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MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF POST OFFICE LIMITED HELD ON TUESDAY 01
NOVEMBER 2022 AT 20 FINSBURY STREET, LONDON EC2Y 9AQ AT 10:00 AM
Present: Ben Tidswell Chairman (Chair)
Tom Cooper Non-Executive Director (TC)
Carla Stent Non-Executive Director (CS)
Zarin Patel Senior Independent Director (ZP)
Lisa Harrington Non-Executive Director (LH)
Saf Ismail Non-Executive Director (SI)
Elliot Jacobs Non-Executive Director (EJ) (Joined at 10:11)
Brian Gaunt Non-Executive Director (BG)
Nick Read Group Chief Executive Officer (NR)
Alisdair Cameron Group Chief Finance Officer (AC)
In attendance: Rachel Scarrabelotti Company Secretary (RS)
Tim Mcinnes Strategy and Transformation Director (TM)
Zdravko Mladenov Group Chief Digital and Information Officer (2M)
Ben Foat Group General Counsel (BF)
Simon Recaldin Historical Matters Director (SR)
Apologies: N/A
Action
1. 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 Directors 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.
2. Minutes and Matters Arising
TABLED and NOTED were draft Minutes from the Board Meeting of 27 September 2022.
Subject to the incorporation of the comments provided by LH, the Board RESOLVED that
the Minutes of the Meetings held on 27 September 2022 be APPROVED as a correct record
of the Meeting and be signed by the Chair.
The Board NOTED the action log and status of the actions shown. The Chair called for
comments on the action log. Matters raised were as follows:
* Slcommented on the action numbered 18 in the action log, noting that M Roberts
had spoken to the corresponding Area Manager however SI was not aware of any
further follow up activity. SI advised that the use of the equivalent of Christmas
seasonal helpers could assist Postmasters when they had peak distribution periods
such as had occurred in relation to BRP cards. NR replied that the Company was
providing Christmas helpers for peak this year. SI advised that no Area Managers
were aware of the increased numbers in respect of the distribution of BRP cards. NR/M
ACTION NR advised that he would revisit this issue with M Roberts; fioberts
@ Sl spoke to item 14 of the action log in relation to paper bags and expressed
disappointment that this item had been closed. SI shared his view that the
Company should have been pursuing this as an option;
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SI raised point 2 on the action log and advised that he was disappointed with
progress on this item. SI advised that he had raised this matter with J Smyth
originally in February 2022, and whilst J Smyth had assisted on this, the matter had
now been passed on. SI advised that he was waiting for email correspondence in
relation to this matter. ACTION The Chairman requested that SI and NR follow up
after the meeting and provide a further update on the status of this item;
ACTION CS requested that actions 1 and 8 be left open, so as to ensure
consistency in the way items were treated. The Chair requested that RS attendto rs
this;
TC raised action item 4 in relation to Phase 3 HU deliverables and queried the
status. NR replied that the issue was that the Company did not have sufficient
funds to attend to all HU items, and a decision would need to be taken as to which
of the remaining elements were completed and to what degree. NR noted that
with the Inquiry commencing the focus would be on improvements made to
Horizon, so management were looking to identify funds in relation to this. In any
NR/sI
event management needed to bring a plan to the Board for recommendation,
setting out within our current funding constraints what we could realistically
achieve by the time we reached Phase 7 of the Inquiry. TC advised that he was
concerned that if funds were diverted for HU activities that this would take money
from, for example, NBIT, and both projects are vital. TC further advised that BEIS
did not have sufficient visibility on this. NR asked for clarification as to what. TC
replied in relation to Hi deliverables and advised that the Company needed to
provide BEIS with visibility.
NR advised that the Company needed to recontract with BEIS; we could not deliver
as against the expectations of BEIS, and we needed to be clear on what we could
deliver. NR further advised that awareness across the Board as to what could be
achieved was required and that there were going to be some tough choices come
December. NR stated that given the financial constraints currently, he did not
think management could devise a plan they would be prepared to execute. TC
replied that he was on the same theme, and that this would take a while to
permeate with BEIS. We needed visibility at Board level, so we could commence
discussions with BEIS. CS queried how we could have a pivotal conversation with
the shareholder so the Board could reach a conclusion and noted that we did not
have the luxury of time. The Chair agreed with this and noted that this was the
conversation that the Directors wanted to have at Board today. In relation to the
HU elements where money was allocated to address issues, the Chair queried
whether this allocation would result in the issues that most affected Postmaster’s
being attended to. NR replied in the affirmative, however the proposed allocation
of money was also to cover wider recommendations in the judgment, and that a
proposal would need to come back to Board.
LH noted that the Company was investing heavily in NBIT, and that there would
come a time when fixing issues on Horizon was no longer of utility. The Chair took
this point; we could explain to the Inquiry that we had not undertaken certain
work on Horizon, because we were correcting the issue on NBIT. AC shared his
view that the Inquiry was a red herring so far as the conversation was concerned,
and that this was a fiscal problem, specifically the constrained amount of money in
the change plan. LH advised that she did not agree with this assessment. TC
advised that he had thought that there were issues with Fujitsu and their capacity
to deliver further changes on Horizon. The Chair drew the discussion to a close
advising that Phase 3 HU deliverables was down as an item for consideration at the
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December Board and suggested that the matter be discussed then, although
commented that a decision paper might be brought rather than a noting paper.
TC advised that he did not see the paper as a decision paper, TC wished to know
what the position was currently on the Phase 3 HI deliverables. CS advised that
there was a list of all the HJ actions, along with detail as to how things had
progressed, and what was proposed to be attended to and what was not. Looking
at this as against the 3YP, there would be budget required to have all these items
completed, which went to AC’s point as to the amount of budget required to
deliver these.
The Chair called for any further comments on the actions log. There were no further
questions.
Committee Reports (verbal)
Historical Remediation Committee
The Chair, in his capacity as Chair of the Historical Remediation Committee (HRC),
proceeded to provide an update to the Board on the work of the HRC and referenced the
HMU update paper provided in the Board pack. Key discussion points were as follows:
¢ The Chair advised that settling on the appropriate OHC compensation process was
difficult, and it was taking the HMU team time to resolve. The issue had been
considered by HRC a few times, however HRC were hopeful that they would
receive a paper on this, this month, so the matter could be brought to the
December Board meeting. This was against the background of some good
progress on existing claims, especially with non-pecuniary amounts. However, if a
change was going to made from a negotiated to a remediated solution we needed
to get on and do this, so we did not end up with a more complicated transition;
The other point the Chair wished to touch on was detriment. Funding for Pot A
detriment (suspensions) had been confirmed yesterday by government. In
relation to Pot B detriment the HMU team had a plan as to how they were going to
approach funding, which was likely to be seeking funding for identified parts of Pot
B, a few at atime. This issue would brought back to the Board once the approach
was settled;
Confidential: discussion of legally privileged advice
.
@ The HRC had asked for more detailed information on the position of those
Postmasters currently making repayments. ZP noted that the sample
investigations conducted showed that payments in approximately 60 — 70% of
cases related to clear evidence of liability on the part of the Postmaster. AC
contributed that he thought there was some nervousness around speaking to the
Postmasters affected; at the end of the day, we were still accepting payments
although we had not undertaken a contemporaneous investigation and AC’s view
was that we had to stop.
