The publication of the audited Fujitsu Services Holdings PLC financial report for 2008-9 has seriously undermined the company’s case for the pay freeze and attack on pensions. They don’t present a picture of a company in trouble. The report isn’t just some bit of PowerPoint to bamboozle employees. It is signed off by KPMG (the auditors); the board says that in preparing it they “make judgements and estimates that are reasonable and prudent”; and it was signed off by Richard Christou.
Some key points and quotes:
- “The Company delivered a year of good performance in a period of instability in the global financial markets and declining markets. Revenue growth was strong, with an increase of more than 12.5% to £2.8bn in the year and most sectors above prior year performance. Profit before taxation from continuing activities at £199.2m is in line with expectations.”
- “strong order performance in the year of £2.6bn”
- “gross margins have continued to improve and are reported at 19.9%”
- “The year under review saw a further strengthening in the Group’s net equity position from £342.8m to £658.1m and an increase in the Group’s cash position by 1.8% to £45.4m.”
- “Retirement benefit obligations: Expenses and obligations for employee retirement benefits are calculated according to a variety of actuarial assumptions. If actual experience differs from these assumptions, or if the underlying assumptions themselves change, there is a risk that it will affect the amount of expense for the Group’s retirement obligations. Our position is protected from such fluctuations in the short term by the use of the corridor approach under IAS 19”
- “The Group’s attrition rate was 10.4% (8.5% in 2008)”
- During the year, two Directors resigned from the board (H Madarame and D Courtley). The package for the highest paid director dropped sharply from £2.368m in 2008, suggesting that this had been David Courtley. You probably don’t need to take round a collection for him though – the company paid out £1.59m in “compensation for loss of office”. Comment: how does that compare to what you’d get?
- “The Company paid interim dividends to its shareholders of £109.8m during the year, representing a dividend of 5.52 pence per ordinary share (2008: £19.7m).”
- Pension expense relating to [all the company’s] defined benefit plans rose from £34.6m in 2008 to £37.4m in 2009 (8%), while wage and salary costs rose from £725.2m to £853.4m (18%) and contributions to defined contribution plans rose from £16.7m to £19.2m (15%). The number of employees in the Group went up from 20,348 to 20,682 (2%), so the average salary rose from £35,640 in 2008 to £41,263 (up 16%). Comment: Did your pay go up 16% last year? Total DB contributions amounted to just 4% of wage and salary costs.
- The deficit on the Group’s defined benefit pension schemes is shown as having declined from a peak of £648.3m in 2006 to £324.2m in 2008 then rising to £376.4m in 2009.
No doubt there are some issues in the business, but let’s keep a sense of proportion. The hard work, skill and commitment of employees deliver good profits for the company. What is the company delivering for us? In good times and bad, the company always wants more from us for less in return. First they came for bonuses, then pay, then pensions. If we don’t say “Enough Is Enough!” what will they be after next?
Our UNITE National Officer, Peter Skyte, has written to Ella Bennett (HR Director, Fujitsu UK & Ireland) as follows:
From: Skyte, Peter
Sent: 16 July 2009 13:24
To: Bennett Ella
Cc: Upton Larry; Allinson Ian; German, Maureen
Subject: Fujitsu Services pay and pensions
Can I introduce myself as the Unite National Officer with responsibility for our membership in Fujitsu Services, and the IT & Communications Sector more generally. I believe we have spoken in the past but not met.
As I am sure you are aware, the proposal from Fujitsu Services to close the ICL Defined Benefit pension plan to future accrual has produced a very strong reaction from our members and the Fujitsu workforce affected. This came on top of the last-minute decision to cancel the April pay review.
Unite is already involved in the forum the company has set up as the channel for consultation over the pensions proposal, but only on behalf of the Manchester bargaining unit. Across the UK we are campaigning in defence of Fujitsu Services employees’ pay and pensions and members have decided the following goals:
1. A fairer pay system
2. More money for employees
3. Defend the ICL DB pension scheme
4. Improve pension provision for those with something worse
The recent publication of the Fujitsu Services financial report for 2008-9 has reinforced the belief that the company can afford to offer a pay rise and good pension provision for its employees.
We believe that a direct negotiation, rather than merely consultation, would be more likely to produce an outcome that is acceptable to both the company and its employees. Accordingly I would like to invite Fujitsu Services to enter into negotiations with Unite with a view to seeking an agreed resolution on pay and pensions.
I look forward to your response, and an early meeting to discuss this further.
If you go along with this, perhaps your office could contact Maureen German in my office via the number below to arrange a mutually convenient date.
Following the company decision not to end pension consultation prior to 25th September 2009 (which means that no change will take effect before January 2010), UNITE paused the process of the “consultative ballot” of members across the country to gauge support for industrial action. Your reps and officers are discussing a new timescale for this.
In the meantime meetings are taking place across the country, our new combine structure is up and running, and many more employees are deciding to join UNITE. Membership across the UK is up over 20% already this year – keep up the good work. Employees can only win on big issues like pay and pensions by sticking together and being organised.
This witty film about how a union can improve things in a workplace may help you get the message across. [Note: this is on YouTube, so cannot be viewed from work during peak hours]
Elsewhere in the IT industry, mobile engineers at HP/EDS in the London and Eastern region have won union recognition with UNITE through the statutory process. As the majority of them had joined UNITE, they didn’t have to go through a ballot.
Over at IBM, employees are up in arms over the proposal to close their Defined Benefit pension scheme. IBMers report the same feelings of betrayal that have been so widespread in Fujitsu. One site had a meeting of 150 staff to discuss the issue, and many across the country are joining UNITE. This is a very significant development in what has for decades been a bastion of non-unionism in the industry.
UNITE members in Barclays (which is also threatening a final salary pension scheme) have already returned a 92% majority in a consultative ballot and are going forward to a statutory ballot for strike action over the coming weeks, with strikes possible in September.
The news from American Express should shatter any illusion that it is only Defined Benefit pensions that were under threat. The AMEX “stakeholder” scheme was miserly to begin with, proving that giving up valuable benefits doesn’t make cheaper ones safer.
The Company has now published the minutes of the Pensions Forum meeting on 2nd July.
A company “leaflet” about their proposal is being mailed out to all scheme members. You should take a good look at this. One key statement is:
Fujitsu is very interested in pursuing and developing an alternative solution, if one can be found, which delivers the same risk reduction as closing the Plan to future accrual.
While that sounds very open-minded, the company’s target risk reduction (which the company quantifies as 100%!) is totally incompatible with a Defined Benefit pension.
The email notice sent out to DB members today goes even further:
Fujitsu is very interested in pursuing and developing an alternative solution, if one can be found, which delivers the same risk and cost reduction as closing the Plan to future accrual.
If we want decent pensions we are going to have to fight for them!
Your Choices and AVCs
Please remember that the main election period for Pension Choices and AVCs closes on 24th July. The lack of the normal pension benefit statement prior to the election period has caused concern and confusion. As a result of UNITE and the IPMC raising this, the company is now allowing a limited second election period.
The company has now published “Benefit Statement and Pensions Choices FAQs” on the “FAQs and more information” section of the “Pension Change” CafeVIK community. You should read these so that you can decide whether to take any action, and if so what action to take. Questions 5-15 deal with the timescale and should be read together.