Pearson preliminary results: analysts meeting. Sample containing about 9993 words speech recorded in business context

11 speakers recorded by respondent number C414

PS2Y7 X m (Michael, age unknown) unspecified
PS2Y8 X m (David, age unknown, chairman) unspecified
PS2Y9 X m (Frank, age unknown, chief executive) unspecified
PS2YA X m (James, age unknown, finance director) unspecified
PS2YB X m (Robert, age unknown) unspecified
PS2YC X m (Ken, age unknown) unspecified
PS2YD X m (Charles, age unknown) unspecified
PS2YE X f (Lorna, age unknown) unspecified
PS2YF X m (Stuart, age unknown, chief executive officer) unspecified
HUPPSUNK (respondent W0000) X u (Unknown speaker, age unknown) other
HUPPSUGP (respondent W000M) X u (Group of unknown speakers, age unknown) other

1 recordings

  1. Tape 104501 recorded on 1993-03-29. LocationLondon: London ( Savoy Hotel ) Activity: analysts meeting speech

Undivided text

Michael (PS2Y7) [1] I think we'll, got another minute or so.
[2] I think I'll start.
[3] ... Well welcome everybody and welcome to some Pearson results that er ar maybe rather better than some of you were expecting.
[4] Er taking part in our presentation this morning is Frank , the Chief Executive of, of Pearson, er James , our Finance Director and David who is er our resident as Pearson Executive Director resident in the U S and he is also Chairman of our Oil Services Division.
[5] Profits are lower and earnings are lower than last year, but cash generation which we've been working particularly hard on er for the past couple of years er and which we will be talking about further in a minute has come through extremely well er and we produced higher levels of cash this year than at any time in the company's history.
[6] With this in mind we are er recommending a small increase in the net dividend.
[7] ... A number of things have changed since er, we reported rather gloomily six months ago.
[8] One of the major changes is that the trading environment in which U K companies operate has been improved by lower interest rates and the lower value of the pound which is also helpful to the translation of our overseas profits and to our exports.
[9] Particularly as we are a company whose sales as you know is split roughly a third a third a third er that is a third in the U K, a third in North America and a third in the rest of the world.
[10] ... The media and entertainment business brought in excellent results collectively up twenty five percent and as you can see the book businesses performed particularly strongly [...] even better now.
[11] Erm investment banking and fine china in the market circumstances er performed well, erm although they're down on the previous year.
[12] Er the disappointment obviously is oil services, so to begin I'm gonna ask David , who as I said is Chairman of our Oil Services Division Camco to address this straight away. ...
David (PS2Y8) [13] Just better ah, that's fine.
[14] Thank you Michael for that introduction which er could be likened to a poisoned chalice I suppose.
[15] Erm you probably all know Murphy's law that what can go wrong will go wrong, when I looked at the Oil Service Industry in last year, I rather think that Murphy was a bit of an optimist myself.
[16] Er, obviously on a more serious note, er it was very disappointing that we had such a severe er downturn in profitability last year after several years of steadily rising profits, and so what I want to do this morning was tell you a little bit about what happened in the last part of the year, since we met at the time of the interim results presentation last September, tell you the actions that have been taken and give you a little bit of insight as to where we stand at the present time.
[17] You may remember that we were talking last autumn about gas prices hopefully continuing to rise natural gas by [...] to rise during the rest of the year and in fact that did take place and it did have some impact on the domestic rig count in the United States which went up quite strongly in the last part of the year.
[18] Although I should warn you that about two hundred of those nine hundred rigs were probably actor active as a result of special tax breaks, which were ended at the end of nineteen ninety two and won't be repeated.
[19] The biggest problem and disappointment was that the international rig count continued downwards and that was where we had been hoping for increased sales and increased market share looking into this year and into the last part of last year.
[20] As a result, overall our sales were down, roughly in line with our competitors in the oil service industry, but there was continuing pressure on margins and profitability and there had obviously been some build-up on the international side in anticipation of higher sales.
[21] With an uncertain outlook for nineteen ninety three from our point of view it's absolutely crucial to get costs in line we had obviously done cost-cutting during the previous two years, but we really needed to be sure that if revenues were not going to increase, we shouldn't wait for a recovery to bail us out.
[22] This led to restructuring costs, including redundancies and closures and other one-time charges totalling approximately twenty million dollars, of which approximately eighteen million dollars came in the second half and a very large portion of that in the last quarter of the year.
[23] The areas where we put in most effort were Reed Tool the drill bit company where there were redundancies earlier in the year and in particular the U S operations of Redder and also the U S operations of Camco Products where in fact in the U S part of it, there are now thirty eight percent less people employed than there were a year ago.
[24] In doing all of this, we were in good or maybe bad company depending upon how you view it, for example Halla Burton had special charges last year of a hundred and eighty seven million dollars which compared with a hundred and eighty two million dollars of special charges the previous year and Baker Hughes similarly had charges of eighty million dollars and sixty million dollars.
[25] At the same time, we reduced capital expenditure from forty two million dollars to twenty four million dollars, but we did keep up our R and D efforts and had several rather successful new product introductions during the year.
[26] As a result with good control of working capital, our cash flow overall was virtually the same as in the previous year in spite of the significant profit collapse and although there may be some further redundancies this year, I don't expect them to be in any way on the same scale as during nineteen ninety two and the important thing is that we now have costs in line with the lower level of revenue as we look into nineteen ninety three.
[27] To take a quick look now at the current conditions and in fact you'll see the extension of gas prices, rig counts etcetera into this year on the charts that you'll be given with a pack after this meeting.
[28] Gas prices in the first quarter of this year have continued firm.
[29] The U S rig count is down, both because of those rigs I told you about for tax reasons and also because there's always a seasonal downturn in the first quarter of this year.
[30] There is some indication that the seasonal downturn may be flattening out a little bit earlier this year than usual.
[31] The Canadian market has been very strong, which is important for Reed Tool which has a big market share up there for its drill bits.
[32] The international market however does still remain weak.
[33] There may have been some weather impact in the last two months, but basically, it looks like the major U S oil companies that were going overseas are still spending money on buying leases and building up infrastructure.
[34] The national companies such as Mexico and Venezuela are still re-organizing themselves and obviously a lot of time, effort and nervous energy is being spent by people on figuring out what to do in the C I S, where there are obviously great opportunities, but great risks as well.
[35] So the trading environment still remains er somewhat weak, but the better news is that the medicine we've applied does seem to be working.
[36] The newly-appointed C E O, Gary who took over at the end of the year when Gill retired has been very involved in these restructuring efforts and has been working very effectively and is on top of the situation, and although three swallows may not make a summer, I can at least tell you that Camco has traded profitably in each of the first three months of nineteen ninety three and now I'd like to hand you over to Frank , who will talk about the rest of our business. ...
