transformation
Comms Non-repeat of vacancy savings from FY23/24
Comms Colleague conference upfront payment + Media relations funding
42
POL-BSFF-130-0000029_0091
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Risks relating to Opex cost increases and cost savings
Risks not included in the FY24/25 plan relating to cost increases
Risk Area Risk Items Identified £m
Staff/Vacancies Additional FTEs required to cover workload across the business including to support Inquiry backfill ~
Accounting Accounting treatment of staff costs between opex and exceptional. Note, this is a Trading Profit risk only, nota risk to Profit Before Tax.
Higher ATM cennox costs, Banking note counters, unknown impact of Payzone integration, contracted BOI eagle fund spend and potential
Commercial . 5 I
higher hedging costs. I
Legal External legal support/advice required. Higher legal costs relating to new MSL loan supplier. i !
Merkedne Potential increased contracted spend requests from Partners. Plan currenrly does not have any marketing spend relating to Drop & Collect
or to support new branch openings. Hi i
Property Alternate site at the end of City Towers lease (end of May). I
Comms & Engagement Increased spend for Postmaster and colleague conferences and for government engagement. i '
Network Increase to branch discrepancies run rate as a result of various factors. I
Total Risks E
Risks not included in the FY24/25 plan relating to cost savings
Risk Area Risk Items Identified I
Staff/Vacancies Delays in ClO and CX reorganisation. I
Commercial Higher HMPO project management costs from tablet network expansion.
Legal External legal spend not affordable. i I
Property DMB savings, rates challenge, reactive maintenance challenge, utilities price. i j
Network Lack of recovery on non-transactional losses and higher trend on branch robberies as plan based on best case. H
Total Risks E i
POL-BSFF-130-0000029_0092
POL00448861
POL00448861
6. Supporting Analysis:
Product Profitability
POL-BSFF-130-0000029_0093
Post Office Limited - Document Classification: INTERNAL
Purpose and Methodology: Levels of Profitability
To understand truer profitability at the Trading Profit level for products and services considering direct costs, indirect costs and allocation of central overheads;
POL00448861
POL00448861
To leverage these results as a tool to support, validate and enhance commercial and network decision making across the organisation such as options for descoping
products for NBIT, validating the commercial decision to exit Lottery and POCA, or discussion around the Banking Framework v4
ributior
Product: u Cost of u Variable Vai
jue #s5 I Sales "51 PM Rem c
Product Profitability is assessed at three levels:
LessI
Fixed
PM Rem
Less
Opex (Staff &
Non-staff costs)
Notional tes
ofi
Allocated
Overheads
Product revenue and FRES income less direct costs that would immediately stop being incurred if
Variable sales stopped i.e. Cost of Sales (product managers, license fees, credit card costs) and Variable PM
Contribution
Rem
Notional Profit
Allocated Profit
Variable Contribution less further direct and indirect costs which could be attributed to a product and
removed with some effort if sales stopped i.e. Fixed PM Rem (legacy contract payments) and
Operating expenses (direct and indirect staff costs and non-staff costs)
Notional Profit less allocation of central overheads which would be incurred regardless of sales
stopping i.e. corporate administration costs that most mature UK corporates would have regardless
of industry. These include Comms team costs, Auditor fees and Property costs
45
POL-BSFF-130-0000029_0094
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Product Profitability: Key findings and Limitations
on the FY Budget, all commercial business units ar jected to make a positive variable contribution — where possible the: ould continue to be
benchmarked to competitor products in commercial assessments
At the notional profit level (before the allocation of central overheads}
Mails is projected to be loss making assumed to be due to the following:
i) The network cost base for delivering Royal Mail products and services is aligned to a revenue base that is declining year on year (e.g. Labels and Stamps) - removing these
increasing network costs in line with revenue requires some time and investment.
ii) With the implementation and delivery of the Mails Strategy, Non-Royal Mail revenues are growing but this is expected to take time to ramp up; growth in this area will
require investment.
iii) Variable Postmaster Remuneration % on Mails (including new Non-RM Mails products) is significantly higher than other BUs such as Banking - this needs to considered
when reviewing the Remuneration Strategy in the Summer.
Further analysis at the product level show two other products are also loss making at the Notional Profit level:
i) I Home Insurance — for which the long term profitability continues to be reviewed.
ii) Payzone - for which a continuation of the Integration Plans will enable co-ordinated revenue opportunities and cost reduction for long term profitability.
Limitations of this analysis:
This analysis centres around an allocation of Trading Profit ie. EBITDAS level of profitability as a KPI for POL trading performance. However based on Board member feedback
there are other elements that could be considered in assessing a ‘true’ sense of profitability, including:
* The £50m Network Subsidy Payment from DBT in subsidising the cost of delivering the Network Access Criteria; this sits below Trading Profit and further work on ‘branch
level profitability’ is being carried out to assess the total cost of the uncommercial network in preparation for the FY25/26 Spending Review.
* Cost of ‘change’ activity e.g. cost of product development that sits within Exceptional spend or Capex or the cost of NBIT/ other network technology improvements
+ The Postmaster ‘cost to serve’ i.e. the true cost for the Postmaster with an understanding of the PM Rem rate % aligned to time and motion analysis
Based on Board member feedback, this analysis could also be developed further for use as a tool in scenario modelling or investment appraisal, for example in assessing the impact
of cost reduction measures such as exiting DMBs or the potential impact of automation. Ultimately, we recommend an approach that balances the effort in developing this for other
uses against the value it could generate.
46
POL-BSFF-130-0000029_0095
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Product Profitability: Overview 2024/25 by Business Unit
Business Unit oe ‘2 Cost of Sales ixed PM Rem StaffCosts NomStaff sees laa
income
Mails RM
Mails Non RM
Total Mails
Banking Services
ATMs
Total Banking & ATMs
Travel Money
Mortgages, Savings & Loans
International Money Transfer
Credit Cards H
Pol i
Total FS-INS-TM-IMT
Payment Services & Payzone
Total Payment Services & Payzone
Retail & Gift Cards
Government Services
Identity Services
Total Retail, Government & Identity
Voucher Encashment
Supply Chain
Central Commercial
Overheads
Total Other
Total POL i
In Strictest Confidence
POL-BSFF-130-0000029_0096
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Proposed Reclassification of Non-staff costs to Cost of Sales (1/2)
Based on discussions with Technical and Commercial Finance, ciigatglof Non-Staff Costs have been identified as potential reclassification into Cost of Sales for
FY24/25 and beyond. Should these changes be agreed and actioned, the opex % of revenue & income would redu Gedue IRRELEVANT
FY23-24 FY24-25
9+3 Forecast Budget
Banking Barclays Cheque Processing I We get paid for all cheque deposits, so this cost is one to one with transactions.
I We get paid for all cheque deposits, however, sometimes more than one cheque is put in a single pouch. This cost therefore
I relates to specific transactions but is not fixed for each transaction.
I Banking Hub operational costs that are charged directly back through revenue.
I We get paid for all passports, however, sometimes more than one passport is put in a single pouch. This cost therefore relates
Comments Status
Banking Royal Mail Cheque Pouches
Banking BH Operational Costs
Government Services Postage costs { t fenes
I to specific transactions but is not fixed for each transaction.
IRRELEVANT I we are paid for each voucher that goes out and we have to post most of them, so each postage charge relates to a specific paid
Payment Services Postage
POI Marketing - PPC
Total
Total Opex 9% Revenue & Income - current
Total Opex % Revenue & Income - after proposed ch
Notes for consideration
+ IFRS doesn't explicitly specify what should / should not be included in COS. It is mentioned briefly in various IFRS agendas/papers but is vague.
+ Judgement is therefore involved in classifying COS vs non-COS but must be appropriate and consistent - and we need to be able to justify any judgement.
* Often, reporting entities look to US GAAP which is slightly more detailed. It puts sales / marketing type costs in admin/opex/general type line items.
+ Currently, we don't split COS out in the ARA — so the impact at the moment on external reporting is minimal. However, there may be a time when this changes (a new IFRS.
standard is due to take effect from 2027 which is more explicit in how accounts are presented).
48
POL-BSFF-130-0000029_0097
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Proposed Reclassification of Non-staff costs to Cost of Sales (2/2)
The Variable Contribution margin across POL is at! based on current reporting structure, with Mails atm Banking at {iM and FS, Travel and Insurance at
Hiiieed Reflecting the proposed Opex to CoS reclassifications, Banking margins would reduce by {MMM pts, Payment Services by fi pts and POI by PERE pts. itis
recommended that these continue to be benchmarked to competitor products in commercial assessments.
Pre Opex to CoS Transfers:
rae Dicey Em e See Variable PM Rem Cost of Sales ana Margin % Variable contribution Margin %
Mails RM 7
Mails - Non RM
Mails
Banking Services
ATMs
Banking & ATMs
Travel Money
Mortgages, Savings & Loans
International Money Transfer
Credit Cards
PO Insurance
FS-INS-TM-IMT
Payment Services & Payzone
Retail, Lottery & Gift Cards
Government Services
Post Opex to CoS Transfers:
Identity Services
Voucher Encashment
Other i
Total i
49
POL-BSFF-130-0000029_0098
Allocation of overheads methodology
to products based on di ition and rational apportion:
POL00448861
POL00448861
= Overheads are allocated based on the following drivers:
Q * «2
Weighting based on
Direct cost usage Revenue
cash usage
Weighting based on
resource usage
= Revenue is a common basis for allocation however other metrics are used in conjunction with revenue to derive a rational
apportionment that depends on the cost type, for example:
= Network and Postmaster costs are weighted more heavily towards network products and less towards platform
products;
= Customer Experience, Marketing costs are assigned more towards product groups that take a larger % of the resource.
50
POL-BSFF-130-0000029_0099
POL00448861
POL00448861
7. Appendix
POL-BSFF-130-0000029_0100
Key Activities for 2024/25
Driving topline revenue
Deliver future formats and
automation to support
branch profitability
Reduce central costs, and
Postmaster cost to serve
Enhance IT & Digital
services
Develop our People and
Culture
Ce Se Se
4th Mails Carrier for in-
branch sales
New Ebay Propositions
Complete PUDO Rollout
Develop & roll-out ‘2nd
device’ to whole network
Enhance Branch Hub
. = Increase
Deliver
4 customer
Banking
reach and
Framework 4 P
active base
= Develop new mails SSKs
and replace existing estate
Reshape the network to
POL00448861
POL00448861
Deliver new HMPO,
IMT and Lending
provider contracts
Roll-out banking
automation, incl. 3,000
note counters
to drive performance support sustainability . aa . Reduce
and central for POL, Postmasters Ps iD .
efficiencies and SPs costs discrepancies
Sail ely . peers a GEE = Improve Sales & = Deliver integrated
Rollout into metaein PUDO Horizon online to branch
Branch Network compliance TOTES Journeys
Deliver improved
colleague
experience and
engagement
Managing heightened risks across the business
Reset our leadership
capability and develop
talent pipelines
* Continue cultural
transformation
POL-BSFF-130-0000029_0101
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Deprioritised Activities not included in the FY24/25 Plan
Additional Mails Strategy investments There is appetite to do more within the Commercial space, should there be capacity to do so / funding available, in particular
(including Smart Drop Box, Shop to in relation to the Mails Strategy which would enhance the current proposition and longer term commercial prospects. This
Shop, Carrier 4 BiB) would include Ebay propositions, DPD and Evri new products, PUDO/Sales journey enhancements and Multicarrier ICDC,
RMG to Parcels online. The benefits from these investments are subject to ongoing assessments.
5 MFDs are being prioritised within the FY24/25 Plan however there is further appetite to do more in the Banking space
should there be capacity to do so/ funding available in particular, a pilot to provide technical integration and prove value of
Banking Investments strategic network placement into Banking Hubs, as well as new ATM deployment & Cheque Clearing scheme improvements.
There is appetite to do more here in terms of re-issuing Postmasters with consistent and enforceable contracts should there
Reactant BenenCaees be capacity to do so/ funding available. Whilst there is no planned change to the terms of these contracts, the Operations
Manual is being updated to provide greater clarity and support Postmasters in process compliance in achieving Operational
Excellence.
The Plan assumes reduced Network Strategy Acceleration (NSA) activity with funding in 24/25 reduced from:
‘fn particular this means we have delayed the option to offer 400 poorly used and loss-making SPSO bi
incentive payment to leave the network.
Additional spend on Network Strategy
Acceleration
PCI Upgrade from 3.2.1 to 4.0 Imeaewt! of estimated spend is required to be compliant with 4.0, although POL is not compliant with 3.2.1 today and
quirements of 4.0 are currently unknown.
Spend to undertake upgrade of the Payzone IT platform.
AanineseTER ‘Potéiitially avoids system risk to Payzone, and D&C / 2nd Device
53
POL-BSFF-130-0000029_0102
POL00448861
POL00448861
Further detail on Operational Excellence Incentives (OEls)
Why are we
launching OEls?
What are the
proposed metrics?
What are the key
enablers?
What are the
timelines?
What are the
financial impacts
for POL & PMs?
eS eS oe
Branches are required to perform various back office activities such as cash counting and end of day balancing. These
activities, which account for ~25% of branch workload, are currently remunerated indirectly via the rates we pay for
product sales rather than through a specific payment.
Compliance across the network is mixed, resulting in increased costs for POL e.g. discrepancies & interest. OEls are
designed to directly reward compliance, creating a win-win cycle of improved profitability for both sides.
The scorecard used to determine the payments has been developed through extensive engagement with PMs. We
are proposing 4 simplified measures for the first iteration: 1) completion of the monthly Trading Period Balance (a
gateway measure); 2) daily cash declarations; 3) cash pouch errors; and 4) retention of excess cash.
Compliance against these metrics will enable branches to earn up to a 5% monthly boost to variable rem.
We will commit to keeping these metrics under review to achieve right outcomes for both POL and PMs.
To give branches the best chance of success we will support the launch of OEls with 3 critical enablers:
i. A comprehensive package of online and in-person training support, including the relaunched digital Operations
Manual and continued Operational Excellence Visits led by Area Managers
ii. Anew dashboard on Branch Hub providing timely MI on performance against the OEI metrics
iii. The roll out of high grade note counters to c2,800 branches
We are proposing to launch the OEls from August trading / September remuneration, to allow time for branches to
properly get to grips with the new scoring mechanism.
We will share monthly ‘dry run’ data in the intervening period, to enable them to understand their current
performance levels and what they need to do to close any gap against the full 5% award.
Current average award against the OEls scorecard,
costing
Is of compliance across the network would generate
auvantion an annualised basis. 100% compliance across the
's is that over the first s we will see an improver
taverage award, costin
e is expected to be broadly
«tin 2024/25 based on the August launch.
interest & discrepancies from 2025/26.
et by equivalent cost saving:
POL-BSFF-130-0000029_0103
Post Office Limited - Document Classification: INTERNAL
FY24/25 Financial benefits from Change spend programmes
Live Change Spend Programmes are
POL00448861
POL00448861
expected to drividgaiatabof benefits in the FY24/25 plan, which is a net YOY increase offtttittf profit. Benefits for closed
programmes are no longer tracked, however, at the time of respective closures droveliatiitabf annualised benefits of whici{ieMAMtits from historical DMB programm
Revenue Growth
Banking Services &
ATMs
Mails
International Money
Transfers
All Other
PO!
Network
Cost Reduction
clo
Network
Government Ser
: IRRELEVANT
}
i
PO! {___}p year benefit from PO! Protection Supplier Change, with no incremental change
Supply Chain i in saving lesg=-«-=bf new cost for the outsourcing of the Swindon Cash Centre
All Other I _fnssaving from moving eKYC service from DIGI to Yoti
New Recurring Cost Toy
Mails 10m incremental Postmaster Remuneration and new run costs associated with the delivery of the fmasmur/ew non-RM mails revenue
! large proportion of thé#s=!) 24/25 cost relates to costs for fibre connection replacing old Coppércoririéction in branches. Thé rsws'YOY cost increase relates
clo i increasing numbers of branches moving to fibre connection, an indexation increase in the cost of PCI compliance, further Branch hub Fesource costs becoming
IAU costs and increased application costs
para Services & M rem and run costs associated with ATM revenues as delivered by the ATM Strategy programme
neeiraticr Srey aa I 'M rem and run costs associated with Western Union
Transfers I
res arious new recurring costs{="s="="bf which relates to PZ integration, ie. alignment of PZ staff benefits to POL when they become POL employees and new
= ocurement resource
Network rop and collect enhancement costs
Total Benefit
lI ATM revenue is dependent on the ATM Strategy!" YOY reduction is due to decline in cash usage
‘revenue growth from Mails Strategy initiatives, including the introduction of new parcel carriers and further rollout of the Amazon proposition
/estern Union revenue, £3m YOY increase
lof Credit Card revenue (one of several credit card products) discontinued resulting in a YOY decline
‘revenue in 23/24 is one-off benefit from the implementation of the POI Regulatory and Compliance Change initiative, resulting in a YOY decline in revenue
refit
{Projected revenue loss from planned DMB closures, branch churn, partly offset by revenue growth from Drop and Collect branches
fn
vs.es"tost reduction in 24/25 of which a large proportion relates to 1) Verizon costs as Copper line connection in branches are replaced, 2) saving from moving
“onnectivity away from Verizon sites and 3) a reduction in Fujitsu run costs from the delivery of CIO programmes.
‘if the YOY benefit relates to savings in costs and fixed PM remuneration from the Hard To Place and Network Strategy Acceleration programmes, £2m relates
JMB savings gelates to Operational Excellence (note counter implementation) benefits and £0.5m cost saving from branch churn
"cost reduction benefit for delivery of DVLA & SIA services using tablet devices across an expanded network and decommission of the AE! booths.
POL-BSFF-130-0000029_0104
Post Office Limited - Document Classification: INTERNAL
Breakdown of Costs by Activity
Retail Operations Staff Cost incl. field team
Branch Discrepancies
Stationery
Retail Engagement Staff Cost
Central Operations Staff Cost
Strategic Partners
NFSP Grant
Postmaster Other
Fujitsu Costs - Horizon Support
Verizon Network costs for supporting branch
DXC Branch
CIO Other
Planned Maintenance
Estates Fees
Utilities
Property Other
I2) Cost of cash access
Cash Values in Transit
Cash processing & verification
Central Support
Supply Chain Other
Royal Mail Cheque Pouches
ATM Maintenance
Staff Costs
Barclays Cheque Processing
ATM Software
Banking & ATMs Other
POL00448861
POL00448861
56
POL-BSFF-130-0000029_0105
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Breakdown of Costs by Activity
3) Back office central costs
Corporate head of ost of sales and any oth
I4) Revenue suppo
ing costs e.
Staff Cost Marketing
Keences Contact Centre & Operational
Accenture Staff Cost
DXC Colleagues ed
CFO copier
Customer Experience
aa Staff Cost
Insurance Customer Experience Other
Aa Far Renee Mas
CFO Other Staff Cost
People Mails Segregation
Staff Cost Mis-selling Penalty
Insurance Project Opex
Apprenticeship Levy Mails Other
Healthcare mun! Payment Services & Payzone mn
Training & Development Staff Cost
People Other T
ts con
Legal Payment Services Other
Compliance .
cue Stock Operations i
peas Cher HMRC Fees
Hedging Losses
Travel Money Other
Cost of Sales
_, RL 57
POL-BSFF-130-0000029_0106
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Product Profitability Analysis: Mails
At a produ: ‘ted to be at
bi
2024/25
Non-Staff
Vi
Product @ d PM Rem Staff Costs
Mails RM labels
Mails RM Special Delivery
Mails RM Home Shopping Returns
Mails RM International Priority & Standard
Mails RM Acceptance i
Mails RM Stamps i
Mails RM Parcelforce i
Mails RM Other Trading
Mails RM Mails Other
Mails RM Mailwork i
Total Mails RM '
Mails Non RM Sale in Branch
Mails Non RM Click and Collect
Mails Non RM Drop-off Purchase '
Mails Non RM Returns H
Mails Non RM Online Platform i
Total Mails Non RM :
Total Mails
58
POL-BSFF-130-0000029_0107
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Product Profitability Analysis: Banking and ATMs
I profit level, all Banking products are exp ing supported by the Saal Banking Framework fee.
Allocated
overheat
Allocated
Pr
Non-Staff Notional
Costs
Variable PM Variable
Cost of Sales xed PM Rem Staff Costs
Rem contribution
Revenue &
Product
Income
Banking Services Deposits
Banking Services Withdrawals
Banking Services Banking Other
Banking Services Change Giving
Total Banking Services
ATMs ATMs
Total ATMs
Total Banking & ATMs
59
POL-BSFF-130-0000029_0108
Post Office Limited - Document Classification: INTERNAL
Product Profitability: FS-INS-TM-IMT
Notional profit across all product areas, with ex
tion of Home Insurance which is exp
ed to be slightly loss making
POL00448861
POL00448861
2024/25
Business Unit Product
Travel Money Travel Money - Branch
Travel Money Travel Money - Online
Total Travel Money
Mortgages, Savings & Loans — Mortgages, Savings & Loans
Total Mortgages, Savings & Loans
International Money Transfer MoneyGram
International Money Transfer Postal Orders
International Money Transfer Western Union
International Money Transfer
Credit Cards
Total Credit Cards
Pol Travel Insurance
Pol Protection
Pol Home Insurance
Pol Motor Insurance
Pol Other Insurance
Total PO!
Revenue & — FRESProfit Variable PM
Income
Cost of Sales
Share Rem
Total FS-INS-TM-IMT
Variable
contribution
Fixed PM Rem Staff Costs
Notional Allocated Allocated
overheads Prof
A
AJ
mM
r~
<
>
z
_
60
POL-BSFF-130-0000029_0109
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Product Profitability: Other
POL Bill Payments profit making at a notio!
I level, Payzone slightly I
Revenue & Variable PM Variable Non-Staff Notional Allocated Allocated
Business Unit Product Cost of Sales Fixed PM Rem Staff Costs
Income Rem contribution Costs Profit overheads Profit
Payment Services & Payzone _ Bill Payments
Payment Services & Payzone _Payzone i I R R E L EVAN T
Total Payment Services & Payzone I
Retail, Government, Identity: All products profit making at the notional profit level
2024/25
i Revenue & Variable PM Variable Non-Staff Notional — Allocated —_— Allocated
Business Unit Product Cost of Sales Fixed PM Rem Staff Costs
Income Rem contribution Costs Profit overheads Profit
Retail & Gift Cards Gift Cards Zz
Retail & Gift Cards Retail i
Total Retail & Gift Cards I
Government Services DVLA H
Government Services Home Office !
Government Services uKVI i
Government Services Other H
Total Government Services I
Identity Services Document Certification Service i
Identity Services Yoti H
Total Identity Services i
Total Retail, Government & Identity i
61
POL-BSFF-130-0000029_0110
POL00448861
POL00448861
Security Headroom Drivers
FY24/25 Baseline:
‘£m FY23/24 P1 P2 P3 P4 P6 P7 Ps Pg P10 Pil P12 Fy24/25
Security Headroom Brought Forward
Trading profit
FRES Profit Share (non-cash)
FRES Dividend
Interest
Change Spend
Remediation Compensation
Network Subsidy
Investment funding
Investment loan
Movement in payables
Other
Security Headroom Carried Forward
IRRELEVAN
<Lowest point>
62
POL-BSFF-130-0000029_0111
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Sustainable affordability: Implications on FY25/26
Based on all considerations of the Business Plan, decisions on the quantum of FY24/25 Change spend must be balanced with a view of sustainable affordability.
Whilst additional change spend of tin FY24/25 may not breach Security Headroom in FY24/25 it erodes the ability to manage cash flow and self-funded
investments in FY25/26 and beyond as demonstrated by these scenarios. This is further impacted by the expectation that a Trading loss will be made in FY24/25
———
(iti
MAXIMUM FY25/26 AVAILABLE CASH OF recevanr!
MaxiMUM FY25/26 AVAILABLE CASH OF," MAXIMUM FY25/26 AVAILABLE CASH OF! mastevav
IRRELEVANT
Security FY24/25 Other Security Security FY24/25 Other
Security Security FY24/25 Other _— Security
Headroom Change Cash Headroom Headroom Change Cash — Headroom Headroom Change Cash — Headroom
end- Spend Movements — end- end- Spend Movements end- end- Spend Movements end-
FY23/24 FY24/25 FY23/24 FY24/25 FY23/24 ry24/25 63
POL-BSFF-130-0000029_0112
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Cover Page
fTitle: I P11 — Performance Overview 25th March 2024
Potted — Strategic Financial Planning & Analysis Sesser RatheynisheratelntenmiGro
Input Sought: Noting
The purpose of this slide deck is to provide details and analysis on the Period 11 financial performance.
The Board are asked to note the P11 performance.
POL-BSFF-130-0000029_0113
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Executive Summary (1/3)
1 Total Revenue ani
jabove budget). The incentive commission is recognised in P11 when it becomes virtually certain
following confirmation from Bank of Ireland. Banking services revenue was ahead of budget in the mont! ied by a volume recovery in Deposits; on a YTD basis Deposit
revenue has now caught up to be in line with Budget. Post Office Insurance revenue underperformed ag ith budget and forecast, with Travel and Protection insurance
sales continuing to be adversely impacted by.the negative press coverage.
is has translated to a Trading Profit of {1% wrt in P11 and a YTD trading profit of “labove budget and! under prior year). This has surpassed the:
wae FOrecast Trading Profit (as wemnted to the Board on 1% March), however the full year outturn continues to be reviewed based on potential year end adjustments.
Mails Revenue i
2 * P11 Mails revenue of as in line with budget, but jisscevanr} under forecast, largely due to underperformance in 2nd class labels.
+ YTD Mails revenue is head of budget, however he launch of Tracked and further expectation of RM price increases this is putting pressure on FY24/25 Mails
projections although partially offset by growth in revenue streams with other carriers.
+ Compared to prior year, total Mails revenue was uflw.smin period, largely due to the impact of RM cyber attack on International volumes in the same period last year (estimated to
beliersusnsrin the month). When adjusting for this the YoY growth isIs=mtvith the decline in RM Labels, being offset by growth in Non-RM carriers.
Banking & ATMs Revenue
Banking services revenue oft lahead of budget due to higher deposit volumes and !neeve
3 both personal and business banking deposits, ATVs remain under budget due to deposit limit regulations:
growth in P11 and 6% growth YTD.
* The outperformance from P10 and P11 has offset previous revenue underperformance on deposits, which are now in line with budget YTD at!
performance on deposits has continued into the first week of P12.
+ ATMs revenue under both budget and forecast due to an ATM classification issue with Vocalink which has impacted the commission rate applied. This is
expected to be resoived pre year-end, with the additional revenue missed from P11 to be recognised in P12.
head of forecast due to higher volumes and higher ATVs across
rétal banking revenue continues to increase year on year with 10%
This strong
Other Revenue
4 + Post Office Insurance revenue and forecastfirrevevan; With Travel and Protection insurance searches, online traffic and
sales notably down considered to be adversely impacted by POL press coverage. Insurance sales Nave recovered slightly in P12, 4% up on budget in the first week of
the period, although slightly under forecast. Protection insurance remains more of a challenge with daily reviews of marketing and social media activity which has been
significantly paired back since January.
* Mortgages, Savings, Loans revenue of
higher interest rates for longer thal fer margins across the BOI products.
* Government Services Revenue of! "J under budget, with UKVI revenue of is is considered to be an impact of the changes to
student visa requirements preventing students from bringing dependents to the UK. The YTD upside on UKVI at P11 neewa and almost all of this could be offset by the
end of the year. ~ 2
iunderperformed against both budge’
Jabove budget) includestissetevanr} of Bank of Ireland incentive commission; This wasi"="} higher than budget due to
POL-BSFF-130-0000029_0114
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Executive Summary (2/3)
Postmaster Remuneration (PI
* P11 Variable PM Rem of
igher than budget, from outperformance in high rem generating Mails and Banking products (Special, Dellveny and Deposits); and
“I above forecast, lar n by Banking and Lottery (with final transactions occurring in the first week of P11). YTD Variable PM rem
revenue, an increase from ® in prior year. This is driven by Banking (which has benefitted from two rate increases) and Mails, where the YoY revenue decline from Labels
(lower rem generating) is offset Py other (higher rem generating) products which have remained stable.
+ YTD Fixed PM Rem of {_ below budget predominantly from lower exceptional payments. There continues to be a conscious shift away from loss making and
poorly used branches, replacing aire with Drop & Collect and focusing fixed payments towards commercial branches. The Rem Strategy will continue to be assessed and
reviewed through FY24/25 and beyond.
6 Staff costs and Headcount
+ P11 Staff Costs I over budget withimsartidue to delay in DMB Exits and from unbudgeted GLO resourcing costs which are expected to be settled
by DBT in P12; this has been partially offset by updated bonus accruals and unutilised CIO sala se provision. Agains' is
due to updated bonus accruals with further refinement and adjustments likely as we approach the year end. As at the end of P11, headcount is 62 FTE above budget - with 81
FTE over budget in Postmaster (due to delay in DMBs exit) offset by open vacancies in Supply Chain, ClO and People.
that have been, and in some areas remain, unfilled across the business.
7 Non-staff cost . jonny
+ P11 Non-Staff Costs oft wer than thé maewrforecast. This is driven by c.
off social media“éfannels and lower BOI Eagle
+ Based on the original construct of the, vi with a gap of
+ However, since the Remco have approved the fungibility principles of classifying ‘genuine and intended’ savings achieved elsewhere towards the {enctevan hallenge, the
latest forecast suggests that the full {
+ We are focusing on refining the evidence of these cost savings being achieved as part of year end processes.
POL-BSFF-130-0000029_0115
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Executive Summary (3/3)
9 Open Branch network
+ The network increased by 47 branches in February to finish at 11,783 branches. This increase was largely due to re-openings of Outreaches.
+ A further 18 Drop & Collect branches were opened in the month, with 552 trading and 575 Drop & Collect branches live by the end of February. Drop & Collect openings will
continue to grow through to the end of March, and we plan to have over 600 locations as we start the new financial year.
+ With the current forecast we are looking to maintain a stable network number through to the end of the financial year and into Qi of FY24/25.
1 0}! Investment and Change Snend_fexcluding project Opex — to be included from P1 FY24/2!
P11 Change Spend of with underspends driven by fim
disputed supplier invoices in ATM Banking Strategy: "inderspend across SPM and v.
in VAT refunds (not controllabl
CIO projects; these underspend
layed costs (timing differences) from
been partially offset by)"***ev"tidelay of
proceeds fro! xpected in P12) and: verspend in Remediation Unit.
+ YTD spend of below budget with the full year forecast expected to remain below budget.
+ Based on th rom costs being
rephased into FY24/25, removal of contingencies and savings/underspend in P11.
The implications of this rephasing into FY24/25 is being assessed with regards to the FY24/25 Budget (proposed I
1 1 Security Headroom
ined throughout the year).
= RU/Inquiry spend (over and above the’
iscussions and should this position change this would provide additional SH upside.
position throughout FY24/25. The lowest point w
* The SH forecast assumes an unfunded variance of
contingency); these are subject to ongoing business G
POL-BSFF-130-0000029_0116
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Scorecard
3-Month 12-Month
POL Scorecard - FY23/24 Period 11 Rolling Rolling
Average Average
Vai ce RAG to Variance to IRAG to P!
Budget I”
to Budget Budget Prior Year Year
[Trading Profit POL Mm e——_— TT
ITotal Postmaster Rem (excl. merch commission) POL £m
[Total PM Rem % Revenue POL %
Variable PM Rem % of Variable Revenue (YTD) POL %
[Total PM Rem % Cost POL %
Change Spend (excl. RU and SOA) POL £m
Security Headroom POL £m
Number of Branches POL #
FTE POL #
Mails Labels Volumes commercials
Banking Deposit Volumes Commercial #
Deposit ATVs Commercial £
\Travel Money Sales Volumes Commercial #
'Travel Insurance Sales Volumes commerctalllte
BoE Base Rate Commercial %
(Increase)/decrease in PM discrepancy provisions Retail £k
'Transaction Corrections Retail #
Major Incidents It #
Incidents iT #
Branch Down Volumes IT #
+ There has been a big increase in Transaction Corrections (TCs) in P11, because of the lottery exit and the ~ percentage points
issuing of 5,000 nil value TCs. pp = pi ge p
POL-BSFF-130-0000029_0117
POL00448861
POL00448861
nt Classification: INTERNAL
Post Offic
Profit Before Tax
Actual Budget 943 Forecast. Variance toy, YoY YoY % Actual Budget Variance YoY YoY %
budaet..
Limited - Docum
Mails - RM
Mails - Non RM.
Retail/Lottery & Gift Cards
Government Services
Banking Services
ATMs
International Money Transfer
Travel Money
Payment Services & Payzone
Voucher Encashment
Mortgages, Savings & Loans
Credit Cards
PO Insurance
Identity Services
Supply Chain/Other
Total Revenue
Cost of Sales
Postmaster Rem Variable Costs
Postmaster Rem Fixed and Other Costs
Merchant Commission
FRES
POCA Other Income
Gross Margin
Staff Costs
Non Staff Costs
Total Overheads
Trading Profit/(Loss)
Network Subsidy Payment
EBITDA
Depreciation
Interest
Exceptional Change Spend
Remediation Settlement/Reimbursement
Investment Funding
Profit/(Loss) On Asset Sales
Profit/(Loss) Before Tax
IRRELEVANT
POL-BSFF-130-0000029_0118
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
P11 YTD Trading Profit vs Budget
P11 YTD Revenue and Income is c.£38m higher than budget, largely driven by opportunities arising from external factors, such as higher
interest rates and delay in RM tracked product. Last March, the business agreed to increase PM Rem through implementation o1 f cost
challenges, towards which significant focus has been shifted in ensuring this was delivered.
23/24 Budget P11 VID. Unbudgeted Revenue + income Mi Costs F¥25/24 Actual P11 VID
POL-BSFF-130-0000029_0119
POL00448861
POL00448861
Appendix
}00029_0120
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Staff costs and Headcount
P11 Staff Costs offfieeamuavere [iim ver budget with Siieuty due to delay in DMB Exits and geaegegt from unbudgeted GLO resourcing costs which are expected
to be recharged to DBT later in the year; this has been partially offset by updated bonus accruals and unutilised CIO salary increase provision. Against 9+3 forecas
staff costs werd i@eMtt#lower, largely due to updated bonus accruals with further refinement and adjustments likely as we approach the year end. As at the end of
P11, headcount is 62 FTE above budget — with 81 FTE over budget in Postmaster (due to delay in DMBs exit) offset by open vacancies in Supply Chain, CIO and
People. YTD staff costs offfqaataet are under budget, which include {MSM4M@j for unutilised salary increase provision within ClO, {MBSM} for GLO resource
costs yet to be recharged to DBT, a changed DMB budget assumptions and GSEMMMFfor bank hub staff costs. On an underlying basis, after adjusting
these, staff costs are c under budget, largely driven by the vacancies held throughout the year across the business.
Period 11 FTE (excl. contractors)
Var to Mvt in
Budget _year
943 Variance Variance
Forecast to budget to 9+3.
Actual Budget YoY YoY % Actual Budget Variance YoY YoY % Actual Budget
Banking & ATMs
Payment Services & Payzone
FS-INS-TM-IMT
Mails, PUDO, Retail, Government and Identity
Commercial Planning & Strategy
Central Commercial
Total Commercial
Customer Experience
Postmaster
Network
Supply Chain
Property
Retail Central
Total Retail i
clio
BTU
cro
People
Leas
Remediation Unit
Strategy & Transformation
Communications
Central
Total
POL-BSFF-130-0000029_0121
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Non-Staff Costs
P11 Non-Staff Costs of gms were gitiitg under budget and gaat lower than 9+3 forecast. This is driven by c. ¥BRMf lottery provision releases, c RgmiMlower
spend across commercial including reduced PO! marketing from turning off social media channels, and lower BOI eagle fund spend, £0.7m additional VAT
recovery due to a higher recovery rate in Q3 and £0.8m lower spend within CIO of which aa is genuine saving and fay related to timing. YTD Non-Staff
costs of {meNANINE are now YggewMiunder budget and based on the latest forecast, we expect c. {iiiiifof higher than budgeted non-staff costs in P12
Period 11 P11 In month - Commentary against
3 Variance to Variance to ‘
Cost Type Actual Budget, 93 ‘ eto YoY YoY % ‘Actual Budget_-Variance. YoY yor% Cost Type:
Staff & Agent Related Costs + Finance & Losses - release of lottery
Consultancy & Advisory Services provisions no longer required now
Finance & Losses POL has ceased providing Lottery
IT Infrastructure & IT Services H service.
Legal Costs I
Managed Services i IT Infrastructure & IT Services -
Marketing & Communications i i wreevanrof Savings and £0.4m timing.
Postage
Property & Facilities Management
Legal costs - timing difference on the
unbudgeted project Rose Bow! (£0.8m
Other Operating Costs
Total Non Staff Costs accrued in P11).
_ a oe a) + Other operating costs - additional
BU Actual — Budget precast budget AB YoY YoY % Actual Budget_—-Variance. ~—-YoY YoY % Vv covery from higher rate in Q3
Commercial Tarcuevant! higher proportion of OBC
Retail H ‘(Operational Business Change) works
clog eT i I recharged to Postmasters
cro ' Network programme opex ‘délayéd
People i spend fs delay in the purchase
Leas of Property equipment, due to delay in
Communications the signing of the new contract with
Centrally Managed/Other the supplier wee
Total Non Staff Costs os
10
POL-BSFF-130-0000029_0122
POL00448861
POL00448861
Post Office Limited - Document Classificat
Investment & Change Spend
P11 Change Spend, {ieetetagis lower than previous forecast, with underspends driven by [aagiad in VAT refunds, fi
supplier invoices in ATM Banking Strategy, Sgtifunderspend across SPM and various CIO projects, partially offset by H88kdelay of sale of assets and
In: INTERNAL
overspend in Remediation Unit. YTD spend off @GRSWSNMN below budget with full year forecast expected to remain below budget
Period 11 vro Fy23/24
Project Groupings
‘Other Change Spend Top 10 Budget FY2A/25
‘Other Change Spend = CIO
‘Other Change Spend - Commercial
‘Other Change Spend - Retail
‘Other Change Spend - Supply Chain
‘Other Change Spend - Other
Proceeds from Sale Of Assets
‘Net Other Change Spend
Remediation
POHIT Inquiry
Remediation & POHIT Inquiry
‘Next Generation Maile Automation
Strateglc Technology Programme
Horizon Replacement CO projects
Replacement of Horizon
[Total Change Spend
‘Net Other Change Spend raeievasrjf which:
Implication on full year
In month variance
plication on FY: SOA & ATM Banking main in month
“ale of Assets Sale of Frederick Street branch included in Forecast for P11 has slipped to P12 due to an issue withthe ttle deed document. He et Greif? eaerO LT BiaI Meee ae Tee
cei “ATM Banking Strategy P10 & P11 invoices being queried with supper, therefore votes not good receipted in P11 ees Se ee
Change notable variances: iy
‘Spend “WAT recovery spread across various projects Full Year expected outturn: Reduced frr ~ Kross Other
Pci Complance as 10+2 forecast was not updated Change Spend from costs being rephased ino FYZUZS, removal of
{ies.evi bata Cantre Fortification underspend in Legacy OS Migration, underspend resulting from a new PM in iewalls project, network and resource isues for Windows XP. contingencies and savingslunderspend in PLL
I __edence MOM Tactieal Upgrade due to issues wth completion of User Acceptance Testing, leading to milestones not being met
Ful ang expected outtumn:
RU and Remediation Unfanaaanrpverspends predominantly driven by catch up of costs in CCRC due to PAP legal fes relating to criminal appeals and Overtumed Convictions due to tho incense taehde oN
Inquiry higher HSF fees $25éziated with the Upfront Offer and further unbudgeted Restorative Justice costs. ri hey i tr beberle
September 2024,
Replacement of Hotzon (mana In month valance lnplication on FYSPM revised forecast is a fone=ba year
1 7 Pe reduction partly triggered from in month variance with further reductions
Replacement { Strategic Technology Programme of whic wings (reduction) due to VAT refundi="= of resources not correctly charged. planned for March in resourcing, AWS and 3rd party support.
Peroranes lemsumbsty due to lower than expected 3 party sipport ;
JT Second Device over optimism in the forecast submitted forthe Prove case Full Year expected outturn: Reduced tron
nnd Application Modernisation delays and Fujteu fare to provide a delvery plan Replacement of Horizon projects mostly driven by Pit sevingslunderspend
in PLL.
11
POL-BSFF-130-0000029_0123
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Open Branch Network
The network increased by 47 branches in February to finish at 11,783 branches, largely due to re-openings of Outreaches. A further 18 Drop & Collect branches
rading and 575 Drop & Collect branches live by the end of February. With the current forecast we are looking to maintain a
were opened in the month, with 5!
stable network number through to the end of the financial year and into Q1 of FY24/25
Network numbers for February 2024, = February's open branch count finished at 11,783 slightly ahead of forecast due to re-
showing the month-on-month change by openings in the Outreach format.
format
= A mobile van in the Lake District region representing 17 stops was off the road in
January. It has since been repaired and traded in February.
Number of outlets} Jan 2023 I Feb 2024I Net = 575 Drop & Collect branches were live by the end of February with 552 trading. D&C
inthe network I (Traded) I (Traded) I Change openings will continue to grow through to the end of March and we plan to have over
600 locations as we start the new financial year.
Mains 3,278 3,273 5 = Churn is forecast to finish at a similar level to 2019/2020 and 2020/2021.
Local 4,209 4,207 2
11,777
" "I
peri: February re pening tpn
DMB 115 115 0
Traditional 1,800 1,787 -13
Drop & Collect 534 552 18
Outreach 1,800 1,849 49
Total 11,736 11,783 47
12,
POL-BSFF-130-0000029_0124
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Security Headroom
urity Headroom in P11 offal was iiueemap wer than forecast, resulting from timing of cash receipt on BOI incentive commission (EAA) and
RU/Inquiry funding (gatetftt] BOI incentive cash is expected in P12, with RU/inquiry funding forecast to be revised following further discussion. The Baseline
Budget for FY24/25 assumes {@848RMU/Inquiry contingency funding and {489 Horizon replacement funding resulting in a positive Security Headroom
position throughout FY24/25. The lowest point would befMMMMilin Dec-24 (noting a recommended buffer of giimaintained throughout the year). The SH
forecast assumes an unfunded variance of cliff change spend on SPMP (over and above the and clit} of RU/Inquiry spend (over and above the
Wet contingency) - these are subject to ongoing business case/ discussions and should this position change this would provide additional SH upside
700
600
500
400
300
200
100
o
o
eo
SDH MDD DD DD DD 2
yw s ‘\
2 PP DP
SK HP GM KH VM LK WK 8
PO Do bh
StH KK
Actual Feast - Baseline
13
POL-BSFF-130-0000029_0125
POL00448861
POL00448861
Post Office Limited - Document Classification: INTERNAL
Loan and NRF Utilisation
jiod (Janua
sting to enter the
Apr-23 y-23 jun-23 Jul-23
Available NRF ‘Available WCF sms Additional NRF Board Approved Buffer =mmeLoan and NRF Utilisation _##*ee Loan and NRF Forecast
14
POL-BSFF-130-0000029_0126
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
weds FY23/24 Outturn - Postmaster y ‘i th
Title: proposal Meeting Date: I 25'" March 2024
Asha Patel - Director of FP&A
Author: Martin Edwards - Network Strategy I Sponsor: Kathryn Sherratt - Interim CFO
& Delivery Director
Input Sought: Decision
The purpose of this paper is to set out the considerations around the quantum, mechanism and
timeline of a Postmaster proposal for which the SEG are requesting Board approval.
