[Michael:] Well good morning, Ladies and Gentlemen. Before we start the presentation I'd mention there will be hard copies of the slides available, the video is for internal use only and there should be plenty of time for questions at the end. Six months ago we reported interim results, [clears throat] fifty eight percent down on the previous year but held out hope for a stronger performance in the second half, in the event our os optimism was justified. And in the second half when we always make the bulk of our profits, we fought back and our second pre-tax er, er performance, exceeded by some five million er, that of nineteen ninety. This wasn't sufficient to make up the ground lost in the first half and the outcome for the year as a whole, you now see. I'd like to draw your attention to a couple of points on this slide. First, the high earnings per share after extraordinary items, which is increasingly relevant to the proposed new accounting standards and secondly, [clears throat] that we're recommending a maintained dividend which we can prudently do, bearing in mind [clears throat] our reasonable dividend cover and low net debt. We now come to the breakdown of trading profit by sector. Profits er, from oil services were well and educational publishing in the U S er, put in a very strong performance. Frank will be going into more detail on these and our other businesses, which are all facing an uphill struggle, particularly in the U K and North America, both in deep recession and which you can see continue to make up the bulk of our markets. I'd add that at the moment we do not see any upturn in any of our major markets. Before handing over to Frank, I'd like to emphasise some of the key points of nineteen ninety one. Yes, we did have a strong profits recovery in the second half, greatly helped by oil services and U S educational publishing. We had a strong improvement in operating cash generation and that and the sale of brought net debt down to a low level. B Sky B is now profitable of trading level, we increased our stake in it during the year from eleven percent to sixteen percent. Frank became the new chairman and we believe that in due course, it's gonna generate substantial profits. Finally, I'd like to mention that we shall be recommending for shareholders a one for one scrip issue. This isn't intended as any particular message, but we are now one of the weightiest shares in the F T S E index and be we believe that it should improve the market liquidity of the shares. Now, Frank.
[Frank:] Good morning everyone. I think when we talked to you er, when we presented the interims er, we talked about the action we would be taking given the difficult circumstances and er, if I could just remind you. We said we'd be going for cost space reductions. Well, we've done that, as we said we would and of course, in a business such as Pearson, which is a people business er, although we regularly monitor employment statistics, such as total employ total number of employees er, revenue per employee, cost per employee, profit per employee, there are times when we have to take er, difficult decisions and er, so we've gone in for a lot of redundancy, which we'll see in, in er during the next slide or two. But not just redundancy, we've taken initiatives in lots of other areas, we'll show you those as well. On capital spending we tended to concentrate on that spending which would show a return on the investment and if we could we've postponed er, maintenance spending erm, renewal of cars and that kind of thing. All of our Chief Executives accept er, cash generation targets erm, either cash generation or ratio of working capital to er, to sales and that kind of thing and erm, as well as er, profit to turn over issues and that's er, stood us in good stead this year. And we've been saying to Chief Executives, if you can't get the profit or you can't get the sales, well at least concentrate on trying to, trying to get the cash, get the debtors in, that kind of thing. And we think that's er, er, gone well too. And of course, we've tried to reinforce our market positions and I think we've succeeded in er, in virtually all of our businesses. Er, now if we look at the er, staff reduction by sector. Again, when I spoke to you during the interims, I was expecting redundancies during the year of, of er, about a thousand. In the event we've achieved fourteen hundred, nearly fourteen hundred, and that follows on the six hundred redundancies we had last year. Er, and as well as the erm, staff reduction initiatives er, staff reduction initiatives that this showed you the savings er, in the year. Most of the savings of course coming next year, a small saving this year. As well as that, we managed to restrict the pay round for the whole of Pearson in the U K to four percent. Going to other cost saving initiatives erm, in the newspapers we've, we made lots of savings in newsprint. This was usually negotiating better discounts, in some of our production centres reducing the web width, which of course saves newsprint and in many areas er, in the regional newspapers reducing the distribution of our freeze in areas where we thought it er, it wouldn't affect, it wouldn't have affected the performance of the title. Er, on the book side we've managed er, considerable reductions in freight costs, warehousing and printing. In entertainment I'd think the reduc cost reductions there were pretty well, er restricted to good housekeeping, but from fine china er, we managed to transfer the, the er, work in the Minton factory to the Knowle Street factory and that allowed us to close the Minton factory and quite apart from the redundancies that entailed, we saved something like two hundred and fifty thousand er, non staff related overhead. Er, group wide, in the U S A, the er, New York headquarters staff under David 's direction achieved a very worthwhile er, reduction in telecoms, two million a year and this was by er, aggregating our telecoms erm, business and negotiating an er, one contract. And they've just about completed a second one on freight which will save two million dollars a year. And we're looking to, to do similar transactions in the U K, but of course with the lack of, or the reduced competition in the U K we, we may not do quite as well. Er, on capital ex expenditure er, most of the capital you see there was erm, investment which will show a return er, on investment. Er, the big items were Brighton where we're spending ten, eleven millions er, with the new press and the new building, which is pretty well completed er, it very shortly will be on-stream. Erm, the oil company continue to invest in capital expenditure, as it should do and er, most of that is spent between services, drilling and, and radar and at, Tussauds we continue to invest er, Alton Towers has got er, the Ghost House opening today and the Runaway Train and we were finishing off the Marylebone Road project, which is a very big, big project involving er,re the complete refurbishment er, new shops and a view right there in the basement. And so the er, the reward for our firm grip on costs and the concentration on cash is a favourable swing of, of forty seven er, million pounds in the full year and there should be more to come because now we're at the end of our er, capital spend on newspapers er, the newspapers will of course, become very substantial cash generators. We look at the er, profit of the newspapers individually. Of course it was a very, very difficult year for the Financial Times. Ad sales were down fourteen percent er, but we er, we increased our market share and in fact our market share was the best since nineteen eighty six er, when the F T was the market leader. Circulation was down four percent, but overseas we increased our circulation by five percent and again in the U K in, in newspaper sales we held our market share. Er, Profile did very well, increasing sales by twelve percent last year and following the deal with Texline er, sales moving well ahead again this year. Er, Les Echo had problems on the medical side, partly government regulation, partly the market and we've reorganized er, two medical divisions into one and that should give us er, give us some cost saving there. The newspaper circulation was up three percent to a new record at one hundred and twelve thousand, seven hundred and that was a very good performance. Ad volume was down erm, but not as much as in the U K.
