Fujitsu Ltd has more than doubled its equity stake in wholly- owned UK subsidiary ICL Plc with a $234.15bn (25bn yen) cash injection, company sources confirmed yesterday. The investment boosts loss-making ICL’s equity ratio from 7% to 15% bringing Fujitsu’s total investment in the UK IT services firm to about $2.81bn. The new funds are aimed at cementing ICL’s financial position ahead of its plans to stage a public offering and list on the London Stock Exchange some time next year. Managers have steadfastly reiterated this corporate goal despite posting a $327.81m loss for the irregular 15-month term to March 1999.
The UK firm’s losses knocked Fujitsu’s group earnings $127.38m into deficit in fiscal 1998. Fujitsu has also been amortizing about $93.66m year in goodwill for ICL. The Japanese hardware giant took over ICL in 1990, and assumed 100% ownership in 1998 with the acquisition of outstanding shares held by Northern Telecom Europe Ltd.
ICL had its earnings tipped into the red after being left out of pocket by a UK government decision to cancel part of the firm’s flagship $1.5bn project to computerize social security payments at post offices. Fujitsu’s cash will partially offset the $289.4m one-off costs that ICL was forced to write off after ministers in London switched social security payments to bank accounts. The decision saddled ICL with a scaled-down and less lucrative contract to set up a secure smartcard based retail platform for post offices. However revenue from the transaction-based contract will start to show during the next few years and ICL is expected to turn a profit in the year to March 2000, Fujitsu sources told the Nikkei Japanese financial newswire recently. ICL’s 1998 fiscal year was extended from December to March to synchronize with its Japanese parent.