AC advised that this matter needed to be returned to the December
Board. The Chair advised that we all knew that we needed to deal with this,
however the problem was how.
The
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problem was, what did we say to Postmasters who were making payments and
who had made payments. This created a serious risk of crystallising large unfunded
liabilities for POL. The HRC had not been satisfied that this risk was adequately
managed by the proposals to date on how it would be communicated. The Chair
shared his view that he thought that perhaps there was a path through now
though and referenced the earlier proposed funding approach. AC reiterated his
view. The Chair replied by outlining his assessment of the risks. CS queried
whether the Postmasters in question would have the ability to make a claim via
another scheme. TC replied that there was no scheme for losses after 2017, so
they would not. The Chair advised that the view of HRC was that we needed to get
to the bottom of the detriment channels then we could progress; we could not
otherwise reach any conclusions on the liability issue. The Chair noted that AC had
made his point very clearly and consistently and agreed that the matter needed to
be brought back to the December Board. NR queried what we were going to
achieve between now and December. The Chair advised that the HRC had asked
SR to prepare a paper bringing all the strands of the issue together. NR queried
whether we were still investigating. The Chair replied that his understanding was
the Company investigations into individual payees were continuing. EJ queried
whether Postmasters were paying the Company, or whether the Company was
deducting monies from Postmasters; the answer would put a different complexion
on things. ACTION The Chair advised that he would ask this question of the HMU
team;
In relation to the dispute button on Horizon, TC noted that the paper in the Board
pack seemed to suggest that losses were not going to be dealt with after a certain
time in the current manner; we needed to be clear about what we were going to
do about Postmasters who owed the Company money. We could not write these
losses off; however, we could not roll these into NBIT. AC advised that he had
spent a couple of days with the team in Chesterfield talking about Postmaster
losses following on from the losses from August which were significantly larger
than the prior run rate, and which in September were also above average. In the
case of disputes raised by Postmasters about losses, the Chesterfield team would
instigate an investigation, and where they were satisfied that Postmasters owed
the Company money, they would request them to pay back the money and
generally Postmasters repaid the money. There appeared to be only a few cases
where Postmaster’s refused to repay the money, and the value of these cases was
circa £150k. Where the Company really lost money however was that cases were
investigated only where the team thought that they had a reasonable chance of
reaching a conclusion, so, for example, they would not investigate cases from
years ago. This was deeply uncomfortable. In terms of whether Postmasters were
actually repaying, the answer that AC received was that we did not know, the
team did not have the data. AC would return to this in relation to the 3YP. The
team would continue to investigate what they could, however the data was very
poor;
There was another issue that AC wished to raise in relation to the 3YP, which was
highly confidential. In terms of the NBIT rollout, we would start slow and increase
Postmaster confidence, then roll out to about 50 — 100 branches a day. We
needed a clean start to build confidence in NBIT and to do that we needed to have
clean opening balances. What we had agreed was that an employee from the
Company would be present on the day each branch transitioned, and count the
cash, stamps and lottery tickets and that would be the starting position in NBIT.
AC advised that the wrinkle in this was that it did not allow for the few weeks
which it might take to resolve transaction corrections. What this meant effectively
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was that any difference on Horizon would be crystallised at the point of switch to
NBIT. AC further advised that whilst the Company provided against losses in
theory, and the transition to NBIT should not be very different from the usual
approach applied to losses, he was concerned about the potential size of the
provision. AC noted in passing that he had been told, anecdotally that when
Horizon was updated in 2006 approximately £20m had been written off, benefiting
Postmasters. This was a passing remark many years later and had not been
evidenced. In terms of differences when we transitioned to NBIT this would
essentially be made up of 3 items. The first of these would be credits to
Postmasters and we would pay these. The second would be losses; we could
investigate and send to law enforcement as appropriate. Thirdly, for the small
losses, these were a difficult category given investigations took time and resource.
AC advised that in the draft 3YP management were suggesting the small losses be
written off, although AC anticipated that this proposal would be tested and
challenged by HMT. CS pointed out that the proposed approach gave rise to an
accounting issue and that this could be a challenge in the accounts. TC
contributed that the approach raised funding issues also, as well as potentially
communication problems, given all the efforts to remediate the past. AC replied
that the Company currently did not investigate debit differences where it was
thought we did not have a reasonable prospect of successfully recouping monies.
We provided for Postmaster losses otherwise after 60 days. EJ spoke to the
Postmaster loss process and the use of the dispute button. AC advised that once
the dispute button had been activated that the item moved off a Postmaster’s
account and went for resolution. The Postmaster was supposed to speak to the
call centre at this point. What a lot of Postmasters were doing was then not taking
calls from the call centre. AC shared his view that this was not an acceptable
balance between the franchisor and franchisee and suggested that if Postmasters
did not engage and speak with us, then the dispute should be pushed back to the
Postmaster. AC queried whether Postmaster’s should speak to the call centre first,
then the call centre could log the dispute;
On the issue of call centres, SI advised that he had pressed the dispute button then
had been unable to get through. ACTION SI expressed his disappointment and M Roberts
questioned whether the call centres could be open later, when Postmasters may
have more time to deal with these sorts of issues. ACTION SI also asked if
categorisation was possible when a dispute was raised. AC agreed that this would
be useful and advised that M Parks had joined as Central Operations Director, who
would provide intellectual leadership in the team and assist with the data. ZP
noted the reference to the Retail team however shared her view that these areas
were equally pertinent to finance as they were entwined with accounting. AC took
the point and advised that he would continue to stay on the pitch, however the
teams who undertook the work did not report to AC;
CS queried whether the dispute button was stopping us from moving forward, and
whether it might help us to turn this off. AC advised that this would require the
Company to hire people however this was difficult given we were stating that we
needed to take costs out. Most of the work management were going to be
undertaking between now and the December Board was going to be working out
M Roberts
where we were prepared to accept the consequences of proposed decisions and
where we were not. Of course, there were many things that the Company could
be doing, however these additional items were all unbudgeted, so we could not;
TC noted that one of the consequences of this discussion could be striking the
right balance between the Company and Postmasters, and noted that the onus of
proof could move back to Postmasters after the introduction of NBIT;
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EJ advised that the Company needed to give Postmasters better data to analyse; it
was impossible to analyse anything from Horizon;
TC observed that if the business could not function like a normal business on NBIT
and the basis of the current contracts we needed to recontract with our
Postmasters. AC advised that this had been discussed many times. NR noted that
we had 69 different types of Postmaster contract in the network at present, due to
flexibility having been given to broker different deals on the ground. In
interpreting the ClJ and HU we went through the thought process of amending
contracts. We now found ourselves in the position that we needed to recontract
with Postmasters so as to be the business that we wanted to be. We are not going
to be able to do this by 2025. We were de-scoping NBIT because we were time
bound by March 2025. We are getting off Horizon, as opposed to delivering a
swish new system.
Nominations Committee
The Chair invited LH to provide an update on the work of the Nominations Committee.
LH advised as follows:
Arecruitment campaign had been launched seeking 3 new NEDS. The first
priority was to find a candidate to succeed CS as ARC Chair;
The recruitment process had not been easy so far. In terms of the Evaluation
Panel, we had secured an independent assessor, and ZP would sit as a panel
member. Unfortunately, SI would not make the first session of the Evaluation
Panel, although there were further sessions coming up which SI could contribute
to;
In terms of the skillsets sought, we needed accounting, financial services, retail,
technology and business improvement. A suitably experienced candidate was
also required to be appointed as Remco Chair. In addition, we were seeking a
diverse longlist of candidates;
The candidate list so far was a little underwhelming, perhaps due to brand issues.