[speaker003:] [cough]
[Frank:] The economists had a tremendous year erm, really bucking the trend and contributing about five million pounds to er, F T's er, associates profits. The circulation was a new record and four hundred and eighty five thousand, nine hundred by year end and it just seems to go from strength to strength. Er, we swopped our sharing expense on the er,Sp Spanish financial daily er, with cash for a twenty five percent stake in the Group and er, one of the things this er, does is to give us a stake in, in Marca, which is the second biggest newspaper in Spain and incidentally has the same social and economic profile as El, The Times of Spain er, and it's a sport paper which sells seven days a week, two hundred and thirty four thousand circulation and its nearer, nearest competitor sells one fifty thousand. It's a very big cash generator for the very high cover price and that should benefit from this year's Olympics. Expansion itself went up erm, circulation by twenty three er, percent last year and ad sales were up fourteen percent. Westminster Press had a very difficult year. Ad volume was down er, three point four percent overall. Nearly all of that was in classifieds where erm, the volume was down about er, eleven point eight, nearly twelve percent and er, revenue down by eight point three percent. Situations vacant in particular showed a very, a very big drop and erm, and in fact we, the yield was lower than the year before, but we've er, continued with our pac press rationalization programme and er, I think as I mentioned at the interims, the Basildon Evening Echo is now printed on the F T's presses, which incidentally has got the contract to and is printing er,. Erm, but W P continued to er, hang on to its market leadership in virtually every centre and erm, despite the difficult year managed to launch er, several new titles. Er, if we turn to the revenue split I think this underscores the recession er, and you'll notice that there's a much lesher lesser proportion of revenue coming from advertising. Er, they're overall figures, but for instance the F T, which er, the year before seventy five percent of its revenue came from advertising and er in, in ninety one it was down to seventy percent. If we go on to books erm, I think that Longman performance is exceptionally good erm, of course for book business it's very much first half, second half, most of the profit coming in second half, but er, erm, Longman only dropping seven percent on the year before seems to me a particularly good performance given the environment and in fact it generated more operating cash flow than the year before. It did very well with English Language Teaching sales er, in Europe and Asia as planned and its medical and professional sponsored adver erm, business in, in Japan grew much quicker than we expected. But education in the U K and Canada was very, very tough indeed. Pitman, which is the U K leading er, business book publisher increased sales by sixteen percent and Alhambra after the er, reorganization is doing rather well and the first book we've published on the new Spanish educational curriculum is forty percent ahead of er, budget. Ali Addison Wesley was er, one of our stars this year. Er, a fourth year of record profits, record er, sales, record margin, with the schools business thirty seven percent ahead of the previous year with our successful maths programme, aided and abetted by er, the business that produces the manipulatives to go with the maths programme. The college market in the U S A was the weakest for decades, but our college sales were up ten percent. Internationally we're up thirteen percent and in the Europe and, Europe and Pacific twenty percent. And on the er, general book front, the erm, Iron John was on the New York Times best sellers list for fifty one weeks and twelve of those at number one. I'll deal with Penguin separately. Federal and Capital we er, is, is a small business er, but highly profitable and er, it's a subscription business so that the cash comes in advance and er, the er, the only criticism I have of Federal and Capital is that it's, it, it, it, it would be nice if it was five times bigger than it is. But we're working on that. Looking at Penguin er, it was a very difficult year but the profit you see was erm, is after providing for the losses up to the date we disposed of Smith Mark and also making further provision on, on er, leases when we moved out of the other buildings, centralized the editorial and er, administrative functions into one office and, and but for that you would see that the er, the Penguin profit would have moved ahead from the year before. Erm, some of you are very critical of, of, of the Penguin operation when you were in the U S A but I have to tell you, they did achieve record sales there last year and increased market share and in fact the children's er, book publishing was twenty percent ahead of the year before. In the U K the improvement plans we've been working on for the last two years have been very successfully implemented but they've been overtaken by the U K recession. In the U S A we've appointed John President and so we've got the structure that we wanted, with Peter as, as Chairman at the top and concentrating on er, on publishing as he ought to, one of the great publishers of the world, dealing with the authors, dealing with the agents and dealing with the editorial staff. With a Managing Director in U K, Trevor and a Managing Director, President in the U S A, John and er, John had a very good start and we're sure this will be an improved er, stretcher from our business. Turning to, turning to entertainment and media investments er, it was a very tough year for the Tussaud group and starting with the er, Gulf War er, and erm, the only Tussaud business that, that does a lot of business in the first quarter is erm, Marylebone Road and you may remember that the Gulf War caused foreign tourists to stop coming to London and er, also erm, British tourists stopped coming to London and during that time attendances were actually twenty five percent down, so the recovery from there is, has been very good. Our highlight was the opening of Scenerama, our Dutch exhibition which opened in mid year and that's well ahead of budget and by year end we'd had six hundred thousand admissions through the turnstiles. Alton er, did well er, to restrict attendances to a five percent drop. I should remind you, of course, that we have the usual three million black hole Alton this year, the first quarter. At Chessington attendances pretty well stood still, again a very good performance in my view and er, justification for the capital spending that's gone on in recent years to bring that er, to bring Chessington to where we want it to be. Warwick too had a very good performance and er, and maintained its er, attendances. Er, turning to the media investments, well we all tend to think that the er, the bids tended to be on the high side but er, at least Yorkshire got the licence for the next ten years and they have the option in ninety eight to go for a further ten years and I can tell you er, because I've had er, lots of conversations with Clive that they're really working on, on making the best improving their returns from that franchise and I'm quite sure they'll succeed. Pickwick as you know we sold er, during the year, or sorry when the year ended, this year. Turning to er, Camco, our old services campaign, again that er, I think that was a very, very good performance er, sales were ahead of last year, trading profit ahead of last year and they even proved, improved the margin very, very slightly and that's our second star of the year. Erm, Products and Services did very well internationally, in fact the entire business did well internationally, generally, particularly in Venezuela, Nigeria and by year end the er, joint venture in Russia was er, was complete and ready to start. We also did a very important er, technology transfer to Czechoslovakia, which er, unsubmersible pump neck technology and that's tended to, to erm, hide a slight delcl er decline in the last quarter of the year, normally in oil most of the profit or more of the profit comes in the second half than the first, but with the Gulf War last year oil prices were pretty firm and er, so we've made er, quite reasonable profits in the, in the er, first half and so too in the second half, but in the last quarter they've been showed up by that technology er, transfer and the er, U S oil price is er, is, is er stag the U K's is stagnant, the U S is stagnant in oil and the gas prices are very, very far down, they're well down. Turning to investment banking and I should just remind you that er, we take fifty percent of Brothers' profits and ten percent of New York and Paris and given the conditions, given the environment last year, I don't think need be ashamed of the performance er, although in London the only business to really come in, come in with impressive returns was er, asset trading money, broking and banking. There was erm, a great reduction in corporate activity but corporate finance kept very busy er, with their value services and money raising and er, we were responsible for the National Power flotation and the disposal of Gratton. In Paris er, were top of the M & A league but the volume was well down on the record nineteen ninety. New York too did well, advising on thirty seven acquisitions er, thirty seven transactions, including acquisition of Tonka and acquisition of the Max Factor division of Revlon. On fine china erm, although profits were down, Royal Doulton did manage a margin of eight point five percent and here again improved the cash flow on nineteen ninety. And they continued to develop their distribution and retail network and now over half of our sales are overseas and er, we developed our direct mail and our chain store business er, even though demand was down. In fact we made most of our profits or a lot of our profits last year by erm, sheer volume and, and, and a decline in yield. Erm, a bigger sale of the smaller price it of the lesser priced items. I mentioned earlier that we closed the erm, Royal Minton factory and four other factories are on short time, but we continued to invest in operation efficiency to improve our competitive position and er, now over to er, to James. James.