Executive Summary
Based on the latest forecast view of trading performance for FY23/24, taking into consideration
POL's online performance and the upside received in P11 through the Bank of Ireland’s
Incentive Commission, the Strategic Executive Group recommend that an additiona
shared this year with Postmasters. AS a one- -off proposal over and above (and separate
the year 23/24 which is made in Api 2024.
Such a proposal would be announced to Postmasters within this financial year (aligned to the
creation of a ‘constructive obligation’) alongside a package of Remuneration announcements
(see Appendix 1). This announcement is currently expected to be either Wednesday 27' March
or Thursday 28'" March before the year end.
Report
1. Based on the P12 forecast and an expectation of some likely year~ end adjustments, the
FY23/24 Outturn is currently projected to be in the region of I mneLEVANT} This, of course, is
2. This proposal of £4.7m would reduce the FY23/24 Trading Profit Outturn accordingly, with
a direct impact on SH for next year, reducing the low point to ci
3. Consideration has been given as to whether this proposal could be increased further e.g.
uplift. The implications of this would be a further reduction to the low-
point in SH with a risk of getting closer to the ‘Board approved buffer.
4. This risk must be considered in light of other unknown and emerging adjustments as part
of the year-end and audit process, for example IR35, which would reduce next year’s
security headroom should it need to be provided for.
Internal
POL-BSFF-130-0000029_0127
POL00448861
POL00448861
@
SH buffer is utilised, in order to preserve a positive SH position (recognising
the nature and quantum of working capital swings) appropriate management action would
need to be taken e.g. stopping ‘Other change spend’ programmes, deferral of supplier
payments which management are keen to avoid.
Financial Impact
6. As noted above, this proposal would have a financial impact of
Trading Profit and FY24/25 Security Headroom.
Treducing FY23/24
Risk Assessment, Mitigations & Legal Implications
7. As noted above.
Stakeholder Implications
8. To be discussed with Board and subject to Board approval this will be announced to
Postmasters. Overall, it is expected that this proposal will be received positively by
Postmasters and compliment and strengthen the reception of the Remuneration package
for next year which is broader in nature and outlined in Appendix 1. However, there is
recognition that the remuneration package when taken together with this separate
Postmaster proposal will be compared to inflationary pressures, in particular the 10%
increase in National Living Wage.
Next Steps & Timelines
9. If approved, this proposal would be announced to Postmasters within this financial year -
either on Wednesday 27" March or Thursday 28'" March (TBC)
Internal
POL-BSFF-130-0000029_0128
POL00448861
POL00448861
Appendix 1
Summary of 2024/25 rem package (DRAFT)
Main measures:
‘CPLA tar changes for RMG products already announced generate
12 months volumes)
. get coe te oe} oe oe ee ee eee)
trading I
Internal
POL-BSFF-130-0000029_0129
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
weds £50m Short Term Facility Meeting
Title: ‘Amendment Date: 25 March 2024
Tom Lee, Group Financial P
Author: Controller Sponsor: one Group
Peter Mitchell, Group Treasurer.
Input Sought: Approval and Resolution
Board is asked to approve the amendment to extend the Department of Business and
Trade (“DBT”) Short Term Facility by one year to 31 March 2025.
Consequently, Board is asked to pass the resolution set out in the Appendix.
Executive Summary
DBT provide two liquidity facilities to Post Office Limited, bei ‘Working Capital Facility
(“WCF”) and A recevan Short Term Facility (“STF”). The} Timnes evant WCE requires one-day notice for
draw downs, wh r STF is a same day facility” ‘Tie STF is therefore an emergency
short-term facility to cover unex, events in client settlements. To date the STF has not
been drawn down on, however a increase in banking deposits would require a same-day
drawdown and therefore in such an instance the STF would be required.
The STF is currently scheduled to end on 1 April 2024. The proposed extension will extend the
term one year, to 31 March 2025, aligning the end date with that of the!
Facility. Both facilities are due to be renegotiated / extended with DBT ahead of the 31 March
25 end date.
Strictly Confidential
POL-BSFF-130-0000029_0130
POL00448861
POL00448861
@
Appendix
Board Resolution
Amendment Letter (the “Amendment”) relating to the £50 million short term credit
facility agreement entered into between The Secretary of State for Business and
Trade (as lender) and Post Office Limited (POL) (as borrower) on 4 April 2019 (as
subsequently amended from time to time)
“Having carefully considered the terms of the Amendment, it was unanimously resolved
that:
e the terms of the Amendment and any other documents ancillary to, or to be entered
into by POL in connection with, the Amendment or the transaction, including bank
mandates, subscription letters, utilisation requests and selection notices (the
“Ancillary Documents") be and are approved by POL; and
* any one authorised person is authorised to execute the Amendment or Ancillary
Document which is not being executed as a deed and any two directors and any one
director and the secretary of POL are authorised to execute and deliver any Ancillary
Document which is to be executed as a deed (in each case with any amendments,
variations or additions that he or she in his or her absolute discretion considers
appropriate).”
Strictly Confidential
POL-BSFF-130-0000029_0131
POST OFFICE LIMITED
BOARD REPORT
POL00448861
POL00448861
Integration of the Payzone Ltd
Title: business into Post Office Limited Meeting Date: I 25 March 2024
Barbara Brannon, Product Portfolio
Author: Director ~ Retail & Lottery, Sponsor: Owen Woodley, Deputy CEO
Government & International
Payments Services
Input Sought: Approval
The Board is asked to formally approve the integration of the Payzone business into Post Office
Limited which it is proposed is structured such that Payzone Bill Payments Limited (PZ) shall
declare a dividend and satisfy the payment of that dividend by transferring the assets and
liabilities of PZ to POL.
Capitalised terms used, but not otherwise defined, shall have the meaning given to them as
defined below in this Board Report.
In connection with the Payzone Integration, the Board is requested to resolve to:
Confidential
approve the form and circulation of the DBT Written Consent;
subject to the receipt of the duly executed DBT Written Consent and subject to the
board of PZ (the PZ Board) confirming the Distributable Reserves Position:
a.
b.
c.
approve the entry by the Company into the POL Written Consent;
approve the entry by the Company into the Capital Contribution Documents;
approve the entry by the Company into, and the circulation of, the Retailer
Notices;
approve the entry by the Company into the Deeds of Novation;
subject to the execution of each Deed of Novation, approve the delivery by the
Company of the corresponding Confirmation of Novation;
subject to no response being received from a Remaining Transfer Party by the
integration date (or such later date as determined by POL):
i. where such Underlying Agreement does not permit assignment, approve the
delivery by the Company of a Confirmation of Transfer (by way of novation
by conduct) to such Remaining Transfer Party; and
ii. where such Underlying Agreement does expressly permit assignment,
approve the delivery by the Company of a Confirmation of Assignment to
such Remaining Transfer Party;
approve the adoption by the Company of the Payzone Integration Sourcing
Strategy;
approve the entry by the Company into the Deed of Assignment of Trade Marks;
approve the entry by the Company into the Direct Award Novation Agreements;
approve the entry by the Company into the British Gas Novation Agreement,
novating the settlement agreement between PZ, the Company and British Gas;
POL-BSFF-130-0000029_0132
POL00448861
POL00448861
@
k. approve (or if required, ratify) the entry by the Company into the intra-group
Deeds of Termination;
lL; subject to the entry by PZ into the Deed of Surrender and the Tripartite
Agreement, approve the entry by the Company into the New Lease Agreement;
m. subject to the declaration of the Dividend-in-Specie and the circulation of the
Dividend Resolution by PZ:
i. approve the entry by the Company into the Dividend Resolution such that a
dividend on the share in the capital of PZ shall be satisfied by the transfer of
the entire trade and business of PZ to the Company as documented by the
Business Transfer Agreement; and
ii. subject to the approval of the entry by the Company into the Dividend
Resolution, approve the entry into the Business Transfer Agreement; and
n. approve the entry by the Company into the Bulk Change Deed and Deed of
Indemnity in relation to transfer of PZ bank accounts;
©. approve the entry by the Company into the Power of Attorney;
p. entry into (and, if required, the ratification of the entry into) any other documents
necessary and taking any action necessary to give effect to the Payzone
Integration including but not limited to the entry into tax election notices and VAT
deliverables, and any further documents approving the transfer of ownership of
any agreed PZ bank accounts to the Company; and
iii. in relation to the Proposals generally, any person appointed Attorney pursuant to the
terms of the Power of Attorney is hereby authorised to do all such acts and things and
negotiate, approve, agree and execute on behalf of the Company all such other
documents to or in which the Company is a party or is otherwise interested and all other
documents as any such person may consider necessary or desirable in the context of
the Proposals.
Executive Summary
In January 2023 the PO Board approved the integration of PZ into PO, for the following reasons:
i) enablement of transforming technology, specifically the de-risking of New Branch IT (NBIT)
and NBIT second device; ii) enablement of the network strategy, and the acceleration of Drop
& Collect (D&C) rollout; iii) mitigation and regularisation of known risks; and iv) business model
simplification.
Following consultation with tax, accounting and legal advisers, management has proposed that
the Payzone Integration be implemented through the process outlined in this Board Report.
The subsequent section of this Board Report presents an overview of the Payzone Integration
implementation process from a legal and documentation perspective, while explaining the
requirements for the resolutions requested.
At the time of the Board approval in January 2023, it was not clear which Articles of Association
would be triggered by the Integration process. In line with PO governance, Board are requested
to formally approve the Integration now there is clarity on the Articles of Association which are
triggered, in order that it can go to DBT for approval.
Confidential
POL-BSFF-130-0000029_0133
POL00448861
POL00448861
Report
1. By way of summary, the following steps are required to implement the Payzone
Integration:
1.1. the consent of the Company and the Department for Business and Trade (DBT) for
the Payzone Integration (the Consent Matters);
1.2 the intercompany debts owed by PZ to the Company pursuant to the credit facilities
agreement entered into between the Company (as lender) and the Company (as
borrower) dated 16 October 2023 (the Credit Facilities Agreement) shall be
released (the Released Amount), and the capital contribution reserve of PZ shall
be credited by a commensurate amount (the Capital Contribution) and interim
accounts shall be prepared reflecting the same (the Interim Accounts);
1.3 _ if, on the basis of the Interim Accounts, the PZ Board determine there are sufficient
distributable reserves, PZ shall declare a dividend-in-specie (the Dividend-in-
Specie) which is to be satisfied by the entry by PZ and POL into a business transfer
agreement relating to the trade and assets of PZ; and
1.4 existing contracts entered into by PZ with suppliers, retailers and other third parties
shall be terminated, novated or assigned (as applicable) (the Existing Agreement
Matters),
(together, the Payzone Integration).
2. This Board Report seeks approval in relation to all of the matters comprising the Payzone
Integration (together, the Proposals), and shall explain the requirements for each such
approval.
3. With respect to the Consent Matters, in order to comply with the constitutional
requirements of both PZ and POL, the following Company actions are proposed:
3.1. the Company shall approve the form and circulation of a consent request to DBT
(the DBT Written Consent), in respect of the Payzone Integration, pursuant to
which the Company shall:
3.1.1 in accordance with the articles of association of PZ (the PZ Articles), seek
authorisation to approve the consent matters included in the consent
request circulated by PZ to the Company on or about the date of this Board
Report with respect to PZ’s entry into, and implementation of, the Payzone
Integration. The complete list of such matters is included as Appendix 1
(PZ Consent Matters) (the POL Written Consent); and
BL. in accordance with the articles of association of the Company (the
Articles), seek approval for the Company and PZ to enter into, and
implement the Payzone Integration. The complete list of such matters is
included as Appendix 2 (POL Consent Matters).
4. The Capital Contribution is required to create positive distributable reserves in the
accounts of PZ, as evidenced by the Interim Accounts, thus enabling the Dividend-in-
Specie to, subsequently, be distributed to the Company in accordance with applicable law
(the Distributable Reserves Position). With respect to the Capital Contribution, the
following Company actions are proposed:
4.1. the Company shall enter into a deed of release, pursuant to which the Company
agrees to release PZ from its obligations arising pursuant to the Credit Facilities
Confidential
POL-BSFF-130-0000029_0134
POL00448861
POL00448861
@
Agreement in respect of the Released Amount, such amount comprising the Capital
Contribution (the Deed of Release); and
4.2 the Company shall enter into the capital contribution release letter (the form of
which is included as Schedule 1 of the Deed of Release) that specifies the accounting
procedures that PZ is requested to comply with in connection with the outstanding
balances released pursuant to the Deed of Release (the Release Letter, together
with the Deed of Release, the Capital Contribution Documents).
5. In order to implement the transfer of the trade and assets of PZ to the Company, it is
proposed that PZ declares a final dividend on the share in the capital of PZ to be satisfied
in specie by way of transfer of the trade and assets of PZ to the Company which shall be
effected through a business transfer agreement to be entered into between PZ and the
Company (the Business Transfer Agreement). In addition to this, POL and PZ shall also
enter into a deed of assignment of trade marks pursuant to which all trade marks held by
PZ shall be assigned to POL (the Deed of Assignment of Trade Marks), this is
documented separately to make it easier to register the transfer of trade marks. The
payment of the Dividend-in-Specie shall remain subject to the Company approving the
written shareholder resolution relating to such Dividend-in-Specie (the Dividend
Resolution). With respect to the Dividend-in-Specie, the following actions are proposed:
5.1 subject to the receipt of the Dividend Resolution, the entry by the Company into
the Dividend Resolution; and
5.2 subject to the Company approving entry into the Dividend Resolution, the entry by
the Company into the Business Transfer Agreement.
6. Pursuant to the Business Transfer Agreement the Company shall provide an uncapped
indemnity to PZ in respect of any liabilities of PZ that may arise prior to or following the
Payzone Integration.
7. In order to effect transfer of ownership of bank accounts from PZ to the Company, the
Company shall provide an uncapped indemnity to each relevant credit institution that may
make direct debit payment requests on behalf of the Company in order to indemnify
against any claim made as a result of incorrect direct debit instructions provided by the
Company (the Deed of Indemnity). In order to ensure the transfer of responsibility for
indemnity claims occurs at the right time, whether for past or future direct debit
transactions, the Company and PZ will enter into an agreement that notes that the Deed
of Indemnity provided by the Company shall apply from the date of integration and that
PZ will remain liable under their indemnity prior to that date (the Bulk Change Deed).
8. In relation to the Existing Agreement Matters, PZ has entered into a number of contracts
with suppliers, retailers and other third parties in order to conduct its business. As part of
the Payzone Integration, it is proposed that these contracts be terminated, novated or
assigned (as applicable). With respect to the Existing Agreement Matters, the following
Company actions are proposed or have already taken place:
8.1 the Company shall circulate a notice of transfer to certain retailers, notifying such
retailers that the Company shall assume the rights and obligations of PZ arising
pursuant to the (i) Retailer Terms and Conditions; and (ii) Branch Operating
Agreements (as applicable) (the Underlying Retailer Agreements) and that PZ
shall be released from such obligations as of the date of Payzone Integration (the
Retailer Notices);
8.2. the Company shall enter into a deed of novation between PZ and certain contractual
counterparties (each a Novated Party, and together the Novated Parties)
4
Confidential
POL-BSFF-130-0000029_0135
POL00448861
POL00448861
@
pursuant to which the Company shall assume the rights and obligations of PZ arising
pursuant to the relevant underlying agreement (the Underlying Agreements),
and PZ shall be released from such obligations as of the date of Payzone Integration
(the Deeds of Novation);
8.3 subject to the execution of any and each Deed of Novation, the Company shall
circulate the corresponding novation confirmation notice to the relevant Novated
Party (the Confirmation of Novation);
8.4 subject to no response being received from a given Novated Party (each such party
being a Remaining Transfer Party) by the date of Payzone Integration (or such
later date as may be determined by the Company), the Company shall enter into
the following notices with respect to each such Remaining Transfer Party: (i) a
confirmation of transfer of the Underlying Agreement from PZ to the Company by
conduct (the Confirmation of Transfer), where the Underlying Agreement does
not permit assignment; or (ii) a confirmation of assignment of the Underlying
Agreement from PZ to the Company pursuant to the terms of the relevant
Underlying Agreement (the Confirmation of Assignment), where the Underlying
Agreement does expressly permit assignment;
8.5 the Company shall enter into five (5) novation agreements between PZ and certain
contractual counterparties which are being awarded on a direct basis, and which
would otherwise contravene the Company’s procurement policy (the Direct Award
Novation Agreements) and the adoption by the Company of the payzone
integration sourcing strategy in respect of such Direct Award Novation Agreements
(the Payzone Integration Sourcing Strategy);
8.6 the Company shall enter into a novation agreement between British Gas Trading
Limited (British Gas) and PZ pursuant to which the Company shall assume the
rights and obligations of PZ arising pursuant to the settlement agreement entered
into between PZ, the Company and British Gas on 22 December 2023 (the British
Gas Novation Agreement);
8.7. the Company shall enter into a deed of termination with certain contractual
counterparties (each a Terminated Party, and together the Terminated Parties)
pursuant to which the Company shall terminate existing services agreements with
such Terminated Party/ies (the Deeds of Termination);
8.8 if required, the Company shall enter into a deed of termination with PZ with respect
to certain intra-group services arrangements (the Intragroup Deeds of
Termination); and
8.9 subject to the entry by PZ into:
8.9.1 a deed of surrender in respect of the existing lease agreement entered into
on 25 August 2016 between, inter alios, Organon Pension Trustees Limited
(the Landlord) and PZ (formerly known as Payzone UK Limited) (the
Deed of Surrender in respect of the Existing Lease Agreement); and
8.9.2 an agreement between the Landlord and PZ pursuant to which the Landlord
and PZ shall ensure that the Deed of Surrender and New Lease Agreement
(as defined below) are in force, and effective by no later than the date of
the Payzone Integration (the Tripartite Agreement), the Company shall
enter into a lease with, inter alios, the Landlord, on similar terms to the
Existing Lease Agreement (the New Lease Agreement)
Confidential
POL-BSFF-130-0000029_0136
POL00448861
POL00448861
@
9. Following the conclusion of the aforementioned steps, should the Board wish to do so it
would be a fairly straightforward process to place PZ into members’ voluntary liquidation,
given that the trade and assets of PZ will have been transferred to the Company in their
entirety. PZ may be placed into members’ voluntary liquidation through the passing of a
written shareholders’ resolution which: (i) approves that PZ may be wound up voluntarily;
and (ii) approves the appointment of an insolvency practitioner to act as a liquidator (the
MVL Resolution). If the Board wish to pursue this process at some point in the future
approvals for any members’ voluntary liquidation will need to be requested separately.
10. Due to the high number of documents that require execution to effect the Proposals, it is
recommended that a Power of Attorney (the Power of Attorney) be granted by the
Company so that responsibility for execution can be delegated to an appropriate
individual. A Power of Attorney has been drafted to delegate authority to Barbara Brannon
to agree, sign and execute all agreements and documents that are necessary in connection
with the Payzone Integration. The Power of Attorney expires after a period of three
months, and is limited to only those matters that are necessary to deliver Payzone
Integration, as well granting authority to appoint a substitute attorney if, for whatever
reason, Barbara was unavailable.
Financial Impact
11. One-off integration costs are forecast at i IRRELEVANT ‘over budget due to the extension
of the programme by 4 weeks and additional legal costs.
12. Following the legal integration, we will transition to an interim people model with a
phased approach aligned to wider organisational changes within PO. This includes
embedding an interim organisation and planning the long-term assimilation of PZ
resources. Consequently, the financial benefits of integration attributed to resources
have been removed from this project.
13. As part of the transition process, PZBP is likely to extend its accounting reference date
such that it will produce accounts for a 14 month period to end of May 2024 rather than
end of March 2024. If this decision is made it will trigger Article 8.1(R) in POL’s Articles
of Association and Article 45.3(S) of the PZBP Articles.
Risk Assessment, Mitigations & Legal Implications
14. The legal considerations have been addressed in a separate paper prepared by NRF and
the Legal team, issued alongside this one. It details the legal risks associated with legal
integration.
15.
This is further discussed within the legal risk paper
and should be read alongside this paper. A paper setting out the additional details are set
out within the reading room.
Stakeholder Implications
16. Shareholder consent/approval will be required to proceed with this transaction. Undue
delay to this approval will impact the proposed integration date of 1 May 2024.
Confidential
POL-BSFF-130-0000029_0137
POL00448861
POL00448861
@
Next Steps & Timelines
17. An overview of the remaining tasks to execute the final phase of integration is set out
below.
18. If the Board approves the proposed integration, the next step is to seek final shareholder
consent.
Payzone Board meeting 1 @ 20th March
POL Board meeting @ 25th March
DBT Approval @® by 8th April - exact date TBC
‘TUPE Consultation Ends @ sth Apri
Payzone Board meeting 2 @ 9th April
Integration Date @ ist May
19. Not all the documentation referred to above has been uploaded to the Reading Room as
we appreciate that a number of them are legal process documents which are unlikely to
be of interest to the Board.
The documents uploaded to the Reading Room are the: (i) POL Written Consent; (ii) DBT
Written Consent; (iii) Capital Contribution Documents; (iv) Draft Dividend Resolution; (v)
Business Transfer Agreement (excluding Schedule 1 - Fixed Asset Register); (vi) Payzone
Integration Sourcing Strategy; (vii) Direct Award Novation Agreements; (viii) British Gas
Novation Documents; (ix) the Power of Attorney and (x) the Deed of Surrender, Tripartite
Agreement and New Lease (Property documents) as these represent the main legal
documents.
If you would like to view any of the other documents referred to above which have not
been included in the Reading Room please contact Christian Spelzini and Aimee Daughters
and they will send them to you.
Quick Links to the Reading Room:
1 Payzone Integration Sourcing Strategy
2 Legal Risk Note
3 NED Pre-Board Briefing Note
4. DBT Written Consent (from POL)
5. POL Written Consent (from Payzone)
6 DBT Written Consent (from Payzone)
7 Capital Contribution Documents
8. Draft Dividend Resolution
9 Business Transfer Agreement (excluding Schedule 1 Fixed Asset Register which is
available upon request)
10. Direct Award Novation Agreements x5
11. British Gas Novation Documents x2
12. the Power of Attorney
13. Property Documents (including the Deed of Surrender, Tripartite Agreement and New
Lease).
Confidential
POL-BSFF-130-0000029_0138
POL00448861
POL00448861
@
Appendix 1: PZ Consent Matters
In accordance with Article 45.4 (Group Undertakings) of the PZ Articles and Article 8.2(B) of
the POL Articles, the Company shall request that DBT authorises the Company to approve the
following PZ actions, each of which are anticipated to be required in connection with the
Payzone Integration, as included in the POL Written Consent in accordance with the following
provisions of the PZ Articles:
1. 45.3(F): The declaration or payment of any dividend or the making of any distribution by
PZ other than in accordance with the Group Strategic Plan (as defined in the PZ Articles);
2. 45.3(G): Any distribution, payment or return to shareholders of PZ out of capital of PZ;
3. 45.3(H): The adoption of a Company Business Plan (as defined in the PZ Articles) or any
material variation of a Company Business Plan previously adopted;
4. 45.3(N): The amalgamation or merger of PZ with any other company or business
undertaking;
5. 45.3(S): The adoption of any accounting reference date or any material variation of the
accounting practices and policies to be applied in the preparation of the accounts of any
member of the Group, if different from the practices or policies then adopted or applied
by other members of the Group (other than any accounting practice or policy required to
be adopted by law or required by generally accepted accounting principles applying in the
place of incorporation of the company or the relevant member of the Group); and
6. 45.3(U): Save as specifically provided for in the approved Group Strategic Plan, any
substantial alteration in the nature of the business carried on by PZ.
Confidential
POL-BSFF-130-0000029_0139
POL00448861
POL00448861
@
Appendix 2: POL Consent Matters
In accordance with Article 8.1 (Matters requiring consent) of the Articles, the Company shall
request that DBT authorises the Company to approve the following Company actions, each of
which are anticipated to be required in connection with the Payzone Integration, as included in
the DBT Written Consent in accordance with the following provisions of the Articles:
1. 8.1(M): The amalgamation or merger of any of the Group with any other company or
business undertaking;
2. 8.1(0): Save for any intra-group arrangements entered into between wholly owned
members of the Group in the ordinary course of business by any Group Company (as
defined in the Articles), the making of any loan (otherwise than by way of deposit with a
bank or other institution the normal business of which includes the acceptance of deposits
or in the ordinary course of business), the granting of any credit (other than in the normal
course of business) or the giving of any guarantee or indemnity (in each case other than
in the normal course of business) by any Group Company;
3. 8.1(R): the adoption of any accounting reference date or any material variation of the
accounting practices and policies to be applied in the preparation of the accounts of any
member of the Group, if different from the practices or policies then adopted or applied
by other members of the Group (other than any accounting practice or policy required to
be adopted by law or required by generally accepted accounting principles applying in the
place of incorporation of the company or the relevant member of the Group); and
4. 8.1(V): Save as specifically provided for in the approved Group Strategic Plan (as defined
in the Articles), any substantial alteration in the nature of the business carried on by any
Group Company.
Appendix 3: Business Rationale & Integration
Benefits
Business Rationale
1. NBIT needs to deliver a legacy pre-pay service to our energy bill payment clients. The
business decided this will be delivered through the second device, rather than on the main
NBIT counter. While PO can compliantly procure the second device, this does not extend
to the software and back-office integrations around the device, and so a legal framework
is required for PO to access existing PZ capability.
2. Delivering legacy prepay is technologically complex and costly and therefore the business
has considered withdrawing the service but decided against it. Legacy prepay is a
requirement for most of our energy bill payment client contracts, and bill payment is part
of our core portfolio and SPEI provision. The financial, social, shareholder, and Postmaster
3. Intangible Benefits: Successful integration supports PO’s strategic objectives and offers
other intangible benefits.
Confidential
POL-BSFF-130-0000029_0140
POL00448861
POL00448861
@
° Strategy Enablement: The form of integration and timetable for completion proposed
supports the achievement of POL's strategic objectives
° Financial transparency and probity
° No longer needing to have an arm’s length arrangement and the relevant intragroup
agreements and processes will mean that utilising support from PZ will be far more
straightforward, saving time and cost
° Control and Compliance: Integration will enable PO to improve internal control and
effective compliance with internal procedures and external regulatory requirements,
mitigating existing risks
* Procurement: preparation of a future procurement strategy, to part mitigate
existing risk and establish a clear route to fully regularise procurement
* Technology: The application of PO standards and procedures is needed in the
areas of network/cybersecurity, product development, and IT resilience
° Process Simplification: There are opportunities to simplify processes within PO. Early
opportunities have been identified in support functions and are driven by
harmonisation of processes, reduced complexity in handovers and information flows
and adoption of PO systems. Examples include:
+ Accounting and reporting: elimination of duplication in reporting processes
+ Tax: simplification of the VAT return, one less Corporation Tax return
+ Treasury: Retain existing PO banking relationships. Explore options for pooling
PZ cash and use of existing PO overdraft facilities to support cash settlement
° Future optionality: commercial opportunities around physical/digital payments and
around network footprint merit further exploration at a later stage.
4. Tangible Benefits: Integration does not deliver tangible benefits, in terms of cashable
savings, particularly in the short to medium term:
. In the short to medium term the two networks (PZ and PO) will remain separate;
there is no proposal at this stage to ‘merge’ the two networks (e.g. create a PO
network of 23,000+ locations). The retail model used by Payzone and now PO for the
Drop and Collect format offers expansion potential.
. No material benefits from consolidation of technology, and early transfer onto PO
systems, have yet been identified however, combined with NBIT delivery the
opportunity to streamline systems over time is an active discussion.
10
Confidential
POL-BSFF-130-0000029_0141
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Payzone Letter of Support Meeting Date: I 25 March 2024
Tom Lee, Group Financial
. Controller; ss .
Author: Daniel Ward, Head of Financial & Sponsor: Kathryn Sherratt, Interim CFO.
Technical Accounting
Input Sought: Decision
The Board are requested to review the draft Letter of Support (“LOS”) from Post Office
Limited (“POL”) to Payzone Bill Payments Limited (“PZBP”) as required for the signing of the
PZBP Annual Report and Accounts (“ARA”) for the year ended 26 March 2023 and approve
for signing by the Interim CFO.
Previous Governance Oversight
e° PZBP loan agreement update (Board - September 2023)
e Payzone Letter of Support (SEG - March 2024)
Executive Summary
In line with the prior year, in order for PZBP to sign its ARA on a going concern basis, a LOS is
required from POL, its parent company. A LOS is required due to the fact that PZBP is unable
to support a going concern status independently of its parent due to it being loss-making and
being in a.sianificant net liabilities position. Within the net liabilities at the balance sheet date,
there is i!"FEVANtiof debt owed to POL. The balance has reduced slightly to
2023/24, however if POL were to demand repayment of all amounts outstanding relating to
this debt on its maturity, PZBP would not have the cashflows available and as such would
become insolvent.
POL and Payzone management have carefully considered the planned integration of PZBP's
trade and assets/liabilities into its parent company, POL, through a 'hive-up' transaction in Q1
of 2024/25. Payzone management has determined that the 2022/23 ARA should continue to
be prepared on a going concern basis, subject to ongoing support from the parent company.
This decision is based on the understanding that deviating from this approach could convey a
misleading message to external stakeholders, such that the business will cease trading and
may be unable to settle its current and future liabilities.
Without a letter of support, PZBP’s external auditors, PricewaterhouseCoopers (“PwC”), will not
sign the ARA on a going concern basis. It is therefore POL management's recommendation that
POL provides a LOS to PZBP.
Report
1. In line with the prior year, in order for PZBP to sign their ARA on a going concern basis, a
LOS is required from POL, its parent company.
2. ALOS is required as a result of the financial position and performance of PZBP. The
Company has been loss making since acquisition and in 2022/23, PZBP made a loss after
tax of £2.9m with net liabilities of / s at the balance sheet date.
Internal
POL-BSFF-130-0000029_0142
POL00448861
POL00448861
Within the of net liabilities there is debt owed to POL at the balance
sheet date. The balance has reduced slightly t yas at P9 2023/24, however if PZBP
were unable to repay the loan in line with its t it would be at risk of insolvency.
4. PZBP has continued to make losses in 2023/24, further increasing net liabilities. As such,
the Company is unable to support its going concern status independently.
5. POLand Payzone management have carefully considered the planned integration of PZBP's
trade and assets/liabilities into its parent company, POL, through a 'hive-up' transaction
in Q1 of 2024/25. Payzone management has determined that the 2022/23 ARA should
continue to be prepared on a going concern basis, subject to continued support from the
parent company. This decision is based on the understanding that deviating from this
approach could convey a misleading message to external stakeholders. By not preparing
on a going concern it could indicate that PZBP will cease trading and are unable to settle
its existing or future liabilities. In reality, PZBP is to be hived up as a going concern and
will continue trading. Additionally, no formal decision has been made to liquidate the
company, allowing the entity to prepare its ARA on a going concern basis.
6. Without a LOS, PZBP’s ARA would either require modification to be on a non-going concern
basis (‘break-up’ basis) or would include a more general material uncertainty around the
going concern position (there is a material uncertainty already included, however this is
to mirror that within POL given the reliance on a LOS). Neither option is sensible as a set
of financial statements which show the parent is unwilling to provide a LOS would likely
trigger market concerns.
7. A draft of the LOS is included in Appendix 1. The key points to note are that POL are
committing to not seek repayment of the outstanding balances and that POL will advance
further amounts to PZBP as required by PZBP, with these undertakings covering a period
of at least 12 months from the date of signing the letter — albeit recognising that the risk
is mitigated somewhat as PZBP will likely not need additional funding once the integration
completes.
8. It is clear from discussions with PwC that any amendment to the proposed wording in the
LOS would impact the going concern status and/or disclosures, meaning that signing
would be delayed.
9. Given the potential support is uncapped we are seeking Board approval for the Interim
CFO to sign the LOS.
10. As referred to in an earlier Board paper (January 2023), previous indicative legal advice
and aiming to be approved at Board in March 2024, is
intended to mitigate this risk.
Internal
POL-BSFF-130-0000029_0143
POL00448861
POL00448861
Appendix 1
[Parent Entity Letterhead]
Payzone Bill Payments Limited
Finsbury Dials
20 Finsbury Street
London
England
EC2Y 9AQ
Dear Ladies and Gentlemen,
Funding requirements of Payzone Bill Payments Limited (“the Company”)
We confirm that Post Office Limited (the “Parent”) has a clear understanding of the strategy and business plan of the
Company, including the Company’s projected funding requirements for at least the next 12 months from the date of
signing of the Company’s financial statements for the period ended 26 March 2023.
The Parent will provide financial support to the Company such that the Company is able to operate as a going
concern and to settle its liabilities as they fall due. This financial support will include:
- Not seeking the repayment of amounts advanced to the Company by the Parent and/or other members of
the Parent group unless adequate alternative financing has been secured by the Company; and
- Advancing further amounts to the Company as required by the Company.
In providing this assurance, we have taken full account of our own funding requirements, obligations and
commitments for the same period as this letter covers. We have also ensured that provision of this assurance does
not contravene any law, regulation, financing agreement, loan covenant or other contractual arrangement governing
or materially impacting upon the operation of the Parent.
This undertaking will remain in place for the foreseeable future and will not be withdrawn during a period of 12
months from the date of signing of the Company's financial statements for the period ended 26 March 2023.
Yours faithfully
Signed for and on behalf of Post Office Limited
Internal
POL-BSFF-130-0000029_0144
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Invoke a compliant 2-year extension
and compliantly uplift the spend with
EntServ UK Limited (DXC) for End User
Compute Services
Title: Meeting Date: I 25 March 2024
Mike Hancock - Senior IT Supplier
Author: Manager, and Dionne Harvey - Head of I Sponsor:
IT Procurement
Chris Brocklesby, Group
Chief Technology Officer
Input Sought: Decision
Board are requested to:
1. approve a recommendation to invoke the two-year compliant extension and approve a
modification of the contract for additional spend of £14,002,744, for End User Compute
Services from EntServ UK Limited, trading as DXC, for both Colleague & Branch.
2. delegate contract award to SEG and authorise any 2 Directors or any Director and the
Company Secretary to execute the contract modification.
Executive Summary
Following approval at the July 2021 Board, a PCR 2015 compliant contract was approved by GE
and awarded to EntServ UK Limited trading as DXC Technology, (“DXC"), following a compliant
tender for the End User Computing (EUC) managed service using the Crown Commercial
Services Technology Services 2 Framework.
The contract commenced on 10 September 2021, for the provision of EUC services, with a
contract value of £23,176,003 over a three-year initial term & capped at £34,709,829 over a
5-year term based on predicted costs for the EUC RUN services (~£6.6M/annum), Re-
Procurement/Transition (£1.49m) and Win10 project costs (£0.23m). The contract supports
optional extensions of either 1) up to two separate periods of twelve-months each or 2) a single
24-month period of extension.
Colleague End User volumes are higher than forecasted and since commencement of the
contract, POL has spent an additional ~£5.88M on various Projects/CAPEX which had become
necessary and could not be made by an alternative contractor for both economic and technical
reasons and would have caused significant inconvenience or substantial duplication of costs if
not undertaken by DXC; material commitments include:
Project Committed Value _ Project Committed Value
PED Rollout £3,361,064 PX35 Repairs
Print Issue £1,128,893 PCI Compliance
EPSON Printers £279,907 PX35 Motherboards £93,491
SEG approved on Wednesday 13 March 2024 for the recommendation to invoke the two-year
compliant extension and approve a modification of the contract for an additional spend of
£14,002,744.
Confidential
POL-BSFF-130-0000029_0145
POL00448861
POL00448861
Report
1. IT are requesting approval for execution of the two-year compliant extension.
2. In addition, a modification to the contract is requested to be approved under PCR
regulation 72(1)(b), to increase the value of the contract by £14,002,744; total Contract
value £48,712,573.
3. Pursuing this contract modification, will support the immediate need for increased budget
to ensure the continuation of services with the supplier, and meet the needs of the
Business, including the Inquiry.
Financial Impact
4. Current committed spend, to 26 Feb 2024, is £22,238,573 (£14,224,125 Opex &
£8,014,448 Capex), with a forecast expectation to reach £23.176M (the 3-year contract
cap) in April 2024.
@& DXC Spend Forecast
Risk Assessment, Mitigations & Legal Implications
5
6. The legal risks associated with this modification, particularly with regards to the Public
Contracts Regulations 2015 are addressed in a separate legal Risk Note.
Stakeholder Implications
7. This Modification and extension will enable POL to commence future projects with DXC
(for Branch or Colleague) not yet committed, but in the demand forecast.
8. The reach of DXC engineering services team (including sub-contractors for Counter & Print
services), who are fully security vetted for Branch visits play a vital role in maintaining
chain of custody for PCI DSS compliance. Continuity of Service is therefore viewed as
critical to the business.
9. If the contract value is not increased and the term is not extended, then an urgent re-
procurement exercise will need to be undertaken, however, POL will incur significant costs
(which are unbudgeted) which will impact upon BAU resources and take circa 12 months
(based upon past transition timings) & therefore is not recommended.
10. Should IT require additional services in the future taking the total value of the contract
over £50m then DBT approval (CAAG) will be required.
Next Steps & Timelines
11. Contract extension to be finalised and submitted to POL’s eCAF process for approval.
12. Procurement to publish a Contract Modification notice to the market.
Confidential
POL-BSFF-130-0000029_0146
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
weds Optima Health Occupational Health y ‘i th
Title: Services Meeting Date: I 25'" March 2024
Martin Hopcroft, Director of H&S, .
Author: Environment and Business Sponsor: Karen MeEwen, Chief People
ec i Officer
Continuity
Input Sought: Decision
The Board is asked to:
Approve additional spend of £500,000 (exclusive of VAT) to OH Assist (TA Optima
Health) for the provision of Occupational Health and Employee Assistance Services.
This is to enable the continuation of Occupational Health, Employee Assistance and
Trauma Support services, including support for witnesses to the Public Inquiry, without
disruption to employees and postmasters during this period (up to end June 2025).
Approve the extension to the current contract under regulation 72 (1) (b).
Contract award decision and authority to sign the contract is delegated to the SEG
(Strategic Executive Group).
Executive Summary
1. OH Assist, trading as Optima Health, have provided Occupational Health services to Post
Office Ltd for over 10 years including; OH and Employee Assistance services for
employees; wellbeing support for witnesses to the Public Inquiry; and trauma support
for postmasters.
2. Optima Health understand the current challenges and issues impacting our people and
are providing dedicated support to individuals and teams at this turbulent time.
3. The current contract was awarded through the CCS Framework in July 2020 for £1.3m
plus annual RPI increases, this contract is in place until 1st July 2024. By extending the
contract for a further year, the value of the contract will increase by c£500k.
Report
1. We are coming to the end of our 2+2yr Contract with Optima Health which has a value of
£1.3m + RPI which increased pricing during year 2 and year 3 but was frozen for year 4
by agreement. Contract end date is 1st July 2024. The current contract was procured
through the CCS Framework in 2020.
2. Optima Health have worked closely with Post Office Ltd to align their services to Post
Office Occupational Health needs and provide dedicated support to employees and teams
where required, especially over the past two years in response to an increase in
organisational stress, mainly due to the impact of the Public Inquiry.
3. At this time, dedicated mental health support is being provided to employees, including
wellbeing support to witnesses, and online wellbeing guidance is available to postmasters
to support the trauma support service.
4. Extending the Optima Health contract for one year will give us continuity of supplier for
employees and witnesses in particular to the end of the Inquiry.
1
Confidential
POL-BSFF-130-0000029_0147
POL00448861
POL00448861
Risk Assessment, Mitigations & Legal Implications
9. A legal risk note has been uploaded to the Reading Room.
Stakeholder Implications
10. By not increasing the contract value this would mean a procurement exercise would be
required, with the possibility of a new supplier being onboarded. This would lead to
disruption and likely to be a material impact on the level of service received by employees
and postmasters during a critical period.
Next Steps & Timelines
11. The recommendation is that we extend the Occupational Health service for a period of 12
months to provide the current level of service and continuation of support to employees
and Postmasters during this turbulent time.
12. This will enable Optima Health to plan delivery of current services and resources during
2024 and H1 2025, during which time a full procurement exercise will be undertaken.
Confidential
POL-BSFF-130-0000029_0148
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Sekes Procurement Sourcing Strategy: . 7 th
Title: Network Consumables Meeting Date: I 25'* March 2024
Author: Pete Marsh, Retail Operations Sponsor: Martin Roberts, Chief Retail
Director Officer
Input Sought: Decision
Board is requested to:
Consumables. The proposal is to award
‘extension and a total contract value of
‘From CCS framework RM62!
e Delegate “contract award to SEG and authorise any 2 Directors or any Director and the
Company Secretary to execute the contract which results from the Procurement
described herein.
Executive Summary
e This paper seeks approval for the proposed sourcing strategy of a further competition
from lot 1 - ‘Office Stationery and Electronic Office Supplies’ from RM6299 ‘Office
Solutions’ for a managed service. In the event CCS appoint a single supplier to lot 1
then a compliant direct ‘d Id take place.
* The proposed term of with an optional and compliant
extension, provides stability of supply through the transition from Horizon to NBIT, and
the following BAU period.
Report
1. Post Office have an enduring need to supply consumables to the Post Office network,
branches, supply chain and admin locations. Typical products include branch receipt rolls
and printer inks, bullion film-wrap and office stationery.
2. Post Office stock operations as part of the Supply Chain team in Retail order the
consumables. Deliveries are made to the National Stock centre for storage, picking and
onward distribution to branches and supply chain locations when ordered. Admin office
stationery orders are placed through Web3 and are delivered directly.
