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ICL PLC
INTERNATIONAL COMPUTERS LIMITED
ICL GLOBAL INVESTMENTS LIMITED
Minutes of the ICL Executive Management Committee
held on Monday 3rd September 1996
at ICL, ICL House, 1 High Street, Putney SW15 1SW.
Present: Mr
Mr
Mr
Mr
Mr
Mr
Mr
Mr
Mr
Mr
Ms
Mr
Mr
In
attendance: Mr
Mr
Mr
Mr
Mr
Ms
Apologies for absence were received from
Mr N P D Eadie.
ACTION BY
96/200
JGL, DJB
Secretary, and
ALL to Note
96/201
manexec/minutes/02.09.96
WM
POH-1
K Todd
Christou
Davison (
Hartnell
Livesey-Haworth
Lillywhite
E Powell
(Chairman)
Goasdoué
Teague
Escudier
M-A Van Ingen
H Watanabe
P M Whitwam
HOUDMUDZsewWH
G“Qemanwa
R F Scott
T Yamada
M J Austin (Item 201)
K Varuohovi (Item 201)
A Kelly (Item 201)
S McLaren-Thomson (Item 204)
Mr D J Berry and
NEW MEMBERS OF THE COMMITTEE
Marie-Ann, Tim, Rod and David Teague were attending
their first meeting as full Committee Members and
would now receive all papers including ERP and the
Forecast Blue Books. This also applied to David
Berry, who was not present.
ACTUAL AND PERFORMANCE FORECAST REVIEWS
John Lillywhite reported with the Group Executive
Directors/Managing Directors commenting for their
own business. Points noted:
Page 1
a)
b)
PMW 11/9
c)
ALL
da)
ALL to Note
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For the YtD, actual revenue was £99m below budget
and, at a loss of £16.8m, PbT for Systems and
Services was £4.9m below budget. Adding D2D and
Volume Products the loss so far for the year of
£63m was £32m below budget and £11.9m below last
year at this time.
The forecasts for Q3 and the full year showed
revenue falling, compared to the previous forecast
but John said they still implied a higher revenue
performance from August to December than had been
achieved last year.
Forecast PbT had been held for Q3 and the full year
but there had been increases in the task, to £4.9m
for Q3 and £11.1m for the full year. Therefore the
full year PbT forecast given to Fujitsu at the end
of July, £15m, depended on a task of £11.1m to be
achieved. John said the only significant central
help with the PbT would be if ICL Sorbus decided to
establish help desk facilities at STE09, preferably
in Q3, which would enable release of a provision
taken against vacant space in that building. Paul
would
investigate this. Further on property, it was
reported the Inland Revenue would not now wish to
take over MAN12 (Arndale Centre building). If it
was rebuilt we may still have lessee’s obligations
although if the rebuilding project was funded by
the EC, we could benefit.
Inventories, previously heading downwards were now
beginning to increase slightly to budget.
Receivables were better than forecast but up on
budget. John said receivables were too high
considering the decline in revenue to budget.
The rolling forecast showed that quarters 1, 2 and
3 of 1997 were expected to show revenue increases
of 11.4%, 16.8% and 14.6% respectively. During
1996 so far we had achieved 1% growth on 1995 and
the forecast was a 6% increase for the whole of the
year. This taken together with some unrealistic
profit forecasts for the first % of 1997 led John
to believe that not enough attention was being paid -
to the forecast this far out.
The cash forecast at £156m for the full year
compared to £83.7m for year to date, was beginning
to creep up although John acknowledged that the
central programmes of cash actions would be likely
to reduce the year end out turn significantly, as
previously.
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e) Some comments on individual businesses:
hose PbT forecast had deteriorated slightly
“were finding it difficult to make up ground with
the continuing uncertainty over their ownership.
Torsten would investigate the FICHL forecast (and
any additional possibilities) for Sparc servers and
ensure Alastair was working to this in terms of
Tv 6/9 factory loading etc.
Keith would discuss with David, the status
DIT 13/9 of negotiations with EDS.
TeamWARE was a continuing concern with Kari saying
that the Q3 and full year revenue forecast, both of
which were substantially below our aspirations, now
contained significant risk. Torsten would brief
Jukka on the discussion, prior to the next review
of the business with Keith, and would also cover
particularly the product roadmap and our offering
to compare to Microsoft Exchange and other packaged
Tv 6/9 products. Our support capability was also
important. Torsten would also check out those
Tv 6/9 client managers who were not attending the events
arranged by TeamWARE and defaulters would be
advised to the relevant GED/MD. Torsten would also
Tv 6/9 arrange for weekly good news reports to come out on
TeamWARE sales/successes. Keith communicates
DIT 6/9 considerable concern to Jukka on the TeamWARE
situation.