[James:] Good morning everyone. Well as you can see from what Frank said, the six main sectors overall didn't fare too badly, sixteen percent drop in aggregate at the trading level and in fact er, our other interest less expenses were actually ended on eleven percent because we had a million pounds more profit from Lakeside when we sold the Tesco's site. However, the damage was done at the discontinued line which simply reflects the fact that we had er, Elserver in for two and a half months in nineteen ninety one, as opposed to twelve months the year before. So trading profits down twenty four percent and although the interest charge was down er, quite sharply, largely, of course, as a reduction in net depth through the Elserver sale, profits before tax ended up as you heard before, twenty three percent lower. If we go from that to the earnings, there's another erm, er, slide to take us through that. I think the most interesting point here is the tax charge which is two percentage points down on the year before and that really is prior year adjustments, there are other pluses and minuses but that's a significant reason. Extraordinary profits, you may be surprised to see are only twelve point nine million after the Elserver sale but that is a function of the write back of good will on the disposal of Elserver which you will see explained in the preliminary statement, thus reducing the er, profit from two hundred and twenty nine million, which was the estimate at the interim, to thirty five million for the year as a whole. We did that in the with the erm, urgent issues task force new standard on good will. We had to do it cos I'm a member of the task force. I mean I'd be sacked otherwise. So, earnings after extraordinaries up fifty four percent er, even so. Now, the profits, the profits you've seen where the profits came down, let's look at it another way and that is really to see er, the impact per the year before. Fifty three million down in profits overall. Foreign exchange worked to our advantage this year, the dollar was at one seventy two on average. Er, we had, obviously, no help from acquisitions because of the Elserver effect less interest. Our exceptional items were rather heavier in nineteen ninety one, you won't be surprised after what you heard from Frank about the er, number reductions. We had redundancy cost, we had lease provision and one or two other items. So, the underlying performance, in fact, accounted for only forty million out of the fifty three million reduction in profits. Now, again, we need to distribute the underlying performance because it wasn't equally distributed between the various sectors. Now, clearly the two major er, baddies there were the newspapers and investment banking and that reflects their operational gearing and the sharp decline in revenue you are well aware of. The two pluses are books, thanks largely to Addison Wesley, thankfully decisively so and the oil services business and the only other item worth reflecting, I think worth er, remarking on, is in fact that if you take out the black hole effect er, the entertainment fall was only two million and I think that is a creditable performance. So, if we now leave profits and go to cash. Er, the cash flow is slightly crowded and to we've split it into two slides. You can see er, at the top, of course the profits were down but nonetheless er, I think quite encouragingly, we have higher operational cash flow and I'll go into a little detail of that later. Er, a sharp fall in the interest, tax and dividends line led to the forty five million turnround at what we regard the crucial measure, net funds from operation. This tells you whether you're generating money for shareholders or where they consume you. If we look at the next slide, you'll then see er, the change from net funds from operations, plus eighteen million, down to the various large reduction in borrowings, you're already aware of and, of course, the erm, disposals less acquisitions as it should read for ninety one er, stands out there. We spent only really modest amounts, apart from there was a small further investment in B Sky B, nothing else worth recording. So, turnround in a net debt of three hundred and twenty million and I think we will look again now at the net funds from operation and look at the analysis a little further. Trading profit less potential was only down twenty five million because, of course, a good slice of the reduction in trading profits came from er, associates, mainly Elserver which is rather niggly in distributions. The working capital outflow was controlled and was only er, sixteen million more working capital, which is considerably better than the year before and then finally you had the er, improvement in the capital expenditure. Capital expenditure less depreciation is eighteen million better, that's of course a function of two er, elements. The reduction in the and the persistent rise the depreciation charge, which is going over the last four years as we maintain a high level of capital spending. Improvement in operating cash flow was then compounded by er, the financing line and that really is overwhelmingly er, a reduction in tax paid, function of the lower profits than previous years and of course, the impact of consortium relief in B Sky B. Net change, forty five million pounds and that we regard as one of the most satisfying outcomes for the year. Now Elserver also impacted, of course, materially on the balance sheet as the next slide will show us. Curiously, net trading assets are virtually unchanged between the two years. This is obviously a coincidence, since it's a function of so many different things including exchange effects. However, the balance between debt and equity is remarkably changed. You'll have the sharp improvement in shareholders' funds resulting from the write back of good will on the Elserver disposal and the consequent reduction in net borrowings, from four hundred and five to a hundred and eighteen million. Now, net debt of the hundred and eighteen million is of course, er, a balance of two items. We have our debt itself, the gross debt, which came down about a hundred and twenty million and that is all set by a substantially increased cash balance. The cash is overwhelmingly held in sterling. We need a hundred million of it to er, pay back Coupon Bond that matures in May and by the same reason, the final column shows that the balance of our debt between fixed and floating er, will change, other things being equal on the pro-forma basis. At the moment or at the year end of our variable debt, commercial paper in the United States, a very cheap form of debt, formed the overwhelming proportion. Our fixed debt is accounted for by our quoted sterling bonds and er, the balance of a medium tone note programme which we have outstanding in the United States. On the pro-forma basis, our hopes, which of course not yet been born out, that interest rates will be declining er, will give us some advantage by the year end, as a number of caps and swabs which we put in place during nineteen ninety one, unwind. Now, balance sheet with the lower debt and promising cash flow, of course, impacts on financial ratios and I think that this is the best measure of how we come through nineteen ninety one rather than the profits. The dividend cover is not wonderful but it's perfectly adequaly adequate as Michael said at the beginning. Interest cover was already strong and is now at nearly ten times patently er, a very healthy level and whether or not you add back the good will on other er, acquisitions, I dare say the ratio is at a very low level indeed. Clearly, we have plenty of powder and it's dry. Thank you.