3. In November 2020 approval was granted for the award of a call-off contract from CCS
4. The term wa: {IRRELEVANT I rom January the 1% 2021 to December the 31% 2024 with a total
contract value (TCV) of ii
5. At the current monthly rate of spend there is a risk that Post Office may exceed the TCV
in September/October 2024 and so the re-procurement is being accelerated.
6. The CCS RM6299 ‘Office Solutions’ is due to be awarded in April 2024, replacing RM6059
‘Office Supplies’. Post Office submitted our requirements to CCS for inclusion in framework
RM6299 in 202 id expect to benefit from participation in th CCS framework.
Vs f the annual POL spend under the existing framework is attributable
to Horizon consumai les (receipt rolls and ink cartridges). During the proposed term of the
call-off contract Horizon is expected to be replaced with NBIT and so long-term stability
of supply is a consideration.
1
Internal
POL-BSFF-130-0000029_0149
POL00448861
POL00448861
@
8. Post Office have successfully contracted for Network Consumables on the two previous
iterations of this framework, finding the managed service offers value-add through
account management with the Post Office Stock Services team, consolidated and flexible
supply, cost efficiency and support with supply risk management.
Financial Impact
9. Included in the forecast is a} year-on-year inflation, ai ear-on-year spend
reduction (inline with current trends), a lump sum to account for Payzone integration and
reduction in the spend directly related to Branch Horizon consumables for the
year extension.
10. The TCV of ;!RRELEVAN
demand as contingency.
Initial Term Sub-Total (4-years & 9-months)
Extension Sub-Total (2-years)
Payzone Integration Allowance
Forecast Total
Spend Headroom Allowance
Total Contract Value
rir Iem Ir mm I
Risk Assessment, Mitigations & Legal Implications
11. There are no known PCR issues at the outset of this procurement.
12. CCS have confirmed there is no term-limit to a call off and legal have provided headline
guidance that ee A separate Legal
Risk Note will be provided at contract award.
13. Post Office submitted our requirements to CCS for inclusion in framework RM6299 in 2023
and expect to benefit from participation in the
Next Steps & Timelines
14. On the basis that SEG & Board approve the sourcing strategy, upon confirmation from
CCS that the framework has been let the procurement strategy will be executed by June
24 and return to SEG for contract award approval in July 24.
Internal
POL-BSFF-130-0000029_0150
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
as TB Cardew Contract - PR 7 . th
Title: Berean Meeting Date: I 25'® March 2024
Karen McEwen, Chief People
Officer
Karen McEwan, Chief People
Author: Officer
Sponsor:
Input Sought: Decision
Board is asked to:
e Approve an increase to the value and Public Relations Services being provided by TB
Cardew under their existing contract with POL.
e To facilitate the additional spend and provision of additional services to approve a
modification to the existing contract under Regulation 72(1)(b)
e Authorise any 2 Directors or any Director and the Company Secretary to execute the
contract modification
Executive Summary
As a result of events that have occurred since the start of 2024 POL has required a substantial
increase in services from Cardew, these include:
e the increased public scrutiny that has arisen and the knock-on impact this has had on
POL’s brand; and
e Cardew backfilling the vacancy left by POL’s departing director of communications,
The existing contract has an ostensible cap of £730,800 over its full 4-year maximum term
with a monthly retainer of} and spend until the end of January 2024 of
This increase in services has meant a surge in activity under the Agreement that POL estimates
will result in incurring an additional er calendar month in fees. This will mean that
the value of the existing contract will be exceeded in May of 2024. It is POL’s intention to
procure a replacement provider of the services to commence in September 2024 using the CCS
dynamic purchasing system RM6124. To give itself time to achieve this, POL intends to modify
the current contract to add the additional services and to bring it to an end when the new
provider of the Services is appointed. It is important that we monitor spend and services closely
to ensure that we do exceed the value or scope of the modified contract.
Report
1. The current contract was procured through the CCS Framework in 2021 and went live 01
January 2022 with an anticipated spend of £730,800 over the 4 years term.
2. The scope of the contract provides a number of services to POL under a/imrevevant! per
month retainer and these services will continue to be required including: ~ °
2.1. Provide strategic communications advice to senior leaders across the business and
tactical delivery with targeted media enabling POL to land POL key messages with
journalists and securing positive media coverage for Post Office. The agency will also
provide POL advice for dealing with reactive issues that could negatively impact the
reputation of the Post Office and will provide advice on how to handle any crisis
communications scenarios.
Confidential
POL-BSFF-130-0000029_0151
POL00448861
POL00448861
@
2.2. In addition, the agency will provide specialist financial PR promoting POL cash and
banking services and retail trade press PR promoting the changes POL are making to
the business to best support Postmasters to run profitable businesses and overall
support the Post Office in securing media coverage which complements POLs
ambitious strategy to 2025.
2.3. Strategic communications counsel to be provided to the most senior leaders at the
Post Office including the Chief Executive and other members of the Group Executive
level and to members of the Communications directorate. Both on proactive and
reactive issues that could potentially impact the reputation of the Post Office in the
media.
2.4. influence financial journalists at national media outlets to deliver a national financial
PR audience strategy in relation to the Post Office’s cash and banking services and
demonstrate the strategy via successful media and broadcast coverage.
2.5. Influence retail trade journalists to deliver a retail trade press engagement strategy
and demonstrate the strategy via successful media coverage.
2.6. Tactical delivery of ‘priority’ stories in national media, broadcast (TV and radio) and
trade publications every quarter. Working closely with the Communications
directorate and colleagues across the different parts of the Post Office business, to
proactively deliver ‘priority’ stories which help demonstrate the transformation of the
Post Office in line with its strategy to 2025.
2.7. Tactical delivery of ‘drumbeat’ stories in national media, broadcast and trade
publications every quarter. Working closely with the Communications directorate
and colleagues across the different parts of the Post Office business, to proactively
deliver ‘drumbeat’ stories which ensure the Post Office continues to appear regularly
in the media.
2.8. Write / edit press releases and produce accompanying documents such as Q & As.
2.9. Secure thought leadership pieces in national media and trade press. Draft and secure
thought leadership pieces on a range of topics related to the Post Office business.
3. To allow for the additional services we intend to modify the contract under Regulation
72(1)(b) to increase the value by £365,400, this will allow time for POL to run a compliant
procurement exercise to put a new contract in place whilst ensuring continuity of service.
Risk Assessment, Mitigations & Legal Implications
4. _We consider there to be good argument Si
A legal risk
note has been uploaded to the reading room.
Stakeholder Implications
5. POL will run a procurement exercise which will then have sufficient head room to enable
POL to manage any future unexpected spend in PR. The new contract will cover the current
BAU services and any further surge requirements. The current contract will terminate once
the new contract is in place.
Confidential
POL-BSFF-130-0000029_0152
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
SPMP DBT Business Case Update/
Title: Horizon replacement business case I Meeting Date: I 25't March 2024
update
Chris Brocklesby Chief
Transformation Officer, Tim
McInnes Transformation & Strategy
Director
Chris Brocklesby, Chief
Author: Sponsor: Transformation Officer
Input Sought: Noting
POL have drafted the next funding request to support our Horizon replacement activities. This
request will be formally submitted on 18" March and we expect to receive HM Treasury
approval in June.
Executive Summary
e In December 2023 DBT approver
business case
e The funding agreed as part of that submission covered activities from April 2023 until
June 2024 for SPMP and SDES and until March 2025 for the Horizon Extension. The costs
for these activities have now been updated and extended to cover the period from April
2023 to March 2026.
Tf interim funding for the Horizon Replacement
The Horizon replacement business case includes the following components:
+ SPM programme: the programme of activity being undertaken by POL that is developing
New Branch IT (NBIT), the replacement to the incumbent Horizon system.
+ Horizon: this represents workstreams to sustain Horizon while NBIT is being developed.
This includes POL being able to extend its commercial arrangements with Fujitsu UK, as
well as investment in the core software, infrastructure and branch hardware.
+ SPMP Dependent Enabling Spend (SDES). This scope refers to 3 specific projects;
+ the development of the next generation of Self Service Kiosks (SSKs),
+ the rollout of a new ‘2™ device’ as a new mobile platform for Postmasters which
will initially replace our existing bill payment capability provided by Paystation
* anew Identity and Access Management (IDAM) application to provide modern,
secure access to all of POL’s applications
The business case requires Post Office to update estimates for the total cost of the
programmes in scope, whilst seeking funding for spend to March 2026. The latest funding
request is estimated to b ‘AS set out below (excluding optimism bias and
contingency):
Confidential
POL-BSFF-130-0000029_0153
NBIT Complete End Dec 28
23/24
24/25
Nominal Values (excl Run Costs)
25/:
POL00448861
POL00448861
SPMP
SDES
Horizon
Less: Existing Funding
Variance to Agreed In-Year Funding
Total New Funding (excl OB)
Optimism Bias
Total New Funding (incl OB)
Contingency
Total New Funding (incl OB & Contingency)
IRRELEVANT
Note: we are in discussion with DBT keyholders on the treatment of Optimism Bias and
Contingency for this funding request. The internal POL view is that OB in FY24/25 & FY25/26
is unlikely to be needed. If OB is needed it is more likely to arise post-25/26.
Next Steps & Timelines
1. The approval process is expected to be:
Confidential
e>pance
Investment Committee review
Full business case submission
DBT keyholder review
DBT investment committee
IPA Assurance Review
CMA Subsidy Control Assessment
HMT TAP committee approval
11" March
18"? March
w/c 8" April
w/c 18" April
Early-May
Late-May
June
POL-BSFF-130-0000029_0154
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Sekes Fujitsu Horizon Agreement . 7 th
Title: Extension Meeting Date: I 25'* March 2024
. I Simon Oldnall, GLO & Horizon IT 35 Chris Brocklesby, Chief
ROR: Director Spenser: Transformation Officer
ripe Sought: Noting
To note the timeline for putting in place any potential arrangement to support Horizon
beyond 31st March 2025.
2. To note the emergent commercial and legal risks outlined in the paper.
3. To note the potential financial impact of the extension with a likely value of c£250m and
the proposed spend of £1.5m to fund resources to deliver the extension, including project,
external commercial and legal expertise.
Executive Summary
This paper sets out the current position on the discussions to date around continuation of
support services for the Horizon platform beyond March 2025.
Whilst discussions are ongoing, no commitment is yet in place from Fujitsu to continue their
support.
An extension to the current agreement carries legal and commercial risk owing to the high
probability of challenge to External independent
legal and commercial advice is being sought to quantify this risk.
In the interim POL legal have prepared a view on the potential areas we would need to mitigate.
Report
1. The current Horizon Services agreement with Fujitsu Services Ltd (FJS) expires on the
315 f March 2025; This includes all services previously extended under contract
modifications in 2023.
2. POL has approached FJS to discuss an extension of the current agreement for a term of
up to 5 years (to 2030) in order to ensure we have continuity of support for all aspects
of the Horizon platform.
3. Whilst this position is clarified a number of activities have commenced with a view to
ensuring that we are prepared to reach an agreement once FJS indicate that they are in
a position to do so. These activities are set out below.
Timeline for putting in place support beyond 2025.
4. Discussions have commenced with FJS and our high-level requirement to provide
support for a period of up to 5 years was formally communicated at a meeting on 1%
November 2023 and subsequently confirmed in writing on the 21%t°f November 2023.
Confidential
POL-BSFF-130-0000029_0155
POL00448861
POL00448861
@
FJS are yet to provide a formal commitment to an extension of the services agreement
and have reinforced their position that they have no desire to extend their services and
would encourage POL to replace Horizon as soon as possible.
FJS have also indicated that they will require a formal request from government to
extend the Horizon services agreement before they offer this commitment. This request
may be delayed owing to the current political climate and upcoming General Election.
We continue to work with FJS to develop more detailed requirements in the absence of
this commitment and have been developing a view on the future duration of the sub-
services contained in the agreement. FJS have already indicated that they will not
extend the Banking and Payment service (currently subcontracted to Worldline)
therefore POL will need to put in place a suitable commercial agreement for these
services ahead of March 2025.
Subject to a commitment to the extension, the aim is to have a contract variation in
place within the next six months. However, this plan will be subject to the dependencies
above and also will need to factor in approvals from DBT in the form of their Commercial
Assurance and Advisory Group (CAAG) process.
Legal & Commercial Risk
9.
10.
lis
The POL commercial and legal team have identified 4 legal avenues under whic!
hese are detailed in the report travelling with this paper.
We have commissioned a review of the commercial and legal risks associated with these
avenues and this review, which is being conducted by Hogan Lovells with support from
Mason Advisory, will consider the two potential areas of legal risk, i.e.:
1
This work remains ongoing and will likely not complete until June. In order to inform
Board, the POL legal team have produced a separate risk report. The key areas called
out in this risk report are.
.
Confidential
POL-BSFF-130-0000029_0156
POL00448861
POL00448861
13. Itis also to be expected that the announcement of the proposed extension will attract
scrutiny through media attention and Government.
14. The external review will need to fully understan
15. Work is underway to collate all relevant materials and our assumption is that
Financial Impact
16. Indications from FJS are that any extension, if offered, will be on similar commercial terms
as now ‘Coith indexation to be applied annually to the ervice charges over the extension
17. In common with recent extensions of specific services, FJS have also indicated that
investment in the Horizon platform, in order to mitigate end of service life/support risks,
Proposed extension period. The entire contract value could therefore be ¢
18. There will also be additional project spend by POL to support both the extension activities
and the subsequent upgrade activities. The former of these is estimated at}
24/25 and is included in our budget. ,
Next Steps & Timelines
19. POL will continue to engage with FJS on detailed requirements. In parallel we have begun
discussions with HMG, both directly with DBT stakeholders and the Cabinet Office (via the
Crown Representative) with a view to both securing the pre-requisites and also building
understanding of the investments required in the Horizon platform.
20. We will provide Board with a further update in June with the output from the
legal/commercial workstream and the proposed heads of term for the continuation of
services.
21. Once approved this would enable us to make a submission to the DBT CAAG for their final
approval.
Uploaded to the Reading Room: Legal Risk Note.
Confidential
POL-BSFF-130-0000029_0157
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: SPMP Funding Drawdown request I Meeting Date: 25 March 2024
. Kelly Goodwin - SPM Programme . Chris Brocklesby - Chief
ad Director Speriairs Transformation Officer
Input Sought: Decision . .
To approve and delegate authority to IADG (via SEG) release of up to! (0 continue
development of NBIT and ramp up the resources to enable a scale to up to Ss, finalise the
reorganisation and remediation of the Strategic Platform Modernisation Programme. This will
fund the programme until the end of July by which time we expect our next funding request
will be approved by DBT and HMT.
Executive Summary
Funding Approvals to Date
Mar-21 Mar-21 to Jun-21 I I
Jul-21 Jul-21 to Dec-21 i Hl
Nov-21 Jan-22 i
Jan-22 Feb-22 to Mar-22 i
Mar-22 Apr-22 to Jun-22 I Hl
Jun-22 Jul-22 to Sept-22 Hi
Sep-22 Oct-22 to Jan-23 IRRELEVANT i
Jan-23 Feb-23 to May-23 i iI
Jun-23 Jun-23 to Sept-23 I Hl
Jul-23 Feb-23 to Oct-23 ‘I
Sept-23 Sept-23 to Mar-24 SPM (incl. RTP) i i}
Current I _Mar-24toJul-24 I SPM (incl. RTP) I_I 4
Introduction & What has been Delivered against Prior Plan
1. At September Board,/ !was approved for the continuation against the materially
scaled back plan whilst discussions have been ongoing with DBT and HMT around the
longer-term Business case and plans.
2. Since the September board approval there has been a significant amount of change within
th gramme, this has had activity and financial impact resulting in an underspend of
in-year. Two critical areas of change to note are the programme reset and the
wider replanning required to support the Horizon Replacement Business Case (HRBC) for
the next tranche of funding to March 2026.
a. Initiated from the findings of the Accenture led Programme Diagnostic Review
(completed late Oct 2023) the programme has been engaged in reorganisation
1
Confidential
POL-BSFF-130-0000029_0158
POL00448861
POL00448861
@
and remediation work across the entirety of the organisation. This work has been
conducted in addition to continued delivery of NBIT, and against the backdrop of
a >70% reduction in programme resource (see appendix 2). Despite the
challenging conditions, the programme has successfully reintegrated all Retail
Transformation Programme capabilities, redesigned and reset the organisation and
conducted various other people, process and technology reset activities.
b. IThe HRBC generation has triggered a full reassessment of the nature of the SPMP.
in two critical areas, delivery timeline and delivery approach. The full reappraisal
of the delivery timeline has resulted in an extended view of the end-to-end
programme plan out to 2028. In order to make execution of the timeline more
manageable the HRBC has divested SPMP enabling activities (IDAM, SSK, 2°
Device) to become separate projects under a Horizon Replacement portfolio.
3. As a result of the change activity over the last funding increment, deliverables and
timelines have shifted from those agreed in the last board paper. Detailed explanation
referencing each activity from the last paper can be found at appendix 1. Summary
Progress on critical delivery items relevant to this paper:
a. Deployment and Go-Live of R2.0. R2.0 successfully went live in Aldwych 01
Feb 24. However, the decision taken in October 2023 meant that R2.0 went live
in a ‘mails only’ format. Banking functionality was removed and rescheduled to
R2.2, expected to deploy Q3/Q4 2024. The key impact of removing banking
functionality from R2.0 is the enablement of NBIT to deploy outside of the DMB
network, full mails and banking functionality is a prerequisite for deployment to
non-DMB branch entities.
b. Deployment and Go-Live of R2.1. First Go-Live of R2.1 is currently progressing
to plan. Due to the removal of banking from R2.0, R2.1 is no longer an enabler
for deployment beyond the DMB network. R2.1 will deploy all Parcel Force
functionality to the mails product, add capability to ingest BAU reference data and
remediate a number of defects as an enabler to further scaling of NBIT Counter
Terminal deployment.
c. Scaling Counter Terminal Deployment. Scaling to non DMB branches by 31
Mar 24, as stated in the previous paper, is no longer viable due to the removal of
banking functionality to a future R2.2 deployment. The focus is now on deploying
Release 2.1 to 5 DMB’s starting with Leeds in April.
Current Request
4. The present request is to ensure SPMP can continue and remain in governance while
discussions witl T_ and HMT are ongoing around the next phase of the Business case
approval. Thefiereevanr! quested still reflects a materially reduced level of spend compared
to June 2023 anc provide cover up to end July 2024.
5. The next key milestone for SPMP is the deployment of Release 2.1 to two DMBs in London
and Leeds. First Go-Live at Aldwych is planned for late March 2024 with Go-Live at Leeds
planned to follow on the 4" April. 2.1 will deliver full Parcelforce functionality to the
2
Confidential
POL-BSFF-130-0000029_0159
POL00448861
POL00448861
@
counter terminal app, fix high impact defects deemed critical for continued R2.1 branch
rollout, and add in the strategic tokeniser allowing NBIT to consume BAU reference data.
6. In parallel with deploying, remediating, and supporting Release 2.1, the programme will
also progress to delivering its next key milestone, the technical completion of Release 2.2
which is the minimum capability required to deploy NBIT outside of the directly manged
branch network.
7. From a programmatic perspective the following key milestones will also be achieved
between now and the end of June 2024:
a. SPMP Diagnostic Review: Expected to be complete by 31 March 2024. Work on
longer-term remediation items will fall outside of the 31 March deadline as they
are continuous improvement activity and will continue to be tracked by the
programme going forward.
b. Integrated Assurance Plan: The programme has been working closely with
Group Assurance to mature assurance approach around the programme focussing
on priority areas and developing a risk profile of current and future releases.
Requirements have been developing and premarket engagement has commenced
to secure an Assurance Delivery Partner to accelerate this work. Meanwhile the
SPM Assurance team are creating priority work packages with work commencing
18 March. This work will focus on Security, Testing and Defects Management(Risk)
and Business Requirements.
c Completion of Infrastructure and Projects Authority (IPA) Assurance: A
Prerequisite of the programme’s onboarding to the Government Major Projects
Portfolio (GMPP), and in support of approvals for the HRBC, the IPA will conduct
gateway assurance of the programme. The formal planning day to define dates,
times and actions will take place 2" April 2024. Execution is expected within the
window of 21% April - 3™ May 2024. The final report expected no later than 17"
May 2024.
d. Further rollout to DMBs: 3 further DMB (Glasgow, Brighton and E.Croydon)
have been identified for additional rollout across April and May 2024 with the intent
of bringing NBIT live operations up to 5 Points of Presence no later than 31 May
2024.
Shareholder Engagement & DBT Approval
8. In parallel to this funding request, the last increment of the extant business case, work is
ongoing to complete the submission of the new HRBC. The HRBC will deliver funding to
cover the entirety of Horizon replacement as a portfolio of activities: Horizon Extension,
SPMP and SPMP Dependent Enabling Spend (SDES) activities. Final draft of the HRBC will
be submitted to DBT on the 18" March 2024 to initiate keyholder dialogue & feedback to
Progress to a final version for the DBT Investment Committee. DBT Investment
Committee sits 18" April 2024.
Confidential
POL-BSFF-130-0000029_0160
POL00448861
POL00448861
Financial Context Supporting Drawdown Request
9. In the period between April 2024 and July 2024, the programme is requesting approval
from the Board to spend ;!RRELEVANTwhich translates into an average run rate of approx.
£5.7m per month. The costs break down as follows:
TOTAL (incl. contingency)
Tech Delivery
1.1 Drop and Collect
1.2 NBIT Platform
1.3 NBIT Product Journey Tech Delivery
1.4 NBIT Product Journey Design
1.5 NBIT Branch Management
1.6 NBIT Integration
1.7 NBIT Service & Support
1.8 NBIT Enterprise App
1.9 NBIT Architecture
1.10 Tech Team Management
1.11 Identity and Access Management
1.12 Data & Reporting
Deployment and Training Costs
2.1 Hardware
2.2 Deployment and Connectivity
2.3 Training Planning and Content Development
Business Change
3.1 Business Change Management
3.2 gPQ8 buy
3.3 Postmaster Engagement and Communications
Service & Support Costs
4.1 Service and Support wrap (non IT)
Programme Costs
4.2 Assurance and Testing
4.3 Procurement & Sourcing
4.5 SPM Programme + BTU Resources
Other Costs
5.2 Contingency
5.3 MALS SPO Levy
Apr. Total
IRRELEVANT
Spend Type
April L May I June _I
CAPEX
Exceptional
Total
Confidential
IRRELEVANT
POL-BSFF-130-0000029_0161
POL00448861
POL00448861
@
Next Steps and Timelines
10. Subject to Board approval an update on progress against the deliverables underlying the
funding drawdown will be presented to the July Board, alongside a wider update on funding
discussions (i.e. a large part of which will relate to progress on discussions with DBT and
HMT on SPMP). Monthly updates will be provided to Board thereafter.
Confidential
POL-BSFF-130-0000029_0162
POL00448861
POL00448861
@
Appendix 1: Detailed Commentary on Prior Milestone Activities
Activity
Deployment of Release 2.0 to
two DMBs in London and Leeds
Status
Complete
to 1x DMB
Commentary
The decision was taken in October 2023
to separate banking functionality from
R2.0 proceeding with a ‘mails only’
scope. This was driven by the amount of
technical debt that needs to be
addressed to enable banking
integrations to be successfully deployed,
and full engagement with banking
framework completed.
Banking functional scope has since been
rescheduled into R2.2 which is now
expected Q3/Q4 2024
Mails functionality is live in one DMB in
London (Aldwych) with plans to scale to
Leeds at the point of R2.1 Live which is
expected late March 24.
Complete (Less deferred Leeds
deployment)
Deployment of R2.1 - To
enable scaling outside of DMBs
In
Progress
Due to the shift in planning and functional
roadmap capabilities bought about by the
decision to remove banking functionality
from 2.0 this item is redundant.
Banking functionality is a prerequisite to
go outside of DMBs and_ therefore
deployment to other branch entities will
not take place until R2.2 is deployed
(likely Q3/Q4 2024).
It should be noted that this is not a
wholesale delay to scaling deployment of
NBIT. Alternative plans are now in place
to continue rollout on a DMB only basis.
R2.1 first deployment expected late
Mar 24
Scaled to 5x DMB expect 31 May 24
Resolve 71 outstanding defects
that can be mitigated in a pilot
in a DMB but which we deem
unacceptable in an
independent or strategic
partner setting
In
Progress
Work ongoing has reduced the number of
S1/S2 defects impacting strategic &
independent partners down to ~25.
Further resolution of these will take place
through the R2.2 build and deployment.
Resolution work ongoing.
Address 11 specific cyber
security exceptions, which
have been deemed acceptable
for the Release 2.0 prototype,
but not for further expansion
in non-POL controlled settings
In
Progress
Over this reporting period the total
number of specific cyber security
exceptions was rationalised down to 9.
3 have been resolved, and an additional
exception has emerged leaving 7 open
exceptions requiring resolution.
Resolution work ongoing.
Confidential
POL-BSFF-130-0000029_0163
POL00448861
POL00448861
@
Activi Status Commentary
Design and implement anI In e Architecture team expected to finish
updated AWS environment I Progress design work mid-March.
strategy to match the scale of * Implementation is expected to begin in
SPMP (i.e. 20k-25k counters) Tech Planning Increment 2 (April start)
and rationalise the total spend e An incremental approach will be adopted
on AWS environments. to rollout improvements environment-
by-environment in line with the
scalability requirements of the rollout
strategy.
« This is a continuous improvement
activity that will remain live / in
progress for tl duration of build
and rollout activities.
Deliver the full slate of I In e Full Parcelforce functionality will be
Parcelforce services, which I Progress delivered as part of R2.1.
were previously deprioritised « Expected Complete late Mar 24
and are not included within
Release 2.0.
Readiness for a small scale Pilot I Complete I* R2.0 was successfully released and put
in March 2024 live in Aldwych 01 Feb 24 completing a 4-
week operating cycle before being
withdrawn to make way for R2.1 live
testing.
e Original intent was for 2x DMB (Aldwych
and Leeds). In order to ensure 2.1
deployment and Go-live timelines were
not impacted the 2.0 deployment was
scaled back to Aldwych only.
e However, the conditions and intent for a
‘small scale pilot’ have been achieved for
2.0 at Aldwych, useful operating data and
user feedback has been obtained from
this and will enhance the R2.1
deployment.
+ Complete
Restructuring of the existing I In « This item is nearing completion.
programmatic structures into a I progress I* All elements formerly split off from SPMP
single programme entity with into the RTP structure have been
uniform, GE-level governance recovered and reintegrated into the
and singular programme programme.
management and delivery KPIs * Redesigned SPMP organisation has been
implemented at L1 and L2 of the Org.
« GE Sub-Ctte Steerco for the programme
has been re-instantiated and has been
running on a 2-weekly cadence since Oct
23.
Confidential
POL-BSFF-130-0000029_0164
POL00448861
POL00448861
@
Status Commentary
e The establishment of a performance
measurement framework for the
programme remain ongoing at this point.
e Likely complete by 30 April 2024
Full support and completion of I In « Diagnostic Review has completed Oct 23
the Accenture SPMP diagnostic I Progress with 32 recommendations suggested. Of
review, and commencing those recommended, 25 were taken
implementation of the forward for action and are included in the
recommendations they identify remediation tracking project.
« Overall 63% of work has been completed
with 6 recommendations closed. Actual
progress is tracking just behind
expected progress required to close
all issues by 31 Mar 24.
Transitioning clearly defined I Complete I* Second Device has been transitioned and
areas of scope into separate has been presented to Board in March
projects (e.g. Identity and 2024 for an interim approval
Access Management or ‘Second « IDAM will be presented to Board for
Device’). approval in June 2024.
Appendix 2: Estimated Resource profile
Between August and September 2023 POL has reduced aggregate headcount in SPMP by over
500 FTEs. This level will be maintained until at least March 2024. Within this funding request
increment the SPMP intends to conduct a small-scale ramp-up to ensure that the correct
capability is in place for transition to the scope and delivery requirements of the HRBC.
1000
800
600
400
200
0
8
888
7e1775 842
Aug
Sep Nov
ea SOEING
™Previous Total
Confidential
289
532
I 342 fisse 324 339 al
Oct b
Jul
Mar — Apr Jun
May
™Current Total
POL-BSFF-130-0000029_0165
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
“Second Device” ~ Interim
Title: Business Case and Drawdown Meeting Date: I 25 March 2024
request.
Zdravko Mladenov, Group Chief
Digital Information Officer
Chris Brocklesby, Chief
Author: Transformation Officer
Sponsor:
Input Sought: Decision & Noting
e Board are requested to approve a drawdown oft. .
for the “Second Device” project. The drawdown primarily to allow for
hardware to be procured, while the technical solution completes development.
e Board are requested to note that the drawdown of the above funds is subject to DBT
approval to reallocate funds within the interim Horizon Replacement envelope. Should
such approval not be granted, the project will have to delay the hardware purchase
until the next Horizon Replacement business case is approved.
Executive Summary
As part of the universal service offering, POL is obligated to provide pre-paid bill payment for
public utility services. The current legacy solution, Paystation, is being discontinued by the
supplier at the end of the contract in March 2025. To continue providing the service, Post
Office is planning to deploy a mobile, handheld “Second Device”, similar to the technology
used in Drop & Collect and leveraging NBIT architecture and components. An additional
benefit of this approach is the ability to deploy PUDO and other products on the “Second
Device” in the future.
While the software ‘build’ is progressing well, the March 2025 timeline remains a challenging
target, further exacerbated by the supply chain challenges being faced in the Red Sea / Suez
Canal. To retain a chance of meeting the timeline, Post Office needs to place an order for the
equipment as quickly as possible.
The total Project cost is expected to bei
which is primarily for hardware costs. The project will return te Board in July or Septem er
2024 with a status update and the next drawdown. At that point the software build and the
deployment/training approach are expected to be completed.
Internal
POL-BSFF-130-0000029_0166
POL00448861
POL00448861
Report
1. As part of the universal service offering, POL is obligated to provide universal Bill Payment
facilities for public utility services. The obligation runs till March 2025, but there is an
assumption that due to critical socio-economic purpose of the service, it will be extended
at least through the next Spending Review period. Furthermore, POL has several
commercial agreements with energy companies, with three commitments ending beyond
2025.
2. The current legacy solution, Paystation (see Appendix 2 for a visual), is operated by
Ingenico / Worldline, including the back-office processing via Horizon. The Paystation
solution has reached end of life (both hardware and software), and Ingenico / Worldline
have served notice that they will be discontinuing the service at the end of their current
contract in March 2025.
3. Post Office’s solution to this challenge has been the “Second Device”, a hand-held solution
similar to what is used in Drop & Collect locations. See Appendix 3 for a Device Strategy
on a Page.
4. Alternative options to “Second Device” that were considered and dismissed include (a)
discontinuing the pre-paid Bill Payment products altogether after March 2025; (b)
deploying Payzone technology and making every Post Office branch also a Payzone
location; (c) trying to extend the contractual commitment with Worldline / Ingenico at a
likely large extra cost and a multi-year commitment to the legacy technology to justify
the supplier investment in it.
5. From a technology perspective, similarly to the next generation Self-Service Kiosks, the
“Second Device” leverages components and architecture from NBIT. Due to this
architectural approach, in the future Post Office will be able to easily add PUDO and other
products to the solution. Note, however, that the immediate focus is on building the legacy
pre-paid bill payment products that will stop being offered via the Paystation in March
2025 and that will also not be offered on the NBIT terminals.
6. From a programmatic and funding perspective, “Second Device” work launched in 2023
and was originally part of SPMP. Subject to DBT and Treasury approval, it will continue to
be funded via the Horizon Replacement funding envelope. Programmatically, in light of
the NBIT slowdown after June 2023, the “Second Device” effort has now been stood up
as a separate project, with a much accelerated timeline aiming to meet the March 2025
deadline.
7. From a delivery perspective, the “Second Device” challenge across the ‘build’, securing
connectivity in-branch, delivering training and ultimately deploying the new solution is
significant. The technical solution is well advanced and already in early stages of testing,
targeting completion in May 2024. However, some of the outstanding major risks include:
i. Hardware purchase: “Second Devices” will be procured compliantly via an
existing contract with SCC. They will then be manufactured via a dedicated
production “run” by the manufacturer, XAC, who also supplies the devices for
2
Internal
POL-BSFF-130-0000029_0167
POL00448861
POL00448861
@
Drop & Collect. After the order is placed, there was a 5-month lead time for the
devices to be built, shipped from Taiwan and prepared for deployment across
11,000 locations. That timeline is now under further pressure due to the global
supply chain challenges, arising from the situation with Red Sea / Suez Canal
shipping lanes. The implications for Post Office are that we need to put ina
order as quickly as possible in order to maintain the possibility of meeting the
March 2025 deadline.
ii. Back-end integrations: Originally, the “Second Device” would integrate and feed
data into the NBIT backend applications to enable end-of-day branch
reconciliations. With the change in timelines, developing an integration to
Horizon has been added to the scope and remains outstanding. The technology
team is assessing the options of completing that integration without requiring
Fujitsu support, which would otherwise increase the time and cost substantially.
iii. Training and deployment approach: Given the lead times for hardware, there is
a very narrow window for branch roll out, which will require extensive cross-
POL coordination to deploy by March 2025. Similar coordination will be required
with other technology efforts, such as the Copper-to-Fibre migration, the pace
of which will influence how branches connect the “Second Device” initially (i.e.
via Wi-Fi or 3G/4G).
8.
is primarily to allow for placing the required
hardware order and complete the application development through the end of July. See
the Financial Impact section for further detail.
Financial Impact
9. The total forecast for development and deployment of Second Device is finnetevanr! broken
down in A dix 1. Actuals at the end of April are expected to be approx.
includes { t! while “Second Device” was operating under the SPMP umbrella until
November 2023, and the remaining ‘om the interim DBT Business case for Horizon
replacement approved in November 2023.
10. The balance of the forecast is intended to be drawn down in two phases.
requested in this paper to place an initial hardware order and continue with technology
development through till the end July. This spend is contingent upon agreement from DBT
to reallocate spend within the initial interim Horizon replacement Business case, where
delays in the progress of Belfast Oracle Database upgrades has created headroom. Should
such approval not be granted, the project will have to delay the hardware purchase.
11. The project will return to Board for the remaining {i is well as to provide a status
update, in July or September 2024. The funding is included within the Horizon
Replacement Business Case that is currently progressing through DBT and Treasury
reviews.
Internal
POL-BSFF-130-0000029_0168
POL00448861
POL00448861
@
Risk Assessment, Mitigations & Legal Implications
12. See above.
Stakeholder Implications
13. From a public sector perspective, as part of the universal service offering, POL is obligated
to provide universal Bill Payment facilities for public utility services. This obligation runs
till March 2025 and is assumed to be extended afterwards. From a commercial
perspective, POL has several commercial agreements with energy companies, with
commitments running past 2025.
Next Steps & Timelines
14. A further update will be provided to Board, in July or September, with a request for the
final drawdown to be approved.
Internal
POL-BSFF-130-0000029_0169
POL00448861
POL00448861
@
Appendix 1
The Business case requests funding in 2 stages:
1. On IADG/Board approval of the Business case, to place the hardware order & continue
with application development.
3. Total funding including Prove Case/” _ ~~ IRRELEVANT }
Spend Summary
[Deployment/Decommission i
[Hardware i
Technical Delivery i
Resource
a
IRRELEVANT I
Prove + Business Case Total
SPM Spend
(Total Investment
Internal
POL-BSFF-130-0000029_0170
POL00448861
POL00448861
Appendix 2
Paystation vs. “Second Device”
Paystation today Second device in the future
Internal
POL-BSFF-130-0000029_0171
POL00448861
POL00448861
Appendix 3
I coV0 version
In-branch Technology Device Strategy on a page
Next-Generation NBIT/Horizon counter: A larger device at the back of
customer automation the store offering nearly the full suite of POL
technology (SSK): POL services. This will replace the current Horizon
will continue to. counters and fortress
develop and roll-out
our customer self-
service kiosks which
offer a standalone and
self-sufficient system
for Post Office
products
xs
“Second Device’ / Retailer Accompaniment Device:
Asmalil, portable device that can be kept next to the
term, which will be particularly valuable device and won't rely on there being Ee]
for large retailers such as Co-Op OT Fibre an NBIT counter to operate
Internal
POL-BSFF-130-0000029_0172
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Post Office Horizon IT Inquiry I meeting ate: I 25 March 2024
Update
Author: Diane Wills — Inquiry Director
SUBJECT TO CONFIDENTIALITY UNDERTAKINGS — NOT FOR FURTHER CIRCULATION
This document contains information which is confidential to the Inquiry. It must not be discussed or shared with
anyone who does not hold a confidentiality undertaking accepted by the Inquiry.
SUBJECT TO LEGAL PROFESSIONAL PRIVILEGE
Input Sought: Noting
Board is requested to note:
i. The disclosure meeting with the Inquiry held on 28 February 2024
ii. The written statement from Sir Wyn regarding POL’s closing submissions for Phase
4 and the POL prosecutions expert
iii. The funding request being submitted for Board approval
iv. ISC’s approval to release Deloitte from their confidentiality obligations it owes to
POL
ve The new Letter of Engagement with HSF
Executive Summary
The senior POL Inquiry team, BSFF, KGKC and KPMG met with the Inquiry on 28 February for
a disclosure meeting. It was a positive and productive meeting, during which Jason Beer KC
confirmed that the purpose of the meeting was to look forward and agree on how we could
work together to meet the Inquiry’s hearing schedule, starting in April. Several practical
arrangements relating to disclosure were agreed, including direct communication between
KPMG and the Inquiry’s Senior Information Officer. The meeting was recorded, and the agreed
minutes will be shared with Core Participants in due course.
The POL Inquiry team have been working with HSF to finalise a new Letter of Engagement.
The original engagement came to an end on 5 March 2024, and a new contract was signed to
cover the period 6 March to 19 April 2024.
The Inquiry informed us, via a written statement on 29 February, that it will disregard any
reference to the prosecution expert’s report in POL’s written closing submissions for Phase 4.
Sir Wyn was critical for the way in which the report was submitted - in his view without proper
communication, and without inviting the inquiry to formally accept it. We do not consider this
criticism to be warranted and ISC have therefore agreed to us writing to the Inquiry inviting it
to reconsider the position.
SEG separately has a paper seeking agreement to go to Board later this month, to request
funding up to the current approved Government amount of
including the contingency fund), currently forecast to last to end September 2024. Significant
spend for the next six months includes disclosure remediation, witness preparation, and Phases
5 to 7 hearings and preparation. (See separate ‘Inquiry Funding’ paper).
Dan O’Mahoney joined the Inquiry Team on 4 March, replacing Gemma Ludgate, as our Inquiry
Operations and Strategy Director.
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0173
POL00448861
POL00448861
@
Report
Phase 4
1. POL submitted the second part of its Prosecutions Expert report (focussing on the criminal
case study analysis) to the Inquiry on 2 February 2024. The report was heavily relied on
in POL’s Phase 4 Closing Submissions which were provided to the Inquiry on 16 February
2024.
2. On 29 February, the Inquiry published a statement from the Chair in response to POL’s
Closing Submissions. POL had been given advance warning of this only hours before its
publication and were not asked for comment. The statement was highly critical of POL’s
approach to submitting its Expert report to the Inquiry and the way POL had relied on it
in Closing Submissions. Consequently, the Inquiry decided to disregard the submissions
made by POL where these rely on or refer to the Expert report. On advice from KGKC
rs The
decision does not accord with an ‘on the record’ conversation Jason Beer KC had with
KGKC in early September, and which was the basis for how we proceeded. Separately, we
are compiling a chronology and analysis as to the different decisions taken with a view to
any lessons which can be learned. This will be shared with ISC in due course.
3. In the event that Sir Wyn does not agree to change his position, KCKC’s view is that the
PHASE 5 / 6
4. The full timetable for Phase 5/6 hearings (67 witnesses to provide oral evidence) has been
published by the Inquiry so work is being fast-tracked to ensure the team and business
are ready for attendance and engagement. There are additionally a significant number of
written statements that are expected to be sought (see further below for more detail).
5. Work is progressing with BSFf to ensure POL’s objectives for the Phase 5 hearings are
central to BSFf’s design of a preparation pathway that suits POL (in terms of how we
anticipate receiving work products, how we envisage attendance at hearings, and what
we want to receive in advance of witnesses appearing).
6. We have now received the analysis prepared by Counsel of the Second Sight transcripts
as set out in the previous SEG update. This analysis is being digested by the legal team
together with a variety of work products provided relating to the other Phase 5
workstreams. Additionally, further papers prepared by Counsel on Paula Vennells, Angela
Van Den Bogerd and the General Counsels in post, have been received and will similarly
be reviewed by the Phase 5 legal team. An update will be provided.
7. Disclosure remediation relating to Exchange data continues for Phases 5 and 6 with the
Inquiry having now set deadlines as to when documents relating to each witness must be
supplied. Letters have also been sent to the Inquiry concerning progress and the
methodology taken to ensure fast and effective disclosure, including the use of AI to
prioritise pools of documents for review.
8. In order to properly prepare for the hearings, Counsel and BSFFf will undertake a significant
document review exercise to understand what documents have been disclosed (by POL
and other CPs) in relation to Phase, and to then also analyse the witness statements as
they are produced. Identification of relevant issues and specific areas to focus our
2
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0174
POL00448861
POL00448861
@
attention on within this phase will be crucial in our preparation to better understand what
evidence is likely to come out of those hearings.
9. We know that the Inquiry has instructed governance experts who have started reviewing
disclosed material. Their appointment has led to additional rule 9/s21 requests which are
in hand. At present, it is not clear when we will receive the expert’s report on corporate
governance. Once the Board has considered the Grant Thornton Governance Review it will
be essential that this is shared with the Inquiry team so that we can both advise on its
disclosure to the Inquiry and on its impact for phases 6/7.
PHASE 7
10. Preparation for Phase 7 is well underway and Counsel/BSFF and POL have provided a
timeline of activities from now to July 2024 which will ultimately result in the production
of POL’s Phase 7 corporate witness statement by Nick Read. This will likely be one
overarching statement, plus additional parts relating to specific technical topics such as
compensation and Horizon. Recent events and heightened media activity may lead to
the Inquiry deciding to call additional witnesses which we estimate may extend the
hearings by a further two weeks.