Marie-Ann said the '« forecast of PbT £3.
the full year was at risk by £400k expected !
losses and £600k costs to close the retail o tlet.
She was working t rease the forecast to cover
these items. On Mari having
M-AVI 6/9 considerable problems with: who were not
signing up to the expected gt mts. She would
discuss this offline with Keith.
Richard L-H explained the Enterprises Group issues
including serious deteriorations in Finland and
Sweden and further risks in ICL Enterprises UK.
From the last forecast to this forecast, £5m of
Richard’s £10m contingency had been used up to hold
the full year forecast. Richard was vigorously
On the good news
‘ontract and the South
had both just been
-alive.on the
IRRELEVANT
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RL-H/NPDE
RL-H
JGL 6/9
PMW 20/9
f)
ALL to Note
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The Committee note considerable concern over the BT
mediation contract now on Red Alert for 60 days.
The principal issue remained unreliability of the
large servers when heavily utilised. Richard and
Ninian would brief Keith after the next review and
Richard added there was an unforecast cost
implication of £8m for his business and £10m for
the whole of ICL, in the worst case scenario.
Keith drew attention to the huge step between Q3
and Q4, for Richard’s businesses and advised on
getting the cost profile right for the business
circumstances.
The Retail forecast for Q3 had dropped by £1m but
had been held for the full year. Rod was
conducting reviews to try to improve Q3. Ona
discounting arrangement agreed between Messrs Palk
and Morgan, there was a forecast £2m profit impact
to be dealt with. John would arbitrate between
David Palk and Adrian King if necessary and would
advise Keith on the facts and consequences and how
it happened.
In FSS, Tim was still working to recover to budget
in Q3 and the full year, which might be achievable
since the forecast revenue/profit were flat rather
than peaking towards the year end. He was
concerned about commitment and competence in his
sales force and managers.
Sorbus continued to cause concern with both the Q3
and full year and PbT profit having been lowered
this time by in total of £3m and Paul identified a
further £4m in risks. Paul said Project Dawn was
important to Sorbus’ recovery and when the new
project manager had fully acquainted himself and
produced a proper project plan, Keith and Paul
would review it.
On Outsourcing, Nigel still hoped to improve to
budget, but by Q4 rather than Q3.
John asked the GEDs/MDs to carefully watch revenue
growth and the growing tendency for backending in
both revenue and profit. Also the tendency for
internal revenue to increase rather than external
revenue might mean margin deterioration in future
rather than real growth in the business. Keith
emphasised the importance of Q3 to Fujitsu and ICL
and how vital it was to avoid any deterioration in
the commitment we had given to Fujitsu for this
quarter and for the full year, of £15m PbT. We
were losing business we should win and it was
important for GEDs/MDs to understand why this was
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ALL to Note
TE 6/9
96/202
WID
96/203
96/204
ALL to Note
Tv 6/9
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happening (for example we should understand the
risks better). All necessary cost cutting actions
should be taken, including stopping discretionary
spend and recruitment and actions with suppliers.
Keith said it was easy to become depressed by the
forecast but there was much good news including the
Pathway, where we were likely to
only pilot
I (where Tim would see if this could be
“announced, which would be particularly helpful with
First Union and others in the US).
John said the contract, which would now go on until
the end of December 1999, had been signed but the
announcement was embargoed until 30 September.
£2m had now been released into this year’s forecast
in John’s business. Keith emphasised the
importance of managing the risks in the contract
and keeping a risk log of the actions etc to be
taken to enable the contract to emerge into
profitability in the end.
ICL PATHWAY LIMITED
Keith and Richard Christou reported on the Board
meeting just held, where Pathway, although there
was a very great deal to be done, was meeting its
early deadlines leading to the initial ‘go live’ of
23 September.
ELECTRONIC COMMERCE
Sue McLaren-Thomson gave a presentation
concentrating on what electronic commerce was,
ICL’s opportunity and on the comments received from
the Committee members on the document she had
circulated previously. Inevitably, elements of
electronic commerce development would remain in
various of the ICL businesses although it was
accepted there was a need for a common strong line
and message that ICL was very much in this
business. Investment in electronic commerce
projects should be identified in strat plans.
It was agreed there would be light central
coordination at this stage, managed by Torsten who
in particular would pick up on the key actions
identified by Sue in her presentation. It would be
important to keep in close contact with Fujitsu on
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Tv electronic commerce and to remain aware of the
internal (both within the ICL group and the Fujitsu
group asa whole) dimensions.
