[Michael:] at the meeting of the accounts and the reports o an of the directors and auditors for the year ended thirty first December eighty nine... and the final dividend for nineteen eighty nine. Secondly, the re-election of directors retiring... er, and thirdly... the appointment of the audit auditors and their remuneration. The A G M will be followed, er, directly after this meeting, er, by an extraordinary general meeting... erm... to propose, er, an increase in the authorized share capital... to seek authority to create new preference share capital... to renew the board's power to allot shares... to [cough] seek authority to purchase our own shares... to reduce share capital by repaying existing preference shares... to make some amendments to the employee share schemes... to increase the aggregate amount available for directors' fees and to enable the company to issue summary financial statements. I'll now call upon David of Coopers and Lybrand to read the report of the auditors to the members. Thank you David. Erm... next, er... I shall be proposing a resolution to receive the report and accounts and to declare a dividend. Then... before putting the resolution to the vote... I shall say a few words and ask whether, ah, there are any questions. The report and accounts have been in your hands for the statutory period... er, and you've had the chance to read my statement. I therefore propose that the report of the directors and the audited accounts for the year ended thirty first December nineteen eighty nine now submitted to this meeting... be and are hereby... er, received and that the final dividend of twelve point five pence, er, net per share, recommended by the directors... be and is hereby declared payable on first June nineteen ninety, to holders of ordinary shares of the company on the register, three P M... on fourth of May nineteen ninety. We are entering the nineteen nineties as a well-defined... well-balanced company... both in the spread of our businesses and the geographical spread of our markets. We now generate sixty five percent of our sales outside the United Kingdom. We had another excellent year in nineteen eighty nine... with a twenty percent increase in earnings per share and a nineteen percent increase in dividends per share. Since eighty two... er, when we merged the two Pearson public companies... we have increased Pearson's earnings per share and dividends four-fold. We have achieved this by selling top quality products and services expertly and aggressively in the international marketplace... by acquiring businesses which complement and support our four chosen areas of operation... and by disposing of businesses which had no obvious place in those areas. I explained in my statement in the annual report about the management reorganisation which occurred at the end of nineteen eighty nine. Although Frank has been a director of Pearson since nineteen eighty six and those of you been to this meeting in the last few years will have seen him before... I'd like to introduce, ah, Frank to you in his new capacity... Managing Director and Chief Operating Officer at Pearson. Frank, will you take a bow.
[speaker003:] [clapping]
[Michael:] Erm, many of you will also have seen Jean-Claude at previous meetings... which he attended in the capacity as to Michel. I'd like to welcome Jean-Claude to this his first A G M as a full member of the board.
[speaker003:] [clapping]
[Michael:] Er, now to move on to events that have happened since the, er, annual report was printed... many of you will no doubt have seen in the press that the same time as we announced our results at the end of March that we agreed to buy, er, the Alton Towers theme park... er, in Staffordshire, from John, for sixty million pounds... er, the purchase has now been completed. Erm, Alton Towers is a really marvellous addition to the Group... er, which intends to develop the business further both by attracting more visitors... er, with new and exciting rides and also, er, by, through their unique knack of increasing visitor spending levels. Er, we also announced at the same time as the Alton, er, Towers acquisition that Longman had acquired Rank Training for eleven and a half million pounds. Er, this company has a leading position, er, in the fast expanding field of video training products for the corporate market... and that's an area which Longman has identified, er, as a new area for expansion. Longman is already one of the U K's leading providers of business education... materials and will use this base to develop and expand the Rank Training business. If the early nineteen nineties are as testing a time for U S and U K markets as many people predict... I'm nonetheless confident that Pearson is better placed than most companies to withstand this. In the first quarter of this year... we've seen more moderate growth in those geographical areas... but in nineteen eighty nine nearly forty percent of Pearson's trading ca profit... came from economies outside the U K and North America... and we expect our activities in these other areas to continue to grow at a satisfactory rate. Well, I think that concludes, er, the, er er, remarks that I'd like to, er, make. I've already put the, er, resolution to the shareholders but, erm... er, before voting on it I'd be pleased to answer any questions. And could you, could you say... your name... and...