11. BSFf are undertaking a gap analysis from the Teach-In sessions and associated Elevator
Pitches to identify questions and areas of focus that POL need to address. There will
then be a series of deep dive sessions to dig into the Elevator pitches so that the team
Properly understand progress to date and potential areas of criticism. Thereafter, POL
business leads will complete narrative documents for each of their business areas for the
purpose of amalgamating and preparing the overarching Phase 7 corporate witness
statement. Alongside this there are ongoing meetings with the POL Inquiry team, BSFf,
Kate Gallafent KC and Nick Read in preparation for his role as the main POL corporate
witness. These will increase in frequency once the Rule 9 request is received. This will
be an extremely resource heavy period for POL business leads, POL Inquiry team, BSFF,
and Counsel.
DISCLOSURE
12. The Inquiry have been clear that our disclosure efforts remain under scrutiny, that they
will call a disclosure hearing if there are any other issues and that they expect there to
be no delays to Phase hearings because of late disclosure. This is primarily because
there is simply no flex in the timetable that Sir Wyn has announced. As such, even a
relatively small delay will cause a significant issue for the Inquiry.
13. We sought some greater understanding about likely future disclosure requests from the
Inquiry at our meeting with them on 28 February. The Inquiry were not prepared to be
definitive but did confirm that they do not currently have any more big structural
disclosure requests in mind for Phases 5 and 6. To date some limited disclosure has
been made that relates to Phase 7. There may be further Phase 7 requests, but it is
currently unclear how exactly the Inquiry will approach that, and recent media interest
and Select Committee appearances may make Sir Wyn more interested in current day
POL and our practices and culture.
14. Mimecast remediation process and e-discovery priorities: We have implemented plans to
manage the competing priorities between the remaining Phase 4 remediation work,
which is being undertaken by HSF and P&P, and the work required by BSFf in readiness
for Phases 5, 6 and 7. This is a substantial and resource intensive phase of disclosure
work, due to the number of high intensity witnesses and the large number of documents
3
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0175
POL00448861
POL00448861
@
that we will need to be collected, processed and reviewed. We are making good progress
and have prioritised tranches of work in the order of witnesses giving evidence. POL is
monitoring progress closely through daily disclosure meetings with delivery partners.
15. eDiscovery priorities: We have enhanced capacity to speed up the process of harvesting
documents from POLs eDiscovery platform by providing access to KPMG support.
16. Structural review: The Relativity Workspace consolidation project is on track to complete
within budget by the end of March. At the meeting with the Inquiry on 28 February, the
Inquiry recognised this project as likely being useful and were keen to better understand
the benefits as they have expressed their frustrations around duplicates and near
duplicates. Alongside, this we continue to make good progress with BSFf on the
completion of the structural review with their report expected imminently. Work with
Innovo Law to scope POL’s data universe will also be completed by the end of March.
The R9/S21 end to end process map, RACI and Risk Register have been shared with the
Inquiry Steering Committee and we have implemented monthly MI updates to report the
status of POLs and third-party risks and controls.
17. POD Review: The confidentiality review of POL documents being disclosed by the Inquiry
to CPs is continuing to be incredibly resource intensive. The impact is being felt heavily
within the Inquiry team but also across the business. Whilst considerable amendments
have been made to the policy to seek to minimise the burden on the business whilst still
protecting the most confidential material, we are considering again whether further
changes to the approach are needed.
18. Disclosure Remediation Costs Recovery: POL have part paid invoices submitted by HSF,
KPMG and P&P relating to the period June 2023 to December 2023, withholding payment
relating to disclosure remediation costs. In total POL have withheld approximately
illion, of which ! relates to HSF invoices. Further amounts may be withheld
against Counsel's invoices once further information has been received from P&P. A
preliminary meeting was held with KPMG on 29 February 2024 and a meeting with HSF
is scheduled for 26 March 2026. A meeting with P&P is expected to be time-tabled
shortly. KPMG are only implicated in relation to one issue (de-duplication) in respect of
which HSF and KPMG each blame the other. Further information is awaited from KPMG
to enable POL to better understand their position, following which it is anticipated that a
further meeting will be time tabled. Given the positions adopted by both KPMG and HSF
a three-way discussion, possibly via mediation may ultimately be required. Likely level
of recovery has not yet crystalised and will be significantly influenced by risk appetite.
Further advice is awaited from BSFf and ISC are regularly updated.
SUPPLIER CONTRACTS
19. Board approved a new contract award for Burges Salmon on 30 January 2024. The
contract will be fundamentally the same as the existing contract and supports the need
for increased budget given timetable extensions and to ensure the continuation of
services with the supplier. The new contract is expected to be in place by the end of
March 2024.
20. Board approval was received on 26 September 2023 to enter into two further contracts
with Herbert Smith Freehills (HSF) in respect of the Inquiry Team and Remediation unit
(RU). The RU contract was signed on 27 November 2023. The previous contract with
HSF for the Inquiry team expired on 5 March 2024. The new letter of engagement
commenced on the 6 March and will run up to and including 19 April 2024. The new
contract broadly does two things (1) it confirms a list of tasks (largely disclosure related)
4
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0176
POL00448861
POL00448861
that HSF will complete; and (2) provides POL with the right to request that HSF take on
new pieces of work.
WITNESS SUPPORT
21. Between April and July, 67 Phase 5/6 witnesses will give oral evidence to the Inquiry. In
addition, we expect a number of additional witnesses will be required to provide a
written statement only. A summary of Phase 5/6 witness numbers is set out in the table
below:
Phase 5/6 witness Current POL Employee/ Former POL Total number of POL
Contractor/Director Employee/ witnesses
Contractor/Director
Oral 5 25 30
Written 2 16 18
Total 7 41 48
22. Whilst the Phase 7 witness list is less certain than for Phases 5/6, we are anticipating
there to be approximately four POL witnesses required to give oral evidence in
September. The Inquiry may request more and so this is an estimate at this stage.
23. As previously reported to SEG, a high proportion of witnesses are former POL employees
(85% are former employees for Phases 5/6). The Inquiry Team has been liaising with
POL People and Health & Safety Teams to ensure appropriate wellbeing support is
offered to these individuals. Previously, 24/7 Optima support was only offered to current
employees however at the end of February this was extended to former employees as
well. This is already having a positive impact.
24. The Witness Support Team has also been working closely with POL’s communications
team to prepare for what could be an increase in demand for witness support with
media-related queries. In terms of proactive help, witnesses will be provided with an
updated Q&A document which now includes information on the types of press interest
they may experience and what their options are should this happen. When it comes to
reactive support, there are currently two members of the comms team who are able to
join a call with a witness to offer guidance and we are looking to expand this to a pool of
three by the time hearings start up again in April.
COMMUNICATIONS
25. Work has continued to increase internal awareness and understanding of the Public
Inquiry and the Post Office Inquiry Team’s work among colleagues across the business.
This includes reviewing, redesigning and rewriting The Hub Inquiry Team webpage and
planning for a POL wide lunch and learn session hosted by the Inquiry team at the end
of March.
CONFIDENTIALITY RELEASE
26. On 18 January 2024, ISC approved releasing Deloitte (including current and former
personnel) from the confidentiality obligations it owes to Post Office, to the extent that
such obligations concern matters which are within the Inquiry’s Terms of Reference. This
5
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0177
POL00448861
POL00448861
@
waiver is solely for the purposes of enabling Deloitte to disclose materials to the Inquiry,
make submissions to the Inquiry, or otherwise give evidence to the Inquiry to assist it in
fulfilling its Terms of Reference. This general waiver does not release Deloitte (or its
current or former personnel) from obligations of confidentiality in respect of any
information which is the subject of legal professional privilege retained by Post Office, or
any privilege which cannot unilaterally be waived by Post Office (such as without
prejudice privilege). This release does not permit the disclosure of information over
which Post Office has not waived privilege. We wrote to Deloitte on 12 February 2024
and subsequently to the Inquiry on 15 February 2024 to confirm the above.
Legally Privileged & Strictly Confidential
POL-BSFF-130-0000029_0178
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title:
Inquiry FY24-25 Funding Drawdown
request Meeting Date: I 25 March 2024
Author: Diane Wills, Inquiry Director
SUBJECT TO CONFIDENTIALITY UNDERTAKINGS ~ NOT FOR FURTHER CIRCULATION
This document contains information which is confidential to the Inquiry. It must not be discussed
or shared with anyone who does not hold a confidentiality undertaking accepted by the Inquiry.
Input Sought: Noting / Approval
Board
is requested to:
Note update in the Inquiry assumptions since January 2024 Board and the updated risks
and opportunities within the Programme (detail in Annex A, B and C).
Note that this forecast is based on the following assumptions holding true (Annex A
shows the most up to date assumptions and any movement since January 2024):
a. Phase 5/6 starting early April 2024; Phase 7 starting September 2024 for four
weeks; closing hearings early November 2024; 86 remaining sitting days.
b. HSF continue to deliver Phase 4 work in accordance with the terms of the letter of
engagement.
Review maximum 5m documents from Chesterfield backup tapes by March 2024.
No further new data repositories identified.
Review <1.5m documents for disclosure; produce <490k documents.
No more than three disclosure hearings; Compensation hearings to be rolled into
Phase 7. However, Sir Wyn may call an additional hearing prior to this.
Relativity: KPMG consolidate workspaces by end March 2024.
Support <70 POL witnesses (c.40 of them high intensity) for Phases 5-7; D&O
recovery 20% average for those with ILR.
i. Programme resource requirement does not exceed 53 FTE average and only four
FTE for post-Phase 7 (and wrap up period) work; Inquiry Programme not
responsible for any additional POL resource (other than in current budget).
>mao
2)
April-September 2024 (noting the current lifetime forecast of
‘and FY24/25 budget o1 covered in Annex F).
year plan of
Please see the supporting financial pack uploaded to the Reading Room.
Executive Summary
We are seeking funding up to the current approved Government funding ot
hich is the
‘contingency (for Inquiry and RU i
Strictly Confidential
POL-BSFF-130-0000029_0179
POL00448861
POL00448861
@
would be for Inquiry). This approved funding is forecast to last Inquiry (and RU) until the end
Trade (BT) have confirmed that they have the Chief Secretary to the Treasury (CST) approval
and have laid the title for a WMS (Written Ministerial Statement) on Tuesday 19'* March 2024.
In coordination with this DBT are finalising the funding letter to be issued early week
When we came to Board in January 2024, we flagged that Sir Wyn was looking to extend
hearings to Autumn 2024. Since then, we have had further communications from Sir Wyn that
Phase 7 will take place in September 2024 after the summer break, that there will then be a
pause in hearings and then he will regroup to hear closing submissions. This means that closing
hearings are likely to be November 2024. Given the considerable optimism in the current Phase
5 timetable we have built around four weeks of additional hearings contingency into the figures.
This change in hearing timetable assumptions mostly impacts on our costs in the second half
of the year, although there is some knock-on preparatory work in the first half. Overall, this
drives lifetime spend to:
The significant buckets of spend for April to September 2024 are:
* Disclosure remediation,,! IRRELEVANT} Material volumes of data exist on Microsoft
Exchange which are not on Mimecast and other repositories. Work is needed to
remediate disclosure for all Phases. The priority is to remediate Exchange for Phases
5/6 ahead of Phases 5/6 beginning, which means it should be completed in April 2024
« Witness preparation, ‘We expect Phase 5/6 witnesses to give evidence
between April — July and Phase 7 witnesses to give evidence in September. Therefore,
witness costs for April to September will include ILR preparation costs, familiarisation
sessions, BSFf costs for supporting POL on correspondence with ILRs and liaising with
insurers on D&O recovery.
« Phase 5 hearings, I ' We anticipate the bulk of disclosure for Phase 5 has
already been produced. Counsel, BSFF and POL legal teams are working to digest
the significant volume of disclosure material produced by POL, together with
disclosure from other CPs and the witness statements. The output of this work will
be factual narratives, chronologies and likely areas/documents of concern for
consumption by POL ahead of key witnesses giving evidence and for the
consideration and preparation of Rule 10 questions and closing submissions.
e Phase 6 and 7 preparation;. BSFf and POL will continue to respond to any
further information requests alongside reviewing all Phase 6/7 material disclosed by
the Inquiry. As with Phase 5, narratives will be prepared in preparation for Phase 6
witnesses. For Phase 7, which will also include compensation matters, we are
preparing in advance of receiving any Rule 9 request(s) to provide the corporate
statement on current practice and procedure.
Annex E sets out the governance approvals and drawdowns for 2023/24. Today’s
request is the first for 2024/25. Annex D sets out the expected activity and
workstream cost breakdown for (1) April-September 2024; and (2) April-May 2024.
Strictly Confidential
POL-BSFF-130-0000029_0180
POL00448861
POL00448861
Report
1. Whilst we have reported in previous Board papers on our expected whole life costs, this
is our first request for any funding for FY2024/25. At this stage we are requesting’
which will take us until the end of September 2024 and the expiration of thefir
funding approved by Government for RU and Inquiry. Alon side this we are having
conversations about accessing additional funding over thi } The significant pieces
of work that we expect to complete between April and September 2024 are:
Witness preparation
2. Phase 5/6 witnesses are expected to give evidence between April and July. The
breakdown of those witnesses (and summary of D&O coverage) is:
Phase 5/6 oral ITotal number IINUmberof POL) Number covered Number covered Number not
or written POL of POL Witnesses that by AIG policy by Allianz policy covered by D&O
witness witnesses are current (e.g. contractors)
employees
Oral 30 E} 21 9 (e)
Written 18 2 14 3 1
48 7 35 12 1
3. Witnesses will continue to incur ILR costs in the lead-up to their oral evidence date. The
five current employee witnesses due to give oral evidence will be offered the chance to
take part in a Familiarisation Session with King’s Counsel ahead of appearing at the
Inquiry. This session aims to ensure witnesses understand what giving evidence at an
Inquiry is likely to look and feel like and is there to support them giving their best evidence.
These sessions are funded by POL.
4. Whilst the Phase 7 witness list is less certain than for Phases 5/6, with Sir Wyn likely still
deciding how to approach current practice and compensation and who to call, we are
currently estimating there to be around four witnesses required to give oral evidence.
5. BSFf’s witness team continue to support POL with each individual witness; corresponding
with the witnesses’ ILRs; managing document disclosure to witnesses; and liaising with
insurers on D&O recovery. We anticipate that liaison with D&O insurers will be resource-
heavy through these months as we continue to be met with challenges from insurers.
Phase 5/6 hearings and preparation
6. To date, Phase 5 document production to the Inquiry has totalled around 180k documents,
which is more than the cumulative disclosure total for Phases 1 to 4. POL’s counsel and
legal teams are continuing their intensive work on the analysis of these documents aligned
to the five key workstreams. High level summaries will be shared with senior stakeholders
to ensure there is an understanding of the likely evidence to come out of the Phase 5/6
hearings.
7. The published witness timetable is being utilised to focus Counsel/legal resources on the
order for construction of witness profiles based on documents disclosed, and in preparation
for receipt and dissemination of Core Participant statements. This work collectively will
provide POL with the expected key shape of Phase 5 and any specific concerns and
3
Strictly Confidential
POL-BSFF-130-0000029_0181
POL00448861
POL00448861
@
evidence that is likely to arise. This in-depth understanding and profiling will inform the
consideration, timing and wording of any Rule 10 questions.
8. Similar to, and in parallel with, Phase 5, the Phase 6 preparation requires BSFF and
Counsel to both support the creation of, and then complete in-depth analysis of, POL
responses to Rule 9 requests. Whilst the Inquiry has indicated that there are unlikely to
be further large-scale disclosure requests for these Phases (for example spanning 20 year
time periods), there will be a flow of new and follow up asks from the Inquiry that will
continue to absorb time and resource. The Grant Thornton report on POL Corporate
Governance is likely to be relevant to Phase 6 and will need to be analysed once this has
been presented to, and accepted by, Board.
Phase 7
9. Preparation for Phase 7 is well underway and Counsel/BSFF and POL have provided a
timeline of activities from now to July 2024 which will ultimately result in the production
of POL’s Phase 7 corporate witness statement by Nick Read. This will likely be one
overarching statement, plus additional parts relating to specific technical topics such as
compensation and Horizon. Due to recent events and heightened media activity, the
Inquiry may decide to call additional witnesses, potentially adding a further two weeks of
evidence.
10. BSFf are undertaking a gap analysis from information provided to date to identify
questions and areas of focus for POL to address. There will then be a series of deep dive
sessions with key business leads to test progress to date and understand potential areas
of criticism from Sir Wyn. Thereafter, POL business leads will complete narrative
documents for each of their business areas for the purpose of amalgamating and preparing
the overarching Phase 7 corporate witness statement. Alongside this there are ongoing
meetings with the POL Inquiry team, BSFf, Kate Gallafent KC and Nick Read in preparation
for his role as the main POL corporate witness. This will be an extremely resource heavy
period for POL business leads, POL Inquiry team, BSFF and Counsel.
Ongoing disclosure
11. The Inquiry have been very clear that our disclosure efforts remain under scrutiny, that
they will call a disclosure hearing if there are any other issues and that they expect there
to be no delays to Phase hearings because of late disclosure. This is primarily because
there is simply no flex in the timetable that Sir Wyn has announced. As such, even a
relatively small delay will cause a significant issue for the Inquiry.
12. We sought some greater understanding about likely future disclosure requests from the
Inquiry at our meeting with them on 28 February. The Inquiry were not prepared to be
definitive but did confirm that they do not currently have any more big structural
disclosure requests in mind for Phases 5 and 6. To date some limited disclosure has been
made that relates to Phase 7. There may be further Phase 7 requests, but it is currently
unclear how exactly the Inquiry will approach that, and recent media interest and Select
Committee appearances may make Sir Wyn more interested in current day POL and our
practices and culture.
13. The priority is to remediate Phase 5/6 Exchange, which we are aiming to complete in April.
This is a substantial and resource intensive piece of work, due to the number of witnesses
4
Strictly Confidential
POL-BSFF-130-0000029_0182
POL00448861
POL00448861
@
Participating in Phases 5/6 and the large number of documents that we will need to be
harvest, process and review. BSFf are leading on the Phase 5/6 remediation, and we are
currently making good progress. HSF and P&P are leading on the Phase 4 remediation,
prioritising those phase 4 witnesses who have been recalled for Phase 5.
Financial Risk:
Cost Controls
14. We continue to ensure proper management of spend and remain incredibly aware that
with spend of this size, and competing pressures across both POL and Government, cost
controls are of the utmost importance. Having overhauled our processes and controls
during 2023‘ we continue to ensure they are properly embedded and operational.
Risks and Opportunities
15. Whilst the budget for 2024/25 is completed on a prudent basis, there are a number of
financial risks and opportunities (Annex C). We are managing these risks and
opportunities operationally with the programme under the funding envelope approved.
Crystallising opportunities:
16. There are a number of opportunities listed in Annex D, and we are working to maximise
the number of opportunities realised in FY 2024/25. This paper is requesting funding for
April to September 2024 and there are some items that we anticipate we may be able to
start realising in this period:
a) Disclosure remediation costs. There are a series of meetings with KPMG, P&P and
HSF across March and April 2024, the aim of which is to reach settlement with the
three firms for the costs of remediation of the disclosure errors that came to light in
Summer 2023. The cost of remediating those disclosure issues is estimated to be in
the region of} This includes for de-duplication, a process in which POL
was in no way involved. POL has always accepted that within the overall expense
there is a layer of costs that would have been incurred had disclosure been carried
out in accordance with the Inquiry’s expectations initially. Ultimately recovery will be
determined by the progress of those commercial negotiations; POL’s recovery
objectives will need to be balanced against the risks inherent in a formal dispute
process including legal costs and the importance of preserving supplier relationships
so as to continue to support the Inquiry. We are aiming to realise this recovery in
April, but it will depend upon the response of our suppliers in the forthcoming
meetings.
b) D&O Recovery. POL’s policy on witnesses is twofold, the first is to provide support
(including reasonable legal costs) to current and former POL witnesses and the
second is to maximise D&O recovery. To date POL has only made claims under our
AIG policy and will continue to seek recovery of costs as they are incurred by Phase
5-7 witnesses under this policy (approx. 75% of witness total). Costs incurred by
1 See, for example, section 2 of the Inquiry Team’s January 2024 Board paper and section 16 of our September 2023 Board
paper.
Strictly Confidential
POL-BSFF-130-0000029_0183
POL00448861
POL00448861
@
witnesses under the Allianz policy are expected to take longer to recover given
challenges with Allianz’s position on confirming cover for individuals before they
have submitted a witness statement. We are actively exploring options for
obtaining certainty as to the likely ultimate D&O recovery rate with Allianz.
c) Relativity workspace consolidation. The project to consolidate our 17 main
Relativity workspaces into one and to internally deduplicate all documents in that new
workspace is due to complete by the end of March. This should bring about (i)
efficiencies given in KPMG management costs as there will be fewer places where
searches will need to be run; and (ii) savings in legal review costs as there will be
fewer duplicates for the reviewers to work through. The project is one that the Inquiry
has welcomed given their public frustration with the number of duplicate and near
duplicate documents in the productions made by Post Office.
Engagement with Government
17. Monthly engagement. We continue to share monthly update packs and meet to discuss
our spend with UKGI, DBT and HM Treasury. These conversations are constructive and
transparent, and we have come a long way with ensuring that government colleagues
understand the detail of our spend profile and levers.
18. Contingency and future spend. We have been talking to government colleagues since
late 2023 about how we can access their Eontingency that was included in the request
for funding (and DBT included in the submission to the Competition and Markets
Authority). Unlike th teontingency was not handed over to DBT from
HM Treasury in late 2023. The monthly meetings have been about ensuring that HM
Treasury understand our spending and the controls we have in place so that they are
comfortable with releasing the contingency funds. DBT are finalising the funding letter to
be issued week commencing 18 March 2024 confirming access to the tontingency.
The funding condition HMT have placed on DBT, is that DBT must work with POL to further
reduce the costs of POL’s spending on its legal fees (without impairing the speed of
compensation to postmasters) and provide an update to DBT for mid-April so they can
update HMT by the end of April 2024.
19. Additional spend. Since late 2023 we have been messaging to government that with
the changing timetable and ongoing high levels of disclosure our spend may exceed the
cluded in the 3YP. Conversations about the scope and process for an additional
business case are ongoing. Government are aware that, on current forecasts, this needs
to be completed ahead of the: nning out in September 2024.
Strictly Confidential
POL-BSFF-130-0000029_0184
POL00448861
POL00448861
Annex A - Assumptions September 2023 vs March 2024
‘September 2023 Board Assumptions
March 2024 Board Assumptions
Timetable: Phase 5 starting early January 2024
SF continuing to lead Phase 4; and provide support to BSFF until end FY 2023/24,
Phase 7 would be c.Apni 24
‘Timetable: Hearings finishing by 14 June 2024 and total remaining sitting days <128.
Backup Tapes: Review of maximum 4m documents from Winchester/Chesterfield backup
tapes by end-2023,
Data: No new data repositories identified.
Disclosure process: Review of c1.5m documents; disclosure of ¢:90k documents.
Disclosure / compensation hearings: No more than five non-Phase hearings.
Compensation: No ad hoc compensation hearing in FY 2023/24, one in FY 2024/25.
Relativity: KPMG continue managing Relativity in its current format,
Witnesses: Support for <20 POL witnesses; D&O recovery at S5% average for all POL
witnesses
Programme resource: Team doesn't exceed 45 FTE average and only four FTE for post
Phase 7 work; Inquiry Programme not responsible for any additional POL resource (other
than in current budget),
Inquiry Phases 5/6 starting w/c 09 April until 31 July 2024. W/C 27 May one week break.
‘Additional three weeks of hearings.
HSF continue to undertake disclosure work that should be completed by May 202:
Some Phase 4 witnesses have been pushed into 5 & 6, HSF to support until sumimer 2028,
Phase 7 starting 3 September until 27 September 2024 (four weeks); Up to four POL
witnesses
Closing Statements: One month break expected between Phase 7 & closing hearings early
November. Finance assumptions have built in some flex allowing until December.
Phase 4 searches completed and circa 60 docs produced to the Inquiry. Phase 2 search
result numbers have been received by HSF from KPMG and HSF to write to POL with thelr
document review approach, Current approach is for HSF to complete the doc reviews and
produce by end March.
‘Since September 23 five servers and 12 tapes we identified at Chesterfield and are
Included in the further new dat ‘are assumed to be i
Disclosure process: Review <1.5m documents for disclosure; produce <490k documents
No more than three dicosure bearings in 202. (Sir Wyn statement 31 January 2024:
‘another disclosure hearing likely before or during Phases 586)
Io‘ hoe creer ton hesfnge cotoeneaton tbe yoted Imo Phase 7 got forward
(Sir Wyn confirmed compensation will be in Phase 7 but he may call another ad-hoc
‘compensation hearing)
Relativity: KPMG consolidate workspaces by end March 2024,
‘Overall assumption <70 witnesses require support for phases 5-7 (c. 40 of them high
Intensity). D&O assumptions remain but confirmation of recovery is proving particularly
challenging through our Allianz pol
30 POL witnesses required to give oral evidence in P5/6 with an additional 18 witnesses
‘required to provide a written statement only. The Inquiry have reiterated that these
‘numbers could change,
Programme resource: Team doesn't exceed 53 FTE average and only four FTE for post
Phase 7 work; Inquiry Programme not responsible for any additional POL resource (other
than in current budget)
Annex B - Hearing day assumptions March 2024
4-64u128,19Sep-200ct23. 4-28 128,19 Sep-200c.28, 4-284u123,19Sep-20.0c123
maek e-RS ESLOc-20ee28 — 7-200ee23, 11 Jan-2Feb I 7-200ec23,11J0n-2Fed26I = = bad e
hase sooa-#Dec28 uan-15 war2e 2 «
_ Ape -4Ju1 26 Apr - 3100126 “ @ Fo
fea I DE PeReenats-e AB Mar-10.Apr26 2 Fa
Phase 7 26Jen-9Feb28 22 Apr-4BMay24 m2l-16 Aue 28 3Sep-27 50028 s 6 16 °
sings (0: Mar 28 a 2esun 28 25ep-18Sep 26 290-8Nov26 ‘ 4 8 . °
Total 106 28 be 8 a
‘erage S66 will now un sogemner
Strictly Confidential
POL-BSFF-130-0000029_0185
POL00448861
POL00448861
Annex C - Financial Risks and Opportunities
Risks
IWorkstream Risk £m
Risks not included in the FY24/25 budget relating to cost increases
Disclosure Disclosure - emerging issue (high level estimate)
All Timeline - slippage of 3 months into 2025
Phase 4 HSF Future W ork on P4 that materialises
All Further Counsel support requirements
BSFF Increase in BSFF costs due to unforeseen issues
Compensation Hearing Compensation Hearing (1 day) and prep
BSFF Post Hearing Further non Counsel costs post hearing
Total Risks
Opportunities
Workstream Opportunity
Opportunities not included in the FY24/25 budget relating to cost savings
Remediation Reclaim 42% remediation costs
Cost of specific items held within FY24/25 budget
All Further cost control measures for legal partners i
All Possible 10% saving on BSFF costs, based on current run rate i
Data Assurance Data assurance spend may not be required
All Hearing Timeline - hearings finish in November, saving December's costs i
Disclosure Reduced BSFF costs linked to disclosure requests vnnexevantI
Witness Increased D&O Claim H
Compensation Files Handover of HSF compensation files - costs lower than expected i
Strategic Advice May not be required I
Data Restructure Data restructure repository Hl i
Total Opportunities i
Total Risk H
Strictly Confidential
POL-BSFF-130-0000029_0186
Annex D - Plann
A for (1) April
2) April-
Workstreams
Total Request
Witness Support
Internal Resource
Counsel Support
Inquiry Hearings
Programme Cost
De Minimis
Documents & Disclosure
Supporting Supplier Cost (incl KPMG)
IRRELEVANT:
Total
Annex E - Previ
vernan
POL00448861
POL00448861
r 2024
This is the first request made of Board for funding for FY 2024/25. In 2023/24 the Inquiry team
sought funding from Board (in March, June and September 2023, and January 2024) of
The following table sets out the approved Board funding and HMFM drawdown approvals for the
full FY 2023/24.
Mar-23 Board
Jun-23 Board
Sep-23 Board
Jan-24 Board
Total to date
May-23 HMFM
Jul-23 HMFM
Sep-23 HMFM
Oct-23 HMFM
Dec-23 HMFM
Jan-24 HMFM
Total to date
Board Approvals
“April - May 23
June - Sept 23
Oct 23 - Mar 24
Feb - Mar 24
Delegated authority for 2023/24
ved Drawdowns
April 23 spend
June 23 - Sept 23 spend
Increased costs to end of Sept
Oct 23 - Dec 23 spend
Increased spend Dec 23 - Jan 24
Increased spend Feb - Mar 24
Annex F - 2 year view and lifetime approvals
Mar 24 Board
‘Sep 23 Board ( £150m Envelope)
Var
23/24 I 24125 I I 2YP [Lifetime] Approved pre 23/24
_ TT] Approvals from Apr 23
IRRELEVANT J request untisep2
pore yen ng geen nnnnl] Remainder until Mar 25
Strictly Confidential
Remainder after Mar 25
_ IRRELEVANT
POL-BSFF-130-0000029_0187
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Sensitive Issues request and
Inquiry SteerCo ToR
Joanne Waites, HM Risk &
Author: Resourcing Manager and Dara Sponsor: Diane Wills, Inquiry Director
Carton, Delivery Lead
Title: Meeting Date: I 25 March 2024
Input Sought: Approval and Noting
Board are asked to approve the following (paras 10 to 13):
i. Delegate decision making in respect of individual cases as to the appropriate course of
action where the identity of a Speak Up reporter could be revealed in documents that
are of relevance for disclosure to the Inquiry to the Senior Independent Director and one
other independent Non-Executive Director
ii. The removal of the Sensitive Issues Panel as a sub-committee of ISC (Report points (10
to 13)
Board are also asked to note the following (approved by SEG)
iii. The proposed amendments to the Inquiry SteerCo (ISC) governance model set out in
the report below (Report points 1 to 9)
iv. The ISC Terms of Reference (ToR) version 1.8 set out in Appendix 1 (reflecting the
proposal in point (iv)) Appendix 1
v. Changes in the Delegated Authority Matrix ‘DAM’ as highlighted to reflect the removal of
the Strategic Executive Group (SEG) and other minor amends to reflect the current
Inquiry structure (Separate Attachment).
Executive Summary
The ToR and DAM were approved at Board on 8" July 2021 with subsequent minor updates
made during 2021, 2022 and 2023. The Group Executive (GE) further approved amendments
to the ToR on 15" November 2023 and it was noted at Board on 28'* November 2023. More
recently ISC and GE have approved minor amendments to membership on 12" and 14%
February 2024 respectively. More recently ISC and SEG approved the changes detailed within
this paper on 07 March 2024 and 13 March 2024 respectively.
Recognising the need for flexibility based on Inquiry timelines and the ad hoc nature of items
arising, and recognising the senior management team construct of ISC, this paper sets out the
rationale to facilitate a straight-through route for ISC papers to travel to Board, without the
need to be reviewed/approved by SEG first.
Additionally, following a review of governance with the Company Secretary, it is proposed that
decision making in respect of Inquiry disclosure matters pertaining to speak-up matters, will
be retained by the Board, and delegated to the Senior Independent Director and a further
named Independent Board member.
The Company Secretary and Chief of Staff have both been engaged regarding the rationale and
approach to implementing the proposed changes to the Governance model and are fully
supportive. They have recommended that the proposed changes are captured within the ISC
TOR.
Confidential
POL-BSFF-130-0000029_0188
POL00448861
POL00448861
Report
SEG/ISC Governance Arrangements
1. Whilst at its core, the requirement from POL in support of the Horizon IT Public Inquiry
(Phases 1-6) is the provision of historic documentation and witness statements in a timely
manner, there are many complexities and considerations that arise on an hoc basis that
require nimbler decision-making than what is in place currently.
2. Whilst ISC and/or the Inquiry Director hold an appropriate amount of delegated authority
for decision making, it is the flightpath to once-per-month Board meetings that can be
particularly challenging, with decision papers having to navigate ISC and SEG, then onto
Board.
Current governance operating model
SEG
ISC
3. Whilst SEG has a pan-POL operational guardianship responsibility, including being the
gateway for Board papers, SEG itself holds delegated authority for only one Inquiry related
matter which in itself is limited to ‘recommend for approval’ to the Board for the
Lifetime Inquiry Budget. The Board, the ISC, and/or the Inquiry Director and team, hold
delegated authority for all other material matters with the exception of ‘Drawdown of
Board Approved Funding’ which is held by HMFM.
4. The table below displays the primary activities with associated Delegated Authorities. The
proposal would be to remove SEG from this matrix, with Funding being ‘recommended for
approval’ from ISC directly to Board going forward.
Board SEG Isc tng HMFM
Dir
Approval of overall Strategic Approach to Inquiry x
Approval of topics for closing submissions Phases 1-6 and x
ad hoc Comp hearings
Approval of content of skeleton closing submissions x
Phase 1-6 and ad hoc Comp hearings
Approval of final content for closing submissions Phases x
1-6 and ad hoc Comp hearings
Confidential
POL-BSFF-130-0000029_0189
POL00448861
POL00448861
@
Approval of topics, content for skeleton and final closing
submissions for Phase 7
Approval of overall approach to Legal Privilege x
‘Approval of ad hoc decisions on legal privilege within the
overall Board approved approach*
Approval of funding for the life of the programme X
Approval proposed funding request for Board Approval X
Approve drawdown of Board approved Funding X
Approve drawdown of funding over annual budget
and/or agreed tolerances
5. As the CEO, interim CFO (ie one of the Board directors and two out of five SEG members)
and at least three members of the new senior leadership team (Diane, Tim and Simon)
have voting rights at ISC, then from an oversight and expediency of decision making basis
it is our reasonable proposal that ISC can recommend papers for approval by Board
without the need for these papers to be approved by SEG first.
6. We propose we would instead provide SEG members with copies of the papers travelling
to Board (subject to appropriate redactions or conflict of interest considerations). The
Inquiry director will continue to attend monthly SEG meetings to additionally provide a
brief verbal general update.
7. HMFM was put in place to approve the drawdown of funding from the Board approved
budget. HMFM provides for drawdown within and outside of approved budget within certain
tolerances. This committee also approves funding drawdown for the Remediation Unit,
such that all Historical Matters funding drawdown is governed in the one place, and the
funding can be considered holistically and separately as required.
8. The primary driver for this change in governance structure is to provide greater flexibility
to the Inquiry team in terms of preparation, review & challenge, and approval from ISC
for papers travelling onto Board. Removing the formal SEG oversight/approval element
from the mix extends the timeline for submission of papers by roughly a week, but also
avoids a scenario like the one we are having now, when SEG is sometimes scheduled in
advance of ISC during the course of the week which means some members hear updates
before others, or are hearing them more than once
9. Taking this approach would, as we understand it, align with one of the propositions
underpinning the new structure that information is shared with the right groups. Given
the overlap in membership of Board, SEG and ISC it is much more effective use of senior
leadership time, not to spend time on the same papers in multiple forums if this can be
avoided.
Sensitive Issues Panel
10. The Sensitive Issue Panel was constituted on 15/11/2023 and added to the ISC ToR as
a sub-committee. The remit of this committee was to consider redaction proposals in
respect of documents to be disclosed to the Inquiry which contain confidential Speak-Up
information. The construct of the committee was two non-Executive Board members and
one Executive member (voting members) supported by Inquiry director and a number of
SMEs.
Confidential
POL-BSFF-130-0000029_0190
POL00448861
POL00448861
@
11. This sub-committee has met twice to date and has opined on two cases.
12. However, following discussions with Company Secretary, the separation of powers
between the Board and the Executive is compromised under this construct with the ISC
membership drawn from the Board and the Executive, blurring accountabilities and
responsibilities for decision making.
13. Under direction from Company Secretary, it is therefore proposed to stand down this
committee, and instead to seek agreement for decision making to be delegated to the
nominated Board members. On that basis it is therefore proposed to amend the ISC ToR
to remove reference to the Sensitive Issues Panel.
Proposed Governance Structure
ISC
Amendments made to the ISC Terms of Reference
i. Removal of the para 3.1.A.c: the recommendation by ISC to GE for onward
transmission to the Board
ii. Amending GE to SEG
iii. Para 6 b added: The Chair also has discretion to reshare approval papers with SEG
(prior to onward transmission to Board) if deemed appropriate
iv. Para 6 f added: To ensure SEG are informed all papers being sent to Board are to be
shared to the SEG Reading Room
v. Removal of para. 3C: the Sensitive Issues Panel as a Sub Committee of ISC.
Financial Impact
14. There are no financial implications to these changes.
Risk Assessment, Mitigations & Legal Implications
15. The Inquiry team have discussed the proposal to issue papers directly from ISC to Board;
and the proposed change to the Sensitive Issues Panel with the Company Secretary and
Chief of Staff, who are supportive of this arrangement given the amendments
encompassed in the paper carry minimal risk and no corporate governance issues.
Uploaded to the Reading Room: ISC ToR = Tracked Changes.
Confidential
POL-BSFF-130-0000029_0191
POL00448861
POL00448861
Appendix 1 - Amended Inquiry SteerCo ToR
Input / Reviewed By:
Date Version Document Revi Becument
Author/Reviser
5/7/2021 1.0 Inquiry SteerCo ToR Kevin Hutchinson
4/4/2023 1,4 Changes made to reflect need for swifter I Helen Bussey
decision-making around the strategic
approach, reduction in quorum, Reviewers:
introduction of emergency provisions for Diane Wills
urgent decision-making, introduction of Gemma Ludgate
formal minutes, introduction of delegates Louise Sivey
Evelyn Hocking
Andrew Mortimer
16/05/23 1.2 Updated to reflect latest external advice Helen Bussey
on management of potential conflict
16/06/23 43 Updated to reflect the feedback from Helen Bussey
CoSec with regards escalation routes
where there is a potential conflict of
interest. Incorporates escalation to Senior
Independent Director and at least two
other Non-Executive Directors
26/07/23 1.4 Update to reflect the proposed changes to I Donald Peacock
ISC membership. The addition of 2 voting
members (Anshu Mathur, Group
Assurance Director and Kathryn Sherratt,
Finance Director). The Removal of one
non-voting member, Helen Bussey.
06/11/2023 1.5 Updates to Members and changes to Joanne Waites
reflect additional delegation of authority
to Inquiry Director and Introduction of
Section 3c
15/11/2023 1.6 GE Minor amends Joanne Waites
08/02/2024 1.7 Updates to Members Joanne Waites
29/02/2024 1.8 Updates to Governance Structure, Joanne Waites
removal of the Sensitive Issues Panel as a
Sub Committee of ISC para. 3C within the
ISC ToR
Updates to the DAM in line with Inquiry
Structure and Finance Forum out of spend
requests
POL-BSFF-130-0000029_0192
POL00448861
POL00448861
Governance
Committee Version Decision Date
Inquiry Steering Committee Vi.L For approval in 04/04/2023
principal to submit to
GE
Inquiry Steering Committee v1.2 For approval 16/05/23
Group Executive Committee VLG For approval 28/06/23
Group Executive Committee V1.4 For approval 09/08/23
Inquiry Steering Committee Vvo1.5 For approval 08/11/2023
Group Executive Committee vo1.5 For approval 15/11/2023
POL Board V01.6 For Noting 28/11/2023
Inquiry Steering Committee V01.7 For approval 12/02/2024
Group Executive Committee V01.7 For approval 14/02/2024
Inquiry Steering Committee v01.8 For approval 07/03/2024
Strategic Executive Group “SEG” v01.8 For approval 13/03/2024
POL Board V01.8 Noting
1. Background
The Inquiry Steering Committee (ISC) ultimately derives its authority from the Post
Office Limited Board. Board retained authority for certain strategic matters and
delegated other matters to the Group Executive committee [GE]. ISC was established
in December 2020, as a focused GE sub-committee, to provide oversight of the
Inquiry Programme and to make decisions in meeting POL’s Inquiry objectives.
The objectives of the programme are:
1. Support and cooperate with the Inquiry in its work, which include timely
response to requests (e.g. rule 9s / S21’s);
2. Demonstrate the good progress that has been made in respect of these
issues and the ongoing plans that POL has to ensure that these issues
would never happen again;
3. Appropriately support witnesses through this process.
2. Purpose
The purpose of the ISC is to provide Executive oversight of the Inquiry Programme.
The ISC:
a. Acts as the Executive Sub-Committee accountable for making decisions as to
the strategic approach to the Inquiry and 3rd parties (other than for those
matters reserved to the Board)
b. Provides direction, guidance and support to the Inquiry Director in delivering
the Inquiry Programme on any matter that is escalated for discussion or
approval.
POL-BSFF-130-0000029_0193
POL00448861
POL00448861
The responsibilities and delegated authorities of the ISC are as set out in these terms
of reference, changes to which must be approved by the Strategic Executive Group
and noted by the POL Board.
3. Responsibilities
A. Ri nsii
1. Decisions on the strategic approach to Inquiry and Third Parties
including to:
a. Approve the content of skeleton closing submissions for each phase
(approval of topics must first be approved by Board);
b. Approve the content of skeleton written submissions for ad hoc hearings on
compensation matters;
c. Approve for recommendation to the Board issues reserved to Board for
decision (such as on the approach to legal privilege and as set out in the
Delegated Authority matrix);
d. Approve the overall Inquiry Communications strategy;
Confirm the need to acquire documents not in POLs custody/control;
f. Approve decisions relating to issues of substance on which POL may seek to
challenge the Inquiry’s approach through a legal process.
©
2. Approve the strategic approach to 3rd parties in respect of
documents/legal privilege including but not limited to:
a. Royal Mail Group
Fujitsu
UKGI/BEIS
Former advisers
Former executives and POL employees.
panos
3. Approval of principles and guidelines for key Inquiry processes in
particular in relation to:
a. proactive information sharing with the Inquiry;
b. witness support (pastoral and financial) for former and current POL
employees (including D&O insurance);
c. commercial sensitivity document reviews and whether POL should seek a
Restriction Order in any case.
4. Decisions on urgent and operational matters which have the potential to
impact on the relationship with the Inquiry or otherwise have wider
implications, such as:
a. POLs own phase preparations, e.g. whether to appoint experts, whether to
seek to proactively offer the Inquiry various work products.
POL-BSFF-130-0000029_0194
POL00448861
POL00448861
5. Oversight and direction on programme delivery
a. Overseeing status of Rule 9 and Section 21 requests and closure of Human
Impact tracker measures;
b. Advising on risks and issues escalated to ISC.
