y, MEMORANDUM
f Company Secretary’s Office
29" June 1999
To: The Directors, ICL PLC
From: TK Todd
Re: Capital Injection
In the paper I sent you with my memo of 21" May concerning the negotiations on
Pathway, we mentioned that Fujitsu had undertaken to make an injection of new
capital into ICL PLC to restore consolidated net worth as defined by the banking
covenants, to £225m, by 30" June.
The amount of the capital injection needed has been established at £131.7m and,
after discussion, it is proposed that the injection should take place by issue of new
ordinary shares at a price of £0.50p per share.
More detail and the necessary formalities are set out in the attached resolutions.
May I ask that if you approve, you kindly sign these and fax the signature page
back to Rod Scott (fax no:!
A paper from John Bennett is attached reporting progress on the Pathway Project
following the Government’s decision to cancel the benefit payment card services
and go ahead with ICL Pathway on the new basis, and the ICL decision to take a
provision of £180m in the 1998/9 accounts.
Thank you
p-p. Keith Todd
iclple/m-capital injection
FUJ00003633
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ICL PLC
Written Resolution of all the Directors of the Company pursuant to Article 97(A) of
the Articles of Association of the Company.
The Board note that
1.
Following the creation of a provision of £180m in the Company’s accounts,
arising out of the ICL Pathway Private Finance Initiative contract with Post
Office Counters Limited and the Department of Social Security it was proposed
that the Company’s major shareholder, Fujitsu Limited would subscribe for
new ordinary shares in the capital of the Company (the “capital injection”) in
order to restore the company’s consolidated net worth (as defined in the
banking covenants) to £225m.
The capital injection would total £131.7m and the new Ordinary shares would
be allotted to Fujitsu Limited, it was proposed, on 30" June 1999.
In order to make the capital injection it would be necessary to formally increase
both the authorised and the issued share capital of the Company and it was
proposed that 150,688,800 unclassified shares at present part of the authorised
capital be redesignated as ordinary shares for issue as part of the capital
injection. The Company’s other shareholder, Fujitsu International Finance
Nederland B.V. has a right to be offered an appropriate proportion of the new
shares but it was proposed to disapply this right of pre-emption in favour of
Fujitsu Limited’s subscription for all the new shares.
The most recent valuation of the Company’s shares by the UK Inland Revenue
(for the purposes of the grant of share options to employees) was £0.50p per
share. Since that valuation, the Company had announced (inter alia) the
following:
> the ICL Pathway related provision of £180m and a profitable
restructured contract of approximately £1bn revenue over the six years
to March 2005.
> for the 12 months to March 1999, an increase in revenue including
growth of 16% on 1998 in revenue from strategic customers, an increase
in operating profit on ongoing operations before exceptional charges of
19%, improved operating margin on ongoing operations and an
increased forward order book totalling £4.0bn.
Having regard to these and other factors, the Board were advised the relevant
ICL executives believed the value of shares in ICL was not materially different
from £0.50p and consequently it was proposed that the capital injection take
place at a price of £0.50p per new ordinary share.
To achieve the capital injection action is required by the Board and (on the
recommendation of the Board) by the Company’s shareholders in accordance
with the resolutions below and the Board hereby
resolution/icl-capital injection
FUJ00003633
FUJ00003633
FUJ00003633
FUJ00003633
RESOLVE THAT
a) the capital injection generally described above should proceed
b) the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
value to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
c) the attached shareholders’ resolution be and is hereby approved for issue
to the Company shareholders in lieu of holding an Extraordinary
General Meeting to consider the matters set out therein
d) the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
e) subject to the passing of the shareholders resolution referred to at
c) above on 29th June 1999 and receipt on 30th June 1999 of a
completed application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited, the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
f) Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and
things sign any and all documents make or give any and all entries
filings confirmations, receipts or acknowledgements in order to effect
and complete the capital injection and related matters.
Dated this 29th day of June 1999
Sir Peter Bonfield-~ M Naruto
T Sekizawa
Vicomte Davignon H Kurokawa
H Sakai JJ Ollila
resolutionvicl-capital injection
FUJ00003633
FUJ00003633
RESOLVE THAT
a) the capital injection generally described above should proceed
b) _ the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
value to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
c) the attached shareholders’ resolution be and is hereby approved for issue
to the Company shareholders in lieu of holding an Extraordinary
General Meeting to consider the matters set out therein
d) __ the attached form of application for new ordinary shares in the capital of
. the Company (the application. form) be and is hereby approved for the
capital injection
e) subject to the passing of the shareholders resolution referred to at
c) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
f) Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and
things sign any and all documents make or give any and all entries
filings confirmations, receipts or acknowledgements in order to effect
and complete the capital injection and related matters.