[speaker003:] My name is Mr, I am an ordinary shareholder of some years' standing. I welcome your speech because you have a quite a good habit of optimistic outlook future which is contrary to what a lot of other chairmen are saying. it does, it does the company very very no chance in the following year share prices have dropped enormously. I noted you that the company bought Alton Towers. Now I'm not I'm asking is whether its shareholders could write in to apply for a concessionary ticket to Alton Towers and get a reduced price if they so wish. Thank you very much.
[Michael:] Thank you, Mr. Er... er, I've, er I just... I'm just saying that, er, that, that last year... er, when I made a few remarks... that they were misquoted by Reuters and we did leave the meeting and the share price dropped by... er, several P... and we had to send out a correcting statement so this year we've taken the precaution of issuing a press release... er, at the same time as er, er, I'm making these remarks so I hope at least they won't be misinterpreted. Erm... as to I think I heard you say... er, ask about concessionary prices to Alton... Towers, was that correct?
[speaker003:] [inaudible response]
[Michael:] Ya. Well... er... we, we've taken a, a, a policy view over the years because the group has a number of er very attractive er products and, and, and, and shareholders have frequently asked if was possible... erm, to have concessions in all sorts of areas and the view we've taken... is that... it involves a, a, a, a, a great deal of administration... and that our real job is to... er... increase the profits of the business... er,a as well as we can and then to pay dividends to the shareholders... erm... who will... er, er, then use that money... er, hopefully to buy a good number of our products. Yes sir.
[speaker003:] Good morning. My name is... and, er... it appears to me, sir... that you like to make life difficult for the managers to negotiate wage settlements with the employees of the company... I note that your salary has increased by more than fifty percent... in one year. That I don't think will please John Major or Mrs Thatcher... for being, er... seeing you fuelling and other directors and all the directors of our public companies... fuelling inflation with their inflationary wage rises... doesn't seem reasonable whatsoever... and I think that er... one should consider this in a different light.
[Michael:] Thank you for... er, question. There's been quite a lot of comment in the press... erm, on high levels of, of salary... of, of remu remuneration for directors and I think it might be helpful... er, if I was... were t were, were to make some general remarks on the background... er, of how we... er, approach directors' remuneration. On the question of my own... er... er, er, position... I think I would ask, er, in a minute to have Sir Simon to say something... because er, er, er, I don't, I... I, you know, I don't set my own remuneration. Er, and... in general we have a, er, panel of the non-executive directors who set the directors' salary... in relation to the other directors I am also on that panel... er, but obviously not in relation to my own salary. Erm... we have, er, access to the advice of professional advisers, namely and Co... our policy is to keep base salaries at the mid-point of market competitive range... erm, and provide bonus opportunities that can lift total take home pay into the upper quartile. Erm... the bonus element of the Pearson scheme is highly leveraged... we are very keen to achieve above-average performance for our shareholders... and let me give you an example, if in nineteen ninety... erm... Pearsons as a company achieved say five percent... growth in earnings per share... erm... the directors' remuneration, and by the way that's not a forecast so I want to make that absolutely clear, it's just an illustration... if earnings per share increase by five percent and you could say, er, therefore we would expect directors' remuneration to be perhaps increased by five percent... that wouldn't be the case at all... our directors' salaries would actually halve... erm, Ill say that again, directors' total take home pay would halve because the salary element wouldn't, wouldn't alter. Erm... so... er... i i i er, I think that erm, er er er y you'll see that erm th th the the situation isn't, erm, er, perhaps quite as simple a a as you might, erm... as you might think... erm... and, er, next year if that happened... er, perhaps there'd be headlines saying Pearson directors... er, half their remuneration. Erm... and the reason we set this is that we are... erm... er... the... er, er... we believe that this above average er growth in the... in the, erm, er, earnings per share of the company is what shareh increases in shareholder value really depend on... and... er... again to give an example... erm, if you take the, the, the, the, the, the F T S E a hundred companies... erm, and you do analyses of their... er, growth rates and earnings per share you will find that the average growth rate was eleven and a half percent... and ours... er, was... er, twenty, twenty percent... so it's above average remuneration... erm, er, er, for above av... for above average performance. And I don't think I can say much more than that but perhaps Simon
[speaker003:] I hardly feel, sir, that erm... erm... you don't have some influence on your salaries and the other directors' salaries, I've heard a lot of directors and chairmen say that they have no influence on their own salaries. This doesn't cut any ice with me because I believe that... none of these directors would be in on the board if they weren't invited there by yourself. So... erm...