[Frank:] Er, we are going to be joined er, for questions by David, who is er, the Chairman of Camco and the u the Pearson Executive Director, resident in the U S. Michael, who is er, C E O group and Hugh who is C E O of Westminster press er, financial newspapers. When you er, ask a question first time could you, could you say your name and the organization that you represent. Could I have the first question please?
[Mark:] It's Mark from the Daily Telegraph. Can I just ask you if your position on the Daily Mirror is still that you're not at all interested in it, or is there a prospect that you may change your mind when you've seen the figures from the Mirror?
[Michael:] Er, we had a good look at, at the figures, although they weren't totally finalized we had a pretty good understanding of the situation and I think it is highly unlikely that we would er, seek to re-open any negotiations.
[Jason:] Er, Jason from the Independent. Just a supplementary on that. This er, your comment that you had a good look at the figures, severely confused the merchant bankers who are advising the Mirror group as they, they didn't feel that they'd finalized the figures themselves. So, did you have a, a mole inside the Mirror Group?
[Michael:] Er, James would you like to answer that question?
[James:] Well, I'm not a mole. No, I think that we had a fairly clear idea, certainly on the pension fund, we've not obviously got accurate numbers, a clear idea of the broad er, shape of, of the problems and erm, that allowed us, without having to wait for very accurate figures, to draw the conclusions about the scale of the problem, the amount of investment we'd like to, we need to make and thus erm, whether or not it was of interest to pursue. You didn't need to have a, a long form report in front of you I think, to draw the conclusion.
[Richard:] Er, Richard from the Scotsman. Can I just ask you to be slightly more specific on your first answer. Does that mean you're not actually interested in any parts of the Mirror Group? I refer particularly also to the, the Daily Record and the Sunday Mail in Scotland.
[Michael:] Er, I'll be more, I'll be clearer. Er, we are not interested in any parts of the Mirror Group.
[Raymond:] Er, Raymond, Financial Times. Companies with as strong a balance sheet as yours have been known to seek acquisitions er, in the midst of a very deep recession. Why have you not done so?
[Michael:] Er, there are a couple of factors there. One is that we do make acquisitions, we on, on the whole er, prefer er, organic growth because it is normally more profitable and the prices you have to pay for acquisitions er, tend to put significant premiums on the companies you buy which you may er, in the longer run eventually erm, er, turn into shareholder value. But er, any acquisition has to fit extremely well strategically and it has to be at a price that we consider to be a, a, a good price. Now, so far er, the acquisitions that have come onto the market haven't really reflected er, the trading conditions in which all companies in this country have been operating for the last eighteen months. In oth other words, there haven't been particularly good value acquisitions that are strategically suitable for us. It doesn't mean to say that we are not on the, alert and on the look out and er, I think those opportunities erm, er, will still occur and that er, we will be involved. Now, there's one other element that's worth mentioning. Erm, it is perhaps only in the last er, six months or so that the erm, turnaround in the fortunes of erm, er, B Sky B have been acknowledged and er, I think there has been an element in our thinking that we wanted to keep our dry er, until such time as er, B Sky B which we have great belief and faith in and our, as you know we increased our investment during the year erm, sees its way through to profitability and I'm happy to say that that's happening now at a reab reasonable rate and that that means that it is highly unlikely that the hundred and thirty million of guarantees that we still have outstanding to B Sky B are likely to be called. So, we're in a pretty strong position to make acquisitions if they appear at the right price and they fit our strategic framework. Sorry, that was rather a long answer. Yes Sir?
[William:] William, Daily Mail. Erm, you, a lot of people now talk as though it's erm, plain sailing or flying for B Sky B and it's gonna be er, hunky-dory, whereas Anglia Television have just written their stake down to a prenominal amount because they don't think it's gonna make, stand a chance of making a profit before the turn of the millennium. Do you think they're being too gloomy and do you think certain other people are being too euphoric?
[Michael:] I think that the reasons people have written down their erm, er, holdings in B, B Sky B have varied. Er, sometimes it's for tax reasons, sometimes it's for er, for, for, for erm, er, reasons such as last year when er, we wrote down our, our stake by some seventy one million erm, it was because at that point the financing for B Sky B was not yet er, at all clear because the shareholders had been unable to agree at that point erm, that they would guarantee the two hundred or so million that er, needed to go in before the er, project became successful and so there was a genuine doubt on the financing. Er, I don't know if James again, you might like to comment. We'll keep Frank in reserve, he's a Chairman at B Sky B.
[James:] Er, I think er, Frank will correct me if we're closer to the, to the sharp edge than Anglia, who have got a very small stake and only in the equity of B S B H, are coming very low in the pecking order to get their money, whereas er, where there is a whole complex er, schedule of who will participate in the er, substantial cash flow that we expect to emanate from B Sky B in due course, but I think that's the main reason why Anglia, I haven't talked to David. Frank, do you talk?
[Frank:] Well, I mean it's, it's definitely tax driven. I mean erm, Anglia talked er, talked to me anyway as Chairman of B Sky B erm, before they, before they did the write off and it's, it's just tax driven.
[speaker003:] So you're right at the head of the pecking order?
[Frank:] Pardon?
[speaker003:] You're right at the head of the pecking order, when the cash generation starts you'll be first in line?
[Frank:] Er, we will, but the pecking order er, the pecking order is the subject of agreement and it's public. Er, but I mean clearly the, the debt and the guarantees are paid down first and so for the reason we are high up in the pecking order, because we provided the er, the loans and the guarantees.
[James:] Yes?
[speaker003:] Following that up when, when can your long suffering shareholders er, expect to see any return on the B Sky B stake and a follow up on that? Now, you've got sixteen percent and you're the Chairman when shouldn't you equity account it?
[Frank:] Well, I'm not certain our shareholders are long suffering. Erm, in fact I think the turnaround has er, has been remarkably quick and remember, we saved our shareholders from having to write the lot off. So I wouldn't accept your description justified.
[speaker003:] Mick.
[Frank:] Mm.
