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\ PATHWAY GROUP LIMITED
I MINUTES OF A DIRECTORS MEETING
ICL HOUSE, 1 HIGH STREET, PUTNEY, LONDON SW15 1SW
oN
15TH JUNE 1995
:
ir Michael Butler (In the Chair)
J H Bennett
S S Jones
A E Oppenheim (From item 9)
T K Todd
J White
IN
ATTENDANCE R
R RRRRR
F Scott (Secretary)
ACTION
95/8 THE BOARD
Sir Michael took the Chair and welcomed all
present to the meeting. Mr Todd reported,
following the action given him by the Board
Resolutions dated 9 June, under which the
Chairman and Directors had been appointed, that
discussions continued with Sir Michael over the
terms of his appointment.
It was agreed that Mr T Reynolds of An Post
should be appointed to the Board and accordingly
IT WAS RESOLVED
THAT Mr T Reynolds be and he is hereby appointed
a Director from a date to be determined.
It was understood Mr Reynolds Director's
remuneration might be payable to An Post. Mr
Mr Todd Todd was asked to arrange the terms of
appointment, including the timing.
Mr Bennett made recommendations on appointment of
executives to the Board, which were agreed.
Consequently Mr Oppenheim would be appointed to
the Board immediately but the proposed Business
Development Director board appointment would not
be made for the time being until the candidate
(Mx S Hodgkins) was better known to the Chairman
and the other Directors.
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Mr Bennett
Mr Bennett
95/9
95/10
a)
b)
c)
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IT WAS RESOLVED
THAT Mr A E Oppenheim be and he is hereby
appointed a Director.
It was noted that a vacancy remained for a Non-
Executive Director in order to bring up the Board
to the strength originally expected. This matter
was deferred for the time being possibly until an
approach to another potential shareholder was
under consideration.
(Mr Oppenheim joined the meeting and was
congratulated on his appointment.)
CORPORATE MATTERS PRIOR TO THIS MEETING
The Secretary reported on the business of the
first meeting of the Board on 12 April 1995, and
on the resolutions signed on 9 and 15 June 1995,
particularly mentioning appointments of the
Chairman and Directors and issue of shares to ICL
(now 49% of the equity), Girobank (now 368) and
De La Rue (now 15%).
MANAGING DIRECTOR’S REPORT
Mr Bennett reported and the following points were
noted:
The Board noted that 16 copies of the POCL/BA Bid
proposal were submitted on time on Thursday 8
June and so far as could be ascertained, had been
well received. The Board discussed information
available so far about the Bids and Bidders. The
Chairman advised that Mr Bennett should prepare
some likely questions and proposed answers for
the Board so that Directors would be briefed.
The Board expressed their appreciation for the
efforts of Mr Bennett and his team in submitting
the proposal and asked him to convey their thanks
and appreciation to all concerned in Pathway and
the sub-contractors.
Illustrative prices from sub-contractors had been
obtained before the proposal submission, but Mr
Bennett and his team were moving quickly to
establish a much more competitive position. A
suppliers conference would be held in July.
The proposed date for the announcement of the
short-list was 21 July and the Board discussed a
possible launch plan for Pathway around that
date. It was agreed in order to maximise press
interest in particular that the launch would be
better during the week of 10 July. Mr Bennett
would make plans accordingly.
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q)
Mr Oppenheim
Mr Bennett
e)
f£)
g)
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Mr Bennett referred to security measures
(including electronic ones) being taken regarding
flow of information from and within Pathway.
Referring to security of financial information,
Mr Todd said Pathway should work progressively to
cut down the number of banks with which serious
discussions were held in order to reach firm
proposals with only one group of financiers
before the final bid. Mr Oppenheim would pursue
this strategy.
Mr Bennett referred to the competitive advantage
which he believed Pathway had obtained by
proposing the An Post solution based on Escher
software. This advantage was balanced by the
difficulties of the relationship with Escher,
although a tripartite "teaming" agreement had
been concluded and the future was now much more
secure.
It was noted that Mr J Dicks, who has been
appointed Technical Director will, with Mr.
Oppenheim on commercial matters, be responsible
for managing the relationship with Escher.