Frank (PS2Y9) [37] [cough] Thank you David.
[38] Good morning everyone.
[39] Last year in the er Annual Report er Michael and [...] wrote we will continue to concentrate our efforts on cash generation ... and so obviously this is the er this has been the most important of our management actions.
[40] We've continued to focus on cash.
[41] We've concentrated on market share, we've been exercising cost reductions and we've been continuing with investment.
[42] ... Now how did we focus on cash?
[43] Well we er have [...] programmes designed to encourage chief executives to er concentrate on cash generation.
[44] We've er added extra staff in, in er credit control departments where it's been necessary and by a process of education, at every Pearson seminar we rang home the message of the importance of cash and James provides examples of different methods of operating and the effect it has on cash ... and what happened to market share?
[45] Well we've er we've gained in, in many areas and held in all.
[46] ... Cost reductions ... there are many, many actions we've taken and so lots of the cost reduction is the accumulation of er of rather smaller ones, but the main ones are redundancy, sadly, more redundancy and we'll give you the numbers in a second er we've asked our suppliers for greater discounts or better discounts and been successful here.
[47] We control the pay round, the pay round increase in Pearson was less than three percent a a and we've continued with capital expenditure designed to reduce costs.
[48] Good example would be Penguin U S A er where we've er er put up a new building er in which to house a press to be [...] by Donnelly which will allow much shorter print runs of our trade books and this should reduce the number of [...] and as you know, that's one of the biggest problems facing the trade book industry [...] .
[49] Another example would be the Talbot System and the Financial Times, which will provide full page make-up and is already yielding benefits and will continue to do so in ninety three and ninety four.
[50] ... But we've continued with investment to develop our business as well er and so we acquired Ventura which publishes the er Spot er books.
[51] We really [...] in Paris and we invested th five point seven million in the toy ride at Alton Towers, er one point six million in the roller-coaster, we've authorized three point six five million to be used at er Warwick Castle to develop the King Maker Exhibition and we spent ten million on a new ride underground at Madame Tussauds in Marylebone Road, the Spirit of London.
[52] We've launched the series of six Beatrix Potter videos, the first two have been very successful, the first one sold three hundred and fifty thousand copies and is er I think it's number three in the best seller list and we'll give you one of these to take home and er and, and watch to your leisure.
[53] ... er [laugh] we er launched the Medical Daily in Spain with our Spanish associates and we've introduced interactive videos that our er Natural Sciences Division have Addison Wesley and elsewhere.
[54] We move to redundancies, well there you will see that er er newspapers that is to say Westminster Press and Camco have borne the brunt er and ... I will say no more other than that the reduction in payroll year-on-year will be thirty million pounds.
[55] Moving to fine china, there was a very considerable overseas sales decline, particularly in Canada where there were lots of major retailers going bankrupt, but despite that, sales were over two hundred million for the fourth year in succession and we had a record December.
[56] This was achieved by altering the mix and concentrating more on the lower-priced er china such as erm chain stores and hotel and airline ware.
[57] In the U S we continued with our expansion by opening sixteen shops and our bridal wear in America was a market leader.
[58] ... Newspapers.
[59] Well there you'll see a summary.
[60] The F T Newspaper which includes magazines, electronic publishing and [...] was up a bit.
[61] The F T Associates which is er includes the Economist [...] in Spain was up a lot and Westminster Press was er was down, but of course Westminster Press took a major redundancy charge, they were also bringing on a new plant at Brighton and therefore running two plants simultaneously which is very costly er and they launched [...] on Sunday.
[62] Again they charged against revenue ... but er I can assure you that er Westminster Press will increase its cash generation during this year.
[63] The Financial Times itself, the er trading profit was up ten percent, despite having to cope with an advertisement volume which is now higher than during the er seventy four recession.
[64] Cost cutting went on and as I say will continue in ninety three and ninety four.
[65] Circulation just about held its own in U K, but was up six point three percent in Europe and is now one hundred and thirteen thousand five hundred and the electronic publishing was up eighty one percent.
[66] ... There's Echo ... There's Echo goes from strength to strength to the extent that one of its competitors, the main competitor, Tribune del Expansione was obliged to merge with Lacoude Francais I mentioned earlier that Ensure was re-launched and er it achieved a circulation of a hundred and five thousand.
[67] In circulation of Les Ecca was up four percent year on year.
[68] The Economist circulation is now five hundred and twenty five thousand each week, and although their er year is out of sync with ours, I expect the profits for the year to be at or near record levels once again.
[69] Recollettas our Spanish investment paid off handsomely, profits more than doubled and Marker is er, the seven day a week sports paper, is now the er second biggest paper in Spain and has a higher readership than the first paper.
[70] Expansione the financial daily [cough] excuse me also increased its circulation once again and its profits.
[71] [cough] Moving to books and of course the books division er was the star this year I am pleased to stay.
[72] Starting off with Penguin.
[73] With record sales, record profit and record cash generation, they managed to reduce their inventory by thirty percent during the year and had the most ever number of best sellers on the New York Times best seller list, and that's continued into ninety three in January, we had eight on the New York Times best seller list.
[74] At Longman, here again, best ever sales profits and cash generation.
[75] In Spain, we took Hal Hambra from a loss to a profit and the award of the Albanta Prize by the Spanish government and this is an award given to the best new text book in, in the Spanish educational system each year.
[76] In Japan our small but beautiful medical information business increased its profits by forty five percent and Ladybird er we had a swing from a loss to a profit margin of ten percent.
[77] Addison Wesley er had a, yet again another year of progress.
[78] I am pleased to say we've taken the trading margin there from five percent to fourteen point two percent in the last four years.
[79] This was achieved with a higher erm educational higher education [...] perform the industry in the year say and that was a major contributor and our Natural Sciences Division had its best ever sales.
[80] ... Entertainment and Media er the Tussaud Group had the highest ever attendances at Alton Towers, at Warwick Castle er and at Rock Circus.
[81] Scenerama in Holland performed above budget.
[82] Alton Towers in fact was a record turnover and profit and I think it justifies our marketing of goods I mentioned the two investments on new rides earlier and that was designed to move the audience from the white socks brigade to family unions, it seems to be working very well
Unknown speaker (HUPPSUNK) [laugh]
Frank (PS2Y9) [83] [cough] ... Peskibe continues to thrive, operational profits there are now well over a million a week ... and I think it's worth remembering that one subscriber may have three subscriptions say to two movie channels and one sports channels ... and if you count these individually, it means that we now have four point nine million subscriptions achieved during the second worst recession, recession this century.
