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Briefing for meeting with Tim Parker, 11 September 2018
Tim has recently been appointed for a second term as chair of Post Office Limited
(POL). His first term included:
e Transformation of the branch network, which has stabilised at ~ 11, 500
branches
e Cutting costs and moving into profitability. Results for FY 17/18 are imminent
and will show EBITDAS of £35m compared to £90m loss in 2013/14
e Funding Agreement with HMG covering the 3 years to April 2021, allowing for
£210m of public investment and £160m of subsidy payments
Challenges and opportunities
e Litigation —- a group of former sub-postmasters claim they were wrongly fined
or prosecuted for discrepancies that they say arose from POL’s Horizon IT
system and associated processes. The trial begins 5 November and POL will
brief BEIS Perm Sec and minister on 17 October. UKGI have not yet been
satisfied that the business has done enough to identify, assess and manage
the risks
e IT transformation - POL have made good progress in modernising an
antiquated IT architecture. The next step is a migration of back office
systems. This has been put back repeatedly, and now looks likely to happen
late 2018 or early 2019
e Traditional business facing competition and migration to online delivery
e Retail strategy to develop new formats and improve the franchise model (only
3% of branches are directly managed). This needs to link with the growing
role in basic banking and a proposed discussion paper on the long-term
future of Post Office.
e Spending Review will look beyond period of current Funding Agreement and
will need a mechanism for POL to fund strategic investments eg acquisitions
e Getting the right capacity in POL’s management team and ensuring it is not
overstretched by the Board’s ambition. Board has previously raised concerns
about a lack of commercial expertise in relation to critical negotiations
UKGI/ POL relations
e While we have a strong relationship with both Tim and POL’s CEO (Paula
Vennells), there has been some recent tension with specific individuals
pushing back at what they see as undue interference. This has centred
around the litigation case and financial reporting - where we have been
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operationalising the Funding Agreement’s requirements for quarterly reports
to UKGI
Policy sponsorship of POL is moving from UKGI to BEIS and a new
framework document is being agreed with POL to formalise governance
arrangements
It would be good to get Tim’s take on this