We had been transparent regarding time commitments;
The incoming Chair H Staunton was invested and contributing to the process;
The advertising for the roles was live;
The Deadline we were trying to hit was to secure shareholder approval to appoint
an ARC Chair this side of Christmas. ZM queried whether the appointment would
need to go to No. 10. TC replied that it should be a decision for the Secretary of
State.
Remuneration Committee
The Chair invited LH to provide an update on the work of the Remuneration Committee.
LH advised that retrospective shareholder approval for executive director payments that
were made in August 2022 under the STIP and LTIP remained outstanding, so the DRR
could not be laid in Parliament at present. TC noted there had been a very positive
meeting with the Permanent Secretary on this matter.
LH further advised that the Remuneration Committee had been considering
benchmarking, and that the Committee were looking to approve a position on this.
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4. CEO Report
TABLED and NOTED was the CEO report.
Key points detailed by NR were as follows:
e NR had advised at the QSM yesterday that the Company had had a great H1, based
on all the metrics one would typically look at;
¢ However, our Mails business remained under pressure, and we were mobilising
more quickly to determine our response;
e We had had a significant reaction from our customers on the RMG strikes. A lot of
suppliers were delisting RMG and taking their business elsewhere. The losses that
we were experiencing in terms of revenue were quite material and average
footfall was declining. BG noted that the move to alternative suppliers would
extend beyond Christmas as well, as suppliers were entering into 6-month
contracts;
Our revenue losses from the RMG industrial action were balanced against the
strong performance of our other business products, and we had been able to
balance given the Company’s diverse product offering. Banking was doing well, as
was travel. From a current trading perspective it felt relatively good;
¢ Branch churn was at its lowest levels since separation;
@ We had reached over one hundred Drop & Gos;
* McColl’s were anticipated to announce later today which parts of the estate would
not be retained, and this included closing approximately 30 Post Offices. In terms
of how we would address this, we were not proposing to replace these branches
with full Post Offices: we needed to send a message to BEIS that we could not
afford to continue replacing branches. We had prepared a response in
anticipation of the McColl’s announcement which was along the lines that we
were going to do our best however we could not agree a like for like replacement.
That said, we did not want these branches to close ahead of Christmas, so the
expectation was that McColl’s would announce that these branches would stay
open until the end of January. These branch closures provided us with an
opportunity to do something different. ACTION By the time the Board reconvened
in December we would have a plan detailing how we were going to approach this
issue;
* We had performed reasonably in relation to our costs. A recruitment ban had
been initiated and we were not replacing departing employees;
In terms of progress against our strategic priorities:
- improving branch profitability — changes to Postmaster remuneration had
been announced earlier in the year in August and these had been well
received. The Postmaster Business Update was scheduled for 10 November.
As to whether we were proposing to provide Postmasters with additional
remuneration, we were not. The Update would include details in respect of
H1 performance and anticipated developments over the next 6 months. We
needed to be realistic as to what could be achieved and as to what the
Company could afford;
- Transforming technology — phase 1 of the NBIT pilot was operating. NR
remained anxious about descoping. Some issues had been highlighted via the
pilot; however, this was the whole purpose of the exercise;
- Rebuilding trust — we had hit 90% of offers issued for HSS for the end of
October. NR had met with Ms J Hamilton a few weeks ago, to thank her for
M Roberts
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her resilience. NR had spoken to Dr Hudgell as well, with whom we had a
good rapport, and who seemed pragmatic and sensible;
The wider economic headwinds were material. Heading into Christmas and peak,
the RMG industrial action was still scheduled for Saturday week and Monday and
the cost-of-living crisis would likely dampen Christmas;
NR had spoken with S Thompson of RMG; it seemed like a race to the bottom with
RMG very dug in on their position; they seemed not to be concerned about the
effects on the Company. NR had spent some time with the brokers for RMG last
week to discuss what they saw as the end game. Their view was that GLS would
not be divested however they did see this as part of the debate, along with the
USO and the industrial action. Royal Mail could potentially give some ground to
the unions if there was some movement on the USO, such as going down from 6
days to 4 for example. NR was deeply troubled that many of our customers would
walk; we needed to get off being a mono carrier. We are going to do an Evri trial
before Christmas, and a Doddle trial as well. We did not have enough bandwidth
to deal easily with all of this: dealing with the anticipated industrial action and
peak at the same time as trialling these we would have our hands full;
In terms of the Inquiry, one of NR’s key take aways was that the culture of the
business was going to be under scrutiny. Sir Wyn’s intervention in respect of
compensation was quite helpful. ZM and J Smyth had attended the Inquiry
hearings last week, to listen to the Inquiry’s expert witness on IT. The experience
was very sobering for ZM and J Smyth. The roll out of NBIT was of great interest to
the Inquiry, and the Inquiry would want to know how the new system was
procured, how it was planned to roll it out, what training would be provided to
Postmasters, and what the Company was putting in place so that this was not a
repeat of Horizon. ZM and M Roberts had realised that the bar set was incredibly
high. We could not behave like an ordinary Plc undertaking technology
transformation; we would be in the middle of Phase 7 of the Inquiry during the roll
out of NBIT. We had invested in changes to Horizon however the fact that we had
not achieved change in certain areas would not be acceptable;
‘As to what was keeping him awake at night; it was the Mails business and the
squeeze on Postmaster remuneration. ACTION We would write to the Chancellor
again on vulnerable business status; Post Office were managing the energy
vouchers, we were the business hosting the pop ups with British Gas, so there was
a strong case for vulnerable business status;
We needed to determine what needed to be in place come 1 September 2023
when Phase 7 of the Inquiry commenced. We needed to consider also what we
wanted to have achieved and be in a position to say, on 8 December at the Inquiry
Compensation hearing. Similarly in relation to Phase 6 of the Inquiry, we needed
to determine what precisely it was that we needed to have achieved by this point.