[84] The churn rate is now down to eleven percent, the result of positive action that we've taken there ... and we expect to add a million homes during this year ... and the cable audience I am pleased to say is growing still very very slowly er but that should help as well.
[85] ... [cough] ... Now lastly er just to er just to indicate that virtue has its own reward, there's the record operating cash generation for you to see ... and on that note I'll pass you over to James [...] .
[86] James.
James (PS2YA) [87] Thank you Frank.
[88] I don't know whether I'm virtue or the reward, but never mind!
[89] Er, back to the profit and analysis er remind you so far there's three which ... er you're all very I'm sure already familiar with but we have to explain to some of our less sophisticated audiences.
[90] Six sectors down ten percent, that of course included investment banking which we haven't touched on, but er the Lazard Houses profits were down a little less than ten percent which is rather good going, given their ... erm heavy specialist skills in M and A which were a little bit in short supply last year.
[91] Er looking at the rest of the P and L, you will see that we have split out a profit on sale of fixed assets which is our Lakeside erm Capelat [...] and the Capco shares er which is why the corporate expenses for this other income has turned a way round, it's gonna be negative nowadays, so we thought it'd look a little silly saying other income less expenses.
[92] Erm operating profit therefore down eleven percent, that's er the ongoing businesses plus of course the impact of the erm er the sale of er Elsevere are holding in the first erm up to ten weeks of ninety one.
[93] Therefore although the interest charge is well down, profit before tax was down sixteen percent, it's down sixteen percent er because of course the old extraordinaries, the extraordinaries we had below the line in ninety one the eight million you see net profit on disposals are back above the line in under F R S Three, that's the Elsevere profit less the Smith Var losses very broadly speaking.
[94] Continuing down the and P and L account the erm ... tax charge, you've seen a note in the erm preliminary results present erm handout is not in fact up as a percentage if you look at the operating er if you look at it in operating terms, there was a tax credit in in extraordinaries last year this therefore had reduced the nineteen ninety one tax charge comparatively, strip it out and tax chargee share was around twenty nine percent.
[95] Primary earnings under F R S Three including everything down twenty one percent, but taking out the non-operating items, that's the erm fixed assets, er profit sales on the one hand and the old extraordinaries on the other, and you have I think a more meaningful guide to our performance a reduction in any nine percent.
[96] ... There were some significant erm factors that im impinged on profits i in nineteen ninety two and we've listed here the most important ones.
[97] To an extent tha they er offset each other as you can see, since the erm underlying operating performance, although less than the total [...] in operating profit er was, was, was quite varied.
[98] The ... I, I'll run through them rather quickly.
[99] On the negatives there was the er resumption of a S S A P twenty four charge for U K pensions, a little less than we expected, we had a strong revaluation in mid-year, the incremental redundancy costs that Frank has already touched upon and er the er dis er the discontinued profits not in ninety two.
[100] Offsetting that with the Smith Mark, losses and the one-time provision for the Penguin U S Leases, that was all ... taken care of in nineteen ninety one and the benefit from our fully [...] benefit from our ninety one acquisitions and little bit [...] in ninety two.
[101] If I turn from the P and L Account to the operating cash flow, er you've got the F R S One cash flow in your er in your pack in the preliminary announcement obviously, but we er don't find it terribly helpful, it's not the way we manage the business so I thought you erm would forgive us if we present it in the way we think it's a little easier to follow.
[102] Now this slide really takes the behind, takes us behind the first figure on the on the consolidated F R S One cash flow table and it really traces hard despite the reduction in profits, the very strong performance in working capital that Frank eluded to earlier means that er we actually end up with a net cash flow for operating activities more than thirty five million pounds higher.
[103] I'd just like to elude to the er positive string on exchange, we take our profits in during the year at an average rate, but the cash benefit obviously er year on year is, is better than that er to the extent that the erm dollar has strengthened throughout the year or by the year end against the pound and we get the full benefit of that in our cash flow.
[104] Reduction in capital expenditure er broadly offset the reduced erm income from partnerships and associates which is basically our Lazard income, that's [...] so the very good er contribution we got in ninety one reflected the nineteen ninety er profits they were earning.
[105] Operating cash flow as we look on it, well up.
[106] The reduction in interest broadly matched the increase in tax paid between the two years, so the net movement of funds from operations are a critical parameter for whether we're really generating cash for new initiatives, significantly better at forty five point six million and this ... this excludes the proceeds of fixed asset disposals, so all in all we had pretty nearly sixty million cash free and clear.
[107] Not a lot was spent on acquisitions er and not really any material disposals other than the ones already referred to.
[108] The change in net debt, er worth referring worth mentioning minus three point three million that much worse would have been significantly lower thirty five million or so lower if we'd had the same year end exchange rate as we did in nineteen ninety one.
[109] I turn from this rather convoluted erm aspect of cash flow back to the balance sheet.
[110] Balance sheets really haven't changed either er formally the way we publish them to you or the way we look at it, them ourselves.
[111] Er really no great change here, small improvement in capital and small increase in capital employed and of course with little change in net debt and the shareholders' funds have gone up.
[112] ... If you look at the net debt in greater detail ... it is still the difference between erm substantial gross debt and substantial amounts of cash, each of which have gone up somewhat during the year.
[113] The significant change I think is in the balance of debt between fixed and variable rate, where we took a conscious decision and been working it through to take more advantage of the prospective and er decline, it was prospective earlier in the year er in selling interest rates and the continued low er short-term rates in the United States.
[114] ... The upshot of the erm ... the year of course has been rather a healthy lot of financial ratios.
[115] We've er we're showing the dividend cover in a variety of ways because it's ... I think not clear that any one measure is, is only er the way of calculating it.
[116] Under F R S Three which is the erm ... everything above the line earnings a a covers down, earnings down from two one to one six, not much change on the adjusted earnings which we think is perhaps more meaningful and if you look at the cash generation the test of whether you can pay it a very significant improvement from one two to one point seven times.
[117] Interest cover er has improved accordingly, you saw the interest charge was, was usefully down and erm the [...] ratio is low and has remained low.
[118] So on that healthy note I'd like to hand you back to Michael to summarize. ...
Michael (PS2Y7) [119] I'm optimistic about nineteen ninety three.
[120] I can't of course foretell er what's gonna happen in Eastern Europe, but looking externally er at the lower interest rates and the er more competitive value of the pound and internally at the improved cash flow and the actions that we've been taking over for the past couple of years and I can say that there's now generally a more optimistic feeling in the air amongst our group companies.
[121] ... As you've heard we've been cutting costs pretty significantly over the last couple of years erm [cough] what we're talking about is three thousand people having been er made redundant over the two and a half years and as we were saying earlier substantial redundancy costs have had to be borne.
