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ICL PLC
Minutes of the meeting of the Board of ICL Pathway Limited
Held at 10.30 am on Tuesday 20" July 1999
At 26 Finsbury Square, London, EC2A 1SL
Present:
In attendance:
Sir Michael Butler (Chairman)
Mr T K Todd
Mr R Christou
Mr J H Bennett
Mr AE Oppenheim
Mr H Kurokawa
Mr M Stares
MrR F Scott (Secretary)
Mr A Nagai
Mr H Hirata
Action by: 1.
Pathway/minutes/20july99
Membership of the Board
It was proposed that Mr Kurokawa join the Board. It was
also proposed that Mr M Stares and Mr T Escudier become
directors to, in particular, enable the Board to form a single
ICL view on how the Pathway project will help with ICL’s
Government and financial service customers. The Board
agreed the proposals and
RESOLVED
a) That Mr H Kurokawa be and he is hereby appointed
a Director of the Company.
b) That Mr M Stares be and he is hereby appointed
a Director of the Company
c) That Mr T Escudier be and he is hereby appointed
a Director of the Company.
Minutes of the past meetings
The Minutes of the meetings held on 7 May 1997 and
11'* May 1999 were approved as a correct record and signed
by the Chairman.
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Matters Arising
Mr Christou confirmed that the accounts for the year ending
31‘ December 1997 had been filed at Companies House.
Managing Director’s Report
Mr Bennett expanded on certain points in the report circulated
with the meeting papers and there were questions and
discussions. Points noted:
a)
b)
c)
d)
Software release LT2 had been successfully implemented
as planned and was making a significant difference in the
existing 299 post offices in live trial. 23 more post
offices were being added very shortly.
Acceptance was now “centre stage” and many incidents
were being handled via the “acceptance incident list”
prior to the expected acceptance date. These included the
“hot list” which had mainly arisen from the live trial
experience. Items on the “hot list” must be resolved
before acceptance was complete
Mr Bennett referred to “cost down” proposals which were
as important to the financial outcome as the programme
milestones. These proposals centred on reduction in
manpower, dealing effectively with compensation claims
from sub-contractors arising from cancellation of the
benefits card and savings on ongoing sub-contract
activities.
The Board noted the cash payments which would follow
acceptance and then successful roll out of the first 1800
post offices. The payment on acceptance was £68m.
Acceptance was targeted to happen on the 16" August
and the invoice could be raised shortly afterwards with a
30 day payment period. The earliest time the first roll out
could be achieved would be at the end of the first week of
November. Then the invoice could be raised with 30 day
payment. Delays on acceptance and roll out involved
delays in payment through Christmas and into, possibly,
Year 2000 issues and it was determined that this situation
be avoided. It was later made clear in the meeting that if
payment were received on the dates indicated above, ICL
Pathway would not require a further standby financing
facility from Fujitsu.
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Mr Bennett
Sir Michael/
Mr Todd
Mr Bennett/
Mr Christou
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e) Until roll out was successfully achieved it was not
realistic to refer to ICL Pathway as having a full
partnership with the Post Office (which it was hoped
would lead to increases in business above the base
contract in future). We should therefore concentrate at
present on a successful relationship as a contractor to the
Post Office. Mr Bennett referred to the “close
engagement” policy we were following on Acceptance
with the Post Office with urgent attention to issues which
arose for example on Wednesday evening in the Post
Offices. Mr Todd asked the executives to ensure that all
mission critical issues were identified and dealt with such
that the “go live” date was not delayed.
f) Sir Michael referred to ICL Pathway and ICL’s reputation
over the project, to government attitudes and the activities
of the Parliamentary Committees particularly those for
Trade and Industry and the Public Accounts. Mr Christou
had been approached by the National Audit Office
requiring information, probably as a precursor to
investigation into and discussion of the recent events on
the project, by the Public Accounts Committee. A draft
letter was being prepared to correct the impression given
by Ministers in their evidence to the Trade and Industry.
It was hoped this would prevent Ministers from again
implying that ICL or ICL Pathway was responsible for the
problems of the project. Mr Todd and Sir Michael would
discuss this approach. Also, Mr Christou and Mr Bennett
would re-read the PA and Treasury panel reports in order
to advise Mr Todd whether there was any reason why we
could not confirm we saw no issues concerning
commercial confidentiality (ic. as far as we were
concerned these reports could be given to the
Parliamentary Committees).
Commercial and Financial Director’s Report
Mr Oppenheim referred to his report which had been
circulated and there were questions and discussion. Points
noted:
a) Codification of the new contract between ICL Pathway
and Post Office Counters Limited, to replace the legally
binding Letter of Intent executed at the end of May 1999
had progressed well and_ signature had been
recommended to the Post Office Board. Mr Oppenheim
said that he felt this was a clear contract, better than the
original and with more acceptance within the Post Office
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Mr Oppenheim
Mr Bennett
Pathway/minutes/20july99
b)
c)
d)
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than the previous Letter Agreement. He felt it would
form the basis of a successful working relationship.
Staff would be educated on the new agreement.
Mr Oppenheim said that in addition to the new contract,
the entire change control procedure had been re-written in
order to make this process more understandable to all
concerned.
Mr Kurokawa referred to the necessary guarantee letter of
ICL Pathway, in respect of the new contract, from Fujitsu
Limited which was going to the Fujitsu Management
Committee for consideration on 21‘ July. Mr Todd took
the opportunity to again acknowledge the positive and
helpful support of Fujitsu in the Pathway project. He also
thanked the negotiating team including Mr Oppenheim,
backed up by Mr Christou, for their efforts in arriving at
the new contract document.
