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COMPANY SECRET FUJITSU
FUJITSU SERVICES HOLDINGS PLC
FUJITSU SERVICES LIMITED
FUJITSU SERVICES OVERSEAS HOLDINGS LIMITED
FUJITSU SERVICES (INVESTMENTS) LIMITED
(the “Companies”)
Minutes of a Meeting of the Fujitsu Services Management Committee
of the Boards of Directors of the Companies
Held at 10.00 am on Thursday 15‘ November 2007
at
Irrelevant
Present: Mr. R. Christou (Chairman)
Mr. T. Adachi
Mr. D. Courtley
Mr. B. Harris
Mr. K. Ishida
Mr. K. Kato
Mr. H. Madarame
Mr T. Moriya
Mr. T. Yamada
In attendance:
(Secretary)
07/48 Minutes of the Meeting held on 23 August 2007
The minutes of the preceding meeting were agreed as circulated and
the Chairman would sign them on behalf of the committee.
07/49 Chief Executive Officer's Report FSMC/07/40
Mr Courtley presented his report FSMC/07/40.
He noted that the Q4 budget included reduced revenues and profit
as a result of the severe drop in revenues on the HMRC ASPIRE
contract. However, vigorous cost management on HMRC and other
government accounts would improve margins such that PBT could
remain unchanged from the Q3 budget.
Mr Kato requested a report one year after the TDS acquisition and
suggesting that this should be a standard part of any acquisition
process. Mr Courtley advised that FS would be pleased to provide DC
such a report and Mr Harris explained that the results of two audits
set up by FS would be forwarded to FJ: a) A review of progress
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COMPANY SECRET
07/50
07/51
against the original acquisition business case by the M&A team; b) a
review of progress towards integration and the adoption of FS
policies and procedures by Internal Audit.
Medium Term Plan
Mr Courtley presented the Medium Term Plan (“MTP”) remarking
that he considered the projected revenues and profits represented a
balance of the maximum profitable growth that could be achieved
without significant additional investment.
The main issues preventing higher growth were the downtum in UK
government spending on which FS had historically been dependant
and the difficulty of winning more private sector business without a
more credible global delivery model.
It was agreed that FS could not by itself resolve the underlying issue
of global credibility.
It was also agreed that the FSMC was the appropriate body to
approve the MTP.
Summarising the position at the end of the discussion, the Chairman
observed that the FSMC members were prepared to approve the FS
MTP but they wished to understand more of the detail underlying
the plan.
Mr Courtley would provide additional detail to Mr Katayama.
At the next FSMC meeting the budget would be presented and by
then everyone should have had time to read the MTP detail.
Chief Financial Officer's Report
Mr Harris presented his report FSMC/07/42 covering the Q2, First
Half results and the Q4 Budget for the 2007-08 financial year. He
advised that the results of the recently acquired Mandator AB were
included in the Q4 Budget from November.
Revenues for the First Half were 11% higher than in the same
period in 2006-7 and 3% of the increase was accounted for by TDS.
The balance sheet reflected the repayment of an advance payment
of £30m more on the NHS account than had been anticipated.
Responding to a question from the Chairman, Mr Harris confirmed
that the cash flow differences were driven by the NHS repayment
and the acquisition of Mandator AB.
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FSMC/07/41
DC
FSMC/07/42
COMPANY SECRET
07/52
07/53
07/54
Major Bids Report
Mr Courtley summarised the Major Bids Report FSMC/07/43. He
complained that Fujitsu-Siemens Computers (“FSC”) was again
competing with FS on the Sainsbury’s bid and across the retail
sector. The Chairman pointed out that as a director of FSC he and
Mr Katayama had a conflict of interest and could only advise Mr
Courtley to talk to Mr Bischoff. Mr Courtley advised that he had
discussed this conflict with Mr Bischoff but since then nothing had
changed. He indicated that one solution would be for FS not to
compete against FSC and to adjust its budget accordingly. Mr
Adachi suggested that alternatively, FS could use its power as_ the
largest customer of FSC products in the UK to influence FSC.
The Chairman agreed that the possible acquisition of the PRS
operation by FS should be discussed at FSC shareholder level and
he assured that Mr Courtley’s complaint would be raised at the next
FSC Board Meeting.
In response to a question from Mr Yamasaki, Mr Courtley confirmed
that the BT and Ford bids might include the provision of datacentre
services in the US and that FS would examine how to provide those
services.
Thanks were expressed for the support received from FJ on the
Astellas bid. Mr Yamada stated that further support might be
required in future from FJ due to the specific nature of their
business.
Major Accounts
Mr Courtley referred to his report FSMC/07/44 and explained that
discussions were taking place to reset the NHS contract and these
were expected to be finalised before the Year End.
The Chairman pointed out that this had the potential to be a very
significant issue if agreement on the contract reset could not be
reached.
Mr Courtley also drew attention to the very material impact that the
reduction in expenditure by HMRC on the ASPIRE contract would
have in this financial year.
Mergers & Acquisitions and Offshore Update
Mr Courtley presented the M&A and Offshore update
(FSMC/07/45).
He advised that a Domination Agreement would be sought in order
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FSMC/07/43
RC
FSMC/07/44
FSMC/07/45
COMPANY SECRET
07/55
07/56
07/57
07/58
07/59
07/60
to simplify the relationship with TDS and enable its merger with FS’s
existing operations.
It was noted that it had been decided not to proceed with the
proposed acquisition of Circle following the announcement of
Circle's second quarter results and Mr Courtley advised that
attention was now focussed on partnering with an established Indian
player.
In the light of previous experiences, Mr Kato recommended 100%
ownership. Mr Courtley thanked him for his advice and explained
that the arrangement was planned to allow for a quick exit resulting
in 100% ownership.
Major Disputes — Progress Report
The major disputes progress report FSMC/07/46 was noted by the
meeting.
HR Manpower Report
This report FSMC/07/47 was noted by the meeting.
Recapitalisation of Fujitsu Services S.A. in France
The proposal to recapitalise Fujitsu Services SA was considered
and approval was given for the injection of €22m into Fujitsu
Services S.A. by its parent company Fujitsu Services Overseas
Holdings Limited as set out in paper FSMC/07/48.
Recapitalisation of Fujitsu) Services -— Tecnologias de
Informacao LTDA (Portugal)
The proposal to recapitalise Fujitsu Services — Tecnologias de
Informacao LTDA (“FS TI”) was considered and approval was given
for the injection of €3m into FS TI by its parent company Fujitsu
Services Overseas Holdings Limited as set out in paper
FSMC/07/49.
Signed and Sealed Documents
The list was noted and the documents signed or executed as deeds
between 31°! July and 21% October 2007 were ratified, approved
and confirmed.
Minutes of the Corporate Governance Committee
The Minutes of the Corporate Governance Committee meeting that
took place on 23 August 2007 were noted.
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FSMC/07/46
FSMC/07/47
FSMC/07/48
FSMC/07/49
FSMC/07/50
FSMC/07/51
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COMPANY SECRET FUJITSU
07/61 Minutes of the Audit Committee FSMC/07/52
The Minutes of the Audit Committee meeting that took place on 234
August 2007 were noted.
07/62 Any other business
There was no other business.
07/63 Date and location of next meeting
The next Meeting of the Committee would take place on Thursday
21* February 2008 in Tokyo.
The Chairman thanked everyone for their attendance. There being
no further business, he declared the meeting closed.
Charman ceeeeee
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