Dated this 29" day of June 1999
Sir Peter Bonfield M Naruto
TK Todd T Sekizawa
Vicomte Davignon H Kurokawa
resolutionvicl-capital injection
Fax sence py
iii Sad
)
»)
5)
d)
)
RESOLVE THAT
the capital injection generally described above should proceed
the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150,688,800 ordinary shares of 25p cach nominal
value to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
the attached shareholders’ resolution be and is hereby approved for issue
to the Company shareholders in licu of holding an Extraordinary
General Mecting to consider the matters set out therein
the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to at
c) above on 29th June 1999 and receipt on 30th June 1999 of a
completed application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company's Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Seeretary be and are hereby authorised to do all necessary acts and
things sign any and all documents make or give any and all cnirics
filings confirmations, receipts or acknowledgements in order to offect
and complete the WA injection and related matters,
Dated this 2980 Ge vile €. COA Loan
GRO
v Sir Peter Rpield ~ M Naruto
TK Todd T Sckizawa
Vicomte Davignon H Kurokawa
H Sakai JJ Ollila
esolutlonlel-capitol injection
FETEN BUTI LELD Aa-7Ra cyeEETyy oluiau Pg:
z
FUJ00003633
FUJ00003633
~ 30/86/1999 89:24
KEITH TODD PAGE
"99-06-38 14113 ° P37
RESOLVE THAT
a)
b)
c)
d)
the capital injection generally described above should proceed
the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150.688.800 ordinary shares of 25p cach nominal
value to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
the attached shareholders’ resolution be and is hereby approved for issuc
to the Company shareholders in licu of holding an Extraordinary Gencral
Meeting to consider the matters set out therein
the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to al
c) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form und payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotied to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised o do all necessary acts and things
sign any and all documents make or give any and all entries filings
confirmations, receipts or acknowledgements in order to effect and
complete the capital injection and related matters.
Dated this 29" day of June 1999
“Sir Peter Bonfield MNaruto
“TK Todd T Sekizawa
Vicomte Davignon H] Kurokawa ™
H Sakai JJ Ollila
“$Gillibrand
revalutwedicl-eupiat syochon
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84
30/86/1999 69:24
KEITH TODD PAGE
"99-06-38 14:13 P.2/7
RESOLVE THAT
a)
b)
¢)
d)
e)
iy)
the capital injection gencrally described above should proceed
the current authorised but unissued unclassificd shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and arc
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
valve to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
the attached shareholders’ resolution be and is hereby approved for issuc
to the Company shareholders in lieu of holding an Extraordinary General
Meeting to consider the matters set out therein
the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to at
c) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be cntered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do al! necessary acts and things
sign any and all documents make or give any and all entries filings
confirmations, receipts or acknowledgements in order to effect and
complete the capital injection and related matters.
Dated this 29" day of June 1999
“Sir Peter Bonfield
“TKTodd “T Sékizawa ——
Vicomte Davignon H Kurokawa 7
H Sakai JJ Ollila
SGillibrand
cosolunua/rel-copiaal injection
FUJ00003633
FUJ00003633
a3
FUJ00003633
FUJ00003633
RESOLVE THAT
a) the capital injection generally described above should proceed
b) the current authorised but unissued unclassified shares of 25 pence
each in the capital of the Company totalling 150,688,800 shares be and
are hereby redesignated as 150,688,800 ordinary shares of 25p each
nominal value to rank pari passu and form a single class in all respects
with the Company’s existing ordinary shares of 25p nominal value
c) the attached shareholders’ resolution be and is hereby approved for
issue to the Company shareholders in lieu of holding an Extraordinary
General Meeting to consider the matters set out therein
d) the attached form of application for new ordinary shares in the capital
of the Company (the application form) be and is hereby approved for
the capital injection
e) subject to the passing of the shareholders resolution referred to at
c) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a
certificate in the name of Fujitsu Limited for the said shares
53) Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and
things sign any and all documents make or give any and all entries
filings confirmations, receipts or acknowledgements in order to effect
and complete the capital injection and related matters.
Dated this 29" day of June 1999
Sir Peter Bonfield M Naruto
; T Sekizawa
“Vicomte Davignon ——_ ! H Kurokawa
H Sakai JJ Ollila
resolutionvicl-capital injection
~ 39/06/1999 09:24
* +98 06/30 WED 11:51 FA.