[122] Nineteen ninety three is gonna be the first year in which the full benefits of this cost cutting are gonna come through and whilst it's always a continuing process and there will be some further redundancies, I am glad to say that we believe that the bulk of the redundancies are now behind us.
[123] We've re-aligned our cost space which makes us more profitable at the existing levels of demand and potentially very profitable indeed er ... er when you consider that we have the capacity to respond to any upturn in demand without increasing our costs.
[124] The underlying point I'd just like to give an example er of how the F T would benefit er if a recovery takes place.
[125] For every extra hundred fee of advertising revenue we add seventy five P to operate in profit.
[126] Any upturn in demand also produces a substantial improvement in profit in several other of our businesses, for instance Westminster Press, Les Echo Lazards Tussaud and I'd like to remind people that we're a very second half oriented company and that in the first half of nineteen ninety two we had some major one-off contributions to profits which very much helped the figures, but nonetheless, we're pleased at the way the trading profits of the operating companies are moving.
[127] It's early days er to make predictions, but we're off to a positive start for the year.
[128] Thank you very much and we'd like now to answer any questions that you may have.
[129] ... Yes?
[130] We have microphones.
Robert (PS2YB) [131] Do you want to say who we are?
Michael (PS2Y7) [132] Sorry?
Robert (PS2YB) [133] Do you want to say who we are?
Michael (PS2Y7) [134] No, I, I think we know.
Robert (PS2YB) [135] Okay.
Unknown speaker (HUPPSUNK) [laugh]
Robert (PS2YB) [136] Erm the Financial Times you showed er I think including the F T Group and Les Echo er in, in the profit analysis, but you did say that their operating profit was up ten percent th the F T Group which I take it to mean they made fourteen point three, leaving I think four point two to Les Echo You did also say that Les Echo had gone from strength to strength but f from my figures I think it's a third successive decline in their profit.
[137] Would you like to, to explain what from strength to strength means or whether I've got my figures wrong erm a and, and perhaps give an idea of what from strength to strength will mean in coming years?
Unknown speaker (HUPPSUNK) [laugh]
Michael (PS2Y7) [138] Er I think in this context strength to strength is talking about market share, erm Frank er was saying how we've made considerable gains in relation to the opposition and er such an extent that in fact er it had to join up with the er er er with the other financial newspaper, but Frank would you, would you like to add?
Frank (PS2Y9) [139] Yes.
[140] The circulation is erm is has grown every year we've had it and that's very important because erm a lot of the subscrip a lot of the circulation of Les Echo is in fact a subscription in advance such it's cash generating qualities are high even when the profits are down.
[141] Now the profits are down erm mainly because of the er the recession in France which started later than U K, and secondly because we've er we've er re-launched Bonjour and so we have the re-lau re-launch cost there.
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [142] [laugh] Er James would you like to [...]
James (PS2YA) [143] Well I think Robert's, er I mean Robert's always a good guide on these matters I mean the F
Unknown speaker (HUPPSUNK) [laugh]
James (PS2YA) [144] The F T
Michael (PS2Y7) [laugh]
James (PS2YA) [145] The F T itself as it were profits were up erm about up to about fourteen million and erm Les Echo was just over four. ...
Michael (PS2Y7) [146] Yes?
Unknown speaker (HUPPSUNK) [147] I'm er
Michael (PS2Y7) [148] Sorry
Unknown speaker (HUPPSUNK) [149] I'm curious about the oil services.
[150] The profit was down thirty million or so and if we look at the geographic breakdown of profit, er the U S A was up ... er and yet if er Addison Wesley was about the same Penguin was up ten ... so where did this thirty million drop in profits at oil services arise, was it in the U K and Singapore ... as opposed to the U S or, or was there something different about Penguin U S compared with Penguin U K?
Michael (PS2Y7) [151] David, would you like to?
David (PS2Y8) [152] Well I think if I could ask James to help on the geographic spread of the profits overall and then I could perhaps supplement that afterwards on the oil services.
James (PS2YA) [153] The erm, yes Camco's profits were down in the U S, but Penguin North America was substantially up, erm and Addison Wesley of course was up in erm dollar terms.
[154] Th this er ... the, the small increase in sterling of er Addison Wesley in fact under er I mean it didn't do them justice in dollar terms they were up fourteen percent.
[155] Erm ... th that's the main er so overall you had a net gain in fact to erm ... U S profits er Camco erm I think less than that erm Camco's profits to [...] were spread fairly broadly geographically er as you do know it does operate as you do rightly point out erm ... pretty much everywhere else and it's erm featured both in South America and Asia's decline ... and Africa, but not in Europe.
[156] It was up in Europe but down in the U K. ...
Michael (PS2Y7) [157] Yes? ...
Unknown speaker (HUPPSUNK) [158] Erm can I just clarify that the thirty million of erm savings, was that actual redundancy costs which took place in ninety two or was that redundancy costs plus the sav commensurate savings which will then benefit ninety three er or was it just the savings?
Michael (PS2Y7) [159] Frank, would you?
Frank (PS2Y9) [160] Erm, I think what I said was that as a result of these actions, the payroll would be thirty million less in ninety three than ninety two.
[161] That's what I was meaning.
Unknown speaker (HUPPSUNK) [162] So that doesn't include any redundancy costs?
Frank (PS2Y9) [163] Well the redundancy costs erm er taken in ninety two ... so
Unknown speaker (HUPPSUNK) [164] But does the thirty million include the redundancy costs or is that just the savings?
Michael (PS2Y7) [165] The redundancy costs are part of the savings.
Frank (PS2Y9) [166] No the [laugh]
Unknown speaker (HUPPSUNK) [...]
Frank (PS2Y9) [167] no listen the redundancy cost is taken in, in ninety two an and therefore the payroll is better is less by thirty million in ninety three, so that's ... that's the benefit there.
[168] ... Costs are in ninety two and therefore there was a cha there was a charge there was a net charge in ninety two and in ninety three the payroll will be thirty million less than it would have been.
Michael (PS2Y7) [169] In ninety two there were redundancy costs to some extent offset by some er savings in payroll, there'll by no redundancy cost relating to those previous redundancies in ninety three, but there will be the full saving on the payroll.
[170] So anyway
Unknown speaker (HUPPSUNK) [...] [...]
Michael (PS2Y7) [171] Yes we can.
Unknown speaker (HUPPSUNK) [172] [...] thirteen million [...] ...
Unknown speaker (HUPPSUNK) [173] Is that thirteen or thirty million?
James (PS2YA) [174] Thirteen, one figures one three.
[175] That's the gross cost actual cost of redundancies.
[176] Obviously there's some depending when they, depending on what time of the year you will get some of the savings.
David (PS2Y8) [177] Michael can I add something?