[speaker003:] Take issue beyond that.
[Frank:] Sorry, what was the second part of the question?
[speaker003:] Well, the first part of the question was when, when will they start seeing a return back on that money and secondly, when shouldn't you equity account it?
[Frank:] Well, er, equity accounting, James is better placed to answer that question than me. Erm, I'd be very surprised if, if cash, if, if B Sky B doesn't start to trade at a profit overall in erm, in the second half of ninety three. And, and thereafter cash can flow out because the first thing that flows out are loans and guarantees. So we're, we're quite close to getting cash back from B Sky B.
[speaker003:] Sorry, can I get it absolutely clear. I didn't fully understand that. Are you actually saying er, money will actually be raised in addition to the financing charges in the second half of ninety three?
[Frank:] No, no, I'm talking about profit from the, from the business. Money from the business.
[speaker003:] Just to clear another point up. Last autumn it was stated in a document that there would have to be further subscriptions of finance before er, the project became profitable. Are you now saying that's no longer necessary?
[James:] That is the two hundred million that I was referring to er, earlier, wasn't in place at the time that we made our write there.
[speaker003:] So, that was all the remark applied to?
[James:] Well yes, but that, remember we provided for up to two hundred million which we thought would see us through to the end of ninety two. Now it looks as if not all of that will be called, but we can't be sure at this stage. But it looks as if it may not all be called.
[speaker003:] Should I just comment on the assessing the equity accounting point. Er, the present situation is that there's complex erm, arrangements for the exercise of votes, basically unanimity is required and in those circumstances we as a shareholder cannot exercise material influence which is a necessary pre-condition for equity accounting. Ourselves.
[Roger:] Roger from the Guardian. Erm, can we, er, two separate questions. One is going back to the issue of acquisitions erm, where are you most interested, both geographically and er, as far as your operation is concerned, where are you most interested in making acquisitions? Er, and a completely separate question now, entertainment er, could you just tell us a bit more about what's happening at Alton Towers and also how you think it's gonna be affected by EuroDisney?
[speaker003:] Yes er, well I think we might, I'll answer the second question but we'll, we'll, we'll answer the first question but we'll ask Michael, who's right here to, to comment on entertainment.
[Michael:] In fact today, this afternoon we're launching a whole new area at Alton Towers which is additional to anything before erm, Frank referred to it briefly, there's a Runaway, so called Runaway Train ride, there's a Ghost House and that's all part of a new complex, which we've got longer term plans to expand further. Er, that's costing something up to ten million pounds approximately. So, we have erm, underlying confidence in the long term future of Alton Towers, I think that's very important to state. As far as EuroDisney is concerned, I personally welcome its establishment in France. I think that it is going to have a good effect on improving trading for the better parks and attractions in this country and as you know I think, Alton Towers is the leading er, park of its kind in this country, Chessington which we also own is the second er, leading park, one and a half million visitors a year, Alton Towers approximately two million visitors a year in this country. Both offering excellent value for money. The point I think that has to be understood about EuroDisney, which perhaps hasn't been properly perceived yet by the public is that it is very much a destination for the British public. It is not a place you can just go to for the day and therefore you need to spend at least a couple of days getting there overnight, coming back again and er, for a family of four I calculate that even taking one's own car across the Channel, the average cost for a family of four, is of the order of five or six hundred pounds. I don't see how you can do it cheaper for that. Don't forget to get into Disney is twenty five pounds, which is more than double what we're charging at Alton Towers for example. Er, the comparable cost for a family of four in this country to go to somewhere like Alton Towers or to Chessington in your own car including the cost of petrol of getting there is of the order of fifty or sixty pounds at the outside. In other words, only ten percent of the total costs of going to Disney. Therefore, the one is a destination which you'll probably find you'd prefer to go to for a long weekend or perhaps a, part of your annual holiday etcetera, our parks are places you go to for a day out and I think therefore there is a very er, strong difference between the sort of visit and because I feel that EuroDisney which will undoubtedly will be good, it's a proven formula er, it's run well er, it appeals to a lot of people and therefore it will be I think er, successful, exactly how successful I obviously can't say, but it will be successful, it will certainly attract British visitors, but they'll come back, looking er, with certain higher expectation, a value for money, quality etcetera, etcetera. And we believe we already offer that, I think the figures indicate that and therefore in the medium and the longer term I believe that our attractions will undoubtedly benefit and I would finally say that if you er, go back and look at the history of Disney in America, after the establishment of Disney Parks in America there was a big improvement in extension of the amusement parks in the rest of America which er, the traditional theme parks, so called, in America grew in the period after the establishment of Disney Land in California and I think a similar sort of thing is going to happen, not perhaps just in this country er, but also in Europe generally. In certain locations there are clearly planning problems, environmental problems that sort of thing, in establishing parks but I believe er, and I know a lot other people in the leisure business believe that there will be a growth. But the ones that'll gain will be the quality ones offering the best value for money and as you know, Pearson believes in quality and certainly value for money and therefore I believe we will benefit from that.