RESOLVE THAT
a)
b)
c)
4)
©)
the capital injection generally described above should proceed
the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
value to rank pari passu and form a single class in all respects with the
Company's existing ordinary shares of 25p nominal value
the attached shareholders’ resolution be and is hereby approved for issue
to the Company shareholders in lieu of holding an Extraordinary General
Meeting to consider the matters set out therein
the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to at
¢) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and things
sign any and all documents make or give any and all entries filings
confirmations, receipts or acknowledgements in order to effect and
complete the capital injection and related matters.
Dated this 29" day of June 1999
“Sir Peter Bonfield M Naruto
TK Todd
‘Vicomte Davignon
“HSakai ; JJ Ollila
“S Gillibrand
cenolution/icl-capital injection
FUJ00003633
FUJ00003633
KEITH TODD PAGE 15
IS Lee RE Wat) Qooz
38/06/1999 89:24
KEITH TODD PAGE
7999-06-30 14113 P.4/7
RESOLVE THAT
a)
b)
4)
e)
1)
the capital injection gencrally described above should proceed
the current authorised but unissued unclassified shares of 25 pence cach
in the capital of the Company totalling. 150,688,800 shares be and arc
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
value to rank pari passu and form a single class in all respects with the
Company's existing ordinary sharcs of 25p nominal valuc
(he attached shareholders’ resolution be and is hereby approved for issue
to the Company shareholders in lieu of holding an Extraordinary General
Meeting to consider the matters sct out therein
the attached form of application for ncw ordinary sharcs in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to at
¢) above on 29" June 1999 and receipt on 30" June 1999 of a completed
application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company’s Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and things
sign any and all documents make or give any and all entries filings
confirmations, receipts or acknowledgements in order to effect and
complete the capital injection and related matters.
Dated this 29” day of June 1999
“Sir Peter Bonfield “MNenuto OS™
TK Todd T Sekizawa
WiKurokawe
H Sakai TT Ohl
Gillibrand
temlavioniel-copnel inection
FUJ00003633
FUJ00003633
05
01/07 198 10:51 FAX]
RESOLVE THAT
a)
b)
c)
Cy)
e)
the capital injection generally described above should proceed
the current authorised but unissued unclassified shares of 25 pence each
in the capital of the Company totalling 150,688,800 shares be and are
hereby redesignated as 150,688,800 ordinary shares of 25p each nominal
value to rank pari passu and form a single class in all respects with the
Company’s existing ordinary shares of 25p nominal value
the attached shareholders" resolution be and is hereby approved for issue
to the Company shareholders in lieu of holding an Extraordinary
General Meeting to consider the matters set out therein
the attached form of application for new ordinary shares in the capital of
the Company (the application form) be and is hereby approved for the
capital injection
subject to the passing of the shareholders resolution referred to at
c) above on 29th June 1999 and receipt on 30th June 1999 of a
completed application form and payment of the subscription monies of
£131,700,000 from Fujitsu Limited, 263,400,000 new ordinary shares in
the capital of the Company be allotted to Fujitsu Limited the name of
Fujitsu Limited be entered in the Company's Register of Members
therefor and the Common Seal of the Company be affixed to a certificate
in the name of Fujitsu Limited for the said shares
Mr T K Todd, Mr R Christou, Ms M J Faull and/or the Company
Secretary be and are hereby authorised to do all necessary acts and
things sign any and all documents make or give any and all entries
filings confirmations, receipts or acknowledgements in order to effect
and complete the capital injection and related matters.
Dated this 29th day of June 1999
Sir Peter Bonfield M Narato
TKTodd T Sekizawa
Vicomte Davignon H Kurokawa,
“HSakai Troma
sesolution/icl-eapital injection
NOKIA Booz
FUJ00003633
FUJ00003633
36/06/1999 89:24
"99-@6-30 14:14
KEITH TODD
The Directors
ICL PLC
26 Finsbury Square
London
EC2A 1DS
30" June 1999
Deer Sirs
We hereby apply for 263,400,000 new ordinary shares nominal value of 25p
each in the capital of your company at a price of £0.50p per share.
Our remittance of £131,700,000 has been sent to your bankers, valuc today
Yours faithfully
Fujitsu Limited
ielplom-copraiaoounn
FUJ00003633
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PAGE 96
P.S77
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KEITH TODD PAGE 67
. 39/86/1999 89:24 ¢ ___GRO
P.6/7
*99-26-30 14:14
ICL PLC
SHAREHOLDERS’ RESOLUTION
‘To the Directors of ICL PLC (the “Company”)
The undersigned, being all the members of the Company who would be entitled to vote
on the attached Special Resolution if it were to be proposed at a general meeting of the
Company, hereby resolve as set out in the attached Special Resolution with the effect
that such Special Resolution shall be as valid and effectual as if it had been passed on
29" June 1999, with the required majority of votes cast, at such a general mecting duly
convened and held on such date.