Mr Oppenheim said that ICL Pathway now had a clear
financial and banking strategy and relations with the
banks were improving. He confirmed that if acceptance
and roll out took place on time there would be no need
for a further Fujitsu standby facility. Nevertheless this
matter would remain under review and Mr Kurokawa
would be advised immediately of any delays in
acceptance and roll out which would impact (inter alia)
on the need for further finance from Fujitsu.
Mr Oppenheim referred to the business case for the
project. He felt ICL Pathway was on track with the
assumptions made in the existing business plan but
contract negotiations had taken precedence over business
plan improvement for the time being. Mr Todd requested
Mr Bennett and Mr Oppenheim to produce a plan before
the end of September in order to show how we can move
the project into profit. This would be a recovery plan for
the project’s profitability and Mr Todd had committed
this to Mr Akikusa (at present the business plan showed
profit through to 2002 of £130m, £50m less than the
provision taken of £180m).
Financing and Share Issue
Mr Oppenheim explained the financial background to the
Company’s position leading to the proposal that the Company
issue £131.7m new ordinary shares to its parent International
Computers Limited which would, in particular, enable loans
and other financing to be repaid.
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The Company Secretary explained the formalities required to
increase the Company’s share capital and issue the new
shares and the Board
RESOLVED
THAT the following Ordinary and Special Resolutions be
approved for submission to the Company’s Shareholder with
the request that they be approved:
“The Undersigned hereby Resolve that:
Ordinary Resolutions
A
The Authorised share capital of the Company be
increased from £20,0001,000 to £151,701,000 by the
creation of 131,700,000 new ordinary shares of £1 each
ranking pari passu in all respects with the £1 ordinary
shares in the capital of the Company in issue on the date
of passing of this resolution.
With effect from the time of passing of this resolution
the directors be unconditionally authorised, pursuant to
Section 80 of the Companies Act 1985, to allot relevant
securities (as defined in that Act) up to a maximum
amount of £131,700,000 at any time or times during the
period of five years from the date hereof and at any time
thereafter pursuant to any offer or agreement made by
the Company before the expiry of this authority.
Special Resolution
Cc
In accordance with Article 3(b) of the Company’s
Articles of Association the Directors of the Company be
and are hereby instructed that the following authorised
but unissued share capital
131,700,000 ordinary shares of £1 each created today
under the ordinary resolution A above;
shall be offered immediately to International Computers
Limited”
Following this there was a brief adjournment of the Board
meeting to enable the Company’s shareholder, International
Computers Limited to consider the above shareholders
resolutions and, if agreed, to formally apply for the new
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shares in the Company.
International Computers executed the shareholder resolution
and made application for the new shares. The Chairman then
reconvened the meeting, and
The Directors note that
International Computers Limited (ICL) had made application to
the Company for 131,700,000 ordinary shares of £1 in the
capital of the Company payable at par and had accordingly
made arrangements for payment to the Company of
£131,700,000, and the Directors hereby
RESOLVE
A THAT 131,700,000 ordinary shares of £1 each in the
capital of the Company be and are hereby issued and
allotted to ICL that the name of ICL be entered in the
Register of Members as holder of the said 131,700,000
ordinary shares and that the Common Seal of the
Company be affixed to a share certificate in the name of
ICL therefor
B THAT the Company Secretary be and he is hereby
authorised to file all necessary documents resolutions
returns and forms make entries in the Company’s
Register and otherwise do any act or thing needed to
complete or perfect the matters referred to in the
resolution set out above.
Statutory Accounts for the Period 31‘ March 1999
Mr Oppenheim tabled a new draft of the proposed Statutory
Accounts and explained the salient features. It was noted that
there was still matters to be finalised on the accounts and the
auditors had not yet confirmed they were ready to sign their
report. Accordingly the Chairman proposed that a Committee
be established to finalise the accounts, authorise their
signature and complete other necessary formalities.
The Board then
RESOLVED
THAT a Committee comprising Mr A E Oppenheim and Mr R
Christou be and are hereby authorised on behalf of the Board to
i) Approve and arrange signature of the Directors Report and
Financial Statements and otherwise approve the said
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iii)
iv)
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Report and Accounts after making such changes to any
draft as they deem necessary or desirable.
Authorise and sign any Letter of Engagement and/or Letter
of Representation to the auditors, Messrs Pricewaterhouse
Coopers.
Instruct the Company Secretary to arrange a shareholder
meeting including any necessary formalities for the
appointment of Messrs PricewaterhouseCoopers as
auditors until the next Report and Accounts are laid before
the Company’s shareholders.
Negotiate, agree and arrange any Letter of Support or
Guarantee from any holding company or otherwise relating
to any aspect of the Company’s business and give any
commitment or undertaking on behalf of the Board in
connection with the approval ete of the Report and
Accounts or related matters.
Change of Registered Office
The Secretary reported that the Post Office had changed the
post code of the Finsbury Square building with the result that
ICL Pathway Limited amongst other ICL subsidiary
companies must change its registered office from 26 Finsbury
Square, London, EC2A 1DS to 26 Finsbury Square, London,
EC2A 1SL. This was agreed and the Company Secretary
would file the form.
Date of Next Meeting
The next previously planned meeting was 24'" November
1999 but it was agreed a meeting would be held in September
to consider the position concerning acceptance and roll out in
particular. The Company Secretary would contact Board
members and fix a date.
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