B. Responsibilities of individual Steering Committee members:
1. To understand the goals, objectives, and desired outcomes of both the
Inquiry Programme and any wider operational improvement programmes and
projects, including those governed by IDG;
2. To consider the impact of the actions of the Inquiry Programme in relation to
Post Office’s responsibility to respond to the Inquiry;
3. To prioritise attendance at ISC meetings;
4. Review all material circulated to ISC members and clarify as necessary their
own understanding of key issues;
5. To complete actions within the timescales set by the Chair;
6. To provide constructive challenge on matters on the agenda, considering the
best long term interests of POL;
7. To apply a horizontal lens, assessing and understanding impacts across the
organisation, highlighting any anomalies, overlaps and gaps;
8. To work collaboratively to achieve agreed strategic objectives;
9. To promote continuous improvement and alignment to best practice,
providing regular feedback;
10.To act on opportunities to communicate positively about the programme and
to share learnings where it will support positive change in other projects and
Post Office more generally.
4. Authority
The Board has granted delegated authority to ISC, via SEG, to make decisions in
support of the strategic approach to the Inquiry and 3" parties, as set by Board,
and in establishing principles for the proactive information sharing.
Decisions may be taken within the authority of ISC and within the approved
Programme spend limits. ISC have no authority to approve funding requests. Further
details are set out in the Inquiry Delegated Authority Matrix.
5. Quorum
A minimum of two (2) standing attendees are required for the meeting to be quorate.
The quorum must include at least one attendee invested with delegated authority, i.e.
the Group CEO or the Inquiry Director (or their delegate).
6. Decision-making
POL-BSFF-130-0000029_0195
POL00448861
POL00448861
. Decisions shall be made by a majority of the ISC members in attendance, with
a casting vote from the Chair.
. The Executive Members (those on SEG) retain discretion to direct approval
papers to SEG (prior to onward transmission to Board) if deemed appropriate
. Under exceptional circumstances, or where an urgent decision is required, the
Group CEO, in consultation with the Inquiry Director (or Inquiry Operational &
Strategy Director as delegate), may, at their discretion, take decisions off-line
on behalf of ISC and without reference to other attendees. In such
circumstances the Inquiry Director (or Inquiry Operational & Strategy Director
as delegate) shall arrange for the decision to be followed up in writing (with
the full approval trail) and recorded on the Inquiry Decision Log.
. If approval is required between scheduled meetings, a decision may be sought
from ISC members over email and such decisions should meet quorum
requirements set out above. In such circumstances the decision shall be shared
with all members at the earliest opportunity and the decision recorded on the
Inquiry Decision Log.
. Decisions taken and actions raised or updated at the forum will be recorded
and a log kept by the Inquiry Programme Office.
To ensure SEG remain informed of Inquiry matters, the Inquiry Director will
provide a monthly update and all ISC papers will continue to be shared to the
SEG Reading Room (redacted papers as appropriate)
POL-BSFF-130-0000029_0196
7.
POL00448861
POL00448861
Meetings
Frequency:
a. Meetings will take place at least monthly.
b. Extraordinary meetings may be required for rapid decision making in relation
to critical matters arising and where possible at least one day’s notice will be
provided to attendees. Such extraordinary meetings may be called at the
request of the Chair.
c. If no critical decisions are required, and a meeting is not needed, a report may
be issued to update members on progress and upcoming activities.
d. A decision will be taken by the Inquiry Programme Office in consultation with
the Inquiry Director and ISC members during the week prior to the meeting as
to whether any scheduled meeting is required. Where the ISC is not required,
attendees will be notified promptly, no later than two days in advance of the
meeting.
e. Notice of each meeting shall be given to all those entitled to attend but notice
need not be given in writing.
Format:
a. The ISC may meet in person, by telephone or by other electronic means, so
long as each member can contribute to the business of the meeting
simultaneously.
Minutes:
8.
a. Minutes will be produced by the Secretariat and circulated promptly following
the meeting along with actions and decisions. These meeting records will be
maintained by the Inquiry Programme Office.
b. Minutes will be assumed to have followed the agenda items as included in the
agenda.
Standing Agenda
Standing agenda items are as follows:
1. Minutes from previous meeting
. Items requiring ISC decision or for Noting
3. High level programme update:
e Update on Inquiry since previous meeting
¢ Forward view of activities
e¢ Open actions and actions closed since last meeting
4. Financials and MI reporting to include Key Risks & Issues will be on a monthly
basis in line with financial data availability (WD7).
N
POL-BSFF-130-0000029_0197
9. Supporting Materials
POL00448861
POL00448861
All papers will be submitted a minimum of one working day before the Group meets.
Papers for every ISC will include the following:
1. Agenda for upcoming meeting;
. Minutes, actions and decisions from the previous meeting;
2
3. Decision/discussion/noting papers;
4. Status report including:
a. Summary of progress since last meeting
b. Open actions and actions closed since last meeting
5. Management information to include Financials, Key Risks & Issues and a
summary of Inquiry commitments and any other supporting documents to be
provided on a monthly basis.
10. Membership
Role Voting Rights
Group CEO Yes
Group Chief Finance Officer Yes
Finance Director Yes
Deputy for Group CEO and Group Chief Finance Officer
Director of Integrated Communications, Planning and Delivery Yes
Strategy & Transformation Director Yes
Horizon and GLO IT Director Yes
Inquiry Director (Chair) Yes
Group Assurance Director Yes
Inquiry Operations & Strategy Director Yes
Deputy for Inquiry Director (Chair)
Secretariat No
Other attendees:
Other attendees may attend ISC as required to present agenda items or to assist in
decision-making, as requested by the ISC Chair, and if required for that agenda item,
must have an approved Confidentiality Undertaking in place.
POL-BSFF-130-0000029_0198
POL00448861
POL00448861
11. Management of potential conflicts
The following process will be followed where a Steering Committee member has a
potential interest in any proposed agenda item.
Step 1 - Preparing ISC meeting papers
a. Based on the agenda, the Inquiry team (led by the Inquiry Director) shall
identify potential interests and consider whether any of those interests create
an actual or potential conflict of interests.
Step 2 - Assessment of potential conflicts
a. Before sending the meeting pack to the ISC members, the Inquiry Director
shall discuss and agree with the relevant ISC member whether an interest
should be disclosed, or if a potential conflict arises, applying the principles. If
an interest or potential conflict is identified this will be documented per the
principles, see Appendix 1.
b. Where the interest may give rise to an actual or potential conflict of interest,
the Inquiry Director will work with the ISC member to determine the correct
course of action.
c. If the ISC member (who is not the CEO) and Inquiry Director fail to agree on
whether there is a potential conflict, the Inquiry Director shall liaise separately
with the CEO, who shall determine if a conflict arises.
d. If the relevant ISC member who may have an interest in the agenda item is
the CEO, and if the CEO and Inquiry Director do not agree on whether there is
a potential conflict, the Inquiry Director shall discuss the matter with the Senior
Independent Director and Legal Non-Executive Director of the POL Board who
shall decide the issue.
e. If for any reason the Inquiry Director believes the Senior Independent Director
and Legal Non-Executive Director of the POL Board may have a potential
conflict, then the CEO’s potential conflict shall be considered by the Chairperson
of the POL Board without any identified interest in the matter.
f. To support the Inquiry Director in consulting (as appropriate) with the Senior
Independent Director of the Post Office Limited Board or the Chairperson of the
POL Board, as regards a potential conflict, per the above, the Inquiry team shall
prepare a written summary of: (i) the relevant decision that needs to be made;
(ii) the potential conflict issue that has arisen; (iii) a proposed recommendation
/ course of action to be taken.
Step 3 - Circulation of meeting packs
a. The agenda shall be circulated to ISC members together with the full meeting
packs and at this point the ISC members will be asked to review the papers
POL-BSFF-130-0000029_0199
POL00448861
POL00448861
and consider whether they have any potential interest in the matters to be
discussed (particularly where the Inquiry team may not be aware of it).
b. In the majority of cases where a potential conflict has been identified it will be
appropriate for the relevant ISC member to: (a) receive the entire board pack;
and (b) remain in the meeting room during the discussion of the matter in
relation to which they have a conflict. However, such ISC member shall not
participate in any decision-making in relation to the matter, per the principles.
c. Only where the potential conflict of interest raises specific sensitivities will it be
appropriate: (a) to send the relevant ISC member a modified version of the
board pack with the materials pertaining to that agenda item removed or
redacted; and / or (b) for the ISC member to step out of the meeting during
the discussion of the relevant matter. In assessing the existence and gravity of
any such potential sensitivities, regard shall be had to POL’s best interests,
taking into account any particular external stakeholder scrutiny in relation to
the matter to be discussed.
d. Where the above scenario applies, the cover email sent to the ISC members
with the pack will outline the potential interest of any parties and explain that
to avoid a potential conflict the members in question will not participate in the
specific discussion/decision item on the agenda:
Step 4 - Interests identified during the meeting
a. On rare occasions, an ISC member may identify that they have an interest in
a topic (which may give rise to a potential conflict of interest) during a meeting
where this was not previously identified through Steps 1 to 3.
b. In this scenario, the Inquiry Director shall exercise their discretion as Chair of
the ISC to pause the discussion pending a consideration of whether a potential
conflict of interest arises, applying the process set out at Step 2 above.
12. Future updates to ISC ToR
The Committee will undertake a review of the Terms of Reference at least every
twelve months. Significant changes proposed to the Terms of Reference will require
ISC approval for recommendation to SEG for approval and to Board for noting.
POL-BSFF-130-0000029_0200
POL00448861
POL00448861
APPENDIX 1 —- PROPOSED PRINCIPLES FOR
MANAGING POTENTIAL CONFLICTS OF INTEREST
. All Inquiry Steering Committee (ISC) members shall consider at the earliest
opportunity whether they have an interest - be it actual or potential, direct or
indirect, or financial or otherwise - in any matter which is under consideration by the
ISC. For further guidance on what constitutes an “interest”, please consult the POL
conflicts of interest policy.
. In advance of any ISC meeting, the Inquiry Director shall circulate an agenda of the
matters to be discussed. Prior to the meeting, ISC members shall consult the agenda
and identify whether they may have an interest in any agenda items for the
upcoming meeting.
. Where any ISC member has an identified interest in matters to be discussed at a
forthcoming meeting, the ISC member with the relevant interest shall, together with
the Inquiry Director, assess whether such interest may give rise to an actual or
potential conflict, considering all the relevant circumstances and information that
may give rise to a conflict between the identified interest of the relevant ISC member
and POL.
. In assessing whether there is a potential conflict, the question to be asked is
whether, taking into account what the relevant ISC member knows or ought to know,
a fair-minded and informed observer would think there is a real possibility of an
actual or potential conflict of interest arising between the interest(s) of the ISC
member and the best interests of POL.
. This question should be considered taking into account what reasonable steps may
be put in place to mitigate the risk of conflict or perceived bias or partiality on the
part of the ISC member, bearing in mind that in the ordinary course the ISC is better
equipped to determine a strategy when all of its members participate in the decision-
making process.
. If the ISC member and the Inquiry Director agree that there is a risk of a potential
conflict between POL’s interests and those of any ISC member(s) in relation to any
matter to be discussed, the ISC member shall decline to participate in the decision-
making pertaining to such matter, in the best interest of both POL and the ISC
member. No impropriety is assumed on the part of the ISC member.
. If the ISC member and the Inquiry Director do not agree on whether a potential
conflict arises, the Inquiry Director shall seek the opinion of the CEO regarding
whether the ISC member should participate in decision-making on the relevant
matter.
. If the interest referenced at point 3 relates to the Inquiry Director, but not the CEO,
the decision as to whether the Inquiry Director has a potential conflict of interest
shall be taken by the CEO, having regard to the considerations listed at points 4 and
5 above.
. If the interest referenced at point 3 relates to the CEO, then the decision as to
whether the CEO has a potential conflict of interest shall be taken by the Senior
POL-BSFF-130-0000029_0201
10.
11.
12.
13
POL00448861
POL00448861
Independent Director and Legal Non-Executive Director of the POL Board, having
regard to the considerations listed at points 4 and 5 above.
If for any reason the Inquiry Director believes the Senior Independent Director and
Legal Non-Executive Director of the POL Board may have a potential conflict of
interest such that a perception of a conflict may arise if the Senior Independent
Director and Legal Non-Executive Director of the POL Board were to decide on the
issue of whether the CEO’s interest in a matter rises to the level of a potential
conflict, the question shall be considered by the Chairperson of the POL Board
without any identified interest in the matter.
Where the Inquiry Director consults with the Senior Independent Director and Legal
Non-Executive Director of the POL Board or the Chairperson of the POL Board, per
the above, the Inquiry Director shall prepare a written summary of: (i) the relevant
decision that needs to be made; (ii) the potential conflict issue that has arisen; (iii)
a proposed recommendation / course of action to be taken.
.If the Inquiry Director and the CEO are both potentially conflicted on account of
identified interests, the General Counsel (if not potentially conflicted) or another
member of the ISC (if the General Counsel is potentially conflicted) shall prepare
the materials referenced in point 11 above.
Any disclosure of an interest or any conflict should reflect the following ‘disclosure’
principles:
a) Specifically describe and document the identified interest or conflict in sufficient
detail to allow for a decision to be made as to the existence of the potential or
actual interest or conflict
b) In relation to an identified interest where the ISC concludes no conflict arises,
document the basis for the conclusion.
c) In relation to a potential or actual conflict, document: (i) the general nature
and/or source of the conflict; (ii) the risks that arise from the conflict; and (iii)
risk mitigation steps taken.
POL-BSFF-130-0000029_0202
POL00448861
POL00448861
APPENDIX 1 — INQUIRY: FINANCE DELEGATED AUTHORITY MATRIX
POL Board
Programme Sponsor
Inquiry Director
Inquiry Operations &
Strategy Director
Inquiry Head of Legal
Workstream lead
Historic Matters Financial
Management
Director of Integrated
Group Chief Financial
Strategy & Transformation
Inquiry Finance Director
Approve funding for full life of programme x
‘Approve proposed funding request for Board approval
Approve drawdown of agreed funding
‘Approve funding requests over annual budget and agreed
tolerances
‘Approve new spend requests within agreed overall programme
budget
Approve new spend requests over agreed budget but within
agreed tolerances
Remove NEW
Remove x
POL-BSFF-130-0000029_0203
&
Programme Sponsor
Inquiry Director
Inquiry Operations & strategy
inquiry Rrogramme-Manoger
.quiry Head of Legal
Phase-Delivery lead
Workstream lead
Historie Matters Financial
Management
POL00448861
POL00448861
Financial Officer
Director of Integrated
‘Communications, Planning and
Strategy & Transformation
Inquiry Finance Director
Approval of overall strategic approach to the Inquiry
‘Approve decisions on matters of substance on which POL may seek to challenge
the Inquiry's approach through a legal process
‘Approve other matters to Inquiry approach
‘Approve the strategic approach to third parties, Including RMG, Fujitsu,
LUKGI/DBT/Former Advisers/Former Execs and POL Employees
‘Approve operational/tactical decisions for each phase, e.g. whether to appoint,
experts, whether to seek to proactively offer the Inquiry various work products
Phases 1-6:
ZAG! of tools for dosing subisions for pheses.-6 x I
‘Approval of content of skeleton closing submissions for phases 1-6
Approval of final closing submissions for phases 1-6
Phase 7:
‘Approval of topics for Phase 7 closing submissions
‘Approval content of skeleton closing submissions for Phase 7
‘Approval of final submission for Phase 7
‘Approve topics for ad hoc compensation hearings
‘Approve content of skeleton submissions for compensation hearings
‘Approve written submissions for ad hoc compensation hearings
Approve written submissions for ad hoc disclosure hearings
‘Approve written submissions for interim disclosure statements
‘Approve need to acquire documents not in POLs custody/control
‘Approve requests to share documents within POLs custody/control
‘Approve overall approach to legal privilege
‘Approve ad hoc decisions with regard to legal privilege (where these fall within
‘Board's decision on overall approach to legal privilege)
‘Approve funding for full life of programme
‘Approve proposed funding request for Board approval
‘Approve drawdown of agreed funding
‘Approve funding requests over annual budget and agreed tolerances
‘Approve new spend requests within agreed overall programme budget
Approve new spend requests over agreed budget but within agreed tolerances
POL-BSFF-130-0000029_0204
POL00448861
POL00448861
Preparation of packages of proposed emerging themes ari
engagement with 1DG2
ing from Inquiry prior to
‘Approve Inquiry related press releases
Inline with Decision Making approve overall Comms Strategy (Amended in TOR)
Review of communications such as letters, press releases and bulletins issued
internally
‘Approve individual communications to the Inquiry where these are of an
operational nature
‘Approve witness support principles and guidelines (pastoral and financial) for
former and current POL employees (including D&O insurance)
‘Approve principles and guidelines with regards commercial sensitivity document
reviews, including whether POL should seek a Restriction Order in any case
‘Approve decision to escalate commercial sensitivity document reviews to wider
business stakeholders for input
ions prior to responding to the Inquiry (POD Review)
Under exceptional circumstances, or where an urgent decision Is required, the
Group CEO, in consultation with the Inquiry Director, may, at their discretion, take
decisions off-line on behalf of SC and without reference to other attendees (ISC to
bbe informed as soon as possible thereafter)
Oversight of status of Rule 9 requests
‘Approval of approach to responding to Rule 9 requests and section 21 Notices
‘Approval of individual Rule 9 responses
— ;
‘Approval of approach on any requests for corporate witness statements,
‘Approve approach to document searches/reviews for rule 9 requests
Allitems in respect of Whistle sexe ‘activites and clash of public policies
‘Manage all Programme Deliverables including RAID's, Milestones and planning,
escalating to ISC as appropriate.
‘Agreeing on matters to be escalated to ISC (or beyond) for
decision/approval/direction
‘Approve scope for each work stream
a
POL-BSFF-130-0000029_0205
POL00448861
POL00448861
@
POST OFFICE LIMITED
BOARD REPORT
Title: Remediation Unit Programme Meeting 25 March 2024
Update Date:
Author: I Simon Recaldin, Remediation Unit I 6 oso: Simon Recaldin, Remediation Unit
‘ Director lis * Director
Input Sought: Noting — POL Board is asked to Note:
The key strategic issues highlighted in the Executive Summary below:
Ongoing uncertainty in respect of management and delivery of OC and HSS claims;
negative publicity around the speed of redress payments; uncertainty around a potential
Appeal Process; as well as reaction to not only the ITV drama but also the Government
Select Committee on 27" February, combine to present a challenging environment within
which RU is operating.
Significant replanning is currently being undertaken to enable RU to further accelerate
the payment of redress to PMs whatever scheme they have applied to. Consideration is
being given to a range of options to address head on the challenge to further expedite
payments.
Following feedback at the Government Select Committee, RU will refer to redress instead
of compensation wherever possible going forward. This responds to the claim from PM's
that they are being repaid money they gave to Post Office, while being aware that some
HoL’s are compensatory in their nature.
In OC, RU await a decision from Government regarding future delivery of claims, while
in HSS 1,146 Late Applications had been received by 29'" February 2024.
Executive Summary
Overturned Convictions:
1.
2.
As at 29" February, 102 convictions have been overturned, with 35 full and final
settlements reached and more than ~£38m in compensation made to claimants.
DBTs agreement, and subsequent 26" February announcement, of the POL proposed
£450k top up payment (on receipt of pecuniary claim), is a positive development. Early
indications from claimant representatives is that this will accelerate claim submission for
the 54 outstanding pecuniary claims, and the OC team stands ready to progress on receipt.
POL remains largely unsighted on HMG proposals regarding the proposed exoneration
Parliamentary Bill both in terms of timing and scope; ownership of future claims handling
(i.e. will it be POL or Government or a combination of both); and any potential changes in
approach as regards HM the Treasury compensation Value for Money (VfM) directive
(currently considered to be redress amounts analogous with litigation outcomes, rather
than “commercial” settlements which additionally consider Operational and legal costs).
These all continue to present material risks for OC, in terms of budget, scope, approach
and timelines. We continue to seek clarity from DBT, and will provide further updates as
and, when, available.
Strictly Confidential
POL-BSFF-130-0000029_0206
POL00448861
POL00448861
HSS:
4. As at COB 29" February 2024, POL had received 1,146 Late Applications of which 472
have had eligibility confirmed. 697 of these late applications were received following the
Mr Bates vs The Post Office Drama in January.
5. Late applications continue to come in, coupled with enquiries about the HSS from current
and former Postmasters, branch employees and strategic partners. For now, POL
continues to decline HSS applications from assistants/employees since the HSS eligibility
criteria requires applicants to have held a direct contract with POL.
6. A growing number of PMs who have settled their HSS claim are also asking to have their
claim reopened and such requests are being declined. The possible introduction of an
Appeals Process may allow previous settled claims to be re-opened though discussions
continue.
7. As at COB 29" February 2024, POL has issued 242 Offers and 61 ineligible outcomes from
the late applications. No Offers were issued in February as a decision was put through
relevant governance channels to remove ‘Without Prejudice’ labelling from outcome
letters. The matter is now resolved. Letters restarted on 1st March and the website has
been updated with a full explanation for postmasters and the public as to the issue.
8. An interim Late Apps plan has been proposed by HSF, given the rise in volumes, to allow
all parties to be measured against more realistic targets. This interim plan is expected to
be superseded by a new, formal plan once a decision is reached about implementing the
£75k full and final fixed sum offer in HSS. A decision on this is anticipated by early April
2024.
9. Discussions about an end date are on hold while the media coverage of the Post Office
scandal continues, given it would seem inappropriate to be seen to be ‘rushing’ PMs to
submit an application.
10. We are working towards the next DBT/HMT target which is to have issued outcomes to
95% of all late applications received by 30 September 2023 on or before 31% March
2024. We are at 85.7% having issued 241 Offers and 52 ineligible outcomes to this
population.
GLO:
11. The DBT contract has been signed and was published by 4th March. POL has provided
input on redactions.
12. POL have identified that in a minority of cases (0.05% in the sample) additional branch
files are being found for cases already disclosed. DBT have been made aware and this is
being monitored to understand whether there is any impact to SFAs. To date, the risk has
been found to be minimal.
13. Freeths have requested that POL provide an SFA teach in to support their understanding
of the information provided. POL have advised that a specific session can be held if Freeths
are able to provide a list of queries in advance to support training requirements.
14. The GLO disclosure/SFA plan and corresponding resource plan have been reviewed with
input from DBT due to the claims which have accepted the £75k. Decisions required by
DBT include what level of resource is required to mitigate any actions going forwards once
the main disclosures and SFA’s have been completed.
15. POL remains on target with disclosure and SFA requests. 294 disclosure requests have
been completed against a target of 294, and 86 SFA requests have been completed against
a target of 86.
Strictly Confidential
POL-BSFF-130-0000029_0207
POL00448861
POL00448861
@
16. There are 6 live appeals in the CACD - two are opposed and the disclosure deadlines have
been met. The other two are in their early stages and are likely to be opposed. 2 cases
have only recently been lodged with the Court of Appeal Office.
17. In Scotland, there remain two live appeals, one of which is opposed and listed for a
substantive hearing on 24" April 2024. Disclosure is being prepared in relation to the other
appeal and this is listed for a procedural hearing on the same date. There is one contested
live appeal in Northern Ireland, for which disclosure has been provided.
18. Mrs A (of the couple who absconded) is due to be sentenced on 3rd April 2024.
19. There are now 3 CCRC references currently at Southwark Crown Court. Two of those are
Magistrates’ Court deceased cases where the families of the appellants have now decided
that they do wish to continue with the appeals notwithstanding the Government
announcement. The case is due to be listed in April 2024 and involves complex legal
issues.
20. POL continues to prioritise competing disclosure requests. The SCCRC have recently
complained about the timescales provided for the provision of material. A response has
been sent confirming that the SCCRC applicants are being prioritised directly below live
appeals and that the timescales provided are reasonable in the circumstances.
Suspension Remuneration Review:
21. As at 22 February, 539 offer letters have been sent, of which 285_have been accepted.
Payments have been made on 238 of the accepted cases totalling:'"4""} The majority of
the remaining 47 cases awaiting payment are with Treasury for approval. Process changes
have been made to avoid these delays moving forward. CL claims are starting to rise, with
an increase of +7 this week to 27 albeit from a low base.
22. RU remain on track to have made offers to all accepted disclosures by the end of March
2024. Process work continues to finalise letter types (i.e. deceased/ insolvents etc) and
the query process.
23. Work has commenced to start to lock down the SRR population and disclosure letters on
the new c 500-700 cases will start to be sent from next week.
POL Process Review:
24. The CMA published their report on the! PPR funding on 224 February, it remains
open for one week for comment before heina finalised.
25. A proposal for a PPR de minimis level of"! before interest to be applied to PPR claims
is going went to RC for approval on 28th February. RC did not have time to consider the
paper, so we are looking to hold a separate meeting with DBT to agree the approach. We
anticipate this is high enough to cover the majority of claims made across the ten
areas of actual and potential detriment identified. This will make the process simple for
both postmasters and the RU operations team and greatly reduce the length of the
scheme. We aim to launch a small pilot in March/April to ascertain the reaction to the offer
and test the remediation process.
26. Papers are going through governance confirming the final scope of PPR investigations and
listing those items which have been excluded. This will include how claims made for
shortfalls in the HNG-A period leading up to the review and dispute process being
introduced in April 2021 should be managed. Currently, HNG-A claims are outside the
scope of HSS. When these items have been through governance, a paper for consideration
will come to a future GE for consideration by the wider business.
27. Consideration will then be given to how we address postmasters who we have asked to
pause making payments against their outstanding balances. The majority of postmasters
who were making payments have been asked to pause these. There are some postmasters
Strictly Confidential
POL-BSFF-130-0000029_0208
POL00448861
POL00448861
@
who have not been asked to pause but these are for specific reasons which have been
signed off by Legal. Some of these matters may be addressed by PPR disclosures but
many will not.
Capture:
28. Capture was a software package which aimed to replace the manual cash and stock
records kept by postmasters, simplifying the process, and reducing error rates. It was not
mandatory and appears to have been used in a minority of branches; most postmasters
kept manual records. Capture did have bugs/defects, but it appears they were
communicated to users, sometimes with workarounds or news of future updates. Based
on the information known to date, it appears less likely that Capture would have caused
serious detriment to postmasters by itself, in fact there is some evidence that postmasters
found it helpful. At this early stage, the potential for detriment appears more likely to have
been caused by the use that was made of Capture data in audits and investigations into
the difference between Capture reported balances, centralised paperwork and/or cash and
stock in branch. RU continue to investigate this. Postmasters were on the same contracts
from 1991 (Capture was introduced in late 1992) as they were during the Horizon period
i.e., they were expected to make good any shortfalls and were suspended without pay
while investigations took place.
29. Pre 1999 there is very little information to support claims as there is no transactional data
to investigate shortfalls. Therefore, if claims are to be remediated, we will be heavily
dependent on information provided by Postmasters.
30. RU legal is investigating POL’s potential liability for the claims that we have already
received...
Bis I
32. A'discussion paper has been to RC and we are discussing funding options with DBT.
Finance Updat
2023/24 Approved Funding & 3YP.
33. At P11, RU i nder Board Approved Funding YTD despite significantly higher HSF
costs associated with Late Applicants to the HSS scheme. Underspend is due largely to
cost slippage of PPR resourcing and assurance into FY24/25. The Full Year forecast is
expected to be nder Board Approved Funding, again due to costs
slipping onto FY24/25 and, notably, the re-phasing of the Tax Top Up.
34. The forecast for FY24/25 has been significantly impacted by recent events and a resultant
surge in HSS applications. This is expected to continue, although estimates still currently
assume a scheme closure date of September 2024 - risks are being held should this date
be ex d further. Risks associated with further late applications, OC exonerations and
HSS §: payments are not yet quantified and remain outside of the current budget
forecast.
Legal Fees
35. The inclusion of Legal Fees reporting came from an Internal Audit report_r mendation
based on both RU and the Inquiry where, in February 2023, there were inretevant Of unpaid
invoices, with! ‘awaiting a PO, equating to IA recommendéd’GE should be
sighted of outstanding amounts, including invoiced amounts without a PO.
Strictly Confidential
POL-BSFF-130-0000029_0209
POL00448861
POL00448861
@
Outstanding Legal Fees as at 28' February 2024
‘No Purchase Order
By Supplier Count Value £00 “ount Value £000 No P03. WoW £000
HSF
BSFf
Pep
wep
Dace
Innovo
KPMG
Brodies
Pin Mas
COR
aPC
inquiry
RU
Total
IRRELEVANT
Feb23 Mar-23 Apr-23 May-23 _Jun23 _Wub23 Aug-23_ Sep-
lecre
ss
Hss/Po
Inquiry
centrai
~ IRRELEVANT
BsFe
lear
- IRRELEVANT
larodies
pin Mas
cor
apc
Strictly Confidential
POL-BSFF-130-0000029_0210
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Remediation Unit Funding Request pears 25 March 2024
Author: Jamie Tebbutt/Chris Elliott, Project Sponsor: Simon Recaldin, RU Director
Manager
Input Sought: Approval
POL Board is requested to approve:
i. the request that the Remediation Unit seeks Budget approval to delegate authority to
the SEG (via HMFM) for FY24/25 (noting the 24/25FY budget ot Budget
breakdown detailed in Appendix 1).
ii. drawdown funding of for April-September 2024.
DBT have confirmed tl ley have the CST approval and have laid the title for a WMS
(Written Ministerial Statement) on Tuesday 19" March. In coordination with this DBT are
finalising the funding letter to be issued early week commencing 18" March confirming
POL's access to the jontingency.
Executive Summary
Inquiry and RU requested as contingency.
Report
Activity across the Remediation Unit through FY24/25:
1. HSS Offers: continue to process HSS Offers for the late application cohort. Original
forecast for Late applications is under challenge due to sustained media focus throughout
24/25 together with the potential widening of HSS Eligibility Criteria. Expectation is that
volumes will increase significantly above that original forecast and therefore further
funding will need to be secured from POL Board.
2. HSS Dispute Resolution Team: Offer 100% IP to all late applicants and revised offers
by December 2024. Pay all IP top ups by September 2024. Make payment to the 4% of
applicant counter offers where the counteroffer is proportionate to the original panel offer.
Ensure all applicants are paid in full and final settlement by March’25
3. POL Process Review (PPR) - for the 24/25 period - Launch the process by writing to
~27k Postmasters with details of the potential detriment we have found and ask them to
apply for redress. With a pragmatic level of de minimis we aim to make this a very simple
process for the Postmasters and aim to have the majority of payments made within the
year.
Strictly Confidential
POL-BSFF-130-0000029_0211
POL00448861
POL00448861
@
4. Suspension Remuneration Review (SRR): Issue 100% of initial offers to disclosed
cases and to have made 100% payments to accepted cases as well as making Offers on
100% of the Consequential Loss cases by March end 2025.
5. CCRC - PFA disclosure - expected to see an increase in volumes during 2024/25.
Continue to take forward appeals of convictions, Third Party Information Requests and
PFA Outreach Management.
6. OC - As at 6' of March, 102 convictions have been overturned, with 35 full and final
settlements reached and more thani!RRELEVANT!in compensation made to claimants. The
updated HMG policy position regards eligibility of claims previously considered “not in the
public interest”, has streamlined the interim payment/claim assessment process, although
is likely to result in short-term adverse media coverage. POL continues to support the data
requests from the MoJ, which will inform the scope of the proposed Parliamentary bill
regards the potential overturn of all previous Horizon related convictions. The bill has the
potential to materially change the anticipated volumes, timings, scope, and approach for
the Overturned Convictions workstream. Currently POL visibility is limited, although a full
impact assessment will be provided once details are confirmed. Irrespective of external
factors, the OC workstream has continued to progress outstanding claims and
initial/further interim payments. The establishment of the Independent Assessment Panel
(chaired by Sir G Hickinbottom) is a key milestone for OC and is anticipated to be an
essential component for expediting the Pecuniary claim submission and settlement.
Financial Impact
7. Budget approval ensures that RU stays within Financial Governance and can deliver
against all priorities for the FY 24/25.
Risk Assessment, Mitigations & Legal Implications
8. Effect on schedule: Schedule will be delayed without the ability for timely drawdown of
funding against approved budget, this could impact the organisation both reputationally
and financially.
9. Effect on resource requirements: Current resource requirements would be delayed without
RU Budget approval.
10. Effect on other projects /activities /programmes: Without budget approval and subsequent
timely release of funding the Remediation Unit would not be able to provide effective and
fair resolution for claims beyond the Sept 2024. This would impact the organisation both
reputationally and financially.
11. Effect on Postmasters of this change to the project: Claims will be progressed through to
completion providing closure for impacted applicants.
12. Effect on benefits plan: Without timely release of funding POL will not deliver against the
current targets or be able to effectually resolve claims for those who may have
experienced detriment related to previous versions of the Horizon computer system.
13. Effect on risk profile: This will mitigate the risk that RU falls out of financial governance in
FY24/25.
Strictly Confidential
POL-BSFF-130-0000029_0212
POL00448861
POL00448861
@
Stakeholder Implications
14. Budget Approval ensures that DBT and POL can provide fair recompense as swiftly as
possible without further litigation.
Next Steps & Timelines
15. On approval at POL Board RU drawdown will be accessible following approval at HMFM for
the months of April - Sept 24. RU will report back to HMFM/SEG and Board in Sept.
Strictly Confidential
POL-BSFF-130-0000029_0213
POL00448861
POL00448861
Appendix 1
Budget Forecast 24/25 against 3 YP:
Actuals Forecast Forecast I Forecast Approved I Additional
Workstream FY22/23 FY23/24 ~—-FY24/25 3YP 3yP Funding
Horizon Shortfall Scheme
Overturned Convictions
core
POL Process Review (Detriment)
Central
Operations
Workstream Total
Tax Top Up
Exit Costs
Remediation Unit
IRRELEVANT
Strictly Confidential
POL-BSFF-130-0000029_0214
POL00448861
POL00448861
Budget FY24/25 — Remediation Unit 3YP Overview
Consolidated position for Budget FY24/25 id
above Approved Funding.
Actual. ae ee Pee Pelee I OTE, a —
[By Programme
Horizon Shortfall Scheme
loverturned Convictions
I Summary
+ Increase driven by extension of HSS and an increase to estimated volume
of Late Applications to 1,500 including Panel and Mediation/Arbitration
Justice {
Central
‘and higher Internal Resourcing Costs in Operations and.
as programmes extend into FY24/25 and volumes of cases
+ Headcount forecasted to be 90 above Approved Funding di
ion Operations and Central teams into FY24/25 cost
by reductions on OC.
+ Note: Forecast excludes risks relating to mass-exonerations in OC, changes
to the HSS Appeals Process and further associated additional disclosure
requirements ~ all to be quantified pending decisions,
IRRELEVANT
Budget FY24/25 — Horizon Shortfall Scheme
HSS Budget FY24/25 is ¢
bove Approved Funding.
Summary
IRRELEVANT
Cost incr ven the extension of HSS into FY24/25
and an increase of Late applications to 1,500 from 416:
d Rate volume and
Mediation and rbitair
Strictly Confidential
POL-BSFF-130-0000029_0215
@
POL00448861
POL00448861
Budget FY24/25 — Operations
Operations Budget FY24/25 igh ri
ibove Approved Funding.
Summary
Increase to FY24/25 costs driven entirely by Internal
Resourcing extending into FY24/25 and the increased
volumes of cases relating to Late Applications.
Comparing headcount as of March 25, Operations
resourcing increases by 87 - broken down by team, as,
follows:
AsatMar25 -furdert..donconnd Funding... Madlanee..
Ops
* SRR-PRR
Claims review HSS
© Claims review SRR
= DSAR
HSS
SRR
IRRELEVANT
Proposed reductions relat
removed with volume of
to expected OD have been
increasing,
Budget FY24/25 — Central
‘bove Approved Funding.
A
A
m
rr
<
>
=
—
Summary
to FY24/25.pcedominantly driven by Internal
19 costs immewmttac RU schemes extend into
FY24/25 - incres FOI ADP and Legal teams.
‘Comparing headcount as of March 25, Central resourcing
increases by 9 — broken down by team, as follows:
AsatMar2s —_fudeat._.neunved Sunding.....larance....
=Central
= comms
"coo
Finance
=FO1& oP
"Legal
=PMO.
I IRRELEVANT
Total cost of funding FO! & DP Team
External Cost increased srtewntl due to HSF activities in
governance, general meetings and ad hoc advice.
jor FY24/25
Strictly Confidential
POL-BSFF-130-0000029_0216
POL00448861
POL00448861
@
Budget FY24/25 — Overturned Convictions
OC Budget FY24/25 i
wevaiabove Approved Funding,
nding Em. een
Increase in OC costs driven by Restorative Just
4/25 =. Cast Walk from Approved
late to mediation
rs and POL senior
IRRELEVANT ==
Other increases include safiyware costs associated with
GA Data Transfer euenridue to prolonged Criminal
Ape:
requiring data-zharing
oneness niaiaininnnnnennnainannainniineninnninaenansned + Cost reductions due te:
to 9 (a reduction of §) by Mar 25 as proc:
nn expected to n BAU.
A
AJ
rm
rr
<
>
=
—I
Budget FY24/25 - CCRC
CCRC Budget FY24/25 ists
FY24/25 - Cost Walk from Approved Funding (Ek) Summary
i 1+ CCRC cost increases are driven by the additional activities
<é withthe Post-Convietion Disclosure Exercise
for Potential Future Appellants (PF
fabove Approved Funding
Need driven by identification in the Inquiry of a large
number of potentially relevant unsearched
repositories that have been required by the Crown
A
A
m
r
<
>
=
—I
late to the extension of Citizen
1 (Criminal Summary),
a smn EV2AU25. Headless. CCR nance eneenceennenenn
A
A
m
rr
<
>
=
—I
Strictly Confidential
POL-BSFF-130-0000029_0217
POL00448861
POL00448861
Budget FY24/25 — POL Process Review
PPR Budget FY24/25 above Approved Funding.
_. Summary
I «slippage of costs from FY23/24 relating to the PPR
} + Potential opportunity included in R&O as an assessment of
i programme activities ongoing.
Budget FY24/25 —- Risks & Opportunities
Net opportunity position is{ss} not currently in FY24/25 budget submission.
Teta is
Opportunies enced nthe FY2425 budget relating oot savings
Cort specter edwin FY24725 bet
fon Ec TT
etal Opps
Teta ik
Strictly Confidential
POL-BSFF-130-0000029_0218
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
a Remediation Committee updated Meeting
ear Terms of Reference Date: 25 Mareni2028
. Evelyn Hocking, RU COO . . : .
Author: Programme Lead Sponsor: Simon Recaldin, RU Director
Input Sought: Approval
Post Office Board is asked to approve an updated Remediation Committee (RC) Terms of
Reference as detailed in Appendix 1.
Executive Summary
The HRC Terms of Reference were previously approved by POL Board on 28 September 2021.
An updated Delegated Authorities Matrix was approved by HRC on 10 November 2022.
An updated HRC Terms of Reference and updated Delegated Authorities Matrix was approved
for recommendation to POL Board by HRC on 19 April 2023 and approved by POL Board on 6
June 2023.
An updated RC Terms of Reference was approved by RC offline on 11 March 2024, and an
updated RU Delegated Authorities Matrix was approved by RC offline on 1 March 2024.
Updates to the RC Terms of Reference are required to reflect the decision in July 2023 to
remove references to the term “Historical”.
Updates have also been made to the RC Terms of Reference to reflect the changes made to the
RU Delegated Authorities Matrix.
POL Board is also asked within a separate paper submitted to this Committee to approve an
updated RU Delegated Authorities Matrix. It should be noted that the RC Terms of Reference
align with the RU Delegated Authorities Matrix and should be referenced together.
Next Steps & Timeline
1. If approved, CoSec will update the intranet with the clean final version of the RU Delegated
Authorities Matrix and RC Terms of Reference.
2. As new governance protocols and changes to existing arrangements are made this paper
will be updated and brought back through Governance as required.
A tracked changes version of the ToR has been uploaded to the Reading Room.
Strictly Confidential
POL-BSFF-130-0000029_0219
POL00448861
POL00448861
APPENDIX 1
The Remediation Committee (RC) is a Committee of the Company Board (“the Board”) from
which it derives its authority and to which it reports at each scheduled meeting. Its authority
is always subject to the powers and duties of the Board, as set out in the Articles of Association.
A. PURPOSE
1. The purpose of the RC is to:
i) Oversee the administration of the Horizon Shortfall Scheme (HSS); consider the
principles that underpin how HSS claims are assessed for the consideration of
the HSS Independent Advisory Panel (IAP); oversee and consider as required
claim outcomes recommended by the IAP (including those recommending offers
of financial compensation); recommend to the Board decisions on precedent
setting matters; and consider any other matters escalated to the RC for decision;
ii) Oversee the administration of the Stamps Scheme;
iii) Decide, in accordance with decision making tools approved by the Board, the
Company’s stance on appeals to the Court of Appeal (Criminal Division),
Scottish Court of Appeal and Crown Court of convictions where Post Office
acted as prosecutor;
iv) Oversee the efforts made by Post Office to contact potential appellants to
encourage them to apply to overturn their convictions, including where they
were convicted by prosecutors other than Post Office;
v) Oversee the management of claims for compensation made by those who have
had their convictions overturned/exonerated; consider policies, parameters, and
principles that underpin how claims are assessed; recommend to the Board
decisions on precedent setting matters; and consider any matters escalated to
the RC for decision;
vi) Oversee the administration of providing financial compensation to Postmasters
deemed to have suffered detriment as a result of the review of past and
continuing Post Office business practices following the Post Office Group
Litigation “Common Issues” and “Horizon Issues” judgments!;
vii) Consider recommendations made by, and matters, observations and feedback
arising from, the Post Office Horizon IT (POHIT) Inquiry in respect of matters
relating to compensation and potential future appellants;
viii) Oversee the processes in place for the management of litigation costs across
all workstreams and those sufficient resources are in place to support the
management team and enable effective delivery;
ix) In all matters considered by the Committee, take an approach which is
transparent, promotes fair outcomes for appellants and claimants overall, while
representing Value for Money for taxpayers’ money and safeguarding the
reputation of Post Office Limited; and
x) Address such other matters as may from time to time be delegated to it by the
Board.
1 The Board retains oversight of the review of policies, processes and support previously
provided to Postmasters to ensure previous and ongoing conformance with the “Common
Issues” and “Horizon Issues” judgments.
POL-BSFF-130-0000029_0220
POL00448861
POL00448861
POST OFFICE LIMITED
B. DUTIES AND RESPONSIBILITIES WITH REGARDS TO THE HORIZON SHORTFALL
SCHEME (HSS)
2. Review and constructively challenge reports, management information and
financial information from the Remediation Unit (RU) and the Legal Team on the
management (including discretionary decisions within delegated authorities) of the
HSS and consider any recommendations and decisions sought.