Dated this 29" day of June 1999
For afd on behalf of
Fujitsu Limited
“For and on behalf of
Fujitsu International Finance (Netherlands) B.V.
rosoluuorvicl-sharoholders
FUJ00003633
FUJ00003633
é DAL:
32/66/1993 89:24 H KEITH TODD PAGE ub
99-86-38 14:14 * P77
ICL PLC
SHAREHOLDERS’ RESOLUTION
To the Directors of [CL PLC (the “Company”)
The undersigned, being all the members of the Company who would be entitled to vote
on the attached Special Resolution if it were to be proposed at a gencral meeting of the
Company, hereby resolve as set out in the attached Special Resolution with the effect
that such Special Resolution shall be as valid and effectual as if it had been passed on
29" june 1999, with the required majority of votes cust, at such a general meeting duly
convened and held on such date.
Dated this 29" day of June 1999
For and on behalf of
Fujitsu Limited
Fujitsu International Finance (Netherlands) B.V.
resohution/cl-sharcholdors
FUJ00003633
FUJ00003633
ICL PLC
SHAREHOLDERS’ RESOLUTION
To the Directors of ICL PLC (the “Company”)
The undersigned, being all the members of the Company who would be entitled to
vote on the attached Special Resolution if it were to be proposed at a general meeting
of the Company, hereby resolve as set out in the attached Special Resolution with the
effect that such Special Resolution shall be as valid and effectual as if it had been
passed on 29" June 1999, with the required majority of votes cast, at such a general
meeting duly convened and held on such date.
Dated this 29'" day of June 1999
For and on behalf of
Fujitsu Limited
For and on behalf of
Fujitsu International Finance (Netherlands) B.V.
tesolution/icl-sharcholders
SPECIAL RESOLUTION
THAT:
A.
The authorised share capital of the Company be and is hereby increased from
£354,000,000.25 to £391,500,000.25 by the creation of 150,000,000 Ordinary
Shares of 25p each to rank pari passu and form a single class in all respects
with the existing Ordinary Shares in the capital of the Company;
the Directors be generally and unconditionally authorised pursuant to and in
accordance with Section 80 of the Companies Act 1985 to exercise for the
period ending 31‘ December 1999 all the powers of the Company to allot
relevant securities up to an aggregate nominal amount of £65,850,000;
pursuant to and during the period of the said authority the Directors be
empowered to allot equity securities wholly for cash as if Section 89(1) of the
said Act did not apply to any such allotment;
by such authority and power the Directors may during such period make offers
or agreements which would or might require the allotment of securities after the
expiry of such period; and
for the purposes of this Resolution:
i) the nominal amount of any securities shall be taken to be, in the case of
rights to subscribe for or convert any securities into shares of the
Company, the nominal amount of such shares which may be allotted
pursuant to such rights; and
ii) words and expressions defined in or for the purposes of Part IV of the
said Act shall bear the same meanings herein.
resolution/icl-shareholders
FUJ00003633
FUJ00003633
FUJ00003633
FUJ00003633
The Directors
ICL PLC
26 Finsbury Square
London
EC2A 1DS
30" June 1999
Dear Sirs
We hereby apply for 263,400,000 new ordinary shares nominal value of 25p
each in the capital of your company at a price of £0.50p per share.
Our remittance of £131,700,000 has been sent to your bankers, value today.
Yours faithfully
For and on behalf of
Fujitsu Limited
iclple/t-capitalinjection
Company Secret
PLC/99/21
ICL PLC
Board Report 28" June 1999
ICL PATHWAY UPDATE
1. INTRODUCTION
This paper sets out the current status of the ICL Pathway project.
2. HMG DECISION OF 24.5.99
A legally binding Agreement was signed between ICL and POCL on
24.5.99. The essential features follow the proposals made by ICL on
19.5.99 and are:
i.
iii.
iv.
vi.
vii.
Thb/99jun/324
A Letter Agreement has been signed which modifies the previously
drawn up Heads of Agreement between ICL and POCL. These two
documents then take precedent over the Related Agreements (the
original May 1996 contract).