[Michael:] Erm... well, I, I, I beg to correct you. Er... these directors are the bosses of international, erm, companies themselves. They have no, they have no personal, erm, relationship with me... er, I'll give you the example of one of our, erm... er, er... er... erm, er... most recent directors who's, who's just joined the board, Mr Ruben, who's the head of Colgate Palmo Palmolive, and I just described to him... to you how we, erm... how... we, er er er er er selected him. We went to, er, we felt that we needed, er, a U S director because much of our business is in the U S... with wide marketing experience... we went to, erm, headhunters... er, in America... who drew up... er, a list of sixty people, culled from their own research... erm... we narrowed that down as an executive to twelve. We presented these twelve names, er, to the board of Pearsons... erm, the board selected three... er, we kept one in reserve and I was sent out to America by the board to see, er, the two, er, leading candidates. Erm, I met Mr for the first time in the airport lounge at, erm... er, er, Kennedy Airport... erm, we discussed at great length and had a very interesting discussion... erm, er, Pearsons... erm, he accepted... er, the job... and h I, he has no obligation to me whatsoever... and he is one of the... er, members of the... er, remuneration committee, and I actually take offence at what you're saying. Simon
[speaker003:] I'm very sorry you take offence, sir. no offence meant and I... I really hope that you do not take offence in that way. Erm This may be out of order but, er, personal experience is that... the, er, non-executive directors who were involved in the compensation... made a recommendation that, er... Michael 's salary be higher... erm, than he in fact a agreed with, he requested that we lower it... and in fact that was what was done. Well, I do hope that our public companies take into consideration inflation in the future. Er, thank you very much. I'm very
[Simon:] Ladies
[speaker003:] sorry, sir, that if you took offence at anything I said. There was no offence meant.
[Simon:] Thank you. La ladies and gentlemen Lord has asked me to say a few words about erm... er, directors' salaries and particularly about his own. Now I don't stand here in any sense of defending these salaries, in fact I think our policy is entirely right... and it is not inflationary. Ergo, we have to look, I think, at the record of this company over the last few years and as the chairman said in his introductory remarks... the growth in the company, the growth in the earnings per share, has been very remarkable. The, er, credit to that goes to the chairman and chief executive... and the executive directors... and they are responsible for the business... and it is right, in my view, that they should be rewarded for it and encouraged to take risks... to work very hard on our behalf... to ensure that that growth continues... er, er, that benefits the, er, company, it benefits the country... it benefits the... er... ergo, people who are working for it, it is not inflationary because we are looking at productivity and the productivity in the company has increased significantly. Now, as the chairman said... we base the salaries of directors on two elements... an element of base salary which looks at market levels and we... ergo, have a fair base which reflects a sort of medium to upper level of companies of this size... we then leverage, very carefully, a bonus scheme related to performance... and I believe that is the right thing to do and I believe and so do my fellow directors who sit on that committee... believe that it is one of the reasons that we've seen the great growth in this company over the last five years which you've achieved... and which actually the Chancellor of the Exchequer would very glad about because it is increasing the wealth and the benefit of this country, particularly as a lot of those earnings are coming from overseas... and will in, in time be repatriated in Britain. So I believe we're doing the right thing, I think it's for the good of the country... I think it's for the good of the company and the shareholders.
[speaker003:] [clapping]
[Michael:] I'd just like to add... er, that I didn't take offence at the question, I think it was a perfectly qu fair question, it was the, the inference of, of rigging salaries. Er... right, could we go on to perhaps a less emotive issue.