3. I Review and discuss inputs to and outcomes from the IAP on any matters requiring
the Board’s view or decision, following consultation with UKGI and the
Shareholder?.
4. Approve for recommendation to the Board HSS cases which have been
escalated by the Horizon Matters Committee (HMC) that have been deemed to be
of particular complexity, public interest concern or financial consequence.
5. Approve HSS Interim Payments (including relating to Hardship) requests escalated
by HMC.
6. I Approve the principles and approach to be taken within the HSS to settlement
offers which have been rejected by claimants, prior to their submission to the DBT
SteerCo.
7. Approve for recommendation to the Board the IAP’s Case Assessment
Guidelines and significant changes to these guidelines, which set out the key
applicable legal principles outlined in the HSS Terms of Reference and
Consequential Loss Principles and Guidance.
8. Approve for recommendation to the Board the principles for the assessment of
different cohorts of claims, which are intended to assist the consistent treatment of
cases by the IAP, in consultation with UKGI and the Shareholder, before final
submission to the DBT SteerCo for approval.
9. Approve for recommendation to the Board HSS decisions which materially
affect scheme cost and/or timetable or (in the discretion of RC) set significant
principles or establish significant precedent for how different types of claim may be
assessed (e.g. quantified, part-quantified, unquantified, shortfall only,
consequential losses), and how those claims may be treated within a settlement
offer, prior to their submission to the DBT SteerCo and the IAP.
10. Approve for recommendation to the Board any significant changes to the HSS
or IAP Terms of Reference, prior to their submission to the DBT SteerCo.
11. Escalate to the Board any issue which the RC considers requires the attention of
the Board.
2 A POL / DBT HSS Operations Agreement is in place, and this sets out HMG approval
points during the HSS process. A DBT SteerCo for the HSS has also been established.
POL-BSFF-130-0000029_0221
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
POST OFFICE LIMITED
Approve decisions relating to Cautions in the HSS where the recommendation
made is to not concede, or when escalated at the discretion of HMC.
Approve decisions relating to payment of Legal and Expert Fees, Forensic
Accountant Fees, and Medical Expert Fees in respect to HSS Claims when escalated
by the RU in accordance with the RU Delegated Authorities Matrix.
DUTIES AND RESPONSIBILITIES WITH REGARDS TO THE STAMPS SCHEME
Review and constructively challenge reports, management information and
financial information from the Remediation Unit (RU) and Legal Team on the
management of the HSS and consider any recommendations and decisions sought.
Approve the principles that underpin how Stamps Scheme claims are assessed.
Approve decisions which establish a precedent for how other Stamps Scheme
claims may be treated, and any other cases escalated at the discretion of HMC.
DUTIES AND RESPONSIBILITIES WITH REGARDS TO CRIMINAL CASE
APPEALS INCLUDING POTENTIAL APPELLANTS, COURT OF APPEAL AND
CROWN COURT CASES
Review and constructively challenge reports, management information and
financial information from the Remediation Unit and Legal Team on the
management of cases from Potential Future Appellants (PFAs) received by the
Court of Appeal, Scottish Court of Appeal or referred to the Crown Court by the
Criminal Cases Review Commission (CCRC) and consider any recommendations or
decisions sought.
Review and constructively challenge the reports, management information and
financial information from the Remediation Unit and Legal Team on the approach to
contacting PFAs to encourage them to apply to set aside their convictions, including
PFAs who were prosecuted by other agencies.
Approve stance on cases or refer cases to the Board for decision on stance in
accordance with the decision-making tools approved by the Board.
Approve procedural steps, correspondence and submissions in appeal proceedings
as required.
Approve for recommendation to the Board any changes to the decision-
making tools which guide how the stance on cases will be decided.
DUTIES AND RESPONSIBILITIES WITH REGARDS TO THE ESTABLISHMENT
OF COMPENSATION ARRANGEMENTS FOR OVERTURNED CRIMINAL CASES
AND CIVIL CASES
Review and constructively challenge reports from the Remediation Unit and Legal
Team on legal, financial and operational advice on managing claims for
POL00448861
POL00448861
POL-BSFF-130-0000029_0222
23.
24,
25.
26.
27.
28.
29.
30.
31,
POST OFFICE LIMITED
compensation made against the Company by those who have convictions
overturned.
Approve proposed policy / principles prior to submission to DBT and 3" party
claimant representatives.
Approve for recommendation to the Board the policy / principles or
parameters within which RC may approve compensation offers and / or payments,
including the extent to which POL Board and DBT / UKGI approval may first be
required.
Approve decisions on compensation offers and / or payments which fall within the
policy / principles or parameters approved by the Board, from time to time, prior to
their submission to DBT.
Approve for recommendation to the Board decisions which fall outside the
policy / principles or parameters within which RC may make compensation offers
and / or payments, prior to their submission to DBT.
Escalate to the Board any issue which the RC considers requires the attention of
the Board.
DUTIES AND RESPONSIBILITIES WITH REGARD TO THE ADMINISTRATION
OF FINANCIAL COMPENSATION to Postmasters deemed to have suffered
detriment as a result of the review of historic and continuing Post Office business
practices following THE COMMON ISSUES AND HORIZON ISSUES JUDGMENTS
Review and constructively challenge reports, management information and
financial information from the Remediation Unit, Legal Team and Post Office
Limited BAU on work to establish compensation schemes to provide compensation
for detriment identified.
Approve for recommendation to the Board decisions on the establishment of
schemes to provide compensation where there has been Postmaster Detriment.
Approve policy / principles and or parameters within which HMC may make
decisions on compensation offers and or payments where there has been
Postmaster Detriment.
Review decisions on aspects of claims such as consequential loss claims, prior to
their submission to DBT/UKGI.
REPORTING RESPONSIBILITIES/ INFORMATION SHARING/
GOVERNANCE
POL00448861
POL00448861
POL-BSFF-130-0000029_0223
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
POST OFFICE LIMITED
The Committee Chair shall report to each scheduled Board meeting on the nature
and content of the Committee’s discussion, recommendations and action to be
taken,
Report to the Board whatever recommendations it deems appropriate on any area
within its remit where action or improvement is needed.
Report on its activities in the Company’s annual report describing the work of the
Committee.
Approve any changes proposed to the delegated authority to the Horizon Matters
Committee.
Approve any changes proposed to the Horizon Matters Committee Terms of
Reference.
Approve for recommendation to the Board RU Funding Commitment Letters
and related Operations Agreements.
AUTHORITY
The Committee shall have authority to appoint to obtain, at the Company’s
expense, legal or other professional advice on matters within its terms of reference
as required, up to a financial limit determined by the Board.
COMPOSITION AND GOVERNANCE
Membership
The Committee Chair and members of the Committee will be appointed by the
Board, acting on the recommendation of the Nominations Committee.
In the absence of the Chair of the Committee at any meeting, the Committee
members present shall determine who shall chair the meeting.
It shall consist of at least three members, including at least two independent non-
executive directors and the DBT Shareholder Representative.
Quorum
The quorum necessary for the transaction of business shall be two members.
Committee Secretary
The Company Secretary, or his or her nominee, shall act as Secretary to the
Committee and shall attend all meetings to keep minutes and record actions.
POL00448861
POL00448861
POL-BSFF-130-0000029_0224
44,
45.
46.
47.
48.
49.
50.
51.
52.
53.
POL00448861
POL00448861
POST OFFICE LIMITED
Frequency
The Committee shall meet as often as required but at least 12 times per year.
Governance
Meetings may be held in person or by telephone or other electronic means, so long
as all participants can contribute to the meeting simultaneously.
Notice of each meeting shall be given to all those entitled to participate at least two
working days before the meeting.
Meetings for the Committee may be convened by the Secretary in consultation with
the Chair, or by any member of the Committee, at any time. The Secretary will be
responsible for setting the venue date and time of meetings in conjunction with the
Chair. All papers supporting the meeting will be issued not less than 2 days in
advance of the meeting date.
Minutes of each meeting will be circulated to all members of the Committee.
The Committee Secretary shall provide current and new Committee members with
any training, briefings or induction required under the supervision of the Chair.
Only members of the Committee have the right to attend Committee meetings.
Others may be invited by the Chair to attend all or part of any meeting, as and
when appropriate.
The Committee shall have access to sufficient executive time and resources in
order to carry on its duties, including access to the Company Secretariat.
If there should be disagreement between the Committee and the full Board, the
Chairman of the Board shall make time available for discussion of the issue so that
the matter may be resolved.
ANNUAL REVIEW AND APPROVAL
The Committee will undertake an annual review of its performance and the Terms
of Reference. The outcome of these reviews will be recommended to the Board for
approval (notwithstanding amendments approved by the Board whenever so
required).
Approved by: Date: Version: Effective from:
Post Office Limited Board I 06/06/2023 I 1.0 06/06/2023
Post Office Limited Board I 25/03/2024 I 2.0 25/03/2024
POL-BSFF-130-0000029_0225
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
a Remediation Unit Delegated Meeting
‘Titing Authorities Matrix Update Date: i Maric 2504
Author: Evelyn Hocking, RU COO Sponsor: Simon Recaldin, RU Director
Programme Lead
Input Sought: Approval
Post Office Board is asked to approve an updated Remediation Unit (RU) Delegated Authorities
Matrix as detailed in Appendix 1.
Executive Summary
The original HM Delegated Authorities Matrix was reviewed/approved in an ‘Historical
Remediation Committee protocols’ paper by HRC on 12 August 2021 and approved by Post
Office Board on 28 September 2021.
An updated HM Delegated Authorities Matrix was approved by HRC on 10 November 2022.
A further updated version of the HM Delegated Authorities Matrix was approved by HMC on 11
April 2023, HRC on 19 April 2023 and by POL Board on 6 June 2023.
An updated version of the RU Delegated Authorities Matrix was approved by HMC on 20
February 2024 and by RC offline on 1 March 2024.
An updated HM Delegated Authorities Matrix was approved by POL Board on 6 June 2023 to
reflect the decision making at the time. With the project having matured further, updates to
the matrix are now required to reflect changes which have already been taken through
Governance and approved as detailed in Appendix 2.
Amendments have also been made to the matrix to reflect changes in
terminology/abbreviations agreed in July 2023, including in respect of RC (previously HRC), RU
(previously HM/HMBU) and OC (previously OHC).
Detailed in Appendix 1 is the updated RU Delegated Authorities Matrix which is proposed for
approval. For ease of reference the coloured elements are the changes proposed compared to
the previous version of the Delegated Authorities Matrix approved by POL Board on 6 June
2023.
POL Board is also asked within a separate paper submitted to this Committee to Approve an
updated Terms of Reference for the Remediation Committee (RC). It should be noted that the
RC Terms of Reference align with the RU Delegated Authorities Matrix and should be
referenced together.
Next Steps & Timeline.
1. If approved, CoSec will update the intranet with the clean final version of the Delegated
Authorities Matrix.
2. As new governance protocols and changes to existing arrangements are made this paper
will be updated and brought back through Governance as required.
Strictly Confidential
POL-BSFF-130-0000029_0226
POL00448861
POL00448861
Appendix 1 - Remediation Unit (RU) Delegated Author
Horizon Matters Committee
Decision (HMC) or Independent
HMC Sub-Group denoted by * Remediation Committee (RC) POL Board Shareholder Advisory Panel Notes
Delegated to (denoted by role) (IAP)
NB: Spend authority. The POL Board reviews and approves the spend levels annually, including a spend authority for the CEO of up to 5m, The CEO has delegated to the Historical Matters Director a spend limit of up
to £2m. The Board approves the annual budget, including RU spend, for recommendation to the Shareholder.
1. Horizon Shortfall Scheme (HSS)
1.1. Consider the Case Assessment Guidance (setting Review the draft Case
in detail the key applicable legal principles Review the draft Case ‘Assessment Guidance provided ‘Approve for
outlined in the HSS Terms of Reference and Assessment Guidance provided I “by Herbert Smith Freehills for I recommendation to DBT I APProve for submission Adopt
Consequential Loss Principles and Guidance) and by Herbert Smith Freehilis for recommendation 'fo the POL ‘Steers to the IAP
any significant material changes to the guidance. Tecanmendation <3. RG Board
1.2. Consider the principles that underpin how HSS Approve the principles peview and
claims are assessed by cohort (e.g. Heads of for submission to the IAP
Review the draft Principles comment on the
Uae) nd Srna om ream eye) oan Ene provided by Herbert Smith I Approve for recommendation to Anproye fat iethe Steer Co tas principles. Adopt
principles for consideration by the HSS Fivehills for recommendation to POL Board recommendation to DBT I material concerns about I GOiyurte subject to
Independent Advisory Panel (IAP) SteerCo the proposed principles eae
RC resolving any
these shall be considered issues ralsed
by the POL Board .
1.3. Consider decisions relating to the treatment of
claims or claimants which fall outside of the
principles detailed in 1-1, 1.2 and 1.6 Provide recommendations to RC Approve - - .
1.4 Consider Pre and Post Offer Interim Payment Approve Pre-Offer Interim
Requests for HSS Cases ** Payment requests up to £30k
(subject to sufficient Shortfall
Analysis) and Post-Offer Interim
Payments up to 100% of offer Approve Pre-Offer Interim
already made. Payment requests over £30K or
Interim Payment Requests 5 = a =
- Authority delegated to the RU I escalated at the discretion of
Director in respect of Pre-Offer HMC
and RU Ops & Dispute Resolution
Director and Head of HSS in
respect of Post Offer Interim
Payments **
1.5 Consider HSS Claim Outcomes * Exceptions Exceptions Consider and approve Make claim offer
recommendations, following RC / POL
1. Referencing high level 1. Referencing high level Including cases escalated I Board / DBT Steer
information, review and consider I Information, review and Note by HMC/RC/POL Board. Co approval*
whether to Approve Herbert HSF recommendations, which Any material concerns to
‘Smith Freehills meet the pre-panel exceptions be considered by POL I * POL retains final
approval over all
2
Strictly Confidential
POL-BSFF-130-0000029_0227
Decision
POL00448861
POL00448861
Horizon Matters Committee
(HMC) or
HMC Sub-Group denoted by *
Delegated to (denoted by role)
Remediation Committee (RC)
POL Board
Shareholder
Independent
Advisory Panel Notes
(IAP)
Tecommendations, which meet
the pre-panel exceptions criteria*
2. Referencing high level
Information, review and consider
whether to Approve post-panel
recommendations which meet
the exceptions criteria. This may
include considering whether at its
discretion to increase an award
to a claimant, or alternatively
referring back to the Panel for
further information/discussion.
Should it be considered that the
increase impacts the financial
envelope then see 1.5.5 below or
if the increase sets a precedent,
then refer to 1.6*
Non-Exceptions
3. Without referencing case
Information, Note HSF pre- panel
non-exception
recommendations*
4. Without referencing case
information, consider whether to
‘Approve post-panel non-
exception recommendations*
Other
5. Referencing high level
Information escalate to RC cases
that have been deemed to be
of:*
- Particular complexity
- Public interest concern
Financial Consequence
criteria, prior to submission to
the IAP
2. Referencing high level
Information, review and Note
post-panel recommendations
which meet the exceptions
criteria. This may include noting
an increase to an award, or
alternatively referring back to
the Panel for further
Information/discussion. Should it
be considered that the increase
impacts the financial envelope
then see 1.5.5 below or if the
Increase sets a precedent, then
refer to 1.6.
Non-Exceptions
3. Without referencing case
information, Note pre-panel HSF
non-exception
recommendations, before
‘submission to the IAP
4, Without referencing case
Information, Note post-panel
non-exception recommendations
Other
5. Referencing high level
information consider whether to
Approve for recommendation to
POL Board cases that have been
deemed to be of:
- Particular Complexity
- Publicinterest concern
- Financial Consequence
6. RC Members can at their
discretion ask for additional
information on any case for
further discussion and Noting at
RC
Consider and approve
HSS decisions which are
of particular complexity,
Public interest concern,
or financial consequence.
Consider and approve
HSS decisions escalated
at the discretion of RC
including those which set
significant principles or
establish significant
precedent on how
different types of claims
may be assessed, prior
to submission to DBT
Steer Co and the IAP
Board before a deci
is taken.
offers made by POL
to applicants, which
right of approval
extends to DBT
through the
Operations
Agreement.
Strictly Confidential
POL-BSFF-130-0000029_0228
POL00448861
Strictly Confidential
POL00448861
———
Horizon Matters Committee
Decision (HMC) or Independent
HMC Sub-Group denoted by* I Remediation Committee (RC) POL Board Shareholder Advisory Panel Notes
Delegated to (denoted by role) (IAP)
1.6 Decisions which establish a significant precedent Arps La tte
for how other HSS claims may be treated Provide options/ ABprEVe for ema monite the
{ldehlting cose wrbtcotone to the I \PProve for recommendation t© I recommendation to DBT I Where there are material ‘Approve
a charoe Uverall) SteerCo concerns POL Board will
be asked to review thelr
recommendation.
Review
1.7. Provision of cases for consideration by the
Approve for recommendations
Independent Advisory Panel: recommendation to the I and advise POL
Pride optional’ ‘Approve for recommendation to Approve for 3 Board of the
1. Test cases by cohort reese tena Re POL Board recommendation to DBT I If there are material approach tt will
SteerCo concerns POL Board will take to the
be asked to review their I category of case
recommendation. illustrated by the
test case.
1.8 Concession decisions relating to Cautions in the Consider HSF Assessment and Notatenpresen inivespect of
HSS ‘Approve decisions to concede ae
Cautions, ahead of review and 2
recommendation of claim
Consider and approve decisions - . .
cera teil where recommendation is to not
i concede or where cases are
Escalate to RC decisions not to
Shae Ge caeeentt eecalated atthe dscretion of
discretion of HMC.
1.9. Define the DRP principles covering the approach 7 Approve for recommendation to .
settlement offers rejected by claimants Pinwiderrecommendations te RC DBT Steerco ‘Approve
1.9.1 Approach to settlement offers rejected by Provide recommendations to RC I APProve for recommendation to 2 Approve -
claimants in line with DRP principles* - Test cases. DET Steercor
- Subsequent cases Approve a - - .
1.9.2 Approach to settlement offers rejected by . ‘Abprovertur recommendation ta
‘claimants outside of existing DRP principles* Provide recommendations to RC I APProve ior Tecomuves - Approve :
1.9.3 Approach to Negotiation Limits Provide recommendations to Rc I APProve for recommendation to - Approve .
for Mediation Meetings* - Test cases DBT SteerCo ee
- Subsequent cases Approve - - - °
4
POL-BSFF-130-0000029_0229
POL00448861
Strictly Confidential
POL00448861
SO
Horizon Matters Committee
Decision (HMC) or Independent
HMC Sub-Group denoted by * I Remediation Committee (RC) POL Board Shareholder Advisory Panel I Notes
Delegated to (denoted by role) (IAP)
1.10 Significant Changes to the HSS or Terms of Approve for
Reference for the IAP (Independent Advisory Panel) Provide recommendations to RC I APProve Peerepmmendation to I recommendation to DBT ‘Approve ‘Adopt
SteerCo
1.11 Decisions and Payments of Legal and Expert Fees, Approve requests up to Approve requests more than
Forensic Accountant Fees and Medical Expert Fees
In respect of HSS Claims ** - Complex Case - £36k plus I- Complex Case - £36k plus
additional allowances additional allowances
~ Moderate Case - £18K plus I- Moderate Case - £18K plus
additional allowances additional allowances
- Straightforward Case - £11k - Straightforward Case - £11k
plus additional allowances plus additional allowances : Approve
- Forensic Accountant Fees - - Forensic Accountant Fees -
£15K £15K
- Medical Expert Fees - £6k - Medical Expert Fees - £6k
(per discipline) (per discipline)
- Authority has been delegated to
the RU Director **
2. Stamp Scheme
2.1. Consider the principles that underpin how Stamp I Approve for recommendation to Approve! . . .
Scheme claims are assessed RC Ppt
2.2 Consider claim outcomes recommended (including Note recommendations
those recommending offers of financial settlement)
Approve recommendations I Consider and approve any cases - - s
escalated at the discretion of
HMC.
Escalate cases to RC where
2.3. Decisions which establish a precedent for how
other Stamp Scheme claims may be treated. eee Precedent ‘Approve! - - -
2.4 Approach to settlement offers rejected by Approve recommendations, Note recommendations - - -
claimants
3. Criminal Case Appeals including Potential Appellants, Court of Appeal and Crown Court Cases
ses which are within the parameters:
ision-making tools approved by the beebetpemcenevnia! Approve To be briefed -
3.2. Stance on cases requiring Board approval as per Considercases-as-required I Approve for recommendation to .
the decision-making tools before approval. at RC POL Board ‘Approve Consult
5
POL-BSFF-130-0000029_0230
POL00448861
Strictly Confidential
POL00448861
———
Horizon Matters Committee
Decision (HMC) or Independent
HMC Sub-Group denoted by* I Remediation Committee (RC) POL Board Shareholder Advisory Panel Notes
Delegated to (denoted by role) (IAP)
3.3 Changes to Decision-making tools Provide recommendations to Rc I APProve for recommendation to Approve To be briefed °
4. Compensation Arrangements for Overturned Criminal Cases and Civil Cases
Consider
4.1. Decisions on proposed policy / principles for the
treatment of compensation payments for sApprovecublectita rior nee ton
overturned criminal cases and civil ciaims prior to. I Provide recommendations to RC I coneuitation with DBT 7 UKGI - eats ig he -
submission to 3° party claimant representatives caneidered by Ra before
approval.
4.1.1 Approve proposed minor amendments to
Pecuniary Principles** Co/Approved
Note minor amendments - Note minor amendments :
Authority delegated to Head of
(Delegated from 4:1) OC & Head of OC Legal **
. , Consider
4.2. Decisions on the policy / principles or parameters fecommmenigtiona tam
within which RC may take decisions in relation to Approve subject to prior I pol Board, Any material
compensation offers and or payments Provide recommendations to RC I APPYove for recommendation 0 I ‘consultation with DBT / concerns to be -
a UKGI considered by POL Board
before a decision Is
taken.
4.3. Decisions on compensation offers and or Claims which do not meet the I Claims which do not meet the
payments claims which fall within the policy / exceptional case criterla set by I exceptional case criteria set by
principles or parameters approved by the Board DBT DBT Consider and approve
tieeunthins te thine ~ . decisions which
Approve decisions in respect of Note decisions macenel vanecacne
=Non-Pecuniary Clalms* scheme cost and/or
inetable® Consider and approve
Transitional Cases (Post-Pecuniary Principles Claims which meet the Claims which meet the recommendations,
Baselined pre-full Exception Criteria) exceptional case criteriaset bY I exceptional case criteria set by Consider and approve I including cases escalated
DBT DBT decisions escalated at the I by HMC/RC/POL Board.
discretion of RC including 5 3
Provide recommendations for Approve subject to prior RRasewnichises Any material concerns to
decisions to RC in respect of I - ion wit be considered by POL
ESA RE INT consultation with DBT / UKGI I significant principles or I goard before a decision
buen ten eerie ain
Misi ieenieuleieab) . different types of claims
Provide recommendations for may be assessed, prior to
decisions to RC in respect of - submission to DBT /
Pecuniary Claims (Min of 5 UKGI
Claims) *
6
POL-BSFF-130-0000029_0231
Decision
POL00448861
Horizon Matters Committee
(HMC) or
HMC Sub-Group denoted by *
Delegated to (denoted by role)
Remediation Committee (RC)
POL Board
Shareholder
4.3.1 Decisions on compensation offers and or
payments claims which fall within the policy /
principles or parameters approved by the Board
from time to time*
Replaces 4.3 once Shareholder is comfortable on HMC
‘Sub-Group operation (min 5 Pecuniary claims settled) &
Pecuniary exception criteria agreed with DBT
Claims which do not meet the
exceptional case criteria set by
‘OBT
Approve decisions in respect of*
-Non-Pecuniary Claims
-Pecuniary Claims
‘laims which meet the
Der
Provide recommendations for
decisions to RC in respect of*
-Non-Pecuniary Claims
Pecuniary Claims
Claims which do not meet the
exceptional case criteria set by
DBT
Note decisions
Claims which meet the
exceptional case criteria set by
‘Approve subject to prior
consultation with DBT / UKGI
Consider and approve
recommendations on
cases escalated by HMC /
HMC Sub-Group / RC.
4.3.2 Decisions on Advance Payments relating to
Prosecuted related sums / shortfalls and/or
Advance Payments relating to ColleagueShare
Plan sums */#*
Approve
Authority delegated to Head of
OC (<=£20k), RU Director
(> £20k) **
Note payments *
4.3.3 Decisions on £450,000 top-up to Interim
Payments on submission of a sufficiently
particularised claim*
‘Approve *
Note decisions
4.3.4 Decisions on counter-offers before submission
to the IAP*
Provide recommendations for
decisions to RC*
Approve subject to prior
consultation with DBT /UKGI
Consider and approve
recommendations from
HMC/HMC Sub-Group/RC.
4.4 Decisions which fall outside the policy / principles
or parameters within which RC may take decisions
in relation to compensation offers and or
payments
Provide recommendations to RC
Approve for recommendation to
POL Board
Approve subject to prior
consultation with DBT/
uKGI
Consider
recommendations from
POL Board. Any material
concerns to be
considered by POL Board
before a decision is
taken,
4.5 Decisions on Interim Payments in overturned
criminal cases and civil claims within the
parameters of the policy approved by the Board
ape
‘Approve
Authority delegated to RU
Director **
Note Interim Payment requests
which meet the DBT funding
Strictly Confidential
POL00448861
Independent
Advisory Panel I Notes
(map)
7
POL-BSFF-130-0000029_0232
POL00448861
Strictly Confidential
POL00448861
SO
Horizon Matters Committee
Déciston (HMC) or Independent
HMC Sub-Group denoted by * I Remediation Committee (RC) POL Board Shareholder Advisory Panel I Notes
Delegated to (denoted by role) (IAP)
‘riteria In respect of Interim
payments *
" ; ry £600k Offer ts
4.6 Decisions on £600k Offer Payments In overturned I ‘rich meet the DBT eligibility
Criminal Convictions and Civil Claims * eitariae
Eligible (Horizon reliant OT) Note £600k Offer
No case complexities to = Requests which meet
hinder payments (e.9. DBT eligibility criteria
bankruptcy)
Confirmation of residual
payment (net of IPs, part
settlements)
4.7 Payments of Claim Related Legal Costs and MEHGE
Disbursements (including Expert Fees) */ ** Aithoriey osiensted ton
Director following
recommendation from the Head : 2 2
of OC **
Note Legal Costs and
Disbursements *
4.8. General Financial Adjustments relating to approve)
CISELY Authority delegated to - . .
Head of OC (<£20k) **
RU Director (<£60K) **
E.g., Interest Calc amendments, prosecution shortfall rn
discrepancies, and other minor one-off exceptions HMC Sub-Group (>£60k)
5. Postmaster Detriment - Compensation arrangements resulting from historic and continuing Post Office business practices following the Common Issues and Horizon Issues Judgements
Consider
, , jor I recommendations from
5.1 Decisions on the establishment of schemes to Approve subject to prior
provide compensation where there has been Provide recommendations to Rc I APProve for recommendation t0 I “consultation with DBT / I POL Board. Any material a
Postmaster Detriment UKGI undaenal ba POL oer
before a decision is taken
5.2. Decisions on policy / principles and parameters
within which HMC may make decisions on Provide recommendations to RC Approve - To be briefed -
compensation offers and or payments
8
POL-BSFF-130-0000029_0233
POL00448861
Strictly Confidential
POL00448861
SO
Horizon Matters Committee
Déciston (HMC) or Independent
HMC Sub-Group denoted by * I Remediation Committee (RC) POL Board Shareholder Advisory Panel I Notes
Delegated to (denoted by role) (IAP)
5.3 Unpaid Postmaster Suspension Remuneration ‘Approve
Offers ** Offers where the principal sum is
more than £60,000.
Offers where principal sum is - 7 7 -
between £40,000 and £59,999 -
authority delegated to
Remediation Unit Ops &
Escalations Director **
5.4 Principles that underpin how Consequential Loss ;
qaneliaes that und le Recommendations to RC Approve - To be briefed 2
5.5. Decisions on Consequential Loss claims relating Approve subject to prior
to unpaid Postmaster Suspension Remuneration* consultation with DBT / UKGI Review Claims - Approve: -
~ Test Cases / Assured Cases
= Subsequent cases (meeting exception criteria) Approve subject to prior Review claims escalated at the - .
consultation with DBT / UKGI discretion of HMC Approve
= Subsequent cases
Approve - - - -
NB - HMC have delegated authority to an HMC Sub-
Group ("Panel") for CL Claims below £50k
6. Governance
6.1 Changes to Delegated Authorities Matrix for the
Horizon Matters Committee Provide recommendations to RC Approve To note To be briefed 2
6.2. Changes to the Terms of Reference for the Horizon I approve for recommendation to
Matters Committee Pt 7 ‘Approve : : -
6.3. Report to each scheduled POL Board me Draft report Approve for submission to POL Review 2 3
oar
6.4 Reports to UKGI / DBT in line with Operations
Aeon Draft report : - Review
6.5. RU Funding Commitment Letters and related Approve for recommendation to I Approve for recommendation to
Operations Agreements saa a : Tee Approve Approve
9
POL-BSFF-130-0000029_0234
POL00448861
POL00448861
Appendix 2 - Previous Governance relating to proposed changes to RU
Delegated Authorities Matrix
Section of DA Matrix
Details
Previous Governance
Horizon Shortfall Scheme
(HSS)
1.4
Payment of 100% Interim Payments
‘Approved by HMC on 11 July 2023, RC on 26 July
2023 and HMC on 12 Sept 2023
1.8
Concession Decisions relating to Cautions.
Approved by HRC on 16 Feb 2023, HRC offline on
22 Feb 2023 and POL Board offline on 27 Feb
2023
Lat
Decisions relating to the payment of Legal
and Expert Fees
Approved by HMC on 14 November 2023 and RC
‘on 13 December 2023
Overturned Convictions
(oc)
44d
Minor Amendments to Pecuniary Principles
‘Approved by RC on 5 July 2023 and detailed
within the OC Delegated Authorities Matrix
approved at HMC on 10 Oct 2023 and RC on 18
October 2023. Updated paper noted by RC on 15
November 2023.
4.34.34
Decisions on compensation offers and or
payments / claims.
‘Approved by HMC on 10 Oct 2023 and RC on 18
October 2023. Updated paper noted by RC on 15,
November 2023. Further delegated authority
detailed in this matrix as per OC Delegated
‘Authority paper approved by HMC on 13 Feb 2024
and RC on 28 Feb 2024.
4.3.2
Decisions on Advance Payments relating
to prosecuted related sums / shortfalls
Previous limits approved by HMC on 15 March
2023 and HRC on 22 March 2023. Revised limits
and further delegated authority detailed in this
matrix as per OC Delegated Authority paper
approved by HMC on 13 Feb 2024 and RC on 28
Feb 2024.
Decisions on £450,000 Top-Up to Interim
Payments
‘Authority Delegated to HMC by RC offline on 28
January 2024. Quantum of Top Up approved by
POC on 31 January 2024,
43.4
Decisions on counteroffers
No previous Governance. Delegated authority
detailed in this matrix as per OC Delegated
‘Authority paper approved by HMC on 13 Feb 2024
and RC on 28 Feb 2024,
45
Decisions on Interim Payments
‘Authority delegated to HMC by HRC on 3 March
2022, and detailed within Delegated Authorities
Matrix approved by HRC on 10 November 2022.
Further delegated authority detailed in this matrix
‘as per OC Delegated Authority paper approved by
HMC on 13 Feb 2024 and RC on 28 Feb 2024.
4.6
Decisions on £600k offer payments
‘Approved by HMC on 10 Oct 2023 and RC on 18
October 2023. Updated paper noted by RC on 15
November 2023.
47
Payments of Claim related Legal Costs and
Disbursements (including Expert Fees)
48
General Financial Adjustments relating to
‘compensation.
Various including HMC on 25 April 2023, RC on 5.
July 2023, HMC on 18 July 2023, and RC on 16
‘August 2023. Limits summarised and approved by
HMC on 10 Oct 2023 and RC on 18 October 2023.
Updated paper noted by RC on 15 November
2023. Further delegated authority detailed in this
matrix as per OC Delegated Authority paper
approved by HMC on 13 Feb 2024 and RC on 28
Feb 2024.
Suspension
Remuneration Review
(SRR)
SRR offers
Revised SRR approach approved by HMC on 3
October 2023 and RC on 18 October 2023.
Revised DA Limits approved by HMC on 7
November 2023.
Strictly Confidential
POL-BSFF-130-0000029_0235
POL00448861
POL00448861
Be Reports to UKGI / DBT in line with POL /
- DBT Operations Agreements
Governance Reflects existing arrangements
6s RU Funding Commitment Letters and
- Operations Agreements
i
Strictly Confidential
POL-BSFF-130-0000029_0236
POL00448861
POL00448861
@
POST OFFICE LIMITED
BOARD REPORT
a New Group Customer 4 . th
Title: Complaints Policy Meeting Date: I 25" March 2024
@uiffine: Charlotte Johnson, Head of a Martin Roberts, Group Chief
. Customer Complaints Pp ‘ Retail Officer
Input Sought: Approval
The Board is asked to review and approve the following new group policy for the business to
take forward and confirm preference of communication to postmasters:
is Group Customer Complaints Policy
Executive Summary
* Reviewed and approved by RCC & ARC (29'" January 2024)
Reviewed & approved by FRES, Payzone and POMs Risk & Compliance teams
Pending Reviewed & approved by Martin Roberts Group Chief Retail Officer
Reviewed & approved by Laura Joseph Director of Customer Experience,
Reviewed & approved by Russell Tavener Director of Service Delivery & CC
Reviewed & approved by POL Kirsty O’Connor, Head of Legal, dispute resolution
and brand protection
e Reviewed & approved by Rebecca Barker, Head of Risk
The Customer Dissatisfaction Group Risk was introduced and approved by the group board
July 2023 which outlines the risks and our cautious appetite to customer dissatisfaction. This
Customer Complaints Policy has been established to set the minimum operating standards
relating to group risk management of customer dissatisfaction.
This new Customer Complaints Policy firmly establishes and mitigates customer
dissatisfaction by setting clear standards and outlining the procedure by which we will
manage customer complaints. The policy owner is Laura Joseph, Director of Customer
Experience, Digital and Marketing and the GE sponsor is Martin Roberts, Group Chief Retail
officer.
Many of our partnership and client agreements such as the banking framework will also
benefit from this policy being in place, as it gives reassurance that we as a brand will provide
support and manage customer dissatisfaction effectively, with integrity and transparency.
This policy also meets the legal regulations and obligations applicable to us, such as the
Consumer Rights Act.
Compliance with this policy supports the Post Office in meeting its business objectives and to
balance the needs of customers, shareholders, colleagues, and other stakeholders.
Group Policies are not currently communicated to Postmasters or Strategic Partners, however
as this includes operational standards which they will need to support, the relevant sections
of this policy will be communicated to these groups.
Confidential
POL-BSFF-130-0000029_0237
POL00448861
POL00448861
@
The policy will be communicated to colleagues via an email & hub message which will link to
the new policy. For Postmasters a message will be surfaced on branch hub.
Conclusion
Once approved, we will continue to work with Policy Owners and Company Secretariat to ensure
we maintain our policy governance responsibilities and undertake assurance that the polices
are working as expected. This is a key part of the wider Post Office controls work.
Uploaded to the Reading Room: Group Customer Complaints Policy.
Confidential
POL-BSFF-130-0000029_0238
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Health & Safety Monthly Report Meeting Date: I 25'" March 2024
Martin Hopcroft,
Author: Director of H&S, Environment and Sponsor:
Business Continuity
Kathryn Sherratt,
Interim Chief Finance Officer
Input Sought: Noting
The Board is asked to note the contents of the report.
Executive Summary
We continue to support our people, including those who may be impacted by heightened media
coverage of Post Office and the Public Inquiry. Colleagues are signposted to occupational
health, including bespoke support for witnesses which has been extended to ex-employees.
Those who visit branches or work in contact centres, and therefore may have difficult and
emotional conversations with Postmasters or customers, have attended live webinars from
Optima Health on ‘supporting ourselves and others during turbulent times’. We have asked
colleagues to report incidents of abuse or harassment and our Security, Business Continuity
and H&S teams have reviewed and tightened up access and visitor procedures at our central
offices. Mental Health Ambassadors are receiving annual refresher training during March/April.
We have reviewed the end to end support Postmasters receive following a serious incident in
branch eg. robbery. The process will ensure a review is undertaken at 1, 3 and 6 months post
incident with the offer of trauma support, where required.
We continue to respond to the recent property risk identified in the industry, the deterioration
of RAAC (Reinforced Autoclaved Aerated Concrete). Whilst we believe the risk in our estate is
low, we continue to undertake a full assessment of our properties with our Facilities
Management partners. We have requested assurances from landlords, and are sending a
stronger legal letter to 19 who have failed to respond. Where properties are of higher risk, we
have asked the FM provider to undertake a more intrusive survey, however, inspections to date
confirm our view that the risk is low and building fabric in a good state of repair.
Overall, we continue to see a relatively low number of accidents reported. There has been an
increase of minor accidents in Directly Managed Branches, all of which are investigated with
learnings and best practice shared with colleagues. We continue to develop our people and
implement initiatives to mitigate risks. ATM and Cash Vans in Transit (CViT) attacks remain
low, and robberies in January were lower vs expected levels for the time of year (9 vs 13) and
lower than the average (11). 6 of the 9 were successful and 2 suffered high losses. YTD there
have been 57 robberies vs 66 expected. 40% were unsuccessful, an improvement on last year
(33%).
Report
1. At Appendix 1, we summarise KPI performance for the last four years. Whilst YTD
accidents reported are higher at P11 than in 22/23 (49 vs 40), more serious lost time
related accidents are level and days lost have reduced by 64% (9 of 117 days vs 9 of 324
Strictly Confidential
POL-BSFF-130-0000029_0239
POL00448861
POL00448861
@
days), especially in Supply Chain where there has been a 50% reduction in lost time
incidents and a 88% reduction in lost days.
2. Over the past couple of years, accident causation in DMBs has been mainly due to falls
indoors, however, we have seen a reduction this year. Whilst accidents due to striking
against objects or equipment, including bumping into or stepping onto objects reduced in
22/23, we note an increase this year. We will continue to strengthen safety culture in
DMBs, adopting good practice, including use of safety champions, improved reporting and
applying learnings from accident and near miss investigations.
3. The H&S Team are progressing a programme of Individual Risk Assessments, as approved
by Safety Board; following completion of business driver risk assessments. Workplace,
DSE and Lone Worker risk assessments are being rolled out to business areas during Q4.
4. The Security Intelligence Team maintains ongoing collaboration with law enforcement and
industry partners feeding into our daily operational assessments of crime and weekly
tactical analysis discussions to stay ahead of emerging trends and to adopt best practices
for mitigating threats and risks. Security Awareness guidance has been issued including
‘Personal Safety’, ‘CCTV in your branch’ and ‘Need help with your alarms’ as part of the
Winter Darker Nights Campaign. There were 132 branch security health checks
conducted during the period, providing support to Postmasters and branches.
5. Robberies during P10 (Jan) were down against the expected level for this time of the year
(9 vs 13), and level when compared to last year (9). Year to date there have been 57
robberies vs 66 expected levels and 60 last year. Reported abuse shows reductions on
last year with 283 YTD vs 343 at the same point last year and favourable against expected
level of 324. There were 26 reported incidents during the period, 30 last month, down on
the average (35). New self-help guidance and support is held on the Branch Hub site.
6. InP10 there was 1 PO CViT robbery related incidents and 0 PO ATM attacks. POL continues
to deploy gas suppression and the new ATMs are resistant to both gas and soft/solid
explosives. ATM trackers have been deployed in the higher risk areas to mitigate ram
raid/rip out attacks. Industry ATM crime continues to be low and there was a decrease in
December and January. There were 6 industry ATM attacks in the P10 (7 previous mth)
and FYF is expected to outturn around 190 vs pre-pandemic levels of 326.
7. We have reviewed the Supply Chain Safety Plan and are progressing a number of
initiatives including; reviewing the robbery risk assessment and cross pavement risk
profiling data; enhancing the Safety Champion role; implementing recommendations from
the Occupational Health musculoskeletal / fatigue review in CViT. During recent viewing
of CCTV footage downloaded from CViT vehicles to investigate traffic incidents, a number
of near misses due to driver distraction were identified. To address legal and Union
concerns about privacy, we are scoping telemetry with AI technology that can intervene
in such situations. We have issued new driver standards and the Road Risk Policy and are
piloting an increase in the value of cash being carried in the cross pavement cash boxes
to reduce the time crews spend outside the vehicle to reduce risk in line with industry.
Strictly Confidential
POL-BSFF-130-0000029_0240
POL00448861
POL00448861
@
8. A ‘people risk’ for mental wellbeing has been recorded due to an increase in ‘at work’
stress reported in some business areas. Stressors include excessive workload due to
insufficient resource; the pressure of responding to the Inquiry on top of the day job;
alongside additional ‘personal’ pressures colleagues may have to deal with e.g. cost of
living. We have communicatied with colleagues across the business following the Bates
vs Post Office TV drama and we are providing additional guidance to those who engage
Postmasters or customers. We are providing bespoke support to PO Inquiry witnesses
including a Wellbeing helpline and counselling for ex-employee witnesses.
9. We have launched an online wellbeing resource with content suitable for Postmasters,
their owners and staff. We are issuing quarterly campaigns and work closely with the
Retail teams and NFSP to signpost and to help raise awareness of the new resource.
Financial Impact
10. The financial impact of the above initiatives has been evaluated / budgets confirmed.
Risk Assessment, Mitigations & Legal Implications
11. Our highest risks include; violence and abuse aimed at postmasters and employees. The
security and health and safety teams will continue to strengthen mitigation; the potential
change to our risk profile due to increasing levels of cash in the network and; the growing
impact on colleague wellbeing due to the impact of the Inquiry, either directly or indirectly.
Stakeholder Implications
12. Training should be provided to new directors and, where required, directors, management
and colleagues of Group subsidiaries.
13. Information - directors should consider the H&S information that flows to the Board to
support directors, subsidiary directors and management teams carrying out their duties.
Next Steps & Timelines
Safety Sub-Committee is held bi-monthly, next meeting scheduled 10" April 2024. Board and
GE H&S reports will include updates, recommendations and decisions made by the Sub-
Committee.
