§ Mr. Butcher
[pursuant to his reply, 26 November 1984, c. 352.]: The costs of the British Telecom flotation can be broadly divided into two categories: those that can be estimated now, and those that depend upon the take up of the offer.
Costs that can be estimated now include:
£ million Underwriting the United Kingdom portion 14.6 Underwriting the overseas portion 7.8
£ million Commissions to United Kingdom priority applicants for "Placing Shares" (see part IV, section 13 of the prospectus) 30.9 Commissions to United Kingdom priority applicants for commitment shares (see part IV, section 13 of the prospectus) 21.1 Commissions to brokers for priority applications 4.7 Foreign commissions 20.8–22.5 Fees for advice from merchant bankers, brokers, solicitors, accountants and so on 7.0 Pre-prospectus advertising 7.6 Prospectus advertising 3.0 Other marketing costs, including printing prospectuses 6.9 Miscellaneous, including other foreign costs 2.5 Total of costs that can be estimated now 126.9–128.6
Other costs, which depend upon the level of applications, the numbers of shares allotted and the continuing pattern of share ownership include:
- (i) the cost of supplying to British Telecom employees free shares to the value of £70.20 and matching shares up to a maximum of £200.20, together with a 10 per cent. discount on applications up to £2,080 and the administration of this scheme;
- (ii) the cost of supplying telephone rental vouchers (worth £18 each) and bonus shares to those shareholders who are and remain eligible for these incentives, together with the costs of administering these schemes;
- (iii) certain charges made by the receiving bankers and registrars for handling applications and subsequent administration; and
- (iv) the commissions to intermediaries set out in part IV, section 14(d) of the prospectus.
Most of the above costs include VAT at 15 per cent.