[speaker003:] [LAUGHTER]
[John:] Er, my name's John. Could I make a constructive suggestion in this context of board salaries or remunerations... or compensation packages... or bonuses... I'm saying that in a slightly tongue in cheek way because I believe that the majority of shareholders don't understand the differences between these concepts, as you gentlemen evidently do. Most ordinary shareholders have never... had a total remuneration package and have never been part of a... performance-related bonus scheme. Would you be prepared, er... chairman and gentlemen... to consider Pearson giving a lead in spelling out, in the next annual report... the precise relationship between the bonus element... and... some parameter which I gather from your earlier remarks is probably earnings per share. I think this might help to... defuse the whole situation which is getting a little bit hot, I've been
[speaker003:] [cough]
[John:] to a lot of A G Ms recently and this topic is coming up at most and one feels that it almost may become an issue at the next general election. W would you be prepared to consider this at another, at, at a future board meeting?
[Michael:] I think that's a very constructive suggestion and we'll certainly... er, consider it... er, in drawing up the... er, annual report and accounts next year. Yes, lady at the back.
[speaker003:] Erm... er, my name's, an ordinary shareholder for long-standing... erm, it would be very interesting, I don't know whether this is possible now or maybe following on from what the speaker has said, if we had some idea of the American system which is... er, I only know very little about it... er... I, just how that works because we have presidents and vice presidents and, er... I think it work rather differently. So... it would be rather interesting if we could have some sort of comparison.
[Michael:] Would one of our American directors [LAUGHTER] like to []...
[speaker003:] I would have to confess that by American standards the er... er... the, er, directors of Pearson, the executive directors of Pearson and... er, the chairman of Pearson and I think that the directors of most English companies are significantly underpaid by U S standards... that's not to say it's right but, er, that seems to be the, er... ha... the current trend. Actually, I, I didn't mean that, er... regarding the actual amounts because I'm fully aware of the fact that the American ones are very much higher, it's merely the method by which they are... erm... My own feeling is that there is a great similarity and that there is a... a base salary normally which is... set on a competitive level with a target as in this case... perhaps at the mid-point, perhaps at the sixty percent level or whatever it would be... and that a significant uplift in compensation can be obtained by a bonus scheme, if the performance of the company as measured in earnings per share, return on capital, return on equity or any m other measure... if those objectives are met. So I think that th the scheme that... erm... Pearson uses is... er, not at all dissimilar to what would be a fairly standard practice in the United States. and people like that, but... er, I believe that the, the way it's actually organized is different. It, again I have to, I have to say that talk about the company of which I'm chairman... is that there is a... personnel and compensation committee... which in the absence of a chief executive... sets the chief executive's remuneration and with the presence of the chief executive, although he's not, I'm not a member of that committee... we work on the other senior executives of the company, it's quite similar to the process used here in your company.
[Michael:] Yes sir.
[speaker003:] My name is... I have been a shareholder and other members of my family for many years... much has already been said about directors' and your particular... erm, fees in particular. But er it, it, it er it appears to have been overlooked that, erm... some of the directors who were in the bracket in nineteen eighty eight of two hundred and thirty thousand to two ninety five thousand... have been increased from three hundred and fifty five thousand this year to a top of four hundred thousand. Er, you have also erm mentioned about the bonus... er, can I take it from what you have said that this is profit-related? If not... I suggest it should be... and, er, therefore if unfortunately the profits of the company did go down in the foreseeable future... the salaries of yourself and your directors would be reduced. As regards the salaries of the U S A... we've read and seen about so many companies that pay sky-high for v various salaries and other schemes, we don't want that in this country... but we do want a degree of evenness and I would repeat as somebody has already said, that your salary has gone up fifty six percent... which is very, very high. Now there was one other thing if you would care to take it... is that you said that it would involve a great deal of organization for concessionary tickets... for Alton Towers or Tussauds... or any others. Erm... Ready Mix have a theme park... in Th Thorpe Park and there's no problem there of issuing tickets to shareholders for... erm, entertainment of their, their families. They d don't make so much fuss about it... they distribute it... and it gets on very satisfactory and people... er, are very happy to receive these tickets. I think the question of turning it down, that a lot of work is... er, forgive my bluntness... nonsense. Er... one other thing is the... the share capital is sixty five billion pounds. It's true that we had a issue... erm... nineteen eighty five... but the reserves are now six hundred and fifty million. Whether you have given this the same consideration of the increase in, er, directors' salaries... I don't know, but I think y... it's worthy of, er, a further consideration. Er... one last thing... er, do we need so many as eight non-executive directors... which also to be paid? You've got five executive directors... I should think that's adequate with one or two outside directors to... bring outside knowledge or experience... but, er... thirteen is too many I suggest.