This was that so as a Board we could all stand behind the fixes;
We needed to get better on our operational management of the Inquiry and how
we adjusted as we went through the next 12 months;
All Board members were encouraged to attend. CS shared her experience of
attending the Inquiry; whilst the content was familiar it did bring it to life in a
tangible way. In relation to what we wanted to achieve and say in Phase 7, we did
need to be conscious to make things simple so the Inquiry could understand. NR
agreed with this, and advised that Sir Wyn would be asked to engage via activities
such as visiting the model office, so Sir Wyn could see what actually doing;
Our leading counsel at the Inquiry K Gallafent KC had emphasised that we were
here to listen, as well as being physically here, and here to engage. NR had
committed to visit any Postmaster who had been through the compensation
NR
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process. CS shared that the main item that came out for CS from attending the
Inquiry hearings was the focus on the future, not just the past. CS noted that a lot
of the Inquiry hearings were taking part with Sir Wyn on camera as opposed to
being physically present and felt that this was not desirable. NR agreed and
advised that feedback on this had been provided to the Permanent Secretary. LH
advised that she was less concerned about Sir Wyn residing at the Inquiry in a
virtual capacity, however felt that the commencement of the Inquiry hearings was
really affecting some of our executives. LH also noted that she was struck by how
little public interest there was in the Inquiry, although there was a lot of other
news at present. EJ referenced statements that the Company’s reputation rested
on how we performed in the Inquiry; EJ advised that he did not think that this was
necessarily true, the Inquiry might affect us as a business, however the public were
indifferent;
BEIS were looking backwards and conversations with the shareholder were all
around compensation and the Inquiry, as opposed to the network today. EJ
shared his concerns that by focusing too much on the past and not enough on the
future that we could find ourselves in decline. CS shared her view that the Inquiry
presented an opportunity to bring the past and present together and pointed out
that the Inquiry was also about the future. TC agreed with NR that conversations
with the shareholder were all backwards looking and focused on funding. TC
referenced the concerns that people had had ahead of the Cl in respect of the
functioning of Horizon and shared his view that as a Board we needed to focus on
NBIT and being in a position where we could say that NBIT was a robust functional
system. TC was pleased to hear that NR was working to have a list of items that
we needed to have achieved against so we would clear as to what we wished to
communicate going into Phases 6 and 7 of the Inquiry. TC noted that we had an
opportunity to be positively helpful to the Inquiry; there were 2 fundamental
approaches, the first of these being reactive, or the second approach to facilitate
which provided an opportunity to build our reputation in the wider world. The
Board needed to take a decision as to the approach. NR replied that he did not
think that there was any question of the approach required and referenced CS’
comments on the Inquiry being also future focused. Sir Wyn would focus on the
Post Office of today, and whether it was sustainable. EJ shared his view that he
thought Board members were all aligned on this approach, however the future
needed to be funded. Currently there were no further announcements in respect
of remuneration for Postmasters; this was challenging, it was the front line that
was getting hit the hardest and if we were going to fix the future then we need to
fix the front line. CS noted this and shared her view that we needed to go back to
the shareholder and outline what was required. TC agreed and noted that we
needed to have a very dispassionate conversation with BEIS about what could and
what could not be achieved. CS replied that she thought we needed to be really
firm on what it would mean if we could not deliver on what we had to. NR agreed
and advised that we simply could not continue on in the current state; the
executive simply would not manage if the Company was not going to be properly
funded in order to manage. Management were working tirelessly on the 3YP,
however within the current funding envelope we had, we could not see how the
circle could be squared. NR advised that there had been very sensible
conversation on this with the Permanent Secretary. The Chair shared his view,
that following on from the QSM we would need to establish each next logical step
in the dialogue with our shareholder, and expect those to be tested.
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The Chair called for questions for NR. ZP commented that she would encourage the
Company to consider engaging their own IT expert for the Inquiry. NR replied that we had.
LH shared her view that some of the decisions did not feel binary enough at present, for
example if the funding position meant it was a significantly smaller network required then
that is what we needed to decide and deliver. LH further shared that she did not think the
Company was going to receive any further funding.
Sl advised that he had a question on numbered item 8 of the CEO Report, as to the plan
and timing for future roll out. NR referenced the Amazon Return pilot; if this was
successful then it would be rolled out to the rest of the estate on the basis as set out in the
Report.
SI raised numbered item 11 of the CEO Report in relation to implementing a Tracked 24
and 48 service in-branch in time for the new financial year and queried how we were going
to communicate this to the network. NR advised that he did not know at present, and that
we were working through this with RMG at the operational level.
Sl referenced numbered item 22 of the CEO Report, in relation to passports being down,
and queried whether there was a reason why customers would come in for their
passports. NR replied that he did not think that we could read too much into what had
happened this year with passports.
In relation to numbered item 26 of the CEO Report, SI queried the locations of the Drop
and Collects mentioned, and whether these were in response to branch closures or in
response to an identified opportunity. NR replied that in relation to cannibalisation we
were taking quite a robust approach. ACTION Sl requested a high-level overview either
quarterly or every 6 months detailing changes in format in the network. NR replied that he
would ask M Roberts to liaise with SI in this regard.
On point 35 in relation to Postmaster remuneration, SI expressed his disappointment and
advised that he had understood that there would be some improvement on Postmaster
remuneration. NR replied that the commitment had been that Postmaster remuneration
would be reviewed at this point, not that it would be improved. Whilst there was the
possibility that we signalled to Postmasters that we wanted to share in the profitability for
the end of the year, we were unable to do this at present, given the headwinds, and as we
went into conversations with BEIS. SI shared his view that this would make the Voice of
the Postmaster group much stronger. NR took the point and replied that he knew that we
had to face into this and that the Postmaster Business Update on 10 November was likely
to be difficult.
Finance
Financial Performance Report
TABLED and NOTED was a report, ‘P6 — Performance Overview’.
AC spoke to the Report, noting that NR had covered P6 Performance so AC would not
cover this further:
© Branch numbers were better now than at any time since separation. This gave
us some flexibility and we would look to close some loss-making branches
where this would not affect the access criteria;
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¢ Onsecurity headroom, we were in a much better position than where we
thought we would be, however this appeared temporary and reversing. This
position was expected to continue for a while, however, not long enough to
take us through next year. On energy pay-outs — we are being given cash;
however, the pay-out was effected via a noncash transaction, so we then
return the equivalent cash. NR noted the press yesterday due to the
transactions level being so low, with only circa 60% of claims having been
made. EJ advised that he thought that some of this was because customers
did not bring in the correct information in order to claim the pay-out.
5.2 FY22/23 Budget Review (Verbal Update)
AC advised as follows:
.
By the time we accounted for Postmaster remuneration and the additional
Postmaster remuneration announced in August, we anticipated that we would be
ssaewe better off as against the budget, we were now anticipating that we would be
about jnumjall up as against the H1 budget;
travel products were not anticipated to continue their performance until the end
of the year;
We were anticipating broadly for the year as a whole to be
and we thought that there was still good news to come;
We had spent about! more on Postmaster remuneration and employee
wages and lost about in mails. AC was concerned that the mails numbers
were soft and that we would see costs continuing to increase;
We were seeing inflation with third party contracts, and we could not avoid this;
When the position was reviewed by management, we noted that there were lots
of positive reasons for the position, however we would continue to strive to do
better;
On the question as to why we wouldn’t give some of the {===} as against budget to
Postmasters, we haven’t said we wouldn’t do this, it is just that we are saying that
we are not going to do this now and to please allow us some more time.
Postmaster remuneration did feel uncomfortable; whilst this was up year on year
it was due to the one offs announced in August. The narrative that we were
providing to BEIS was that we were pulling very lever and doing everything we
could in terms of self-help. BEIS had been quite sharp previously when we had
mentioned additional improvements to Postmaster remuneration; it would not
help our bargaining position if we provided additional Postmaster remuneration at
this point. SI noted that we would need to think carefully regarding the
communication on this ahead of the Postmaster Business Update on 10
November. NR agreed with this. ACTION ZP queried whether we could invite our
shareholder to listen in on the Update. NR replied that this was a good idea and NR
that he would make this observation to C Creswell. EJ referenced the proposal to
switch off Horizon overnight which EJ understood could save Postmasters
significant amounts. NR agreed to look at this as part of the Update.SI referenced
the Company's good relationship with energy suppliers and queried whether
something could be achieved there to provide for Postmasters. NR replied that
unfortunately there was not. SI noted that he had energy renewals coming up on
2 of his branches and detailed some quotes, which showed material increases. On
energy front, AC advised that this was something that AC and NR had a concern
on; Postmasters should be directing attention at BEIS and their MPs on this
though, rather than the Company.