Strictly Confidential
POL-BSFF-130-0000029_0241
POL00448861
POL00448861
Appendix 1 - Safety Board Dashboard
Accidents P11 (23/24) and Security P10 (23/24)
Health & Safety 4yr Performance
Year/KPI 19/20 20/21 21/22 22/23 22/23 23/24
pizyi> I Pizvro I pizvto I Pizvio I PiYo) I PlayIO
All accidents 70 40 50 41 40 49
Allaccidents / 1000 employees 18.6 11.8 15.2 12.1 11.8 13.7
DMB 21.0 22.7 26.9 23.5 22.5 35.4
Support 75 0.7 21 0.6 0.6 pe
Supply Chain 33.8 15.3 23.5 20.1 20.1 13.6
Lost Time related accidents 10 5 16 10 9 9
Lost Time related accidents / 1000 2.6 is 49 28 27 2.5
employees
*LTIFR (lost time accidents/100,000hrs) iso I 0.083 I 0.281 I 0169 I 0.168 I 0.160
Days lost due to accidents 214 28 484 328 324 117
Days lost / 1000 employees 57 8 147 97 96 33
*LTR (Accident days lost/100,000 hrs) 3.2 05 85 5.5 6.0 24
Days lost due to robbery (assault and ‘ns * = = = 5
trauma)
*LTR (Total days lost/100,000hr inc trauma) 48 0.7 8.9 9.9 10.8 21
RIDDORS (Employee) 2 3 6 4 4 5
NOTE: Whilst the number of days lost following an incident (assault / trauma) rose in 22/23 when compared to
21/22 (255 vs 23), this was due to one incident with a resulting long-term absence. NOTE: *It should be noted
that one single lost time accident increases LTIFR markedly by approx. 0.200 per month, LTIFR is the number of
incidents / 100,000hrs and should always be read alongside the Lost Time Rate (LTR) which is the number of lost
days / 100,000 hrs and an indication of the seriousness of the accident.
‘Commentary
oairumaes Period CVIT robberies 1 (€2k loss)
ene reread
a + 102 CVIT cross pavement observations conducted
nen f \ uring the month
ome + Overall crewmembers followed most security procedures
cee 95%, however there were 1 Helmet failure, 1 vigilance
failure (both Norwich) & 4 failures carrying coin and box
aoe together (Hemel & London)
+ Security awareness focused on CVIT ‘Safety on the
Road’ as well as completing the deployment of the
‘Security Notice boards in CVIT & CC depots,
€ViT Incidents
7 + Industry CViT attacks remain low. FYF is expected to
coutturn c. 30 vs pre-pandemic levels of 198.
Seen etree ere]
EL
Strictly Confidential
POL-BSFF-130-0000029_0242
POL00448861
POL00448861
‘Commentary
Portod
Robberies were lower vs expected levels for the
time of year (9 vs 13), and last yr (8).
Of the 9, 6 were successful, of which 2 suffered
high losses. 4 incidents > £1«
‘Sydenham, Morrisons, £71k, before opening, staff
‘opened back door to two offenders, safe emptied
West Heath, £10k stolen from a till
£83k losses
97 robberies vs 66 expected YTD, 60 last year
Of the 57, 34 were successful, 23 were aitempted
£247k loss vs £454k expected YTD, £952k last yr
40% of robberies were unsuccessful YTD, an
Improvement on last year same point at 33%
132 branch security health checks conducted providing
Postmaster support. 2% (3) access doors left open, 0%
(0) safes left open, and 0% (0) failed till mits.
Retall robberies reported, 1 vs 3 last month. YTD 16 vs
26 last yr
Injuries Sustained
Commentary
Period 1 injuries.
‘Congresbury, BS49. Minor brufse to hand following
counter jump-over. Panic button activated; 2 males
decamped
YTD 10 injuries YTD, same as last year (10).
Abuse & Aggression
Reported abuse shows reductions on last year with 283,
YTD vs 343 at the same point last year. Also favourable
against expected levels at 324
26 reported incidents during the period, 30 last month.
New self-help guidance and support is held on the
Branch Hub site.
Focus on Abuse, Aggression & Violence guidance
as part of the Darker Nights Campaign: Don't leave
Security out In the cold.
ATM Losses
ATM Incidents
‘Commentary
Period ATM incidents 0
YTD 2 vs expected levels of 5, and vs 1 last year
In perspective pre- pandemic, we suffered 61 ATM
attacks during 2018/19, decreasing to 36 during
2019/20 and 17 during 2020/21
‘As a comparison between 2023/24 to an already low
year of 2020/21, POL have seen a decrease of 88%,
whereas the industry notes a 51% decrease
POL continues to deploy gas suppression & trackers in
high-risk areas.
6 industry ATM attacks in the period (7 last month)
Industry ATM attacks decreased in January & December,
FYF Is c. 190 vs pre-pandemic levels of 326. 159 YTD,
Including Cardtronics (47%), Tesco (20%), POL 0.63%
We have reduced ATM cash holdings in high-risk areas,
‘some of which includes areas where the fire services
have seen thefts of cutting equipment used later for
ATM attacks
Strictly Confidential
POL-BSFF-130-0000029_0243
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Sekes POI Accenture Managed Service . 7 th
Title: Contract Extension Meeting Date: I 25'" March 2024
Author: Carl Roe, Head of IT & Change Sponsor: Simon Par, POI CEO
Input Sought: Approval
The POL Board are asked to approve an extension to the Post Office Insurance (POI)
Accenture managed service support contract which extends the contract until November
2026. The consecutive spend over the full 8 years, 3 months totals £6,156,667 requiring POL
Board approval.
Executive Summary
POI Board approved the spend and onward submission to POL Board on 22"4 January 2024.
Accenture Contract Extension for POI IT Services
1. POI use Accenture support services across 4 separate statement of works, namely
Managed Services, Application Insurance Support, Hosting & Change Capacity Spend.
2. Accenture host, manage and configure the Duck Creek policy and billing insurance
platform, on behalf of POI, to sell and administer travel & home insurance policies.
3. The four statement of works have received POI board approval to extend until 2026, which
allowed a full upgrade of the insurance Duck Creek platform to complete, which had not
received an upgrade since inception in 2018.
4. _ Advice from the POL legal team has stated h ii __
ee
5. With the exception of the Managed Service contract, all other individual statement of
works do not exceed a total Of messin
6. The managed service contract ‘provides a number of services supporting POI and 3” party
services providers. Capabilities including Service Desk, cloud services, service
management, integrations, datab: and cyber security.
7. The first-year extension saw crease in contract spend os to the need to review
all capabilities, with a / _
8. Accenture were the previous ‘owner of Duck Creek at the time of the implementation, for
both travel and home, which is why they are the current technical partner.
9. Duck Creek (provider of the insurance platform) are also expected to move to a software
as a service model which will change the hosting landscape and the support model
required in future.
10. Over the next 3 years a strategic review will take place to look at future technical services
& providers, including the relationship with Accenture.
ii. The POL board are asked to approve the extension of the managed service contract which
Confidential
POL-BSFF-130-0000029_0244
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Annual Governance Report Meeting Date: I 25 March 2024
Kuffioe Cordelia Hagan, Assistant Sponsor: Rachel Scarrabelotti, Company
Company Secretary Secretary
Input Sought: Noting & Approval
The Board is asked to note the Directors’ Register of Interests (full document in the
Reading Room).
The Board is asked to approve the following:
a) Updates to the Delegated Authorities from the Board (full document in the
Reading Room);
b) Changes to the Authorised Signatories list as set out in the report (Appendix 1);
c) The revised Matters Reserved to the Board (“MRB”) including the Spend Approval
Limits appendix (Spend Approvals extract at Appendix 2, full MRB document in the
Reading Room); and
d) The revised Nominations Committee Terms of Reference (“ToR”) (full document in the
Reading Room).
Executive Summary
The last Annual Governance Report was considered by the Board at its meeting on 28" March
2023. At that meeting, the Board approved a revised version of the Authorised Signatories list,
and revised versions of the Remuneration Committee ToR and the ARC ToR.
This Annual Governance report is intended to cover the main governance reviews required by
the Board, listed at paragraphs 1-5 below. The Company Secretariat also asks Directors to
review their biographies so that we can ensure that the information on the Post Office
corporate website is up to date.
Report
1. Delegated Authorities
The Board is required to act within its powers, which are set out in the Post Office
Limited (“the Company”) Articles of Association. Excluding those matters specifically
reserved to the Board or which require Shareholder approval, the Board has delegated
levels of authority to the Board Committees and the Group CEO to enable decision
making.
As such, the Company Secretariat maintains a delegated authorities document. It is
proposed that minor changes are made to the delegated authorities document, including
to:
* amend references from the ‘GE’ to the ‘SEG’ following a change to the
membership of this executive forum; and
* update the document to reflect the status of some key SEG sub-committees.
Confidential
POL-BSFF-130-0000029_0245
POL00448861
POL00448861
@
The revised delegated authorities document can be found in the Reading Room.
2. Authorised Signatories
As part of the Contract Approval Process, the Company Secretariat arranges signatures
for documents such as contracts, statements of work, order forms and terms and
conditions, to be signed by authorised signatories.
It is recommended that references in the list to ‘GE Members’ are amended to ‘SEG
Members’. Additionally, it is recommended that the job titles for those personnel who
are authorised to sign specified contracts are updated.
An extract of the authorised signatories’ list can be found in Appendix 1 which has been
revised to reflect the above proposed changes.
3. Authentication of the Affixing of the Company Seal
The Board is asked to note those individuals with delegated authority to authenticate the
affixing of the common seal of the Company in accordance with Section 45 of the
Companies Act 2006 as set out in Appendix 1.
The Company Seal is primarily used to execute documents as deeds (such as trust
documents and in the case of property transactions). The Directors receive and confirm
the list of documents executed via the Company Seal at each Board meeting.
No changes are currently proposed to the list of individuals authorised to authenticate the
affixing of the Company Seal.
4. Committee Terms of Reference Reviews and Matters Reserved to the Board
Review
The Company’s Remuneration, Nominations, Audit Risk and Compliance, Investment
Committees and Remediation Committee (“the Committees”) each have a Terms of
Reference (ToR) in place. Provision 21 of the 2024 UK Corporate Governance Code
recommends that there should be an annual evaluation of the activities and performance
of each Committee against their Terms of Reference.
The Nominations Committee considered its ToR review at its meeting on 27" February
2024. Following approval by the Nominations Committee on 30" January 2024, of changes
to the direct reports of the Group Chief Executive, and the CEO establishing a new
executive management forum, the SEG, changes were proposed to the Nominations
Committee Terms of Reference to update references to the ‘Group Executive’ to the
‘Strategic Executive Group’. The revised Nominations Committee ToR can be found in the
Reading Room.
The ARC will consider its annual ToR review at its meeting in May 2024.
The Board approved the updated Remuneration Committee ToR at its meeting on 1% March
2024. This can be found in the Reading Room for information.
The Investment Committee will review its ToR later this year, given that is has only been
in operation since September 2023.
Confidential
POL-BSFF-130-0000029_0246
POL00448861
POL00448861
@
A revised version of the Remediation Committee ToR was approved offline by the
Remediation Committee on 11 March 2024, and the Board has been asked to review and
approve the ToR during this meeting.
A review of the Post Office Matters Reserved for the Board (‘MRB’) has also been
undertaken. Accordingly, it is recommended that references in the MRB to the ‘Group
Executive’ be amended to the ‘Strategic Executive Group’.
Furthermore, it is proposed that the Spend Approval Limits appendix, included at
Paragraph H of the MRB, be revised so that the job roles that were previously part of the
GE, but who are not members of the current SEG, are able to maintain their £2m delegated
spend approvals. The job titles are: the Group General Counsel; the Group Chief Retail
Officer; the Strategy and Transformation Director, and the Group Corporate Affairs, Brand
and Communications Director.
An extract of the Spend Approvals Limit list can be found at Appendix 2. The full revised
version of the MRB can be found in the Reading Room.
5. Register of Interests
Pursuant to Section 175 of the Companies Act 2006 (“the Act”), a director must avoid a
situation in which they have or can have, a direct or indirect interest that conflicts, or
possibly may conflict, with the interests of the Company. Accordingly, the Company
Secretariat maintains a Register of Interests for directors, and this is formally reviewed
on an annual basis. Additionally, the first agenda item for each meeting is a declaration
of conflicts of interest. The current Register of Interests is in the Reading Room.
Furthermore, in accordance with Section 180 of the Act, and Section 80.2 of the
Company’s Articles of Association, the Board may authorise any matter which would
otherwise involve a director breaching his or her duty under the Act, to avoid conflicts of
interest. The ARC last approved updates to the Conflicts of Interest Policy on 234 January
2023 and this is in the Reading Room for information.
Stakeholder Implications
6. The Company's stakeholders, in particular our Shareholder, The Department for
Business and Trade, have a vested interest in the Company maintaining high standards
of corporate governance.
Quick Links to the Reading Room:
1. Register of Interests
2. Delegated Authorities
3. Matters Reserved to the Board - Clean
4. Mattes Reserved to the Board - Tracked Changes
5. Annex 1 to the MRB
6. Nominations Committee ToR - Tracked Changes
7. Remuneration Committee ToR - Clean
8. Current Conflicts of Interest Policy
3
Confidential
POL-BSFF-130-0000029_0247
POL00448861
POL00448861
@
Appendix 1 - Authorised Signatories
Authorised Signatories
The following positions are approved to sign documents that will bind the Company such
as, but not limited to, contracts, statements of work, change notes, order forms and
terms & conditions.’ Signature is subject to applicable internal policies, processes and
documented exceptions:
- Any Statutory Director;
- The Group Company Secretary’;
- The Deputy Company Secretary
- Any member of the Strategic Executive Group?; and
- Any Senior Assistant Company Secretary.
The following positions* are permitted to sign employment contracts and similar HR
related agreements (together “HR Contracts”), or Postmaster contracts, including
franchise agreements as part of the DMB programme (together “Postmaster Contracts”)
(for the purpose as specified only) as set out below:
Job Title Purpose
People Functional Services Manager HR Contracts
People Lead Team
Talent Acquisition Team
People Business Partnering Team
Retail Engagement Director Postmaster Contracts
Senior Postmaster Onboarding Manager
Lead Onboarding Manager
Onboarding Team Manager
Any one of the following positions is approved to authenticate the affixing of the Company
Seal pursuant to Article 78 (C):
- A Statutory Director;
- Group General Counsel;
- Group Company Secretary>
- Deputy Company Secretary; or
- Senior Assistant Company Secretary.
The following positions® are permitted to sign standard Post Office intellectual property
licensing letters’ (for this specified purpose only):
- Head of Brand
- Group Corporate Affairs, Brand and Communications Director
1 The Board authorised the Company Secretariat to keep a list of authorised signatories in its meeting on 22 January 2016 (see
minute reference 69 of 2016).
? This includes any persons holding this position in the interim.
3 These are executives reporting directly to the Group Chief Executive Officer (Strategic Executive Group) , other than executive
directors and excludes Personal, Executive Assistants or Team Supports who report directly to a Strategic Executive Group
member.
* Or positions equivalent to this. Authority is given to the role holder where job titles are modified or updated however the scope
of the role remains the same. The Company Secretary will determine if it is appropriate to update the authorised signatories list
following a change in job titles.
5 This includes any persons holding this position in the interim.
® Or positions equivalent to this.
7 Or where any amendments are made within the Post Office house position. This will be determined by the Legal team. Non-
standard licences and licences that require stronger/wider obligations or indemnities from Post Office, will go through the
contract approval process before signature.
Confidential
POL-BSFF-130-0000029_0248
POL00448861
POL00448861
@
The following position® is permitted to sign fraud recovery letters with a value up to
£250,000 (for this specified purpose only):
- Banking Director
The following positions? are permitted to sign IT Software Sales Orders subject to an
eCAF and up to the amount of £250,000 (for this specified purpose only):
- IT Vendor Manager - Software
The following positions are permitted to sign exit assistance notices and termination
letters (for this specified purpose only)*°:
- Procurement Director
8 Or positions equivalent to this. Authority is given to the role holder where job titles are modified or updated however the scope
of the role remains the same. The Company Secretary will determine if it is appropriate to update the authorised signatories list
following a change in job titles.
3 Or positions equivalent to this.
10 The termination of contracts, whereby exiting or ending the agreement does not trigger any liabilities nor additional costs, are
exempted from requiring an eCAF and may be signed by the Procurement Director. Termination outside of these parameters (for
example, where early exit fees apply) will be subject to the contract approval process.
5
Confidential
POL-BSFF-130-0000029_0249
POL00448861
POL00448861
@
Appendix 2 - Spend Approval Limits
Spend Approval Limits
The Board has delegated to the Group Chief Executive Officer (CEO) spend approval of
up to £5,000,000 and the Group CEO recommends to the Board the following standard
spend approval limits subject to applicable internal policies and processes'':
Job Title Spend Approval Limit
Group Chief Finance Officer (CFO) £4,000,000
Strategic Executive Group Member!? £2,000,000
Group General Counsel £2,000,000
Group Chief Retail Officer £2,000,000
Strategy and Transformation Director £2,000,000
Group Corporate Affairs, Brand and £2,000,000
Communications Director’?
Direct Reports to the Strategic Executive I £250,000
Group**
The Group CEO may sub-delegate up to his or her spend limit of £5,000,000 and
determine the conditions of that delegation. Such delegation must be provided to the
Group Company Secretary in writing.
The Group CFO and Strategic Executive members may delegate up to their £4,000,000
and £2,000,000 spend approval limits respectively, on a permanent or ad hoc basis, to
their direct reports or below, provided such delegation is provided to the Group
Company Secretary in writing. For the avoidance of doubt, direct reports to Strategic
Executive Group members automatically have a £250,000 delegation, unless the
Strategic Executive Group member advises the Company Secretariat otherwise?>.
11 OPEX spend may be approved in accordance with these levels. CAPEX spend requires prior approval from the Investment
Approvals and Delivery Group. The spend is measured over the life of the contract or project.
32 These are executives reporting directly to the Group Chief Executive Officer (Strategic Executive Group), other than the Group
Chief Financial Officer and excludes Personal, Executive Assistants or Team Supports who report directly to a Strategic Executive
Group member.
13 This includes positions equivalent to the role of the Group Corporate Affairs, Brand and Communications Director, and any
persons holding this position in the interim.
14 Please note that although the Group Chief Retail Officer, the Strategy and Transformation Director, and the Group Corporate
Affairs, Brand and Communications Director, are direct reports to a SEG member, they each have £2m delegated spend approval
limit as above.
35 This does not apply to Personal, Executive Assistants or Team Supports who report directly to a Strategic Executive Group
member.
Confidential
POL-BSFF-130-0000029_0250
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Sealings Report Meeting Date: I 25° March 2024
. Rubia Khanom, Company . Rachel Scarrabelotti, Company
Sarieke Secretariat Administrator Sponsors Secretary
Input Sought: Approval
The Directors are invited to consider the Register of Sealings and to approve the affixing of
the Common Seal of the Company to the documents set out against items numbered 2242 -
2247 inclusive in the Register of Sealings.
Executive Summary
For the Directors to resolve that the affixing of the Common Seal of the Company to the
documents set out against items numbered 2242 - 2247 inclusive in the Sealings Register are
hereby confirmed.
Strictly Confidential
POL-BSFF-130-0000029_0251
Date Created
15/03/2024
Post Office Limited
Register of Sealings
POL00448861
POL00448861
Company Number
2154540
Seal Number
/ File Ref.
Date of
Sealing
Date of
Authority
Description of Document
Persons Attesting
To Document
Destination of
Document
2242 / RX3
Land Registry
application
07/02/2024
07/02/2024
Land Registry form RX3 - Application to cancel a Restriction
placed on Holly House
The Street, Lamas, Norfolk, NR10 SAF, title Number NK200128.
Form RX4 (Seal No. 2223) previously executed in this regard
however Land Registry advised incorrect form - RX3 required.
The original restriction was placed on the Property at the
request of the Royal Mail Group Limited ("RMG") in an effort to
secure monies it understood were owed to Post Office Limited by
one of their postmasters, Siobhan Sayer, who is one of the
registered proprietors of the Property. Following the registration
of the restriction Ms Sayer pleaded guilty to one count of fraud
in relation to the apparent loss to Post Office of £18,997.00. This
conviction has now been overtumed by the appeal courts and
the sum of £18,997 is now not owed to Post Office or RMG. In
light of this, the registered restriction has no legal basis to be in
place and therefore needs to be withdrawn.
Alison Hoyland, Deputy
Company Secretary
Kombeh Secka, Legal
2243 / Deed of
Release
Surrender of
lease
2244 / Deed of I
07/02/2024
07/02/2024
Strictly Confidential
01/02/2024
07/02/2024
Deed of release of restrictive covenant relating to 131 Brent
Street, London NW4 4BY between Post Office Limited (No.
02154540) whose registered office is 100 Wood Street, London,
United Kingdom, EC2V 7ER (Covenantee) and Mohammad
Javanshir Harsini of 12 Colin Crescent, The Hyde, London, NW9
GEY (Covenantor). The Covenantee releases the Covenantor and
the Property from the Covenant (use the Property other than as
a post office together with retail use ancillary thereof) so that
from and including the date of this Deed the Covenant is
extinguished.
I DEED OF SURRENDER of a Lease of the whole of the premises
known as Admiral House, Thompson Street, Manchester M60
OAA between TS DEVELOPMENTS (MANCHESTER) LIMITED
incorporated in England and Wales with company registration
number 14201814 whose registered office is at 1st Floor NQ
Building, 47 Bengal Street, Manchester, M4 6BB (“Landlord”);
and POST OFFICE LIMITED incorporated in England and Wales
with company registration number 02154540 whose registered
office is at 100 Wood Street, London EC2V 7ER (“Tenant”). The
Landlord releases the Tenant from all the tenant covenants and
obligations contained in the Lease and from all liability for any
subsisting breach of them and such covenants and obligations
shall be deemed to have been released as at 10 November
2023.
Alison Hoyland, Deputy
Company Secretary
Alison Hoyland, Deputy
Company Secretary
Womble Bond Dickinson and
Karima Karger (Legal)
Karima Karger, Legal and
Womble Bond Dickinson
POL-BSFF-130-0000029_0252
POL00448861
POL00448861
Seal Number Date of
/ File Ref. Sealing
Date of
Authority
Description of Document
Persons Attesting
To Document
Destination of
Document
2245 / Land 22/02/2024
Registry - UN2
form
20/02/2024
Land Registry form UN2 - A Unilateral Notice in favour of POL in
relation to an interim charging order (dated 18.10.2012 Court
Ref: 2YL56075) was registered (23.10.2012) against a former
Postmaster’s property, 29 Orchard Grove, Shield Row, Stanley,
DH9 8NG, Title number DU318263. The Postmaster has repaid
the debt to which the notice relates and requested its removal.
UN2 form executed by POL, for submission to the Land Registry.
Rachel Scarrabelotti, Group
Company Secretary
HM Land Registry (Durham)
Office
2246/Lease I 28/02/2024
28/02/2024
Lease relating to Suite 2F, Atria Spa Road, Bolton, Greater
Manchester BL1 4AG between Bruntwood 2000 (NW Regen)
Limited (Company No. 06084210) whose registered office is at
Union, Albert Square, Manchester, England, M2 6LW (Landlord)
and Post Office Limited (Company No. 02154540) whose
registered office is at 100 Wood Street, London, United
Kingdom, EC2V 7ER (Tenant).
The lease will be for a term of 3 years commencing 13th
December 2023. Annual Rent is Thirty Eight Thousand Six
Hundred and Ten Pounds (£38,610.00) per annum exclusive of
VAT. The Annual Rent Commencement Date is the 14 March
2024, as there is a rent free period until that date.
Post Office Limited is also required to pay a service charge to
contribute to the cost of repair and services provided to the
building by the Landlord. The amount will be a fair proportion of
the total service charge expenditure at the building and
will be payable quarterly in advance. The service charge
expenditure is currently running at £6.99 per sq ft (£19,991.40
per annum). A new budget is set each April.
Alison Hoyland, Deputy
Company Secretary
Karima Karger (Legal) and
Womble Bond Dickinson
2247 / Seal
No. 2247
13/03/2024
Strictly Confidential
12/03/2024
Licence to underlet relating to Flat 10, The Posting House, Post
Office Avenue,
Southport, PR9 OUH between Post Office Limited (Landlord),
Kingscrown Properties
Limited (Company No. 03299740) whose registered office is
Suites 11-16 Prudential Buildings, 61 St Petersgate, Stockport,
Cheshire, United Kingdom, SK1 1DH (Tenant) and Stephen Alan
Maloney and Liam Maloney of Flat 10, The Posting House, Post
Office Avenue, Southport, PR9 OUH (Undertenant).
This Licence is supplemental and collateral to the Lease and
Underlease. Post Office Ltd is entitled to the immediate
reversion to the Lease and the residue of the term
granted by the Lease is vested in the Tenant. The Tenant
intends to underlet part of the property demised by the Lease
and, under the terms of the Lease, requires the consent of the
Landlord to grant the Underlease.
The Undertenant covenants with the Landlord:
Alison Hoyland, Deputy
Company Secretary
Karima Karger, Legal and
Womble Bond Dickinson
POL-BSFF-130-0000029_0253
POL00448861
POL00448861
Seal Number Date of
/ File Ref.
Date of
Authority
Description of Document
Persons Attesting
To Document
Destination of
Document
(a) that throughout the Liability Period it will:
(i) pay the rents reserved by and observe and perform the
tenant covenants of the
Underlease and not suffer, permit or omit to do anything at or in
relation to the
Underlease Property or the Underlease that would or might
constitute a breach of
those tenant covenants; and
(ji) observe and perform the tenant covenants of the Lease
(insofar as they relate to
the Underlease Property and any rights granted to the
Undertenant), except for the
covenant to pay the rents reserved by the Lease, and not do,
suffer, permit or omit
to do any act or thing at or in relation to the Underlease
Property that would or
might cause the Tenant to be in breach of any of the tenant
covenants of the
Lease.
Strictly Confidential
POL-BSFF-130-0000029_0254
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Sekes Nomination Committee " . th
Title: Membership Meeting Date: I 25'* March 2024
% Marie Molloy, Senior Assistant 35 Ben Tidswell, Senior
bi Company Secretary Spenser: Independent Director
Input Sought: Decision
The Board is asked to approve the appointment of Amanda Burton and Simon Jeffreys as
members of the POL Nominations Committee with the appointments effective 25 March 2024.
Report
1.
Following the departure of the Chair in January 2024, the Nominations Committee is
currently comprised of 3 members, being Ben Tidswell, Senior Independent Director,
Lorna Gratton, Shareholder representative, and Saf Ismail, a Postmaster Non-Executive
Director. The UK Corporate Governance Code 2018 with which POL seeks to comply,
provides that a majority of members of the Nominations Committee should be
independent non-executive directors (provision 17) and this is reflected in paragraph 36
of the Nominations Committee’s Terms of Reference. With neither Lorna Gratton nor Saf
Ismail considered as independent Non-Executive Directors under the UK Corporate
Governance Code 2018, in order to align with the provisions of the UK Corporate
Governance Code 2018 and the Nominations Committee’s Terms of Reference, it is
proposed that Amanda Burton and Simon Jeffreys join the Nominations Committee as
members. The Board should also note that Ben Tidswell is due to step down from the POL
Board and his committee memberships circa 26 July 2024, leaving a vacancy on the
Nominations Committee. The appointment of Amanda Burton and Simon Jeffreys to the
Nominations Committee would allow a period for Amanda and Simon to familiarise
themselves with the work of the Committee ahead of Ben Tidswell’s departure and provide
some continuity of membership during this time.
2. Amanda Burton commenced as a Non-Executive Director of POL in April 2023. Amanda is
currently Chair of the Remuneration Committee.
3. Simon Jeffreys commenced as a Non-Executive Director of POL in March 2023. Simon is
currently Chair of the Audit, Risk and Compliance Committee.
1
Confidential
POL-BSFF-130-0000029_0255
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Future Meeting Dates Meeting Date: I 25" March 2024
Rubia Khanom, Company Rachel Scarrabelotti, Company
Secretariat Administrator Secretary
Author: Sponsor:
Input Sought: Noting
The Directors are requested to note the future meetings dates scheduled in respect of Post
Office Limited Board and Committee meetings.
2024
Date Time Meeting
Tuesday 19 March 2024 I 11:00 - 12:00 I Additional Nominations
Committee
Wednesday 20 March 2024 I 08:30- 10:30 I Remediation Committee’
Wednesday 20 March 2024} 15:00- 18:00 I ARC
Monday 25 March 2024} 12:15 - 17:30 I Board
Wednesday 24 April 2024 I 08:30 - 10:30 I Remediation Committee
Thursday 16 May 2024 I 14:00 - 16:00 I Investment Committee
Tuesday 21 May 2024 I 09:00- 12:00 I ARC
Wednesday 29 May 2024 I 08:30- 10:30 I Remediation Committee
Tuesday 04 June 2024 I 09:00 - 09:30 I Nominations Committee
Tuesday 04 June 2024 I 09:30- 11:00 I Remuneration Committee
Tuesday 04 June 2024] 11:15- 17:00 I Board
Wednesday 12 June 2024 I 08:30- 10:30 I Remediation Committee
Monday 01 July 2024I 14:00- 17:00 I ARC
Tuesday 09 July 2024 I 09:00 - 14:00 I Board
Tuesday 09 July 2024 I 14:30- 18:00 I Board Strategy Away Day - 1
Wednesday 10 July 2024 I 08:30- 17:30 I Board Strategy Away Day - 2
Wednesday 17 July 2024 I 08:30 - 10:30 I Remediation Committee
Tuesday 23 July 2024 I 14:00- 16:00 I Remuneration Committee
Wednesday 21 August 2024 I 08:30- 10:30 I Remediation Committee
1 The Remediation Committee meetings will be Monthly from January 2024 onwards rather than fortnightly.
2 As agreed, the cadence of RemCo meetings is being changed and being de-coupled from Board meeting scheduling and will
now be aligned to the unique activities of RemCo. Moved from 24 September 2024.
Strictly Confidential 1
POL-BSFF-130-0000029_0256
POL00448861
POL00448861
Tuesday 17 September 2024 I 13:00- 15:00 I Investment Committee
Wednesday 18 September 2024 I 08:30- 10:30 I Remediation Committee
Wednesday 18 September 2024I 14:00- 17:00 I ARC
Tuesday 24 September 2024} 10:00- 11:00 I Nominations Committee
Tuesday 24 September 2024 I 11:15- 17:00 I Board
Wednesday 16 October 2024 I 08:30 - 10:30 I Remediation Committee
Tuesday 29 October 2024 I 09:00- 17:00 I Board
Wednesday 06 November 2024 I 10:00 - 12:00 I Remuneration Committee?
Wednesday 13 November 2024 I 08:30 - 10:30 I Remediation Committee
Thursday 14 November 2024I 14:00- 17:00 I ARC
Tuesday 26 November 2024 I 10:00- 11:00 I Nominations Committee
Tuesday 26 November 2024] 11:15- 17:30 I Board
Tuesday 10 December 2024 I 10:00- 12:00 I Investment Committee
Wednesday 11 December 2024 I 08:30 - 10:30 I Remediation Committee
2025
Date Time Meeting
Wednesday 22 January 2025] 08:30 - 10:30 I Remediation Committee
Monday 27 January 2025 I 14:00- 17:00 I ARC
Tuesday 28 January 2025 I 09:00- 17:00 I Board
Monday 10 February 2025] 12:00 - 14:00 I Investment Committee
Wednesday 19 February 2025] 08:30- 10:30 I Remediation Committee
Tuesday 25 February 2025 I 09:00- 12:00 I Board
Tuesday 25 February 2025 I 12:30- 13:00 I Nominations Committee
Tuesday 25 February 2025 I 13:00 - 14:30 I Remuneration Committee
Wednesday 19 March 2025] 08:30 - 10:30 I Remediation Committee
Tuesday 25 March 2025 I 09:00- 12:00 I ARC
Tuesday 25 March 2025] 12:15- 17:30 I Board
3 As agreed, the cadence of RemCo meetings is being changed and being de-coupled from Board meeting scheduling and will
now be aligned to the unique activities of RemCo. Moved from 26 November 2024.
Strictly Confidential
POL-BSFF-130-0000029_0257
POL00448861
POL00448861
Post Office Limited
Board Governance Map & Forward Plan 2024/25
STANDING ITEMS FOR PRESENTATION
Welcome and Conflicts of Interest I Companies Act 2006 5.177 chair Noting x x x x x x x x x
Inquiry Undertakings WA Company Secretary Noting x x x x x x x x x
Minutes from previous meeting Terms of Reference I Company Secretary I Approvel x % Wa x x x x Wa x
Matters Arising WA Company Secretary Noting x x NA x x x x NA x
Committee reports (verbal) Terms of Reference I — Commitee chars Noting x x NA x x x x NA x
0 report Ter of Reference 0 Noting & deeion I ——X x Wa x x x x na x
Financial Pertormance Report
eee Pastore Rag Terms of Reference cro Noting &dscussionI x x Na x x x x Na x
Wrongful Trading Assessment I Rvest fom Chatman cro noting discussion] x x WA x x x x WA x
ine strategic procurement i scheduled
x scuosion Item periodially and thle erm
contract and Sourcing Strategy seen
curren s the Director of Procurement
Pacers acai apendapprovas I emsotRetrnce I seeaveTeam I Wotna/Aepovel I x x a x IEPrgeatemene) x NA * eee reer
Pree) owners accompany te Procurement lector
nen they are seeking contac pprovel
STANDING ITEMS FOR NOTING
scheduled as diacussion item bi-annully
or annually, Including violence and
ealth & Safety Report Terms of Reference cro noting x x a x x x x NA x Ifobteries reporting. The Director of Health
ana Safety, Environment and Business
[Continuity attend for theae tems
foard Paper - 24/01/2022 _ Senior Operational 7/40/2023: neta Performance Dashboard sent
Retail Performance Dashboard onfrming ture I Improvement Manager & I Noting s x 3 x : x ss x fornoting ony in anuary, March uly and
submissions Chit Reta oficer cover
arava Madenov (Group
POL Board Action = 08 a Tecnology Dashboerd wl be presented
lrechnology Dashboard we Sees “°° [Ei Datatinemeten I etme x x NA x x x x NA x [ATachnslony Dashboard wit be ores
frst
Rebuiding Tues Remediation Us I sermeataaeence I PU AMEHnaUly EecveI aang I notin I wa . « wa .
° ponsor “ustice
program)
Rebuaig Tare PBT Tory Termsotaaeeee I RTT ERE vain " Y TA
[Governance emai Forward Pan,
Sealings, Meeting Dates, Forward I Terms.ofReference I Company Secretary noting x x Na x x x x NA x
Panne
{YCLTCAL TTENS: [annual unless otherwiae stated Ta notes column)
Heoritaliee X (including Ja tonal Board in February 2025 to discuss the
Budget and performance against na review of he 2025/28 Budget. Final drat
strategic plan Terma Ralecence oe marae . eperove in March for submission tothe
maeund IShareholder.
Approval
Toprol or
frnree-year plan (to te in with
t-voar plan (ti in with Terms of Reference cro stan oe scheduled
rv yearend 31 March, deadine for ling 31
Jannat Report and Accounts Terms ofReference I ARC Chal/ CFO Approval [December ba muss hat be I In Feriament
POL-BSFF-130-0000029_0258
POL00448861
POL00448861
‘anette Director in a Ihas to be laid in Parliament.
ean nano Gara at
somes
sSisenerer pret II samaotnatene I consnySerny I A ;
cet
pceenehmmmennneen ‘eneetiieeen bemand ny recommended I 2024 to June progress) ' Iwith the UK Corporate Governance Code and
and olicy Compliance I poorovat-no I trot merch
Pid eh
im ey — meee
‘Communications DirectorI PT IGE and Board instead. Annual Item.
[Communications and stakeholder I terms of Reference trend and noting lo be scheduled
FEUD
POL-BSFF-130-0000029_0259
POL00448861
POL00448861
Jaction: BT queried how accurate the costs
[estimated for cash counts in branch atthe time
lof NBIT migration were and what analysis hed
lbeen undertaken. ZM advised that further
Zdravko Mladenov (Group [analysis could be undertaken,
bie meatal yom
FL Board action - 11 say] Caf ital norman I es rene f on en en pre
208, fer Melani Pa fsbes mated sone ee oer
ints Ss ving tenrs Une rnp
Parecta} that, changing the due date
[cash counts in Branch
ided
in December 2024 on cash counts f/ when they
Ihave been completed,
Branch Layouts/ Plans for
Ideveloping a central branch
repository
evew of fusiness Performance Metrics and
Board strategy Away Day -I"cameron (Group CFO) Pisin responce othe Soar’ Interest in how
Next Steps Paper from I TimMetnnes (Statesy I Discussion x lwe measure performance outside profitability,
26 September 2028 Bic mercial opportnibes a tam Products,
Martin Roberts (Chief
Retail Officer), Owen Discussion x
Woodley (Deputy CEO)
POL Board Action - 30
January 2024
Review of Business Performance
Metrics and KPIs
Email from Samenthe I Chris Brocklesby (Chief
Approval x
Full Business case I Séenn on 26/02/2024 I Transformation Officer)
Additional Drawdown
[Cyber Security - Business Case and I Email from Samantha I Chris Brocklesby (Che? I aryova 3
Iapproach Swann on 26/02/2024 _I Transformation Officer) nat
Back office and data (Data
Enablement Programme =
Dravedovn, BackOffice Operational I £maifrom Samantha I Chris Brockesby (chef I poproval x
Modernisation = Sourcing Strategy &
Drawdown)
1707/2023: 2M undertook to come back with»
plan in relation to this option. NR asked that th
process be tested in Q3
Al option wil be considered a5 we
Chri Brockleaby (Chet
lrransforming Technology: Horizon I POL Sosrd Acton «14 ulyI Treneformation Ofer), Ig. vay x Sean etans eared Beto Werner sing
Hiebmee ber eon rove lon ur approsen to ctaver yet. ion wl
Ibe closed on the understanding that the
lapproach to NBIT deployment will
presented to Board in late 2025 and this,
Iwill be included in the Board Forward
Planner.
lBarbare Brannon: This wes superceded by the
verbal update provided to Board after Christmas,
(Programme Director)
Request rom chaieman - [Nei o'utvan(MansgingI [ut wos left x on open item for ater updete.
Mall trteay implementation/ post I" Ccmmeraal wing I Director ParcesandI Oiscssin IX (TBC) There ae sever! papers due to got Board
-_ activity at Board Mails) Jwhen we can find availability and Mails is @
significant element to each, So 1 would
Jrecommend thet we clase this item for now.
Eat ro Saban —I Wo Karey ro
rmorte toparanes I NPactietrecore I — pacmon/ [x (tre!omt
Benking Framework 4 ‘and Alison Hoyland Banking, Payments and Approval: ‘Sign Off}
ner feaien mam mee ates
Scottish Notes - Progress Update ava Noting x (TBC) later date in April 2024 for SEG/ Retail
ree
Distal sreteny POU ganda 30 I Oven Wendy (OOD I ohcenn x
POL-BSFF-130-0000029_0260
POL00448861
X (20mins -
Nicola Stevens (Hes of
IWHS Contract Fr ryounoes "I Partnerships) and Owen Approval omen
Woodley (Deputy CEO} press some)
‘Martin Roberts (Chief [an outline of the known SME opportunity for POL
Retail Officer), Owen X (Moved Jscrose product areas, and the planned activities
Board strategy Away Day -I fal
ley (Deputy CEO) from March to build strategy for improving our SME
[SME opportunity for POL Next steps Paper from I “sng garbara Brannon I 4880 I 2024 to June proposition by the Spring. This builds on
= (Product Portfolio 2028) Jdiscussions in July on how we can de more with
Direewr mall business customers.
thos Programme (culture Email fom Helen Bussey I Owen Woodley, Deputy
ea pc Sneken pees Discussion x Update scheduled fr 04 June 2024
Email rom Tim Perkins on I Tim Perkins, Programme
2024 staff Survey result discussion tonnes Tin Parking, Programme I piscusion x
Postmaster Back Office Martin Edwards (Network I Approval -20mins
Email rom chrysanthy
Remuneration/ operational ‘Strategy & Delivery Iat GE and 15mins at
[Remuneration opera Prspinis on 24/11/2023 ay Be
Icrant Thornton governance review & I Emsil from Chrysenthy te For approval - 15
next steps Prapiniz on 12/12/2023 mine
Sar ory (Grou Legal X(hoved suazz0as ohn cating new pale
Disclosure of Evidence to Support I Board Action - 31 October I Director) John arte I ga, I from March mereporoeei bing clean soe
Police Investigations 2023 (Head of Assurance & Pre 2024 to June adeacerseichea inate prance red
camps Investors) 2028) sere no
[Scheduled for 3une 2024.
[Te support our implementation ofa framework to
meet our obligations under TCFO (Climate risk
land impacts on our financial diclosures) and be
Mertin Hopcrof (Director compliant reporting to this year's ARA, we need
Session for Board on TCFD (Task
Email from Martin HoperoftI_of Health & Safety, to present to the Board the following session,
eset eaiG wteretitnl Himanctal on 16/02/2028" [Environment and BusinessI 'SUsSION = 45 mins) X with support from Inspired, aur Sr party
Continuity) provider
[Fhe purpose wil be to build capacity with the
Bosra to enable them to consider ciate-related
Issues better when reviewing the business
strategy and operations.
POL-BSFF-130-0000029_0261
Technology
Dashboard
Mar 2024
POST
OFFICE
POL00448861
POL00448861
POL-BSFF-130-0000029_0262
IT Operations and People Topics
IT operations — branch
‘Comments: 4 branch impacting M's in February. 2 related to network connectivity issues (Talk Talk and 4G provider)
and the final 2 of these were due to third party technology failures (Scottish Power and Allied Irish bank), We anticipated
‘a quiet month on volumes compared to January and subsequently managed to resolve more incidents than we opened.
Branch-down at the start of day has had a significant improvement and as of 29th Feb we had only 2 branches unable to
trade at the start of the day. 14 outreach locations were unable to trade for over a week, (similar to January) and primary
factor was that outreaches can only be repaired on limited days for limited hours. We had 5 complaints for February, a
reduction of 2 from January.