Michael (PS2Y7) [178] Yes.
Unknown speaker (HUPPSUNK) [...]
David (PS2Y8) [179] I'd just like to add that included in the numbers that I gave you for Camco were not just redundancy costs, but costs of closures of sales offices, distribution networks and some other special one-time charges, so it's not pure redundancy when you look at the numbers that I gave you earlier on.
Michael (PS2Y7) [180] Sorry, we had a ... question.
[181] Over here Go on.
Unknown speaker (HUPPSUNK) [...]
Unknown speaker (HUPPSUNK) [laugh]
Unknown speaker (HUPPSUNK) [182] The erm on the cash flow numbers exchange and other erm can, can you split out what the er what the figures actually were, how much they [...] and [...]
Michael (PS2Y7) [183] James.
James (PS2YA) [184] Erm ... yes I mean they're ... I'm groping for my briefing papers ... a complicated one this.
[185] Er it's mainly er the change in, in foreign currency debt ... erm ... and erm ... the year end debt er er erm the point is we had rather more dollars at the beginning of the year than at the end of the year erm and erm which, which complicates matters, but if you look at our year end debt in dollar terms th erm there was a thirty nine million pound erm adverse movement year on year as a result of that.
[186] The rest of provision the rest of the, of the movement are things like provisions which increased during the year [...] much smaller number.
[187] That, that brings you up to the [...]
Michael (PS2Y7) [188] Yes?
Unknown speaker (HUPPSUNK) [189] Erm [...] over the last three years [...] .
[190] Is that right?
Michael (PS2Y7) [191] Sorry, the?
Unknown speaker (HUPPSUNK) [192] [...] profits.
Michael (PS2Y7) [193] Oh yes.
[194] They will not occur in ninety three.
[195] I thought you said Camco from Capco sorry, yeah.
Unknown speaker (HUPPSUNK) [laugh]
Unknown speaker (HUPPSUNK) [196] Other way round.
[197] Yes.
Unknown speaker (HUPPSUNK) [laugh]
Unknown speaker (HUPPSUNK) [198] Big difference.
[199] Big difference.
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [200] Involved, in, in that conglomeration.
Unknown speaker (HUPPSUNK) [...]
James (PS2YA) [201] Well th the profits of the sale fixed assets that the [...] shares and would be if there were any the sale profits on the sale of any other pieces of land at Lakeside or indeed elsewhere in the group and we sold a site not in ninety two, it was ninety one at Frinton I think you'll remember that so small profits.
Unknown speaker (HUPPSUNK) [...]
James (PS2YA) [202] Correct.
[203] Therefore what is now called corporate [...] this other income is the erm basically head office cost, there's things like profits on from our captive insurance er dividends which we didn't have it in fact last year we did the year before from Blackpool land, small profits from the sale of some shares at [...] Fair and other odds and ends which I ... erm really don't make up a great deal.
Unknown speaker (HUPPSUNK) [...]
James (PS2YA) [204] Yeah any other current assets sales.
[205] That's basically it, current asset and investment sales.
Michael (PS2Y7) [206] Okay Ken.
Ken (PS2YC) [207] [...] twelve months ago you [...] sorry twelve months ago you [...] possibility that the falling out of the capital and accounts profits might be replaced by er taking some credit for the ... obvious major turnaround of B-Sky-B and I wonder whether you could ... elucidate on the prospects of that?
Michael (PS2Y7) [208] Mm.
[209] Well I would, I would, I would just comment that ... there ... er ... in [...] profits have er have [...] it doesn't mean to say that we won't have some profits from our estate at Thurrock because there are other areas of land involved, but they won't be so substantial and for B-Sky-B I would turn to Frank. ...
Frank (PS2Y9) [210] [laugh] Er well erm Pearson is always er er rather cautious of these things, but I think have, are, are very cautious [...] and might take the view if things progress as they are er in the second half of this year that we will er take some credit.
Michael (PS2Y7) [211] James.
James (PS2YA) [212] We've got erm ... yes we've got quite a lot of land stock interest we might have accrued er and haven't, erm thirty million pounds in fact, but erm it hasn't been accrued because in our view it's some years off for being paid, but we ... think er or so I'm informed by the Chairman of B-Sky-B er that things are going quite well
Unknown speaker (HUPPSUNK) [laugh]
James (PS2YA) [213] and erm ... therefore this year er there is a case for saying we shall start to accrue some of the backlog er to the extent, but only to the extent we will expected to be paid shortly thereafterwards.
[214] We don't want to accrue er interest even if it's being expenses by B-Sky-B if it's not going to [cough] actually be paid for many years, but to the extent that it's er likely to turn into cash in the relatively near future, then I think we would erm think it's now time to start addressing that issue and the result would be that we should probably erm accrue some reasonable and not very substantial amount of back-interest er in the current financial year.
Michael (PS2Y7) [215] We have two questions, Robert would you like to address?
Robert (PS2YB) [216] Yes [...]
James (PS2YA) [217] First of all the interest er it ranks higher up the hierarchy.
Robert (PS2YB) [218] [...] to this year's figures when reported next year?
James (PS2YA) [219] Don't think so.
[220] No.
[221] No, no it would just bring it up to date, the stuff we haven't accrued.
Robert (PS2YB) [222] [...] of the accrued guarantee [...]
James (PS2YA) [223] Yes, if you'll give me a moment to find them.
Unknown speaker (HUPPSUNK) [laugh]
Michael (PS2Y7) [224] And while we're waiting?
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [225] Yes.
[226] Frank?
Frank (PS2Y9) [227] I, I'm not sure what you mean by the [...] costs.
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [228] [cough] excluded the double running of [...] er redundancy costs and the other items we just mentioned.
Frank (PS2Y9) [229] Erm ... I think that would, that would add about erm ... say about f four, four and a half million to the profit and the second part of the question Ken?
Ken (PS2YC) [230] Well we told Westminster Press to introduce a budget on the basis that even if there was no revenue increase, er we would achieve a, a respectable trading margin erm ... and so that will happen.
[231] Now ... that the only thing to offset th that this year will be the ... continuing development losses of [...] on Sunday.
[232] ... Current trading is erm ... current trading is improving ... and I would say that er that the last three weeks have been the strongest weeks this year.
[233] It's improving as the year goes on.
[234] Er I think there's er one problem of course is that regional newspapers do depend on situations vacant quite a bit and the situations vacant market isn't improving dramatically.
James (PS2YA) [235] Can I just answer the question I, I dodged?
[236] Eleven million erm, but they're some way down the track, they're not at the top of the hierarchy [...]
Unknown speaker (HUPPSUNK) [...]
Robert (PS2YB) [237] Erm the cash as and when it does start coming through from er from B-Sky-B and the fact that you've actually er promised some of that to read in lieu of the increased er erm equity stake indirect equity stake.
