FUJ00097198
FUJ00097198
Re)
FUJITSU
Fujitsu UK and Ireland
Contracts Update
June 2010
Roger Gilbert
For Fujitsu Eyes Only Copyright 2009 Fujitsu Services Limited
FUJ00097198
FUJ00097198
HNGX R1 Programme
Fe)
FUJITSU
Branch Router roll-out — deployed 11,394 (99.4% of estate, remainder are “tail management” non-penalties)
I
™ 26/03/10 - High Volume Pilot suspended due to system instability issues — root cause traced to Oracle
Branch Database bugs and tuning issues not identified in testing
@ 31/03/10 - Red Alert initiated, High Volume pilot resumed 08/06/10, downgraded to Amber Alert 21/06/10
= No major incidents in live for 7 weeks
™ 29/06/10 - High Volume pilot completed, Post office approved to commence Rollout.
@ 30/06/10 - Rollout started, with 96% success rate*
= *Note: Post Office continuing to cancel 5-10% of scheduled migrations for their operational reasons (branches in early
rollout had insufficient notice). If this continues, will increase tail — estimated to complete in September.
@ 6/07/10 —- HNGX deployed to estate = 2,241 Branches (19.5%) and 7,969 counters (26.3%)
= Completion of HNGX rollout now end August = 12 week slippage vs Q4 and Q1 Budget assumption
& Significance of slippage: Post Office will claim £1.2m per month for the last delay. FJ will offset this by
claiming Post Office cannot meet planned beat rate
™ Actions to minimise delays and/or budget overruns:
= Propose increase in migration daily beat rate in second half of rollout to bring forward completion
@ Provision has been made at the Account level for a Post Office claim of up to £2m. The Programme R1
latest forecast indicates an overrun of £200k on a baseline cost that was approved 12 months ago
Summary:
™@ There is now a high level of confidence that the technical beat rate can be met and that the solution can cope
with high branch volumes
™ There is less confidence in Post Office’s ability to schedule and support the planned beat rate
@ Account is trying to contain impact of cost overrun from HVP delay — negotiations underway at Account level.
For Fujitsu Eyes Only qe 5 } 4 ’ ’ ;
FUJ00097198
FUJ00097198
HNGx - Financials FUJITSU
m@ HNGX Programme — Q2 Budget unchanged from MTP
™@ Issues above will deteriorate forecast by circa £0.2m (from
forecast which has held steady at £92.3m for 12 months)
@ Account level:
= 09/10 result showed overall improvement on Q4 Budget (£4.8m) due to
significant New Business being closed which more than offset £2m
provision to cover risk of POL compensation claim based on September
2009 CCN (i.e. £1m per month delay)
m 10/11 forecast shows overall improvement of £8.2m against MTP due to
significant cost saving opportunities identified
= However, additional Programme delays noted above create significant
risk to this forecast as follows:
¢ An additional £1m to cover the risk of further POL compensation claims based
on rollout completion date of end August 2010
* Delays to implementation of cost saving initiatives
For Fujitsu Eyes Only 2
FUJ00097198
FUJ00097198
Fe)
HNGX Financial update - Programme FUJITSU
To go Lifetime
Latest] Latest
Forecast Forecast
2009/1 I 2010/11
Actual
£m
Revenue . 7.5 . 0 79.8
Gross Margin 5 -11.2 B 0 -11.7
GM% , -150.1% . 0.0% -14.7%
Contract overhead . 0.0 . 0.0 0.0
Contract Margin 5 “11.2I R 0.0] -11.7
CM% . -150.1% . 09
Q4 Budget Contract Margin
Increase / (Decrease) 0.0 0.2 -0.3 0.0 0.0
For Fujitsu Eyes Only 3
FUJ00097198
FUJ00097198
HNGX Financial update — Total Account fujitsu
Revenue
Gross Margin
GM%
Opex
Operating Profit
Opp! %
Q4 Budget Contract Margin
Increase / (Decrease) 4.8 8.4
For Fujitsu Eyes Only 4