Q61 Jon Trickett: Let me take you to table 2 on page 2. One of the things which your consultants told you, which might have been helpful to tell us, is that most of the detail in this is contained in small print, in notes, and note 1 on that table, the sentence is so obscure as to be impenetrable. The first sentence talks about "Figures expressed as net present values based on cashflows discounted at 18.94% in nominal terms." I have no idea actually what that sentence is referring to, other than I think every figure in table 2 is not a real figure; it has been discounted, has it not?
Mr Finlay: I can explain this point. This table is dealing with how the refinancing gain was calculated. The method of how refinancing gains are calculated is quite closely prescribed in Treasury guidance and this is the method used which we set out here.
Q62 Jon Trickett: I think it would be helpful to those of us who speak English and try to make numbers mean what they actually mean in reality, if we could know what the numbers mean. There is an increase from £47.3 million to£117 million going to Octagon, is there not? It looks as though they are going to get an additional £70 million, but in fact that is not a real figure, that £70 million, is it, because it has been discounted at 18.94%? What is the real figure?
Mr Finlay: This is the value, if you like, in today's money of the returns which flow-
Q63 Jon Trickett: What is the real money? What is the real profit, not the £70 million which is, to some extent, a mythical figure, because 18.94, you would have to get a mathematician to tell us why 18.94 was the chosen figure? So what is the real figure?
Mr Finlay: It would be possible to produce a calculation which showed that figure in cash terms. I do not have the figure here.
Q64 Jon Trickett: Tens of millions of pounds more than £117 million.
Mr Finlay: It is certainly more than £117 million because you can see that from figure 8 on page 9.
Q65 Jon Trickett: Do you not know what the figure is? Because this is a mythical figure, it does not really exist except on a piece of paper. Do we not know what it is going to cost to pay Octagon following the refinancing?
Mr Finlay: I do not have the figure here. The data exists and we could provide it.
Q66 Jon Trickett: In a previous Report on the Skye Bridge, the PAC was provided with figures which both showed the discounted figure, which at that point was £10 million, and the true figure, which was £37 million, a multiple of four. I understand that the discount rate on the Skye Bridge deal was about the same as this one. If that is the case am I right in assuming that the figure of £117 million is more likely to be £400 million?
Mr Burr: We can certainly provide-
Q67 Jon Trickett: Is it in that kind of order?
Mr Burr: I cannot say exactly.
Q68 Jon Trickett: Is the £117 million within £100 million of the true figure?
Mr Finlay: You can see the cash flows; they are set out in figure 8 on page 9. The figure that you are interested in is effectively the aggregation of the annual distributions to the shareholders as set out in figure 8.
Q69 Jon Trickett: It is an amount of dosh that goes out of our wallet as taxpayers to a private company, is it not? And it is not £70 million, is it, it is probably a multiple of that, two or three times that amount?
Mr Burr: Yes, it probably is.
Q70 Jon Trickett: It is 100s of millions of pounds more than £117 million, is it not?
Mr Burr: Yes, it is. All we have done is follow the general practice of discounting this back to current values.