[Michael:] Er... well there are a number of, of points there and I'll, I'll try and cover them all. The first you asked again about, er, directors' salaries... er, or directors' er... er... remuneration... erm, and I would only say that all the directors are... er... bonuses are linked to earnings per share. Er, I hoped I'd made clear that if the profits of Pearsons... erm... er not only if they went down... but even if er, there was only a small... erm, increase in earnings per share... er... next year... that the... the directors' salaries would be very considerably reduced... and I thought I'd already made that... erm, er, directors' erm remuneration total take home pay would be considerably reduced... thought I'd already made that point. Erm... on... er, Alton Towers which you brought up again... er... the question is where do you stop? Er, it isn't just Alton Towers, it's whether you should get discounts on Penguin Books... it was whether you got, er, bottles of Chateau le Tour... erm... it, it requests for many different things... and, er, you know, alright... er, it... we could, we could, if Alton Towers seemed to be what, er, all shareholders wanted... er, perhaps we, we could consider that... but, but, but we do have a number of a attractive products. Erm... er... your third point was about the balance sheet and I think I'd ask the finance director... Yes... we, we will give consideration to that of course erm... Sorry, can I
[speaker003:] [talk in background]
[Michael:] Apologies. Erm... we will, course we will give consideration to erm... a further issue which I think is what you were asking us to do. All that does, in effect, as you know is... i i is reduce the unit price... share price, it has no other... effect... erm... a and I think it's purely cosmetic myself and nowadays I think a share price of around seven hundred P which is, er... where the shares are currently hovering, is not... e enormously disproportionate but of course we'll keep it under consideration. Erm... and your last point was about, erm, er... the number of directors and particularly... er, outside directors, non-executive directors. Well all I can say is that, erm... Sir Simon was being extremely modest when he said that the development of this company... er, has been due... er, entirely to the executive directors. That... that isn't actually the case... erm... the non-executive directors have been enormously helpful in, er, the field of strategy... in giving the executive advice... er... they play a very full... er, role in the develop er m development of the company... and erm... they also... er, keep the er executives, er, in order. Who would sack me?
[speaker003:] [LAUGHTER] Ch chairman, I wonder if I may just add to that
[Michael:] I'm sure you know that the Bank of England... the Bank of England have made a very strong point that on balance there should be more non-executive directors than executive directors in the company... and, er... it is felt very strongly that... to get a good mix of non-executive directors really does protect the shareholders' interests... and, er... I think we're very much following the lead, er, of the Bank of, of England, erm, in this particular respect. And I think that we are very lucky in the very high calibre of non-executive directors we've been able to attract. Name, sir.
[speaker003:] On Saturday afternoon last What?
[Michael:] Your name!
[speaker003:] Oh sorry., same as jam! [LAUGHTER] Er, it's very difficult, yes you all laughed when I asked a question last year from over there to get a capital P in Pearson... because you all laughed... it took twenty weeks to get it... in The Times, do you remember? Right. Now we've got a company secretary... he is... er, an F C I S... Chartered Institute Secretaries... that's much better than a chartered accountant, they're no damn good as secretaries, right! And the [LAUGHTER]
[David:] L L B people... really they're not up to much, are they? Now this chap is supposed to have constructive commonsense... forensic ability, what do we mean, the police? Affability... to laugh off his twenty week delay in getting my capital P! Right. Now can we look at his pay... cos you all been busy on the directors' pay and this chartered secretary is really important... and so that he could be available on a Saturday afternoon if he was wanted. Well now, the problem... you say it's emotional... shall I say it was blasphemous, it was Rushdie. Now, erm, the situation there was... that my vicar came to see me... and, erm, what happened was that we've got three churches... well luckily, one of them... only has about twelve in it... another has eighty and another sixty... and he said... well what did he do about Rushdie? And so... well I didn't like what he was doing... but at any rate it happened on Sunday morning... er, somebody read the lesson... and it was Saint, Saint John and there were chapters... and of course it was skipping about the verses all over the place, you just got fed up with verses. Right... he then went to the pulpit... and he said... that he was gonna preach about Lazarus actually... but... he's a quiet fellow and he shouted at the top of his voice... I'm speaking about satanic bondage!