[speaker003:] Thank you Michael. On, on acquisitions, well running through the group, the best of banking er, er strategies to remain non capital intensive and strongly cash generative er, know, you know we've had a twenty million investment erm, A & A er, a Swiss er, house, we're extending our networks. We're not, er we're not the best thing about money and I wouldn't see that happening in the future. On fine china, we're already the largest fine china, fine bone china manufacturer in the world. We might make the odd selective acquisition but not vast amounts of money going on acquisitions there either. In oil... services, in the future there could be further major acquisitions but er, over the past three years we've er, undertaken a whole series of acquisitions and er, and for the moment I wouldn't see anything er, in the, in the major line there, although you never know if some, even sometimes opportunities you aren't capable of creating erm, er, because the er, situation is not right er, do occur and I wouldn't rule it out but erm, er, we haven't erm any major acquisition er, on, on, on the carpet there at the moment. Erm, on entertainment, we're spending a lot of money on organic growth and have done over the past two or three years and er, it's very well spent but again, we're growing our businesses, erm, er, rather than acquiring them. Alton Towers clearly is an exception but again, you have to pay a lot of money for it and it takes quite some time to get the return er, back and, and I would say that erm, many of Michael's erm, er, organic erm, er, expenditure will, will erm, provide er, a really good return rather quicker but in the long run we think Alton is good. Erm, now that leaves us with er, really the er, the publishing, the educational publishing er, the newspapers, magazines, electronic publishing, in all those areas we're active and on the lookout. We certainly, if you look at the breakdown of our sales er, we only sell about a hundred and fifty er, million pounds worth er, of goods and services in Asia, Pacific erm, we would certainly like to make acquisitions in that area just as we did in North America er, in the seventies and eighties and we have now small Pearson er, office, for instance in Tokyo, it's quite slow, erm, er, in that area but certainly we're on the lookout for acquisitions in, in Asia, Pacific. In all of those publishing areas that you've mentioned, newspapers, books, electronic Yes? Karen from News Australia. Would that include taking a stake in the er, the Fairfax float when erm, that takes place later this year? Erm, we, we, we really er, like to be in a position of control in any of the acquisitions er, that we make er, where we are associates rather than, than having a hundred percent or a least erm, over fifty. It is because for strategic reasons we've very want to make the investment, there's no other way of doing it. Erm, to cut a long story short, if a attractive Fairfax erm, individual enterprise came up, we would be far more interested than taking a stake that was a, just an investment. Er, the chances of it coming up seem to me highly unlikely. Clearly, if it did we'd be interested. Is your cost er, programme effectively complete er, or are we gonna be seeing more substantial redundancies this year? Well, we've got our cost reductions as an ongoing process er, so it's never complete, you're always looking for ways to, to become more efficient or effective but I don't anticipate any redundancies er, any further redundancies but obviously if, if, if systems become available which improve our efficiency and effectiveness we, we have to take account of it. What effect would a Labour government have on, in the U K, on Pearson's businesses? Well, there's been quite a lot of, of, of chat recently that, that erm, because of cross-media ownership erm, companies that are involved in cross-media ownership would have, have problems. I think that it is difficult to see under any clear complexion of government that our present holdings er, in newspapers, which are mainly the Financial Times which has a small erm, comparatively small circulation for a national newspaper and less than twenty percent in a television company would, would be affected by, by any government. Er, whether they, a different government would legislate erm, against people having more than a twenty percent stake in er, B Sky B for instance remains to be seen. It must be quite possible, which might mean that there will be some more shares er, available there but er, that is complete speculation. Erm, I don't think that er, in structural terms therefore a, a change of government would er, make a great deal, a difference, then you come to er, the general effect of a, a change of government er, I think at the moment we're living in a situation of uncertainty and er, a clear majority erm, for any party would probably from a business point of view erm, remove the uncertain short term. I think the view you take of the longer term, erm, er, becomes individual and speculative er, as once again you've got to erm, er, come to conclusions about inflation, about encouragement to the economy and er, you can read in many a good newspaper erm, their views on that. Thanks er, did the provision for er, properties like Penguin and four and a half million for the year, did all of that come in the second half, because it's noticeable that Penguin is ahead something like what, thirty two percent, second half on second half. So if that four and a half million was all incurred in the second half its underlying growth rate was something like sixty percent. Er, were there any sort of distortions there in the second half period? Well, Penguin always makes er, er, most of its profits in the second half but, but James would you like to answer.
[James:] It's more in the second half. My colleague Mr who is closer to the ground reminds me that I think there was a small provision in the first half. But we then took a view about, about future years because in a sense we've always been, obviously had to provide for the er, year impression. Discretion now taking a much more realistic view about the New York property market which is, office market which is as lousy if not lousier than erm, than London and say that we ain't gonna relet these, we're not gonna sub-let these properties, let's take, let's take a hit, let's clean it out now. And that was, that element was in the second half.
[speaker003:] Sorry, would there be any exceptional stock provisions that were released, made in the first half, released into the second half for example? So you talked about
[James:] Penguin?
[speaker003:] Yes, cos you talked about
[James:] No, don't make no, no, no. That wouldn't be the case, no.
[speaker003:] Are you er, going to have an extraordinary profit from the sale of the stake in Pickwick?
[James:] Small loss.
[speaker003:] Small loss. Er, Hugh, would you, you haven't had a chance to say anything. Would you like to er, make any comments on er, how a change of government might effect the Westminster Press?
[Michael:] Well, I think it erm, very, I mean I think as you said Chairman, if erm, there's a clear majority for one party it'll unblock a whole lot of delay and decision making which I think is going on and I think that that should be helpful. I suppose the only problem is if there's er, gonna be another general election shortly after the one we're about to have, that'll just er, create a bit more uncertainty for a bit longer I'm afraid.
[Frank:] Er right. Robert of Robert Fleming. I noticed one of the, the Sunday papers had a little bit of a dig on you on strategy over the weekend. Perhaps er, you'd just like to remind us erm, what your strategy is and no doubt how unfair you felt that comment was?
[speaker003:] Well, our strategy is to be a concentrated conglomerate. In other words, sticking to those sectors that we know and understand and which we chose for the nineties because we believe they had good growth prospects. Er, we built on those sectors, during the er, past year with the initial uncertainty on the B Sky B situation er, we have been managing erm, our way through the recession, you've heard from Frank er, about the er, immediate short term measures we've taken. Er, but in the long run we're on the lookout to continue to build both organically and by acquisition where appropriate er, on, on the main sectors. And you've all heard the theme of quality which, which runs throughout our strategic picking. Sorry, Eric er, there was something put up there, beyond your at first.
[James:] Yes,, James. Erm, James put a slide up about accept included a figure of erm, eight million for exceptionals. I wonder if you could just explain the consistent parts of that figure?
[speaker003:] The eight million on exceptionals, James would you?
[James:] That, that is the, the change in exceptionals compared with nineteen ninety. It isn't the total charge. And it comprises er, redundancy provisions er, costs on abortive er, acquisitions or erm, consulting projects er, lease provisions in Penguin and other odds and sods bluntly. I think we're talking at cross purposes. I think the slide that Frank was referring to was the total charge for the year. The eight million is the difference in the exceptional charge for ninety one compared with nineteen ninety. That was a various analysis. Er, Eric.
[Mark:] Can I. You indicated that there's no sign of any er, improvement in your main markets er, but looking for er, optimistic er, calculations could you give us any indications of the er, the benefits of the er, non recurrence of the Gulf War in the first half?
[speaker003:] Well, the non recurrence of Gulf War in the first half is pretty well balanced by the recession that is taking place at the moment and is er, showing as we all know, little signs of lifting. I think a change in the political, direct and when say it, I don't mean a change, I mean a, erm, the outcome of the solution erm, to, to, to the present uncertainty, I think er, will be greatly helpful er, once the election is over in the U K. Er, but it is, it's very, it's very early days er, as we all know. You showed us a slide with net savings for nineteen ninety two of twenty million. Can you actually just take us through those er on one of you slides you had a thing, net savings Er the net savings on redundancies of twenty million pounds?... Are they only redundancies or is it just a net saving? Oh, the net savings altogether. Frank will now take us through the, the net savings of twenty million on redundancies. You've done it once.