[238] How can you actually account for that because either you could er increase your profits by the accrued amounts and then somewhere else [...] balance sheet and should pay for your acquisition [...]
James (PS2YA) [239] Yes well we haven't promised that amount, we've promised an amount equivalent to what we were gonna get [...] carefully.
[240] I E we're not er we're not [...] the erm the interest and dividend [...] we will be making cash amounts cash payments to read equal to the amounts we actually get from B-Sky-B as and when we get them, but we will therefore accrue them as income ... and the payments we've made will be payments that will be part of the cost of the investment.
Robert (PS2YB) [241] Okay and you said you'd start accruing the er erm the interest as and when the er time you were gonna receive the cash became er reasonably clear
James (PS2YA) [...]
Unknown speaker (HUPPSUNK) [...]
James (PS2YA) [242] Thank you.
[243] So that the incremental, only the incremental erm ... in respect of the incremental er er er percentage.
[244] You're quite right.
Michael (PS2Y7) [245] Yes.
Unknown speaker (HUPPSUNK) [246] At the erm at the [...] meeting recently they, they made it clear that er the deal has not yet been finalized.
[247] Can you, can you give us any idea when it'll close?
Michael (PS2Y7) [248] This week.
Unknown speaker (HUPPSUNK) [249] [...] Friday [...] ...
Michael (PS2Y7) [250] Sorry.
Unknown speaker (HUPPSUNK) [...]
James (PS2YA) [251] David and I.
David (PS2Y8) [252] Yes.
James (PS2YA) [253] Do you wanna, do you wanna start? [laugh]
David (PS2Y8) [254] I'll let you start
James (PS2YA) [255] You want me to start.
[256] I, I, well let me start first of all like most companies this has been erm er concentrated [...] wonderfully in er reconsidering the plans and this means that quite seriously that erm er the cost cannot be precisely [...] in the accounts because there's a redesign [...] .
[257] It's a bit of oh my God, I didn't realize we let ourselves in for that much and I, I don't think that's quite fair of us, although I think we, we had a [...] but some operating companies were, have certainly realized that they had erm material potential liabilities down the track led to redesign.
[258] Erm the I think er [...] two comments for David is close to this and the one that we don't expect the P and L charge starting in ninety three and going onwards to be quotes material I E it's getting quite modest, it's not sort of mega bucks.
[259] It is relating obviously not entirely, but overwhelmingly to U S employers.
[260] Secondly there would be a one-time hit for Pryers and that would buy a Pryer adjustment, er we're not gonna spread it forward.
Michael (PS2Y7) [261] Did everybody hear the question?
Unknown speaker (HUPPSUNK) [262] Yes.
David (PS2Y8) [263] Well,i i if I, the,on one of the comments I'd make is that it's the only time I've ever known the accounting profession to do businessmen a favour by forcing them to face up to what the costs of the consequences of their actions are and this has as James said led to looking quite carefully and I think it's difficult to quantify the cost at the moment for a variety of reasons.
[264] We have overhauled the plans in some of the companies, we've considered changes that should be done to ... erm make them more, actually more cost effective for the employee, there's an element of shifting the cost to the employee while still providing them with coverage and I think the other thing is that erm given the ... the redundancies that have gone on in Camco and other parts of the group and cost cutting generally, it's very difficult at this stage to predict you have all sorts of things like actuarial assumptions erm ... cost inflation of medical costs.
[265] I mean I don't wanna make it sound like it's,i i i it's, it's an impossible thing, but it's very difficult at this stage to forecast, but James' basic assertion that it isn't a very material number is correct.
Michael (PS2Y7) [266] Yes ... Charles?
Charles (PS2YD) [267] Er [cough] sorry.
[268] A question on the er oil service operations.
[269] I think at one point that the cash flow figure of fourteen point three million appeared.
[270] Can you say how much was taken out of working capital at the er oil services operations last year and a supplementary point assuming that about seventy percent of oil service revenues were international, international [...] last year, er how significant would the North Sea be within that international figure and t to what degree have the budget changes impacted there ... or will impact there, because we're already starting to hear some er fairly nasty noises aren't we from [...] ?
Michael (PS2Y7) [271] Perhaps David might like to deal with North Sea first and then James.
James (PS2YA) [272] With the ... the financial question?
David (PS2Y8) [273] Yeah I think on the North Sea, it obviously would have erm ... an effect on parts of our business, some parts more than others erm ... it's very early to say exactly what, what effect it obviously in fact to the extent that it encourages the further development of existing fields that clearly benefits parts, parts of our business that are to do with completion equipment and development equipment.
[274] Er the worst side obviously will be the drill bit side where Retool is not very significant in the North Sea Hycal on the other hand has a very strong market presence here ... er and Reler being submersible pumps and [...] base based in enhanced recovery I would say ... the effect would be relatively neutral, though they do a lot of business with companies like B P who are said to be one of the beneficiaries.
[275] I mean I think the, I, I think it can effect this, but not that materially erm ... there are many as you know different provinces round the world and what happens in the C I S is, is obviously very important for the Middle East and so erm it will have an impact.
[276] Perhaps a erm perhaps a lesser impact than on the economy of Great Britain in the long run as to, as to whether those resources are developed effectively.
James (PS2YA) [277] Working capital [...] reduction of [...] by Camco
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [278] Yes.
Unknown speaker (HUPPSUNK) [279] [...] the six million erm U K pension cost isn't [...] ongoing level and just going back to that er post-retirement medical benefits [...] it wouldn't be material I mean [...] definition material can be er something less than five percent of profits.
[280] Are we talking about a figure that could be approaching that sort of level, or substantially lower?
James (PS2YA) [281] Er [...] one question [...] less than five percent it will not be [...] but I don't want to go [...] and indeed I, for reasons that er David outlined, I can't go, can't be precise, but er it's not something to get scared about.
Michael (PS2Y7) [282] Er, do you wanna add?
Unknown speaker (HUPPSUNK) [283] I was only gonna say we're, we will probably have a much clearer idea by the time we get to the [...] results.
James (PS2YA) [284] The, the U K pension charge will er er er go up to the extent that pensionable salaries go up, there's a standard surplus being amortized au fait gently rising pension, I mean there's obviously there's an X percent of pensionable salaries is what the [...] will tell you will have to provide and er [...] er not much more at the moment er therefore the charge will go up a little bit but not, not gradually and it's not much.
Michael (PS2Y7) [285] There's two questions though.
Unknown speaker (HUPPSUNK) [286] Erm, I'm sorry to come back to the central overheads er again, but erm it, considering that the other income largely related to ninety one, I'm a little unclear why the central costs went down, I can't believe there's been any salary cuts at [...]