12 month
Nov-23 Dec-23 © Jan-24—Feb-24
# major IT branch incidents a Aa 44
WiRaised MiResoived —_— — — a
# IT branch incidents (non-major), (k) 3333 3.637
Meised _ MlResohed I
% Horizon uptime 100% 100% 100% 100% 90%
(New definition used from Sep-23 onwards) = = = = —_
# average branches down (start of day) 10 10 13 8
= = = —
# branches down for over a week 10 15 14 14 10
— = = = —
# formal complaints (closed incidents 8 8 7 6 8
for which Postmaster wants to raise a
formal complaint on its handling) II I_I I_I z I_I
IT operations ~ colleague and back office
‘Comments: POL Tech has a backlog on colleague back-office incidents going into March, We will work with our
resolving teams and colleagues to resolve this backlog, The content of these incidents is largely related to long term,
minor impact incidents,
12 month
Nov-23 Dec-23 Jan-24 average
# major colleague IT incidents oo oo 22 Ae
Raised MiResolved — pes
# IT colleague incidents (non-major), (k)
Raised Resolved
POL00448861
POL00448861
Comments: Note that the barometer is currently in development due to a reduction in questions and new data will be
added next month, Please find historical data below.
100% 3246 2%62% 63% 66% 57% 65% 66% 64%
Workforce satisfaction trend over se
time (score calculated from bimonthly 50% *
Technology barometer)
0%
PUVA SRKKSSRRRK SRE
SSERESERESS TSS ERS
# perm / FTC vacancies 42 month
Wopent Filled Nov-23 Dec-23 Jan-24 Feb-24 average
iG. 2, Pon 7 15
Lk m= = kk
‘% number of Contractors
{including NBIT contractors)
<_ « se
% YTD training budget spent note
that this figure can go up and down as
budget is released throughout the year) 25% 21% &
1 Open vacancies averages @-month average
POL-BSFF-130-0000029_0263
POL00448861
POL00448861
Cybersecurity, Technology Risks and Horizon Change and Defect Management
Cybersecurity
‘Comments: This month all Cyber incidents were recognised as single user alerts, these were investigated and resolved with no risk
identified to the business, The SPM AWS Vulnerabilties Prod account has increased due to the use of an insecure image which was
‘automatically replicated to four environments. At the time implementation of the image occurred, there was no tooling in place to scan prior
to deployment. On the assumption the current POC for security tooling goes lve this will prevent further reoccurrences in the future.
Nov-23 _Dev.23 Jan-24 Feb-2412-month avg
# high security incidents 2 10 " 7
Mooleague "Branch mo Oe
# open pen test findings 3 3 a2 42 46 Ho
Critical High I cu 1 om —_=
# AWS vulnerabilities (SPM — Prod)* 4027 2492 2199 2768 3083
critical high Shams ar a O- 169 ow
# AWS vulnerabilities (BAU — Prod)? 7 64 7 78 9 367 6 323 47 525
Critical High -= - _ _
‘Average ie 8 mont average 2averag
‘Comments: intermediate risk position remains stable. A review of risks should be carried out following the change
spend review on the 25th March
9 month
Nov-23 Dec-23 Jan-24 Feb-24 average
‘# intermediate Technology risks.
& Very high
BH tC) 0 0 tC)
= B 88a
) Medium
co = ote = Bl
Horizon change and defect management
‘Comments: There does not appear to be any specific activity which accounts for the high volume of APADG / reference data changes implemented. The increase to the FJ implemented changes to Horizon volume is due to an inorease of Project change,
particularly the Data Centre Fortification Project. This month we saw a major increase in remote aocess reports due to four main reasons; 37 reports of investigating for payment issues at the branch counter after Worldline outages . 31 Transaction
investigations queried by Post masters over misaligned data from weekly financial reports.. 21 long standing issues with reference data, where data is mismatched from POL scripts versus what FJ sends to the counter. 18 EOL technology issues from
various areas. Defect management saw 1 potential financial impact closed. This was from a communication loss both short and long term that caused issues with Pre Order Bureau transactions within branch. This has now closed due to the deployment of
‘an APADC soript that now allows transactions to handle errors correctly during communication failure.
42 month
12 month 12 month
Nov-23 Dec-23 Jan-24 Feb-24 average Nov-23 Dec-23 Jan.23 Feb-24 average Nov-23 Dec-23 Jan-24 Feb-24 average
# changes made to reference ra #uses of Fu’s account for ops A #defects Potential fin. impact 01, orate
data and APADC (Automated °22 262, 308 288 brocesses (privileged access) lll eee Hi Raised 7
Payments Advanced Data = isis Resolved No fin. impact Fey 32 2
eaeire) #uses of emergency account —
by Fu for system changes’ a ne A %_ Criticality score >30/58 2 0 1
=
#FJ implemented platform 5 at 88 13°78 # FJ remote access 213 g t I Under investigation
changes? = pay = -= pa investigations into issues with ‘44 12 98 102 3 3 2 Fix being developed
aparticular counter /branch = mmm 55 Fix awaiting deploy
E92 Mioonre process
1 Number of uses of he brook glass" account used when Fusu are dong changes / updates /mantonanco fo the sytem; sometimes these ar out of hours (e.g, he regular exoutr sot hit) 2 Average s 8 mont average
POL-BSFF-130-0000029_0264
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Retail Performance Dashboard Meeting Date: I 25" March 2024
Tracy Marshall, Retail Engagement
mh Director Saataar Martin Roberts, Group Chief
. Mel Park, Central Operations Lis . Retail Officer
Director
Input Sought: Noting
Board is requested to note the Retail Performance Dashboard containing performance data for
Period 11 (to 25" February 2024).
Executive Summary
From a governance perspective it is important that our Strategic Executive Group and Post
Office Board have oversight of our performance and, crucially, are aware of any specific areas
requiring further work to enhance performance, as well as improvements in train or planned,
to remediate.
The purpose of this report is to provide a summary of the key points to note regarding
performance in P11, with a primary focus on those areas with a ‘red’ RAG status and
requiring further improvement. The report details improvements underway or planned, with
Progress against delivery of such improvements monitored on an ongoing basis by the Retail
team and the Retail Committee. Against each improvement opportunity or action, an
accountable owner is identified who will drive each activity forward to completion, as well as a
planned completion date.
The key metrics are shown in table format, with current performance, YTD average and a
year-on-year comparison, and this can be seen in Appendix One with corresponding planned
improvements shown in Appendix Two. The Retail Performance dashboard itself, containing
detailed information for each of the policy areas, can be found in the reading room.
The dashboard for P11 and associated improvement actions has already been reviewed by the
Retail Committee.
Report
Onboarding
1. Whilst postmaster satisfaction with the Onboarding journey continues to perform
positively at 83%, we have seen an increase in the average time taken to onboard over
the past two months and this now stands at 138 days as at p11. This increase is largely
driven by a delay in potential new postmasters submitting their initial financial
assessment (For the past two months this has seen an increase of 24 days) with no
specific reason being highlighted. Regular support at this stage continues to be offered
however the feedback received from potential new postmasters is that they are simply
spending more time taking advice and considering whether they wish to submit their
application.
Confidential
POL-BSFF-130-0000029_0265
POL00448861
POL00448861
@
2. There has been a slight increase in the time taken to post agreements out after
receiving postmaster acceptances which has been due to the inexperience of new team
members. Training has now taken place to address this, and we expect this to see a
reduction here of around 5 days from P12 onwards.
Training
3. Classroom utilisation for refresher courses continues to struggle and was down again
this month to 41.4%, lower than the year to date average of 47.4% and significantly
down on last year’s P11 figure which stood at 57%. High cancellation rates continue to
be the key driver here with 86 cancellations alone in P11 and often within one week of
course commencement, making it very difficult to re-fill spaces at such short notice.
4. Those working in our Strategic Partner branches such as One Stop are currently
scheduled to attend refresher courses in P12 to recap on back-office processes
specifically and assuming that attendances are not cancelled, this should improve our
position next month.
Cash Management
5. 40 trial branches now have Glory note counters and have been trained on their use.
Early KPI measures from the first few weeks of the trial are positive with the pilot
branches showing a 90% reduction in counterfeit notes versus the control group
showing a 60% reduction.
6. A paper will be presented to IADG on Tuesday 12'" March requesting funding approval to
purchase a further 2,782 note counters. There is a significant delivery lead time for
these note counters hence the timing of request for further funding prior to completion
of the 40 branch note counter trial.
7. The identification of counterfeit notes is only one of the benefits of note counters - the
others being a significant time saving when managing customer deposits and performing
cash back-office processes, more accurate cash counts reducing the risk of loss for both
POL, Postmasters and Strategic Partners and significant leverage heading into the
Banking Framework 4 negotiation.
8. Cash declarations are an important part of assuring the accuracy of cash in branches
and as such this has been an important factor in prioritising operational excellence visits
and Network Monitoring activity. At 90.7% P11 has seen the highest ever percentage of
successful cash declarations suggesting this focus is starting to have an impact
Transaction Corrections, Discrepancies and Postmaster Accounts and Accounting
Dispute Resolution
9. Metrics reported on the dashboard under the headings of i) Transaction Corrections), ii)
Discrepancies and Postmaster accounts and iii) Accounting Dispute Resolution have been
consistently reported as Red or Amber over recent months.
er postmaster balances reduced in P11 by
_} former). Additionally, a one-off increase of
Confidential
POL-BSFF-130-0000029_0266
POL00448861
POL00448861
@
‘was booked to align provisioning policy for multiples/Strategic to that of
current Postmasters. Total Postmaster account provision increase of
11. P11 Postmaster loss P&L impact of b Bs
adverse, driven by one large postmaster loss added in P7 of! charge in
P11 relating to aligning the provisioning policy for multiples and strategic partners as
noted above. Excluding one-off losses, there is favourable position on
postmaster account losses, reflecting I the increased focus on Operational Excellence
across Retail. This is offset by total imeevan; adverse variance spread across increased
missing cheques, cash assurance, cou ‘erfeit notes and lower customer releases.
12. The Lottery Exit has impacted the volume of Transaction Corrections (TCs) issued in P11
with circa 5,000 (nil value) TCs issued to finalise lottery exit. As exit completes in all
branches, we expect the underlying level of TCs to decrease below that prior to exit.
13. As highlighted earlier, providing our highest cash transacting branches with note
counters and thus driving the accuracy of cash pouch remittances back to the cash
centre will also have a significant impact on reducing the number of transaction
corrections being issued to correct cash pouch errors.
14. Whilst the overall number of reported discrepancies remained relatively static, P11 has
seen the highest number reported via the ‘review or dispute’ function all year (858 -
average YTD is 630 for a 4-week period). This is likely to be related to the ongoing
media attention although Lottery exit will also have had a lesser impact on discrepancies
referred through this channel.
15. The increased use of the ‘review or dispute’ button has in turn impacted the number of
cases flowing through to the Network Support and Resolution team (918 in P11 versus a
year-to-date average of 445) for review. This increase has also been driven by the new
Process to move discrepancies more quickly through the triage process allowing an earlier
investigation and improved resolution outcome. The new process will also allow much
more detailed reporting of discrepancies, where they are in the review process and what
the ultimate outcomes might be.
Postmaster Contracts
16. There are 13 open suspension cases at present with the average duration currently
standing at 347 days, significantly higher than the YTD average of 258 and above the
aspirational target of 90 days that we have set. It should be noted however that this
average duration is driven by four branches where the postmasters have been charged
with criminal offences directly related to the operation of a Post Office branch. If we
remove these branches from the data, the average length of open suspensions would be
significantly reduced to 127 days, well below the year-to-date average.
Next Steps
17. We will continue to submit the dashboard for SEG noting each month.
Confidential
POL-BSFF-130-0000029_0267
@
Appendices
Appendix 1 - Retail Performance Dashboard Summary Period 11
Metric
Onboarding satisfaction
Onboarding duration
Confidence after classroom training
Branches engaging with training in the previous 12 mnths
% capacity filled in refresher training sessions
Number of complaints received
% resolved within 10 days - 82%
Volume of outward cash discrepancies
Volume of inward surpluses
Cash Management Volume of inward shortages
Volume of inward counterfeit notes
% of pouches containing discrepancies
% of successful cash declarations
Postmaster Complaints:
Volume of total transaction corrections
Total value of transaction corrections
Tranacton Corrections 4 of cash remittance transaction comectons 6139°
Volume of aged open items. 1843
Volume of total reported discrepancies 54a
Discrepancies and Value of total reported discrepancies (not net) £4.3m*
Postmaster Accounts Volume of Review or Dispute discrepancies ima <<
Value of Review or Dispute discrepancies (not net) £2.7m*
Increase in amount provisioned for postmaster balances —— £0.40m
Volume of discrepancy cases received for investigation La 445°
Volume of discrepancy cases completed —
Accounting Dispute Open investigations by period {including over SLA)
% of discrepancy cases completed within SLA (20 days)
‘Open Postmaster Account Support (PAS}cases
9 of open pre- investigation PAST cases over 12 wk SLA = z ae
Network Monitoring’ Number of Network Monitoring cases 162°
Branch Assurance Support Number of branch assurance activities 40"
Number of suspensions 1 D
‘Average suspension duration (cases closed this period) 200 (closed cases since P12)
‘Average suspension duration (open cases) 271
Contracts imber of terminations 1 Fa
Decision reviews 1 t
9% Decision reviews upheld (cumulative) 100% 95%
* This data is adjusted to reflect either 4- or 5-week periods
Arrows show performance against last period
Confidential
POL00448861
POL00448861
yd to PIL
150 days
NA
57%
92%
15
3625
1049
8.5%
89.2%
11761
£8.69m
2640
5015
£5.6m
747
£36m
-£0.5m
371
447
614
2700
POL-BSFF-130-0000029_0268
POL00448861
POL00448861
Appendix 2 - Summary of the key improvements planned
improvements plant
Theincreasein Onboring Draton is lagey vn by» delay potential new Inprogress Apri'2024 Tracy
past to months this has Marshall
Tr ee coaes aL aoa as acc Comme bebe oe Regular support at
Postmaster Onboarding si toe condos wb er Tarn Down ag une tm ean pet
Onboarding out after ‘Guo to new starter si
taining has taken place to address this, We expect this to reduce by 5 days from P12
onwards
+ Identity stakeholders outside of the RM/AM line in regular contact with branches and in Sight delay January 2024 Tracy
‘a position to promote training ~ Awareness sessions with BSC agreed for 21% March. ut due to Marshall
Network Monitoring have also agreed to attend. Sessions willcover the content of the be
Cer aninm* 2° tramng offer. how branches can access the content and how intemal teams can suppert compete in
" ‘with promotion. Spin of sessions covering selected aspects of training (e.g raising Maren
Intervention requests] willbe set up and agreed in due course
Postenester + Development of a report to identity the origin of classroom referrals which can be split Orginal December_——Tracy
‘Training ‘between those generated internally by the training team and those within the Retail acton 2023 Marsha
Une 2 hereon of te report pacing Sate Pater anon tera from complete
se eapacty filed independent ‘snow ‘New report to be by
‘he Regional vung Laade va Regal Manager meeonps Wl lnve scion pen nl!” farhar
aes souahsed report
iterations
‘underway
Volume of inward * Note counters- Early indications from the note countee tral show a 2896 reduction in cash In progress May 2024 Mel Park
‘pouch errors <£10 (no pict control group 10% reduction) and cash transaction correction
Cash shortages ‘eduction of 2% vs # 1506 increases the conta group
Management = Percentage of ‘+ Cash Declarations ~ P11 sees the highest ever percentage of successful cash declarations in progress. May 2024 Mel Park.
successful cash ‘suggestng the conversations being carned out during the operational excellence vist are
declarations starting to have an impact
+ Note counters ~ Eat ndicabons fom the note counter tal show a reducton in cash Ongoing une 2024 Mel Park
‘transaction correction reduction of 2% ws a 15% increase inthe control group. Whilst not a
_sgpticant reduction we expect a greater impact next period
‘+ Lottery Ext ~ the volume of TC's has been impacted by Sk TCs issued to finalise lottery exit (no Ongoing Apri! 2024 «Mel Park.
Volume and value value). As ext completes in all branches we expect the underlying level of TC's to decrease
‘of total transaction HW at Bor town
‘corrections.
Plow hela lnal celeb Paedp bmanrabarsbedareged Tea eentl male
ae a ‘understand the requirements for the BAU team, Full roll out wil follow,
2 Secs ot plot Ths wl vga agus te lack of ord en ck ching tat odes 8s
Corrections «a current business risk, as well as the proactive monitoring already carried out by the Network
Reconcihation Team.
+ Review of Processes — The process review continues, with 43 out of 50 process maps reviewed in March 2028 Mel Park.
and approved. ready for traning, A delay has occurred due to resource constraints but the progress,
remaining 7 processes ace due for review by the end of May. but
Volume of aged delayed to
items: May
+ Lottery focus - Action plans to resolve the aged items, specifically addressing remaining lottery In progress July 2024 Mel Park
‘era, are conta to improve the open poution
Continued on next page
Confidential
POL-BSFF-130-0000029_0269
POL00448861
POL00448861
Metric Improvements planned or Status I Planned I Owner
completion
date
‘Volume of totat ‘Plan to review root causes with the business ~ There san intention to enhance work a I in May 2024 Mel Park
reported ‘sssrance, verughe and rect cause analysis under anew (tl tbe approved) tangetopersting progress {subject 0
discrepancies model, change)
Discrepancies + Funding to support further how a is ts Awating March 2024 IT
Pietsch {swatting approval as part of the busgedng process. Once the meine wall be wpdate
Reounee Volume of Review
or Dispute + Improved Reporting - MS Dynamics changes are row Ive to enable the autocreation of mean, in ‘Apet2024 Mal Park
discrepancies Including accurate trans! deta tlowag a Revew of Dispute button The pat step isto rebud progress
“Gashboards and elated eperting
+ Strategie Partner Process Seon Werboys met with Christie Heaton on 6 February 19 n January Mel Pack
terre tert eps to eploy plot to the ine enceocment to ncuse all sategie pares progress 2024
Volume of Strategie Parners are very supportive and this process wil be emplemensed subj the
pee discrepancies appecsal of ena riource
Resolution ioteas + Operana xctene Programme: Ao te aces being deere is regrmine in March 2025 Mel Park
‘of an overat of which
Saco breipeoes Program often cuter npr S80 oe oper boo
+ Work with Branch Assurance to increase support reach - All processes were agreed n March Mel Park
and documented. but further work is required on trantiating the procestes into progress 2024
Network Number of Network operational gues for the team to folow. Theze are already wel progressed and are
Monitoring Monitoring cases expected to be finalized, signed off and communicated by the end of March thas been delayed
‘trom February)
+ Further analysis to be carried out on correlation between suspension duration and reason - in Ape Tracy
Initial analysis suggests that there are ificutes in arranging meetings with postmasters- progress 2024 Marshal
beth rom the postmaster and Post Ofc perpactve Furter works needed enfemaking but
the positon on attempts to arrange a postmaster. Gi
trated bt aed ereeng trough ema poremanc end wi av rena ecosnng wi ha
ESP. Completion pushed back to the end of April rom January) as NFSP meeting stilt be
arranged
hs + Recruitment of backfil position - Interviews have now taken place and offer made toan in Janusey Tracy
siabsah external candidate (which has been accepted). Onboarding processes now being folowes progress 2024 Marshall
Coatracee! Suspension wih the am thatthe appontmant wil come into tect by the end of March, Acton wil bat
uration (open remain open unl unt in place dela
‘open until appointment in plac ed
+ Postmaster Suspensions ~ Criminal Charges - paper to be drafted and submitted to SEG in March Tracy
for decision on four suspensions where the postmaster has been charged with an offence Progress 2024 Marsha
that directly relates to the running of a Post Office branch. The purpose of the paper is to
‘Support the Postmaster Suspensions Decision Governance Committee ints work and will
{sk fora decision as to whether to end the suspensions or to maintain them unt such a
point criminal proceedings have been completed.
6
Confidential
POL-BSFF-130-0000029_0270
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Branch Layouts Meeting Date: I 25'* March 2024
Pete Marsh, Retail Operations Martin Roberts, Group Chief
Director Retail Officer
Author:
Sponsor:
Input Sought: Noting
Following a discussion at Board with regards to lessons learned from the rollout of landing
change into the network (e.g. ATMs), an action was taken for the Retail team to share an
update on how we maintain accurate records in respect of branch layouts.
Executive Summary
With such a large and varied network of branches, it is difficult to maintain a fully up-to-date
set of detailed drawings for the network. This is especially true given the franchise style of
operating model and the lack of any requirement for Postmasters and Strategic Partners to
notify us of any changes made to their retail footprint. We do however hold good data on all
locations showing POL-level information regarding technology assets, usage, and basic CAD
drawings for some locations where we have been involved in the build or layout changes in
recent years. This data is used to help support change projects and will be key to supporting
upcoming programmes such as counter rationalisation and PED replacement.
Report
1. The Network Propositions, Design and Analysis team centrally holds data on each branch
within the network. This includes how many customer-facing Horizon terminals, how many
service counters, and how many back-office Horizon terminals are located in each branch.
The team also maintains records to show the frequency of use for each of the terminals.
Information in relation to the number of Paystation terminals, SSKs, PEDs and Printers is
also held. All this data can be surfaced via an internal system called Periscope. This is
widely used by a number of teams within POL, particularly within the various field teams.
An example of how this data is presented in Periscope is available in Appendix 1.
2. Periscope also contains photographs for all branches within the network; these have been
collected over a number of years by our field teams. These can be used to get a visual
understanding of what a branch looks like ahead of any potential activity being carried
out. Photos include internal and external views of the branch, counters and equipment in
situ (See Appendix 2).
3. Inaddition to this, our Property Projects team completes basic drawings for all new branch
openings, relocations and refurbishments. These are generally completed using Microsoft
Visio, and are then used to support installing equipment into a branch. These drawings
1
Confidential
POL-BSFF-130-0000029_0271
POL00448861
POL00448861
are stored on a Sharepoint site and filed under the branch FAD code. The drawings are
not fully detailed, and do not show the services in or around the building, but they should
show the location of the electrics distribution board as this is relevant to the works that
we typically instigate in a branch. The drawings would also show the entrance, walkway
to the Post Office counter, the turning circle in front of the counter, the counter area and
where the desking is to be situated. It is important to note that we only have these for a
proportion of branches where change has been carried out recently - not for the full estate.
It is also worth noting that our teams are not fully CAD trained, and do not have access
to professional software to capture more detailed information. An example can be seen in
Appendix 3.
4. Whilst it would be ideal to have a central repository showing the layout in every branch,
this would likely be an expensive exercise to complete retrospectively and would require
additional resources to support. Maintaining these records up to date would also be a
challenge as retailers often complete their own store refits, and Post Office is not always
involved — nor does it need to be made aware.
5. Postmasters and Strategic Partners have no obligation currently to share their store
layouts with us.
6. Other key learnings from the ATM rollout relate to access of the site and arranging times
for works to be carried out with the key decision makers. We have made good
improvements with a centralised contact database and continue to develop Branch Hub to
become our central communications hub, supporting improvements in this area for future
change programmes.
Next steps
7. We will continue to capture the information we collect in as central a way as possible,
enabling us to land branch change as efficiently as possible.
Confidential
POL-BSFF-130-0000029_0272
POL00448861
POL00448861
Appendix 1 - Branch view via Periscope software
tool
" ¢ Equipment 150208 Stourbridge pf Oetls EER) Adrnocundanes people openngiious Seasons Gaesch Newest images
Appendix 2
Business
Confidential
POL-BSFF-130-0000029_0273
POL00448861
POL00448861
Appendix 3
ee
Confidential
POL-BSFF-130-0000029_0274
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Project Darwin lessons learned I Meeting Date: I 25 March 2024
" Tim Perkins, Programme .
Author: Director Sponsors: Owen Woodley, Deputy CEO
Input Sought: Noting
The Board is requested to:
i. Note the findings of the internal review into Project Darwin - the outsourcing of the
Swindon National Stock Centre.
Executive Summary
An internal review into Project Darwin (the name given to the project undertaken to outsource
the Swindon National Stock Centre) was undertaken in October 2023, with findings agreed in
November 2023.
The review was completed by Chrysanthy Pispinis (Chief of Staff) and Tim Perkins (Programme
Director, Ethos) given the governance and culture aspects of the review.
The review was focused on the causes of the delays in the Project and made broader root cause
findings about governance, culture, delegated authority and knowledge of public procurement
across Post Office.
Aseries of recommendations have been made as a result of the review and these are underway:
a. Defining/re-defining the term Sponsorship within the business;
b. Clarifying delegated authority levels within the business and considering of changes to
delegated authority levels;
c. Specifically, considering delegated authority levels for non-spend decisions (in this case
the sale of a property);
d. Considering how ownership of risk can be moved towards the first line; and
e. Ensuring there is sufficient education on public procurement.
Report
Findings
1. The findings of the review are outlined below. Where there are quotation marks, these are
verbatim comments made by those interviewed as part of the review. The findings have
been agreed by Martin Roberts (as the GE Sponsor of the programme) and Owen Woodley
(as the Sponsor of the review).
Confidential
POL-BSFF-130-0000029_0275
POL00448861
POL00448861
Main causes of delays
2. There were two main causes to the delay in outsourcing the Swindon National Stock
Centre:
a. Failure to obtain a decision from the Group Executive to commence procurement of
the outsourced contract. Decision papers were taken to the Group Executive on
multiple occasions since 2015 under different sponsors (Rob Houghton (CIO), Al
Cameron (CFO) and Martin Roberts (CRO)), without a decision being taken until July
2022.
b. Despite the procurement process being a restricted procurement process (with no
room to negotiate terms), the successful bidder re-opened negotiations on contract
terms post notification of the award. This caused a delay of approximately 3 months.
Root causes of delays
Governance
3. The Steering Committee and programme management on Project Darwin were felt to be
effective. An area of note, however, is that interest was felt to wane at times from some
Steering Committee members given the lengthy programme timescales.
4. The way programmes are sponsored in Post Office is unusual in comparison to other
commercial organisations. There are effectively 2 named sponsors of programmes in Post
Office - a Group Executive Sponsor and a Business Sponsor (usually GE-1).
5. In Project Darwin, Russell Hancock (Supply Chain Director) acted as the Business Sponsor
for the programme. Martin Roberts was the GE Sponsor, but this role is ill-defined. This
finding is not specific to this single programme of work and is more widely observed in
Post Office programmes.
6. Russell Hancock was the de facto Sponsor of Project Darwin.
7. Procurement were the de facto leaders of the procurement process to outsource the
Swindon National Stock Centre.
8. The Business Sponsor identified that he is ‘not a procurement expert’, so sought advice
from the Procurement team to commence the outsourcing process.
9. Regulation 26 of the Public Contracts Regulations 2015 sets out the basis on which a
contracting authority shall choose the most appropriate procurement process. In this
instance, a decision had been made that the restricted procedure was most appropriate
having taken into account all external influences, including the results of a comprehensive
Request for Information (RFI) process.
10. The criteria setting for the RFI was led by the wider project team, rather than just by the
business or procurement, with additional support from external expert consultants
specifically engaged to provide support.
11. Legal advice on procurement issues was specifically provided to the Procurement team
rather than the business, which is consistent with current working practices. Although the
Legal team provide commercial as well as procurement advice (including in this instance
property law advice) this is often best provided to both procurement and the business to
ensure consistency.
12. Legal identified that there has been a shift in the business to Procurement ‘taking a
broader role’ on projects - this observation is wider than Project Darwin. Legal have
welcomed this shift as it allows for greater consistency, earlier sight on matters, and a
more efficient service to the business.
Confidential
POL-BSFF-130-0000029_0276
POL00448861
POL00448861
Culture
13. A culture of risk-aversion impacts decision making in Post Office.
14. The root cause of risk aversion in relation to procurement matters is the averse risk
appetite set by the Board and set out in the Group Legal Policy for statutory and regulatory
requirements.
15. There is an embedded view that taking anything to Board with identified high levels of risk
is undesirable and should only be the case where there is a commercial imperative to
accept a higher than normal risk. It is, in all cases, seen as best practice to seek to
mitigate and/or lower risk in carrying out business, rather than accepting high risk without
challenge.
16. Board does not always, therefore, make decisions based off the full range of options
because the business regulates what it is willing to take to Board on the basis of Board’s
risk appetite.
17. This has also led to an embedded view that the business ‘has to accept procurement and
legal advice’. This leads to a culture of ‘erring on the side of caution’. Procurement and
Legal are clear that the business does not have to accept advice, but this does not change
the embedded view.
18. The business seems to think it should avoid ‘challenge’ at almost all costs (‘always worried
that someone might challenge us’ in relation to procurement). This view comes from two
sources:
a. Comments by the Board that it is pleased that Post Office has not had any challenges
to a procurement exercise.
b. A concern that any future challenge will result in tighter authority levels being
imposed by DBT on procurement matters.
Public Procurement
19. The Public Contracts Regulations 2015 exist to ensure that public authorities are provided
with a workable framework to ensure that public money is appropriately spent, having
regard to best value for money. For the majority of spend in an organisation such as Post
Office, this ought not represent greater burden. However, in a retail environment, if there
is insufficient strategic planning, adhering to these regulations can impact timelines for
procurement.
20. Because of this, there is an embedded view in the business that public procurement
processes are longer, more bureaucratic and lead to worse commercial outcomes than
non-public procurement processes, which is likely to be exacerbated by the lack of
understanding of public procurement.
21. There is a lack of thorough understanding at all levels in the business outside of the
Procurement team of the requirements of the Public Contract Regulations (PCR), despite
training being available.
22. There are benefits to Post Office of public procurement, such as reduced in-house
requirements, the Crown Commercial Service framework and access to Tier 1 and 2
suppliers. These benefits are rarely recognised or referred to in the business.
23. The view of procurement processes being difficult and different in Post Office is widely
shared and, therefore, part of the culture of the business. This results in the embedded
view that the business ‘has to accept procurement advice’.
24. For Project Darwin, a standard Restricted Procedure was undertaken, but this process was
not fully understood by all parties. This lack of understanding was internal and external.
Confidential
POL-BSFF-130-0000029_0277
POL00448861
POL00448861
25. iForce, specifically, were unused to the structure of a public procurement, seeking to re-
negotiate the contract but being imprecise in doing so, both in contract mark-ups and in
failing to clearly identify the core issues they were having in signing the contract. This lack
of understanding was exacerbated by a change in iForce’s main contact person, who then
attempted to renegotiate terms at the point they were no longer able to be renegotiated.
Late renegotiation of terms is also understood to be general market practice of iForce.
Delegated authority
26. Delegated authority levels impact the efficiency of decision making and the speed of any
procurement process.
27. There is a requirement for both GE and the Board to authorise sourcing strategy papers
with a forecasted spend in excess of £5m, and the shareholder, as well as GE and Board,
to authorise spend in excess of £50m. Board will often delegate authority to GE to approve
contract award. By design this requires GE and Board to review a procurement three
times. These requirements are regardless of risk.
28. The culture of risk-aversion, coupled with the view of what is acceptable to take to Board,
could lead to the business looking to mitigate far more risk (which takes more time) than
may otherwise be required before seeking authorisation from the Board.
29. In Project Darwin, this was not the cause of the delay. The cause of the delay was iForce
attempting to renegotiate terms and doing so without clearly identifying where they had
specific issues. The specific issues were eventually identified to be with insurance,
intellectual property and benchmarking.
Group Executive
30. The biggest cause of delay to the overall timeline of considering outsourcing the Swindon
National Stock Centre was with the decision being taken by the Group Executive.
31. The decision was, in effect, ‘kicked down the road’ until a decision had to be taken because
the systems supporting the site were going to be obsolete, unsupported and inoperable.
32. Without the ‘burning platform’, the decision would likely still have not been taken to
commence the outsourcing work.
Property Exchange
33. One specific decision to note in this programme was the decision to exchange on the
Swindon site, which was taken by the programme Steering Committee, at a point where
the contract with iForce was not signed.
34. This decision contrasts with other findings around risk-aversion in this report and, to some
extent, doesn’t seem to be a decision that has very clear delegated authority (not being
spending, but being income).
Recommendations
35. The recommendations made as a result of this review can be found in Appendix A.
Confidential
POL-BSFF-130-0000029_0278
Appendix A
POL00448861
POL00448861
Action
Owner
When
Share the findings of this report with the Group
Executive and Board
Owen
Woodley
January
2024
Define/re-define the term of Sponsorship within the
business particularly considering the difference
between Business Sponsors and GE Sponsors and the
need for both roles. In tandem with this, consider the
consistency in the composition, cadence and authority
levels of Steering Committees in the business. This will
be completed in conjunction with the work on the
clarification of organisational roles and responsibilities
and the Grant Thornton Review.
Chrysanthy
Pispinis/Tim
McInnes
March
2024
Ensure there is clarity on delegated authority levels
within the business and consider areas where further
delegated authority can be given that will allow the
Group Executive and Board to operate more efficiently.
This will be completed in conjunction with the Grant
Thornton Review.
Chrysanthy
Pispinis/
Rachel
Scarrabelotti
March
2024
Specifically, consider non-spend decisions (eg sale of
a property) and how these are captured in delegated
authorities. This will be completed in conjunction with
the Grant Thornton Review.
Chrysanthy
Pispinis/
Rachel
Scarrabelotti
March
2024
Consider how culturally the ownership of risk within
the business can be moved further towards the first
line, reducing the dependence on second and third line
functions. This will be completed in conjunction with
the work on the clarification of organisational roles and
responsibilities.
Chrysanthy
Pispinis
March
2024
Ensure there is education in place on_ public
procurement when onboarding (a) potential new
businesses or individuals within those businesses; (b)
new Post Office Board members; and (c) when liaising
with external entities that do not have public
procurement experience.
Liam Carroll
March
2024
Confidential
POL-BSFF-130-0000029_0279
POL00448861
POL00448861
POST OFFICE LIMITED
BOARD REPORT
Title: Project Darwin, next steps on Meeting Date: I 25'* March 2024
business transfer
Author: Steve Faulkner-Atkinson, gronser Martin Roberts, Group Chief
Programme Manager Retail Officer
Input Sought: Noting
The Group Board is requested to note that the Strategic Executive Group approved that the
consultations for the iForce related redundancies can continue, as planned, without a TUPE
Opt Out.
Executive Summary
The current stock provision operates from an aged, oversized unit in Swindon. Outsourcing to
a 3PL supports the simplification of Post Office and Supply Chain, with a reduced property
footprint and headcount. It also eliminates current IT and property risks. The strategy has been
to sell the Swindon site and use the funds to significantly contribute towards the completion of
the outsourcing to a 3PL.
The sale and leaseback of Swindon together with an outsourcing contract was put in place in
September 2023. Darwin is now progressing the technical and operational elements of the
outsourcing. Consultations for the iForce related redundancies are scheduled to start in mid-
April and it is very unlikely that we will get UKGI, DBT and HMT approval to provide a TUPE Opt
Out to those staff impacted. There will be a benefit reduction following RMG’s decision to
transition to an alternative supplier to manage the non MDA activity, as this reduces the volume
going to iForce. We are bringing forward the Go Live of iForce provided carrier services to
partially offset the benefit impact.
Report
1. In September 2023, I IF utsourcing contract was signed with iForce and the
Swindon National Stock was sold.
2. The leaseback for the Swindon site runs to end © uphold the lease
requirements, a full transfer to iForce and decommissioning of the warehouse equipment
must be completed prior to this.
3. Stock will start to be transitioned to iForce from the National Stock Centre in Swindon in
July, although we plan to start supplier deliveries of stock directly into iForce a bit earlier.
4. iForce will start to pick, pack and despatch orders for Post Office branches in three phases;
(i) transaction stock on 19" August, (ii) value stock on 24 September (except Christmas
stamps which will continue to be issued from Swindon at this point) and (iii) Christmas
stamps on 21% October.
5. To achieve a steady state iForce operation before Christmas peak for pick, pack and
despatch (starts 23" September), we need to complete the majority of the transition to
iForce by early September. It is also why we plan to leave Christmas stamps with Swindon
for the peak Christmas period for pick, pack and despatch (up to 18" October).
Strictly Confidential
POL-BSFF-130-0000029_0280
POL00448861
POL00448861
@
6. Target is to complete decommissioning in early November, to allow small contingency
prior to the Swindon leaseback concluding. It also supports project closure and releasing
remaining project team members ahead of the Christmas break.
7. Decommissioning will include legacy Swindon systems data access for seven years.
8. RMG made the decision to move work not covered in the Mails and Distribution Agreement
to another supplier. Swindon will therefore cease their non-MDA work by 15'* May and
associated employees will then leave as part of a VR exercise.
9. The contract for Biometric Residency Permits concludes in March 2025, however, as
volumes will be low by September / October, we will then move the work to Hemel
Hempstead. Due to the low volumes, no additional FTE will be required in Hemel
Hemsptead to process them until the end of the contract.
10. There will be a small team put in place to manage the iForce contract. This team will report
into the Supply Chain. It will consist of two new Account Management roles and two Stock
management roles. The latter are already in place. Project aims to recruit the Account
Management roles in April and have them in place for mid-May. Existing Swindon
employees will be able to apply for these roles.
11. A package of employee support will be available to anyone being made redundant. The
support falls under the following themes; workplace wellbeing, financial advice, skill
development and outplacement support.
Financial Impact
12. ~ ~~ ~~ PPEI EVANT. ~~ eet
13. A CR will ‘be presented. to TADG (ana April) to amend the budget for Darwin. We will request
(i) a reduction apEx and (ii) an increase of of IT OpEx starting
‘0 retain access to data from Swindon’s Legacy systems.
14. Procurement identified that on a like-for-like basis the i id would reduce Post Office
costs to run the National Stock Centre over the I IRRELEVANT ‘of the contract from
cost reduction of! a forecast for inflation
the estimated total contract value is I This forecast excludes one-
off costs of change, forecasted volume reduction, continuous improvement, and the
Swindon site disposal income, etc. All charges remain fixed for a period of two years. After
two years, the supplier’s charges will be subject to review in line with RPI(X). The only
exception to this is any changes made to legislation (such as National Minimum Wage).
Savings will be achieved through moving to a more efficient operation with a modern
WMS. Two areas of the benefits case are in the process of being amended;
(i) Royal Mail Group (RMG) withdrawal of services not covered by the MDA
agreement between RMG and Post Office. There will therefore be no Part 3
services transferred to iForce and
(ii) We are bringing forward (by 1 year) when we start to use iForce’s carriage
services rather than using RMG’s carriage services. This will now start from the
iForce Go Live. As a minimum, this will cover the non RMG owned SKU’s,
however, this could also include RMG owned SKU’s if we can agree a revised
rate card. Note: Carriage costs are amended annually each April
15. Redundancies will happen in four phases; (i) RMG removal of non MDA work (15' May -
14.4 FTE), (ii) transaction stock orders picked, packed and despatched from iForce (28
FTE), (iii) value stock orders picked, packed and despatched from iForce except Christmas
stamps (15 FTE), (iv) residual stamp stock transitioned to iForce and Swindon de-
2
Strictly Confidential
POL-BSFF-130-0000029_0281
POL00448861
POL00448861
@
commissioning complete (28 FTE). Note: We may split the fourth phase in two and release
some of the last cohort once the peak for pick, pack and despatch of Christmas stamps is
complete. Costs related to the first phase of the redundancy will be accrued in FY23/24
and the remaining phases will be in FY24/25.
16. Annual pay review will increase redundancy costs but it can be accommodated without
additional project funding.
17. We will recruit for two new Account Management roles to manage the iForce account. The
redundancy costs will be reduced if one or both roles are able to be filled from within the
Swindon population who are at risk of redundancy.
Risk Assessment, Mitigations & Legal Implications
18. On 15‘ May, the non MDA work will cease being supported by Swindon, affecting 8.5 FTE
across frontline operational SO1 and admin staff. We opened the requirement up for
expressions of interest in VR to the appropriate staff and received 16 expressions of
interest (14.4 FTE). Post Office have accepted all submitted expressions of interest.
19. There is an assumption that Accenture and Fujitsu will deliver to an agreed schedule, but
there is a risk that they deliver late or with poor quality code, which results in a delayed
Go Live and / or increased project costs. The project is therefore retaining
Exceptional contingency until testing is complete.
20. TUPE arrangements ensure that when the operation is outsourced from Post Office’s
National Stock Centre in Swindon to iForce, staff will retain all of their benefits. The vast
majority of, if not all, Swindon staff will not be willing to move to iForce given the distance.
We therefore expect staff to be TUPE’d across to iForce and then immediately made
redundant and iForce paying their redundancy terms. Post Office contractually indemnified
iForce for these payments. Post Office wanted to get approval from UKGI, DBT and HMT
to offer staff in Swindon a TUPE Opt Out. This would allow them to opt out of being TUPE’d
across and instead given a settlement to the same value. This approach would incur an
additional cost for legal fees: erson). The DMB’s project submitted a similar request
and are still awaiting an answer after 3 months. As the project needs to complete Union
discussions in March so that the consultations can commence in w/c 8" April, we cannot
wait any longer for the DMB’s project to get an answer and then submit a similar request.
21. Legal confirmed that TUPE will not apply if we (i) move Biometric Residency Permits to
another Post Office site or (ii) Royal Mail move to an alternative supplier solution for non-
MDA work because the resource is not solely focused on this work, but rather it is part of
the wider mix of work that they do. A TUPE Opt-Out would also not therefore apply.
Stakeholder Implications
22. There are concerns around the stability, flexibility of an outsourced provision, which are
two areas that have been critical to the business in recent times. On average we have 4
outages per year, with a varying scale and impact to our Postmasters. Post Covid we have
shown the value to our Postmasters through having a flexible operation with direct control,
for example standing up a PPE distribution operation within 48 hours. In future, the
mitigation will be managed through iForce via account governance, SLA’s and an Account
Management team.
Strictly Confidential
POL-BSFF-130-0000029_0282
POL00448861
POL00448861
@
23. Auto Stock Rems and Darwin will Go Live in a similar period and changes from both
projects will impact the Stock team. Communications will therefore be aligned across both
projects to ensure there is no confusion within the Stock team.
24. References to Swindon in training materials will be amended for Go Live
Next Steps & Timelines
25. 1% April: Start recruitment process for two new Account Management roles
26. 15" May: Swindon cease processing non MDA work, 16 staff leave Swindon under VR and
two new Account Management team recruits start in their roles
27. 22°4 july: Start transitioning stock from Swindon to iForce
28. 19* August: iForce start issuing orders for transaction stock through their carriers, exit
of the first batch of Swindon staff related to the iForce transition
29. 2"4 September: iForce start issuing orders for value stock and biometric residency permit
Processing moves to Hemel Hempstead, however, Swindon will retain Christmas stamps
30. 234 September: Christmas peak period for pick, pack and despatch commences
31. 215t October: Residual Christmas stamp stock will be moved to iForce, who will then be
issuing all orders
32. 4‘ November: Complete Swindon de-commissioning
33. 29t* November: Swindon leaseback complete and keys returned to Landlord
34. 13t* December: Project closed
Strictly Confidential
POL-BSFF-130-0000029_0283