[Frank:] Yeah. Well, the twenty million obviously just comes er, in prop well not in proportion because the salary levels differ but in proportion to the numbers er, made redundant in the individual companies. It's quite difficult to, to get at erm, the other, all the other costs because they're a myriad of tiny things. I mean the big ones erm, obviously are the erm, savings of the U S A on telecommunications and freight er, but then there's lots and lots of things, for instance, the one I mentioned at Minton, two hundred and fifty thousand and so in all of our businesses, you know those, many, many small items.
[speaker003:] Is this a combination of the impact of the redundancies plus all these other, not just redundancies? Yes. Can I pick up on your comment, you do not see any upturn in any of your major markets. Advertising revenue seems to be, there seems to be sometimes that there is some slight pick up, the advertising associations predicting a pick up there, one or two companies who have been reporting, have been talking about a little upturn in the first quarter of this year. Did, you don't see any. Does that mean that they are wrong, or you're losing market share?
[James:] Er, it doesn't mean that we're wrong, there are some categories of advertising er, that are showing slight signs and others that are not. Er, Frank would you like to comment?
[Frank:] I'd, actually I think the problem is that you get the odd week er, and even the odd month, where things look better erm, but, but overall, then it slips again and er, overall erm, the end of February, there's no sign that, that volume is increasing from the previous year. Erm, and that's in the F T and that's in W P and the odd category will move. And, I talked to other publishers erm, including a very large one which will be nameless and they have a pretty good spread and their experience was the same as ours. So erm, I don't think there's any signs of advertising here. And on the, on the, on the television front again erm, there isn't a great deal on the television front and there's quite a bit of manipulation going on but erm, there isn't a great deal, deal of upturn. B Sky B is ahead of last year but I mean that's a growing business, you would expect it to be. No, no, advertising is, is still down. It's still, it's been, in the first two months it's been going down on last year in volume terms.
[James:] We have Hugh here er, Hugh, any sign of us losing market share?
[Michael:] No sign of our newspapers losing market share, no. I think the, I mean the, the huge drop that we had in situations vacant advertising in ninety, nineteen ninety one, when we fell from, I mean our job advertising was about twenty million pounds in nineteen ninety and was down to about eleven million in ninety one. But erm, the position at the moment is that, I mean, the situation doesn't seem to be getting any worse. Erm, and there are, there are some signs of erm, odd categories of advertising being slightly up but they are need to be counter balanced by others which are down too. It's really very hard to detect any trend.
[speaker003:] Your share price seemed to take a bit of a knock the other day when Roy made some comments about referring media conglomerates to the Monopolies and Mergers Commission. Firstly, would you see any problem with that under a led government directly and secondly if Rupert were forced to sell off either some of his stake in B Sky B or some of his newspaper interests er, what would be your attitude to er, buying?
[James:] Er, I don't think that er, we would be likely to have a, a problem in selling down. We only have sixteen percent of B Sky B and we have one national newspaper, the Financial Times, which, although influential, is relatively small circulation. I don't see erm, a government of any complexion being likely to insist er, on our going down er, below twenty percent er, in television. So, I don't, I don't personally see that as a direct threat at all and I think that also our, our er, our newspapers don't have any particular political bias of any sort, I think they treat each issue on its merits. So, I don't see from Pearson's point of view that, that a government of any complexion will alter what we can and er, or can't do in relation to our current er, holdings. Er, if any shareholder in B Sky B er, was selling shares, we would obviously consider er, whether we went up from our present sixteen percent er, to twenty percent but it would depend on the circumstances at the time.
[Jason:] Derek. Could you comment briefly on Addison Wesley and the pattern of the, the major programmes in that business and er, what the outlook is for the current year.
[James:] The pattern of trading at Addison Wesley and, and the prospects for the current year er, Frank.
[Frank:] Well, the prospects for the er, current year are still good. Erm, I mean I really can't, I don't expect them to surge ahead as they did last year but all the signs are that, that, they're doing very well and er, it's a very well managed business erm, great cost control er, I don't know whether you noticed recently that Meryl des described the erm, the management of erm, of A W as the er, I think it was the creme de la creme of the...
[James:] Class act of the industry.
[Frank:] class act of the industry. So it's a very well managed business. The pattern is very much first half er, erm, loss or small profit, second half all the profit and in fact you should watch out for the bigger, the bigger Addison Wesley gets, the more the loss in the second half will be because we're investing for that sale...
[James:] In the first half....
[Frank:] in the first half. They're investing in the first half in that second half. So, the chances are it will exaggerate more than anything else. Er, and we have a very strong college front list er, which we would hope would er, would make a contribution again this year, more of a contribution.
[James:] Er, David, resident in America. Would you like to make any general comments on the U S?
[Richard:] On the U S as a whole or on...
[James:] Well, in relation perhaps to, to Addison Wesley.
[Richard:] Well, I think that the erm, the, as Frank has said, they, they have a strong college list for this year, the school business should be they can't repeat the maths programme success of last year although there is follow up business in other states. So, there's strong underpinnings with what they've got and they are in the right areas of the market.
[speaker003:] Erm, could I ask er, a little about er, Longman and er, and er, Penguin in nineteen ninety two and particularly in the case of Longman, is the momentum of profits improvement in the second half carrying, carrying through into nineteen ninety two?
[Frank:] Longman and Penguin in, in ninety two. Er, what, what do we say about that?
[speaker003:] Longman have made a very good start to the year and erm, and so they've progressed from day one, making last year I expect to continue. Erm, and Penguin U S again have er, made a good start and the one area, David can talk about this better than I, but the one area that er, where there is an upturning in business activity and mo promise have come into the U S A. So, you know, we expect erm, Penguin and A W er, Penguin U S certainly to go on and Longman to carry on as they are, improving. David, do you want to say anything about the U S?
[Richard:] No, I think erm, in the, certainly in the consumer area which affects both Penguin and to some extent Royal Doulton, there are definite signs now of the U S economy turning around and that is likely to continue as, as the year goes on. And certainly, trade book publishing did not do at all badly in nineteen ninety one in a recessionary environment and erm, there are, as Frank has mentioned particularly within Penguin, quite a lot of internal restructuring has gone on and one would hope that margins would improve over the next few years as a result of that.