[Michael:] Er, Mr...
[speaker003:] Yes, is
[Michael:] er
[speaker003:] that blasphemous?
[Michael:] er,n what, what, er, er, I think you need to do is ask your question because... er
[speaker003:] Oh right
[Michael:] to have a narratable speech is not in order
[speaker003:] I'm so sorry. yes, yes... right. Is... erm... do we know anything about Rushdie or anything? Another point is, up in Hull in October... er, somebody wrote a book about Mahatma Ghandi... and he got death threats... so the vice chancellor of Hull University... he's in Fenners he's a director of J H Fenners in industrial. So I suggest the secretary rings up the secretary of Fenners... don't say you're listed in newspapers cos industrial people don't like that... but have a word with Fenners and they'll tell you what's gone on.
[Michael:] So, what is your question?
[speaker003:] The question is can a small shareholder do anything for Rushdie, am I doing damage for Pearson? I'm trying
[Michael:] Mm.
[speaker003:] to help Pearson
[Michael:] Mm.
[speaker003:] ... not pick it to bits over its directors' salaries.
[Michael:] Er, well... thank you for your offer of help... it is, er... i i i i it's er... er clearly a very difficult issue, there are... erm, there are important issues of principle... er, in, er... conflicting directions... it is not an easy one... and erm... er er er I don't... er, really know that there is anything... er... that, er... any shareholder of Pearsons is able to do about it. Thank you. [cough]... Are there any further questions? Thank you. Well I will now put the resolution to the meeting... those in favour... would they raise their hands... thank you... those against... there is nobody so I can declare it carried unanimously. Thank you very much. Erm... the next matter is the re-election of the retiring directors... and a separate resolution is required for each one... er... I've asked Mr to propose the first resolution.
[speaker003:] I propose that Mr J H, a director, retiring by rotation... be... and if hereby re-elected a director of the company.
[Michael:] Right. Thank you Mr. I put the resolution to the meeting. Those in favour... any against? Thank you. I declare the resolution carried. Mr to propose Sir Simon.
[speaker003:] I propose that Sir Simon, a director retiring by rotation... be and if hereby re-elected a director of the company.
[Michael:] Put the resolution to the meeting. Those in favour... any against... thank you. I declare the resolution carried. Er... Mr
[speaker003:] I propose that Mr, a director retiring by rotation... be and if hereby re-elected a director of the company.
[Michael:] I put the resolution to the meeting. Those in favour... any against... I declare the resolution carried. Mr.
[speaker003:] Er, I'd like to propose that Mr J C, a director retiring in accordance with article eighty of the company's Articles of Association... be and is hereby re-elected a director of the company.
[Michael:] I put the resolution to the meeting. Those in favour... any against... thank you. I declare the resolution carried. Erm... we now come to the appointment of the auditors and the question of their remuneration. [paper rustling] Under the provisions of the Companies Act Nineteen Eighty Five... their appointment... er, requires the annual approval of the shareholders. I therefore propose that Coopers and Lybrand be and are hereby appointed auditors to the company, to hold office from the conclusion of this meeting until the conclusion of the next meeting... er, of the company... at which accounts are laid for the company in accordance with section two four one... Companies Act Nineteen Eighty Five... and that their remuneration for this period be fixed by the directors. I put the resolution to the meeting. Those in favour... any against? Thank you. I declare the resolution carried. Well, that concludes the business of the A G M... and, er... it's now twelve forty... and... er... we can move straight on to deal with the business of the extraordinary general meeting. Erm... you already had, er, the opportunity to read my letter of the eighteenth of April... er, circulated with the report and accounts, which fully explains the proposals being put forward and which are for firstly increasing the authorized share capital of the company... creating two new classes of preference share... er, renewing the board's authority to allot shares... renewing the board's power to modify preemption rights... authorizing the company to purchase its own... er, ordinary shares... reducing the company's share capital by repaying the existing preference shares... er, making certain amendments to the company's employee share schemes... increasing the aggregate sum available for directors' fees... and authorizing the company to issue summary financial statements. Erm... I... hope that the, er, circular... er... pretty fully explains... er, these proposals... but, er... if there are... er, questions... er, I would be very pleased to answer them. Well, if there aren't any questions... er, I would return to the resolutions, er, separately... and I would propose the first one which is