The continued successful implementation of the
ALPS Project to instal a PC based electronic stop
notice system (ESNS) into Post Offices within the
M25 area was noted. However, the more difficult
part of the rollout was about to start involving
the Crown offices, the difference being that an
additional Post Office supplied software
application is to be installed into these post
offices, with risk that this application could
interfere with ESNS. Some technical problems with
the new ICL Ergopro PCs had caused delay although
the problems had been quickly resolved. .Mr Todd
said ICL’s Information Technology experience
would, he believed, be very beneficial to the
project but nevertheless he insisted that
competitive quotations for all subcontract work
including for PCs, for the project should be
vigorously sought.
The Chairman asked that work begin to establish
opportunities outside of the UK for sale of the
Company’s solution for POCL/BA. ICL and De La Rue
would be happy to help with contacts overseas and
Mr Bennett would follow this up. Mr Bennett added
that he knew of ten countries whose Post Office
or Benefit Authorities were already interested in
what the Company was doing. Possible conflicts of
interest might arise with POCL’s own enterprise
arm. Management was seeking to agree with An Post
and Escher an extension to the teaming agreement
which will limit any conflict as between the
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Company and themselves. It was felt that Escher
are favourably disposed to such an arrangement.
The Chairman added it was important to look at
other uses for the Pathway solution, particularly
because of the effect this might have on the
Private Finance Initiative pricing of the final
bid.
h) It was agreed Mr Bennett's future MD’s Report
Mr Bennett would cover the situation on the "top five risks"
facing the company.
95/10 FINANCIAL DIRECTOR'S REPORT
Mr Oppenheim referred to discussions with Hambros
on the financing of the Company. Meetings had
also been held with other banks. Discussions
Mr Oppenheim would continue on financial strategy, for example.
whether the future capital structure should be
based on ordinary shares or preference shares and
the extent to which lease finance would be used.
In answer to the Chairman, Mr Todd said there had
been no discussions as yet on the possibility of
listing Pathway shares inthe future, or other
means of shareholder exit.
It was agreed Mr Webster of Hambros would be
Chairman asked to brief the Chairman fortnightly on
progress with financing issues.
On choice of Auditors for the Company, Mr
Oppenheim had received a quotation from Price
Waterhouse, who so far seemed very suitable. He
Mr Oppenheim would progress the alternative quotation from
KPMG as soon as possible, to enable a choice to
be made.
95/11 DELEGATION OF AUTHORITY
Mr Bennett and Mr Oppenheim would discuss
Mr Bennett/ delegation of authority proposals for the
Mr Oppenheim Company but this was unlikely to be put in place
until success in the bid.
Mr Oppenheim said it was likely that only
accounting and legal fees would accrue to the
Company in the meantime and he would make
proposals on how these should be authorised.
95/12 BOARD COMMITTEES
It was agreed no Board Committees would be
established at present.
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95/13 DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Secretary would investigate the situation in
Secretary regard to the Directors and others engaged on
Pathway business at present.
95/14 PRESS STRATEGY
The Board discussed how to maximise media comment
on Pathway and our proposed solution for POCL/BA.
This would include exposure in the UK of the An
Post experience. Other exercises, for example,
comment on the Green Paper on Identity Cards
could all help to increase interest in the
general background.
95/15 DATES OF NEXT MEETINGS
The following were agreed:
17 July at 5 p.m. at De La Rue, Agar Street
(Prior to the pre-arranged dinner)
3 August at 3 p.m. at ICL Feltham
7 September at 3 p.m. at ICL Feltham
28 September at 4.30 p.m. at Hambros’ offices.
The following meetings, at frequency of one per
month, have been arranged by the Secretary.
26 October at ICL Feltham at 2.30 p.m.
23 November at ICL Putney at 4.30 p.m.
(5th Floor Conference Room)
14 December at ICL Feltham at 2.30 p.m.
17 January at ICL Feltham at 2.30 p.m.
21 February at ICL Feltham at 2.30 p.m.
It was agreed that the Board would receive
briefings on the Proposal, split over the
meetings on 17 July and 3 August, with Mr Dicks
Mr Bennett present to cover the technical details at one of
these meetings and Mr Hodgkins to cover business
development. at the other.
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