[speaker003:] While we're on the U S, could you say on the oil services er, how much of the er, good performances do you pumps turning round and again what are the prospects of that division for the current year?
[James:] Well erm, can everybody hear the questions or is it bet helpful to repeat? It is helpful to repeat. Er, to what extent er, was the er, was the performance of, of Camco erm, er dependent on a good performance from?
[speaker003:] Well, I'd like to qualify your question if I may put words into your mouth. I think in fact er, had been doing quite well and the specific point that Frank was referring to was erm, the technology transfer that they did with a mar large chip manufacturer, which probably made a contribution in the second half, a net contribution of about five million dollars and that offset some of the weakness in, in other parts of Camco's business in the last quarter of the year. And that er, technology transfer covers submersible pump technology which will be the standard pump line and the Czechs will have a non exclusive erm,li er licence to sell it in the Soviet Union which is a prime market er, and in other areas behind the old iron curtain. And that's an arrangement which will be carrying on over the next few years. Could you tell us please, how much we spent on Ghost House and Runaway Train and what you expect it to bring in, in rewards this year?
[James:] How much we spent on Ghost House and Runaway Train er, and how much er, profit we'll bring in this year. Er, Michael.
[Michael:] The erm, total figure will end up, it isn't all completely spent yet, but it'll end up er, something between eight and ten million pounds. It's impossible to judge exactly how many people will come in as a result of that and er, how much expenditure will be incurred because as you know we're in a recessionary period and as you've already heard there is concern about current trading, but I would hope that it would bring in er, something like a hundred and fifty thousand extra people, certainly in a good year I'd expect more than that but really that's about as much as I'm prepared to say with some additional spending which will be incurred at Alton Towers. But obviously in a recessionary period, which we are certainly not out of yet, you have to remember that Alton Towers has a per cap of something like fourteen pounds a head at the moment, er, average of all people. And therefore in a recessionary period when pressure is on people spending er, that sort of figure is under tremendous pressure.
[speaker003:] Erm, a comment on B Sky B and contribution. I mean, will there be any contribution by way of guar loan guarantees over the forecast, over the next two forecast years or, I mean my understanding was that there was a guarantee fee that, that erm, was still owed this year.
[James:] B Sky B and its contribution erm, to Pearson. Frank.
[Frank:] Well, I mean, we don't, we don't intend to equity account B Sky B for the present time anyway. Er, obviously the guarantee fees are a contractual obligation of B Sky B and er, so we er, we, Pearson are entitled to those and I mean, obviously as, as B Sky B becomes cash generative and erm, then cash will flow into Pearson and I th you know the schedule erm, and in that, in that way.
[speaker003:] James, would you... James just said that we haven't taken any guarantee fees into this year's profit er, nor any interest on, on loan stocks. That's something that we obviously would consider next, this time next year in the light of, of the performance and prospects and clearly on advice from, from those on the board. But, but as the business continues to do, do better, as they're already doing rather well er, that becomes an issue. Two completely different questions. Can you just tell us what you've done to your entrance pricing for your various entertainment centres and also can you tell us why the Canadian profit's almost doubled in the year? I couldn't hear the second question myself. Your erm, on your allocation of geographical profits er, Canada's profits have almost doubled in the year.
[James:] Two totally separate questions, the first relating to entrance pricing at our entertainment businesses and we'll deal with that first. Michael.
[Michael:] The erm, entrance price increases generally have been in line or slightly above inflation. We normally aim and have achieved very successfully in recent years real price increases above inflation. Last year, you'll remember, we had to absorb, in fact in the Tussauds group, about three quarters of a million er, pounds on the increase in V A T and that was a blow to us at the beginning of the season, you remember it was the budget more or less this time last year. Er, this year hopefully er, with pressure, again as I said earlier but nevertheless we are hoping and having er, put in our new price increases for the season which is more or less beginning now. I hope everybody understands er, Alton Towers is launching its new things today, Chessington opened this weekend, so we haven't been trading until this weekend in effect in our parks business. London, of course, and our Amsterdam exhibition has been trading since the beginning of the year and the price increase is generally coming at the beginning of the season, which is more or less now for the parks, earlier for the exhibitions.
[Frank:] And the separate question related to trading profits erm, in Canada. Why have they gone from eight million to fifteen million. Er, James.
[James:] The er, combination of things. First of all, during the course of the year our holding in the Canadian Financial Post reduced, therefore we took in less losses from that business. Secondly, Penguin Canada returned the profits. Thirdly, both Camco and Addison Wesley had very good years in that territory.
[Frank:] Further questions?
[speaker003:] Sorry, can I ask another one? Er, on your erm, West Thurrock er, receipt and profits, I think this is the last er, the last year erm, can you give us an indication of er, thought that you might have of filling the hole er, in nineteen ninety three when you cease to?
[Mark:] Er, the major contribution from one transaction in relation to West Thurrock er, which will be coming to an end er, James would you like to comment on that?
[James:] Well, you're absolutely right, Eric, it does come to an end. Er, to what extent the rift er, filled, I don't think it can be wholly filled as a function of the recovery in er, the market for land. You know we have a considerable holding of er, land immediately adjacent to the reasonable shopping centre there and erm, if and when things become buoyant again and I went down there a couple of weeks and I was rather impressed by, by the look of the area, then clearly land prices go up and we have the capacity to, to generate more profit. But, I think it would be illusory to think that we can maintain our profits from land in ninety three at the same level as it had been for ninety one and two.
[speaker003:] That was the final question. Well, yes we have a final question.
[Raymond:] Tony from. You say if, if all your loans to B Sky B were performing and you consolidated them erm, what your income would be?
[speaker003:] If we consolidated? If you, if all your loans to B Sky B were performing and you took credit for them what, what would the contribution be? Ah. Er, James.
[James:] You mean, if we took the interest from Guarantee fees?
[speaker003:] Yeah.
[James:] You got an answer for that? A useful few million. An exciting shot. It's like all good things to come, I don't like to count my chickens, so I'd rather not, not the little memorandums say, oh you've got another X million, if only we could take them in this year. Any of my colleagues have a number in their mind?
[speaker003:] . Fifteen.
[James:] Thanks Charles.
[speaker003:] Er, we have another question. What criteria, I mean, will you use to determine whether or not you actually erm, take those into account in determining nineteen ninety two's figures?
[James:] Whether and when they're gonna be paid.
[speaker003:] String that to whether, James. When James, not whether. [LAUGHTER]
[James:] Well, I regard the answer to whether as academic. So, on happy, on that happy note could we go next door and have some coffee.