an ordinary resolution... namely it's resolution one, set out in the notice of meeting... to increase the authorized share capital of the company. I put the resolution to the meeting... those in favour... any against? I declare the resolution carried, it's an ordinary resolution. Erm... secondly... I propose a special resolution, resolution two, set out in the notice of the meeting... to create and allot fifty thousand preference shares of U S dollars, a hundred... er, each... and a hundred billion... er, preference shares of one pound each... er, I put the resolution to the meeting... those in favour... any against? I declare the... er, er... special resolution... er, carried. Erm... I propose that ordinary resolution, resolution three set out in the notice of the meeting... to grant authority to the board to exercise the powers of the company to allot ordinary shares... er, this is an annual... er, event... I put the resolution to the meeting, those in favour... any against?... I declare the, er, resolution carried as an ordinary resolution. Erm... [clears throat] next I propose as a, er, resolution four which is a special resolution... and s [clears throat] set out in the notice of the meeting and is... to modify... to a limited extent, the obligations relating to the allotment of shares for cash... contained in section eighty nine of the Companies Act. Er... I put the resolution to the meeting, those in favour... any against?... I declare the resolution carried as a special resolution. Next resolution five which is an ordinary resolution... er, set ou set out in the notice of the meeting... which is to authorize the company to make market purchases of the ordinary shares of the company. This again is an annual. I put the resolution to the meeting... those in favour... any against... I declare the resolution, er, carried... er, [clears throat] as an ordinary resolution. Er... resolution six... is a special resolution set out in the notice of the meeting and is to reduce the company's share capital by... [cough] repaying the five... erm... hundred and one thousand, three and a half percent cumulative preference shares of one pound, er, each at par. I put the resolution to the meeting... those in favour... S... I... well I asked for questions before, Mr, but erm... what is your question?
[speaker003:] Why is there a need, sir, to repay the five hundred and one thousand pounds of the three and a half percent cumulative pref shares... it's quite a low interest involved. What a low interest share?
[Michael:] Well this gives us the ability... er, for a tidying up operation but the finance director will give more details.
[speaker003:] Thank you very much.
[Michael:] It's helpful in the context of the... dollar preference shares we want to issue... because one of the factors of this very small, and as you say cheap... er, historic issue of preference shares is that, er... no preference shares other than those can be repaid prior to that... and the dollar shares we wish to issue which are permanent shares, can be... er, can be erm... repaid at our option and we do want to keep that flexibility in the context of either if interest rates get very high or if the tax treaty between the U S and the U K changes to make them more onerous on the company... and in those circumstances we would be inhibited by the existence of this small historic issue of preference shares... and therefore... it is on balance, although you're quite right there, a cheap... er, source of capital in themselves... it is helpful to the company in the wider sense I believe... if they are repaid. I put the resolution to the meeting... those in favour... any against... declare the resolution... er, carried as a special resolution. Er, next is resolution seven which is an ordinary resolution set out in the notice of the meeting, and it is to authorize the directors to amend the company's employee share schemes in the manner set out in the circular dated eighteenth of April nineteen ninety... to members of the company. I put the resolution to the meeting... those in favour... any against... I declare the resolution carried as an ordinary resolution. Erm... resolution eight... er, set out in the notice of the meeting... to increase the aggregate annual sum available for directors' fees to two hundred and fifty thousand pounds... I put the resolution to the meeting... those in favour... any against... I declare the resolution carried as an ordinary re resolution. Erm... finally, resolution nine which is a special resolution set out in the notice of the meeting... er, and it's to alter the company's articles to enable the company to issue summary financial statements. I put the resolution to the meeting... those in favour... any against... thank you very much, I declare the resolution carried as a special reso resolution. Erm, that concludes the business of the extraordinary general meeting... erm, thank you very much for attending and making it a lively meeting... and, erm, my colleagues and I will be pleased to, erm... meet you in the foyer... er, where refreshments are being served. Thank you very much.