«Iahead on BOI!
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6. Three Year Strategic Plan
TABLED and NOTED was a report, ‘Closing the 3YP Gap’.
AC spoke to the paper advising as follows:
It was not anticipated that we would be in a position to recommend a 3YP to the
Board in December, that the Board could then simply recommend to our
shareholder;
Within the current funding envelope, we would break the security headroom
rules. There would be things we would not do just to stay within the rules
however, including participating in the Inquiry badly and not delivering NBIT
correctly;
Currently management did not think we could come up with a satisfactory plan.
The new NBIT proposals, including ceasing the Belfast exit, and the prospect of
putting a second device in the network to de-risk NBIT, were simply all going to
cost considerably more. We had used up the existing contingency as the
equipment was going to cost significantly more than anticipated. We could not
continue on Horizon beyond March 2025, and we were not sure Fujitsu would go
beyond this date either;
As to how we rolled out NBIT, to keep the numbers closer to the original budget
we had assumed that training material would be written by our internal
communications team and all training would be online, and that there was no
counting of cash and stock on the day of branch transition to NBIT. We have said
that we cannot roll out NBIT like that. The team are working through the detailed
planning however ditional NBIT costs are anticipated to be in the region of
“jand another may be required;
A paper from TM on change spend was included in the Board pack and TM had
got reasonably close to the challenge. However, whilst we could stop projects
and release people, it was not possible to cut these projects altogether. We still
needed to deliver it was just that we were pushing these projects out. AC shared
his view that the risks that we were taking however by delaying these projects
was not acceptable. AC provided the example of the copper wire replacement; if
this was not attended to, we carried the risk of hundreds of Post Offices not being
able to trade because we had not invested in the requisite technology;
On HMU and Inquiry costs, the teams were signalling that they were not going to
get close to the challenge, and these were areas we simply needed to get right;
The position for the commercial team would be re-examined on Friday;
We did not think that clarity would completely emerge for the Retail team, due to
the NBIT roll out. Currently it was anticipated that a significant amount of Area
Managers time in 2024 would be focused on the NBIT rollout. It was not clear as
yet how we would service the role of Area Managers then; we could move this to
the back office; however, the back office was pressed also;
We had an offer to obtain a letter of credit from Barclays and would look to
achieve something similar with Santander;
We were providing managers with permission to start making some redundancies,
this was not going to be a voluntary program however;
ZM was looking at whether we could defer some of the costs for NBIT to later
years. NR commented that ZM was being fantastic in putting his shoulder to the
wheel. Every Friday we met with each business group and the business group
provided an update on their position. The two big business units we were not
getting the cut through that we needed from were commercial and retail;
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@ What we were seeing operationally was that we simply could not cut as much as
our current financial envelope required us to; we had reached a point where we
could not take more money out of NBIT, nor the Inquiry and we needed more
money to deliver these;
© We would write to BEIS now to say that we were not recommending a 3YP at
present as we could not commit to delivering within the current financial
constraints.
The Chair noted that if the above reflected where we were going to be come early
December, and we would need to ask for additional funding which would be a difficult
conversation, in order to do it right, we would need to be clear as to why we needed the
additional funding and detail what it was we were not spending money on. The problem
with this situation was how we went about delivering and executing within a reasonable
time frame: were we in a position to do this? AC advised that management had asked
themselves the same question and the answer was no. This did have a circularity to it — for
example, we were not proposing to do anything in the network commercially, so if we
were not doing anything until 2024 did that mean that the commercial team would leave
inthe meantime? The Chair shared his view that BEIS would look to see line by line where
existing funding had been allocated and challenge applied. AC replied that management
had been through this exercise line by line; it was not the intensity of the challenge; it was
that management did not think they could deliver the asks within the existing funding
constraints. The Chair noted that in order to be able to go to BEIS and say that we needed
this amount of money we needed to be able to demonstrate this as a Board. The Chair
further noted that the request would be pored over and queried how robustly we could do
this. AC we had reviewed our numbers constantly; the paper for the December Board
which would go onto BEIS would say that we were not recommending a 3YP as we could
not deliver it within the rules the shareholder has set, and we anticipate a security
headroom issue. We would be able to say that we had achieved significant inroads
however that we could not push any further. The board would hear today from TM, ZM,
and BF on their areas and the challenge applied. AC noted that ZM was feeling certain on
what was required to deliver NBIT successfully; going through the Inquiry, ZM was simply
not prepared to make compromises he could not explain.
ZP contributed that we needed to think about our strategy around asking BEIS for
additional funding. They would be asked by central government to achieve savings on 17
November. What was the messaging to BEIS going to be? Did we need to look at divesting
Post Office Insurance? Could we ask BEIS to re-purpose some existing allocated monies?
ZP shared her view that she thought come January that the Board would not say that they
could put their names to this 3YP. NR advised that he had touched on this with the
Permanent Secretary; in terms of borrowing from another government department, NR
did not think this would be an option. ZP reiterated that she did not think that the Board
would support the 3YP. AC agreed, noting that the Board was saying that it would not
support delivering NBIT badly and delivering the Inquiry badly. CS shared her view that we
needed to use this as a pivot to move towards our longer-term viability. TC noted that the
communications with BEIS on this were likely going be very difficult and shared his view
that it was better to be up front, and to say that we were not able to provide a plan that
met all the constraints. TC cautioned that we needed to be careful on the tone adopted
and that the style of the prose was unthreatening. LH agreed with this approach;
correspondence to BEIS needed to be clear and factual. Now was the time to make big
decisions, austerity could lead to big pivots. TC reiterated his thoughts that we needed to
be conscious around the messaging to BEIS and not come across threateningly. AC noted
that BEIS often did not understand the dimensions of the issues, and we were not
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provided with an opportunity to speak to Treasury, who were in turn briefed by people
who do not understand the issues. AC advised that NR was working on how we could
acquire access to speak to the team in Treasury.
The Chair called a 10-minute recess starting at 12:45. The meeting resumed at 12:55.
Revised Change Spend
TABLED and NOTED was a report, ‘3YP - Revised Change Spend’.
TM joined the meeting at 12:55, and advised as follows:
e AChad flagged change spend challenge earlier in the meeting, so TM proposed to
provide an overview of the paper then open up for questions;
¢ TM noted that the change spend budget was already 50% lower than forecast for
the previous year, and comprised licence to operate spend, as all the
savings from the change spend budget. ZP queried, in terms of the
proposal may have been finalised however were the savings deliverable. TM
replied that he would come onto this;
e —Interms of risk appetite, there was no contingency to respond if risks materialised;
© There were 3 material increases in/ risks to the change forecast since July. The
first of these was funding allocated to HJ remediation; we were reflecting on how
much we wished to spend on this given the content of the Opening Statements at
the Inquiry. The second item was the change in HMG policy on IR35, and the third
was asset sale value. Given the current economic climate we were taking a more
stringent view on the likely proceeds from any divestment activity. That said, we
had one asset on the market, a site in Manchester, on which we had received 2
offers, and both of these offers were above expectations;
¢ Inrelation to ZP’s point, cutting back on any of the projects brought risks. In the
absence of any contingency, we were essentially saying we would take on the risk
and hope that unforeseen circumstances did not arise; this however did not align
with our experience over the last few years;
¢ — Inrelation to direct and indirect network maintenance, the cuts to the change
spend budget meant that in practice if more branches closed than expected, we
would likely replace, however the format could be different, and this could have a
trading impact as the revised branch format may not be as profitable. Another
item affected by the proposed cuts to the change spend budget was halting the
copper wire replacement by fibre project. We were assuming that Openreach
would be delaying their stop sell (copper switch off). If they did not, thena
number of branches would need to close, and we would not be able to reopen
them;
© On PUDO and automation, these represented important parts of the commercial
strategy and enhanced automation could improve Postmaster remuneration. In
the short term we could survive without these;
¢ Insummary we had a line of sight to achieving jsx2 of change spend savings,
ver there were many risks around this. Getting to the challenge amount of
of savings would be much more difficult to achieve.