Unknown speaker (HUPPSUNK) [laugh]
James (PS2YA) [287] No we're not [...] that.
[288] Er no we had some larger other income erm ... I'm turning up the detail as we ... speak.
[289] There were the sale of er the shares of erm Cedar Fair, our current, which is one of our current assets and investments.
[290] We sold one percent, one percent David?
David (PS2Y8) [291] Yes.
James (PS2YA) [292] Erm towards the end of the year ... and the erm and Spear erm ... Spear had rather a good year, so that's our capital insurance company in Bermuda erm no claims.
[293] So that had rather er I mean that made er made it's not big potatoes, but it made more than a year ago ... and there were small movements on provision adjustments.
[294] That's all, so the ... the income was up, costs were ... costs were marginally down ... costs were down.
[295] [...] reduction of the costs appears in ink.
[296] Mr must have been very austere with his colleagues or
Unknown speaker (HUPPSUNK) [laugh] ...
Unknown speaker (HUPPSUNK) [297] On the oil services division are there likely to be any further technology transfers this year and er secondly could David give some idea of the impact of the proposed B T U Tax in the United States?
David (PS2Y8) [298] On the technology transfer er I don't ... think that there will be any income this year, if there is it will be quite modest, we're talking about three to four million dollars and it's related to follow-up payments for training.
[299] In fact given the, what's happened politically in what was Czechoslovakia and is now the Czech Lands and Slovakia, erm and the financial pressures in Slovakia it's not certain to me that the whole arrangement will go forward.
[300] There's no problem from our point of view if that happens, but we're looking you know quite closely at it and we'll wait and see what happens.
[301] So far as the B T U Tax is concerned, erm it's really ... a political issue as to where the administration or the Congress in the end decide to place the tax, I mean in very simple terms the nearer you place it to the consumer, the more effective it is, but the less politically palatable it is [laugh] which because consumers vote and oil companies don't an and so er I think it will be political pressure to push it nearer to the well head which will be less good for the oil and gas producers.
[302] I suspect a classic Washington compromise in the end.
Unknown speaker (HUPPSUNK) [303] [...] adverse variance fee this year?
David (PS2Y8) [304] No I don't think so, but I mean I think on the whole that the pop the admin the erm Clinton Administrations Policy is to try and encourage the development of nat the use of natural gas, it's environmentally er more acceptable and so I don't see any particular erm direct threat this year.
Michael (PS2Y7) [305] Yes?
Lorna (PS2YE) [306] [...] what average rate did you pay on it and what average rate are you paying this year?
James (PS2YA) [307] Erm ... average net debt was down.
[308] I haven't got er I have to give you the figure afterwards erm ... no I have got it, I have got it.
[309] Erm it was about a hundred and fifty million, but I haven't got it for nineteen ninety one ... erm ... Lorna, sorry you had some more questions [...] parts B, C and D
Lorna (PS2YE) [...]
James (PS2YA) [310] Average rate.
[311] Er accrued rate ... accrued rate was about erm on the, on the, on the interest charge [...] was eight nine, but erm ... er there are a lot of adjustments in there which we've looked at.
[312] I mean let's take one er because of the hyper- inflation in Venezuela you pay fifty percent on debt there.
Lorna (PS2YE) [...]
James (PS2YA) [313] Er we have some credit.
[314] Well that's two million pounds interestingly erm [...] there are [...] costs [...] er er er we had some of our U S interest rates and we er that actually was an outgoing erm ... there, there are lots of other pluses and minuses and we, you can kid yourself the rate [...] being eight point nine accrued and five and a half adjusted er if you want to think you know if you th think the treasury job was a good one, but erm the truth lies somewhere in between I suspect.
Lorna (PS2YE) [315] [...] what do you think the average [...] ?
James (PS2YA) [316] The average interest rate?
[317] Erm ... I, I'll come back to you on that one.
Unknown speaker (HUPPSUNK) [...]
Michael (PS2Y7) [318] Yes.
Unknown speaker (HUPPSUNK) [319] Can you tell us a little about the prospects of fine china in ninety three?
David (PS2Y8) [320] Well I think er what I'll do because Stuart who's the C E O rather happens to be with us er I think I'll ask Stuart if he would like to make a few remarks.
[321] Stuart? ...
Stuart (PS2YF) [322] [cough] ... It's really too early to say.
[323] The first three months of this year we've had an increase in sales, but those have really been attributable to improved er t to stronger U S and Canadian currency rates.
[324] Erm volumes are about level with last year and the improvement in profits is related to currency changes.
[325] So I, I wouldn't to be drawn on that Royal Doulton was late into this cycle and it's a little later than the publishing companies coming out. ...
David (PS2Y8) [326] Yes?
Unknown speaker (HUPPSUNK) [327] [...] ninety two, ninety three and ninety four.
David (PS2Y8) [328] Yes.
[329] Who would like to do that?
Unknown speaker (HUPPSUNK) [330] Erm [...]
Unknown speaker (HUPPSUNK) [331] There wasn't much [...] from our point of view from Addison Wesleys in ninety two.
Unknown speaker (HUPPSUNK) [...]
Unknown speaker (HUPPSUNK) [332] Bills up in ninety three and ninety four.
Unknown speaker (HUPPSUNK) [333] The revise is every year.
[334] Th there's a revision each year, but there's no major reduction er programmes this, in the current year.
[335] In fact this is a year when we're spending for the next adoptions.
David (PS2Y8) [336] Yes?
Unknown speaker (HUPPSUNK) [337] [...] prospects there?
David (PS2Y8) [338] Well, er ... I think that ... [...] and I get it James and I go to Friday Lazard meetings, I think there is er a erm ... better feeling and we would look for progress in ninety three. ...
Unknown speaker (HUPPSUNK) [339] Is, is there [...]
David (PS2Y8) [340] Er in Lazard Brothers in particular?
Unknown speaker (HUPPSUNK) [341] Yes.
David (PS2Y8) [342] Erm
Unknown speaker (HUPPSUNK) [343] With [...]
David (PS2Y8) [344] Yes I think th that, that er it did give, it did, it did give opportunities, but I mean it's not a, it's not an enormously major erm part of our overall Lazard business.
[345] ... Er ... James would you like to add?
James (PS2YA) [346] Yeah I mean I er er er clearly like m m most banks,th th th they found some useful opportunities [...] in September, but I mean I don't say [...] they're not huge players they don't have enormous capital they're not strict punters in, in, in any of the markets.
David (PS2Y8) [347] Yes?
Unknown speaker (HUPPSUNK) [...]
David (PS2Y8) [348] Sorry, would you like [...]
