§ Mr. Michael Marshallasked the Secretary of State for Industry what were the financial targets set for the Post Office's postal business in terms of net assets over the last 10 years; and how well the Post Office has performed in meeting those targets after allowing for interest payments, depreciation and tax.
§ Mr. KaufmanFor the period from 1963–64 to 1967–68 there was a financial target for the Post Office as a whole of a rate of return on net assets of 8 per cent. This was defined as profit before interest but after depreciation at historic cost, expressed as a percentage of average net assets at historic costs. In 1967–68 the return achieved by the Postal Business on this basis was 9 .;1 per cent.
For the period 1968–69 to 1972–73 the postal business had a financial target of a 2 per cent. margin over expenditure. The margin was defined as profit after interest, historical and supplementary depreciation as a percentage of expenditure. Since 1973–74, there has been no agreed financial target for the postal business. I have, however, this matter under review at the present time.
The postal business achieved positive returns on net assets, on the same basis as the target which existed for the period 1963–64 to 1967–68, in the following years:
Year Return on Assets Per cent. 1968–69 2.0 1971–72 6.9 1975–76 8.0 1976–77 17.2
§ Mr. Michael Marshallasked the Secretary of State for Industry what were the financial targets set for the Post Office's telecommunications business in terms of net assets over the last 10 years; and how well the Post Office has performed in meeting those targets after allowing for interest payments, depreciation and tax.
§ Mr. KaufmanFor the period from 1963–64 to 1967–68 there was a financial target for the Post Office as a whole of a rate of return on net assets of 8 per cent. This was defined as profit before interest but after depreciation at historic cost, expressed as a percentage of average net assets at historic costs. In 1967–68562W the return achieved by the Telecommunications Business on this basis was 7.3 percent.
For the period 1968–69 to 1969ߝ70 there was a target of a rate of return on net assets of 8–5 per cent. for telecommunications alone. This target was changed on 1st July 1970 to 10 per cent., and remained in force until 1972–73. These targets were defined in the same way as the earlier target. The rates of return achieved in those years by Post Office telecommunications on this basis were as follows:
Year Return on Assets Per cent. 1968–69 8.0 1969–70 8.4 1970–71 9.8 1971–72 8.6 1972–73 6.9 There was no financial target for Post Office telecommunications for the years 1973–74 to 1975–76 inclusive.
A new financial target for Post Office Telecommunications was announced by my right hon. Friend on 23rd December 1976 for the three years 1976–77 to 1978–79. The target is a real rate of return of 6 per cent., defined as profit before interest but after historic and supplementary depreciation, as a percentage of average net assets revalued to replacement cost. The real rate of return achieved on this basis in 1976–77, after allowing for the £100 million rebate to subscribers, was 6–6 per cent.