On the copper wire replacement LH noted that this was occurring nationally and that
Openreach were way behind on the roll out. LH queried how much we had engaged to see
what the cost would be in the re-connection. TM advised that there would be a cost for
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each new router. LH replied that the service provider should provide the new router. TM
further advised that the costs he had been given were circa for each router and
per engineer branch visit, as well as other ancillary costs. ACTION LH advised that she nm
LH,
would take an action to speak this through with TM.
Whilst speaking about the proposed acquisition of kit and the maintenance of kit, LH
queried who was looking at the intersection points in this regard between Horizon and
NBIT. TM replied that he thought that this went to the wider conversation about device
strategy. LH likened our IT acquisition approach to an airport, where we were looking to
take off planes, and were landing others; where was the air traffic control? TM replied
that overall control for this sat in ZM’s area. LH shared her view that when we were
looking at all these areas, she was not sure if they were all linked up.
EJ raised the automation element and advised that he had some passion around this. EJ
suggested that we fast forward a few years and assume that the Labour party was in
government and the minimum wage was higher. EJ shared his view that Postmasters
would need automation in place to make Post Offices’ viable. EJ queried whether the
Company could partner on the provision of kit for example. TM replied that that was a
question better answered by ZM. We had initially included the change spend
budget for automation, however this proposed spend had been removed. We were going
to look to open a dialogue with WHS on this and SSK’s as we had no money to deliver
these. TM advised that the paper addressed how we would deliver the savings, it was not
that we would necessarily endorse the approach. The Chair asked then how we got toa
position that we could be comfortable with. TM replied that the challenge was our
funding positi
vicinity of mrs! for change spend, so the reduced plan that we started with at the
beginning of the year was already incredibly tight. The Chair asked whether there was
anything we could take out of the plan that did not assist the business to go forward. TM
answered that this depended on risk appetite and proceeded to give the example of
fogging. We had installed a number of these; whilst we did not have a legal obligation to
deliver these, we did have a moral obligation to deploy these so as to protect Postmasters.
We could take money out for deploying these further, however did the business want to
be seen as taking money out in a way that could affect Postmaster safety. AC advised that
we needed to work through the change spend challenge exercise further over the next 4
weeks. NR agreed with this: we would give the Board a view and the Board could
interrogate this. We would also look understand the expectations of our shareholder in
this regard.
; we had originally indicated that we would have need somewhere in the
TC shared his view that the shareholder needed to understand what it was that we would
be losing if the change spend budget cuts were agreed, and conversely what was covered
by the proposals TM replied that there was already an Interpath report on this. TC
reiterated that this was the cost challenge that was being proposed; if we cut
the change spend budget what precisely were we losing from the previous plan. TM drew
TC’s attention to the risks as set out in the paper. TC noted that it was the examples, such
as not deploying further fogging, that brought the paper to life. AC advised that we would
look to articulate the different risks we were taking. A more detailed briefing for the
shareholder may be required. Fogging was an excellent example on the risk appetite
point; we had deployed these to the high-risk branches which is what we set out to do.
There was no evidence that the risk profile in the network was changing, hence we were
proposing that further change spend budget for fogging be removed.
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ACTION The Chair referenced TC’s comments and requested that TM look at this. TM ™
replied that we could look at picking out the top 20 projects; there were circa 120 projects.
TC advised that we needed to be very granular about this; there were going to be very
serious consequences that could flow from our decisions. CS agreed with this and advised
that she thought it would be helpful to understand the impacts collectively on the
different business units. TC asked that the further work also highlight instances where the
spend was still required but just being deferred.
ZP noted the 4 smaller projects identified where change challenge had been realised and
queried the reference to a further 6 small projects where savings might be possible. TM
replied that the allocated target had been applied as against the 15 largest projects. On
the smaller projects there was a feeling that we had squeezed the pips as far as possible.
TM left the meeting at 13:20.
SPMP Deep dive including NBIT Roll-out
TABLED and NOTED was a report, ‘Strategic Platform Modernisation (SPMP) update’.
ZM joined the meeting at 13:22. ZM advised as follows:
e the release 1 of the NBIT counter went live in the DMB branch in Aldwych and in St
John’s, Leeds during October. Positive feedback had been received from
Postmasters in relation to the launch thus far. LH had attended Aldwych in
person. SI advised that he was scheduled to visit St John’s Leeds. ACTION ZM ZM/M
advised that we could organise a visit for Board members to Aldwych to observe _Roberts
the new system;
¢ — Inrespect of NBIT and the 3YP, whilst we could live within current funding
envelope, the view was that this would have catastrophic consequences for the
Company and the shareholder. Additional costs to complete the NBIT project had
been identified in the amount of approximately !==-=, The additional costs were
due to new items that had come into scope, or non-discretionary costs, for
example, the costs of new hardware. Although we had scored a few own goals in
relation to the project, the increase in costs was largely due to external forces, not
the project not being delivered. There was a very clear difference between this
project and the Belfast exit project; here it was explicit that there were additional
items of scope proposed to be added.
LH asked that we clarify up front that the Board were still waiting for a response to the re-
visiting of the original business case, to confirm that exiting Horizon continued to make
financial sense for the Company. This was due to be presented to the Board come
January.
LH referenced the proposed allocation of } for NBIT Postmaster training courses and
shared her view that this was quite a lot of money. LH queried whether the increase in
training costs was being driven perhaps by the experience that people were having in
relation to the Inquiry. ACTION In any case LH questioned why the training and support
was going to cost this much and requested that ZM come back with a deep dive on the zM
proposals in relation to training and support. ZM replied that he was looking at the
narrative coming out of the Inquiry in relation to the rollout of the Horizon system. The
view was that Postmasters were not trained properly, and Horizon was not deployed
properly — we were planning to avoid these errors when NBIT was rolled out. ZM advised
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that even without the Inquiry ZM thought that we would be advocating the same
proposed approach. LH replied that she recalled that we had considerable funds allocated
requested — so what had changed — and why was this so much more. In relation to the
increased cost for training, ZM advised that there were 3 big drivers that went to
explaining the proposed cost increase. The first of these was the use of a learning
management system. We had originally thought that we would use the Company’s
existing system, however this was not viable, and we needed to generate a separate
system. The second driver was that the original business case was predicated on most
Postmasters engaging in online training, with a small number of Postmasters undertaking
training in person. What we had learned from the Inquiry was that this approach was not
good enough, so we had put in for virtual classrooms and physical classrooms.
Postmasters and their staff could still complete their training online, however virtual
classrooms and physical classrooms were then also available. Without this, we could have
Postmasters who were not able to absorb the online training; we wanted to have in branch
training for assurance that branches were ready to go live.