Unknown speaker (HUPPSUNK) [349] Has there been any major change in the distribution of debt and cash erm of nineteen ninety two er compared to nineteen ninety one?
James (PS2YA) [350] No other than the er er er the [...] currencies pretty much the same er as I said of the important changes i is a much heavier emphasis on variable rates [...] . ...
David (PS2Y8) [351] Yes [...]
Unknown speaker (HUPPSUNK) [352] [cough] A are you still intending to favour internal spending vis-a-vis acquisition opportunities on the basis that acquisitions are just too overpriced or with the eleven percent gearing do you think you will be er jumping at the bit a bit fairly soon?
David (PS2Y8) [353] Er I think, I think that er our organic growth tends to be erm er er continuous and er as you know each year we're spending erm substantial amounts er on that er ... we prefer organic growth to acquisitions because we avoid er premiums in the long run er ... frequently er organic growth is, is actually more profitable er ... but ... we are quite likely to make some acquisitions er if erm the right er strategic opportunities er are created.
Unknown speaker (HUPPSUNK) [...] [laugh]
David (PS2Y8) [354] We o er as, as you know we always review er er er er our businesses as subject to a continual view, I have nothing er active to report on that front.
[355] ... Yes?
Unknown speaker (HUPPSUNK) [356] [...] erm shareholding in the current year?
David (PS2Y8) [357] It's stayed around about the eight just over eight percent, there hasn't, there hasn't been much movement. ...
Unknown speaker (HUPPSUNK) [358] Just on the export front [cough] [...] increased optimism er can you just verify what export sales were last year and whether or not you managed to er er hold er local county prices overseas in respect of those exports?
[359] And what
David (PS2Y8) [360] Y
Unknown speaker (HUPPSUNK) [361] sort of kick-offs if any there was on in transactional terms last year [...] Royal Doulton [...] month erm sorry [...] eighteen month type basis?
David (PS2Y8) [362] Yes.
[363] James?
James (PS2YA) [364] Erm well you've Stuart who erm had it at his fingertips equally, but er they have substantial, I, I'll let him talk about [...] oh, over fifty percent export are you not Stuart?
[365] Your turn [...] er and they have erm they do hedge this is I mean our policy is broadly to hedge er o on a twelve month rolling forecast forward er to what extent and what timing is a function of judgment and it is true that the erm er Doulton receivables for ninety three are seventy percent hedged already at a little above the current spot rate.
[366] Erm but er er I think will provide still very good factory profit for them and there is also of course er ... this, there's still more to come.
[367] Th they're our largest exporter er there's inter-company sales which would gen can generate quite useful profits since they get sold on both of er [...] Penguin companies er and Longman of course has a high content of erm er of er non-U K sales and Addison Wesley also er I mean Camco was the most international, but it's erm not er it's not an exporter in sterling denominated terms.
David (PS2Y8) [368] Er but I think also the lower value of the pound er affects Madame Tussaud and the number of visitors here and Michael C O Madame Tussaud, would you Michael like to comment on tourist numbers?
Unknown speaker (HUPPSUNK) [369] Er obviously the erm ... better [...] for overseas visitors [...] pound will help tourism in this country, particularly in London erm ... the Chairman says Madame Tussauds in fact gets about sixty percent visitors over from overseas, Rock Circus at the moment is about fifty percent and it's still rising, which partially explains why it had a very good year last year.
[370] Warwick Castle gets about forty percent of visitors from overseas with whom a large proportion are Americans, and er I suggest that the increase in Americans this year ... will be quite good compared with figures for last year, so we do benefit er I might even mention that in ... Holland er over half the visitors [...] Exhibition in Amsterdam are not Dutch, many of them are Germans, but there are also Americans and of course other overseas visitors there.
[371] So erm [cough] foreign earnings is important for us.
[372] Our parks, Alton Towers and Chessington get a very insignificant amount of overseas visitors which is normal for such places in this country and many other places in the world.
[373] But erm, we're ... reasonably optimistic about visitor numbers.
[374] The concern in London particularly of course is the incidents of terrorist in of terrorist incidents, and that undoubtedly affected er visitation in London, not just at our places, but in most tourist attractions, particularly towards the end of last year.
[375] On the other hand it has to be said that the er publicity for that does not seem to have penetrated very far amongst foreign visitors and there isn't very much evidence that foreign visitors have been put off coming here in spite of the considerable number of incidents that there have been in this country, particularly in London of course in the last year or so.
[376] It's affected mainly the U K visitors.
David (PS2Y8) [377] So we try not to mention them.
Unknown speaker (HUPPSUNK) [378] We try not to mention David.
David (PS2Y8) [laugh]
Unknown speaker (HUPPSUNK) [379] Did you
Unknown speaker (HUPPSUNK) [...]
Unknown speaker (HUPPSUNK) [380] did you consider er an accelerated second interim dividend?
David (PS2Y8) [381] I'm glad you asked that ... erm yes we did, we did give it consideration er ... er we decided against it, because it would have meant er to declaring the dividend on Friday for technical reasons and announcing our results erm today and this could have been in danger of misleading er the market er because this [...] lower results and we have an increased dividend and that was erm ... probably the main reason why we decided that we wouldn't do it er the slight increase in net dividend in fact should compensate erm ... and this is coincidence er er f fo for the increased A C T on the [...]
David (PS2Y8) [382] Yes?
Unknown speaker (HUPPSUNK) [383] Could you give us some indi ... give us some indication as to how erm supportable the excellent performance in Penguin is likely to be through nineteen ninety three [...] looking forward, you obviously have a particularly high level of best sellers?
David (PS2Y8) [384] Well it was a particularly er high level of best sellers to erm er er Stephen King's erm and what I'm glad to say is that this is continuing into ninety three and I think we've got eight er eight best sellers on the, on the New York Times best seller list, so er ... you know prospects for ninety three also look, look, look good. ...
Unknown speaker (HUPPSUNK) [385] Yeah I believe recently [...] have indicated they will start [...] B-Sky-B will you and if so, when?
David (PS2Y8) [386] James?
James (PS2YA) [387] Well they said maybe they will, maybe they won't [laugh] according to the press releases that turn up.
[388] Erm I think we're er er we're quite clear at the moment that the correct erm interpretation of it from our point of view is as a fixed asset investment ... and unless something changes in the er constitution of the company, erm although it may be erm the guiding thing [...] become [...] profitable I think one's got to play by the rules and the rules at the moment say it isn't one. ...
Unknown speaker (HUPPSUNK) [389] Which doesn't mean to say we won't have substantial erm P and L er contribution fro from B-Sky-B. ...
David (PS2Y8) [390] Any more questions er?
[391] ... Well thank you very much indeed for coming ... and er then if anybody wants to ask any further questions privately, they're welcome.