96/205
There was a discussion on several of the
individuals mentioned on the
recently by David Berry. Members of the Committee
would pick up the relevant actions. (Company
Secretary 6/9 Secretary will brief David Berry/Mark
Birchenhough) .
96/206 PROCESS SOLUTIONS AND SERVICEPOWER DIVESTMENT
PROPOSALS
The papers on these had been circulated and
approved by the Committee members. This minute
notes this approval and that authority to negotiate
and conclude the sales has been delegated to
RL-H/RC Richard Livesey-Haworth and Richard Christou.
96/207 COUNTRY MANAGEMENT BOARDS
Torsten circulated a paper and his proposal was
approved that Country Management Boards be put in
place to support the host Country Managers in their
host country management roles. Any additional
comments would be fed into Torsten. It was also
agreed that Paul and Rod would act as the Country
Management Board for Italy, Austria and Switzerland
and Committee Members if they wished would comment
to Keith on whether they thought it necessary to
ALL have a host Country Manager and a Country
Management Board for the UK. There would be one
RL-H/JGL 6/9 for Ireland, however and Richard L-H/John would
advise Torsten.
a Ba
96/208 ICL PRODUCT CONFORMITY PANEL - RED ALERT STATUS
REPORT
The Committee noted the report and confirmed its
intention to monitor and review all safety related
matters.
Regarding the present report, Ninian would be asked
to advise on the closure criteria for the 151V/152V
monitor inspection plan. Ninian would also be
NPDE 13/9 asked to review with Richard Christou whether ICL
had any liability at this stage despite the fact
that not all monitors had been inspected.
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Also, on the S90CD Notebook overheating, Ninian
NPDE 13/9 would be asked to advise on the results of the
Fujitsu ICL Finland and ICL Norway investigation.
96/209 SPAIN
It was noted the Fujitsu Executive Management
Committee had agreed the merger of the Fujitsu and
ICL businesses in Spain. Work was progressing and
in connection with this, Paul and Ninian would be
likely to meet Kojima-san in the following week.
Richard would arrange for Robin Hacking to be
RL-H 6/9 available in the event that Project Doris (Asia)
could also be discussed with Kojima-san.
96/210 SEKIZAWA-SAN’S VISIT
Hideo mentioned Sekizawa-san would be visiting the
UK, mainly to address the Fujitsu SuperComputer
User Conference in Manchester. However, it seemed
that David Mills might be arranging for Mr Sekizawa
HW 6/9 to meet the press and Hideo would advise Keith, as
the Senior Fujitsu Group Executive in the UK, of
what the proposals were.
96/211 ‘GOOD NEWS’
Paul and Joe would ensure that EMC members got
individual copies of the Good News circulars being
issued by the Press Office since those who had
PMW/JWG 6/9 suppressed ‘junk mail’ on their Officepower were
not receiving it.
96/212
Paul, who was visiting: iwith David Teague and
John Gardner would represent ICL collectively in
discussions with this utility/outsourcer which was
chaired by Derek Lewis. Several ICL units needed
to be involved in the approach to this customer,
including CFM and the next Account Review, would
Tv 9/9 consider the situation and whether a new client
Manager needed to be appointed.
96/213 PURCHASING REBATE SCHEME
Richard Christou mentioned the scheme had now been
launched officially and requested that all
Committee members support this opportunity to save
ALL money.
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96/214 FUTURE MEETINGS
Keith referred to the objectives he wished the
Committee to fulfil in its meetings including
leadership in ICL towards profit and. mobilising the
common interests of the Committee members. In ‘
future members would receive the Technical Strategy
NPDE Board minutes and a programme would be developed
for handling key industry relationships.
There was some consensus among Committee members
that the forecast reviews were evolving in to a
more useful format with a main presentation by John
and shorter more strictly relevant contributions by
GEDs/MDs on the important changes/remedial actions
in their businesses.
96/215 DATE OF NEXT MEETING
Date of next Account Review: Monday, 9th September
1996 at 2pm.
Date of next full EMC: Monday, 30th September 1996
at 2pm.
96/216 CLAES HULTMAN
The Committee received a presentation by Claes
followed by discussion and dinner. Claes had now
managed 9 corporate recovery situations and he
advised on how ICL might handle some of its issues.
He particularly mentioned price management which he
thought had brought about 2/3 of the improvements
in the numbers in the situations he had been
involved in (1/3 from cost cutting), setting
performance targets, reducing the headquarters
functions dramatically and his proposition that if
pre-tax profit was less than 10% of revenue then a
business should not be allowed to grow, only
improve profit.
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