EJ queried whether it would be possible to have dedicated high-speed assistance in
relation to the launch, for example, so it would only be a few seconds before a call was
answered. EJ referenced the average age of Postmasters and advised that Horizon might
be the only IT system that they use. EJ queried whether there was an approach
somewhere between what ZM was proposing, a blended option perhaps? LH took the
point and observed that of course no one Postmaster was the same, so did the proposal in
relation to training assume that all Postmasters were to receive the top level of support.
ZM replied no; as a starting point all Postmasters would receive the online training
content. We proposed to obtain professionals to deliver the online content. The next step
would be that Postmasters attended the online classroom, then there would be in person
training for 2 days. We would have a list Postmaster by Postmaster and staff member by
staff member of who needed the training. As to why we needed to reinforce the Retail
team, in the original business plan we had planned to implement on a standard basis.
However, via the Inquiry, it had become apparent that a lot of Postmasters had the best
relationship with their area managers with whom the Postmasters had trust and received
support, so it was proposed that area managers went in to support the rollout, which
would mean area managers working on the rollout for 12 — 18 months. In essence we
were utilising the area manager/ Postmaster relationship — we could not buy this on the
market. LH advised that she thought that the Board needed to hear from the Retail team
with their perspective on the proposal. AC advised that this was being worked on by the
Retail team at present. LH shared her view that this was something that the Retail team
needed to take on, and not have put on them. ZM noted that there already exists an
action item for M Roberts to bring this item back to the Board. CS queried, in terms of
area managers and what they were doing now, were we satisfied that that was right. NR
advised that we would need to look at a week in the life of an area manager, it would not
be a complete backfill exercise.
Sl expressed concern regarding the training materials being written by professionals and
asked whether this could not have been undertaken by Postmasters. SI also asked that the
training materials be provided in multiple languages. ZM replied that we had 3 or 4
Postmasters seconded full time to the project. AC advised that he thought that a lot of the
training would be by way of video. EJ queried which languages SI was thinking the training
be delivered in. SI replied Urdu and Gujrati as a starting point.
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ZP thanked ZM for the helpful update and advised that she had 3 reflections to share.
Firstly, on phase 1, what was NBIT going to deliver, what were we actually going to get?
ZM replied by inviting ZP to the Aldwych branch and assured ZP that seeing was believing.
Release 2 would contain all Mails and Banking products, so if release 2 was successful we
would be significantly progressed. ZP referenced numbered paragraph 5 of the paper
which set out the compromises we are going to need to make and accept, and that the
Board would need to collectively consider these. ZP also noted the 2-year period for which
the NBIT project had been running and that there had been many learnings along the way:
ZP wanted to make sure that we had bottomed out the learnings as much as possible and
thought that we had one last chance to go in for additional funding. ZM replied that whilst
we could exist within the current funding envelope, that the consequences were going to
be unpleasant. AC advised that he would simply say no to delivering NBIT within the
existing funding position. LH expressed concern around the moving around between
business units of the cyber security costs. AC reminded the Board about the previous
discussions on risk appetite, and that the Board had said that we could accept cyber
security risk however not on NBIT. In respect of the proposed cost increases, TC advised
that the Board would need to understand what was in the original business case and what
was not, and we needed to then explain this to BEIS. We needed to be very strong on this
one, given the value of the change. TC further advised that he was somewhat confused on
the numbers. ZM addressed this briefly. TC shared his thoughts that the timing and the
explanation on this needed to be now, as this was when we were looking to go into bat
with BEIS. LH agreed with this, however referenced ZP’s point about going to the
shareholder with a proposal that the Board were comfortable with. TC agreed and noted
that it was about creditability. ZP shared her view that inflation was going to stay high for
a long time, so this should be factored in.
The Chair summarised the asks of the Board for the December and January Board
meetings. ZM noted these as being a paper be provided for the December Board meeting
detailing the difference in the cost to deliver NBIT and how this had happened. For the
January Board meeting an NBIT training deep dive had been requested, setting out what
was proposed and the costings. NR replied that he thought there was a strong appetite to
see some of this detail in December. AC agreed with this and requested that further
details of the roll-out be brought back to the Board in December. ZP asked about the
timing for ZM to meet with BEIS. ZM advised that he would push his current meeting with
BEIS back.
In relation to the procurement of the hardware, SI recalled that when this was discussed
that there would be a screen on the customer facing side and potentially a scanner. The
majority of time wasted in branch was around taking a phone from a customer — a screen
and scanner on the customer facing side would make the customer journey much quicker.
SI shared his view that he thought that this was important for our future. ZM advised that
there were no customer facing screens and that this decision had been taken in order to
save costs. SI reiterated his view to which EJ agreed.
ZM left the meeting at 13:55.
Revised HMU/ Inquiry spend
BF and SR joined the meeting at 13:55.
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The Chair advised that the Board was invited to discuss the proposed approach to HMU/
Inquiry spend, and then to make a decision in this respect come the December Board
meeting.
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The Chair called for further questions for BF and SR. There were no further questions.
The Chair paused to provide a summary of the agreed way forward on the 3YP and the
approach to the shareholder, being the production of 2 narratives as follows:
- Firstly a high level narrative outlining the revenue drivers and other pressures
on the Profit and Loss statement, which would also detail the anticipated
impacts on Postmaster remuneration, and risks around NBIT and the Inquiry.
This narrative would raise questions in terms of the long term viability of the
Company, demonstrate the funding gap, and assist to illuminate the answer to
the question of the size and shape of the network, as against the timing of the
BEIS policy review; and
- Secondly a detailed narrative setting out the work completed on cost
management and self-help. This work needed to be completed to a level to be
verifiable for the shareholder to audit.
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The Chair further noted the Board’s reflections on the appropriate tone to adopt in
relation to the shareholder; we needed to be careful to avoid any language or positioning
that could be perceived as an ultimatum. The sequencing was important, with the
finalisation of the work on the 3YP, the imminent arrival of the incoming Chair of the
Board, new ministerial appointments at BEIS, and wider issues in government.
Historical Matters
Historical Matters Unit Update
TABLED and NOTED was the following paper, ‘Historical Matters Programme Update’.
Public Inquiry Update and Funding Request
TABLED and NOTED was the following paper, ‘Post Office Horizon IT Inquiry: Update’.
BF and SR left the meeting at 14:18.
Approval Requests
SPMP Device Funding Drawdown
TABLED and NOTED was a paper, ‘SPMP Device Funding Drawdown’.
LH had a query on the devices; she could not see the ramp up and it was not clear at any
one point whether we would have too much or too little kit. CS advised that she had a
question on the hedging and the financial piece, and a second question around the
operational logistics of the purchasing. We were committing to the purchases up front so
had a contingent liability, could we get caught operationally and then not have the items
at the relevant time. CS was concerned about this issue, given changes to freight and that
we were operationally in a different environment now. AC agreed that these were
legitimate concerns, however provided assurance that management were facing these
challenges. ACTION NR advised that he would pick up these matters with ZM. zm
The Board RESOLVED that the Strategic Platform Modernisation Programme purchase of
full counter devices up to the value of I! Tbe and is hereby APPROVED.
External Auditor’s proposed fees and terms
TABLED and NOTED was a paper, ‘External Auditor Appointment Fee and Scope’.