This Letter Agreement will be replaced by a Codified Agreement
targeted to be completed by ICL and POCL by 16.7.99. This
comprehensive document will become the new POCL Agreement.
If by 16.7.99 material issues remain unresolved, then POCL have the
right to terminate the contract up to 30.7.99 on payment of £150m.
In a separate DSS Agreement also signed on 24.5.99, all the Benefit
Payment Card related services were terminated. This was in full and
final settlement of all claims and counter claims. Transitional
arrangements were also put in place whereby ICL Pathway were to
be paid to remove existing Benefit Payment Card customers from
the system and return them to previous forms of payments, either by
order-book or Automated Credit Transfer (ACT).
The ICL contract with POCL remains a Service Contract, but only
for Core Services (EPOSS, APS and OBCS), remains in place until
March 2005, is paid for on a staged fixed price basis starting after
Acceptance, and POCL have the option at the end of the contract of
purchasing all the Project Assets from ICL Pathway for the sum of
£i.
Escalation processes are defined for both technical and legal issues
as necessary.
There remains an intention to work towards a form of
Public/Private/Partnership for network banking and Modern
Government, but these are not committed and are not part of the
Core Services.
1 28" June 1999
FUJ00003633
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Company Secret
PLC/99/21
3. POCL RESPONSE TO THE HMG DECISION
POCL and Post Office Board were seriously shocked by the decisions made
by HMT and DTI on their behalf covering the contractual terms and the
funding commitments which they now need to manage. They feel badly let
down by the public sector at large, and by DSS in particular. They clearly
have difficult and incomplete negotiations with the DSS yet to be finalised.
Their relationships, therefore, with ICL are very cool on all aspects of
partnership and future business, and are quite difficult at a working level as
they seek to squeeze as much out of the Codification exercise and
Acceptance as possible. Once we have cleared the hurdles of Codification,
Acceptance, and start of National Roll-out the atmosphere should improve.
We have a number of difficult months ahead.
4. CONTRACT PROGRESS
The joint work between ICL and POCL to complete the Codified
Agreement by 16.7.99 has kept to schedule. Good progress has been made
across a wide area, and although considerable work remains to be done, the
date of 16.7.99 is achievable with the goodwill and effort by both parties.
5. ACCEPTANCE PROGRESS
The contract calls for Acceptance to be achieved by 16.8.99. All the
preliminary work has been completed and trial results and completion
reviews are now with POCL for their assessment. Of the 240 Acceptance
Incidents raised, we have just one categorised as High. This incident is
serious, since it relates to the difficulties being experienced by the sub-Post
Masters in carrying out their stock and office balancing each Wednesday
evening. Although the ICL system is generally conformant to requirements,
it is proving too complex for most post office staff to handle. Considerable
effort is being applied to improve and simplify the business processes, the
software, the documentation and to improve training.
All other Acceptance Incidents are in the Low category, although we fully
expect a growing and increasingly difficult list to be lodged with us as the
mid-August deadline approaches.
6. NATIONAL ROLL OUT
This remains on target to start 23.8.99 and complete March 2001. The start
date is of course dependent on successful completion of Acceptance by
16.8.99.
Thb/99jun/324 2 28" June 1999
FUJ00003633
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Company Secret
PLC/99/21
7 ICL PATHWAY BUSINESS CASE PLAN
ICL took provision of (£180m) as an exceptional item in its Accounts for
1998/9 to cover all abortive costs arising from the DSS cancellation of the
benefit Payment Card services.
The attached Annex 1 summarises the expected revenues, profit and cash
flows over the contract life to March 2005.
8. SUMMARY
A revised contract with POCL is achievable by mid-July, and with the
planned capital injection of £132m from Fujitsu in 99/00, shows a PBT loss
of (£50m) prior to the opportunities which will arise from future business in
network banking, client re-engineering and Modern Government.
J. Bennett
Thb/99jun/324 3 28" June 1999
im
Revenue
PBT
Equity
Net Debt
Peak Cash
Notes:
Thb/99jun/324
Company Secret
PLC/99/21
ANNEX 1
PATHWAY CORE BUSINESS PLAN
Prior
1 169 189 #115 115 115 110 904
(180) 15 20 25 24 23 23 (50)
20 152 152 152 152 152 152
250 152 143 28 9 -52 -102
370
Acceptance 16 August 1999
Start of Roll Out 23™ August 1999
End of Roll Out March 2001
Subcontract compensation £30m paid out in September/
October (£15,15m)
Peak cash position arrived at during September 1999
4 28" June 1999
FUJ00003633
FUJ00003633