NOTING the RECOMMENDATION of the Audit, Risk and Compliance Committee, the Board
RESOLVED that PwC's:
(i) fees for the 2022/23 financial year in the amount o'
hereby APPROVED;
(i) scope for the 2022/23 financial year be and is hereby APPROVED; and
(iii) terms of engagement be in the same form as previously, subject to any legal or
regulatory amendments required.
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FY21/22 ARA Publication and Filing
TABLED and NOTED was a paper, ‘FY21/22 ARA filing’.
CS noted the approval request in the paper, however advised that the Board may need to
consider a Plan B. AC replied that if we were not able to file by December, we would need
to re-open the accounts. LH replied that a Plan B could be not including the DRR for
publishing with the FY21/22 ARA. CS replied that she would discuss with PwC whether this
was feasible. TC shared his view that not including the DRR would cause more issues. AC
agreed with this. ZP suggested that we write to BEIS, reminding them that we were
waiting for their approval, and advising that we were due to file in December.
Subject to the shareholder approving FY21/22 STIP and FY21/24 LTIP elements of the
Executive Director’s remuneration, the Board RESOLVED that:
(i) laying of the Company’s Annual Report and Accounts for FY21/22 in
Parliament in December 2022 be and is hereby APPROVED;
(ii) filing of the Company’s Annual Report and Accounts for FY21/22 with the
Registrar of Companies in December 2022 be and is hereby APPROVED; and
(iii) the Company Secretary be instructed to file the Company’s Annual Report and
Accounts for FY21/22 with the Registrar of Companies, following the laying of
the Company’s Annual Report and Accounts for FY21/22 in Parliament.
Postal Museum Loans
TABLED and NOTED was a paper, ‘The Postal Museum loans’.
The Board RESOLVED:
(i) to DELEGATE authority to the Group Chief Executive Officer to finalise the
terms of the repayment plan in respect of the outstanding loan due from The
Postal Museum in the amount of
(ii) to authorise any 2 Directors or a Director and the Company Secretary to sign
any resulting documentation.
Procurement
TABLED and NOTED were the following papers:
(i) ‘Procurement Report’;
(ii) ‘Appendix 1 - Security Pay-out Contract’;
(iii) ‘Appendix 2 - Deployment Services for NBIT System to Branches Sourcing
Strategy’;
(iv) ‘Appendix 3 - Software Reseller Sourcing Strategy’;
(v) ‘Security Pay-out Contract - Procurement Risk Exception Note’; and
(vi) “Security Pay-out Contract - Legal Risk Note’.
Appendix 1
In relation to Appendix 1, AC noted that an internal investigation had been initiated and
that BF’s team was leading this. There may be disciplinary consequences depending on
the results of the investigation.
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The Board RESOLVED a direct award fe
‘curity pay-out services to Zunoma with
other pay-out schemes with a contract period commencing on 1 September 2022 expiring
30 June 2023 be and is hereby APPROVED.
Appendix 2
In relation to Appendix 2, TC queried the subject matter of the procurement. The Chair
advised that the Board were being asked to approve the procurement approach at this
stage, without approving actual spend. ACTION TC took the point and asked that the L Carroll
matter be returned to the Board to provide an update once the subject matter was
defined and actual spend was contemplated.
The Board RESOLVED:
(i) Procurement be conducted via the CCS Technology Service 3 Lot 2 (Transition
and Transformation) Framework to select a supplier to provide deployment
services for NBIT with length of contract to be! IRRELEVANT with one {!
APPROVED;
(ii) to DELEGATE authority to the GE to award the contract and to finalise the
terms of the contract; and
(iii) to authorise any 2 Directors or any Director and the Company Secretary to
execute the contract.
Appendix 3
TC queried whether we were currently spending at the level indicated in the paper. AC
clarified that the amount quoted in the paper was a maximum contract value, and we
would be committing to spend a minimum of
The Board RESOLVED:
(i) Procurement be conducted via a competition under the Crown Commercial
Services TePAS Framework to select a supplier to provide Software Reseller
Services to Post Office with length of contract to be [IRRELEVANT with a
maximum value of with a minimum commitment spend of
annum be and is hereby APPROVED;
(ii) to DELEGATE authority to the GE to award the contract and to finalise the
terms of the contract; and
(iii) to authorise any 2 Directors or any Director and the Company Secretary to
execute the contract.
12. Noting Papers with no Presentation
12.1 Health & Safety Report
TABLED and NOTED was a paper, ‘Health & Safety Monthly Report’.
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Common Issues Judgement Dashboard
TABLED and NOTED were the following papers:
(i) ‘Common Issues Judgment Dashboard P6 Cover Paper’; and
(ii) ‘Common Issues Judgment Dashboard P6’.
The Chair observed that the Postmaster training point was highlighted in the Dashboard.
Noting and Governance Items
Incoming Chair - Independence
TABLED and NOTED was a paper, ‘Independence of incoming Chair’.
RS spoke briefly to the paper, indicating that the matter at hand was in relation to an
assessment as to the independence of the incoming Chair, rather than a conflict issue. RS
advised that her view, and that of our internal and external counsel, was that it was open
to the Board to consider the incoming Chair could be considered independent upon
appointment as Chair.
RS noted that ZP had advised RS of the incoming Chair’s shareholding at WH Smith plc. RS
advised that she was checking the point with H Staunton, however in the meantime we
had conducted searches and it appeared that the incoming Chair still held these shares. TC
advised that he thought the paper should have referenced the shares. RS took the point
however advised that this was more of a conflict point and H Staunton would need to
declare this conflict when he joined the Board and that a plan would be put in place to
manage this conflict.
The Board of Directors RESOLVED that Mr Staunton would be independent upon
appointment to the Post Office Limited Board. In making their decision, the Directors
concluded that Post Office’s business relationship with WH Smith plc would not affect Mr
Staunton’s independence, objective judgement, and his ability to hold executive
management to account. Furthermore, WH Smith plc was only one of Post Office’s strategic
partners and the Board have determined that there are no other circumstances or
relationships that can be considered to impair Mr Staunton’s independence upon
appointment.
Moreover, Mr Staunton has extensive experience in leading and contributing to Boards and
holding executive management teams to account both as a Chair and a non-executive
director. As well as being the Chair of WH Smith plc, Mr Staunton most recent roles include
being Chair of Capital & Counties Properties Plc and Exeter University Business School.
Mr Staunton will be stepping down from his role as Chair of WH Smith plc on 30" November
2022 and will be joining the Post Office Limited Board on 1 December 2022. As such, there
will be no period of overlap in conducting these two appointments.
Sealings Report
The Board APPROVED the affixing of the Common Seal of the Company to the documents
set out against itemsnumbered 2156, and 2158 — 2161 inclusive in the Seals Register.
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15.
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Future Meeting Dates
The future meeting dates were NOTED.
Forward Agenda
The Forward Agenda was NOTED.
Any Other Business
There being no other business the Chair declared the meeting closed at 14:37.
Date of next scheduled meeting
Chairman
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Voting Results for Board Minutes from 01.11.2022 (approved on 06.12.2022)
‘The signature vote has been passed. 1 votes are required to pass the vote, of which 0 must be independent.
Vote Response Count (%)
For 1 (100%)
Against 0 (0%)
Abstained 0 (0%)
Not Cast 0 (0%)
Voter Status
Name Vote Voted On
Tidswell, Ben For 12/12/2022 17:12
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